TIDMHAN
RNS Number : 9407I
Hansa Trust PLC
22 June 2017
Hansa, investing to create
long-term growth
Annual Report
For the year ended 2017
31 March 2017
Welcome
Welcome to the Hansa Trust PLC Annual Report for the year to 31
March 2017.
Your Company has had a rather better year, as the prospects for
Brazil and its economy improved to the benefit of our investment in
Ocean Wilsons. Elsewhere in the portfolio there was encouraging
progress. Details of both can be found within the sections of the
Strategic Report.
I would also like to take this opportunity, on behalf of the
Board, to invite you to the Company's Annual General Meeting at
11.00am on 28 July 2017 at The Washington Mayfair Hotel in London.
We value the feedback we receive from all shareholders and look
forward to meeting you at the AGM.
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 under the Financial Services and Markets Act 2000 if in
the UK, 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 and any
accompanying Form of Proxy, 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
England & Wales under company number 00126107.
Long-Term Highlights 2017
Rolling Five Year NAV Returns (per annum)
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 Trust's goal.
Share price record
Approximate Attribution Ordinary Shares
of Shareholders'
1 Yr Returns
Due to NAV change +148p +20%
Due to discount
change -12p -2%
Dividends +16p +2%
Shareholders' Return +153p +21%
Approximate Attribution Ordinary Shares
of Shareholders'
5 Yrs' Returns
Due to NAV change +133p +15%
Due to discount
change -171p -19%
Dividends +79p +9%
Shareholders' Return +41p +4%
The tables show the contribution of the rising NAV offset by a
rising discount, due we believe to the association with Brazil of
the holding in Ocean Wilsons and its Brazilian subsidiary, Wilson
Sons.
The Board is cautiously optimistic that the politics of Brazil
are improving, thereby enhancing the prospects for Wilson Sons over
the longer-term.
Dividend Payments (total payments over five years*)
The Dividend Policy can be found in the Organisation and
Objectives section of this annual report and on the Company's
website. It can be summarised as the declaration at the beginning
of the year of two equal dividends, one paid in November and the
other in May.
* Based on dividends attributable to their respective financial
years.
Long-term (5yr) record
31 31 Capital Total
March March Return Return
2012 2017
NAV 1,117.5p 1,281.2p +14.6% +23.3%
NAV (Ocean
Wilsons Holdings
Ltd) 659.6p 887.6p +34.6%
Ocean Wilsons
Holdings
per Hansa
Share 457.9p 393.6p -14.0%
KPIs
Ten Year Fixed
Interest Gilt +11.4%
Inflation
(CPI) 95.4 102.5 +7.4%
MSCI ACWI
TR GBP 88.8 169.3 +90.6%
Share Ord
Prices Shs 905.0p 866.5p -4.3% +5.7%
"A" Ord
shs 891.5p 848.0p -4.9% +5.2%
Ord
Discounts Shs -19.0% -32.4%
"A" Ord
Shs -20.2% -33.8%
Over the past five years the value of the holding in Ocean
Wilsons has held back the returns earned by the rest of the
portfolio. Its capital performance has done rather better than the
five year fixed interest gilt and inflation and a little better
than the MSCI ACWI. The two Hansa Trust share prices have, we
believe, suffered from Ocean Wilsons Holdings' association with
Brazil, resulting in a widening of the discount.
Chairman's Report to the Shareholders
The Strategic Report has been prepared in accordance with
requirements of The Companies Act 2006 and incorporates the
Chairman's Report to the Shareholders, the majority of the former
Directors' Report and elements from the Directors' Remuneration
Report.
Stock Markets and Politics in 2016/17
What an unexpected year it has turned out to be. A year ago
markets had just suffered a dose of the hiccoughs, caused largely
by fears over China's economy. But the eight year old bull market
proved to be too strong to be derailed by such fears - or as it
turned out - by the two subsequent political shocks, the British
voting to leave the European Union and the Americans voting to have
Donald Trump as their new president. To add to that - and of
particular significance to us - was the impeachment of Brazil's
erstwhile president, Dilma Rousseff. Global markets, led by those
in America, just rolled on and on upwards and upwards.
For the better part of 35 years we have lived in an era of
benign politics - at least within the developed world. During and
following the Thatcher/Reagan years of the 1980s, the economic
policies emanating from centralist governments recognised the
importance of both free trade and of creating wealth, to generating
economic growth and general prosperity. Business was worth the
risk. And as a consequence, we have seen an unprecedented (in
modern times at least) creation of new wealth - courtesy of global
free trade, extraordinary technological developments and very
generous monetary policies. Huge fortunes have been created.
We may think that, following the events of the last year or so,
we live in unusual times, but the truth is we have been doing so
for a long time. The populism that appears to be developing - and
is seen by some as something of a threat to the world's economic
order - is not an out of the blue event; it is rather a development
provoked by how the few have benefited from the prosperity and by
how much they have benefited from it. There is now the inevitable
political backlash - led, it would appear, by political mavericks;
but then by who else? Politics are now firmly back on investors'
agenda. It is something we spend time talking about at Board
Meetings, concerned as we are with political risk within our
portfolio.
Net Asset Value: Long-term Performance
Five year return: NAV: +14.6% to 1,281.2p per share; 23.3%
including dividends.
The tables in the Long-Term Highlights section illustrate - with
some commentary - the salient points behind the Company's long-term
(five year) performance. As we have remarked at some length over
the past few years, the returns from the portfolio have been
affected by the large holding in Ocean Wilson Holdings Ltd ("Ocean
Wilsons", "Ocean Wilson Holdings" or "OWHL") - the value of which
fell by 14% over the last five years - largely because of the
decline in the value of its Brazilian subsidiary Wilson Sons Ltd
("Wilson Sons"), whose share price actually rose by circa 18% in
Brazilian Reals, but fell by 12.5% in Sterling terms.
As a consequence of this, and relative to our peer group (see
website for peers) and to the MSCI All Country World Index ("MSCI
ACWI"), we have lagged some of our Key Performance Indicators
("KPIs"). We believe that the action that we have undertaken over
the past five years has already generated positive results and has
set us up for some much more competitive returns in years to
come.
During the last five years:
-- We have refreshed the Board of Directors with two new
appointments, one of whom is now the Chair of the Audit
Committee.
-- We have broadened the base of the equity exposure from "UK
small cap" to internationally based companies, both as direct
equity and through investment in funds managed by best in class
managers.
-- We have set a dividend policy which seeks to provide clarity
in respect to the dividends in the year ahead.
-- Wilson Sons' business has continued to make progress; it is a
well-managed company with excellent long-term prospects, which we
would expect to benefit from. The Brazilian economy seems to be
making tentative steps in the right direction.
In doing all of this we have created a portfolio which, while
not necessarily unique, is quite different from what exists
elsewhere and provides shareholders with an exposure to investments
not easily available to the individual investor. It is, however, a
rather illiquid portfolio and one not suited to managing a share
buy-back scheme. So, in order to reduce the discount, we need to
create greater demand for our shares - by earning good and
competitive returns and then by telling the story. In this respect,
we are working with Edison, an investor relations firm, to go out
and tell the Hansa Trust story to those investors we believe might
be interested in it.
The Future
Guessing, yet alone analysing the future, would appear to be a
mug's game - at least judging by the success of opinion polls! But
we can observe trends and come to some sort of conclusion as to
which are lasting and which are not. What is hugely more difficult
is attributing time scales to those trends.
Perhaps the most obvious trend, that surely has some sort of
limited life, is that of the ever growing level of global debt -
global government debt alone being circa $70 trillion or close to
the size of the global economy. It cannot go on growing forever.
Quite extraordinarily low - one might say punishingly low -
interest rates have afforded these ever increasing levels of debt
but one day that too must change. The debt problem "can" continues
to be kicked down the road and it just gets bigger with every kick.
It is, or should be, a matter of some concern to politicians and
investors alike. Against declining demographics in the developed
world, dealing with it seems to me a tough ask.
The other issue of some concern is how to ensure that the
ambitions of rising political populism and its goal of spreading
the benefits of globalisation and technological productivity don't
damage those engines of growth. I am sure it can be done but it's
not clear the new rivalry in politics will manage to achieve the
best of both. Globalisation, technology and quantitative easing in
the developed economies have benefited the few but not the many,
leading to the rise of populism and nationalism. They will
influence the order of things in the future, including carrying the
risk of rising international conflict.
Plenty to worry about if you want to. However, there are also
some really positive developments. The most obvious is the quite
extraordinary achievement being made in various technologies - not
only in electronics but also in healthcare, in metallurgy, in
environmental management and so on. The world is changing at a
quite extraordinary pace as the table below illustrates. Technology
and the underlying software that it enables is literally changing
the way we do business and the way we live our lives. From nowhere
it seems, the world's largest companies are brand new names as the
old ones either fade into lesser significance or, as in some cases,
become obsolete and die. Technology is both creative and
destructive and the modern day portfolio manager has to put the
business models of his/her investee companies under a microscope to
see if they benefit or suffer from the onward march of
technology.
The Most Valuable Companies in the World
March March
2007 2017
(US$s (US$s
bn) bn)
Exxon Mobil 430 Apple 754
General Alphabet
Electric 364 (Google) 574
Microsoft 273 Microsoft 509
Citigroup 253 Amazon 423
Berkshire
AT & T 246 Hathaway 411
Largest Largest
5 1,566 5 2,671
Source: Wikipedia
Secondly, there are parts of the world where populism is in
retreat, it having been tried, tested and found wanting. Perhaps
the most unlikely of places for such political turnaround is Latin
America, where democracies (a relatively new political structure in
the longer-term scheme of things) are now returning governments
with the combination of populist awareness and business friendly
policies. Argentina, Brazil, Columbia, Mexico and Peru all have
such governments. It is likely that Chile will have one by the end
of the year and even the basket case, Venezuela, may embark on
better things in a year or two's time. And there are other parts of
the world where the politics is improving. Therein lies
opportunity.
In respect of Brazil, I should restate the long-term confidence
the Board has in its investment in Wilson Sons (through Ocean
Wilsons). It has fared well in good and in difficult times and, if
the improved outlook for Brazil continues, we would expect an even
brighter prospect for the future of the company.
There is no doubt that the current, post Financial Crisis, bull
markets are long in the tooth - although the necessary slower
economic growth following the Crisis prevented too quick a build up
of economic or financial excesses. Many stocks and shares are
probably too expensive, but that depends on their companies'
prospects. In a changing world some have even better prospects than
investors can imagine, others rather worse.
It is a truly exciting world and offers huge opportunities for
astute (careful and courageous) investors.
Some Housekeeping
1 Benchmarks/Key Performance Indicators
We established the benchmark we have been using in April 2003 to
reflect Hansa Trust's goal of achieving growth of shareholder value
- or put another way - of making money through growing the net
asset value and paying dividends. The benchmark - the total return
of the three-year average of a five year UK government bond plus
two per cent - was chosen to reflect a risk free (or as near risk
free as possible) return that would also achieve the goal of growth
of shareholder value plus the two per cent.
The circumstances of the last eight years - from the bottom of
the bear market (March 2009) that followed the onset of the
Financial Crisis - have been characterised by significant equity
bull markets and very low interest rates - leading to high returns
from equities and low returns from short-term bonds. Making money
by investing in equities has not been difficult - either in
absolute terms or relative to that "safe" alternative that is our
benchmark. Hence the questions we have received about the
benchmark.
Benchmarks should be no more than comparators but,
unfortunately, they become templates for management - in all walks
of life including portfolio management. They should reflect the
goal or goals concerned - not constrain or guide the portfolio that
is used to achieve the goals (that is putting the cart before the
horse). With circa 30% of the portfolio invested in Ocean Wilsons,
another 40% invested in international funds and finally 30%
invested in international equities, there is no portfolio-fitting
index for Hansa Trust's portfolio anyway.
As a Board of Directors, we monitor the returns made in absolute
and relative terms against the KPIs that we have established for
that purpose and are set out in the Organisation and Objectives
section of this report. The comparisons are made over 1,3, 5 and 10
years. Here and hence forward we will comment on our returns when
reporting to shareholders by reference to our KPIs and not have a
single benchmark that would be appropriate some times and not at
other times.
Our first and most important goal is to make money for
shareholders and we compare that against a safe return from an
appropriate government bond - for this we have elected to follow
the 10 year UK Government gilt; our second goal is to achieve
returns that are higher than inflation and we use the UK's CPI as
the KPI for comparison; and finally we compare our returns with
those of our peer group and of an appropriate index - for which we
have elected to follow the MSCI All Country World Index because it
is an appropriate KPI for UK investors wishing to invest
internationally.
Two other aspects that influence the returns that shareholders
receive are the share price discounts to the underlying net asset
value and the costs of running the Company. There are also
appropriate KPIs for them.
2 I have also mentioned we are working with Edison to go out and
promote the Hansa Trust story to those investors who might be
interested in such an investment. With the onset of MIFID 2 (EU
legislation, which, amongst other things, will affect the level of
research on companies provided for investors), there will be less
investment research available about all but the very biggest
companies; Edison provides research on Hansa Trust.
Hansa Trust will not be of interest to all investors -
particularly those interested in more conventional, index focused
portfolios and those requiring a large, liquid share base but it
will interest some. With a relatively high discount and improving
prospects, it is just possible that the Company's shares could
prove to be a quite rewarding investment. We believe so; we'll
see.
3 I have mentioned we have recently broadened the base of our
"UK small-cap" equity portfolio on to an international base,
because it seems sensible to take advantage of opportunities in
other parts of the world - notably in the US but also
elsewhere.
4 The policy on Directors' Remuneration will be presented to
shareholders at the AGM on 28 July 2017 for their consideration and
approval. At the meeting, it will be proposed that the current
overall cap of GBP175,000 should be maintained on annual Directors'
fees.
Alex Hammond--Chambers
Chairman
22 June 2017
The Board of Directors
The Directors who served during the year to 31 March 2017
are:
Alex Hammond--Chambers
(Chairman)
Alex joined the Board in 2002. He serves on a number of boards
of a variety of companies, including other investment trusts and
open-ended investment companies (including Findlay Park Funds).
His career has spanned two phases. The first phase working for
Ivory and Sime (investment managers) for 27 years, from which he
gained portfolio management skills and experience running
investment trusts. The second phase, working for 25 years to date,
has been involved in corporate governance, serving on the boards of
many companies in a number of different industries and countries -
investment trust company boards particularly. He has served as
chairman of the Association of Investment Companies and as a
governor of the NASD (NASDAQ).
Meetings Total
attended Yearly
Meetings
---------------- --------- ---------
Strategic 1 1
---------------- --------- ---------
Board 5 5
---------------- --------- ---------
Audit Committee 2 2
---------------- --------- ---------
Jonathan Davie
(Audit Committee Chairman)
Jonathan joined the Board in January 2013. He is a non-executive
director of Persimmon and Gabelli Value Plus+ Investment Trust and
also chairman of First Avenue Partners, an alternatives advisory
boutique.
Jonathan qualified as a Chartered Accountant and then joined
George M. Hill and Co. and became an authorised dealer on the
London Stock Exchange. The firm was acquired by Wedd Durlacher
Mordaunt and Co. where Jonathan became a partner in 1975. He was
the senior dealing partner of the firm on its acquisition by
Barclays Bank to form BZW in 1986.
Jonathan developed BZW's Fixed Income business prior to becoming
chief executive of the Global Equities Business in 1991. In 1996 he
became deputy chairman of BZW and then vice chairman of Credit
Suisse First Boston in 1998 on their acquisition of most of BZW's
businesses. He focused on the development of Credit Suisse's Middle
Eastern business. He retired from Credit Suisse in February
2007.
Meetings Total
attended Yearly
Meetings
---------------- --------- ---------
Strategic 1 1
---------------- --------- ---------
Board 5 5
---------------- --------- ---------
Audit Committee 2 2
---------------- --------- ---------
Raymond oxford
Raymond joined the Board in January 2013. He served 18 years
with the British Foreign & Commonwealth Office. He spent three
years in Moscow (1983-1985), seven years in the Cabinet Office
covering Soviet and East European political, military and economic
developments (1985-1992) and was a founding member of the British
Embassy in Kiev (1992-1997). In 1997 he left British government
service to pursue private business interests in the United Kingdom,
Eastern Europe and the Middle East, chiefly in energy, agriculture
and environmental remediation. In October 2014, Raymond was elected
to the House of Lords, the upper chamber of the British
Parliament.
Meetings Total
attended Yearly
Meetings
---------------- --------- ---------
Strategic 1 1
---------------- --------- ---------
Board 5 5
---------------- --------- ---------
Audit Committee 0 2
---------------- --------- ---------
William Salomon
William has been a Director of Hansa Trust PLC since 1999 and,
through his family's wider investments as well as direct share
ownership, has a significant, long standing, investment in the
Company.
William's experience in investment banking and management is
important to the Board in developing and monitoring investments in
special investment themes and in the Company's strategic investment
through Ocean Wilsons Holdings Limited in Wilson Sons.
William is the senior partner of Hansa Capital Partners LLP
("Hansa Capital Partners", the Portfolio Manager and Company
Secretary), deputy chairman of Ocean Wilsons Holdings Limited and
its listed subsidiary Wilson Sons Limited. He is also a shareholder
representative on the investment advisory committee for DV4 Ltd
("DV4"). William was formerly the vice chairman of Close Asset
Management Limited and chairman of the merchant bank Rea Brothers
PLC.
Meetings Total
attended Yearly
Meetings
---------------- --------- ---------
Strategic 1 1
---------------- --------- ---------
Board 5 5
---------------- --------- ---------
Audit Committee 2 2
---------------- --------- ---------
Geoffrey Wood
Geoffrey was appointed to the Board in 1997. Geoffrey is
Professor Emeritus of Economics at Cass Business School, in the
City of London, Professor Emeritus of Monetary Economics at the
University of Buckingham and a visiting Professorial Fellow at the
Centre for Commercial Law at Queen Mary and Westfield College of
London University. He has been visiting Professor at the University
of South Carolina and at the National Bureau for Economic Research
at Harvard. In addition he has been an advisor to a number of
Central Banks and City of London financial firms and has been a
specialist adviser to the Treasury Select Committee. Geoffrey has a
deep knowledge of economics and, specifically, monetary and fiscal
policy issues.
Meetings Total
attended Yearly
Meetings
---------------- --------- ---------
Strategic 1 1
---------------- --------- ---------
Board 5 5
---------------- --------- ---------
Audit Committee 2 2
---------------- --------- ---------
The Board
The Board
Each Director brings certain individual and complementary skills
and experience to the Board's workings, as summarised in the
previous Directors' pages and dedicates his time to the Company to
ensure its success. All Directors resign at each AGM and offer
themselves for consideration for re-election. The Board recommends
the re-appointment of each of the Directors, based on his
continuing contribution to the Company and its shareholders.
The Board is charged by the shareholders with the responsibility
for looking after the affairs of the Company. It involves the
stewardship of the Company's assets and liabilities and the pursuit
of growth of shareholder value. These responsibilities are
discharged in many ways and are explained below.
INVESTMENT POLICY, STRATEGY AND KEY PERFORMANCE INDICATORS
The investment policy adopted by the Board, which constitutes
the Company's business model, is to invest in a portfolio of quoted
and unquoted special situations, many of which may not normally be
available to the general public, with the objective of achieving
growth of shareholder value. By the very nature of special
situation investments, the opportunity to invest in them will arise
at any time but often not for long periods. Sometimes a number of
opportunities may arise at the same time. Any single investment
may, on occasion, constitute a significant proportion of the
portfolio and/or that of the company concerned.
The investment strategy of the Company has evolved over time,
but it has always been managed with a strong focus on seeking out
undervalued investments. The Company has a strategic stake in Ocean
Wilsons Holdings. The Company has broadened its (non-fund) equity
exposure to include global equities. Equity exposure is also
achieved through investment in funds managed by third party
managers with whom we have relationships through Hansa Capital
Partners' activities. Many of the investments are not readily
available to the general public. The final part of the Company's
portfolio reflects its size and flexible structure, as we are
always on the lookout for unconventional investments, which often
cannot be accommodated by more traditional, larger fund managers,
typically less flexible in their approach. These more eclectic
investments range from those sectors benefiting from structurally
higher growth, such as biotechnology, to assets which we believe
stand on unwarranted discounts to their true intrinsic value,
including other investment trusts.
This investment approach may well produce returns which are not
replicated by movements in any market index.
Previously, returns were compared with an absolute benchmark
derived from the three year average rolling rate of return of a
five year UK Government bond plus 2%, with interest being
reinvested semi-annually. However, the Board considers that the use
of a single benchmark won't always offer shareholders relevance and
the clarity needed with regard to the performance of their
Company.
As a board of directors, we monitor the returns made in absolute
(firstly) and relative (secondly) terms against the KPIs that we
have established for that purpose and are set out in the
Organisation and Objectives section of this report. The comparisons
are made over 1,3, 5 and 10 years. We will now make comment on our
returns when reporting to shareholders by reference to our KPIs and
not have a single benchmark that would be appropriate some times
and not at other times.
The Portfolio Manager is charged by the Board to implement the
investment policy under its supervision and guidance. It is
important for the Portfolio Manager to be able to vary any
investment at any time, in order either to protect shareholders'
funds and/or to optimise shareholders' future returns.
POLICY ON BOARD DIVERSITY
Appointments to the Board are made on merit and against
objective criteria in accordance with the AIC Corporate Governance
Code. The Board considers it is of paramount importance to
shareholders that, after consideration of the skills and experience
needed by the Board, candidates are chosen on the basis of merit
only and that there should be no discrimination in the choice of
Directors for any reason.
Long--Term Performance
TEN YEAR COMPANY PERFORMANCE STATISTICS
Ten Year Record
Net Asset
Value Share Price
Ordinary (Bid) Discount/(Premium)
Year ended Shareholders' and 'A' Annual Ordinary 'A' Ordinary 'A'
31 March Funds Ordinary Dividends Ordinary Ordinary
2017 GBP307.5m 1,281.2p 16.0p 866.5p 848.0p 32.4% 33.8%
2016 GBP255.6m 1,064.9p 16.0p 729.8p 725.5p 31.5% 31.9%
2015 GBP273.3m 1,138.6p 16.0p 860.0p 827.5p 24.5% 27.3%
2014 GBP287.4m 1,197.5p 16.0p 879.3p 877.5p 26.6% 26.7%
2013 GBP259.9m 1,082.9p 15.0p 834.0p 815.0p 23.0% 24.7%
2012 GBP268.2m 1,117.5p 14.0p 905.0p 891.5p 19.0% 20.2%
2011 GBP264.1m 1,100.5p 3.5p 971.0p 952.5p 11.8% 13.5%
2010 GBP215.0m 895.9p 25.0p 755.0p 735.0p 15.7% 18.0%
2009 GBP152.4m 635.0p 18.0p 510.0p 500.0p 19.7% 21.3%
2008 GBP221.9m 924.5p 13.0p 820.0p 815.0p 11.3% 11.8%
2007 GBP249.5m 1,039.4p 12.5p 1,123.0p 1,022.5p (8.0)% 1.6%
To 31 March 1 3 years 5 years 10
2017 year years
Share Price
Total Return
Ordinary shares
(%) 21.1 4.6 5.7 -6.5
'A' non--voting
Ordinary shares
(%) 19.3 2.7 5.2 0.9
To 31 March 1 3 years 5 years 10
2017 year years
Net Asset Value Total Return
Performance
Net Asset
Value (%) 22.0 11.7 23.3 43.8
Organisation and Objectives
This section explains how the Board has organised the Company
and seeks to deliver its objectives.
BOARD COMMITTEES
The Directors consider that, in order to fulfil their
responsibilities as the Directors of the Company, they should all
be members of every sub-committee, except where there is a deemed
conflict of interest.
Audit Committee
The Audit Committee, which meets at least twice a year, consists
of all five Directors and Edwin Teideman, a former director, whose
skills and experience of the Company strengthen the Committee.
Jonathan Davie is the Chairman of the Audit Committee.
Nomination Committee
The Board as a whole fulfils the function of the Nomination
Committee. Appointments are made on merit and against objective
criteria in accordance with the AIC Code. The Board considers it is
of paramount importance to shareholders that, after consideration
of the skills and experience needed by the Board, candidates are
chosen on the basis of merit only and that there should be no
discrimination in the choice of directors for any reason. The
Company's Articles of Association require newly appointed Directors
to submit themselves for election by shareholders at the next AGM
after appointment and that they will be subject to re-election at
intervals of no more than three years. However, the Board has
determined that all Directors will retire and offer themselves for
re-election each year at the AGM.
Management Engagement Committee
The Board, with the exception of William Salomon, fulfils the
function of this Committee. The level of management fees, level of
service provided and the performance of the Portfolio Manager are
reviewed on a regular basis to ensure these remain competitive and
in the best interests of shareholders. The Board also receives
feedback from the Company's Alternative Investment Fund Manager
("AIFM"), Maitland Institutional Services Limited. The Board, after
the recommendation of the Management Engagement Committee,
considers the engagement of the AIFM and the Portfolio Manager to
be in the best interests of the shareholders.
Remuneration Committee
The Board fulfils the function of a Remuneration Committee and
considers the specific appointment of such a committee is not
appropriate for an investment trust company. The level of
Directors' fees is monitored annually and formally reviewed every
three years, in the light of their duties and also relative to
other comparable companies. The upper limit on Directors'
remuneration is to be presented to shareholders at the AGM for
their consideration and approval.
In the absence of a separate Remuneration Committee, the
Chairman is responsible for ensuring appropriate contact is kept
with the principal shareholders during the year.
PROMOTING THE COMPANY
Although the Board has always considered ways and means to
promote the ownership of the shares in the Company, the
establishment of the Retail Distribution Review a number of years
ago has had the effect of making the various different investment
products compete rather more directly with each other. It assists
the Board in targeting the type of shareholder that Hansa Trust
shares would most likely appeal to. It has placed an added
requirement that we should promote the "Hansa Trust story" in the
market place so there is reasonably widespread understanding of it;
by doing so, we aim to promote the demand for the Company's shares
with a positive effect on the discount.
Indeed the promotion of the Company is also part of the discount
policy, the purpose of which is to encourage the demand for the
Company's shares and thereby reduce any discount at which the
shares sell in relation to the NAV.
The Company has the following promotional initiatives and
activities:
-- Recognising the growing number of DIY investors, we continue
to develop the Annual Report, the monthly factsheet and the website
to make them, we hope, more interesting and easier to use.
-- The remit of Winterflood Securities as the Company's
corporate stockbroker was broadened to assist in proactively
promoting the Company and enhancing its market coverage.
-- We have expanded our working relationship with Edison
Research to help produce written research on the Company, its
investments and its progress and gain wider access to IFA and
investor platforms. Such research is distributed to many thousands
of investors.
-- In addition to Edison and Winterflood Securities initiatives,
our Portfolio Manager, Hansa Capital Partners, is increasing the
numbers of presentations to investment trust investors.
-- We are working with Capita Asset Services, the Company's
Registrars, to improve our understanding of our shareholder base
and promote the dividend re-investment programme.
SERVICE PROVIDERS
Service Provider Policy
The Board consists entirely of non-executive Directors; it
delegates the day to day implementation of its policies to third
party service providers. The Board has contractually delegated to
external organisations the management of the investment portfolio,
the custodial services which include safeguarding of the assets and
the day to day accounting and company secretarial requirements.
Each of these contracts is only entered into after proper
consideration of the quality and cost of services, which are
regularly reviewed and monitored either by the Board or its
Committees.
The Board, in seeking to engage organisations which can provide
the relevant levels of experience and expertise at an acceptable
cost, carries out the following processes:
-- Monitors third party suppliers, performance and costs:
The Board, at its regular meetings, reviews reports prepared by
both the Portfolio Manager and the Administrator, which enables it
to monitor the performance and costs of the third party suppliers
to the Company. Following the implementation of the Alternative
Investment Fund Managers' Directive ("AIFMD"), the Board has
established a monitoring programme for the AIFM and Depositary. The
Company Secretary meets each supplier regularly to monitor its
processes and systems and, in addition, the AIFM and Depositary
attend at least one Board Meeting per annum.
-- Monitors investment risks and returns:
The Board reviews reports prepared by the Portfolio Manager at
its regular meetings, which enables it to monitor the investment
risks and returns.
-- Determines investment strategy, guidelines and restrictions:
The Board determines the investment strategy in conjunction with
the Portfolio Manager. The strategy is monitored regularly and
refinements are made to it as required, with formal review at the
Board's annual strategy meeting.
The Board issues formal investment guidelines and restrictions;
compliance with these is reported by the Portfolio Manager's
compliance officer on a regular basis and is also monitored
independently by the AIFM.
-- Determines gearing levels and capital preservation through the use of hedging instruments:
The Board, taking account of advice from the Portfolio Manager,
determines the maximum level of borrowings the Company will
undertake at the time of borrowing. The Company has entered into a
short-term loan facility with BNP Paribas; currently the extent of
the facility is GBP30m. The Board has approved the utilisation of
hedging instruments at appropriate times, in order to provide the
portfolio with a limited degree of protection from extreme market
declines.
THE PROVIDERS
Portfolio Manager
Hansa Capital Partners LLP charges an investment management fee
at an annual rate of 1% of the net assets of the Company (after any
borrowings) but, after deducting the value of the investment in
Ocean Wilson Holdings on which no fee is payable. Hanseatic Asset
Management LBG, a company connected to Hansa Capital Partners LLP,
separately charges an investment management fee to the investment
subsidiary of OWHL.
The terms of the portfolio management agreement permit either
party to terminate the agreement by giving to the other not less
than 12 months' notice, or such shorter period as is mutually
acceptable. There is no agreement between the Company and the
Portfolio Manager concerning compensation in respect to the
termination of the agreement. In its annual assessment of the
Portfolio Manager, the Board concluded that, because of the calibre
of the management team and its commitment to the Company and the
long-term returns to shareholders it has produced, it is in the
best interest of shareholders that the Portfolio Manager remains in
place under the present terms. Details of the fees paid to the
Portfolio Manager can be found in Note 3.
Auditor
The Auditor, Grant Thornton UK LLP, has expressed its
willingness to continue to act as Auditor to the Company and a
resolution to re-appoint Grant Thornton UK LLP as Auditor to the
Company will be proposed at the forthcoming AGM.
New audit guidance limits the non-audit related work that can be
carried out by the Company's Auditor - in particular tax compliance
work. Any new supplier is approved by the Board. If non-audit work
were to be carried out by the Company's Auditor, the appointment
would be approved by the Board, in advance, to ensure that the
Auditor's objectivity and independence is safeguarded. (Details in
Note 4.)
Company Secretary
The Company engages Hansa Capital Partners LLP as its Company
Secretary at an annual rate of GBP100,000, excluding VAT (2016:
GBP100,000).
Alternative Investment Fund Managers' Directive
The Company appointed Maitland Institutional Services Limited,
with effect from 10 June 2014, to act as its AIFM with
responsibilities for the Portfolio Management and Risk Management.
The AIFM has sub-contracted to Hansa Capital Partners LLP the
provision of Portfolio Management services. During the year to 31
March 2017, the AIFM has charged GBP116,247 (2016: 110,525) for its
services.
Administrator
The Company engages Maitland Administration Services Limited as
its Administrator, at an annual rate of GBP125,179, excluding VAT
(2016: GBP123,173).
Depositary
BNP Paribas Securities Services is the Company's Depositary, an
appointment that was ratified by the AIFM. During the year to 31
March 2017, BNP Paribas Securities Services charged GBP93,145 for
the combined Depositary and Custodial service excluding VAT (2016:
GBP86,031).
KEY PERFORMANCE INDICATORS
The Board at its quarterly meeting reviews the returns and the
performance of the Company, including an analysis using the KPIs
listed below.
Previously, returns were compared with an absolute benchmark -
the three year return of a five year gilt plus 2% - it providing a
comparison with a safe alternative return in pursuit of our goal of
growth of shareholder value. However, the Board considers that the
use of a single benchmark won't always offer shareholders the
relevance and the clarity needed with regard to the performance of
their Company.
We continue to compare our returns with those of a safe fixed
interest gilt, however using the 10 year UK Gilt Return. Our
returns are also compared to the rate of inflation (real returns
are important to shareholders) and with those of our peer group and
appropriate indices.
Additionally, two further KPIs: costs of managing the Company
are monitored against the NAV (that ratio is also known as the
'ongoing charges percentage per annum ratio') and the
discount/premium that the shares sell at in relation to the NAV
were likewise monitored.
As a Board of Directors, we monitor the returns made in absolute
(firstly) and relative (secondly) terms against the KPIs that we
have established for that purpose noted above. The comparisons are
made over 1,3, 5 and 10 years. We will now make comment on our
returns when reporting to shareholders by reference to our KPIs and
not to a single benchmark that would be appropriate some times and
not at other times.
i) Shareholders - Total Returns
As noted above, a comparison is no longer made between the
'Total Return' of each class of shares to that of a single
benchmark. Rather, the performance of the shares should be compared
to the KPIs noted opposite.
To 31 March 1 3 years 5 years 10
2017 year years
Share Price
Total Return
Ordinary shares
(%) 21.1 4.6 5.7 -6.5
'A' non--voting
Ordinary shares
(%) 19.3 2.7 5.2 0.9
ii) Company - Total Returns
These comparisons are used to determine the effectiveness of the
Investment Strategy and of the Portfolio Management. The KPIs below
should also be noted.
To 31 March 1 3 years 5 years 10
2017 year years
NAV (%) 22.0 11.7 23.3 43.8
Relative comparison
Peer group
average (%) 21.0 27.7 62.8 87.3
* See website for peer group
iii) Discount/(Premium)
A comparison is made between the discount/(premium) of the
Company's two classes of shares, those of the Company's peer group
and of the AIC average.
To 31 March 1 3 years 5 years 10
2017 year average average years
average average
Ordinary shares
(%) 31.5 26.9 26.5 19.9
'A' non-voting
Ordinary shares
(%) 33.2 28.9 28.1 21.6
Peer group
(%) 9.5 8.2 8.4 7.1
AIC (%) 7.0
Note: AIC only produces AIC average for 1 year.
iv) Expense ratios
A comparison is made between the level of expenses
(administrative and management) of the Company and the net asset
returns (both annualised) in order to assess the value for money
shareholders receive.
To 31 March 1 3 years 5 years 10
2017 year p.a. p.a. years
p.a.
Ongoing charges
per annum
(%) 1.0 1.1 1.0 1.0
NAV total
return (%) 22.0 3.8 4.3 3.7
v) Key Performance Indicators
The following are the KPIs that the Board use to assess the
returns of elements of the portfolio and of the Company as a
whole.
To 31 March 1 3 years 5 years 10
2017 year years
10yr UK Gilt
Return (%) 2.3 16.1 11.4 38.2
UK CPI Inflation
(%) 2.3 2.8 7.4 25.9
MSCI ACWI
(total return)
(%) 32.0 54.3 90.6 132.4
LIMITS
Investment Guidelines
The Investment Policy enables the Portfolio Manager to invest
worldwide, in either UK or foreign, quoted or unquoted companies.
The Board does not believe it is practical to impose limits on the
geographical allocation of assets because, with the globalisation
of businesses, it is an almost impossible task to monitor. While
fully aware of the impact of geopolitical influences on the outcome
of investment returns, the Board, in conjunction with the Portfolio
Manager, regularly reviews each investment on its individual
merits. There is no geographical constraint on where and how much
may be invested in any one country or currency.
The Board does not set a limit on the number of investments
which can be held in the portfolio; however it usually has holdings
in at least 30 investments. The current investment strategy was
announced on 22 April 2014. The following items require Board
approval:
(a) Investing in illiquid assets in excess of 10% of the portfolio's value.
(b) An investment to be made in a derivative instrument.
(c) At the time of investment, the market value of an investment
sector exceeds the following bands within the portfolio:
i. Country-based Exposure 0-40%
ii. Global Equities 0-40%
iii. Eclectic & Diversifying Assets 0-40%
Note: the Investment Guidelines have been modified since being
published in the 2016 Annual Report. The sector "UK Equity Special
Situations" has been widened to "Global Equity" and the upper limit
of "Eclectic & Diversifying Assets" has been increased from 30%
to 40%.
(d) An investment greater than 5% of the market value of the
portfolio (at the time of the investment) can be made in any
company/fund.
(e) An investment, which constitutes more than 5% of the share
capital of the investee company, can be made.
(f) An investment is made that involves a potential conflict of
interest for a Director of the Company, the Portfolio Manager or
any connected party to either.
These investment guidelines remain in force as at the time of
signing of this Report.
Borrowing Limits
The Board believes shareholders' returns may be enhanced if the
Company borrows money at appropriate times for the purpose of
investment. While the Articles of Association allow the Company to
borrow up to 3.5 times shareholders' funds, the amount that can be
borrowed at any time is normally subject to a constraint imposed in
the lender's borrowing covenants. The Board will normally set an
informal borrowing limit of approximately one half of the lender's
covenanted constraint at the time the borrowings are made, allowing
plenty of capacity for the value of the portfolio to fall, without
having to sell investments to conform with those covenants.
However, in extreme circumstances, such as when it is believed to
be the bottom of a bear market, the Board may well borrow up to the
full amount the lender's covenant allows.
PRINCIPAL RISKS
The Board reviews the principal risks from the point of view of
the long-term shareholders, the main risk being that over the
long-term (which we determine to be five years) they do not make a
return from their investment in the Company. The Board confirms
that it has carried out a robust assessment of the principal risks
facing the Company, including those that would threaten its
business model, future returns, solvency and liquidity. The Board
considers the risks the Company, and therefore shareholders, face
can be divided into external and internal risks.
External risks
External risks to shareholders and their returns are those that
can severely influence the investment environment within which the
Company operates. These risks include anti-business government
policies, economic recession, declining corporate profitability,
taxation and rising inflation. The impact of such an environment
could lead to sharp rises in interest rates and in stock market
decline. Deflation is also a source of concern in some countries,
but until deflation increases sharply it is not a significant
impediment to growth. But, it may lead to negative interest rates
which would surely damage the banking system and the levels of
savings available for investments. At their regular Board Meetings
and at the annual strategy meeting, the Directors and the
Management consider long-term risks that concern them,
including:
Economic, currency and equity declines.
Risks, particularly political risks, associated with Brazil.
The growth of global debt.
Unquantifiable risks resulting from worldwide political
'hot--spots'.
It should be stressed these are the external risks which most
concern the Directors and the Management, not forecasts of future
events. The mitigation of these risks is achieved by sensible stock
and sector diversification and adherence to the Board's investment
restrictions and guidelines.
Internal Risks
Internal and operational risks to shareholders and their returns
are: portfolio (stock and sector selection and concentration),
balance sheet (gearing), and/or administrative mismanagement. In
respect of the risks associated with administration, the loss of
Approved Investment Trust status under s.1158 CTA 2010 would have
the greatest impact. The portfolio is continuously monitored by the
AIFM and the Portfolio Manager to ensure the Company is compliant
with s.1158/1159 and monitoring reports are presented to the
Board.
The mitigation of these risks is achieved by the Board
performing regular reviews of all service providers and monthly
reviews of s.1158/1159 compliance.
The Board considers the risks to the Company's two share prices,
apart from those mentioned above, include the risk of higher
discounts. The Board monitors the discount/premium and may take
action when appropriate. However, given the Company's stated
objective of increasing shareholder value over the long-term, the
Board does not consider short--term NAV or share price volatility
to be a risk to long--term shareholders.
Details of how the principal risks arising from financial
instruments (as determined by the Financial Reporting Council) are
managed, have been summarised in Note 20.
Details of the Company's policy on stewardship in relation to
invested companies can be found on the Company's website at
www.hansatrust.com.
DIVID POLICY AND DIVID PAYMENTS
Dividend Policy
The Board's dividend policy is to pay two similar interim
dividends each year. The Board will declare the rate of the two
dividends at the beginning of the financial year in question.
Barring unforeseen circumstances, the first interim dividend will
then be paid in November during the financial year with the second
being paid in the May following the end of the financial year.
Again, barring unforeseen circumstances, the Company expects the
dividends to grow over time reflecting the longer-term returns of
the portfolio. If circumstances are such that the level of cash
income generated by the portfolio is insufficient to meet the
dividend commitment, the shortfall may be made up from the
Company's reserves. Under certain one-off circumstances an extra
and final dividend may be proposed at the Company's Annual General
Meeting.
Dividend Payments
The dividends paid and proposed are as follows:
2017 2016
GBP000 GBP000
Ordinary and 'A'
non-voting Ordinary
shares
First interim paid
8.0p (November 2016)
(2016: 8.0p) per
share 1,920 1,920
Second interim paid
8.0p (May 2017)
(2016: 8.0p) per
share 1,920 1,920
Total dividends 3,840 3,840
Due to the payment of two interim dividends relating to the year
ended 31 March 2017, the Board is not proposing a final dividend
per Ordinary and 'A' non-voting Ordinary share classes.
Discount Policy
The discount policy of Hansa Trust is to encourage the demand
for the shares, by ensuring it has an investment policy that is
attractive to investors and which is likely to produce above
average returns over the long-term and then to promote the Company
and its prospects so as to encourage the demand for its shares.
The Board of Directors does not believe it can manage the
discount in the short-term and has therefore eschewed having an
active share buy back policy. Furthermore, the Board does not
believe buying in its own shares is in the best long-term interest
of shareholders because:
it reduces the number of shares outstanding and therefore the
liquidity of the shares in the market place; less liquidity may
cause a rise in the discount;
it means a liquid portfolio needs to be maintained, compromising
the ability to have a portfolio of special situations; the
maintenance of the long-term investment policy and its portfolio,
takes precedence over the short-term discount policy;
the holding in Ocean Wilson Holdings would represent an even
greater percentage of the portfolio and buying back shares would
raise the relative exposure to Brazil, which the Board does not
wish to do; and
buying back shares to manage the discount is only necessary if
there is not enough market place demand for them; buying back
shares treats the symptoms of the problem of lack of demand, not
the cause.
The one good reason for buying back shares is that, if done so
on a large enough scale and at a large enough discount, it can have
a material and positive effect on the NAV per share. So, if there
is an unusual opportunity to buy back shares such that it would
make a reasonably material impact on the NAV, then we will do
so.
Insurance
The Company through its Articles has indemnified its Directors
and Officers to the fullest extent permissible by law. During the
year the Company also purchased and maintained liability insurance
for its Directors and Officers.
Status and Activities
During the year under review the Company has operated as an
investment company in compliance with s.833 of the Companies Act
2006 and s.1158/1159 of the Corporation Tax Act 2010 as amended.
The Company has obtained approval from HM Revenue & Customs
("HMRC") of its status as an investment trust under s.1158 of the
Corporation Tax Act 2010 for all accounting periods commencing on
or after 1 April 2012; the Directors are of the opinion that the
Company has conducted its affairs in compliance with the ongoing
requirements of s.1158 since approval was granted and intends to
continue to do so.
Going Concern
The Company's business activities, together with the factors
likely to affect its future development, performance and position,
including its financial position, are set out in the Chairman's
Report to the Shareholders, the Portfolio Manager's Report and
other elements of the Strategic Report. After due consideration of
the Balance Sheet, activities of the Company, estimated liabilities
for the next 12 months and having made appropriate enquiries, the
Directors have concluded the Company has adequate resources to
continue in operational existence for the foreseeable future as the
assets of the Company consist of securities, the majority of which
are traded on recognised stock exchanges, or open ended funds run
by established managers. For this reason, they continue to adopt
the going concern basis in preparing the Financial Statements.
Longer-Term Viability Statement
The Financial Reporting Council requires that the Directors make
a statement concerning the longer-term viability of the Company, in
addition to the Statement of Going Concern. As stated many times in
the wider Strategic Report, the Directors consider 12 months to be
a relatively short timeframe and look to the longer-term for both
the performance and risks associated with the Company. The
Directors consider a period of five years as being a more
representative period. This period is sufficiently long to cancel
out short-term market volatility and allow longer-term performance
to become apparent. Barring unforeseen circumstances and taking
account of the Company's current position and principal risks, the
Directors consider the Company fully satisfies the formal
requirement that there be "a reasonable expectation that the
Company will be able to continue in operation and meet its
liabilities as they fall due over this assessed period". The Board
continually monitors the Investment Strategy and Investment
Guidelines issued to the Portfolio Manager and AIFM and directs
those entities to target long-term capital preservation. Further,
whilst the Board has sanctioned the use of gearing, the facility
available to the Portfolio Manager is relatively small compared to
the NAV of the Company. Finally, a number of the more significant
costs in each financial year are contracted to be calculated, on
the basis of the underlying NAV of the Company. As such, in a
period of negative portfolio performance, the cost base should also
fall.
Greenhouse Gas Emissions
Hansa Trust PLC has no greenhouse gas emissions to report from
the operations of its Company, nor does it have responsibility for
any other emissions producing sources under Part 7 of Schedule 7 to
the Large and Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008, as amended.
Social, Community, Human Rights, Employee Responsibilities and
Environmental Policy
The Company does not have any employees. As an investment trust,
the Company has no direct social, community, human rights, or
environmental impact. Its principal responsibility to shareholders
is to ensure the investment portfolio is properly invested and
managed.
Portfolio Manager's Report
Market backdrop
Stock markets have provided a healthy backdrop for your Company,
with the rapid ascent they experienced in the latter part of last
year continuing into 2017. Buoyed by a cocktail of an improving
economic outlook across the globe, an anticipated stimulation
package from the Trump administration and tentative signs of better
company profitability, market prices moved higher. Overall then,
equity markets produced strong returns over the last 12 months, and
these are further boosted when measured in Sterling because of the
currency's weakness post-Brexit.
Global equities in Sterling terms rose by some 32.0% during the
last 12 months, with the US, UK, Europe and Japan returning 34.5%,
23.3%, 27.0% and 31.3%, respectively. More surprisingly, emerging
markets have also started to perform well. Initially, following
Donald Trump's surprise US election victory, emerging markets fell
sharply. Investors reacted cautiously to a more US-centric policy
with threats of greater protectionism, higher interest rates and a
rising Dollar; all usually negative for emerging markets. Of late,
though, markets have chosen to ignore these concerns and instead
have focused on the positive impact of stronger global growth, with
emerging markets typically representing a geared play into this,
while also benefiting from more attractive valuations and ongoing
strength in many commodities, which provides a boost for
commodity-exporting nations. The region as a whole returned 9.7% in
the last quarter of the financial year, taking its 12 month return
to 34.5%, with notably strong performance in Asian emerging
markets, which returned 35.5% over the year and Latin America,
which rose by 41.5%.
In contrast to the strength experienced in equity markets, bonds
have been more muted recently, but their annual returns have been
generally strong. Anticipated stronger economic growth combined
with the greater use of fiscal policy are serving to accelerate the
expected path of interest rate rises in the US. Even in Europe,
investors are starting to anticipate the eventual end of the
current loose monetary regime. Overall, for the year, global
government bonds generated an 11.0% return, investment-grade credit
rose 16.3% and high yield produced a strong 30.0%.
Within commodities, there was mixed performance over the course
of the year, but Sterling's weakness meant most commodities
produced good returns when measured in that currency. Industrial
metals continued to be robust, up 44.8%, helped by the improved
global growth environment.
Brent crude rose by 56.2% over the year, although it paused for
breath in the final quarter, declining by 6.4%. Partly this
reflected investors reassessing OPEC's commitment to oil production
cuts and, importantly, the ability of shale oil producers to
influence future oil supply by rapidly turning production on and
off.
Pinning the tail on the donkey
With many stock markets hitting all-time highs, as the current
bull market reaches its eighth anniversary and your Company
achieving strong results over the last 12 months, it is worth
pausing for a health-check.
At Hansa Capital Partners we view stock markets through the lens
of the business cycle, with markets typically following a fairly
pre-defined sequence of events. All cycles are different, with
their own quirks and nuances, but almost without exception they
comprise the familiar stages of despair, hope, growth and
optimism.
The challenge, of course, is to determine where we stand within
the cycle and which idiosyncrasies this particular cycle will
exhibit. Like pinning the tail on the donkey you have a sense of
where one stands but it is impossible to be completely certain.
What we can do, however, is gauge where a number of key metrics are
to help us improve the odds of identifying the correct point.
Important metrics to consider regarding the business cycle include:
the macro backdrop, corporate profitability, valuations, policies
and other factors such as geopolitics.
Working through this list the macro picture has undoubtedly
improved. The path of growth in this cycle has been muted compared
to previous recoveries and different regions have experienced
different growth rates, with the US and the UK leading the way and
Europe being a clear laggard. Recent surveys suggest growth is
improving, albeit it is still below that which would have been
expected historically. What is less clear is how successful
President Trump will be in implementing his spending and tax plans
and how this will feed through to global growth. His intentions are
clearly to boost growth, at least in the US, but such efforts often
have long lead times and the early signs of his Presidency are not
encouraging regarding his ability to successfully negotiate the US
political system. Autocratically managing a private US real estate
firm is one thing, but it is by no means clear that this approach
will work at the government level, where a degree of finesse is
required!
Linked with the macro backdrop is corporate profitability. Like
economic growth, company earnings have been muted this cycle and
estimates have been persistently downgraded. Again, a multitude of
factors lies behind this but central, in our opinion, was the
global financial crisis and the subsequent central bank policy of
zero interest rates. These served to dampen corporate confidence
and subsequent investment, with many companies preferring to engage
in corporate engineering through share buy--backs. Furthermore,
many companies that should have died, and so freed up capital for
more productive uses, were kept alive in this process. The net
effect of this has been low productivity and a stock market
recovery that has been driven by rising valuations rather than
improving profitability.
Higher valuations are perhaps our biggest concern. At the
beginnings of cycles, when valuations are low, markets have the
capacity to rise even in the face of negative news flow. One would
then normally expect there to be a point when corporate
profitability starts to improve, such that markets continue to rise
but are no longer being re-rated, at least initially. As mentioned
above, this cycle has been unusual in that corporate profitability
has been muted and as a result stock market valuations have risen
more quickly than is typical. Again central bank policy has played
an important role in this. By forcing down interest rates,
government bond yields fell to multi-decade (even century!) lows.
This had the dual effect of forcing investors to move up the risk
spectrum, into asset classes such as equities in order to achieve
their income and return requirements, and also making assets such
as property and equities look attractive from a relative valuation
perspective. The net impact of this is that almost all assets now
sit above their historical valuation averages. Whilst valuations
are not in fact particularly good predictors of short--term future
market returns, they are very important over the longer-term.
Historically, when equity markets have stood at current levels
(with the US Shiller P/E at 29.5x), they have typically been
followed by negative real equity returns over the next five
years.
CHART 4: Higher valuations typically mean lower long-term
returns
Shiller P/E Subsequent S&P 500 returns (real)
From to 3-month 6-month 12-month 2-year 3-year 5-year
5.1 9.7 4% 9% 15% 20% 31% 50%
9.7 11.2 1% 2% 9% 21% 21% 30%
11.2 12.7 1% 2% 6% 16% 22% 36%
12.7 15 2% 5% 7% 10% 14% 21%
15 17.1 1% 0% -1% -1% -1% 11%
17.1 19.1 -1% -1% -1% -3% 1% 10%
19.1 21 2% 3% 5% 11% 23% 47%
21 23.3 0% 0% 1% 4% 9% 11%
23.3 26.5 2% 2% 4% 7% 7% 3%
26.5 45.5 0% 0% -2% -5% -9% -15%
Average since
1928 1% 2% 4% 8% 12% 22%
Source: Goldman Sachs Global Investment Research
Hence if we update our scorecard we find:
CHART 6: Key metrics within the business cycle
Poor OK Good Very Good Comments
Macro Backdrop X Getting better
Corporate X Improving
Profitability
Valuations X Deteriorating
Policy X Fiscal positive,
monetary
deteriorating
Other (Geopolitics) ? Swing factor?
Pulling all of this together and reflecting back on the stock
market cycle, we can draw a number of important conclusions.
Clearly the global financial crisis and subsequent policy actions
have made this an unusually elongated cycle. This is important,
although we also note that stock markets rarely die of old age.
Combining this with high valuations and with policies starting to
shift to a tightening phase, we are inclined to believe we are in
the latter stage of the cycle. Our sense is that we have moved from
the growth to the optimism stage (arguably this started in
2016).
Typically the optimism phase lasts a couple of years in the US
and about half that in Europe. This phase of the cycle can be quite
powerful and is often dominated by momentum investing (i.e. people
do not worry much about valuations). It is also a rather dangerous
phase with rising volatility, and the absence of a valuation buffer
makes the market vulnerable to disappointing news flow.
As for idiosyncrasies, clearly the geopolitical backdrop has
considerable scope for extending or contracting this cycle. Europe
has huge potential for disappointments, either from the Brexit
negotiations or from one of the several elections in 2017.
President Trump is also a wildcard. If he is successful in his
growth-push this would likely extend the current cycle (although in
our view it would also increase the downside in the next downturn).
Conversely any failure of his plans for growth will not be taken
well by the markets and neither would any signs that his more
maverick views on protectionism and foreign policy are coming to
fruition.
In conclusion, we are inclined to continue riding the current
cycle with market optimism, often quite a powerful stage of the
business cycle. We do, though, acknowledge that the risks are
rising, with markets having had no meaningful pull-back for quite
some time. As a consequence we are ever ready to increase our
allocations to more defensive assets if we see further signs of
excess, or if the risk/reward balance becomes increasingly
unattractive.
Portfolio review and activity
The Company has returned 22.0% over the financial year. This
compares to 32.0% for the MSCI ACWI for the equivalent 12 month
period and 2.3% for both the 10yr UK Gilt Return and UK CPI
Inflation. This strong performance was driven by good performance
from both Ocean Wilson Holdings and the investment portfolio, with
notably strong performance from Wilson Sons, which are discussed
below. The Company's NAV per share rose over the quarter from
1,250p at the end of December to 1,281p at the end of March. This
compares to a level of 1,065p at the beginning of the financial
year in March 2016.
Core regional funds
Reasonable performance has been generated in the regional silo
over the last year, although the range of returns has been wide.
This diverging performance has been a major feature of markets over
the past 12 months, with many active managers struggling to
generate outperformance. Partly, this reflects the major rotations
discussed in previous reports, in particular with emerging markets,
cyclical companies and commodities all bouncing back strongly
following multiple years of disappointing performance.
The strongest performers included Vulcan Value, the US equity
manager based in Birmingham, Alabama. The portfolio manager, CT
Fitzpatrick, follows a value approach and, whilst this style has
struggled in recent years, it performed strongly during the past 12
months and quarter (the fund's NAV was up 31.8% and 4.8% over the
respective periods). Findlay Park American, another of our US
equity managers, also performed well, its NAV returning 3.3% over
the quarter and 19.0% over the year. Its investment manager
continues to express a relatively cautious view on equity
valuations by maintaining a high cash position in excess of
15%.
Strong performance was also generated by Schroder Asian Total
Return. The Fund's NAV rose 35.0% over the year, with performance
driven by stock selection, as the manager focused on strong
franchises and resilient cash flow generation.
The main area of disappointment has been the performance over
the past 12 months by some of the managers who have been among the
largest contributors to performance in recent years. Most notably,
Odey Absolute Return Fund and Adelphi European Select Equity Fund
were material detractors. The Odey fund saw a number of stock
specific challenges, as well as being poorly positioned during the
sector rotation, whilst Adelphi's investments reported strong or
stable underlying earnings, but were de-rated by the markets. We
watch these funds carefully, but recognise it is not normally
sensible to sell good investment managers following a period of
poor performance.
Eclectic and Diversifying
During the last 12 months we have been introducing a number of
more defensive investments into the portfolio. This reflects our
belief that, whilst equities remain the favoured asset class, there
are risks in being fully invested in equities as the business cycle
becomes mature and valuations rise. It is very early days but we
have been pleased with the performance of a number of the names,
especially in the global macro hedge fund space. Macro funds have
been under pressure in recent years, with limited investment
opportunities in a flat interest rate environment. 2016, however,
has provided a more fruitful backdrop with interest rates starting
to diverge and macro events becoming more plentiful.
One underperformer during the quarter and over the past 12
months was the investment in Argentière. This fund's NAV declined
1.8% during the quarter and has fallen modestly over the past 12
months. The manager seeks to capitalise on spikes in realised
equity market volatility, by building option positions with convex
return profiles. Unfortunately, the fund failed to capitalise on
the increased volatility surrounding the Brexit referendum and the
US Presidential election.
UK Equities
Cape reached an agreement to settle with Insurer PL Litigation,
with the maximum amount payable being settled from the Group's
existing cash resources, thus removing a significant risk to the
business and the distraction of a likely protracted appeals
process, thereby enabling the management to focus on the
development of the core business. Cape announced a strong set of
final figures and the decision to halve and re-base the dividend is
constructive, as it clearly signals the desire to continue
executing the growth strategy now that the main asbestos litigation
threats have been settled. Higher growth prospects for lower risk
have duly been rewarded with a higher share price.
Hargreaves Services announced it has received planning approval
in principle for 1,500 new homes on part of a 392 acre site
situated less than 15 miles from Edinburgh city centre. This is the
first phase of a wider master plan for more than 3,200 homes to be
developed over the next 12-15 years, an important milestone in
achieving the target of delivering GBP35--GBP50m of new value from
the overall property portfolio over the next five years. Hansteen
Holdings successfully crystallised the value of its German and
Dutch property portfolios, selling them for EUR1.28bn (7% yield), a
6% premium to the December FY16 valuation and 30% above FY15, as
the European assets hit cyclically high occupancy and rents,
combined with a favourable exchange rate. The net effect will be to
remove GBP1bn of property and GBP400m of debt, resulting in GBP600m
of cash, with the intention to return a substantial proportion of
net cash to shareholders. The company also plans to sell GBP35m of
Belgium and French properties. The remaining UK-weighted business
is well placed to deliver attractive returns, comprising GBP677m of
property yielding 7.3% (with a vacancy rate of 7.7%), which is in a
sweet spot for rising occupational demand and late-cycle yield
compression.
NCC Group has a dominant position in the UK cyber-assurance
market, counting most of the FTSE 100, Fortune 500 companies and
the British Government among its customers. The company warned that
earnings before interest, tax, depreciation and amortisation would
be 20% lower than the bottom of its previously forecast range of
GBP45.5-GBP47.5m after a disappointing third-quarter performance.
Rob Cotton stepped down as chief executive, and Jonathan Brooks,
chief financial officer of ARM Holdings from 1995 until 2002 has
been appointed as a non-executive director. Hilton Food announced a
strong set of final figures and a 17.1% dividend increase, whilst
continuing to generate significant cash during 2016, enabling the
group's net cash position to grow from GBP12.7m at the end of 2015
to GBP32.3m at the end of 2016. As well as having the cash
available to fund new projects in Australia and Portugal, the
company is in a good position to take advantage of other
opportunities as they arise.
Ocean Wilson Holdings
Recent years have been challenging for the company, as its
exposure to Brazil, through Wilson Sons, has faced the twin
headwinds of the country's worst recession on record and a
seemingly never-ending political crisis. The impeachment of Dilma
Rousseff last summer was a key milestone viewed positively by most
investors, but continuing corruption investigations threaten to
paralyse the successor government of Michel Temer. However, there
are signs of improvement in the economy; the currency has been
strengthening and the equity market recovering. Meanwhile, the
business is beginning to reap the rewards of its investment
programme.
The end of March saw the release of the Wilson Sons' fourth
quarter results. Despite the backdrop of the recession and the
uncertainty caused by Trump's election in the US, the company has
benefited from efforts to diversify its portfolio and improve
efficiency and productivity, thus the full-year profits of $80.7m
were significantly ahead of the $29.3m achieved in 2015. The
company is continuing to focus on improving cash flow, operational
efficiencies and maximising the use of the installed capacity
across all its businesses. In the first quarter of 2017, the
company's two container terminals, Rio Grande and Salvador, took
receipt of $40m and $4.9m worth, respectively, of new crane
equipment, which will contribute significantly to improved
productivity at the terminals. The three new ship--to--shore cranes
at Rio Grande will be the largest such cranes currently in
operation in Brazil.
The Brazilian currency remains much weaker versus the US Dollar
than it has been for most of the past five years, but its strength
over the course of 2016 meant that the average exchange rate in the
quarter was 14.3% higher than in the prior year. This contributed
to general increases in costs, but was positive for the minority of
revenues denominated in Dollars. This benefited Container Terminals
revenue, which was up 12.0%, but the division's EBITDA declined by
9.5%. Although there was volume growth in imports, partly driven by
solar panel imports, export volumes at Rio Grande declined, mainly
owing to the cancellation of some ships. The Towage division
continues to benefit from the expanded fleet, as well as from lower
costs as fewer tugs are rented and its EBITDA grew by 9.4%. The
Offshore Vessels joint venture experienced strong growth in
revenues and EBITDA, which was boosted by the commencement of
operations of two long-term contracts for the two largest vessels
in the fleet.
The Ocean Wilsons Investments Ltd ("Ocean Wilsons Investments",
"OWIL") subsidiary was valued at $238.9m at the end of December
2016, an increase of 0.8% from 31 October 2016. The end of year
valuation is 2.3% below the 31 December 2015 value of $244.4m,
although during this period $4.25m was withdrawn from the portfolio
to contribute to the dividend paid by the parent company. The
portfolio continues to be biased towards equities, both public and
private, reflecting its long--term nature.
The share price performance of Ocean Wilsons Holdings has been
strong since June last year. Although its return in the first
quarter of 2017 was roughly flat, it has produced a return of 35.3%
in Sterling over the last 12 months. On a total return basis, its
return has been 42.7%, which takes into account the dividend of
43.7p per share paid in June last year. The share price represents
a discount to the look-through NAV of 29.7%, based on the market
value of the Wilson Sons shares, together with the latest valuation
of the investment portfolio.
Alec Letchfield
April 2017
Portfolio Statement
as at 31 March 2017
Investments Fair value Percentage
GBP000 of
Net Assets
UK Equity
UBM PLC 8,823 2.9
Hansteen Holdings PLC 8,529 2.8
Experian PLC 6,345 2.0
Galliford Try PLC 4,880 1.6
NCC Group PLC 4,629 1.5
Cape PLC 4,292 1.4
Brooks Macdonald Group PLC 3,957 1.3
Hilton Food Group PLC 2,356 0.7
Hargreaves Services PLC 2,347 0.8
Goals Soccer Centres PLC 2,285 0.7
Altitude Group PLC 1,822 0.6
Immupharma PLC 517 0.2
Six other investments 241 0.1
Total UK Equity 51,023 16.6
Strategic
Wilson Sons (through our holding
in Ocean Wilsons Holdings)
* 62,062 20.2
Total Strategic 62,062 20.2
Core Regional Funds
Findlay Park American Fund 15,104 4.9
Vulcan Value Equity Fund 12,217 4.0
Select Equity Offshore Ltd
Class D 10,773 3.5
Adelphi European Select Equity
Fund Class F 8,515 2.8
Goodhart Partners Longitude
Fund: Hanjo Fund 8,486 2.7
Indus Japan Long-Only Fund 7,994 2.6
Schroder ISF Asian Total Return
Fund Class D 6,523 2.1
Prince Street Institutional
Offshore Ltd 4,528 1.5
BlackRock European Hedge Fund
Class I 4,434 1.4
Pershing Square Holdings 4,020 1.3
CF Odey UK Absolute Return
Fund Class I 3,594 1.2
Vanguard FTSE Developed Europe
ex UK Equity Index 3,298 1.1
NTAsian Discovery Fund Classs
A & B 2,891 0.9
iShares Core MSCI Emerging
Markets IMI UCITS ETF 2,080 0.7
BlackRock Frontiers Investment
Trust 1,560 0.5
SR Global Fund Inc. Frontier
Markets Class M ^ 1,502 0.5
Total Core Regional Funds 97,519 31.7
Eclectic & Diversifying Assets
Ocean Wilsons Investments
Limited
(through our holding in Ocean
Wilsons Holdings)* 32,401 10.5
DV4 Ltd ** 11,849 3.9
GAM Star Technology Fund 11,480 3.7
Global Event Partners Ltd
Class F 9,090 3.0
JLP Credit Opportunity Cayman
Fund 4,627 1.5
Field Street Offshore Fund
Ltd Class A1 3,962 1.3
SPDR MSCI World Financials
UCITS ETF 3,087 1.0
MKP Opportunity Offshore LTD
Class A 2,831 0.9
Hudson Bay International Fund
Ltd Class A 2,701 0.9
BNY Mellon Absolute Return
Bond Fund - THA 2,312 0.8
Argentière Fund Class
C - NR 1,921 0.6
Keynes Dynamic Beta Strategy
Class A 1,843 0.6
Cantab CCP Core Macro - Pavlov
GBP Class 1,315 0.4
Schroder GAIA BlueTrend Class
C 1,150 0.4
Total Eclectic & Diversifying
Assets 90,569 29.5
Total Investments 301,173 97.9
Net Current Assets 6,307 2.1
Net Assets 307,480 100.0
Note:
*Hansa Trust owns 9,352,770 shares in Ocean Wilsons Holdings
Limited ("OWHL"). In order to better reflect Hansa Trust's exposure
to different market silos, the two subsidiaries of OWHL, Wilson
Sons and Ocean Wilsons (Investments) Ltd ("OWIL"), are shown
separately above. The fair value of Hansa Trust's holding in OWHL
has been apportioned across the two subsidiaries in the ratio of
the latest reported NAV of OWIL, that being the NAV of OWIL shown
in the 31 December 2016 OWHL accounts, to the market value of
OWHL's holding in Wilson Sons, that being the bid share price of
Wilson Sons multiplied by the number of shares held by OWHL at 31
March 2017.
**DV4 Ltd is an unlisted Private Equity holding. As such, its
value is estimated as described in Note 19 to the Financial
Statement and is listed as a Level 3 Asset in Note 21. All other
valuations are either derived from information supplied by listed
sources, or from pricing information supplied by third party fund
managers.
^ On 31 March 2017, the Trust had committed to purchasing 10,577
shares in SR Global Fund Inc. Frontier Markets. As a result, the
cash in place to purchase SR Global Fund Inc. Frontier Markets is
shown as a Current Asset as at 31 March 2017 in Note 12 to the
Financial Statements. All other assets are shown as Investments in
Note 10.
Shareholder Profile and Engagement
Capital Structure
The Company has 8,000,000 Ordinary shares of 5p (1/3 of the
total capital) and 16,000,000 'A' non-voting Ordinary shares of 5p
(2/3 of the total capital) each in issue. The Ordinary shareholders
are entitled to one vote per Ordinary share held. The 'A'
non-voting Ordinary shares do not entitle the holders to vote or
receive notice of meetings, but in all other respects they have the
same rights as the Company's Ordinary shares.
Shareholder Profile
The Company's shares owned at 31 March 2017 are as follows:
Ordinary 'A' non--voting
shares Ordinary
shares
Institutional
& Wealth
Managers 3,439,521 43.0% 15,307,874 95.7%
Directors 2,127,619 26.6% 139,150 0.9%
Private
Individuals 2,380,384 29.8% 438,491 2.7%
Other 52,476 0.7% 114,485 0.7%
8,000,000 16,000,000
Substantial Shareholders
As at 31 March 2017 the Directors were aware of the interests
below in the Ordinary shares of the Company, which exceeded 3% of
the voting issued share capital of that class.
The following information is disclosed in accordance with the
Companies Act 2006 and DTR 7.2.6 of the FCA Disclosure Guidance and
Transparency Rules.
The Company's capital structure and voting rights are summarised
above and in Note 15.
-- The giving of powers to issue or buy back the Company's
shares requires an appropriate resolution to be passed by
shareholders. Proposals for the renewal of the Board's powers to
buy back shares are set out in the Notice of the Annual General
Meeting at the end of this report.
-- There are no restrictions concerning the transfer of
securities in the Company; no special rights with regard to control
attached to securities; no agreements between holders of securities
regarding their transfer known to the Company; no agreements which
the Company is party to that affect its control following a
takeover bid; and no agreements between the Company and its
Directors concerning compensation for loss of office.
Notwithstanding the foregoing, the Company may require any holder
of shares to transfer some or all of its shares (or otherwise
refuse to register any transfer of shares) to avoid the Company
being regarded as a "close company" as defined in s.414 of the
Income and Corporation Taxes Act 1988, to another person whose
holding of such shares, in the sole and conclusive determination of
the Board, would not cause the Company to be a close company.
No. % of
of voting voting
shares shares
Nomolas Ltd 2,069,425 25.9%
Victualia Limited
Partnership 2,069,425 25.9%
William Salomon is interested in 2,069,425 of the shares held by
Victualia Limited Partnership, representing 25.9% of the voting
share capital. In addition, William Salomon has further interests
in the Company's shares; the total interest is detailed in the
Directors' Interests section below.
As at 22 June 2017, the date of signing of the Annual Accounts,
there have been no disclosures to the Company of changes of
interests under DTR 5.
BOARD AND MANAGEMENT SHAREHOLDINGS
Directors and Directors' Interests
The present members of the Board are shown above.
The Board's policy is that all Directors retire annually. All
Directors being eligible, at the forthcoming Annual General
Meeting, will retire and seek re-election in accordance with the
Board's policy. The contracts of employment between the Company and
each of the Directors do not allow for any compensation payment in
the event of loss of office.
The interests of Directors and their connected parties in the
Company at 31 March 2017 are shown below:
Ordinary shares 'A' non--voting Nature
of 5p each Ordinary of interest
shares
of 5p each
2017 2016 2017 2016
Alex Hammond-Chambers 4,900 4,900 10,600 10,600 Beneficial
Jonathan Davie 4,000 4,000 26,000 26,000 Beneficial
Raymond Oxford 1,850 1,850 1,850 1,850 Beneficial
William Salomon 2,115,869 2,115,869 98,700 98,700 Beneficial
Geoffrey Wood 1,000 1,000 2,000 2,000 Beneficial
As at 22 June 2017, the date of signing of the Annual Accounts,
there were no changes to report to the Directors' holdings.
William Salomon is the senior partner of Hansa Capital Partners
LLP. Fees payable to Hansa Capital Partners LLP amounted to
GBP2,009,794 (2016: GBP1,934,627). The fees outstanding at the
year-end amounted to GBP181,091 (2016: GBP157,999). During the
year, no rights to subscribe for the shares of the Company were
granted to, or exercised by Directors, their spouses or infant
children.
PORTFOLIO MANAGER'S INTERESTS
As at 22 June 2017, the date of signing of this Annual Report,
the management and staff of the Portfolio Manager's group,
excluding the holding of William Salomon, shown above, were
interested in c2.1m shares in the Company - a mixture of Ordinary
and 'A' non-voting Ordinary shares.
ANNUAL GENERAL MEETING
A special resolution relating to the following items will be
proposed at the forthcoming AGM:
Authority to repurchase 'A' non-voting
Ordinary shares
A resolution will be proposed at the forthcoming AGM, seeking
shareholder approval for the renewal of the authority for the
Company to repurchase its own 'A' non-voting Ordinary shares. The
Board believes the ability of the Company to repurchase its own 'A'
non-voting Ordinary shares in the market could potentially benefit
all equity shareholders of the Company in the long-term. The
repurchase of 'A' non-voting Ordinary shares at a discount to the
underlying NAV would enhance the NAV per share of the remaining
equity shares.
The Company's Articles are drafted in such a way that the
Company may from time to time purchase and cancel its own shares.
However, company law requires that shareholders' approval to
repurchase shares be sought. At the AGM the Company will therefore
seek the authority to purchase up to 2,398,400 'A' non-voting
Ordinary shares (representing 14.99% of the Company's issued 'A'
non-voting Ordinary share capital, the maximum permitted under the
FCA Listing Rules), at a price not less than 5p per share (the
nominal value of each share) and not more than 5% above the average
of the middle-market quotations for the five business days
preceding the day of purchase or, where a series of transactions
have taken place the higher of the last independent trade and
current highest independent bid on the trading venue where the
purchase(s) will be carried out. The authority being sought, the
full text of which can be found in Special Resolution 10 in the
Notice of Meeting, will last until the date of the next AGM.
The Company is seeking authority to use its realised capital
reserve to allow repurchase of shares in the market. The decision
as to whether the Company repurchases any shares will be at the
absolute discretion of the Board. Any shares purchased will be
cancelled.
Notice Period for General Meetings
The EU Shareholder Rights Directive increased the notice period
for general meetings of companies to 21 days unless certain
conditions are met, in which case it may be 14 days' notice. A
shareholders' resolution is required to permit that the Company's
general meetings (other than AGMs) may be held on 14 days' notice.
Accordingly, Special Resolution 11 will propose that the period of
notice for general meetings of the Company (other than AGMs) shall
not be less than 14 days' notice.
An ordinary resolution relating to the following item will be
proposed at the forthcoming AGM:
(a) Approve the Directors' Remuneration Policy
Resolution 8 will be proposed at the forthcoming AGM, seeking
the triennial shareholder approval of the Directors' Remuneration
Policy, as detailed under "Policy on Directors' Remuneration".
The Directors consider that the above highlighted resolutions,
and all the resolutions to be proposed at the forthcoming AGM as
set out in the Notice of Meeting, are in the best interests of
shareholders as a whole and unanimously recommend all shareholders
to vote in favour, by ticking the appropriate boxes on the enclosed
Form of Proxy. This form should be returned to the Company's
Registrar as soon as possible, but in any event so as to arrive no
later than 48 hours before the time of the AGM.
If the Board considers a significant proportion of votes have
been cast against a resolution at the AGM, the Company will
explain, when announcing the results of voting, what action it
intends to take to understand the reasons behind the results of the
vote.
APPROVAL OF THE DIRECTORS
The Directors consider the Annual Report and Accounts, taken as
a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
For and on behalf of the Board
Alex Hammond--Chambers
Chairman
22 June 2017
Report of the Directors
The Companies Act 2006 requires the Directors to report on a
number of items within the Annual Report. With the introduction of
the Strategic Report, the Directors have chosen to report on some
of those items within the body of the Strategic Report, while
others remain within the Report of the Directors.
ITEMS INCLUDED WITHIN THE STRATEGIC REPORT
The following items are listed within the Strategic Report:
-- Statement of the existence of qualifying indemnity provisions for Directors.
-- Names of Directors, at any time in the year - see above for
the Directors' details and attendance at Company meetings.
-- Greenhouse Gas Emissions.
-- Policy on Diversity - see within "The Board".
ITEMS REPORTED WITHIN THE DIRECTORS' REPORT
Disclosure to the Auditor of Relevant Audit Information
The Directors confirm that, so far as they are aware, having
made such enquiries and having taken such steps as they consider
they reasonably ought, they have provided the Auditor with all the
information necessary for it to be able to prepare its report. In
doing so each Director has made himself aware of any information
relevant to the audit and established that the Company's Auditor is
aware of that information. The Directors are not aware of any
information relevant to the audit of which the Company's Auditor is
unaware.
Capital Structure
The Company's Capital Structure is described in the "Investor
Information Section".
Corporate Governance Report
The Corporate Governance Report, including the Financial Risk
Management Review of the Company, is included in this document
starting below.
Future Developments and Post Balance Sheet Events
The Company does not have any imminent future developments or
post balance sheet events to report.
APPROVAL OF THE DIRECTORS
The Directors consider the Annual Report and Accounts, taken as
a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company's
position and performance, business model and strategy. Further
details demonstrating the Company's performance, business model and
strategy have been included within the Strategic Report.
For and on behalf of the Board
Alex Hammond--Chambers
Chairman
22 June 2017
Corporate Governance Report
UK Corporate Governance Code
Internal Controls
The UK Corporate Governance Code ("UK Code") (issued September
2014 and applying to accounting periods beginning on or after 1
October 2014, but superseded by the April 2016 Code for accounting
periods beginning on or after 17 June 2016), which can be found on
the website of the Financial Reporting Council (www.frc.org.uk),
requires the Directors to review the effectiveness of the Company's
risk management and system of internal controls on an annual basis.
The Directors, through the procedures outlined below, keep the
system of risk management and internal controls under review. The
Board has identified risk management controls in the key areas of
business objectives, accounting, compliance, operations and
secretarial as areas to be included in the extended review.
The Board recognises its ultimate responsibility for the
Company's system of risk management and internal controls and for
monitoring their effectiveness. In order to perform this
responsibility the Board receives regular reports on all aspects of
risk management and internal control from the Company's service
providers (including financial, operational and compliance
controls, risk management and relationships with other service
providers); the Board will authorise necessary action in response
to any significant failings or weaknesses identified by these
reports. However, it must be noted this system is designed to
manage rather than eliminate the risk of failure to achieve
business objectives and can only provide reasonable and not
absolute assurance against material misstatement or loss.
Financial Reporting
The Board has a responsibility to present a fair, balanced and
understandable assessment of annual, half-year and other price
sensitive public reports and reports to regulators, as well as to
provide information required to be presented by statutory
requirements. To ensure this responsibility is fulfilled, all such
reports are reviewed and approved by the Board prior to their
issue.
The Board confirms there have been no important events since 31
March 2017, of which the Board is aware, which would have a
material impact on the Company.
Compliance with the Provisions of the UK Corporate Governance
Code
The Board has considered the principles and recommendations of
the AIC Code of Corporate Governance ("AIC Code") by reference to
the AIC Corporate Governance Guide for Investment Companies ("AIC
Guide"). The AIC Code, as explained by the AIC Guide, addresses all
the relevant principles of the UK Code, as well as setting out
additional principles and recommendations on issues of specific
relevance to investment companies such as Hansa Trust PLC.
The Board considers that reporting against the principles and
recommendations of the AIC Code, and by reference to the AIC Guide
(which incorporates the UK Code), will provide more appropriate
information to shareholders.
The Company has complied with the recommendations of the AIC
Code, thereby the UK Code.
The Board confirms, with the exception of the existence of a
senior independent Director and the need to involve the Chairman
early in the process for structuring a new share launch (as it is
not relevant for this Company), that it has in all respects
followed the AIC Code in meeting its obligations under the Listing
Rules and the UK Code. The AIC Code can be found on its website at
www.theaic.co.uk.
Association of Investment Companies Code
The AIC Code has 21 principles, the vast majority of which the
Board has been following for many years. However, modern corporate
governance requires that boards not only govern their companies
sensibly and responsibly, but that they are seen to do so. Hence
there is a requirement to follow a check list of principles, which
in our case is drawn from the AIC Code. They include:
The Board
-- The Chairman should be independent
Alex Hammond-Chambers has been assessed by the Board to be
independent.
-- A majority of the Board should be independent of the Manager
All the Directors are subject to an annual independence review
and with the exception of William Salomon, who is a partner of the
Portfolio Manager, all are adjudged to be independent and to have
performed their duties in an independent manner.
-- Directors should be submitted for re-election at regular
intervals. Nomination for re-election should not be assumed, but be
based on disclosed procedures and continued satisfactory
performance
All Directors resign at each AGM and where appropriate offer
themselves for re-election.
-- The Board should have a policy on tenure which is disclosed in the Annual Report
The Board has determined that neither age nor length of service
necessarily compromise independence, rather that experience and
knowledge gained in service normally strengthen independent
performance. All Directors have service contracts, details of which
are contained in the Directors' Remuneration Report.
-- There should be full disclosure of information about the Board
A brief biography of each member of the Board can be found on
above. The Company's Chairman chaired the Board and Remuneration
Committee during the year. Jonathan Davie was Chairman of the Audit
Committee for the full year.
-- The Board should aim to have a balance of skills, experience,
length of service and knowledge of the company
The Board regularly reviews its requirements to direct the
affairs of the Company. When and where appropriate, individuals are
identified who would strengthen the Board and are put forward as
candidates for Board membership.
-- The Board should undertake a formal and rigorous annual
evaluation of its own performance and that of its committees and
individual Directors
The Board undertakes a formal written evaluation every three
years. In the other years the Board carries out an evaluation of
the independence of each Director, by means of a written response
from each Director on his fellow Directors, the progress of the
actions resulting from the previous reviews and any new ideas for
improving the returns to shareholders, by enhancing the
effectiveness of the Board. The Chairman is evaluated by another
Director on behalf of the Board.
-- Directors' remuneration should reflect their duties and
responsibilities and the value of their time spent
The level of Directors' fees is monitored annually and formally
reviewed every three years, in light of their duties,
responsibilities and their time committed to the interests of the
Company; note is taken of fees paid by other comparable companies.
A note of the Company meetings attended by each Director is
included with their biographies above.
-- The Independent Directors should take a lead in the
appointment of new directors and the process should be disclosed in
the Annual Report
The identification and appointment of a new Board member is a
matter for the whole Board. The Chairman, as the de facto senior
independent Director, is charged with taking the lead in all the
processes with respect to the appointment of a new director.
-- Directors should be offered relevant training and induction
When a new Director is appointed, he/she attends an induction
seminar held by the Company Secretary and the Chairman. Directors
are also provided on a regular basis with industry, regulatory and
investment updates. Directors regularly participate in industry
seminars and training courses where appropriate. In addition, the
Company maintains a membership of its trade body, the AIC, to
ensure it has reliable access to technical resources and best
practice.
Board meetings and the relationship with the Manager
-- Boards and managers should operate in a supportive, co--operative and open environment
The Board is primarily responsible for the running of the
Company and maintains specific duties and responsibilities. Where
the Board has delegated certain duties to the AIFM and Portfolio
Manager, the Board, the AIFM and the Portfolio Manager operate in
an environment of mutual trust and respect, both at formal Board
Meetings and during the year when ad-hoc communications are
instigated by any party.
-- The primary focus at regular Board Meetings should be the
review of the investment performance and associated matters such as
gearing, asset allocation, marketing/investor relations, peer group
information and industry issues
At the regular Board Meetings, discussions are held and reports
and papers reviewed, all of which cover the above mentioned
aspects.
-- Boards should give sufficient attention to overall strategy
The Board holds an annual strategy meeting with the Portfolio
Manager, to specifically discuss the Company's future investment
and corporate strategies. However, macro trends, the drivers for
the wider economy and their potential for impact on the portfolio
are discussed at every Board Meeting.
-- The Board should regularly review both the performance of and
contractual arrangements with the Portfolio Manager
The Board formally reviews the performance of the Portfolio
Manager each quarter, at which Board Meeting the Portfolio Manager
presents a written report. At the annual review of the Portfolio
Manager all aspects of its service to the Board are reviewed,
particularly the long-term returns to shareholders and the terms
and conditions of its contract. This review is conducted by the
independent Directors only.
-- The Board should agree policies with the Manager covering key operational issues
Within the agreement, service levels are defined between the
AIFM, Portfolio Manager and the Company. In addition the Board
determines certain investment restrictions and guidelines for the
Portfolio Manager, on which the Portfolio Manager reports monthly
and the AIFM also monitors.
-- Boards should monitor the level of share price discount or
premium (if any) and, if desirable, take action to reduce it
The Board monitors the levels of discount or premium and
comments on it at its regular meetings. The Board also seeks
authority to purchase up to 14.99% of the Company's 'A' non-voting
Ordinary shares at the Company's AGM. The Board, through the
Chairman, ensures that shareholders are fully aware of the
Company's policy with regard to share buybacks and, additionally,
states its discount policy in the Annual Report.
-- The Board should monitor and evaluate other service providers
The Board, through its Audit Committee, receives independent
reports from the auditors of the main service providers; these
reports are called either AAF 01/06 or ISAE3402 reports.
Shareholder Communication
-- The Board should regularly monitor the shareholder profile of
the Company and put in place a system for canvassing shareholder
views and for communicating the Board's views to shareholders
The Board reviews the shareholder profile at its regular
meetings. The Company, through its Portfolio Manager and Company
Secretary, has regular contact with its shareholders. The Board
supports the principle that the AGM should be used to communicate
with all shareholders and promotes its website to them. The Company
Secretary and where appropriate the Chairman, regularly receive and
handle communications from shareholders. These communications are
received by letter, email or telephone. Any matter requiring the
Board's attention is referred to it for action.
-- The Board should normally take responsibility for, and have a
direct involvement in, the content of communications regarding
major corporate issues even if the Manager is asked to act as
spokesman
The Board is responsible for all major corporate issues and as
such would have a direct involvement in both the issue and the
content of its communications.
-- The Board should ensure shareholders are provided with
sufficient information for them to understand the risk:reward
balance to which they are exposed by holding the shares
The Board, through the issuance of the Annual and Half--Year
Reports, and monthly factsheets, aims to ensure both shareholders
and prospective shareholders are made fully aware of the investment
aims and KPIs of the Company, the types of investments the Company
is likely to enter into, the disposition of those investments in
the portfolio, the gearing of the Company and the period over which
its performance should be judged.
UK STEWARDSHIP CODE
The aim of the Stewardship Code is to enhance the quality of
engagement between institutional investors and companies, to help
improve long-term returns to shareholders and the efficient
exercise of governance responsibilities.
The seven principles of the Code are that institutional
investors should:
-- Publicly disclose their policy on how they will discharge their stewardship responsibilities.
-- Have a robust policy on managing conflicts of interest in
relation to stewardship which should be publicly disclosed.
-- Monitor their investee companies.
-- Establish clear guidelines on when and how they will escalate their stewardship activities.
-- Be willing to act collectively with other investors where appropriate.
-- Have a clear policy on voting and disclosure of voting activity.
-- Report periodically on their stewardship and voting activities.
Discharging stewardship responsibilities
The Company, in conjunction with the AIFM, has delegated to its
Portfolio Manager, Hansa Capital Partners LLP, the day to day
operation of the Company's policy, which is to operate a due
diligence process when considering any investment.
The process includes a number of key factors in the
establishment of whether an investment is suitable for its
portfolio and will include:
-- Competent management.
-- Likelihood of offering an acceptable return for the risk undertaken.
-- Financial and structural soundness.
-- Regular reporting.
-- Sound business plans.
-- Compliance with current governance and regulatory requirements.
The Portfolio Manager will engage the Board on controversial
matters arising from the operations of the policy.
COMPLIANCE WITH THE COMPANIES ACT AND FINANCIAL CONDUCT
AUTHORITY UKLA LISTING RULES
In discharging its responsibilities of stewardship the Board is
governed by the Companies Act and the Financial Conduct Authority
UKLA Listing Rules.
The Company's Articles of Association include a general power
for the Directors to authorise any matter which would or might
constitute or give rise to a breach of the duty of a director under
s.175 of the Companies Act 2006. Procedures have been established
for the disclosure of any such conflicts and also, where relevant,
for the consideration and authorisation of these conflicts by the
Board.
Under UK Company Law the Directors are responsible for ensuring
that:
-- Adequate accounting records are kept, that are sufficient to
show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the Financial Statements
comply with the Companies Act 2006.
-- The assets of the Company are safeguarded; and for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
-- The Report of the Directors and other information included in
the Annual Report is prepared in accordance with Company Law in the
UK. The Directors are also responsible for ensuring the Annual
Report includes information required by the Listing Rules of the
FCA.
-- The Company has effective internal control systems, designed
to ensure that adequate accounting records are maintained; and that
financial information on which the business decisions are made,
which is issued for publication, is reliable. Such a system of
internal control can provide only reasonable, but not absolute,
assurance against material misstatement or loss.
-- The Company Financial Statements for each financial year are
prepared in accordance with IFRS, as adopted by the EU. Under
Company Law directors must not approve the financial statements
unless they are satisfied they give a true and fair view of the
state of affairs and profit or loss of the Company for that
period.
In preparing these Financial Statements, the Directors are
required to:
-- select suitable accounting policies and apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with IFRS as adopted by the EU; and
-- prepare the financial statements on the going concern basis,
unless it is inappropriate to presume the Company will continue in
business.
Under the FCA UKLA Listing Rules and the UK Code, the Board is
responsible for:
-- Disclosing how it has applied the principles and complied
with the provisions of the AIC Code and, thereby, the UK Code, or
where not, to explain the reasons for divergence.
-- Reviewing the effectiveness of the Company's systems of risk
management and internal controls.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website: www.hansatrust.com. Visitors to the website need
to be aware that legislation in the UK governing the preparation
and dissemination of the Financial Statements may differ from
legislation in their own jurisdictions.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
-- The financial statements, prepared in accordance with
applicable international accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company.
-- The Strategic Report, including the Chairman's Report to the
Shareholders and the Report of the Directors include a fair review
of the development and performance of the business and the position
of the Company, together with a description of the principal risks
and uncertainties it faces.
The Directors consider the Annual Report and Accounts, taken as
a whole, are fair, balanced and understandable. Further detail
demonstrating the Company's performance, business model and
strategy has been included within the Strategic Report.
For and on behalf of the Board
Alex Hammond--Chambers
Chairman
22 June 2017
Audit Committee Report
The Financial Reporting Council's guidance emphasises the need
for audit committee arrangements to be proportionate to the task
and proportionate to the size, complexity and risk profile of the
company and as such our Board does not consider the establishment
of an internal audit function appropriate for the size and
complexity of the organisation.
The Audit Committee, which meets at least twice a year, consists
of all five Directors and Edwin Teideman, a former director, whose
skills and experience of the Company strengthen the Committee.
During the Company's year to 31 March 2017, and to date, the
Committee was chaired by Jonathan Davie.
The Committee is authorised by the Board to investigate any
activity within its terms of reference, to seek any information it
requires from any officer or service provider to the Company, to
obtain outside legal or other independent professional advice and
to secure the attendance of third parties with relevant experience
and expertise if it considers this necessary.
The Chairman of the Audit Committee formally reports to the
Board following each Audit Committee meeting and on other occasions
as requested by the Board.
The Terms of Reference are determined by the Board and approved
by the Committee and include, but are not restricted to, the
following:
-- To consider and make a recommendation to the Board as to the
appointment of the external Auditor, tendering of the audit
services, the audit fee and any questions relating to the
resignation or dismissal of the Auditor.
-- To determine with the external Auditor the nature and scope of the audit.
-- To review and monitor the independence of the external
Auditor and the provision of additional services to the
Company.
-- To review the Half-Year and Annual Financial Reports before
submission to the Board, focusing particularly on:
-- any changes in accounting policies and practices;
-- major judgemental areas;
-- significant adjustments resulting from the audit;
-- the going concern assumption;
-- compliance with Accounting Standards and Governance
Codes;
-- compliance with FCA Listing Rules and legal requirements;
and
-- valuation of unquoted investments.
-- To discuss issues and reservations arising from the annual
audit and any matters the Auditor may wish to discuss.
-- To review the Auditor's audit findings and responses to it.
-- To review and monitor the effectiveness of the Company's
Internal Control and Risk Systems prior to endorsement by the
Board.
-- To review the processes and procedures that monitor compliance with s.1158 CTA 2010.
-- To review service providers' AAF 01/06 or ISAE 3402 reports.
In discharging its duties and, in particular, matters relating
to the approval of the Annual Report, Half-Year Report and the
review of the Company's Internal Controls, the Committee considers
reports and presentations made by the Company's Auditor,
Administrators, Company Secretary and Legal Advisers.
In its review of the Annual Report the Committee pays particular
attention to the ownership of assets, the valuations of the
portfolio, recognition of income and outstanding liabilities, if
applicable, which it considers to be of significant importance in
establishing its opinion on it, all of which are covered by the
Auditor in its report and fully discussed with the Auditor.
With regard to the ownership of assets, the Company's Depositary
and Administrator have confirmed the ownership of all assets to the
Audit Committee's satisfaction. With regard to the valuations, the
Audit Committee notes that 66% of the portfolio by value is held in
assets that are listed, hence forming the basis of the valuation.
Further, of the remaining 34% unquoted, the majority relate to
unquoted fund investments where valuations are supplied by third
party managers. The Committee is satisfied with the valuation
process. With regard to revenue recognition, the Audit Committee
reviewed the external Auditor's approach to the audit prior to the
commencement of the audit. The results of the audit in this area
were discussed with the external Auditor and there were no
significant issues arising in relation to the recognition of
revenue.
The Audit Committee, having considered its responsibilities and
its reporting to the Board, confirms it is not aware of any matter
which it should bring to the attention of either the Board or the
Auditor and considers the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company's position and performance,
business model and strategy.
The Audit Committee considers the external Auditor's
independence, objectivity and the cost effectiveness of the audit
process through a process of feedback from the Company advisors,
including the Company Secretary and Portfolio Manager. The
Committee also meet with the Auditor directly to discuss the Annual
Report, the work the Auditor has carried out as part of its review
and any matters raised.
The level of non-audit services provided to the Company by the
Auditor is monitored, as is the Auditor's objectivity in providing
such services, to ensure that the independence of the audit team
from the Company is not compromised. Non-audit services provided by
Grant Thornton UK LLP were, historically, in relation to taxation
services. A change of best practice in the accounting industry
following the new rules on Auditor Independence has meant that
Grant Thornton UK LLP is no longer able to provide tax compliance
services to the Company and continue to act as Auditor. Therefore,
the Company is in the process of appointing a replacement tax
adviser to provide tax compliance services for the year ended 31
March 2017. Further information on fees paid to Grant Thornton UK
LLP is contained in "Other Expenses" within Note 4 of the Financial
Statements.
Grant Thornton UK LLP has been the Company's Auditor for seven
years. Prior to that, and before its merger with Grant Thornton,
RSM Robson Rhodes LLP was the Company's auditor. The Committee
previously indicated that the statutory audit and associated
non-audit services would be tendered for the year ended 31 March
2016. However, the Company now intends to delay the tender until
2019, as permitted under the UK Government's implementation of the
new EU Directive at which point a change of audit firm will be
required.
Following careful consideration of the independence, experience
and value for money of the current Auditor, the Audit Committee has
recommended that the Board propose the re-appointment of Grant
Thornton UK LLP as Auditor to the Company.
For and on behalf of the Audit Committee
Jonathan Davie
Audit Committee Chairman
22 June 2017
Directors' Remuneration Report
Despite the inclusion of the Strategic Report, the Companies Act
continues to require the Company to produce a separate report on
the Directors' Remuneration and that the Board approves the Report
and signs it to confirm its accuracy. There are elements of the
Directors' Remuneration Report that are audited, by law, by the
Company's Auditor. The Auditor's opinion is included in its report
below.
The Board has prepared this Report in relation to all directors
who have served during the year and in accordance with the
requirements of s.420-422 of the Companies Act 2006. Ordinary
resolutions for the approval of this Report, as well as acceptance
of the Remuneration Policy will be put to shareholders at the
forthcoming AGM.
ANNUAL STATEMENT
The Company has five non-executive Directors. The Board as a
whole fulfils the function of a Remuneration Committee. The
Chairman has prepared this statement on behalf of the Board.
There have been no changes to remuneration during the year to 31
March 2017, either on an individual basis or for the Board as a
whole. The most recent update to Directors' remuneration was made
in the year to 31 March 2013. All Directors have served for the
full year, although all retired at the AGM on 29 July 2016 as is
the Company policy and were subsequently re-elected.
POLICY ON DIRECTORS' REMUNERATION
The Board's policy is that the remuneration of non-executive
Directors should include a basic pay level and should reflect the
experience of the Board as a whole, be appropriate for the work
carried out and the responsibilities, financial and reputational
risks undertaken, including additional remuneration for any roles
in addition to the responsibilities of the non-executive director
role, for example, chairman. The remuneration does not include a
performance related element and Directors do not receive bonuses,
share options, pensions or long-term incentive schemes. The total
remuneration of the Board will be kept within the limits set out in
the Company's Articles of Association, as amended from time to
time.
The fees for the non-executive Directors are within the limits
(maximum total fee of GBP175,000) set. This policy was approved at
the AGM held on 21 July 2014 with 99.86% of the votes cast being In
Favour of the policy and the remaining 0.14% being Against. The
policy was approved for a period of three years from 1 July 2014 to
30 June 2017. The Directors consider that the maximum total fee
should remain as GBP175,000. The Policy on Directors' Remuneration
will be presented to shareholders at the forthcoming AGM for their
consideration and approval for a further three years.
DIRECTORS' SERVICE CONTRACTS
It is the Board's policy that every Director has a service
contract. None of the service contracts is for a fixed term. The
terms of appointment provide that a Director shall retire and be
subject to re-election at the first AGM after appointment. The
Board has decided each Director will retire annually at the AGM and
seek re-election as appropriate. The terms also provide that either
party may give three months' notice, in certain circumstances a
Director may be removed without notice and compensation will not be
due on leaving office. There are no agreements between the Company
and its Directors concerning compensation for loss of office.
REMUNERATION COMMITTEE
The Board fulfils the function of a Remuneration Committee and
considers that the specific appointment of such a committee is not
appropriate for an investment trust company such as Hansa Trust.
The level of Directors' fees is monitored annually and formally
reviewed every three years in the light of their duties and also
relative to other comparable companies. The Company Secretary
provides relevant information when the Directors consider the level
of Directors' fees. The Directors' Remuneration Policy will be
presented to shareholders at the AGM on 28 July 2017 for their
consideration and approval. At the meeting, it will be proposed
that the current overall cap of GBP175,000 should be maintained on
annual Directors' fees.
FUTURE POLICY TABLE
The Company only has non-executive Directors, who only receive
fees. The implementation of the above policy could give rise to the
following increase in fees:
Current Potential
total future
fee total
GBP000 fee
GBP000
Non--executive
Director fees 141 175
The Board has appointed the Company Secretary to provide
relevant information when the Directors consider the level of
Directors' fees.
If, in the future, recruitment of another non-executive director
is deemed necessary by the Board, the remuneration would be managed
within the overall limit of GBP175,000. If this were not possible,
it would be necessary to return a revised remuneration policy to
shareholders for their consideration. As above, the Company
Secretary provides relevant information when the Directors consider
the level of Directors' fees. The criteria for agreeing the fees of
any incoming non-executive director would be the same criteria used
to assess the remuneration of existing Directors.
POLICY FOR NOTICE PERIODS
The current Directors' service contracts stipulate three months'
written notice to be given by either the Director or the Company to
terminate the services of a Director. The Board consider this is
sufficient notice to ensure an orderly hand over between the
parties.
SHAREHOLDERS' VIEWS ON REMUNERATION POLICY
The formal views of unconnected shareholders have not been
sought in the preparation of this policy.
EMPLOYEES
The Company does not have any employees and, therefore, no Chief
Executive Officer. Accordingly, the disclosures required under
paragraphs 18(2), 19, 38 and 39 of Schedule 8 to the Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 are not required.
ANNUAL REPORT ON REMUNERATION
Directors' Emoluments (Audited)
The Company does not have any employees, only non-executive
Directors who receive only a basic fee, plus expenses. Therefore,
the use of the detailed remuneration table, as prescribed in the
legislation, is not appropriate here. A condensed table showing the
information relevant to the Directors' remuneration is shown in its
place.
The Directors who served in the year received the following
emoluments in the form of fees:
2017 2017 2016 2016
Fee Total Fee Total
GBP000 GBP000 GBP000 GBP000
Alex Hammond--Chambers
(Chairman)* 38 38 38 38
Jonathan Davie 30 30 28 28
Raymond Oxford 25 25 25 25
William Salomon 23 23 23 23
Geoffrey Wood 25 25 25 25
141 141 139 139
* The amounts due in respect of Alex Hammond--Chambers' fees are
paid to his service company.
The Company pays National Insurance contributions on the
Directors' emoluments where applicable. This amounted to GBP6,736
(2016: GBP7,537). The Company also pays the expenses of the
Directors to attend the Board Meetings.
DIRECTORS' INTERESTS (AUDITED)
Directors must seek permission from the Chairman before trading
in shares, taking note of any Closed Periods. Other than that,
there are no specific rules on Directors' shareholdings.
The interests of Directors and their connected parties in the
Company at 31 March 2017 are shown below.
Ordinary 'A' non--voting Nature
shares Ordinary of
of shares interest
5p each of 5p
each
2017 2016 2017 2016
Alex Hammond--
Chambers 4,900 4,900 10,600 10,600 Beneficial
Jonathan
Davie 4,000 4,000 26,000 26,000 Beneficial
Raymond
Oxford 1,850 1,850 1,850 1,850 Beneficial
William
Salomon 2,115,869 2,115,869 98,700 98,700 Beneficial
Geoffrey
Wood 1,000 1,000 2,000 2,000 Beneficial
As at 22 June 2017, the date of signing of these Annual
Accounts, there were no changes to report to the Directors'
holdings.
William Salomon is the senior partner of Hansa Capital Partners
LLP. Fees payable to Hansa Capital Partners LLP amounted to
GBP2,009,794 (2016: GBP1,934,627). The fees outstanding at the
year-end amounted to GBP181,091 (2016: GBP157,999). During the
year, no rights to subscribe to the shares of the Company were
granted to, or exercised by Directors, their spouses or infant
children.
YOUR COMPANY'S PERFORMANCE
The graph below shows the ten year cumulative total return to
shareholders:
TEN YEAR NET ASSET VALUE TOTAL RETURN RECORD
Note: The table of ten year performance for the Company is also
shown within the Strategic Report.
DIRECTORS' ATTANCE
The Directors meet as a Board on a quarterly basis and at other
times as necessary and the table below sets out the number of
meetings and the attendance at them by each Director.
Strategic Board Audit
Committee
Number of meetings
held 1 5 2
Number of meetings
attended:
Alex Hammond--Chambers 1 5 2
Jonathan Davie 1 5 2
Raymond Oxford 1 5 0
William Salomon 1 5 2
Geoffrey Wood 1 5 2
STATEMENT OF VOTING AT THE AGM
The Directors' Remuneration Report for the year ended 31 March
2016 was presented at the AGM held on 29 July 2016. At that
meeting, the Directors' Remuneration Report was approved by 100% of
the votes cast.
The Directors' Remuneration Report for the year ended 31 March
2017 will be presented to the AGM on 28 July 2017.
On behalf of the Board, and in accordance with Part 2 of
Schedule 8 of the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended), I confirm
that the above Report on Director's Remuneration summarises, as
applicable, for the year ended 31 March 2017:
(a) the major decisions on Directors' remuneration;
(b) any substantial changes relating to Directors' remuneration made during the year; and
(c) the context in which those changes occurred and decisions have been taken.
For and on behalf of the Board
Alex Hammond--Chambers
Chairman
Hansa Trust PLC
22 June 2017
Independent Auditors' Report to the
Members of Hansa Trust PLC
Independent auditor's report to the members of Hansa Trust
plc
Our opinion on the financial statements is unmodified
In our opinion the financial statements:
give a true and fair view of the state of the Company's
affairs as at 31 March 2017 and of its profit for
the year then ended;
have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted
by the European Union; and
have been prepared in accordance with the requirements
of the Companies Act 2006.
--------------------------------------------------------------
Who we are reporting to
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
What we have audited
Hansa Trust plc's financial statements for the year ended 31
March 2017 comprise the Income Statement, the Balance Sheet, the
Statement of Changes in Equity, the Cash Flow Statement and the
related notes.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the European
Union.
Overview of our audit approach
Overall materiality: GBP3,075,000, which is
approximately 1% of the Company's net assets;
and
Key audit risks were identified as existence
and valuation of quoted and unquoted investments.
---------------------------------------------------
Our assessment of risk
In arriving at our opinions set out in this report, we highlight
the following risks that, in our judgement, had the greatest effect
on our audit:
Audit risk How we responded to the risk
----------------------------- -------------------------------------------------------------
Existence and valuation For quoted investments, our audit
of investments work included, but was not restricted
The Company's business to:
is to achieve a * assessing whether the Company's accounting policy for
growth of shareholder quoted investments is in accordance with the
value, from a concentrated, requirements of IFRSs as adopted by the EU and the
long-term, non--index Association of Investment Companies' Statement of
correlated portfolio Recommended Practice ('AIC SORP') and testing whether
of unusual investments. the Company has accounted for such investments in
Accordingly, the accordance with the policy;
investment portfolio
is a significant,
material item in * comparing the investments holdings to the
the financial statements. confirmation from the Company's custodian;
The existence and
valuation of quoted
and unquoted investments * reviewing the liquidity of the investment portfolio
are therefore risks by obtaining trading volumes from an independent
that require particular source, enabling us to gain further comfort over the
and special audit fair value classification; and
attention.
* comparing the valuation to an independent source of
market prices.
----------------------------- -------------------------------------------------------------
For unquoted investments, our audit
work included, but was not restricted
to:
* assessing whether the Company's accounting policy for
unquoted investments is in accordance with IFRSs as
adopted by the EU and the AIC SORP and testing
whether the Company has accounted for unquoted
investments in accordance with the policy;
* assessing whether the valuations were performed in
accordance with the International Private Equity and
Venture Capital Valuation guidelines;
* obtaining an understanding of the investment
valuation process for the private equity funds
through review of the fund's latest available audited
financial statements and review of the fund's latest
quarterly reports;
* on a sample basis, testing additions and disposals
during the year; and
* obtaining a direct confirmation of the investments
held by the Company at the year-end from the
respective fund administrators.
The Company's accounting policy
on non-current investments is shown
in Note 1(d) and related disclosures
are included in Note 10. The Audit
Committee identified the ownership
of assets and the valuations of
the portfolio as significant issues
in its report, where the Committee
also described the action that
it has taken to address these issues.
----------------------------- -------------------------------------------------------------
Our application of materiality and an overview of the scope of
our audit
Materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality in determining the nature, timing
and extent of our work and in evaluating the results of that
work.
We determined materiality for the audit of the financial
statements as a whole to be GBP3,075,000, which is approximately 1%
of the Company's net assets. This benchmark is considered the most
appropriate because net assets, which is primarily composed of the
Company's investment portfolio, is considered to be the key driver
of the Company's total return performance.
Materiality for the current year is higher than the level that
we determined for the year ended 31 March 2016 to reflect the
increase in net asset value this year.
We use a different level of materiality, performance
materiality, to drive the extent of our testing and this was set at
75% of financial statement materiality. We also determine a lower
level of specific materiality for certain areas such as directors'
remuneration and related party transactions.
We determined the threshold at which we will communicate
misstatements to the audit committee to be GBP153,000. In addition
we will communicate misstatements below that threshold that, in our
view, warrant reporting on qualitative grounds.
Overview of the scope of our audit
A description of the generic scope of an audit of financial
statements is provided on the Financial Reporting Council's website
at www.frc.org.uk/auditscopeukprivate.
We conducted our audit in accordance with International
Standards on Auditing (ISAs) (UK and Ireland). Our responsibilities
under those standards are further described in the
'Responsibilities for the financial statements and the audit'
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
We are independent of the company in accordance with the
Auditing Practices Board's Ethical Standards for Auditors, and we
have fulfilled our other ethical responsibilities in accordance
with those Ethical Standards.
Our audit approach was based on a thorough understanding of the
Company's business and is risk based. The day-to--day management of
the Company's investment portfolio, the custody of its investments
and the maintenance of the Company's accounting records is
outsourced to third-party service providers. Accordingly, our audit
work included:
-- Obtaining an understanding of, and evaluating, internal
controls at the Company and relevant third-party service providers.
This included a review of reports on the description, design and
operating effectiveness of internal controls at relevant
third-party service providers; and
-- Undertaking substantive testing on significant transactions,
account balances and disclosures, the extent of which was based on
various factors such as our overall assessment of the control
environment, the design effectiveness of controls over individual
systems and the management of specific risks.
Other reporting required by regulations
Our opinion on other matters prescribed by the Companies Act
2006 is unmodified
In our opinion, the part of the Directors' Remuneration Report
to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the Strategic Report and the Report
of the Directors for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the Strategic Report and the Report of the Directors have
been prepared in accordance with applicable legal requirements.
Matter on which we are required to report under the Companies
Act 2006
In the light of the knowledge and understanding of the company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the Strategic Report or
the Report of the Directors.
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Under the Listing Rules, we are required to review:
-- the Directors' statements in relation to going concern and
longer-term viability, set out on in the Organisation and
Objectives section; and
-- the part of the Corporate Governance Statement relating to
the company's compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Under the ISAs (UK and Ireland), we are required to report to
you if, in our opinion, information in the annual report is:
-- materially inconsistent with the information in the audited financial statements; or
-- apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Company acquired in the
course of performing our audit; or
-- otherwise misleading.
In particular, we are required to report to you if:
-- we have identified any inconsistencies between our knowledge
acquired during the audit and the directors' statement that they
consider the annual report is fair, balanced and understandable;
or
-- the annual report does not appropriately disclose those
matters that were communicated to the audit committee which we
consider should have been disclosed.
We have nothing to report in respect of the above.
We also confirm that we do not have anything material to add or
to draw attention to in relation to:
-- the directors' confirmation in the annual report that they
have carried out a robust assessment of the principal risks facing
the company including those that would threaten its business model,
future performance, solvency or liquidity;
-- the disclosures in the annual report that describe those
risks and explain how they are being managed or mitigated;
-- the directors' statement in the financial statements about
whether they have considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the company's
ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements;
and
-- the directors' explanation in the annual report as to how
they have assessed the prospects of the company, over what period
they have done so and why they consider that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Responsibilities for the financial statements and the audit
What the directors are responsible for:
As explained more fully in the Directors' Responsibilities
Statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view.
What we are responsible for:
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and ISAs (UK
and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
Andrew Heffron
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
22 June 2017
Income Statement
For the year ended 31 March 2017
Revenue Capital Total Revenue Capital Total
2017 2017 2017 2016 2016 2016
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gains/(losses)
on investments
held at fair value
through profit
or loss 10 - 52,575 52,575 - (16,981) (16,981)
Exchange gains/(losses)
on currency balances - 111 111 - (13) (13)
Investment income 2 6,194 - 6,194 6,129 - 6,129
6,194 52,686 58,880 6,129 (16,994) (10,865)
Investment management
fees 3 (2,010) - (2,010) (1,935) - (1,935)
Other expenses 4 (1,123) - (1,123) (1,077) - (1,077)
(3,133) - (3,133) (3,012) - (3,012)
Profit/(loss)
before finance
costs and taxation 3,061 52,686 55,747 3,117 (16,994) (13,877)
Finance costs 5 (2) - (2) - - -
Profit/(loss)
before taxation 3,059 52,686 55,745 3,117 (16,994) (13,877)
Taxation 6 - - - - - -
Profit/(loss)
for the year 3,059 52,686 55,745 3,117 (16,994) (13,877)
Return per Ordinary
and
'A' non-voting
Ordinary share 8 12.8p 219.5p 232.3p 13.0p (70.8)p (57.8)p
The Company does not have any income or expense not included in
the above statement. Accordingly the "Profit/(loss) for the year"
is also the "Total comprehensive income for the year", as defined
in IAS 1 (revised) and no separate Statement of Comprehensive
Income has been presented.
The total column of this statement represents the Company's
Income Statement, prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union. The supplementary revenue and capital return columns are
both prepared under guidance published by the AIC.
All revenue and capital items in the above statement derive from
continuing operations.
The accompanying notes are an integral part of this
statement.
Balance Sheet
As at 31 March 2017
2017 2016
Notes GBP000 GBP000
Non-current assets
Investment in subsidiary at fair
value through profit or loss 9 629 629
Investments held at fair value
through profit or loss 299,671 250,625
10 300,300 251,254
Current assets
Trade and other receivables 12 4,106 253
Cash and cash equivalents 13 4,059 5,028
8,165 5,281
Current liabilities
Trade and other payables 14 (985) (960)
Net current assets 7,180 4,321
Net assets 307,480 255,575
Capital and reserves
Called up share capital 15 1,200 1,200
Capital redemption reserve 16 300 300
Retained earnings 17 305,980 254,075
Total equity shareholders' funds 307,480 255,575
Net asset value per Ordinary and
'A' non-voting Ordinary share 18 1,281.2p 1,064.9p
The Financial Statements of Hansa Trust PLC, registered number
00126107, were approved by the Board of Directors on 22 June 2017
and were signed on its behalf by:
Alex Hammond-Chambers
Chairman
The accompanying notes are an integral part of this
statement.
Statement of Changes in Equity
For the year ended 31 March 2017
Capital Capital
Share redemption Retained Share redemption Retained
capital reserve earnings Total capital reserve earnings Total
2017 2017 2017 2017 2016 2016 2016 2016
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Net assets
at 1 April 1,200 300 254,075 255,575 1,200 300 271,792 273,292
Losses for
the year - - 55,745 55,745 - - (13,877) (13,877)
Dividends 7 - - (3,840) (3,840) - - (3,840) (3,840)
Net assets
at 31 March 1,200 300 305,980 307,480 1,200 300 254,075 255,575
Cash Flow Statement
For the year ended 31 March 2017
2017 2016
Notes GBP000 GBP000
Cash flows from operating activities
Gain/(loss) before finance costs
and taxation* 55,747 (13,877)
Adjustments for:
Realised gains on investments 10 (4,234) (4,302)
Unrealised (gains)/losses on investments 10 (48,341) 21,283
Effect of foreign exchange rate
changes (111) 13
Increase in trade and other receivables 12 (1,456) (67)
Increase/(decrease) in trade and
other payables 14 25 (37)
Purchase of non-current investments (49,307) (29,371)
Sale of non-current investments 50,439 26,200
Net cash inflow/(outflow) from
operating activities 2,762 (158)
Cash flows from financing activities
Interest paid on bank loans (2) -
Dividends paid 7 (3,840) (3,840)
Net cash outflow from financing
activities (3,842) (3,840)
Decrease in cash and cash equivalents (1,080) (3,998)
Cash and cash equivalents at 1
April 5,028 9,039
Effect of foreign exchange rate
changes 111 (13)
Cash and cash equivalents at end
of year 13 4,059 5,028
*Includes dividends received of GBP6,216,000 (2016:
GBP5,912,000) and interest received of GBP5,000 (2016:
GBP1,000).
The accompanying notes are an integral part of this
statement.
Notes to the Financial Statements
1 ACCOUNTING POLICIES
(a) Basis of preparation
The Financial Statements of the Company have been prepared in
accordance with International Financial Reporting Standards
("IFRS"). These comprise standards and interpretations approved by
the International Accounting Standards Board ("IASB"), together
with interpretations of the International Accounting Standards and
Standing Interpretations Committee approved by the International
Accounting Standards Committee ("IASC") that remain in effect, to
the extent that IFRS have been adopted by the European Union.
These Financial Statements are presented in Sterling because
that is the currency of the primary economic environment in which
the Company operates.
The Financial Statements have been prepared on an historical
cost and going concern basis, except for the valuation of
investments and in accordance with the AIC Statement of Recommended
Practice ("SORP") for investment trusts, issued by the AIC in
November 2014, as updated in January 2017, to the extent that the
SORP does not conflict with IFRS. The principal accounting policies
adopted are set out below.
(b) Basis of non-consolidation
IFRS10 stipulates that subsidiaries of Investment Entities are
not consolidated but, rather, stated at fair value unless the
conditions for certain exemptions from this treatment are met.
Hansa Trust meets all three characteristics of an Investment Entity
as described by IFRS10. More details regarding its subsidiary
Consolidated Investment Funds Limited ("CIFL"), are included in
Note 9 of the Financial Statements.
(c) Presentation of Income Statement
In order to better reflect the activities of an investment trust
company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Income Statement
between items of a revenue and capital nature, has been presented
alongside the Income Statement. The Company's Articles of
Association allow net capital returns to be distributed by way of
dividend, in addition to revenue returns. Additionally, the net
revenue is the measure the Directors believe to be appropriate in
assessing the Company's compliance with certain requirements set
out in s.1158/1159 CTA 2010, adjusted for details of Reporting and
Non-Reporting Funds where appropriate.
(d) Non-current investments
As the Company's business is investing in financial assets, with
a view to profiting from their total return in the form of income
received and increases in fair value, investments are designated at
fair value through profit or loss on initial recognition in
accordance with IAS 39. The Company manages and evaluates the
performance of these investments on a fair value basis, in
accordance with its investment strategy and information about the
investments is provided on this basis to the Board of
Directors.
Investments are recognised and de-recognised on the trade date.
For listed investments fair value is deemed to be bid market
prices, or closing prices for SETS stocks sourced from the London
Stock Exchange. SETS is the London Stock Exchange's electronic
trading service, covering most of the market including all FTSE 100
constituents and most liquid FTSE 250 constituents, along with some
other securities.
Fund investments are stated at fair value through profit or loss
as determined by using the most recent available valuation. In some
cases, this will be by reference to the most recent valuation
statement supplied by the fund's manager. In other cases, values
may be available through the fund being listed on an exchange or
via pricing sources such as Bloomberg.
Unquoted investments are stated at fair value through profit or
loss as determined by using various valuation techniques, in
accordance with the International Private Equity and Venture
Capital Valuation Guidelines. These include using recent
arms-length market transactions between knowledgeable and willing
parties where available. The investment in the Company's subsidiary
undertaking is stated at fair value.
Gains and losses, arising from changes in fair value, are
included in net profit or loss for the period as a capital item in
the Income Statement and are ultimately recognised in the Capital
Reserves.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank, short-term
deposits and cash funds with an original maturity of three months
or less and are subject to an insignificant risk of changes in
capital value.
(f) Investment Income and return of capital
Dividends receivable on equity shares are recognised on the
ex-dividend date. Where no ex-dividend date is quoted, dividends
are recognised when the Company's right to receive payment is
established. UK dividends are stated net of related tax credits
where applicable, while overseas dividends and Real Estate
Investment Trusts' ("REIT") income are stated gross.
When an investee company returns capital to the Company, the
amount received is treated as a reduction in the book cost of that
investment and is classified as sale proceeds.
(g) Expenses
All expenses are accounted for on an accruals basis. Expenses
are charged through the revenue column of the Income Statement
except as follows:
(i) expenses which are incidental to the acquisition or disposal
of an investment are charged to the capital column of the Income
Statement; and
(ii) expenses are charged to the capital reserves, via the
capital column of the Income Statement, where a connection with the
maintenance or enhancement of the value of the investments can be
demonstrated.
(h) Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit before tax as reported in
the Income Statement, because it excludes items of income or
expenses that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
Company's liability for current tax is calculated using tax rates
that have been enacted or substantially enacted by the balance
sheet date.
Deferred taxation is the tax expected to be payable or
recoverable on differences between the carrying amounts of assets
and liabilities in the Financial Statements and the corresponding
tax bases used in the computation of taxable profit and is
accounted for using the balance sheet liability method. Deferred
tax liabilities are recognised for all taxable temporary
differences. Deferred tax assets are recognised to the extent it is
probable that taxable profits will be available, against which
deductible temporary differences can be utilised.
Approved Investment Trusts under s.1158 CTA 2010 are not liable
for taxation on capital gains.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable sufficient taxable profits will be available to allow all
or part of the asset to be recovered.
Deferred tax is calculated at the tax rates expected to apply in
the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the Income Statement, except
when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity or other
comprehensive income.
(i) Foreign Currencies
Transactions denominated in foreign currencies are recorded in
the local currency, at the actual exchange rates as at the date of
the transaction. Assets and liabilities denominated in foreign
currencies at the year end are reported at the rate of exchange
prevailing at the year end. Any gain or loss arising from a change
in exchange rates, subsequent to the date of the transaction, is
included as an exchange gain or loss in the capital or revenue
column of the Income Statement, depending on whether the gain or
loss is of a capital or revenue nature respectively.
(j) Reserves
Capital Reserves - Other
The following are credited or charged to this reserve via the
capital column of the Income Statement:
-- gains and losses on the disposal of investments;
-- exchange differences of a capital nature; and
-- expenses charged to the capital column of the Income
Statement in accordance with the above accounting policies.
Capital Reserves - Investment Holding Gains/(Losses)
The following are credited or charged to this reserve via the
capital column of the Income Statement:
-- increases and decreases in the valuation of investments held at the year end.
Revenue Reserves
The following are credited or charged to this reserve via the
revenue column of the Income Statement:
-- net revenue recognised in the revenue column of the Income Statement.
(k) Significant Judgements and Estimates
The key significant estimate to report, concerns the Company's
valuation of its holding in DV4 Ltd. This is explained in more
detail under Note 19 "Commitments and Contingencies". There are no
significant judgements.
(l) Adoption of new and revised standards
Accounting standards issued but not yet effective
Standards issued but not yet effective up to the date of
issuance of the Company's Financial Statements are listed below.
This listing of standards and interpretations issued are those the
Company reasonably expects will have an impact on disclosure,
financial position and/or financial performance, when applied at a
future date. The Company intends to adopt those standards (where
applicable) when they become effective.
-- IFRS 9 Financial Instruments - classification and measurement
of financial assets and financial liabilities as defined in IAS 39
(IASB effective date 1 January 2018).
-- Amendments to IAS 7 - Disclosure initiative Statement of Cash
Flows (effective date 1 January 2017).
-- Amendments to IAS 12 - Recognition of deferred tax assets for
unrealised losses (effective date 1 January 2017).
2 INCOME
Revenue Revenue
2017 2016
GBP000 GBP000
Income from quoted investments
UK dividends 1,701 1,754
Overseas and other dividends 4,254 4,102
Property income distributions 232 261
6,187 6,117
Other income
Interest receivable on AAA rated money
market funds 7 12
Total income 6,194 6,129
3 PORTFOLIO MANAGEMENT FEE
Revenue Revenue
2017 2016
GBP000 GBP000
Portfolio management fee 2,010 1,935
Total management fee 2,010 1,935
Note: Details of the portfolio management agreement are
disclosed in the Strategic Report - Service Providers.
4 OTHER EXPENSES
Revenue Revenue
2017 2016
GBP000 GBP000
Administration fees* 125 123
AIFM fees* 116 110
Directors' remuneration* 141 139
Auditor's remuneration for:
- audit of the Company's Annual Report 33 36
Fees payable to the Auditor for other
services:
- Audit Related Assurance Services:
review of the Half-Year Report 4 4
- all taxation advisory services - 5
Irrecoverable VAT on audit fees 7 9
Printing fees 38 34
Marketing 57 52
Registrar's fees 53 56
Banking charges* 146 147
Secretarial services 120 120
Other 283 242
1,123 1,077
*Denotes services that do not incur VAT. VAT on other costs,
where incurred, forms part of the irrecoverable VAT cost.
5 FINANCE COSTS
Revenue Revenue
2017 2016
GBP000 GBP000
Interest payable 2 0
2 0
6 TAXATION
Revenue Revenue
2017 2016
GBP000 GBP000
(a) Taxation on Ordinary Activities
UK Corporation Tax at 20% (2016: 20%) - -
(b) Factors affecting tax charge for
the year
Approved investment trusts are exempt
from tax on capital gains made by the
Trust. The tax charge for the year
is lower than the standard rate of
Corporation Tax in the UK of 20% (2016:
20%). The differences are explained
below:
2017 2016
GBP000 GBP000
Total profit/(loss) before taxation 55,745 (13,877)
Profit/(loss) multiplied by standard
rate of corporation tax 11,149 (2,775)
Effects of:
- Non-taxable capital (10,537) 3,398
- Non-taxable investment income (1,190) (1,171)
- Excess administration expenses unused 578 548
Current tax charge - -
(c) Provision for deferred taxation
There is no requirement to make a provision for deferred
taxation in the current or prior accounting year.
(d) Factors that may affect future tax charges
As at 31 March 2017 the Company had unutilised management
expenses and loan relationship deficits of GBP24,220,000 (2016:
GBP22,570,000). The expenses will only be utilised to the extent
that there is sufficient future taxable income, or if the tax
treatment of the capital gains made by the Company, or the
Company's investment profile, changes.
7 DIVIDS PAID
2017 2016
GBP000 GBP000
Amounts recognised as distributed to
shareholders in the year are as follows:
Second interim dividend for 2016 (paid
May 2016): 8.0p (2015: 8.0p) 1,920 1,920
First interim dividend for 2017 (paid
November 2016): 8.0p (2016: 8.0p) 1,920 1,920
3,840 3,840
Set out below are the total dividends paid and proposed in
respect of the current financial year, which is the basis on which
the requirements of s.1158 CTA 2010 are considered. The Company's
revenue available for distribution by way of dividend for the year
is GBP3,059,000 (2016: GBP3,117,000).
Revenue Revenue
2017 2016
GBP000 GBP000
First interim dividend for 2017 (paid
November 2016): 8.0p (2016: 8.0p) 1,920 1,920
Second interim dividend for 2017 (payable
May 2017): 8.0p (2016: 8.0p) 1,920 1,920
3,840 3,840
The Board has announced two interim dividends, each of 8.0p per
Ordinary and 'A' non-voting Ordinary share, relating to the year
ended 31 March 2018. No final dividend is proposed for the year
ended 31 March 2017.
8 RETURN ON ORDINARY SHARES (EQUITY)
Revenue Capital Total Revenue Capital Total
2017 2017 2017 2016 2016 2016
Returns per share 12.8p 219.5p 232.3p 13.0p (70.8)p (57.8)p
Returns
Revenue return per share is based on the revenue attributable to
equity shareholders of GBP3,059,000 (2016: GBP3,117,000).
Capital return per share is based on the capital profit
attributable to equity shareholders of GBP52,686,000 (2016: Loss of
GBP16,994,000).
Total return per share is based on the combination of revenue
and capital returns attributable to equity shareholders, amounting
to a net profit of GBP55,745,000 (2016: net loss of
GBP13,877,000).
Both revenue and capital return are based on 8,000,000 Ordinary
shares (2016: 8,000,000) and 16,000,000 'A' non-voting Ordinary
shares (2016: 16,000,000), in issue throughout the year.
9 INVESTMENT IN SUBSIDIARY
The Company owns 100% of the ordinary share capital and voting
rights of Consolidated Investment Funds Limited, an investment
dealing company, registered and operating in England. The fair
value at 31 March 2017 was GBP629,000 (2016: GBP629,000). During
the year to 31 March 2017, Consolidated Investment Funds Limited
was dormant and held no investments.
10 INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
Listed AIM & Unquoted 2017 2016
OFEX Total Total
GBP000 GBP000 GBP000 GBP000 GBP000
Cost at 1 April 2016 88,881 21,425 65,944 176,250 159,605
Investment holding gains/(losses)
at 1 April 2016 81,817 (13,514) 6,701 75,004 96,287
Valuation at 1 April
2016 170,698 7,911 72,645 251,254 255,892
Movements in the year:
Purchases at cost 32,282 - 17,025 49,307 29,371
Sales - proceeds (45,632) (536) (6,668) (52,836) (17,028)
Gains/(losses) on sales 8,203 (4,961) 992 4,234 4,302
Transferred from Listed
to Unquoted (3,129) - 3,129 0 0
Movement in investment
holding gains/(losses) 31,344 8,743 8,254 48,341 (21,283)
Valuation as at 31 March
2017 193,766 11,157 95,377 300,300 251,254
Cost 80,605 15,928 80,422 176,955 176,250
Investment holding gains/(losses) 113,161 (4,771) 14,955 123,345 75,004
193,766 11,157 95,377 300,300 251,254
2017 2016
GBP000 GBP000
Gains on sales 4,234 4,302
Movement in investment holding gains/(losses) 48,341 (21,283)
Gains/(losses) on investments held at
fair value through profit or loss 52,575 (16,981)
Transaction costs
During the year expenses were incurred in acquiring and
disposing of investments classified as fair value through profit or
loss. These have been expensed through capital and are included
within gains on investments in the Income Statement. The total
costs were as follows:
2017 2016
GBP000 GBP000
Purchases 13 8
Sales 35 14
48 22
11 SIGNIFICANT HOLDINGS
The Company's holdings of 10% or more of any class of shares in
investment companies and 20% or more of any class of shares in
non-investment companies are detailed below:
Exc. Minority Interest
Proft
after
Country Latest Total tax
of Class % of available capital for
incorporation of class audited and the
or registration capital held accounts reserves year
Ocean Wilsons Holdings
Limited Bermuda Ordinary 26.5 31.12.16 $535,343,000 $45,060,000
Consolidated Investment
Funds Limited UK Ordinary 100.0 31.03.15 GBP628,887 -
Ocean Wilsons Holdings Limited is included as part of the
investment portfolio in accordance with IAS 28 - Investment in
Associates.
The Company has material holdings in the following companies
which represent more than 3% of any particular class of equity
share capital:
Company Class % of class
of held
Capital
Work Group Plc Ordinary 5.6
Altitude Group Plc Ordinary 5.5
Helesi Plc Ordinary 3.8
All Leisure Group Plc Ordinary 3.6
Goals Soccer Centres Plc * Ordinary 3.0
*Note: At the time of signing of the Annual Report, Hansa Trust
no longer held more than 3% in this Company.
12 TRADE AND OTHER RECEIVABLES
2017 2016
GBP000 GBP000
Amounts due from brokers 2,397 -
Prepayments and accrued income 207 253
Cash committed to purchase SR Global
Fund Inc. Frontier Markets Class M 1,502
4,106 253
13 CASH AND CASH EQUIVALENTS
2017 2016
GBP000 GBP000
Cash at bank 295 116
Cash funds 3,764 4,912
4,059 5,028
14 TRADE AND OTHER PAYABLES
2017 2016
GBP000 GBP000
Due to subsidiary undertaking 629 629
Other creditors and accruals 356 331
985 960
15 CALLED UP SHARE CAPITAL
2017 2016
GBP000 GBP000
8,000,000 Ordinary shares of 5p 400 400
16,000,000 'A' non-voting Ordinary
shares of 5p 800 800
1,200 1,200
The 'A' non-voting Ordinary shares do not entitle the holders to
receive notices or to vote, either in person or by proxy, at any
general meeting of the Company, but in all other respects rank pari
passu with the Ordinary shares of the Company.
16 CAPITAL REDEMPTION RESERVEL
2017 2016
GBP000 GBP000
Balance at 31 March 300 300
17 RETAINED EARNINGS
Reserves Reserves
Revenue* Capital Capital Total Revenue* Capital Capital Total
- Other* - Investment retained - Other* - Investment retained
holding earnings holding earnings
profits** profits**
2017 2017 2017 2017 2016 2016 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Opening balance
at 1 April 3,642 175,430 75,003 254,075 4,365 171,141 96,286 271,792
Profit/(loss)
for the year 3,059 4,345 48,341 55,745 3,117 4,289 (21,283) (13,877)
Dividend paid (3,840) - - (3,840) (3,840) - - (3,840)
Closing balance
at 31 March 2,861 179,775 123,344 305,980 3,642 175,430 75,003 254,075
*These reserves are able to be distributed by way of
dividends.
**Where holding gains relate to liquid investments that can be
realised at their fair value, such gains are also
distributable.
18 NET ASSET VALUE
2017 2016
NAV per Ordinary and 'A' non-voting
Ordinary share 1,281.2p 1,064.9p
The NAV per Ordinary and 'A' non-voting Ordinary share is based
on the net assets attributable to equity shareholders of
GBP307,480,000 (2016: GBP255,575,000) and on 8,000,000 Ordinary
shares (2016: 8,000,000) and 16,000,000 'A' non-voting Ordinary
shares (2016: 16,000,000) in issue at 31 March 2017.
19 COMMITMENTS AND CONTINGENCIES
The Company has a commitment to DV4, an unquoted property
investment company. On 3 February 2017 the remaining GBP702,302 of
the commitment was drawn upon. As at 31 March 2017, the Company's
commitment was fully drawn and the interest free loan referred to
in past reports had been fully repaid (2016: undrawn commitment
GBP702,372). The holding in DV4 is held at a current valuation of
GBP11,849,000 (2016: GBP11,985,000). DV4 is valued using the most
recent estimated NAV as advised to the Company by DV4, adjusted for
any further drawdowns, distributions or redemptions between the
valuation date and 31 March 2017. The most recent valuation
statement was received on 3 February 2017. It is believed the value
of DV4 as at 31 March 2017 will not be materially different but
this valuation is based on historic valuations by DV4, does not
have a readily available third party comparator and, as such, is an
estimate.
20 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Company's financial instruments comprise securities, cash
balances, debtors and creditors. All financial assets and
liabilities are either carried in the Balance Sheet at their fair
value, or the Balance Sheet amount is a reasonable approximation of
fair value.
Risk Objectives and Policies
The objective of the Company is to achieve growth of shareholder
value commensurate with the risks taken, bearing in mind that the
protection of long-term shareholder value is paramount. The policy
of the Board is to provide a framework within which the Portfolio
Manager can operate and deliver the objectives of the Company. In
pursuing its investment objective, the Company is exposed to a
variety of risks that could result in either a reduction in the
Company's net assets and/or a reduction of the profits available
for dividends.
These risks include those identified by the accounting standard
IFRS 7, being market risk (comprising currency risk, interest rate
risk and other price risk), liquidity risk and credit risk. The
Directors' approach to the management of these are set out below.
The Board, in conjunction with the Portfolio Manager and Company
Secretary, oversees the Company's risk management.
The objectives, policies and processes for managing the risks
and the methods used to measure them are set out below; these have
not changed from the previous accounting period.
Risks Associated with Financial Instruments
Foreign currency risk
Foreign currency risks arise in two distinct areas which affect
the valuation of the investment portfolio. 1) the direct exposure
where an investment is denominated and paid for in a currency other
than Sterling; and 2) the indirect exposure where an investment has
substantial non-Sterling underlying investment and/or cash flows.
The Company does not normally hedge against foreign currency
movements affecting the value of the investment portfolio, but
takes account of this risk when making investment decisions. Some
of the fund investments into which the Company invests will, in
part or in whole, hedge some of their underlying currency risk but
this will be known at the time of investment and will form part of
the investment decision. In those cases, the hedging will not
remove the exposure to the underlying country or market sector. The
Portfolio Manager monitors the effect of foreign currency
fluctuations through the pricing of the investments by the various
markets.
Direct No direct Total Direct No direct Total
foreign foreign foreign foreign
currency currency currency currency
risk risk risk risk
2017 2017 2017 2016 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Investments 55,018 244,653 299,671 27,566 223,059 250,625
Investment in subsidiary - 629 629 - 629 629
Other receivables
including prepayments - 4,106 4,106 - 253 253
Cash at bank - 4,059 4,059 - 5,028 5,028
Current liabilities - (985) (985) - (960) (960)
55,018 252,462 307,480 27,566 228,009 255,575
Note: Direct foreign currency risk includes direct exposure to
USD and Euro currencies.
Interest rate risk
Interest rate movements may affect the level of income
receivable on cash deposits and the interest payable on the
Company's variable rate borrowings.
The Company has banking facilities amounting to GBP30m (2016:
GBP30m) which are available for the Portfolio Manager to use in
purchasing investments; the costs of which are based on the
prevailing LIBOR rate, plus an agreed margin. The Company does not
normally hedge against interest rate movements affecting the value
of the investment portfolio, but takes account of this risk when an
investment is made utilising the facility. The level of banking
facilities used is monitored by both the Board and the Portfolio
Manager on a regular basis. The impact on the returns and net
assets of the Company for every 1% change in interest rates, based
on the amount drawn down at the year end under the facility, would
be GBPnil (2016: GBPnil). The level of banking facilities utilised
at 31 March 2017 was GBPnil (2016: GBPnil).
Interest rate changes usually impact equity prices. The level
and direction of change in equity prices is subject to prevailing
local and world economic conditions as well as market sentiment,
all of which are very difficult to predict with any certainty. The
Company has floating rate financial assets, consisting of bank
balances and cash funds that have received average rates of
interest during the year of 0.0% on bank balances.
Cash No Total Cash No Total
flow interest flow interest
interest rate interest rate
rate risk 2017 rate risk 2016
risk 2017 GBP000 risk 2016 GBP000
2017 GBP000 2016 GBP000
GBP000 GBP000
Investments - 299,671 299,671 - 250,625 250,625
Investment in subsidiary - 629 629 - 629 629
Other receivables
including prepayments - 4,106 4,106 - 253 253
Cash at bank 4,059 - 4,059 5,028 - 5,028
Current liabilities - (985) (985) - (960) (960)
4,059 303,421 307,480 5,028 250,547 255,575
Other price risk
By the nature of its activities, the Company's investments are
exposed to market price fluctuations. NAV is calculated and
reported daily to the London Stock Exchange. The Portfolio Manager
and the Board monitor the portfolio valuation on a regular basis
and consideration is given to hedging the portfolio against large
market movements.
The Company's investment in Ocean Wilsons is large both in
absolute terms, GBP94.5m as valued at 31 March 2017 (2016:
GBP69.0m) and as a proportion of the NAV, 30.7% (2016: 27.1%).
Shareholders should be aware that if anything of a severe and
untoward nature were to happen to this company, it could result in
a significant impact on the NAV and share price. However, it should
also be noted that the exposure of Hansa Trust to the currency,
country and market based risk exposure of Ocean Wilsons is, to an
extent, mitigated by the diverse nature of the two investments
within Ocean Wilsons. Wilson Sons, corresponding to 65.7% of Ocean
Wilsons' NAV, has a direct exposure to the Brazilian economy,
whereas Ocean Wilsons Investments is not exposed to Brazil and
corresponds to the other 34.3%. It is an investment the Board pays
close attention to and it should be pointed out that the risks
associated with it are very different from those of the other
companies represented in the portfolio. The Board itself regularly
undertakes a thorough review of its business and prospects and has
determined that its future holds a lot of promise. As a consequence
the Board believes the risk involved in the investment is
worthwhile.
The performance of the portfolio as a whole is not designed to
correlate with that of any market index. Should the portfolio of
the Company rise or fall in value by 10% from the year end
valuation, the effect on the Company's profit and equity would be
an equal rise or fall of GBP30.1m (2016: GBP25.0m).
Credit Risk
The Company only transacts with regulated institutions on normal
market terms, which are trade date plus one to three days in the
case of equities. Fund investment settlement periods will vary from
fund to fund and are defined by the individual managers. The levels
of amounts outstanding from brokers and fund managers are regularly
reviewed by the Portfolio Manager. The duration of credit risk
associated with the investment transactions is the period between
the date the transaction took place, the trade date, the date the
stock and cash were transferred and the settlement date. The level
of risk during the period is the difference between the value of
the original transaction and its replacement with a new
transaction. The amounts due to/(from) brokers at 31 March 2017 are
shown in Note 12 and Note 14.
The Company's maximum exposure to credit risk on cash is GBP0.3m
(2016: GBP0.1m) and on cash funds is GBP3.8m (2016: GBP4.9m).
Surplus cash is on deposit with the Depositary/Custodian.
Liquidity Risk
The liquidity risk to the Company is that it is unable to meet
its obligations as they fall due, as a result of a lack of
available cash and an inability to dispose of investments in a
timely manner. A substantial proportion of the Company's portfolio
is held in liquid quoted investments; however, there is a large
holding in Ocean Wilsons of 30.7% (2016: 27.1%); there are holdings
in AIM and unquoted equity investments of 7.6% (2016: 7.8%) and
there are investments into open-ended investment funds with varying
liquidity terms of 43.8% (2016: 40.7%).
The Portfolio Manager takes into consideration the liquidity of
each investment when purchasing and selling, in order to maximise
the returns to shareholders, by placing suitable transaction levels
into the market. Special consideration is given to investments
representing more than 5% of the investee company. A detailed list
of the investments, split by silo, held at 31 March 2017 is shown
on in the Strategic Report. This can be used broadly to ascertain
the levels of liquidity within the portfolio, although liquidity
will vary with each investment - particularly the funds.
The Company has no financial liabilities at 31 March 2017
arising from its bank loan facility (2016: GBPnil). This loan is
part of a total revolving credit facility with BNP of GBP30m (2016:
GBP30m) that would bear interest based on the prevailing LIBOR
rate, plus an agreed margin. The facility is a committed facility
repayable on or before 30 March 2018 and subject to a covenant
requirement of a minimum adjusted NAV of GBP80m. The Company has
undrawn loans from this facility of GBP30m (2016: GBP30m). The
Company holds this facility for use at short notice for its
investment activities. If fully drawn the loan would form 10.0%
(2016: 12.0%) of the current value of the investment portfolio.
Capital Management
The Company considers its capital to be its issued share capital
and reserves and whilst the Company has access to loan facilities
it is not considered or used as core capital, but primarily to meet
the cash timing requirements of opportunistic investment strategies
and thereby enhance shareholder returns. The Board regularly
monitors its share discount policy and the level of discounts and
whilst it has the option to repurchase shares, it considers the
best means of attaining a good rating for the shares is to
concentrate on good shareholder returns.
However, the Board believes the ability of the Company to
repurchase its own 'A' non-voting Ordinary shares in the market may
potentially enable it to benefit all equity shareholders of the
Company. The repurchase of 'A' non-voting Ordinary shares, at a
discount to the underlying NAV, would enhance the NAV per share of
the remaining equity shares and might also enable the Company to
address more effectively any imbalance between supply and demand
for the Company's 'A' non-voting Ordinary shares.
21 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Fair Value Hierarchy
IFRS 13 'Fair Value Measurement' requires an entity to classify
fair value measurements using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements. The
fair value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
that are observable for the assets or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability not based on
observable market data (unobservable inputs).
The financial assets and liabilities, measured at fair value, in
the statement of financial position, grouped into the fair value
hierarchy and valued in accordance with the accounting policies in
Note 1, are detailed below:
Level Level Level
1 2 3 Total
31 March 2017 GBP000 GBP000 GBP000 GBP000
Financial assets at fair
value through profit or
loss
Quoted equities 147,035 - - 147,035
Unquoted equities - - 11,860 11,860
Fund investments 5,167 135,609 - 140,776
Investment in subsidiary - - 629 629
Net fair value 152,202 135,609 12,489 300,300
Level Level Level
1 2 3 Total
31 March 2016 GBP000 GBP000 GBP000 GBP000
Financial assets at fair
value through profit or
loss
Quoted equities 131,433 - - 131,433
Unquoted equities - - 11,985 11,985
Fund investments - 107,207 - 107,207
Investment in subsidiary - - 629 629
Net fair value 131,433 107,207 12,614 251,254
There have been no transfers during the year between levels 1
and 2.
The Company's policy is to recognise transfers into and out of
the different fair value hierarchy levels at the date the event or
change in circumstances that caused the transfer occurred.
A reconciliation of fair value measurements in Level 3 is set
out in the following table:
2017 2016
Equity Equity
investments investments
GBP000 GBP000
Opening Balance 12,614 11,959
Transferred from Level 1 3,129 -
Purchases 702 -
Sales (700) (550)
Total gains or losses included in gains
on investments in the Income Statement:
- on assets sold 700 550
- on assets held at year end (3,956) 655
Closing Balance 12,489 12,614
As at 31 March 2017, the investment in DV4 has been classified
as Level 3. The investment has been valued using the most recent
estimated NAV as advised to the Company by DV4, adjusted for any
further drawdowns, distributions or redemptions between the
valuation date and 31 March 2017. The most recent valuation
statement was received on 3 February 2017. It is believed the value
of DV4 as at 31 March 2017 will not be materially different. If the
value of the investment was to increase or decrease by 10%, while
all other variables remained constant, the return and net assets
attributable to shareholders for the year ended 31 March 2017 would
have increased or decreased by GBP1,184,900.
22 RELATED PARTIES
Details of the relationship between the Company and Hansa
Capital Partners LLP, including amounts paid during the year and
owing at 31 March 2017, are disclosed in the Strategic Report -
Shareholder Profile and Engagement and in Note 3. Details of the
relationship between the Company and the Directors, including
amounts paid during the year to 31 March 2017, are disclosed in the
Strategic Report - The Board and also in the Directors'
Remuneration Report.
The Company has one subsidiary, Consolidated Investment Funds
Limited, which is dormant. Alex Hammond-Chambers and William
Salomon are directors of CIFL as well as Hansa Trust. There is an
interest-free intercompany loan from CIFL to its parent of
GBP629,000. The Board considers that the par value and fair value
of the loan to be GBP629,000 as it is repayable on demand and does
not have a fixed term. CIFL does not maintain a bank account and
so, in previous years, the Company has paid any costs incurred by
CIFL adjusting the intercompany loan accordingly. During the
current year, CIFL has not incurred any costs and so no changes to
the intercompany loan have occurred.
23 CONTROLLING PARTIES
At 31 March 2017 Victualia Limited Partnership and Nomolas Ltd
each held 25.9% of the issued Ordinary shares. Additional
information is disclosed in the Strategic Report - Substantial
Shareholders.
Notice of the Annual General Meeting
Notice is hereby given that the Annual General Meeting of Hansa
Trust PLC will be held at The Washington Mayfair Hotel, 5 Curzon
Street, London W1J 5HE on 28 July 2017 at 11.00am, for the
following purposes:
Ordinary Business
1 To receive and consider the audited Financial Statements and
the Reports of the Directors and Auditor for the year ended 31
March 2017.
2 To re-elect Alex Hammond-Chambers (a biography and Board
endorsement can be found in "The Board" section above) as a
Director of the Company.
3 To re-elect Jonathan Davie (a biography and Board endorsement
can be found in "The Board" section above) as a Director of the
Company.
4 To re-elect Raymond Oxford (a biography and Board endorsement
can be found in "The Board" section above) as a Director of the
Company.
5 To re-elect William Salomon (a biography and Board endorsement
can be found in "The Board" section above) as a Director of the
Company.
6 To re-elect Geoffrey Wood (a biography and Board endorsement
can be found in "The Board" section above) as a Director of the
Company.
7 To approve the Directors' Remuneration Report.
8 To approve the Directors' Remuneration Policy and authorise
the Board to determine the remuneration of the Directors.
9 To re--appoint Grant Thornton LLP as Auditor of the Company
and to authorise the Directors to determine the remuneration of the
Auditor.
Special Business
To consider, and if thought fit, pass the following resolutions
which will be proposed as special resolutions:
Authority to repurchase up to 14.99% of the 'A' non-voting
Ordinary shares of 5p each in the issued shares capital of the
Company (the "Shares").
10 THAT the Company be and hereby is unconditionally authorised,
in accordance with s.701 of the Companies Act 2006, to make market
purchases up to an aggregate of 2,398,400 shares at a price
(exclusive of expenses) which is:
a) not less than 5p per share; and
b) not more than the higher of: i) 5% above the average of the middle-market quotations (as derived from and calculated by reference to the Daily Official List of the London Stock Exchange) for 'A' non-voting Ordinary shares of 5p each in the five business days immediately preceding the day on which the share is purchased; and ii) the higher of the last independent trade and the then current highest independent bid.
AND
THAT the authority conferred by this resolution shall expire on
the date of the next AGM (except in relation to the purchase of
shares, the contract for which was concluded before such date and
which might be executed wholly or partly after such date) unless
the authority is renewed or revoked at any other general meeting
prior to such time.
11 THAT the period of notice required for general meetings of
the Company (other than AGMs) shall be not less than 14 days.
By order of the Board
Hansa Capital Partners LLP
Company Secretary
22 June 2017
Notes
1 Ordinary shareholders, proxies and authorised representatives
of corporations which are ordinary shareholders, are entitled to
attend the meeting. To be entitled to attend and vote at the
meeting (and for the purpose of the determination by the Company of
the number of votes they may cast), members must be entered on the
Company's register of members by close of business on 26 July 2017
('the specified time') pursuant to Regulation 41 of the Uncertified
Securities Regulations 2001. Changes to the register of members
after the relevant deadline shall be disregarded in determining the
rights of any person to attend and vote at the meeting.
2 If the meeting is adjourned to a time not more than 48 hours
after the specified time applicable to the original meeting, that
time will also apply for the purpose of determining the entitlement
of members to attend and vote (and for the purpose of determining
the number of votes they may cast) at the adjourned meeting. If,
however, the meeting is adjourned for a longer period then, to be
so entitled, members must be entered on the Company's register of
members at the time which is 48 hours before the time fixed for the
adjourned meeting or, if the Company gives notice of the adjourned
meeting, at the time specified in that notice.
3 A member entitled to attend and vote and present in person or
by proxy, shall have one vote on a show of hands. On a vote by poll
every member entitled to vote shall have one vote for every
Ordinary share of which he/she is the holder.
4 A member entitled to attend and vote at this meeting is
entitled to appoint one or more proxies to attend and, upon a poll,
to vote instead of him/her provided that each proxy is appointed to
exercise the rights attached to a different share or shares held by
that member. A proxy need not also be a member. To appoint more
than one proxy, the proxy form should be photocopied and completed
for each proxy holder. The proxy holder's name should be written on
the proxy form together with the number of shares in relation to
which the proxy is authorised to act. All proxy forms should be
enclosed in the same envelope.
5 In the case of joint holders, where more than one of the joint
holders purports to appoint a proxy, only the appointment submitted
by the most senior holder will be accepted. Seniority is determined
by the order in which the names of the joint holders appear in the
register of members in respect of the joint holding (the
first-named being the most senior).
6 To be valid any proxy form or other instrument appointing a
proxy must be received by post (during normal business hours only),
or by hand at Capita Asset Services, PXS, 34 Beckenham Road,
Beckenham, Kent BR3 4TU, or a proxy can be lodged electronically at
www.capitashareportal.com, in each case no later than 11.30am on 26
July 2017.
7 The return of a completed Proxy Form, other such instrument or
any CREST Proxy Instruction (as described overleaf) will not
prevent a shareholder from attending the Annual General Meeting and
voting in person if he/she wishes to do so.
8 Any corporation which is a member can appoint one or more
corporate representatives, who may exercise on its behalf all of
its powers as a member provided they do not do so in relation to
the same shares.
9 As at 22 June 2017 (being the last practicable date prior to
the publication of this Notice) the Company's issued share capital
consists of 8,000,000 Ordinary shares of 5p each, carrying one vote
each. Therefore, the total voting rights in the Company as at 22
June 2017 are 8,000,000.
10 CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so by using
the procedures described in the CREST Manual. CREST personal
members or other CREST sponsored members and those CREST members
who have appointed a service provider(s), should refer to their
CREST sponsor or voting service provider(s), who will be able to
take the appropriate action on their behalf.
11 In order for a proxy appointment or instruction made using
the CREST service to be valid, the appropriate CREST message (a
"CREST Proxy Instruction") must be properly authenticated in
accordance with Euroclear UK & Ireland Limited's specifications
and must contain the information required for such instruction, as
described in the CREST Manual (available via
www.euroclear.com/CREST). The message, regardless of whether it
constitutes the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy must, in order to
be valid, be transmitted so as to be received by the issuer's agent
ID RA10 by 11.30am on 26 July 2017. For this purpose, the time of
receipt will be taken to be the time (as determined by the time
stamp applied to the message by the CREST Application Host) from
which the issuer's agent is able to retrieve the message by enquiry
to CREST, in the manner prescribed by CREST. After this time any
change of instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
12 CREST members and, where applicable, their CREST sponsors, or
voting service providers should note that Euroclear UK &
Ireland Limited does not make available special procedures in CREST
for any particular message. Normal system timings and limitations
will, therefore, apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal
member, or sponsored member, or has appointed a voting service
provider, to procure that his CREST sponsor or voting service
provider(s) take(s)) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting system providers are
referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and
timings.
13 The Company may treat as invalid a CREST Proxy Instruction in
the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
14 Any member entitled to attend, vote or their duly appointed
representative attending the meeting, has the right to ask
questions. In accordance with s.319A of the Companies Act 2006, the
Company must cause to be answered any such question relating to the
business being dealt with at the meeting but no such answer may be
given if: (a) to do so would interfere unduly with the meeting or
involve the disclosure of confidential information; (b) the answer
has already been given on a website in the form of an answer to a
question; or (c) it is undesirable in the interests of the Company
or the good order of the meeting that the question be answered.
15 A copy of this notice, and other information required by
s.311A of the Companies Act 2006, can be found at
www.hansatrust.com.
16 The following documents will be available for inspection at
the registered office of the Company during usual business hours on
any business day (except public holidays) until the date of the AGM
and at the place of the AGM for a period of 15 minutes prior to and
during the meeting:
a) a copy of the current Articles of Association; and
b) a copy of all Directors' Service Contracts.
17 A person to whom this notice is sent who is a person
nominated under s.146 of the Companies Act 2006 to enjoy
information rights (a 'Nominated Person') may, under an agreement
between him/her and the shareholder by whom he/she was nominated,
have a right to be appointed (or to have someone else appointed) as
a proxy for the AGM. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it, he/she may,
under any such agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights. The statements of
the rights of members in relation to the appointment of proxies in
AGM Notice Notes 1 and 2 above do not apply to a Nominated Person.
The rights described in those Notes can only be exercised by
registered members of the Company entitled to attend and vote at
the meeting.
A person authorised by a corporation is entitled to exercise (on
behalf of the corporation) the same powers as the corporation could
exercise if it were an individual member of the Company (provided,
in the case of multiple corporate representatives of the same
corporate shareholder, they are appointed in respect of different
shares owned by the corporate shareholder or, if they are appointed
in respect of those same shares, they vote those shares in the same
way). To be able to attend and vote at the meeting, corporate
representatives will be required to produce, prior to their entry
to the meeting, evidence satisfactory to the Company of their
appointment.
On a vote on a resolution on a show of hands, each authorised
person has the same voting rights to which the corporation would be
entitled. On a vote on a resolution on a poll, if more than one
authorised person purports to exercise a power in respect of the
same shares:
a) if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way; and
b) if they do not purport to exercise the power in the same way
as each other, the power is treated as not exercised.
18 Members should note it is possible, pursuant to requests made
by members of the Company under s.527 of the Companies Act 2006
(the "Act"), the Company may be required to publish on a website a
statement setting out any matter relating to:
a) the audit of the Company's Accounts (including the Auditor's report and the conduct of the audit) that are to be laid before the AGM; or
b) any circumstances connected with an auditor of the Company ceasing to hold office since the previous meeting at which Annual Accounts and Reports were laid in accordance with s.437 of the Act. The Company may not require the members requesting any such website publication to pay its expenses in complying with s.527 or 528 of the Act. Where the Company is required to place a statement on a website under s.527 of the Act, it must forward the statement to the Company's Auditor no later than the time when it makes the statement available on the website. The business which may be dealt with at the AGM includes any statement the Company has been required under s.527 of the Act to publish on a website.
Investor Information
The Company currently manages its affairs so as to be a
qualifying investment trust for ISA purposes, for both the Ordinary
and 'A' non-voting Ordinary shares. It is the present intention
that the Company will conduct its affairs so as to continue to
qualify for ISA products. In addition, the Company currently
conducts its affairs so that the shares issued by Hansa Trust PLC
can be recommended by independent financial advisers to ordinary
retail investors, in accordance with the FCA's rules in relation to
non-mainstream investment products and intends to continue to do so
for the foreseeable future. The shares are excluded from the FCA's
restrictions which apply to non-mainstream investment products,
because they are shares in an investment trust. Finally, Hansa
Trust is registered as a Reporting Financial Institution with the
US IRS for FATCA purposes and complies with its reporting
requirements under FATCA, C-DOT and CRS regimes.
Investor Disclosure
The Company's AIFM, Maitland Institutional Services Limited,
hosts a Hansa Trust Investor Disclosure document on their website.
The document is a regulatory requirement and summarises key
features of the Company for investors. It can be viewed at:
https://www.maitlandgroup.com/wp-content/uploads/2016/10/Hansa-Investor-Disclosure-Document-2017.pdf
Capital Structure
The Company has 8,000,000 Ordinary shares of 5p each and
16,000,000 'A' non-voting Ordinary shares of 5p each in issue. The
Ordinary shareholders are entitled to one vote per Ordinary share
held. The 'A' non-voting Ordinary shares do not entitle the holders
to vote or receive notice of meetings, but in all other respects
they have the same rights as the Company's Ordinary shares.
Contact Details
Hansa Trust PLC
50 Curzon Street, London W1J 7UW
Telephone: +44 (0) 207 647 5750
Fax: +44 (0) 207 647 5770
Email: hansatrustenquiry@hansacap.com
Website: www.hansatrust.com
The Company's website includes the following:
- Monthly factsheets
- Stock Exchange announcements
- Details of the board statements
- Annual and Half-Year Reports
- Share price data reports
- Peer group listing
Please contact the Portfolio Manager, as below, if you have any
queries concerning the Company's investments or performance.
Hansa Capital Partners LLP
50 Curzon Street
London W1J 7UW
Telephone: +44 (0) 207 647 5750
Email: hansatrustenquiry@hansacap.com
Website: www.hansagrp.com
Please contact the Registrars, as below, if you have a query
about a certificated holding in the Company's shares.
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: 0871 664 0300
(Calls cost 12p per minute plus your phone company's access
charge. If you are outside the United Kingdom, please call +44 371
664 0300. Calls outside the United Kingdom will be charged at the
applicable international rate. We are open between 9.00am - 5.30pm,
Monday to Friday excluding public holidays in England and
Wales.
Email: shareholderenquiries@capita.co.uk
www.capitaregistrars.com
Share Price Listings
The price of your shares can be found on our website and in the
Financial Times under the heading Investment Companies.
In addition, share price information can be found under the
following:
ISIN Code
Ordinary shares GB0007879728
'A' non-voting Ordinary shares GB0007879835
SEDOL
Ordinary shares 787972
'A' non-voting Ordinary shares 787983
Reuters
Ordinary shares HAN.L
'A' non-voting Ordinary shares HANA.L
Bloomberg
Ordinary shares HAN LN
'A' non-voting Ordinary shares HANA LN
SEAQ
Ordinary shares HAN
'A' non-voting Ordinary shares HANA
Legal Entity Identifier: 213800AIF87JWGLA1L74
Useful Internet Addresses
Association of Investment Companies www.theaic.co.uk
London Stock Exchange www.londonstockexchange.com
TrustNet www.trustnet.com
Interactive www.iii.co.uk
Morningstar www.morningstar.com
Edison www.edisongroup.com
Financial Calendar
Company year end 31 March
Annual Report sent to shareholders 27 June
Annual General Meeting 28 July
Half-Year Report sent to shareholders December
Interim dividend payments November & May
Company Information
Registered in England & Wales number: 00126107
BOARD OF DIRECTORS
Alex Hammond-Chambers
Jonathan Davie
Raymond Oxford
William Salomon
Geoffrey Wood
COMPANY SECRETARY AND REGISTERED OFFICE
Hansa Capital Partners LLP
50 Curzon Street
London W1J 7UW
PORTFOLIO MANAGER
Hansa Capital Partners LLP
50 Curzon Street
London W1J 7UW
AUDITOR
Grant Thornton UK LLP
30 Finsbury Square
London EC2P 2YU
SOLICITORS
Maclay Murray & Spens LLP
One London Wall
London EC2Y 5AB
REGISTRAR
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
DEPOSITARY
BNP Paribas Securities Services
10 Harewood Avenue
London NW1 6AA
STOCKBROKER
Winterflood Investment Trusts
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London EC4R 2GA
ADMINISTRATOR
Maitland Administration Services Limited
Springfield Lodge
Colchester Road
Chelmsford
Essex CM2 5PW
ALTERNATIVE INVESTMENT FUND MANAGER
Maitland Institutional Services Limited
Springfield Lodge
Colchester Road
Chelmsford
Essex CM2 5PW
Hansa Trust PLC
50 Curzon Street
London
W1J 7UW
T : +44 (0) 207 647 5750
F : +44 (0) 207 647 5770
E : hansatrustenquiry@hansacap.com
Visit us at
www.hansatrust.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUBUQUPMGAP
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June 22, 2017 11:20 ET (15:20 GMT)
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