TIDMHAN TIDMHAN TIDMHANA
RNS Number : 1025D
Hansa Trust PLC
21 June 2019
Hansa, investing to create
long-term growth
Annual Report
For the year ended
31 March 2019
Welcome
Welcome to the Hansa Trust PLC Annual Report for the year to 31
March 2019.
Your Company has had a good year with a further increase in the
net asset value despite the political and economic turmoil both
closer to home in the UK and further afield.
I would also like to take this opportunity, on behalf of the
Board, to invite you to the Company's Annual General Meeting at
1.00pm on 29 July 2019 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.
Yours sincerely
THIS DOCUMENT IS IMPORTANT and if you are a holder of Ordinary
shares it requires your immediate attention. If you are in doubt as
to the action you should take or the contents of this document, you
should seek advice from an independent financial advisor,
authorised 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.
Chairman's Report to the Shareholders
ALEX HAMMOND--CHAMBERS
Chairman
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.
Long-term Returns: THE GREAT BULL MARKET (2009 TO 2019 and still
running)
The Net Asset Value (total return): Ten years: + 157.3%
Five Years: + 25.5%
Shareholders entrust the Board and the investment manager to
earn good returns over the long-term. We usually use five years for
determining whether it has been achieved and we compare the returns
against our three key performance indicators ("KPIs") - being the
returns on UK government stocks, inflation and a world equity
index. The Board is accountable to shareholders for achieving those
returns and so that is what this statement focuses on. Alec
Letchfield's Portfolio Manager's Report focuses on the year's
returns and the circumstances surrounding them.
We have enjoyed a quite extraordinarily extended bull market
over the last ten years, the start of which heralded the end of the
equity bear market brought about by the 2007/09 financial crisis.
We thought it might be interesting to look back over these last ten
years (as well as the last five years), putting in perspective what
has happened.
America's S&P 500 Composite Index, has led the way, having
increased over the past ten years at the rate of 13.5% per annum -
driven by rising profits (accounting for 12.5% of the increase) and
by an increase in the valuation of the Index (accounting for 1% of
the increase). However, after the payment of dividends, the Index
has risen by circa 16% per annum (c. 17% in Sterling terms). These
are, by most historical standards, extraordinary returns and
reflect the very favourable conditions equity markets have enjoyed
over the period, boosted by very easy monetary conditions and
rising corporate profits, in turn driven importantly by rising
corporate profit margins.
Ten Years to March Sterling Return
2019
USA (S&P Comp) 17.0% p.a.
UK (FTSE A-s) 11.1% p.a.
World (MSCI World) 13.5% p.a.
Brazil (BOVESPA) 4.3% p.a.
Returns from other parts of the developed world have tended not
to match those in America (they don't have the large tech companies
which have so driven American equity market values) but even so
they have benefited from much the same influences - rising profits
and price earnings ratios. As the table reflects, in the case of
Brazil, the equity markets of emerging markets haven't fared as
well, bogged down by politics, commodity and currency
weaknesses.
It has been - and may continue to be - a golden age for equities
driven by the benefits globalisation has brought upon corporations
and the profits they have earned. While there is concern amongst
investors about valuation levels, the fact remains that equity
markets have been driven up by rising corporate profits, with
valuations not hugely higher than they were ten years ago. That may
or may not provide some protection to markets in the event of any
untoward developments.
Over the past five Years
The statistics in the table below are the ones that the Board of
Directors focuses on in assessing the progress of the Company.
First and foremost, as we aim to do, we continue to produce
positive total returns over five year periods, as seen below.
The next table shows the raw statistics for the last five
years:
Capital Total
31 31 Return Return
Mar Mar
14 19
NAV per share 1,197.4p 1,405.6p +17.4% +25.5%
NAV per share
(excl. OWHL) 770.7p 969.1p +25.7%
OWHL per Hansa
Trust share 426.7p 436.5p +2.3%
KPIs
FTSE UK Gilts
All Stocks TR
Index +30.7%
UK CPI Inflation +7.3%
MSCI ACWI NR
(GBP) 109.7 192.5 +75.5%
Share
Prices Ord Shs 879.3p 977.5p +11.2% +21.9%
'A' Ord
shs 877.5p 975.0p +11.1% +22.1%
Discounts Ord Shs -26.6% -30.5%
'A' Ord
shs -26.7% -30.6%
It was just over five years ago that we adjusted the portfolio
by coming out of our holdings in big blue chip UK companies and
focusing our international exposure rather more sharply in certain
selected funds. It took us a year or so to change the portfolio, so
that in a year's time we will make our first five year assessment
of the new portfolio. As the table shows, our progress has been
hindered by the returns from our strategic holding in Ocean
Wilsons, albeit its Brazilian subsidiary has continued to build its
business and the politics of Brazil look somewhat more promising
now than they have at any time in the last five years.
Shareholders will be aware that we have embarked upon a course
of building investor awareness of the Hansa Trust story, as part of
our programme to reduce the discount from its relatively high
levels. While there are now a number of new shareholders on board,
it will take time to build sufficient buying to bring the discount
down. The key to success will be the returns we earn.
The 2019 Annual General Meeting
To be held at 1.00pm on Monday 29 July at the Washington Mayfair
Hotel, Curzon Street, London.
The agenda for the Annual General Meeting consists of the normal
proposals for shareholders. We always have an excellent turnout at
our AGMs and I do encourage all shareholders who can attend to come
and join us. We receive plenty of questions, comments and advice at
the meetings, all of which are recorded and subsequently discussed
by the Directors.
Shareholders may note that there is no proposal for a final
dividend, which is because the two equal interim dividend payments
for the year of 8p each, totalling 16p (the same as last year) have
already been announced and paid.
While the Annual Report and the Annual General Meeting each year
serve the purpose of providing information about the Company and
its progress, I do encourage shareholders to stay in touch with
their investment by visiting the website (www.hansatrust.com) from
time to time. It contains a lot of information and updates
occurring during the course of the year and helps, I believe, give
shareholders an extra understanding of the progress of the
Company.
At the Annual General Meeting, the Board will present a
resolution to shareholders to appoint PricewaterhouseCoopers LLP
("PwC") as the Company's Auditor. Regulation now provides that
there has to be rotation of Auditor every ten years, which means
that Grant Thornton must stand down as Auditor. On behalf of
shareholders I would like to thank the firm for its work over many
years, work that is essential to the confidence of shareholders in
the Company's business.
Packaged Retail Investment and Insurance Based Products
("PRIIP")
In an attempt to provide would-be investors with information
about potential investment funds, the FCA has determined each such
fund and each class of share in such fund should provide a "Key
Investment Document" ("KID"). This provides investors with certain
basic investment information to help him/her make an informed
decision about making an investment. Unfortunately, the FCA-defined
method behind the production of the numbers has attracted a certain
amount of controversy, because the numbers produced don't always
appear logical. In looking at our two KIDs (one for each class of
our shares), we would suggest that shareholders/investors
scrutinise a broad range of information about Hansa Trust,
including that posted on our website in making any assessment about
Hansa Trust as an investment.
Domicile
The Board announced at the end of 2018 that it was considering
re-domiciling the Company to an alternative jurisdiction. The Board
has consulted with shareholders and believes there is broad support
for this approach. The Company has continued to work with its
advisers to form a proposal to be put to shareholders and an update
is expected to be released over the coming weeks.
Prospects
Instead of trying to assess the potential impact of the various
matters that affect financial markets (which I have always done in
the past and of which we are all very uncertain), I would like to
dwell on two aspects of the Company's prospects (wherever
domiciled) - the political dynamic of capitalism and its effect on
investing and the unusual (even unique maybe) investment trust that
is Hansa Trust Plc.
The politics of capitalism is changing, not necessarily in
favour of equity investors. At the end of the 1970s, Margaret
Thatcher and Ronald Reagan became the leaders of the UK and USA and
instigated a global revolution in the politics of capitalism which
has lasted ever since. The new politics promoted free trade and
globalisation and the global economy took off. However, the 2007/09
financial crisis has subsequently provoked political doubts about
capitalism and its siblings, free trade and globalisation and
whether it serves the few rather than the many. Over the last 40 or
so years investors have forgotten that politics sets the economic
agenda and thence outcome.
The role of companies within our societies is now undergoing
great scrutiny and change. To begin with, corporate governance is
no longer just about looking after the interests of shareholders
but rather about regulatory compliance ("G") and promoting the
interests of other stakeholders, including the community and the
environment ("E") and customers/clients and those who work for the
company ("S") (a.k.a. ESG). And, I venture to say, the taxes
companies pay. There is a cost to all of this; it will probably
result in a secular decline in profit margins.
Although over 90% of our investments are outside the UK, I
should comment on the political chaos (as I write) within the UK.
Brexit has divided our country, bitterly it seems, into Remainers
and Leavers - replacing, for the moment at least, the political
rivalry between Conservatives and Labour. It is not that losing
preferential trading rights with the European Union will
necessarily do unmanageable damage to the wider UK economy, but
rather the extraordinary political uncertainty that the inept
management of Brexit has created. We have no idea whether we are
going to live and work in a largely capitalist or an extremely
socialist (some say bordering on communist) economy. That's pretty
fundamental to investing.
This change in the politics of capitalism, the electoral chaos
now at large in many democratic developed countries, the
technologies' revolutions and the ever growing global debt mountain
is making it difficult to assess the long-term environment that
long-term investors invest within. Uncertainty, of course, creates
opportunity, but opportunity whilst sailing in stormy waters. In an
uncertain investment environment where return of capital is as
important as return on capital, investing in well managed companies
will provide the best long-term protection as well as the best
long-term returns.
Having indulged in cold shower rhetoric, I would like to be
really rather optimistic about the long-term prospects for Hansa
Trust. UK investment trust companies are unusual investment
vehicles in the context of global investing, having a good fiscal
environment in which to operate and a tradition of sound,
long--term, closed end portfolio management. Yes, the management of
closed end portfolios has important differences with open ended
portfolios and particularly lends itself to the management of
portfolios of unusual, often illiquid investments. In constructing
and managing the portfolio of Hansa Trust, we have sought to
provide you with exposure to interesting and exciting investments
you could not readily make on your own account. The large
investment in Ocean Wilsons, with its excellently managed Brazilian
subsidiary, Ocean Wilsons (c. 30% of our net asset value), the
portfolio of unusual and interesting funds (c. 50%) and the rather
smaller portfolio of growth opportunities globally (c. 20%) -
constitutes something different and unusual for those investors
looking for an alternative to the portfolios of run-of-the--mill,
index listed companies (not that such investments won't be
profitable, they may well be).
In choosing an investment company or a fund to invest in there
are two fundamental considerations: investment area (geography or
sector) and management. I have commented on where Hansa Trust
invests. I would like to comment on the team behind it. Starting
with the top, the Board of Directors, I have been lucky enough to
work for the benefit of shareholders over the last 17 or so years
with excellent colleagues who have worked well as a team to set a
high standard of governance (by which I emphasise commitment and
leadership as opposed to the box-ticking compliance). The
investment management team, led by William Salomon and Alec
Letchfield, does an excellent job of thinking about what we are
trying to achieve over the long-term and what investments might
achieve that. They are thoughtful and decisive investors in an era
dominated by the seduction of shorter-term investment trends. And,
finally I would like to commend Stephen Thomas and his team who
manage the administrative side of the business so efficiently and
effectively, no small undertaking as the stranglehold of triffid
like regulation encompasses all that we do. To all of them on
behalf of all of us shareholders - a big thank you.
It is an excellent team; the portfolio is unusual and exciting.
These are the two essential ingredients for long-term success,
which I am quite sure we shareholders will enjoy.
Alex Hammond--Chambers
Chairman
20 June 2019
I would draw shareholders' attention to the Glossary of Terms
which can be found at the end of this annual report. I hope it is
helpful in understanding a business ever more complicated by
regulation and jargon.
The Board of Directors
The Directors who served during the year to 31 March 2019
are:
Alex Hammond--Chambers
(Chairman)
Alex joined the Board in 2002. He serves on a number of boards
of a variety of companies, including one other investment trust 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 27 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).
Total
Meetings Yearly
attended Meetings
Strategic 1 1
Board 7 7
Audit Committee 2 2
Jonathan Davie
(Audit Committee Chairman)
Jonathan joined the Board in January 2013. He is a
non--executive director of 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.
Total
Meetings Yearly
attended Meetings
Strategic 1 1
Board 7 7
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.
Total
Meetings Yearly
attended Meetings
Strategic 1 1
Board 6 7
Audit Committee 2 2
William Salomon
William has been a Director of Hansa Trust PLC since 1999 and
has a significant, long standing, investment in the Company.
William's experience in investments and finance is important to
the Board in developing and monitoring investments in special
investment themes and in the Company's strategic investment through
Ocean Wilsons Holdings Limited in Wilson Sons.
William is the senior partner of Hansa Capital Partners LLP
("Hansa Capital Partners", the Portfolio Manager and 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") and Chairman of ScotGems PLC investment trust. William was
formerly the vice chairman of Close Asset Management Limited and
chairman of the merchant bank Rea Brothers PLC.
Total
Meetings Yearly
attended Meetings
Strategic 1 1
Board 7 7
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, at Bocconi University 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.
Total
Meetings Yearly
attended Meetings
Strategic 1 1
Board 7 7
Audit Committee 2 2
The Board
Each Director brings certain individual and complementary skills
and experience to the Board's workings, as summarised in the
previous Board of Directors' pages and dedicates his time to the
Company to ensure its success. All Directors retire at each AGM and
offer themselves for consideration for re--election. The Board
recommends the re--appointment of each of the Directors, based on
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.
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.
The Board of Directors monitors the returns made in absolute
(firstly) and relative (secondly) terms against the Key Performance
Indicators ("KPIs") established for that purpose and are set out in
the relevant section of the Annual Report. The comparisons are made
over 1, 3, 5 and 10 years. When reporting to shareholders, comment
on returns is made with reference to those KPIs. There is no single
benchmark that would be appropriate some of the time but 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 COMPOSITION
Appointments to the Board are made on merit and against
objective criteria in accordance with the AIC Corporate Governance
Code. The Board considers it is of paramount importance to
shareholders that, after consideration of the skills and experience
needed by the Board, candidates are chosen on the basis of merit
only and that there should be no discrimination in the choice of
directors for any reason.
Long--Term Performance
TEN YEAR COMPANY PERFORMANCE STATISTICS
Net Asset
Value Ordinary Share Price Discount/
Year ended Shareholders' and 'A' Annual (Bid) (Premium)
31 March Funds Ordinary Dividends Ordinary 'A' Ordinary Ordinary 'A' Ordinary
2019 GBP337.3m 1,405.6p 16.0p 977.5p 975.0p 30.5% 30.6%
2018 GBP323.1m 1,346.3p 16.0p 992.5p 977.5p 26.3% 27.4%
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%
To 31 March 2019 1 year 3 years 5 years 10 years
Share Price Total
Return
Ordinary shares
(%) 0.0 41.2 21.9 132.7
'A' non--voting
Ordinary shares
(%) 1.4 41.8 22.1 137.8
To 31 March 2019 1 year 3 years 5 years 10 years
Net Asset Value Total Return Performance
Net Asset Value
(%) 5.6 37.0 25.5 157.3
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 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 annual 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' aggregate
remuneration (GBP175,000) was approved by shareholders at the 2017
AGM. In determining fees, no individual Director is involved in
determining their own fee.
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 ("RDR") a number of
years ago has had the effect of making the various different
investment products compete rather more directly with each other.
The RDR assists the Board in targeting the type of shareholder
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 a reasonably widespread understanding
of it. By doing so, the Board aims 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 outside 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.
-- Edison Research produces written research on the Company, its
investments and its progress and facilitates 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 Link 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,
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 (the "AIFMD"), the Board
established a monitoring programme for the AIFM and the Depositary.
The Company Secretary meets each supplier regularly to monitor its
processes and systems and, in addition, the AIFM and the 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 considered the use of hedging
instruments in order to provide the portfolio with a limited degree
of protection from extreme market declines and may deploy them if
the circumstances make sense to do so. However, it noted the
difficulty with their successful deployment. Board approval is
required before any investment into any derivative instrument.
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 Ltd ("OWHL") 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 skills
and experience of the management team it is in the best interest of
shareholders that the Portfolio Manager remains in place under the
present terms. Details of the fees paid to the Portfolio Manager
can be found in Note 3 below.
Auditor
Whilst the Auditor, Grant Thornton UK LLP, would be willing to
continue as the Company's auditor, rotation rules mean that it is
not able to do so and the Company must appoint a new audit firm for
the Company's year ended 31 March 2020. The Board would like to
take this opportunity on behalf of shareholders to thank Grant
Thornton for its professional and constructive service over the
years. The Audit Committee has conducted an audit tender process
and will recommend the appointment of PwC. PwC has expressed its
willingness to act as Auditor to the Company, subject to the
completion of its client take-on procedures, and a resolution to
appoint PwC as Auditor to the Company will be proposed at the
forthcoming AGM.
Audit guidance limits the non-audit related work that can be
carried out by the Company's Auditor - in particular tax compliance
work. Hence BDO will continue to provide tax compliance services to
the Company. 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 on below.)
Company Secretary
The Company engages Hansa Capital Partners LLP as its Company
Secretary. During the year to 31 March 2019, the Company Secretary
has charged GBP125,000 excluding VAT (2018: GBP106,250).
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 2019, the AIFM has charged GBP131,311 (2018: GBP127,287) for
its services.
Administrator
The Company engages Maitland Administration Services Limited as
its Administrator, at an annual rate of GBP135,063, excluding VAT
(2018: GBP132,143).
Depositary
BNP Paribas Securities Services is the Company's Depositary, an
appointment that was ratified by the AIFM. During the year to 31
March 2019, BNP Paribas Securities Services charged GBP100,756 for
the combined Depositary and Custodial service excluding VAT (2018:
GBP97,745).
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.
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.
The returns are compared with the return of a government bond,
using the 10 year UK Gilt Return (FTSE All Stocks Gilts Total
Return Index). The returns are also compared to the rate of
inflation (real returns are important to shareholders) and with
those of our peer group and an appropriate index.
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 the shares sell at in relation to the NAV are
likewise monitored.
The Board of Directors monitors the returns made in absolute
(firstly) and relative (secondly) terms against the KPIs
established for the purpose noted above. The comparisons are made
over 1, 3, 5 and 10 years. Comment is made on the returns when
reporting to shareholders by reference to the KPIs and not to a
single benchmark that would be appropriate some times and not at
other times.
i) Shareholders - Total Returns
To 31 March 2019 1 year 3 years 5 years 10 years
Share Price Total
Return
Ordinary shares 0.0% 41.2% 21.9% 132.7%
'A' non--voting
Ordinary shares 1.4% 41.8% 22.1% 137.8%
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 2019 1 year 3 years 5 years 10 years
NAV 5.6% 37.0% 25.5% 157.3%
Relative comparison
Peer group average 3.1% 30.3% 38.9% 186.8%
* See website for peer group members
iii) Discount/Premium
A comparison is made between the (discount)/premium of the
Company's two classes of shares, those of the Company's peer group
and of the AIC average.
1 year 3 years 5 years 10 years
To 31 March 2019 average average average average
Ordinary shares
(%) (26.1) (28.6) (27.0) (23.4)
'A' non-voting
Ordinary shares
(%) (29.3) (30.7) (29.1) (25.1)
Peer group (%) (6.4) (7.5) (7.3) (7.3)
AIC (%) (2.9)
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.
3 years 5 years 10 years
To 31 March 2019 1 year p.a. p.a. p.a.
Ongoing charges
per annum (%) 1.3 1.1 1.1 1.1
NAV total return
(%) 5.6 11.1 4.7 9.9
In January 2018, to comply with the Packaged Retail and
Insurance-based Investment Products Regulation ("PRIIP"), the
Company issued a PRIIPs Key Information Document ("KID") for each
of its two share classes. In the PRIIPs, KID regulations are very
prescriptive as to how costs are calculated and presented. In
particular, as well as the costs of the Company itself noted above,
the PRIIPs calculation also incorporates the costs of the directly
held fund investment vehicles themselves, but not those for
directly held equities. Based upon the financial results for the
year to 31 March 2018, the PRIIPs KID cost ratio is 1.86% per
annum.
v) Key Performance Indicators
The following are the KPIs the Board uses to assess the returns
of elements of the portfolio and of the Company as a whole.
To 31 March 2019 1 year 3 years 5 years 10 years
FTSE UK Gilts
All Stocks
TR Index 3.7% 11.1% 30.7% 62.5%
UK CPI Inflation 1.9% 6.8% 7.3% 24.7%
MSCI ACWI NR 10.8% 50.2% 75.5% 241.3%
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. Whilst
fully aware of the impact of geopolitical influences on the outcome
of investment returns, the Board, in conjunction with the Portfolio
Manager, reviews investments on their 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 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. Core & Thematic Funds
a. Core 0-40%
b. Thematic 0-25%
ii. Global Equities 0-40%
iii. Diversifying Assets 0-40%
iv. Strategic (OWHL including Wilson Sons & Ocean Wilsons
Investments)
(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 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 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, protracted economic recession, declining corporate
profitability, taxation and rising inflation. The impact of such an
environment could lead to sharp rises in interest rates and a
decline in the stock market. Deflation is also a source of concern
in some countries, but unless deflation increases sharply it is not
a significant impediment to growth. However, it may lead to
negative interest rates which would surely damage the banking
system and the levels of savings available for investments. At
their Board meetings and at the annual strategy meeting, the
Directors and the Management consider long-term risks that concern
them, including:
-- Political instability and uncertainty both affecting the UK
(the Company's 'home' jurisdiction) and many of the markets the
Company Invests in.
-- Economic, currency and equity declines.
-- Risks, particularly political risks, associated with Brazil.
-- The growth of global debt.
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, by bringing any future realised capital gains
on the sale of assets into the Corporation Tax charge band (whereas
they are currently not). 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 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 below.
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 are as follows:
2019 2018
GBP000 GBP000
Ordinary and 'A' non-voting
Ordinary shares
First interim paid 8.0p
(November 2018) (2018:
8.0p) per share 1,920 1,920
Second interim paid 8.0p
(May 2019) (2018: 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 2019, the Board is not proposing a final dividend
per Ordinary and 'A' non-voting Ordinary share classes.
Dividend History
The Company's dividend history including annual payments over
the previous ten years is as follows:
DIVID PAYMENTS FOR YEAR TO MARCH (pence per share)
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 the Board 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
In addition to the Statement of Going Concern, the Directors are
also required to make a statement concerning the longer--term
viability of the Company. As stated many times in the wider
Strategic Report, the Directors consider 12 months to be a
relatively short time frame 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 work through. 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.
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".
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
A maturing cycle but not the end of the cycle
Introduction
The past year really has been one of contrasts for world stock
markets. Having been weak for much of 2018, culminating in the
worst December for many years, the first quarter of 2019 has been
one of the strongest in the current cycle. Indeed, the S&P 500
saw its highest return since 1998, Chinese equities enjoyed their
best quarter since 2014 and oil had its best quarter in a decade.
Rather counterintuitively in such a risk-on environment, even bonds
generated positive performance.
Market backdrop
Whilst vindicating our view that the extent of the sell-off in
2018 was unwarranted, the strength of the bounce seen so far in
2019 is surprising.
As a reminder, our stance coming into the New Year was one of a
maturing cycle, but not the end of the cycle. Risk had risen for
much of 2018, with monetary policy well into the tightening phase,
Trump doing his best to unsettle markets and economic growth
outside the US slowing for much of the year. Despite this, our
central view was more sanguine, based on the fact that we just
didn't see the normal metrics in play which typically pre--empt
recessions (and with them a bear market).
Imbalances, which are key to the health of the economy, appear
to be well under control. Household debt remains perfectly
manageable, with the savings ratio at average levels compared to
history. Housing, so often the cause of weakness in the household
sector, is not causing us concern, with affordability good and
housing starts normal. Banks, who can normally be relied upon to
extend credit to those areas which are overheating, appear to have
avoided doing so this time round, although the high yield credit
market has expanded. We would love to say this is due to good
management and the banks learning from past mistakes, but in
reality it more likely reflects the hangover from the Global
Financial Crisis. The need to rebuild balance sheets, combined with
a tighter regulatory framework, has curtailed their normal
pro-cyclical exuberance.
That's not to say there are no areas of concern. Corporate
borrowing has risen sharply, especially in more highly leveraged
companies. Further, the quality of these loans has diminished with
the rise of more risky practices such as covenant light loans. Even
here though there are mitigating circumstances. The sharp reduction
in interest rates seen post the Global Financial Crisis means it is
entirely natural that companies should switch from expensive
equities to cheaper debt. Instead, what is important is the level
of the debt burden and with real and nominal rates still low we
find that the ability of companies to service their debt remains
well within historical limits. Importantly, corporates are spending
these cash flows in a controlled manner ensuring balance sheets
remain healthy.
We also worry about inflation albeit here the messages are a
little confusing. Having recently spent time in the US seeing a
wide range of companies, across sectors and sizes, one of the key
issues currently faced is the ability to attract and retain staff
and the cost of doing so. Interestingly, however, this wage
pressure doesn't appear to be showing at the headline inflation
level and, indeed, rather counterintuitively some countries have
seen bond yields dip back into negative territory, which suggests
deflation rather than inflation. This may partly be a function of
timing but we think it is more likely due to a differing global
picture, with Europe facing structural challenges versus a much
more robust outlook for the US. We will continue to watch carefully
to see how the situation develops but our main concern is that the
US central bank and government are minded to let the economy run
hot, potentially requiring them to slam on the brakes, through
higher interest rates, if inflation does get out of control.
Interlinked with this is the changing monetary policy landscape.
For much of 2018, interest rates and monetary policy were on a
tightening trend. In the US rates have now been rising since 2015
and even Europe has started the process of exiting its quantitative
easing programme. Japan is the only country still actively wedded
to easier monetary policy. Markets, quite rightly, worried that
this withdrawal of liquidity would ultimately weigh on asset prices
with peak-fear reached when the US Federal Reserve chairman, Jerome
Powell, stated late in 2018 that rates would need to rise
significantly more given the strength of the US economy.
Then we saw an unusual about-turn. Central bankers, as a rule,
try to be consistent in their messaging for fear of surprising
markets and causing unnecessary volatility. The announcement in
early 2019 by chairman Powell that rates would now be on hold hence
came as quite a shock to markets given his earlier comments. Why
the change? Well possibly this reflects Powell's underlying
scepticism of economic models. Being a lawyer by training he is far
less wedded to conventional economic theory and much more data
sensitive. With data highlighting a slowing in growth in late 2018
it is perhaps less surprising that he should react in such a way.
Unsurprisingly markets rallied sharply on this announcement,
helping lift investors from the funk of the last quarter, with them
now starting to question if the next US rate move might even be
down rather than up.
The final area of concern for investors, trade, is much more
difficult to call. Whilst one may not always agree with his
methods, market sentiment seems to be moving towards Donald Trump
on trade. Having turned his back on globalisation, Trump has argued
that countries such as China are abusing their trading relationship
with the US. This idea is now gradually becoming the accepted
wisdom more broadly in Washington. Even if the Democratic Party
were to gain power it looks unlikely there would be a significant
shift from the current anti-China rhetoric.
We think there is a short and a long-term angle to how the
current trade war evolves. In the short-term some form of deal and
'win' for Trump looks increasingly likely. With China already
experiencing a period of economic weakness there is a real danger
that a prolonged trade war could push China over the edge and into
a downward growth spiral. China is now of such a size that the old
adage of "when the US sneezes the rest of the world catches a cold"
is likely to work both ways. Trump, who uses the stock markets as a
barometer of his success, looks keen to head off such an outcome,
recognising that a strong US economy is key to his future election
success.
Whilst encouraged by this we remain troubled by the longer-term
outlook for trade. We think there is growing likelihood that we sit
on the precipice of a protracted trade war, with President Xi
unlikely to give up on his aspirations to make China the
pre-eminent global superpower with domination in a number of key
sectors; part of his 'Made in China 2025' strategy. He may well be
prepared to pacify Trump in certain areas in the short-term, but we
see a number of red-lines over which he is unlikely to make
concessions.
Pulling all together we remain firmly of the view that we are in
late cycle territory. Undoubtedly, as highlighted above, this comes
with all kinds of worries and concerns; it always does! However,
our belief that we are not dipping into recession anytime soon
means we viewed the derating experienced in Q4 as unwarranted.
Valuations became cheap in a number of markets and for this reason
the bounce seen so far this year is, in our minds, entirely
justified.
What is perhaps more surprising was the strength of the
snapback. Although hard to monitor, our sense is that the market
was very conservatively positioned coming into 2019 with the trauma
of the Global Financial Crisis fresh in investors' minds and with
the current cycle unusually long by past standards. Therefore the
pain trade was for markets to rise and this is just what we saw. As
is often the case this can result in larger and more powerful
movements in prices than one would normally expect.
How do we see the cycle ending?
One of the most useful exercises to go through late in the cycle
is to think about the scenarios under which we would become more
cautious.
Here we see three potential outcomes, one less worrying, the
other two far more damaging.
The first, less worrying scenario (and our core view), is that
we see a conventional interest rate induced recession and bear
market. As alluded to above the most common manner in which cycles
typically come to an end is through excesses forming in certain key
areas of the economy, which ultimately necessitate central banks to
slam on the brakes and in the process induce an economic downturn
and fall in markets. We are not overly worried about this, with
this type of downturn normally short-lived and shallow, albeit such
a scenario may require that governments to step up to the plate,
with central banks having limited firepower. Going into a recession
with low rates and extended central bank balance sheets will
necessitate that fiscal policy is used more extensively, with the
effectiveness of monetary policy almost certainly diminished under
such a scenario.
Much more worrying would be systematic issues within China or
Europe.
China represents one of the most remarkable development stories
in recent history. From a low base it has become an economic
powerhouse and the world's manufacturer. Around one third of global
growth is expected to come from China in the coming years
reflecting both the size of China's economy and the pace of its
growth. This compares to a contribution of less than 20% from the
US. From a non-economic perspective, China is also making huge
progress especially technologically; earlier this year for example
it became the first country to land a vehicle on the far side of
the moon.
Unfortunately this progress has come at a cost. Private sector
debt levels have been growing at an alarming rate and have reached
levels where other historically high growth countries, such as
Japan and Korea, hit a wall and ultimately collapsed. Equally
whilst the core banking system looks fine, the shadow banking
system now represents over 50% of GDP. Affordability in many key
Chinese cities is some of the worst globally and the working age
population has started to decline as a proportion of the overall
population due to the one--child policy.
It's impossible to say if these issues will come to a head
anytime soon, but one can't help but note that precedent is
typically not good from other countries which have faced similar
problems in the past. The Chinese authorities appear to be well
aware of these challenges, trying to tackle private sector debt
levels for example, and one must hope the command economy structure
will enable them to manage their way out. If they are not
successful the implications for global stock markets could be
dramatic.
Europe equally faces many structural threats albeit the opposite
to the Chinese bubble. Whereas China is arguably suffering from
years of excessive, possibly ill-directed, growth, Europe has
barely recovered from the depths of the Global Financial Crisis.
Growth has been lacklustre to non-existent in many European
countries and the banking system remains mired in the same
challenges the sector faced ten years back. Germany, the engine of
the Euro area to date, suffered a worrying setback last year,
highlighting just how important China has become to end-demand for
German products. One can't help but think that if China is
successful in transitioning from a low to high-end manufacturer it
might cut the legs away from the Mittelstand, the heart of Europe's
growth.
Near-term we see the outlook for Europe and China as
interlinked. If China is successful in kick-starting its economy
this would likely provide a much needed fillip to European growth,
albeit from very low levels. Longer-term we are far less
optimistic. Unless Europe can take the necessary steps towards
greater social, fiscal and banking integration, it is hard to see
the union remaining in its existing form. We are already seeing
chinks in the armour with the UK withdrawing (we think!) and the
election of anti-EU parties in key countries such as Italy. Watch
this space.
Summary
There is clearly a fragility to markets at present. The falls
experienced late last year and the speed with which markets have
rebounded are symptomatic of this. Hence whilst remaining biased
towards equities and risk assets generally, our direction of travel
is to systematically lean away from equities over time, especially
if we see any deterioration in the issues highlighted.
Portfolio Review and Activity
Your Company's NAV has returned 5.6% over the financial year.
The KPIs for the financial year were 10.8% for the MSCI ACWI NR
Index, 3.7% for the FTSE UK Gilts All Stocks TR Index and 1.9% for
UK CPI. A significant part of this performance came in the final
quarter, with the significant bounce that has been seen in many
world markets in early 2019 counteracting the market correction
towards the end of 2018. The Trust's net asset value per share
increased over from 1,346.2p at the end of March 2018 to 1,405.6p
at the end of March 2019.
Core and Thematic Funds
Despite the challenges faced by markets over the past 12 months
the Core Regional silo was up 6.7% and the Thematic silo up 14.3%
over the period.
In the Core Regional silo, the Fund's US holdings were the
largest contributors over the course of the year. Select Equity was
a top contributor, up 22.0%. This small-mid cap fund's largest
holding, life science equipment supplier PerkinElmer, performed
particularly well as growth accelerated. This was due to the
expansion of its presence in China and India and also improvements
in its gross and operating margins. Other good performers included
the technology company Gartner and Live Nation Entertainment, both
large holdings for the fund. Other strong performers were Findlay
Park American, Vulcan Value Equity and Pershing Square Holdings
which were up 20.0%, 13.1% and 53.3% respectively over the
year.
Over the year several of the Japanese funds in the Core Regional
silo, including Indus Japan Long Only (down 10.8%), and Goodhart
Partners: Hanjo (down 4.8%) had negative returns. This was mainly
related to a broad Japanese market sell-off in the fourth quarter
of 2018 and in the case of Indus, increasing positions in holdings
following declines in September, which then declined further in
December. Emerging and frontier market holdings such as BlackRock
Frontiers Investment Trust (down 13.0%), and Prince Street
Institutional (down 9.1%) were also detractors, mainly due to
broader global market factors such as rising interest rates.
GAM Star Technology Fund continued to be one of the top
contributors in the Thematic bucket, returning 18.0% over the year
as the technology sector performed well. Microsoft, Visa and
Alibaba, large positions in the fund, all enjoyed strong first
quarters of 2019, with Visa continuing to perform particularly well
after a difficult December on the back of strong revenue, payment
volume and processed transactions growth. Another strong performer
in this silo was Worldwide Healthcare Trust which was up 13.9% for
the year. The trust benefited from several companies in its
portfolio being acquired over the course of the year, as well as
some big biotechnology holdings outperforming.
Diversifying Funds
The Diversifying silo ended the year with a positive return of
3.1%. The holdings in this silo of the portfolio are designed to
show lower correlation to the equity market, so it is expected that
they will perform more robustly in times of equity market stress,
but lag behind when it is strong.
Hudson Bay International Fund was one of the larger contributors
over the year, up 16.4%. The strong performance was mainly driven
by a decision to take risk off in December, meaning they did not
suffer any large losses and also due to positive currency
movements. Another of the stronger performers over the year was
Global Event Partners, which was up 5.2%. Most of this performance
came in the first quarter of 2019 and was driven by the funds
merger arbitrage strategy. The fund's largest position related to
the Disney/Fox merger which completed in March and drove the
majority of the performance. Another position related to the
IBM/Red Hat merger also performed well.
A detractor over the year was CZ Absolute Alpha which was down
1.7%. The fund suffered from several of its industrial short equity
positions which produced negative returns when markets rose in
early 2019. Schroder GAIA BlueTrend was disappointing over the
course of the year, declining 3.4%. During the first quarter of
2019 the fund had weaker performance than the other trend-following
CTA in the portfolio, GAM Systematic, largely due to a net short
equity position the fund held going into January 2019 which
resulted in a loss for that portion of the portfolio.
Global Equities
The global equity portfolio returned 2.5% over the year. This
pedestrian return is well below the absolute level we strive to
achieve and it was also below the return of the equity indices. The
underperformance relative to global indices was almost entirely
caused by the portfolio failing to participate in the strong rally
this last fiscal quarter.
Perhaps the best way to explain this is to take several steps
back and look at how we run the portfolio. The global equity
portfolio is run for absolute returns over the long-term, not
relative quarterly performance. We believe one of our greatest
competitive advantages is to avoid the institutional imperative of
quarterly performance measurement that creates more of a trading
mentality than an investing one. We buy businesses on a three to
five year view which means quarterly or even annual comparisons to
global indices are not always relevant, as the average holding
period for stocks in the US (where we have the most data) is less
than 12 months, whereas our implied period is closer to five
years.
The second point is because we look for absolute returns the
portfolio does not look like the market index. We go where the
opportunities for long-term returns look most attractive and they
are often in sectors currently out of fashion and offer few
catalysts for investors with a short--term (three to six month)
time frame. An example of this would be our holdings in telecom
stocks, where the portfolio exposure is in the low teens. Paris
based Orange is a solid, well-run business that pays a dividend of
almost 5% a year and offers an 8% free cash flow yield. After years
of returns at or below their cost of capital the industry has
largely been abandoned by investors with telecoms weight in the
European index almost halving over the past ten years. While we may
be holding what currently appears to be an average business we
believe there are a number of embedded options not priced in and in
the meantime we are being paid 5% a year to wait. These options
include, but are not limited to, higher interest rates forcing
rational competition and/or consolidation, service providers
wrestling the economics back from content providers and 5G acting
as a catalyst for a host of new applications.
The investor Tom Russo has popularised the term "capacity to
suffer" which essentially means incurring short-term pain in order
to achieve long-term gains. He looks for businesses and management
teams that have the capacity to report weaker numbers in the
short-term in order to invest in the business for long-term growth,
which leads to far greater compounded returns for holders who share
their long-term time horizons.
We believe this is a great source of opportunity and our two
most recent investments have that element to them. The management
at the global exhibition organiser ITE have been responsible for
EBITDA margins falling from 26% in 2016 when they joined to 14.6%
last year as they reinvested in their Transformation and Growth
("TAG") programme. During this time the stock fell from 100p a
share to 70p as the public markets did not have the patience to
hold through the turnaround. These investments, however, have led
to meaningful growth in organic revenues - the exhibitions that
have gone through TAG grew revenue over 10% during the latest
period. As these investments roll off we expect the cash flow to
increase considerably over the next several years, leaving the
company significantly better positioned for long-term growth than
when the current management team joined.
Similarly, the US retailer, Dollar General issued annual
guidance that was below market expectations, as management chose to
invest in the business. The CFO was clear in saying "we believe
these investments will allow us to enhance our operating margin
profile over the long term. The associated investments, however,
will pressure SG&A rates in the near term". Nevertheless, Mr
Market sold the stock off 8% on the news, meaning we were able to
buy opportunistically at a discount to its intrinsic value.
We agree with Tom Russo that it is important for us as investors
to have "the capacity to suffer". Chasing the hottest stocks and
sectors in the market is initially very rewarding because of the
positive reinforcement you get from the short-term stock
performance and being part of the herd. In contrast going against
the crowd is uncomfortable, but history has shown it should
ultimately prove rewarding over the long-term.
The largest contributors during the year were Iridium
Communications, TripAdvisor and Alphabet, the largest detractors
were Bayer, Coca Cola Bottlers Japan and Interactive Brokers.
Ocean Wilsons Holdings
Brazil's economy continues to recover, albeit slowly. The market
has so far responded positively to Jair Bolsonaro's victory in last
October's Presidential election, although it remains to be seen how
successful he will be in implementing economic reforms. Much will
depend on the economy minister, Paulo Guedes, who talks ambitiously
of free-market reforms, but there will be challenges in passing
them through Congress. While Wilson Sons has put itself in a
position to reap the rewards of its $1bn investment plan over the
last ten years, civil works were begun on the expansion of Tecon
Salvador in the fourth quarter of 2018, after the receipt of all
necessary environmental licences. The work will see the principal
quay extended from 377 metres to 800 metres, which will allow the
simultaneous berthing of two super--post--Panamax ships.
The process of assessing the future of the company's container
terminals and logistics assets announced in July 2018 continues.
This is part of an evaluation of strategic alternatives carried out
by the company management. However, the Board has emphasised that
no formal decision has yet been taken with respect to any of the
alternatives and there is no certainty that a transaction will
occur.
The fourth quarter results for Wilson Sons, which were released
in March, showed a decline in earnings, largely as a result of
weakness in the towage division. For the full year, earnings of
$160.6m were 6.8% down on the prior year, although up 6.4% in R$
terms. The container terminals division was relatively robust over
the year and earnings there rose 12.4%. In the fourth quarter total
operating volumes improved by 2.7%, helped particularly by higher
export volumes at both container terminals. Tecon Rio Grande
improved its net average productivity to 77 movements per hour, 22%
higher than 2017.
Towage results continued to be pressured by the very competitive
environment that affects both volumes and pricing and earnings in
the division were 22.3% lower in 2018. The number of harbour towage
manoeuvres performed in the year declined 6.2% due to increased
competition in some ports and a 1.0% decrease in the total number
of vessel calls in Brazil, driven by the market trend towards
larger vessels and liner consolidation. Weakness in the oil and gas
industry has resulted in some vessels which previously serviced
that industry being deployed in the harbour towage market
instead.
The Ocean Wilsons Investment subsidiary was valued at $258.9m at
the end of December 2018, which represented a decrease of $15.8m
(5.8%) from the valuation at the end of December 2017, although
dividends of $4.75m were also paid out from the portfolio during
this time. The portfolio continues to be biased towards equities,
both public and private, reflecting its long-term nature, but also
includes some assets which display lower correlation to equity
markets.
Over the past year the Ocean Wilsons Holdings share price has
risen by 5.1%, or by 9.9% on a total return basis, which takes
account of the 51.7p dividend that was paid to the Trust in June
2018. The share price represents a discount to the look-through NAV
of 18.9%, based on the market value of the Wilson Sons shares,
together with the latest valuation of the investment portfolio.
Alec Letchfield
April 2019
Portfolio Statement
Fair value Percentage of
Investments GBP000 Net Assets
Core Regional Funds
Findlay Park American Fund 18,935 5.6
Vulcan Value Equity Fund 13,524 4.1
Select Equity Offshore Ltd 13,371 4.0
Goodhart Partners: Hanjo Fund 11,205 3.3
Adelphi European Select Equity Fund 9,587 2.8
BlackRock European Hedge Fund 9,264 2.7
Indus Japan Long Only Fund 8,049 2.4
Schroder ISF Asian Total Return Fund 7,411 2.2
Prince Street Institutional Offshore
Ltd 4,549 1.3
Pershing Square Holdings Ltd 4,360 1.3
BlackRock Frontiers Investment Trust 3,580 1.1
Vanguard FTSE Developed Europe ex UK
Equity Index Fund 3,506 1.0
LF Odey Absolute Return Fund 3,501 1.0
NTAsian Discovery Fund 2,960 0.9
SR Global Fund Inc. Frontier Markets 2,434 0.7
Selwood AM Credit Fund 1,773 0.5
Egerton Long-Short Fund 539 0.2
Total Core Regional Funds 118,548 35.1
Strategic
Wilson Sons (through the holding in
Ocean Wilsons Holdings) * 63,060 18.7
Ocean Wilsons Investments Limited (through
the holding in Ocean Wilsons Holdings)
* 41,691 12.4
Total Strategic 104,751 31.1
Global Equities
Berkshire Hathaway Inc 3,730 1.1
Hansteen Holdings PLC 3,476 1.0
CK Hutchison 3,466 1.0
Iridium Communications Inc 3,448 1.0
Interactive Brokers Group Inc 3,424 1.0
EXOR NV 3,239 1.0
Alphabet Inc 2,888 0.9
KT Corp ADR 2,673 0.8
White Mountains Insurance Group Ltd 2,628 0.8
Orange 2,623 0.8
Hilton Food Group PLC 2,522 0.7
Samsung Electronics Co Ltd 2,447 0.7
TripAdvisor Inc 2,132 0.6
C&C Group Plc 2,068 0.6
Dollar General Corp 2,060 0.6
Nutrien Ltd 1,936 0.6
Subsea 7 1,710 0.5
Bayer AG 1,705 0.5
Howard Hughes Corp 1,687 0.5
ITE Group 1,645 0.5
Orion Engineered Carbons SA 1,530 0.5
CVS Health Corp 1,407 0.4
Technicolor 1,160 0.4
Total Global Equities 55,604 16.5
Diversifying
DV4 Ltd ** 9,764 2.9
Global Event Partners Ltd 8,104 2.4
Hudson Bay International Fund Ltd 3,566 1.1
MKP Opportunity Offshore Ltd 2,809 0.8
Vanguard US Govt Bond Index Fund 2,682 0.8
Apollo Total Return Fund 2,196 0.7
Keynes Dynamic Beta Strategy Fund 2,110 0.6
Biopharma Credit Plc 1,473 0.4
CZ Absolute Alpha UCITS Fund 1,295 0.4
GAM Systematic Core Macro Fund 964 0.3
Schroder GAIA BlueTrend 714 0.2
Total Diversifying 35,677 10.6
Thematic Assets
GAM Star Technology Fund 15,739 4.7
SPDR MSCI World Financials UCITS ETF 3,109 0.9
Worldwide Healthcare Trust PLC 1,734 0.5
Total Thematic 20,582 6.1
Total Investments 335,162 99.4
Net Current Assets 2,188 0.6
Net Assets 337,350 100.0
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
per the 31 December 2018 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 2019.
** DV4 Ltd is an unlisted Private Equity holding. As such, its
value is estimated 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.
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 2019 are as follows:
'A' non--voting
Ordinary Ordinary
shares shares
Institutional
& Wealth
Managers 3,431,314 42.9% 15,168,477 94.8%
Directors 2,127,619 26.6% 139,150 0.9%
Private Individuals 2,406,280 30.1% 672,104 4.2%
Other 34,787 0.4% 20,269 0.1%
8,000,000 16,000,000
Substantial Shareholders
As at 31 March 2019, 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 below.
-- 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 below.
-- 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.
Additionally, following a resolution passed at the Company's AGM on
27 July 2018, the Company's Articles of Association provide for the
voting rights of Ordinary shares to be automatically reallocated to
other shareholders to prevent the Company becoming a close company.
The reallocation mechanism operates where a transfer of shares or
other change in the interests of holders of shares occurs and would
cause the Company to become a close company. In these
circumstances, the voting rights attaching to the affected shares
are reallocated by enhancing the voting rights of the smallest
registered shareholders on a temporary basis pending the operation
of the compulsory transfer provisions referred to above.
No. of
voting % of voting
shares shares
Nomolas Ltd 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 20 June 2019, 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 2019 are shown below:
'A' non--voting
Ordinary shares Ordinary shares Nature
of 5p each of 5p each of interest
2019 2018 2019 2018
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 20 June 2019, the date of signing 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
GBP2,335,435 (2018: GBP2,238,104). The fees outstanding at the
year-end amounted to GBP197,735 (2018: GBP189,575). 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 20 June 2019, 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 c. 2.1m 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 (Special Resolution 10) 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.
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
20 June 2019
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 - see above.
-- Dividend policy and payments made during the year are
summarised in the Organisation & Objectives section - see
above.
-- Names of Directors, at any time in the year - see above for
the Directors' details and attendance at Company meetings.
-- Greenhouse Gas Emissions - see above.
-- Policy on Diversity - see above 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" below.
Corporate Governance Report
The Corporate Governance Report, including the Financial Risk
Management Review of the Company, is included 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 above.
For and on behalf of the Board
Alex Hammond--Chambers
Chairman
20 June 2019
Corporate Governance Report
UK CORPORATE GOVERNANCE CODE
Internal Controls
The UK Corporate Governance Code ("UK Code") (issued 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 ("FRC") (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.
The UK Code was revised in July 2018 for accounting periods
beginning on or after 1 January 2019. Therefore, the new UK Code
will apply to the Company for its year ended 31 March 2020.
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 2019, 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 position 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.
In response to the Issuance of the new UK Code, the AIC Code was
revised and re-issued in February 2019 effective for accounting
periods beginning on or after 1 January 2019. Therefore, the new
AIC Code (the "New Code") will apply to the Company for its year
ended 31 March 2020.
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 below.
-- There should be full disclosure of information about the Board
A brief biography of each member of the Board can be found
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 and suitability 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. As part of the evaluation
process, suitability for each of the Director's roles on other
committees as relevant - notably the Audit Committee - is also
considered.
-- 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 good
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 adhoc 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, specifically to 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/or the Chairman 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 risks shareholders are exposed to, including 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.
The Portfolio Manager has publically stated that it pursues a
global macro investment strategy on behalf of Hansa Trust,
involving a significant proportion of the Company's assets being
invested in open ended managed funds with a minority being invested
in global equities. Consequently, while the Portfolio Manager
supports the objectives that underlie the Code, the provisions of
the Code are not relevant to many of the elements of investment
undertaken by the Company.
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 above.
For and on behalf of the Board
Alex Hammond--Chambers
20 June 2019
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.
To meet the requirements of the AIC Code, as endorsed by the
FRC, the Audit Committee is required to have at least three
independent directors, one of whom has recent and relevant
financial experience. The Board considers that, given the size of
the Company and the range of experience brought by each director,
the Company would be best served by all five directors being
members of the Audit Committee whilst noting that Mr Salomon is not
considered independent. Therefore, 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. The Audit Committee must have at
least one member with relevant and recent financial experience.
Whilst all the Directors have experience in various guises of the
financial industry, more specifically, Jonathan Davie is a Fellow
of the Institute of Chartered Accountants and Edwin Teideman has
previously been a finance director. During the Company's year to 31
March 2019, and to date, the Committee was chaired by Jonathan
Davie.
Going forwards, the Company will be subject to the next version
of the AIC Code of Corporate Governance (published in February 2019
and applicable to Companies for their financial year starting on or
after 1 January 2019, the "New Code"). The guidance within the New
Code is subtly different to that of the previous AIC Code. The New
Code recommends that Audit Committee members are all considered
independent. The Board continues in its view that, given the size
of the Company and the range of experience brought by each
director, the Company would still be best served by all directors
being party to the proceedings of the Audit Committee. However, the
Board also wishes, where possible, to abide by the New Code.
Therefore, for the Company's year ending 31 March 2020 (and,
therefore, in effect at the time of signing of this report), Mr
Salomon will continue to attend the Audit Committee's meetings but
will not be a member of the Audit Committee. Mr Salomon will
continue to hear the Audit Committee's recommendations as a member
of the Company's Board.
The Committee is authorised by the Board to investigate any
activity within its terms of reference, to seek any information it
requires from any officer or service provider to the Company, to
obtain outside legal or other independent professional advice and
to secure the attendance of third parties with relevant experience
and expertise if it considers this necessary.
The Chairman of the Audit Committee formally reports to the
Board following each Audit Committee meeting and on other occasions
as requested by the Board.
A separate evaluation of Committee members is not conducted.
Rather, their suitability is considered as part of the annual
evaluation process which is described within the Corporate
Governance Report above.
The terms of reference of the Committee are determined by the
Committee and approved by the Board and include, but are not
restricted to, the following:
-- To consider and make a recommendation to the Board as to the
appointment of the external Auditor, tendering of the 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:
o any changes in accounting policies and practices;
o major judgemental areas;
o significant adjustments resulting from the audit;
o the going concern assumption;
o compliance with Accounting Standards and Governance Codes;
o compliance with FCA Listing Rules and legal requirements;
and
o valuation of unquoted investments.
-- To discuss issues and 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 61% of the portfolio by value is held in
assets that are listed and traded on an exchange, hence forming the
basis of the valuation. Further, of the remaining 39% 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 current audit partner is Andrew Heffron
who has overseen the audit and non--audit work relating to the
Company on behalf of Grant Thornton UK LLP since October 2016.
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 and also the review of the Company's Half--Year Report. A
change of regulation in the accounting industry following the new
rules on Auditor Independence in 2017 has meant 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
appointed BDO LLP as a replacement tax adviser to provide tax
compliance services for the year ended 31 March 2017 onwards. Grant
Thornton continue to act as the Company's Auditor as well as
reviewing the Half-Year Report. For the year ended 31 March 2019,
fees for non-audit services comprised 10% (2018: 10%) of the total
fees charged by Grant Thornton during the year. The Committee
considers that non-audit fees are sufficiently small to not
compromise Auditor objectivity and also that the familiarity with
the Company made Grant Thornton the best choice to review the
Half-Year Report. Further information on fees paid to Grant
Thornton UK LLP is contained in "Other Expenses" within Note 4 of
the Financial Statements.
AUDIT TER
Grant Thornton UK LLP has been the Company's Auditor for nine
years. Prior to that, and before its merger with Grant Thornton,
RSM Robson Rhodes LLP was the Company's auditor since 1989. As the
Committee previously indicated, the statutory audit and associated
non-audit services are being tendered for the year ended 31 March
2020 as Grant Thornton is required to rotate away from acting as
the Company's auditor before the 31 March 2020 audit would be
complete. The Committee would like to take this opportunity on
behalf of itself, the Board and all shareholders to thank Grant
Thornton for its professional and constructive service over the
years.
The Committee has conducted an audit tender process and will
recommend the appointment of PwC. PwC has expressed its willingness
to act as Auditor to the Company, subject to the completion of its
client take-on procedures, and a resolution to appoint PwC as
Auditor to the Company will be proposed at the forthcoming AGM.
For and on behalf of the Audit Committee
Jonathan Davie
Audit Committee Chairman
20 June 2019
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 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 2019, 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 2016 when Jonathan Davie became Chairman of
the Audit Committee. All Directors have served for the full year,
although all retired at the AGM on 27 July 2018 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, the chairman. The remuneration does not include
a performance related element and Directors do not receive bonuses,
share options, pensions or long-term incentive schemes. The total
remuneration of the Board will be kept within the limits set out in
the Company's 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 28 July 2017 with 99.99% of the votes cast being In
Favour of the policy and the remaining 0.01% being Against. The
policy was approved for a period of three years from 1 July
2017.
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 the level of their
responsibilities, duties and other circumstances including the
level of fees in other comparable companies. The Company Secretary
provides relevant information when the Directors consider the level
of Directors' fees. The Directors' Remuneration Policy was approved
by shareholders at the AGM on 28 July 2017 such that the previous
overall cap of GBP175,000 was maintained on annual Directors'
fees.
FUTURE POLICY TABLE
All of the Directors are non-executive, whose only remuneration
is a fee. The implementation of the above policy could give rise to
the following increase in fees:
Potential
Current future
total fee total fee
GBP000 GBP000
Non--executive
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 repayment of expenses
incurred in the course of performing their duties. Therefore, the
use of the detailed remuneration table, as prescribed in the
legislation, is not appropriate here. A condensed table showing the
information relevant to the Directors' remuneration is shown in its
place.
The Directors who served in the year received the following
emoluments in the form of fees:
2019 2019 2018 2018
Fee Total Fee Total
GBP000 GBP000 GBP000 GBP000
Alex Hammond--Chambers
(Chairman)* 38 38 38 38
Jonathan Davie 30 30 30 30
Raymond Oxford 25 25 25 25
William Salomon 23 23 23 23
Geoffrey Wood 25 25 25 25
141 141 141 141
*
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 GBP6,564
(2018: GBP6,707). 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 2019 are shown below.
'A' non--voting
Ordinary Ordinary Nature
shares of shares of
5p each of 5p each interest
2019 2019 2018 2018
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 20 June 2019, 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
GBP2,335,435 (2018: GBP2,238,104). The fees outstanding at the
year--end amounted to GBP197,735 (2018: GBP189,575). During the
year, no rights to subscribe to the shares of the Company were
granted to, or exercised by Directors, their spouses or infant
children.
DIRECTORS' ATTANCE
The Directors meet as a Board on a quarterly basis and at other
times as necessary and the table below sets out the number of
meetings and the attendance at them by each Director.
Audit
Strategic Board Committee
Number of meetings
held 1 7 2
Number of meetings attended:
Alex Hammond--Chambers 1 7 2
Jonathan Davie 1 7 2
Raymond Oxford 1 6 2
William Salomon 1 7 2
Geoffrey Wood 1 7 2
STATEMENT OF VOTING AT THE AGM
The Directors' Remuneration Report for the year ended 31 March
2018 was presented at the AGM held on 27 July 2018. At that
meeting, the Directors' Remuneration Report was approved by 99.48%
of the votes cast.
The Directors' Remuneration Report for the year ended 31 March
2019 will be presented to the AGM on 29 July 2019.
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 Directors' Remuneration summarises, as
applicable, for the year ended 31 March 2019:
(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
20 June 2019
Independent Auditor's 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
We have audited the financial statements of Hansa Trust PLC (the
'company') for the year ended 31 March 2019, which comprise the
income statement, the balance sheet, the statement of changes in
equity, the cashflow statement and notes to the financial statements,
including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs
as at 31 March 2019 and of its profit for the year then ended;
have been properly prepared in accordance with IFRSs as adopted
by the European Union; and
have been prepared in accordance with the requirements of the Companies
Act 2006.
-------------------------------------------------------------------------
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
'Auditor's responsibilities for the audit of the financial
statements' section of our report. We are independent of the
company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to public interest
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to principal risks, going concern and
viability statement
We have nothing to report in respect of the following
information in the annual report, in relation to which the ISAs
(UK) require us to report to you whether we have anything material
to add or draw attention to:
-- the disclosures in the annual report set out above and below
that describe the principal risks and explain how they are being
managed or mitigated;
-- the directors' confirmation above 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 directors' statement, set out in the financial statements
about whether the directors considered it appropriate to adopt the
going concern basis of accounting in preparing the financial
statements and the directors' 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;
-- whether the directors' statement relating to going concern
required under the Listing Rules in accordance with Listing Rule
9.8.6R(3) is materially inconsistent with our knowledge obtained in
the audit; or
-- the directors' explanation, set out above 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.
Overview of our audit approach
* Overall materiality: GBP3,373,000, which represents
1% of the company's Net Assets;
* Key audit matters were identified as existence and
valuation of quoted and unquoted investments; and
occurrence and completeness of investment income.
* Our audit approach was a risk based substantive audit
focused on investments at the year end and investment
income recognised during the year. There was no
change in our approach from prior year.
-------------------------------------------------------------
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those that had
the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
Key Audit Matter How the matter was addressed in the audit
-------------------------------------------------------------
Risk 1 - Existence and For unquoted investments, our audit work included,
valuation of quoted but was not restricted to:
and unquoted investments * Assessing whether the company's accounting policy for
The company's business unquoted investments is in accordance with IFRSs and
is to achieve a growth the Association of Investment Companies "Statement of
of shareholder value, Recommended Practice: Financial Statements of
from a concentrated, Investment Trust Companies and Venture Capital
long-term, non-index Trusts" (AIC SORP) and testing whether the company
correlated investment has accounted for unquoted investments in accordance
portfolio. The investment with the policy;
portfolio is a significant,
material item in the
financial statements * Assessing whether the valuations were performed in
and the main driver accordance with the International Private Equity and
of the company's performance. Venture Capital Valuation guidelines;
Incorrect asset pricing
or a failure to maintain
proper legal title of * Obtaining an understanding of the investment
the investments held valuation process for Private Equity funds by testing
by the company could the fund's latest available audited financial
have an impact on the statements and by reviewing the fund's latest
portfolio valuation quarterly reports;
and, therefore, the
return generated for
Shareholders. * Obtaining a direct confirmation of the investments
We therefore identified held by the company at the year-end from the
the existence and valuation respective fund administrators.
of unquoted investments
as a significant risk,
which was one of the * Testing the additions and disposals on a sample basis
most significant assessed to determine the additions and disposals were
risks of material misstatement. accurately recorded and occurred.
* For quoted investments, our audit work included, but
was not restricted to:
* Assessing whether the company's accounting policy for
quoted investments is in accordance with the
requirements of IFRS 9 Financial instruments and the
AIC SORP and testing whether the company has
accounted for such investments in accordance with the
policy;
* Agreeing the existence of investments holdings to the
confirmation from the company's custodian;
* Testing the additions and disposals on a sample basis
to determine the additions and disposals were
accurately recorded and occurred, and
* Comparing the valuation to an independent source of
market prices.
The company's accounting policy on non-current
investments is shown in Note 1(d) to the financial
statements and related disclosures are included
in Note 10.
Key observations
Our audit work did not identify any material
misstatements concerning the valuation and
existence of quoted and unquoted investments.
--------------------------------- -------------------------------------------------------------
Risk 2 - Occurrence Our audit work included, but was not restricted
and completeness of to:
investment income * Assessing whether the company's accounting policy for
Investment income is revenue recognition is in accordance with IFRSs and
the company's major the AIC SORP;
source of revenue and
a significant material
balance in the Statement * Testing that income transactions were recognised in
of Comprehensive Income. accordance with the company's policy by selecting a
We therefore identified sample of investments and agreeing the relevant
the occurrence and completeness associated income to third party sources
of investment income
as a significant risk
which was one of the * For a sample of investments, obtaining the respective
most significant assessed dividend rate entitlements from independent sources,
risks of material misstatement. checking against the amounts recorded in the
company's accounting records maintained by the
administrator and agreeing the receipt of the
dividend to bank statements;
* Evaluation of correct categorisation of any material
items that may be capital in nature.
The company's accounting policy on investment
income is shown in Note 1(f) to the financial
statements and related disclosures are included
in Note 2.
Key observations
Our audit work did not identify any material
misstatements concerning the occurrence and
completeness of investment income.
--------------------------------- -------------------------------------------------------------
Our application of 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 GBP3,373,000, which is 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 2018 to reflect the
increase in net assets 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 management fees, directors remuneration and
related parties. We determined the threshold at which we will
communicate misstatements to the Audit Committee to be GBP168,650.
In addition, we will communicate misstatements below that threshold
that, in our view, warrant reporting on qualitative grounds.
An overview of the scope of our audit
Our audit approach was a risk-based approach founded on a
thorough understanding of the company's business, its environment
and risk profile. 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 obtaining and reading controls reports prepared by
third-party auditors on the description and assessing the design of
internal controls at the custodian and administrator.
-- Undertaking substantive testing on significant classes of
transactions, account balances and disclosures, the extent of which
was based on a number of 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 information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our
responsibility to specifically address the following items in the
other information and to report as uncorrected material
misstatements of the other information where we conclude that those
items meet the following conditions:
-- Fair, balanced and understandable set out above - the
statement given by the directors that they consider the annual
report and financial statements taken as a whole is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the company's performance, business model
and strategy, is materially inconsistent with our knowledge
obtained in the audit; or
-- Audit committee reporting set out above - the section
describing the work of the audit committee does not appropriately
address matters communicated by us to the audit committee; or
-- Directors' statement of compliance with the UK Corporate
Governance Code set out above - the parts of the directors'
statement required under the Listing Rules relating to the
company's compliance with the UK Corporate Governance Code
containing provisions specified for review by the auditor in
accordance with Listing Rule 9.8.10R(2) do not properly disclose a
departure from a relevant provision of the UK Corporate Governance
Code.
Our opinions on other matters prescribed by the Companies Act
2006 are 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
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial statements
and those reports have been prepared in accordance with applicable
legal requirements;
-- the information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5 and
7.2.6 in the Disclosure Rules and Transparency Rules sourcebook
made by the Financial Conduct Authority (the FCA Rules), is
consistent with the financial statements and has been prepared in
accordance with applicable legal requirements; and
-- information about the company's corporate governance code and
practices and about its administrative, management and supervisory
bodies and their committees complies with rules 7.2.2, 7.2.3 and
7.2.7 of the FCA Rules.
Matters 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 directors' report; or
-- the information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5 and
7.2.6 of the FCA Rules.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us 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; or
-- a Corporate Governance Statement has not been prepared by the company.
Responsibilities of directors for the financial statements
As explained more fully in the directors' responsibilities
statement set out above, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
We are responsible for obtaining reasonable assurance that the
financial statements taken as a whole are free from material
misstatement, whether caused by fraud or error. Owing to the
inherent limitations of an audit, there is an unavoidable risk that
material misstatements of the financial statements may not be
detected, even though the audit is properly planned and performed
in accordance with the ISAs (UK). Our audit approach is a
risk-based approach and is explained more fully in the 'An overview
of the scope of our audit' section of our audit report.
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance with
laws and regulations, our procedures included the following:
We obtained an understanding of the legal and regulatory
frameworks applicable to the company. We determined that the
following laws and regulations were most significant: IFRS, section
1158 to section 1164 of the Corporation Tax Act 2010, Companies Act
2006 and AIC SORP
We understood how the company is complying with those legal and
regulatory frameworks by, making inquiries to management and the
corporate secretary. We corroborated our inquiries through our
review of board minutes and papers provided to the Audit
Committee
We assessed the susceptibility of the company's financial
statements to material misstatement, including how fraud might
occur. Audit procedures performed by the engagement team
included:
-- challenging assumptions and judgments made by management in
its significant accounting estimates
-- designing audit procedures to identify unusual journal
transactions during the period and testing journal entries posted
at the period end
-- assessing the extent of compliance with the relevant laws and
regulations as part of our audit procedures
We did not identify any key audit matters relating to
irregularities, including fraud, as a result of our audit
procedures
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Other matters which we are required to address
Grant Thornton UK LLP has been the Company's auditor for nine
years. Prior to that, and before its merger with Grant Thornton,
RSM Robson Rhodes LLP was the Company' s auditor. RSM Robson Rhodes
were first appointed by the members in 1990 for the year ended 31
March 1989. The period of total uninterrupted engagement including
the preceding RSM Robson Rhodes tenure, previous renewals and
reappointments of the firm is 30 years.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the company and we remain independent of the
company in conducting our audit.
Our audit opinion is consistent with the additional report to
the audit committee.
Use of our report
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.
Andrew Heffron
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
21 June 2019
Income Statement
For the year ended 31 March 2019
Notes Revenue Capital Total Revenue Capital Total
2019 2019 2019 2018 2018 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gains on investments
held at fair value
through profit or loss 10 - 15,845 15,845 - 16,825 16,825
Exchange gains on currency
balances - 37 37 - 92 92
Investment income 2 6,669 - 6,669 6,062 - 6,062
6,669 15,882 22,551 6,062 16,917 22,979
Investment management
fees 3 (2,335) - (2,335) (2,238) - (2,238)
Other expenses 4 (2,041) - (2,041) (1,253) - (1,253)
(4,376) - (4,376) (3,491) - (3,491)
Profit before finance
costs and taxation 2,293 15,882 18,175 2,571 16,917 19,488
Finance costs 5 - - - - - -
Profit before taxation 2,293 15,882 18,175 2,571 16,917 19,488
Taxation 6 (11) (75) (86) (38) - (38)
Profit for the year 2,282 15,807 18,089 2,533 16,917 19,450
Return per Ordinary
and
'A' non-voting Ordinary
share 8 9.2p 66.2p 75.4p 10.6p 70.5p 81.1p
The Company does not have any income or expense not included in
the above statement. Accordingly the "Profit 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.
Balance Sheet
As at 31 March 2019
Notes 2019 2018
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 335,162 322,322
10 335,791 322,951
Current assets
Trade and other receivables 12 1,118 55
Cash and cash equivalents 13 2,474 1,102
3,592 1,157
Current liabilities
Trade and other payables 14 (2,033) (1,007)
Net current assets 1,559 150
Net assets 337,350 323,101
Capital and reserves
Called up share capital 15 1,200 1,200
Capital redemption reserve 16 300 300
Retained earnings 17 335,850 321,601
Total equity shareholders' funds 337,350 323,101
Net asset value per Ordinary and 'A' non-voting
Ordinary share 18 1,405.6p 1,346.3p
The Financial Statements of Hansa Trust PLC, registered number
00126107, were approved by the Board of Directors on 20 June 2019
and were signed on its behalf by
Alex Hammond-Chambers
Chairman
The accompanying notes below are an integral part of this
Statement.
Statement of Changes in Equity
For the year ended 31 March 2019
Notes Share Capital Retained Total Share Capital Retained Total
capital redemption earnings 2019 capital redemption earnings 2018
2019 reserve 2019 GBP000 2018 reserve 2018 GBP000
GBP000 2019 GBP000 GBP000 2018 GBP000
GBP000 GBP000
Net assets at
1 April 1,200 300 321,601 323,101 1,200 300 305,980 307,480
Profits for the
year - - 18,089 18,089 - - 19,450 19,450
Dividends 7 - - (3,840) (3,840) - - (3,829) (3,829)
Net assets at
31 March 1,200 300 335,850 337,350 1,200 300 321,601 323,101
Cash Flow Statement
For the year ended 31 March 2019
Notes 2019 2018
GBP000 GBP000
Cash flows from operating activities
Gain before finance costs and taxation* 18,175 19,488
Adjustments for:
Realised (gains) on investments 10 (718) (12,670)
Unrealised (gains) on investments 10 (15,127) (4,155)
Effect of foreign exchange rate changes (37) (92)
(Increase)/decrease in trade and other receivables 12 (1,063) 4,051
Increase in trade and other payables 14 1,026 22
Taxes paid 6 (86) (38)
Purchase of non-current investments (34,598) (59,284)
Sale of non-current investments 37,603 53,458
Net cash inflow from operating activities 5,175 780
Cash flows from financing activities
Dividends paid 7 (3,840) (3,829)
Net cash outflow from financing activities (3,840) (3,829)
Decrease/(increase) in cash and cash equivalents 1,335 (3,049)
Cash and cash equivalents at 1 April 1,102 4,059
Effect of foreign exchange rate changes 37 92
Cash and cash equivalents at end of year 13 2,474 1,102
*Includes dividends received of GBP6,516,000 (2018:
GBP6,080,000) and interest received of GBP7,000 (2018:
GBP5,000).
The accompanying notes below 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 in line with the assertion of the
Board above, 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 February 2018, 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 and associates of Investment
Entities are not consolidated but, rather, stated at fair value
unless the conditions for certain exemptions from this treatment
are met. Hansa 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. On 18 June 2019,
CIFL was disolved.
(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 classified at
fair value through profit or loss on initial recognition in
accordance with IFRS 9. The Company manages and evaluates the
performance of these investments on a fair value basis, in
accordance with its investment strategy and information about the
investments is provided on this basis to the Board of
Directors.
Investments are recognised and derecognised on the trade date.
For listed investments fair value is deemed to be bid market
prices, or closing prices for SETS stocks sourced from the London
Stock Exchange. SETS is the London Stock Exchange's electronic
trading service, covering most of the market including all FTSE 100
constituents and most liquid FTSE 250 constituents, along with some
other securities.
Fund investments are stated at fair value through profit or loss
as determined by using the most recent available valuation. In some
cases, this will be by reference to the most recent valuation
statement supplied by the fund's manager. In other cases, values
may be available through the fund being listed on an exchange or
via pricing sources such as Bloomberg.
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, overseas dividends and Real Estate
Investment Trusts' ("REIT") income are all 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. 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 2019. The most recent valuation
statement was received on 8 February 2019 stating the value of the
Company's holding as at 31 December 2018. It is believed the value
of DV4 as at 31 March 2019 will not be materially different but
this valuation is based on historic valuations by DV4, does not
have a readily available third party comparator and, as such, is an
estimate. There are no significant judgements.
(l) Adoption of new and revised standards
The following amendments to standards effective this year, being
relevant and applicable to the Company, have been adopted, although
they have no impact on the financial statements:
-- IFRS 7 Financial Instruments (IFRS 9 Disclosures)
-- IFRS 9 Financial Instruments
IFRS 9, 'Financial instruments' became effective for annual
periods beginning on or after 1 January 2018. It addresses the
classification, measurement and derecognition of financial assets
and liabilities and replaces the multiple classification and
measurement model in IAS 39.
IFRS 9 uses business model and contractual cash flow
characteristics to determine whether a financial asset is measured
at amortized cost or fair value, replacing the four category
classification in IAS 39. The determination is made at initial
recognition. The approach is based on how an entity manages its
financial instruments (its business model) and the contractual cash
flow characteristics of the financial assets.
2 INCOME
Revenue Revenue
2019 2018
GBP000 GBP000
Income from quoted investments
UK dividends 688 653
Overseas and other dividends 5,756 5,105
Property income distributions 218 300
6,662 6,058
Other income
Interest receivable on AAA rated money market funds 7 4
Total income 6,669 6,062
3 PORTFOLIO MANAGEMENT FEE
Revenue Revenue
2019 2018
GBP000 GBP000
Portfolio management fee 2,335 2,238
Total management fee 2,335 2,238
Note: Details of the Portfolio Management Agreement are
disclosed in the Strategic Report - Service Providers above.
4 OTHER EXPENSES
Revenue Revenue
2019 2018
GBP000 GBP000
Administration fees* 135 132
AIFM fees* 131 127
Directors' remuneration* 141 141
Auditor's remuneration for:
- audit of the Company's Annual Report 36 36
Fees payable to the Auditor for other services:
- Audit Related Assurance Services: review of the
Half-Year Report 4 4
Irrecoverable VAT on audit fees 8 8
Printing fees 36 29
Marketing 102 102
Registrar's fees 58 61
Banking charges* 152 145
Secretarial services 150 128
Other** 1,088 340
2,041 1,253
* Denotes services that do not incur VAT. VAT on other costs,
where incurred, forms part of the irrecoverable VAT cost.
** The significant increase in 'Other' fees during the year to
March 2019 is due to professional fees incurred on behalf of a
number of projects totalling circa GBP680,000 Including VAT. The
largest of these was relating to the preparatory work for the
re-domicile project.
5 FINANCE COSTS
Revenue Revenue
2019 2018
GBP000 GBP000
Interest payable - -
- -
6 TAXATION
Taxation on Ordinary Activities
Revenue Capital Total Revenue Capital Total
2019 2019 2019 2018 2018 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
UK Corporation Tax at 19%
(2018: 19%)
Irrecoverable foreign tax 86 - 86 38 - 38
Tax relief on gain arising
from disposal of Non--Reporting
Offshore Fund (75) 75 - - - -
11 75 86 38 - 38
Factors affecting tax charge for the year
Approved investment trusts are exempt from tax on capital gains.
The tax charge for the year is lower than the standard rate of
Corporation Tax in the UK of 19% (2018: 19%). The differences are
explained below:
2019 2018
GBP000 GBP000
Total profit before taxation 18,175 19,488
Profit multiplied by standard rate of Corporation
Tax 3,453 3,703
Effects of:
- Non-taxable capital (3,018) (3,214)
- Gain arising on disposal of Non-Reporting Offshore
Fund 75 -
- Non-taxable investment income (1,224) (1,094)
- Excess administration expenses unused 714 605
- Irrecoverable foreign tax 86 38
Current tax charge 86 38
Provision for deferred taxation
There is no requirement to make a provision for deferred
taxation in the current or prior accounting year.
Factors that may affect future tax charges
As at 31 March 2019 the Company had unutilised management
expenses and loan relationship deficits of GBP31,439,000 (2018:
GBP27,454,000) after taking into account unrealised gains of
GBP928,000 (2018: GBP1,156,000) on Non-Reporting Offshore Funds.
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. Presently only the capital gains on Non-Reporting
Funds are subject to tax. No deferred tax liability has been
recognised in relation to the unrealised gains on these funds due
to the excess of unutilised management expenses.
7 DIVIDS PAID
2019 2018
GBP000 GBP000
Amounts recognised as distributed to shareholders
in the year are as follows:
Second interim dividend for 2018 (paid May 2018):
8.0p (2017: 8.0p) 1,920 1,920
First interim dividend for 2019 (paid November
2018): 8.0p (2018: 8.0p) 1,920 1,920
Unclaimed dividends refunded - (11)
3,840 3,829
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 GBP2,207,000 (2018: GBP2,533,000).
Revenue Revenue
2019 2018
GBP000 GBP000
First interim dividend for 2019 (paid November
2018): 8.0p (2018: 8.0p) 1,920 1,920
Second interim dividend for 2019 (paid May 2019):
8.0p (2018: 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 2019. No final dividend is proposed for the year
ended 31 March 2019.
8 RETURN ON ORDINARY SHARES (EQUITY)
Revenue Capital Total Revenue Capital Total
2019 2019 2019 2018 2018 2018
Returns per share 9.2p 66.2p 75.4p 10.6p 70.5p 81.1p
Returns
Revenue return per share is based on the revenue attributable to
equity shareholders of GBP2,282,000 (2018: GBP2,533,000).
Capital return per share is based on the capital profit
attributable to equity shareholders of GBP15,882,000 (2018: Profit
of GBP16,917,000).
Total return per share is based on the combination of revenue
and capital returns attributable to equity shareholders, amounting
to a net profit of GBP18,089,000 (2018: net profit of
GBP19,450,000).
Both revenue and capital return are based on 8,000,000 Ordinary
shares (2018: 8,000,000) and 16,000,000 'A' non-voting Ordinary
shares (2018: 16,000,000), in issue throughout the year.
9 INVESTMENT IN SUBSIDIARY
As at 31 March 2019, 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 2019 was GBP629,000 (2018: GBP629,000).
During the year to 31 March 2019, Consolidated Investment Funds
Limited was dormant and held no investments except for an
intercompany loan. As of 18 June 2019, Consolidated Investment
Funds Ltd was dissolved.
10 INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
Listed AIM & Unquoted 2019 2018
GBP000 OFEX GBP000 Total Total
GBP000 GBP000 GBP000
Cost at 1 April 2018 89,464 - 105,988 195,452 176,956
Investment holding gains at
1 April 2018 106,683 - 20,816 127,499 123,344
Valuation at 1 April 2018 196,147 - 126,804 322,951 300,300
Movements in the year:
Purchases at cost 20,249 - 14,349 34,598 59,284
Sales - proceeds (21,423) - (16,180) (37,603) (53,458)
Gains/(losses) on sales 1,235 - (517) 718 12,670
Movement in investment holding
gains 7,375 - 7,752 15,127 4,155
Valuation as at 31 March 2019 203,583 - 132,208 335,791 322,951
Cost 89,525 - 103,640 193,165 195,452
Investment holding gains 114,058 - 28,568 142,626 127,499
203,583 - 132,208 335,791 322,951
2019 2018
GBP000 GBP000
Gains on sales 718 12,670
Movement in investment holding gains 15,127 4,155
Gains on investments held at fair value through profit
or loss 15,845 16,825
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:
2019 2018
GBP000 GBP000
Purchases 68 77
Sales 16 45
84 122
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 as at 31 March 2019 are detailed
below:
Exc. Minority Interest
Country Class of % of Latest Total Profit
of capital class available capital after
incorporation held accounts and tax for
or registration reserves the year
Ocean Wilsons Holdings
Limited Bermuda Ordinary 26.5 31.12.18 $554,225,000 $13,308,000
Consolidated Investment
Funds Limited UK Ordinary 100.0 31.03.18 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 % of class
Capital held
Ocean Wilson Holdings Limited Ordinary 26.5
Helesi Plc Ordinary 3.8
All Leisure Group Plc Ordinary 3.6
12 TRADE AND OTHER RECEIVABLES
2019 2018
GBP000 GBP000
Amounts due from brokers 184 -
Overseas withholding tax recoverable 6 6
Prepayments and accrued income 138 49
Cash committed to purchase SR Global Fund Inc.
Frontier Markets Class M 790 -
1,118 55
13 CASH AND CASH EQUIVALENTS
2019 2018
GBP000 GBP000
Cash at bank 2,474 1,102
2,474 1,102
14 TRADE AND OTHER PAYABLES
2019 2018
GBP000 GBP000
Amounts due to brokers 694 -
Due to subsidiary undertaking 629 629
Other creditors and accruals 710 378
2,033 1,007
15 CALLED UP SHARE CAPITAL
2019 2018
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 RESERVE
2019 2018
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**
2019 2019 2019 2019 2018 2018 2018 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Opening balance at
1 April 1,565 192,537 127,499 321,601 2,861 179,775 123,344 305,980
Profit for the year 2,282 680 15,127 18,089 2,533 12,762 4,155 19,450
Dividend paid (3,840) - - (3,840) (3,829) - - (3,829)
Closing balance at
31 March 7 193,217 142,626 335,850 1,565 192,537 127,499 321,601
* 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
2019 2018
NAV per Ordinary and 'A' non-voting Ordinary share 1,405.6p 1,346.3p
The NAV per Ordinary and 'A' non-voting Ordinary share is based
on the net assets attributable to equity shareholders of
GBP337,350,000 (2018: GBP323,101,000) and on 8,000,000 Ordinary
shares (2018: 8,000,000) and 16,000,000 'A' non-voting Ordinary
shares (2018: 16,000,000) in issue at 31 March 2019.
19 COMMITMENTS AND CONTINGENCIES
The Company has no outstanding commitments as at 31 March 2019
(2018: GBPnil).
20 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Company's financial instruments comprise securities, cash
balances, debtors and creditors. These assets are classified in the
following measurement categories:
-- those to be measured subsequently at fair value through profit or loss; and
-- those to be measured at amortised cost.
The financial assets held at amortised cost include trade and
other receivables, cash and cash equivalents.
Risk Objectives and Policies
The objective of the Company is to achieve growth of shareholder
value commensurate with the risks taken, bearing in mind that the
protection of long-term shareholder value is paramount. The policy
of the Board is to provide a framework within which the Portfolio
Manager can operate and deliver the objectives of the Company. In
pursuing its investment objective, the Company is exposed to a
variety of risks that could result in either a reduction in the
Company's net assets and/or a reduction of the profits available
for dividends.
These risks include those identified by the accounting standard
IFRS 7, being market risk (comprising currency risk, interest rate
risk and other price risk), liquidity risk and credit risk. The
Directors' approach to the management of these 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 2019 foreign foreign 2018
currency currency GBP000 currency currency GBP000
risk risk risk risk
2019 2019 2018 2018
GBP000 GBP000 GBP000 GBP000
Investments 113,164 221,998 335,162 95,982 226,340 322,322
Investment in subsidiary - 629 629 - 629 629
Other receivables including
prepayments 184 934 1,118 - 55 55
Cash at bank - 2,474 2,474 - 1,102 1,102
Current liabilities - (2,033) (2,033) - (1,007) (1,007)
113,348 224,002 337,350 95,982 227,119 323,101
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 (2018:
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 (2018: GBPnil). The level of banking facilities utilised
at 31 March 2019 was GBPnil (2018: GBPnil).
Interest rate changes usually impact equity prices. The level
and direction of change in equity prices is subject to prevailing
local and world economic conditions as well as market sentiment,
all of which are very difficult to predict with any certainty. The
Company has floating rate financial assets, consisting of bank
balances and cash funds that have received average rates of
interest during the year of 0.0% on bank balances.
Cash flow No Total Cash flow No Total
interest interest 2019 interest interest 2018
rate risk rate risk GBP000 rate risk rate risk GBP000
2019 2019 2018 2018
GBP000 GBP000 GBP000 GBP000
Investments - 335,162 335,162 - 322,322 322,322
Investment in subsidiary - 629 629 - 629 629
Other receivables including
prepayments - 1,118 1,118 - 55 55
Cash at bank 2,474 - 2,474 1,102 - 1,102
Current liabilities - (2,033) (2,033) - (1,007) (1,007)
2,474 334,876 337,350 1,102 321,999 323,101
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, GBP104.8m as valued at 31 March 2019 (2018:
GBP100.1m) and as a proportion of the NAV, 31.1% (2018: 31.0%).
Shareholders should be aware that if anything of a severe and
untoward nature were to happen to this company, it could result in
a significant impact on the NAV and share price. However, it should
also be noted that the exposure of Hansa 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 60.2% of Ocean
Wilsons' NAV, has a direct exposure to the Brazilian economy,
whereas Ocean Wilsons Investments is not exposed to Brazil and
corresponds to the other 39.8%. It is an investment the Board pays
close attention to and it should be pointed out that the risks
associated with it are very different from those of the other
companies represented in the portfolio. The Board itself regularly
undertakes a thorough review of its business and prospects and has
determined that its future holds a lot of promise. As a consequence
the Board believes the risk involved in the investment is
worthwhile.
The performance of the portfolio as a whole is not designed to
correlate with that of any market index. Should the portfolio of
the Company, as detailed above, 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 GBP33.7m (2018:
GBP32.2m).
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 2019 are
shown in Note 12 and Note 14 above.
The Company's maximum exposure to credit risk on cash is GBP2.5m
(2018: GBP1.1m) and on cash funds is GBPnil (2018: GBPnil). Surplus
cash is on deposit with the Depositary/Custodian.
Liquidity Risk
The liquidity risk to the Company is that it is unable to meet
its obligations as they fall due, as a result of a lack of
available cash and an inability to dispose of investments in a
timely manner. A substantial proportion of the Company's portfolio
is held in liquid quoted investments; however, there is a large
holding in Ocean Wilsons of 31.1% (2018: 31.0%), unquoted equity
investments of 2.9% (2018: 3.6%) and investments into open-ended
investment funds with varying liquidity terms of 45.6% (2018:
43.4%).
The Portfolio Manager takes into consideration the liquidity of
each investment when purchasing and selling, in order to maximise
the returns to shareholders, by placing suitable transaction levels
into the market. Special consideration is given to investments
representing more than 5% of the investee company. A detailed list
of the investments, split by silo, held at 31 March 2019 is shown
above. 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 had no financial liabilities at 31 March 2019
arising from its bank loan facility (2018: GBPnil). This loan is
part of a total revolving credit facility with BNP of GBP30m (2018:
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 2020 and subject to a covenant
requirement of a minimum adjusted NAV of GBP80m. The Company has
undrawn loans from this facility of GBP30m (2018: GBP30m). The
Company holds this facility for use at short notice for its
investment activities. If fully drawn the loan would form 10.0%
(2018: 10.0%) 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:
31 March 2019 Level 1 Level 2 Level 3 Total
GBP000 GBP000 GBP000 GBP000
Financial assets at fair value through
profit or loss
Quoted equities 171,501 - - 171,501
Unquoted equities - - 9,764 9,764
Fund investments 3,109 150,788 - 153,897
Investment in subsidiary - - 629 629
Net fair value 174,610 150,788 10,393 335,791
31 March 2018 Level 1 Level 2 Level 3 Total
GBP000 GBP000 GBP000 GBP000
Financial assets at fair value through
profit or loss
Quoted equities 162,060 - - 162,060
Unquoted equities - - 11,783 11,783
Fund investments 8,335 140,144 - 148,479
Investment in subsidiary - - 629 629
Net fair value 170,395 140,144 12,412 322,951
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:
2019 2018
Equity Equity
investments investments
GBP000 GBP000
Opening Balance 12,412 12,489
Transferred from Level 1 - -
Purchases - -
Sales (2,432) -
Total gains or losses included in gains on investments
in the Income Statement:
- on assets sold 22 -
- on assets held at year end 391 (77)
Closing Balance 10,393 12,412
As at 31 March 2019, 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 2019. The most recent valuation
statement was received on 8 February 2019. It is believed the value
of DV4 as at 31 March 2019 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 2019 would
have increased or decreased by GBP976,400.
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 2019, are disclosed in the Strategic Report -
Shareholder Profile and Engagement above and in Note 3 above.
Details of the relationship between the Company and the Directors,
including amounts paid during the year to 31 March 2019, are
disclosed in the Strategic Report - The Board above and also in the
Directors' Remuneration Report above.
At 31 March 2019 the Company had one subsidiary, Consolidated
Investment Funds Limited, which was dormant and, as at the year
end, was in the process of being wound up. This process was
completed on 18 June 2019 with Companies House confirmng that the
subsidiary had been dissolved. However, as at 31 March 2019, Alex
Hammond-Chambers and William Salomon were directors of CIFL as well
as Hansa Trust. There was 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 2019 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 above.
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 29 July 2019 at 1.00pm, 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 2019.
2 To re-elect Alex Hammond-Chambers (a biography and Board
endorsement can be found above) as a Director of the Company.
3 To re-elect Jonathan Davie (a biography and Board endorsement
can be found above) as a Director of the Company.
4 To re-elect Raymond Oxford (a biography and Board endorsement
can be found above) as a Director of the Company.
5 To re-elect William Salomon (a biography and Board endorsement
can be found above) as a Director of the Company.
6 To re-elect Geoffrey Wood (a biography and Board endorsement
can be found above) as a Director of the Company.
7 To approve the Directors' Remuneration Report.
8 To approve the Company's Dividend Policy as can be found above.
9 To appoint PricewaterhouseCoopers 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:
10 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").
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
20 June 2019
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 25 July 2019
('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 Link Asset Services, PXS, 34 Beckenham Road,
Beckenham, Kent BR3 4TU, or a proxy can be lodged electronically at
www.signalshares.com, in each case no later than 1.00pm on 25 July
2019.
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 20 June 2019 (being the last practicable date prior to
the publication of this Notice) the Company's issued voting 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 20 June 2019 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 1.00pm on 25 July 2019. 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
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
AIFMD
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/2017/08/Hansa-Investor-Disclosure-Document-MISL-21-01-2019-1.pdf
Packaged Retail and Insurance-based Investment Products
("PRIIPs")
The Company's AIFM, Maitland Institutional Services Limited, is
responsible for applying the product governance rules defined under
the MiFID II legislation on behalf of Hansa Trust PLC. Therefore,
the AIFM is deemed to be the 'Manufacturer' of Hansa Trust's two
share classes. Under MiFID II, the Manufacturer must make available
Key Information Documents ("KIDs") for investors to review if they
so wish ahead of any purchase of the Company's shares. Maitland
have done this as required. The PRIIPs KIDs can be found at:
https://documents.feprecisionplus.com/priip/MAIT/PRP/MAIEPT_FE42_en-GB.pdf
and
https://documents.feprecisionplus.com/priip/MAIT/PRP/MAIEPT_FE43_en-GB.pdf
and links to these documents can also be found on the Company's
website for good measure:
https://www.hansatrust.com/shareholder-information/regulatory-information.aspx
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.
Link Asset Services
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: enquiries@linkgroup.co.uk
www.linkassetservices.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 28 June
Annual General Meeting 29 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 (for year ended 31 March 2019)
Grant Thornton UK LLP
30 Finsbury Square
London EC2P 2YU
AUDITOR (proposed, for year ended 31 March 2020)
PricewaterhouseCoopers LLP
Atria One
144 Morrison Street
Edinburgh EH3 8EX
SOLICITORS
Dentons LLP
1 Fleet Place
London EC4M 7WS
REGISTRAR
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
TAX ADVISOR
BDO LLP
55 Baker Street
London W1U 7EU
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
Glossary of Terms
AIC
The Association of Investment Companies ("AIC") is the UK trade
association for closed-ended investment companies.
Alternative Investment Fund Managers Directive ("AIFMD")
The AIFMD is a regulatory framework for alternative investment
fund managers ("AIFMs"), including managers of hedge funds, private
equity firms and investment trusts. Its scope is broad and, with a
few exceptions, covers the management, administration and marketing
of alternative investment funds ("AIFs"). Its focus is on
regulating the AIFM rather than the AIF.
Annual Dividend/Dividend
The amount paid by the Company to shareholders in dividends
(cash or otherwise) relating to a specific financial year of the
Company. UK Investment Trusts are required to distribute a minimum
amount each year based upon a minimum allowed level of retention of
revenue income. The Company's dividend policy is to announce its
expected level of dividend payment at the start of each financial
year. Barring unforeseen circumstances, the Company then expects to
make two interim dividend payments each year - the first at the end
of November during that financial year and the second at the end of
May following the end of the financial year.
Bid Price
The price at which you can sell shares determined by supply and
demand.
Capital Structure
The stocks and shares that make up a trust's capital i.e. the
amount of ordinary and preference shares, debentures and unsecured
loan stock etc. which are in issue.
Closed-ended
A company with a fixed number of shares in issue.
Depositary/Custodian
A financial institution acting as a holder of securities for
safekeeping.
Discount
When the share price is lower than the Net Asset Value, it is
referred to as trading at a discount. The discount is expressed as
a percentage of the Net Asset Value.
Expense Ratio
An expense ratio is determined through an annual calculation,
where the operating expenses are divided by the average NAV. Note
that there is also a description of an additional PRIIPs KID
Ongoing Changes Ratio explained above.
Five Year Rolling NAV Return (per annum)
The rate at which, compounded for five years, will equal the
five year NAV total return to end March, assuming dividends are
always reinvested at pay date.
Five Year NAV and Share Price Total Return
Rebased from 0% at the start of the five year period, this is
the rate at which the Company's NAV and share prices would have
returned at any period from that starting point assuming dividends
are always reinvested at pay date.
Gearing
Gearing refers to the level of borrowing related to equity
capital.
Hedging
Strategy used to reduce risk of loss from movements in interest
rates, equity markets, share prices or currency rates.
Investment Trust
An Investment Trust is a company that is a form of collective
investment vehicle. The company is a closed-end fund and is
constituted as a public limited company listed on a Stock Exchange.
In the UK, Investment Trusts that meet the approval criteria from
HMRC benefit from certain beneficial tax allowances - most notably
not paying tax on Capital Gains. Their taxation status is governed
by s.1158 of the Corporate Tax Act 2010.
Issued Share Capital
Issued share capital is the total number of shares subscribed to
by the shareholders.
Key Performance Indicators/KPIs
A set of quantifiable measures that a company uses to gauge its
performance over time. These metrics are used to determine a
company's progress in achieving its strategic and operational goals
and also to compare a company's finances and performance against
other businesses within its industry.
Market Capitalisation
The market value of a company's shares in issue. This figure is
found by taking the stock price and multiplying it by the total
number of shares outstanding.
Mid Price
The average of the Bid and Offer Prices of a particular traded
share.
Net Asset Value/NAV
The value of the total assets minus liabilities of the
company.
Net Asset Value Total Return
See Total Return.
Offer Price
The price at which you can buy shares determined by supply and
demand.
Ordinary Shares
Shares representing equity ownership in a company allowing
investors to receive dividends. Ordinary shareholders have the
pro-rata right to a company's residual profits. In other words,
they are entitled to receive dividends if any are available after
payments to financial lenders and dividends on any preferred shares
are paid. They are also entitled to their share of the residual
economic value of the company should the business unwind.
Hansa Trust has two classes of Ordinary share. The Ordinary (8m
shares) and the 'A' non-voting Ordinary shares (16m shares). Both
have the same financial interest in the underlying assets of the
Company, and receive the same dividend, but differ only in that
only the former shares have voting rights, whereas the latter do
not. They trade separately on the London Stock Exchange, nominally
giving rise to different share prices at any given time.
Premium
When the share price is higher than the Net Asset Value it is
referred to as trading at a premium. The premium is expressed as a
percentage of the Net Asset Value.
Packaged Retail and Insurance-based Investment Product
("PRIIP")
Packaged retail investment and insurance-based products (PRIIPs)
make up a broad category of financial assets that are regularly
provided to consumers in the European Union. The term PRIIPs,
created by the European Commission to regulate the underlying
market, is defined as any product manufactured by the financial
services industry, to provide investment opportunities to retail
investors, where the amount repayable is subject to fluctuation
because of exposure to reference values or the performance of
underlying assets not directly purchased by the retail
investor.
Public Limited Company ("PLC")
A Public Limited Company in the UK is a company limited by
shares with an authorised share capital of over GBP50,000.
Shareholders' Funds/Equity Shareholders' Funds
This equates to the Net Asset Value of the Company.
Spread
The difference between the Bid and Ask price.
TIDM
Tradable Instrument Display Mnemonics ("TIDM"). A short, unique
code used to identify UK-listed shares. The TIDM code is unique to
each class of share and to each company. It allows the user to
ensure that they are referring to the right share. Previously known
as EPIC.
Total Return
When measuring performance, the actual rate of return of an
investment or a pool of investments over a given evaluation period.
Total return includes interest, capital gains, dividends and
distributions realised over a given period of time.
Total Return - Shareholder
The Total Return to a shareholder is a measure of the
performance of the company's share price over time. It combines
share price appreciation/depreciation and dividends paid to show
the total return to the shareholder expressed as an annualised
percentage.
VIX Index
The VIX, or the CBOE Volatility Index, is a widely used measure
of the implied volatility of the stock market, based on S&P 500
index options. It is calculated and published by the Chicago Board
Options Exchange.
Hansa 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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACSPGUQAQUPBGQG
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June 21, 2019 13:06 ET (17:06 GMT)
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