Half-year Report

RNS Number : 2976T

Hansa Investment Company Limited

23 November 2021

Hansa , investing to create long-term growth

Interim Report

Six months ended

30 September 2021

2021

Welcome

I am pleased to present the 2021 Interim Report for Hansa Investment Company Limited ("the Company", "HICL") to the shareholders.

The Covid-19 pandemic has continued to dominate the news headlines during 2021, but I am pleased to say that many of those reports have been regarding vaccination success as well as the ever-increasing bank of knowledge the worldwide scientific community is accumulating in the treatment and defence against the virus. There is a huge challenge to protect the populations of Developing World countries, where access to vaccination remains generally poor, but there is a sense that the battle is being won. I am also pleased to say your Company and its service providers have continued to operate successfully during this period, which is testament to their planning and resourcefulness.

I draw your attention to the detailed Statement written by Alec Letchfield of our Portfolio Manager, Hansa Capital Partners LLP ("HCP"). You'll note Alec's current views on the wider market and also specific thoughts on your Company's portfolio of assets. In summary, whilst Alec flags potential storm clouds on the horizon for global markets, I am pleased to say that the portfolio has shown good performance over the six months covered by this Report.

Finally, by the time this Report is published, you will no doubt have noted that the second quarterly interim dividend, totalling 0.8p per share for the year to 31 March 2022 was paid on 26 November 2021.

With best wishes

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

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

Interim Report

Chairman's Report to the Shareholders

Interim Management Report

Portfolio Manager's Report

Portfolio Statement

Financial Statements

Condensed Income Statement

Condensed Balance Sheet

Condensed Statement of Changes in Equity

Condensed Cash Flow Statement

Notes to the Condensed Financial Statements

Investor Information

Company Information

Chairman's Report to the Shareholders

JONATHAN DAVIE

Chairman

Introduction

I am pleased to report that our Portfolio Manager and other service providers to Hansa Investment Company remain resilient and have not been operationally affected by the continuing Covid-19 problems.

SHAREHOLDER RETURNS

The past six months have shown an increase in net asset value ("NAV") from 306.6p to 322.0p, whilst the discount has narrowed from 35.4% to 33.1% for the Ordinary shares and from 35.3% to 34.3% for the "A" Ordinary shares.

The Core Regional and Thematic silos have shown increases of 9.9% and 4.8% respectively against an increase in the MSCI ACWI NR Index of 8.9%. It was also very encouraging to see our long-term holding in Ocean Wilson Holding Ltd ("OWHL") increase by 20.9% in the period.

The lesson from history about a potential increase in the value of the Brazilian Real I mentioned in my Interim Statement last year has failed to materialise. That said, the Real has stabilised which is encouraging against a background of drought, frost which has devastated the coffee crop and the continuing high rate of Covid-19 deaths, which at the time of writing are thankfully starting to decline rapidly.

Our global equity portfolio has declined 2.9%, mainly due to its exposure to value rather than growth.

I am pleased to report that our Manager, Alec Letchfield, continues to manage our portfolio with great thoughtfulness and diligence, which you will see from his report, despite the volatile environment.

PROSPECTS

The outlook for stock markets remains challenging, partially as a result of labour shortages, supply disruption creating bottlenecks and Covid-19 which continues to wreak havoc in many countries.

All the above, together with ample liquidity and ultra-low interest rates, are beginning to develop noticeable inflationary trends, creating an increasing amount of pressure for Central Banks to act to prevent inflation getting out of control. None of the above is helped by international tensions, particularly between China and the western democracies led by the United States.

Perhaps one of the bigger surprises has been the sudden appearance of energy shortages as the northern hemisphere winter looms. Striking examples include a cargo of LNG which, in early 2020, was priced at about $10m, is now trading at about $280m, or that oil traded at less than zero one day on the US futures market in April 2020 against a price at the time of writing of approximately $86 per barrel.

To my mind the oil price will remain firm for a number of reasons. On the supply side the search for new reserves and shale production has declined rapidly, whilst demand in the developing countries is rising and global demand is now almost back to where it was before the pandemic started. Whilst inflationary in the near future, this may prove to be the decisive factor to create deflationary forces in the longer-term.

It is very difficult to forecast where and when inflation will peak in the present cycle. All we know for certain is that the present problems of shortages, disruption and quantitative easing which are some of the reasons for noticeable wage inflation, will come to a close to be followed by a surplus of goods which will signal the start of a deflationary period.

On a positive note, it is encouraging to see some commitments being made on a number of issues at the COP26 Climate Change Conference held in Glasgow, particularly the abandonment of deforestation and reductions in methane‑emissions. It would be remiss of me not to write about HICL's actions and thoughts on the present ESG debate. On the matter of investment policy, as reported in the Year-end Report, our Portfolio Manager continues to develop its Responsible Investment Policy which the Board supports. As a long-term investor, HCP has a natural desire to be a responsible investor and good corporate citizen. This is reflected in the belief that such businesses and investments are likely to generate superior long-term returns and, furthermore, consideration of such issues is an important element in the assessment of potential risks. The Responsible Investment Policy seeks to incorporate ESG factors into investment decision‑making. The Manager is not pursuing an exclusionary policy through negatively screening potential funds or companies and thereby restricting our investment universe, but instead will engage with those companies and funds which they feel are falling short on their responsibilities. However, there is an expectation that our existing investments should take ESG issues seriously, to clearly report on them and to aspire to do the right thing. Additionally, as you may also recall when HICL became domiciled in Bermuda, your Board decided to make the relevant carbon offset payments on travel, which we continue to do through GreenFleet Australia, a leading not-for-profit environmental organisation on a mission to protect our climate by restoring forests.

Alec Letchfield's comments reflect a more nuanced approach to investment opportunities, with the possibility of greater volatility and more modest returns, whilst sticking with a continuing strong bias towards equity investment.

Let us all hope the Covid-19 challenge continues to decline as we all learn to cope with this coronavirus.

May I wish you all seasonal good wishes and much good health, and prosperity for 2022.

Jonathan Davie
Chairman
23 November 2021

Interim Management Report

The Directors present their Report and Condensed Financial Statements for the period to 30 September 2021.

THE BOARD'S OBJECTIVES

The Board's primary objective is to achieve growth of shareholders' value over the medium to long‑term.

THE BOARD

Your Board consists of the following persons, each of whom brings certain individual and complementary skills and experience to the Board's workings:

Jonathan Davie (Chairman of the Board and Management Engagement Committee), Richard Lightowler (Chairman of the Audit Committee), Simona Heidempergher (Chairman of the Remuneration Committee), William Salomon and Nadya Wells (Chairman of the Nomination Committee).

Individual profiles for each member of the Board can be found in the Company's Annual Report each year and on our website.

BUSINESS REVIEW FOR THE PERIOD TO 30 SEPTEMBER 2021

The Business Review, which includes a discussion of important events which occurred within the period to 30 September 2021, is covered in the Chairman's Report to the Shareholders and the Portfolio Manager's Report.

Hansa Investment Company Limited is a Bermudan company formed in June 2019 to take on the business of Hansa Trust Ltd ("Hansa Trust"). As a company, HICL has limited financial history only having taken on the business of Hansa Trust in August 2019. Therefore, when discussing the medium and longer-term financial performance of the Company and its portfolio, the Board will continue to incorporate the financial performance from Hansa Trust, as well as HICL where relevant.

KEY RISKS FOR THE FINANCIAL YEAR TO 31 MARCH 2022

The key risks and uncertainties relating to the period ended 30 September 2021 and for the year ended 31 March 2022 are materially the same as those reported in the Year-end Report for the Company for the year ended 31 March 2021. Specifically, with regard to Covid-19, the Board is of the opinion that the worst is already behind us and is optimistic that the ongoing global vaccine rollout, as well as the multitude of other treatment strategies will limit the future economic damage from this virus. The Board, with the Portfolio Manager, continues to focus on the likely future economic impacts as the world emerges from the pandemic and how these, in turn should influence our investment approach.

GOING CONCERN BASIS OF ACCOUNTING FOR THE PERIOD TO 30 SEPTEMBER 2021

The Directors consider it appropriate to adopt the going concern basis of accounting in preparing these Interim Financial Statements. The Directors do not know of any material uncertainties to the Company's ability to continue to adopt this approach over a period of at least 12 months from the date of approval of these Financial Statements.

The Directors will include a Long-Term Viability Statement in each Annual Report.

RELATED PARTY TRANSACTIONS

During the period, Hansa Capital Partners LLP charged portfolio management fees and company secretarial fees to the Company, amounting to £1,601,000 excluding VAT (six months to 30 September 2020: £1,291,000; year to 31 March 2021: £2,742,000). Amounts outstanding at 30 September 2021 were £261,000 (30 September 2020: £219,000; 31 March 2021: 251,000).

THE BOARD'S RESPONSIBILITIES

The Board is charged by the shareholders with responsibility for oversight of 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 remain unchanged from those detailed in the last Annual Report.

The Directors confirm to the best of their knowledge that:

• The condensed set of Financial Statements contained within the Interim Financial Report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and on a going concern basis.

• This Interim Management Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency Rules.

The above Interim Management Report, including the Responsibility Statement, was approved by the Board on 23 November 2021 and was signed on its behalf by:

Jonathan Davie
Chairman
23 November 2021

All Change, Please

Market backdrop…

With stock markets enjoying stellar returns over the past 18 months it increasingly feels like much of the low hanging fruit has now been picked. The combination of economies rebounding, as countries reopened from their Covid-19-induced hibernation, together with a wall of liquidity, has served to turbocharge asset prices. Over the half-year however we have started to see some cracks beginning to appear in this goldilocks environment for global markets.

Economies, having generally recovered well, are now showing signs of rolling over, with lead indicators increasingly pointing towards slower growth as the year progresses. Partially this is a function of the maths with it impossible for the extreme growth exhibited over the past year to continue forever, but also because Covid-19 has reared its head again. The delta variant, in particular, caused a number of countries to either slow their reopening process or to tighten restrictions again. Global supply chains have also come under pressure. With demand exceeding supply as economies reopen many areas have experienced bottlenecks, choking growth in the process. To date we have seen bottlenecks form in important sectors such as fuel, natural gas, semi-conductors and the automotive industry.

The outlook for liquidity is also deteriorating. Time and time again in the current cycle central banks have stepped in to shore up markets through liquidity injections, which reached unprecedented levels during last year's pandemic. So far in the current cycle this wall of liquidity has had little impact on inflation and, instead, deflation has been the main challenge. This year however inflation appears to be rearing its ugly head again.

Driving this rise in inflation has been the introduction of fiscal spending on top of what was already an extraordinarily loose monetary picture. Having seen little fiscal stimulus post the global financial crisis due to concerns over high debt levels, governments felt they had little choice but to start spending given the gravity of the potential impact of the pandemic on jobs and the broader economy. Unfortunately, fiscal policy tends to be more inflationary in nature and, once the spigot is opened, it is often very hard for politicians to wean themselves off this additional expenditure. Combine this with the bottlenecks created as economies reopen and it is unsurprising that we have seen prices spike in a number of sectors, in particular commodities, cars and lumber and a corresponding jump in wages in leisure and transport.

The big debate of course is whether this is temporary or more structural in nature. We'll touch on this point a little later but it is clear to us now that the lows we saw in inflation last year have almost certainly passed with the real question now, being whether inflation stops at manageable levels or reaches a point that necessitates central bankers to rapidly withdraw liquidity. Markets, having previously forecast that central banks would not act anytime soon as they seemed more worried about employment and the health of the economy, are now shifting to anticipating that quantitative easing ends sooner and interest rates go up earlier than previously thought.

Hence the goldilocks environment we have been experiencing for the past year is shifting to a more nuanced backdrop, with perhaps the greatest fear being that we are heading into a period of stagflation i.e. falling growth and rising inflation. It is not surprising then that stock markets have proven to be more volatile recently.

In terms of market returns world equities were up for the half, gaining 9.0%, but underlying this was a 2.1% fall in September. The US was positive over the half, rising by 11.8%, but again fell by 2.6% in September, while the returns in the UK and Europe were 8.3% and 8.4% for the half and 0.1% and -2.7% in September respectively.

Amongst the outliers, Japanese equities were up by 4.3% and 5.0%, respectively, for the half and September, receiving a modest boost from the more positive Covid-19 data and the confirmation of a new prime minister. In contrast China fell by 14.2% and 3.0% in the half and September, respectively, reflecting a nasty combination of slowing growth, debt default concerns in relation to the property group Evergrande and government action to reassert their influence on the technology and education sectors.

Highlighting one of our key concerns and themes for the coming years, this poor equity market performance was accompanied by generally weak bond markets. Whilst historically the balanced portfolio, a 60%:40% blend of equities and bonds, had typically performed well with good bond market performance offsetting periods of poor equity market performance, we fear this might not be the case in the future. For the half global bonds returned 2.1%, UK Government bonds -0.2% and US Treasuries 4.2%.

Finally, in the alternatives space, hedge funds were modestly up over the half-year, whereas commodities produced robust returns rising by 23.8% with oil in particular strong over the period.

Thematic exposure…

One of the most successful areas of our investment approach has been our thematic silo. Reflecting our long-term investment philosophy, this silo typically attempts to identify those sectors which possess structural growth characteristics and generate above market returns. Occasionally we will invest in more tactical areas but primarily this element of the portfolio will focus on those areas which, we believe, will provide us with persistent secular growth.

In terms of our current themes we have favoured technology and biotechnology and more recently added exposure to impact investing. All have similar characteristics, most notably being at the forefront of the changing world in which we live and exhibiting growth levels typically well ahead of the broader market at a time when overall growth has been lacklustre.

One of the key questions to investing in this area is knowing when to jump on or off the train. There have been many occasions during the current cycle when we have questioned whether or not it is time to get off. Valuations often move into the more expensive territory, or there are recurring questions over regulation that lead many commentators to periodically call the top of the market. Generally, however, these structural growth companies have been able to grow into their valuations and, importantly, as a rule of thumb these trends go on for longer than most people anticipate.

The current backdrop however does make us pause and ask if we have gone past our stop. Valuations in certain areas are looking extended, but more importantly the changing economic and interest rate landscape potentially has important implications for the prospects of growth sectors such as technology and biotech. In an environment where growth is hard to come by, as has been the case in recent years, the scarcity value of sectors such as technology, biotech and impact companies is very high. Combining this scarcity premium with a negative real interest rate backdrop means we can attribute higher valuations to such long duration names.

Hence if we are moving back into a more conventional growth and inflation environment, buoyed by fiscal spending, the scarcity value of higher growth sectors diminishes. Why buy expensive growth names when more cyclical names can be purchased at lower valuations? Furthermore, if this environment results in interest rates normalising then the value we can attribute to higher growth, longer duration names falls.

Compounding these concerns we have started to see a number of warning flags raised on our favoured sectors. Technology for example, which has benefited from the confluence of the internet shifting from being the domain of academics to being available to the masses, the ability to manipulate and store huge quantities of data and the advent of mobile communications, has now started to show signs of excess. From a market dominance perspective technology has now become the largest sector by size and number within market indices. Having previously represented just 3% of companies in the S&P 500 in 1970, tech names now account for 28% of the S&P including six of the top 10 companies. Looking back through time it is incredibly rare for the dominant companies of 10 years back to be the dominant companies of the future.

This dominance has also called into question the level of power exhibited by the big tech names. Many of the larger technology companies have adopted a Pac-Man approach of buying newer, smaller technology companies such that they prevent happening to themselves what they did to the incumbent bricks and mortar names which they disintermediated. Similarly there are signs that they are abusing their market power with access to consumer data giving many tech companies an unparalleled insight into how we live, shop and manage our lives.

The danger from such dominance is that governments start to wage war on the tech giants in an effort to stymie their powers. Illustrating this risk has been the situation in China over recent months. China was the one region that appeared to be developing a similar tech ecosystem to that of the US, creating their own tech behemoths who had access to a huge market, with consumers prepared to give up their data in exchange for cheap goods and services. With most commentators assuming that the Chinese government was happy to accept the trade-off, creating an industry on a par with that of the US, it therefore came as a huge shock when the authorities stepped in and started regulating the tech names and wiping huge amounts of value off the Chinese technology sector in the process. The danger is that this greater regulation and oversight becomes a global phenomenon with the recent Meta Platforms (formerly Facebook) whistle-blower case illustrating the scale of the problem.

Biotechnology also faces challenges. Whilst in many ways vindicated by the instrumental part the sector played in the development of Covid-19 vaccines, there is a persistent threat of pricing controls in the US. The US is faced with a ticking time bomb from the ever-rising level of health care costs which currently account for around 11% of US GDP. If these are not tackled then the country faces spiralling debt levels and inequality, with poorer parts of society unable to receive adequate healthcare. Whilst the biotechnology sector argues that it is part of the solution rather than problem, helping to reduce overall healthcare costs which they say are primarily down to high care costs and not drug prices, there are persistent calls for the cost of drugs to be regulated.

Finally, impact led sectors have been buoyed by a powerful shift towards ESG investing. The sector is in practice a broad church ranging from electric vehicles to more effective energy usage to optimising how we consume food and water. Nonetheless the huge momentum towards all things ESG has meant many areas are potentially in bubble territory. It is, for example, hard to square how Tesla's market capitalisation is greater than that of the entire automotive industry, when it produces just 500,000 cars a year compared to the 25.2m cars produced by Volkswagen, Toyota and GM.

The big question then is whether it is time to reduce our weighting to these sectors and refocus the portfolios on the more cyclical and value areas of the market?

Our view is that whilst current events certainly lend themselves towards more balance in the portfolios, we do not believe that the longer-term structural trends are fundamentally broken. Cycles are often characterised by dominant multi-year trends, but within this there are periods where these trends are temporarily out of favour and other sectors come to the fore. This feels like one such period.

Technology has already seen quite a shakeout in its more expensive areas, but despite this we continue to view the sector as only part way through its journey. Whilst perhaps the pace of new, revolutionary technologies will slow, with it hard to replicate such new and novel technologies as social media, Google and the smart phone, it still feels like we are very much only part of the way through the journey as to how they are adopted in our everyday lives and the way in which companies operate. The scale and impact of this adoption process will continue to be huge. Similarly we are not arguing that the tech giants of today will continue to be the dominant ones of the future (although many would argue that a number of these companies possess monopolistic powers and will remain pervasive unless they are broken up by governments), but instead that new technology companies will come along and displace the current names.

Similarly in the biotechnology sector it again appears we are still travelling rather than arriving. Whilst historically the biotech sector was much smaller and more volatile, it has undergone a structural change in recent years. With research and development previously the domain of the big cap pharma companies who were struggling to replace older blockbuster drugs coming off patent, it became obvious they just weren't set up to allocate capital efficiently in the drug discovery process. In contrast smaller, more nimble biotech companies were particularly adept at discovering drugs and developing new ways to tackle diseases and the challenges presented by an ageing population. Big cap pharma has morphed into the development and sales units for these new products, as was illustrated during Covid-19 with Pfizer buying in the vaccine developed by BioNTech. Greater regulation is likely to remain an ongoing issue with it being easy for politicians to sound tough on drug pricing, but in practice it makes little sense to discourage the discovery of new and better drugs that keep people out of hospitals.

The impact sector is more difficult to break down given its breadth and certainly some areas do look expensive. Nonetheless we remain of the view that the necessity to protect the environment will generate significant investment opportunities in the years ahead. This challenge will only be exacerbated as developing nations become wealthier and, in the process, consumers want to purchase more products such as meat and cars with all the corresponding challenges in terms of energy consumption and harmful emissions.

Hence whilst the current uptick in inflation, cyclical growth and the historic lack of investment in many commodities will underpin the more cyclical areas of the market, ultimately these remain sectors you may not want to own forever and forecasting their drivers remains challenging to impossible. Not least you have to both purchase them well and sell them well, which history shows is very difficult to do consistently. In contrast those sectors generating structural growth have the wonderful advantage that ultimately their growth will bail you out over time.

Summary….

It undoubtedly feels as though the best of the current cycle has passed. The powerful combination of economies rebounding from their Covid-19 lows, together with huge quantities of liquidity created a wonderful backdrop for global stock markets. With the market returns over recent years being well above the average it would be surprising if we weren't in for a period of more modest returns and greater volatility.

Saying this it is also the case that we continue to view equities as our favoured asset class. Whilst they may well generate lower returns in the future they continue to look far more attractive than bond markets, where the combination of low yields, rising inflation and interest rate increases looks particularly unappetising.

Inflation is likely to remain the key debate in the near-term. With the reopening process creating considerable challenges, inflation has spiked sharply and, in the process, brought forward the likelihood of both earlier and higher interest rate rises. The big question is whether this inflation morphs from being temporary to structural. At this stage we are minded to view the lows in inflation as having been set, but equally we are not of the opinion it will lead to structurally problematic inflation in the longer-term. We are, however, watching the situation closely and will certainly change our position if the evidence points in this direction.

At the sector level we advocate more balance in the portfolio, not least to hedge against higher more persistent inflation, whilst remaining firmly wedded to structural growth sectors such as technology, biotech and impact, whether this is through the public or private markets. It is also our plan to come back to our thoughts on impact investing in a later House View with the sector an area of growing importance in the investment world.

Portfolio Review and Activity

Your Company produced a return of 8.8% for the first half of the financial year on a NAV total return basis, giving a total return of 28.4% over the last 12 months. There has been good performance from the Core funds. The Thematic and Diversifying silos have also made gains albeit a little more muted, while Global Equities made a negative return over six months. Ocean Wilsons Holdings has been a strong contributor to performance in recent months, with a total return of 20.9% over six months and 72.5% over 12 months. The key performance indicators for the six-month period were 8.9% for the MSCI ACWI NR Index (GBP), -0.2% for the FTSE UK Gilts All Stocks TR Index and 2.7% for UK CPI. Over the last 12 months these KPIs were 22.2%, -6.8% and 3.0%, respectively. The Company's net asset value per share increased from 306.6 pence per share at the end of March 2021 to 332.0 pence per share at the end of September 2021.

Core and Thematic Funds

The Core Regional silo produced a stronger return than the Thematic silo over the first half of the financial year. The Core Regional silo gained 9.9%, while the Thematic silo was up 4.8%. Over the last 12 months, however, the Thematic silo has been stronger with a gain of 25.5%, compared to one of 20.7% for the Core Regional silo.

During the last six months the North American holdings have once again made significant contributions to performance. Three of the four positions produced strong mid-teens returns, while Pershing Square Holdings was up 4.8%. Vulcan Value's 16.5% return was the strongest, followed by 16.0% from Select Equity and 14.7% from Findlay Park American. Contributors to Select's performance included Ceridian HCM, which provides human capital management software, Repligen, whose products are used in the manufacturing of biologic drugs and PerkinElmer which serves the laboratory services market including with equipment used for genetic screening and drug discovery.

The two Japan funds, Goodhart Partners: Hanjo Fund and Indus Japan Long Only Fund were both positive but the Indus fund was notably stronger, with a return of 12.9% compared to 1.5% from the Hanjo fund over the last six months. The Hanjo fund's focus on smaller cap companies has meant many of its portfolio holdings have been ignored by the market recently and its 12 month return has been -3.7%, while Indus Japan has performed much more strongly over that period and is up 28.1%. Two of the strongest contributors for the Indus fund more recently have been Daiichi Sankyo and Kadokawa. Daiichi Sankyo is a pharmaceutical company with a number of products including antibody-drug conjugates ("ADC") for the treatment of cancers as well as vaccines. The company announced another partnership with AstraZeneca over the summer which will see the companies work together on datopotamab, a clinical-stage ADC for lung cancer. Kadokawa is a publishing and media company that is expected to benefit from Japan's growing market for animated content, while it also has an online education business that is performing well.

Emerging markets have had a more difficult six months, although there were still some strong returns within this section of the portfolio. The weaker performing holdings included the passive iShares Core MSCI Emerging Markets ETF which declined 0.3%, and the Schroder Asian Total Return Fund that was down 0.7%. However, the NTAsian Discovery Fund, which is focused on the smaller economies of south east Asia, gained 22.2%, which takes its 12 month return to an extremely strong 55.0%. Several of the fund's largest positions did very well, particularly those listed in Vietnam, where investors focused on the improving vaccination rates and recovery prospects for 2022 despite the impact of strict lockdowns dampening company results. Mobile World Group has had a very strong period despite reporting a decline in revenues in August, as over 70% of its stores were affected by the lockdown. However, online and delivery sales grew 30% over the year, and its grocery chain was a bright spot with 54% revenue growth in August. The IT conglomerate FPT has benefited from the pandemic and delivered strong revenue and net profit growth in the first eight months of the year. Frontier markets have been notably stronger than emerging markets this year, although the BlackRock Frontiers Investment Trust delivered a relatively muted gain of 2.1% over the last six months, bringing it to be up 37.4% over 12 months.

The Thematic holdings have experienced mixed returns over the first half of the financial year. Having led the markets for so long, the technology sector and growth equities more generally, have been a little more muted and they were particularly weak in the latter half of September. Despite this the GAM Star Disruptive Growth Fund gained 3.8% and remains up 29.5% over 12 months. Li Auto was a notable detractor, with the stock buffeted by concerns around Chinese regulation, although the manager continues to like the fundamentals of the business, which is exposed to key secular trends such as the electrification of cars. Two of the healthcare positions fell over the last six months, with RA Capital International Healthcare down 3.9% and Worldwide Healthcare Trust down 1.6%, while BB Biotech managed to deliver a gain of 5.9%. Significantly stronger performance was achieved by Impax Environmental Fund and the SPDR MSCI World Financials ETF, which were up 13.3% and 12.2%, respectively, over the last six months.

Diversifying Funds

The Diversifying silo has produced a return of 3.6% over the last six months, taking its return over 12 months to a pleasing 8.7%. It has been particularly encouraging that the silo has continued to deliver good returns in an environment where cash and bonds have been flat or negative. The holdings in this silo are intended to show lower correlations to the equity market.

The macro trading fund Hudson Bay International continues its good performance, delivering another 4.6% over six months which brings it to now be up a very impressive 20.6% over 12 months. The other macro fund, MKP Opportunity, has performed less well, falling 0.2% in the last six months, and it is up only 3.1% over 12 months. The two CTA funds have performed strongly so far this financial year, with GAM Systematic Core Macro and Schroder GAIA BlueTrend up 8.4% and 6.2%, respectively. The fixed income portion of the Diversifying silo also produced positive returns over the last six months, with BioPharma Credit leading with a gain of 6.9% while Selwood Liquid Credit Strategy, Apollo Total Return and Lazard Convertible Global (purchased in July) returned 3.2%, 2.4% and 1.3%, respectively. Weaker performance has come from CZ Absolute Alpha Fund (-3.1%) and Global Event Partners (+0.2%), but these two funds remain up 9.3% and 13.9%, respectively, over the last year.

Global Equities

The portfolio fell 2.9% over the past six months, with the biggest positive contributors being Alphabet, CTT and CVS Health. The biggest detractors were Interactive Brokers, TripAdvisor and Nexon.

We invest on a five-to-ten-year time horizon which allows us to ignore short-term noise and focus on the long-term value creation of the businesses we own. This is certainly not regarded as the most exciting or popular way to participate in the stock market at the moment, not least because still we experience the same short-term volatility, as traders move in and out of the market on a weekly, daily, or hourly basis.

We saw a spike in volatility towards the end of the quarter, when the ever-important US Treasury bond yield began to move higher. This particular indicator is important because it is used as the proxy for the risk-free rate in many stock valuation models. When valuing a company using a discounted cashflow model, investors apply a discount rate to model the present value of a stock's future cashflows (the price they are willing to pay for those cashflows today); this discount rate is the sum of the risk-free rate plus a risk premium. In simple terms, if an investor uses a lower discount rate to discount a company's future cashflows, they will end up with a higher price than they would do were they using a higher discount rate. This is important to understand because it goes some way to explaining market conditions over the past few years. Lower discount rates, driven by lower risk-free rates, thanks to loose monetary policy, have resulted in investors being willing to pay ever higher prices for the future cashflows of businesses, some of which may not be generating revenue at all at present. The value of businesses with less exciting growth prospects but good cash generation are less appealing, when an investor can pay a 'reasonable' price for huge prospective future revenues from growth businesses in the longer term.

In recent years we have focused on less glamorous stocks that do not offer the promise of astronomical revenue growth, not because we don't believe they can grow at those rates, but because the price was too high. When the risk-free rate rises, our lower priced holdings seem more attractive on a relative basis and our portfolio benefits. We saw this effect in the last seven days of September when treasury yields rose and the portfolio's holdings performed well, whilst the market suffered.

Declining treasury yields over the past six months have certainly had a detrimental effect on the portfolios short-term performance, but should they continue to rise we expect a similarly positive benefit. Although it is frustrating that moves in the bond markets have been dictating performance, we are focused on long-term value creation and nowhere is that clearer than at our second largest holding, Interactive Brokers.

We last wrote in detail about Interactive Brokers at the end of 2019; since then the price of the stock is c.30% higher, but the value of the business has grown even faster. In 2019 we wrote "the market's concerns now centre on low interest rates, slowing account growth and zero commission trading". The backdrop of low interest rates (expectations of which drive bond yields) has worsened, but the move by other companies to zero commission trading has not hurt the business at all. If anything, it has helped the business, as it popularised stock trading and meant that the savvier traders graduated to using the Interactive Brokers platform.

As a reminder, the company makes money in two ways: commissions on trades and net interest income ("NII"). The latter is the difference between the interest it receives and the interest it pays out. There is no doubt that the business has been hurt by interest rates falling from 1.5% to 0% today, as not only are they failing to earn interest on their $85 bn of client deposits, but they previously offered clients the highest rates amongst their peers, so have lost a valuable marketing tool. The collapse in interest rates meant they missed out on an extra $239m in NII in 2020. The good news is that rates cannot go much lower than current level, and profits are expected to be boosted by $102m for every 25bps increase in interest rates.

The account growth concern from 2019, when it slowed to 15%, has also dissipated. Since then, accounts have exploded from 689,000 to 1.54 m, a 58% annualised growth rate. Client equity growth has kept pace, growing from $174 bn to $353 bn, meaning the average client equity remains at around $250k, far higher than upstart peers like Robin Hood.

The founder and Chairman Thomas Peterffy's long-term goal is to get to 80 m accounts. Whilst we think that may be a tad ambitious, we do expect 20% growth in accounts annually, for the next several years. We believe paying 19x earnings for this fast-growing business, which is currently under-earning relative to its potential, is a great place to be, regardless of the current interest rate environment.

During the past six months we sold our remaining holdings in Nexon and Iridium, and trimmed our position in Samsung Electronics, in part to fund purchases in Coats Group and ViaSat.

Ocean Wilsons Holdings

The two parts of the business within the holding company structure are recovering well from the effects of the pandemic, although port congestion, particularly in Asia, had a negative impact on container volumes during September. The Ocean Wilsons Holdings' share price has fallen back a little recently as the market takes stock after its recent very strong performance, but it remains up over six months. Its total return was 20.9% over the last six months and 72.5% over the last year. The share price represents a discount to the look‑through NAV of 42.3%, based on the market value of the Wilson Sons shares together with the latest valuation of the investment portfolio.

The investment portfolio shares many characteristics with the portfolio held directly within Hansa Investment Company, with a preference for funds with clearly-defined strategies, run by managers with skin in the game. It also has a significant private equity programme invested in Limited Partnerships, and many of these funds have been delivering strong returns in recent years. After paying out $2.5m for dividend payments in May 2021, the portfolio was valued at $335.9m at the end of June 2021, up from $332.7m at the end of April 2021 and $310.3m at the end of December 2020. The gross time‑weighted performance over the first six months of the 2021 calendar year was 9.5%, which is strongly ahead of the 5.7% return of the Performance Benchmark.

Plans to relist the Wilson Sons subsidiary on the Novo Mercado segment of the stock market, which requires the company to adopt corporate governance practices over and above those required by Brazilian law, have progressed well. The company relisted on 25 October. It is hoped that this will stimulate a further rerating of Wilson Sons and ultimately Ocean Wilsons.

The second quarter results for Wilson Sons (released in August) were strong, with earnings of $41.1m, 11.3% higher than the same quarter in 2020. Operating results were boosted by trade flow growth, while the effect of port congestion have not yet caused significant declines. Increased domestic economic activity drove higher import and transhipment volumes, although there were signs that logistic bottlenecks and a lack of empty containers were challenging exports volume growth. The Salvador terminal had an all-time record first half, handling 184,000 TEU, while the Rio Grande terminal grew total volumes by 10.8% against the second quarter in the previous year.

The towage division also delivered good results, driven by large commodity volumes as chemicals and oil performed well. The number of harbour manoeuvres in the second quarter was up 8.8% from last year and revenue per manoeuvre also grew. However, demand for oil and gas offshore support services remains challenging, with an oversupply of offshore platform supply vessels.

Alec Letchfield
November 2021

Portfolio Statement

as at 30 September 2021

Investments	Fair value £000	Percentage of Net Assets
Core Regional Funds
Findlay Park American Fund	29,220	7.3
Vulcan Value Equity Fund	23,470	5.9
Select Equity Offshore Ltd	21,628	5.4
BlackRock Strategic Hedge Fund	15,225	3.8
Schroder ISF Asian Total Return	12,340	3.1
Adelphi European Select Equity Fund	12,291	3.1
Goodhart Partners: Hanjo Fund	11,891	3.0
Pershing Square Holdings Ltd	8,854	2.2
Indus Japan Long-Only Fund	8,275	2.1
Prince Street DigDec Fund Ltd	7,433	1.9
Egerton Long-Short Fund Ltd	6,678	1.7
Vanguard FTSE Developed Europe ex UK Equity Index Fund	4,680	1.2
iShares Core EM IMI UCITS ETF	4,285	1.1
NTAsian Discovery Fund	3,821	0.9
BlackRock Frontiers Investment Trust PLC	3,297	0.8
Total Core Regional Funds	173,388	43.5
Strategic
Wilson Sons Limited (through our holding in Ocean Wilsons Holdings)*	53,072	13.3
Ocean Wilsons Investments Limited (through the holding in Ocean Wilsons Holdings)*	37,650	9.5
Total Strategic	90,722	22.8
Global Equities
Exor NV	4,824	1.2
Interactive Brokers Group Inc	3,591	0.9
CK Hutchinson	2,643	0.7
Group Catalana Occidente SA	2,572	0.6
Orion Engineered Carbons SA	2,515	0.6
Alphabet lnc	2,278	0.6
Arch Capital Group Ltd	2,123	0.5
Subsea 7	2,066	0.5
Viaset Inc	1,959	0.5
CVS Health Corp	1,950	0.5
Marel	1,927	0.5
Dollar General	1,896	0.5
Coats Group PLC	1,786	0.5
Berkshire Hathaway Inc	1,761	0.4
Samsung Electronics Co Ltd	1,741	0.4
Hilton Food Group PLC	1,580	0.4
TripAdvisor Inc	1,329	0.3
C&C Group PLC	1,216	0.3
CTT-Correios de Portugal	1,000	0.3
Total Global Equities	40,757	10.2
Diversifying
Global Event Partners Ltd	10,270	2.6
DV4 Ltd**	8,870	2.2
Hudson Bay International Fund Ltd	4,948	1.3
MKP Opportunity Offshore Ltd	3,045	0.8
Selwood AM Liquid Credit Strategy	2,614	0.7
Keynes Systematic Absolute Return Fund	2,458	0.6
Apollo Total Return Fund	2,444	0.6
Lazard Convertible Global	2,157	0.6
Vanguard US Govt Bond Index Fund	1,689	0.4
CZ Capital Absolute Alpha UCITS Fund	1,346	0.3
BioPharma Credit PLC	1,326	0.3
GAM Systematic Core Macro (Cayman) Fund	1,148	0.3
Schroder GAIA BlueTrend	922	0.2
Total Diversifying	43,237	10.9
Thematic
GAM Star Fund PLC - Disruptive Growth	26,069	6.5
Impax Environmental Markets Fund	5,243	1.3
BB Biotech AG	4,245	1.1
SPDR MSCI World Financials UCITS ETF	3,323	0.8
RA Capital International Healthcare Fund	3,087	0.8
Worldwide Healthcare Trust PLC	2,306	0.6
Total Thematic	44,273	11.1
Total Investments	392,377	98.5
Net Current Assets	6,047	1.5
Net Assets	398,424	100.0

*Hansa Investment Company Limited owns 9,352,770 shares in Ocean Wilsons Holdings Limited ("OWHL"). The two subsidiaries of OWHL, Wilson Sons and Ocean Wilsons (Investments) Ltd ("OWIL"), are shown separately above. The fair value of the Company's holding in OWHL has been apportioned across the two subsidiaries in the ratio of the latest reported NAV of OWIL, that being the NAV of OWIL shown per the 30 June 2021 OWHL quarterly update, 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 30 September 2021.

**DV4 Ltd Is an unlisted Private Equity holding. As such, its value is estimated as described in Note 1(k) to the Statutory Financial Statements and is listed as a Level 3 Asset in note 20 of the Statutory Financial Statements 31 March 2021. All other valuations are either derived from information supplied by listed sources, or from pricing information supplied by third party fund managers.

Financial Statements

Condensed Income Statement

For the six months ended 30 September 2021

	(Unaudited) Six months ended 30 September 2021			(Unaudited) Six months ended 30 September 2020			(Audited) Year ended 31 March 2021
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Gains on investments held at fair value through profit or loss	-	29,472	29,472	-	38,310	38,310	-	93,032	93,032
Foreign exchange gains/(losses)	-	6	6	-	(47)	(47)	-	(181)	(181)
Investment income	5,157	-	5,157	2,817	-	2,817	6,350	-	6,350
	5,157	29,478	34,635	2,817	38,263	41,080	6,350	92,851	99,201
Portfolio management fees	(1,519)	-	(1,519)	(1,231)	-	(1,231)	(2,621)	-	(2,621)
Other expenses	(662)	-	(662)	(592)	-	(592)	(1,149)	-	(1,149)
	(2,181)	-	(2,181)	(1,823)	-	(1,823)	(3,770)	-	(3,770)
Income for the period	2,976	29,478	32,454	994	38,263	39,257	2,580	92,851	95,431
Return per Ordinary and 'A' non‑voting Ordinary share	2.5p	24.5p	27.0p	0.8p	31.9p	32.7p	2.2p	77.4p	79.6p

The Company does not have any income or expense not included in the Profit for the period. Accordingly the "Income for the period" is also the "Total Comprehensive Income for the period", as defined in IAS 1 (revised) and no separate Statement of Comprehensive Income has been presented.

The total column of this Statement represents the Income Statement, prepared in accordance with IAS 34. The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in the above Statement derive from continuing operations.

Condensed Balance Sheet

as at 30 September 2021

	(Unaudited) 30 September 2021 £000	(Unaudited) 30 September 2020 £000	(Audited) 31 March 2021 £000
Non ‑current assets
Investments in subsidiary at fair value through profit or loss^	-	3,179	3,179
Investments held at fair value through profit or loss	392,377	307,552	365,268
	392,377	310,731	368,447
Current assets
Trade and other receivables	17	102	177
Cash and cash equivalents	6,450	6,380	2,833
	6,467	6,482	3,010

Current liabilities
Trade and other payables	(420)	(3,577)	(3,567)
Net current assets/(liabilities)	6,047	2,905	(557)

Net assets	398,424	313,636	367,890

Capital and reserves
Called up share capital	1,200	1,200	1,200
Contributed surplus	325,719	326,979	326,019
Retained earnings/(accumulated losses)	71,505	(14,543)	40,671
Total equity shareholders' funds	398,424	313,636	367,890

Net asset value per Ordinary and 'A ' non ‑voting Ordinary share	332.0p	261.4p	306.6p

^This represents Hansa Investment Company Limited' s investment in Hansa Trust Ltd and its associated intercompany loan at fair value. As part of the dissolution process, since the prior year-end, the remaining value of Hansa Trust Ltd was transferred to HICL via a capital reduction process, leaving a negligible value on 30 September 2021. On 9 November 2021, Hansa Trust Ltd was dissolved and removed from the Register of Companies held at UK Companies House.

Condensed Statement of Changes in Equity

For the six months ended 30 September 2021

(Unaudited)

	Share Capital £000	Contributed Surplus Reserve £000	Retained Earnings £000	Total £000
Net assets at 1 April 2021	1,200	326,019	40,671	367,890
Profit for the period	-	-	32,454	32,454
Dividends	-	(300)	(1,620)	(1,920)
Net assets at 30 September 2021	1,200	325,719	71,505	398,424

Condensed Statement of Changes in Equity

For the six months ended 30 September 2020

(Unaudited)

	Share Capital £000	Contributed Surplus Reserve £000	Retained Earnings £000	Total £000
Net assets at 1 April 2020	1,200	327,939	(52,840)	276,299
Profit for the period	-	-	39,257	39,257
Dividends	-	(960)	(960)	(1,920)
Net assets at 30 September 2019	1,200	326,979	(14,543)	313,636

Condensed Statement of Changes in Equity

For the year ended 31 March 2021

(Audited)

	Share Capital £000	Contributed Surplus Reserve £000	Retained Earnings £000	Total £000
Net assets at 1 April 2020	1,200	327,939	(52,840)	276,299
Profit for the year	-	-	95,431	95,431
Dividends	-	(1,920)	(1,920)	(3,840)
Net assets at 31 March 2021	1,200	326,019	40,671	367,890

Condensed Cash Flow Statement

For the six months ended 30 September 2021

	(Unaudited) Six months ended 30 September 2021 £000	(Unaudited) Six months ended 30 September 2020 £000	(Audited) Year ended 31 March 2021 £000
Cash flows from operating activities
Profit before finance costs	32,454	39,257	95,431
Adjustments for:
Realised (gains)/losses on investments	(1,601)	4,028	2,011
Unrealised gains on investments	(27,871)	(42,338)	(95,043)
Foreign exchange	(6)	47	181
Decrease in trade and other receivables	160	2,401	2,326
Increase/(decrease) in trade and other payables	32	(136)	(146)
Purchase of non-current investments	(3,894)	(8,412)	(27,416)
Sale of non-current investments	6,257	12,434	28,444
Net cash inflow from operating activities	5,531	7,281	5,788
Cash flows from financing activities
Dividends paid	(1,920)	(1,920)	(3,840)
Net cash outflow from financing activities	(1,920)	(1,920)	(3,840)
Increase in cash and cash equivalents	3,611	5,361	1,948
Cash and cash equivalents at start of period	2,833	1,066	1,066
Foreign exchange	6	(47)	(181)
Cash and cash equivalents at end of period	6,450	6,380	2,833

Notes to the Condensed Financial Statements

1 ACCOUNTING POLICIES

(a) Basis of preparation

The Financial Statements of the Company have been prepared in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and with International Accounting Standard 34 (IAS 34), 'Interim Financial Reporting', as adopted by the European Union (EU). The interim financial statements should be read in conjunction with the Company's Year End Report for the year ended 31 March 2021, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. IFRS means standards and interpretations issued (or adopted) by the International Accounting Standards Board (IASB) (they comprise: International Financial Reporting Standards, International Accounting Standards (IAS) and Interpretations developed by the IFRS Interpretations Committee or the former Standing Interpretations Committee (SIC)) or IFRS that have been adopted in the relevant jurisdiction.

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

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

(b) Basis of non-consolidation

IFRS 10 stipulates that subsidiaries and associates of Investment Entities are not consolidated but, rather, stated at fair value unless the conditions for certain exemptions from this treatment are met. Hansa Investment Company Limited meets all three characteristics of an Investment Entity as described by IFRS 10. The Company had one, 100% owned, subsidiary Hansa Trust Ltd. The Company became the 100% owner of Hansa Trust's shares as part of the Scheme of Arrangement on 29 August 2019. On 9 November 2021, Hansa Trust Ltd was dissolved and removed from the Register of Companies held at UK Companies House.

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

(d) Non-current investments

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

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

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

Private equity Investments are stated at fair value through profit or loss as determined by using various valuation techniques, In accordance with the International Private Equity and Venture Capital Valuation Guidelines. In the absence of a valuation at the balance sheet date, additional procedures to determine the reasonableness of the fair value estimate for Inclusion In the financial statements may be used. These could Include direct enquiries of the manager of the Investment to understand, amongst others, the valuation process and techniques used, external experts used in the valuation process and updated details of underlying portfolio. In addition, the Company can obtain external Independent valuation data and compare this to historic valuation movements of the asset. Further, recent arms-length market transactions between knowledgeable and willing parties where available might also be considered. As part of the dissolution process, since the prior year-end, the remaining value of Hansa Trust Ltd was transferred to HICL via a capital reduction process, leaving a negligible value on 30 September 2021. On 9 November 2021, Hansa Trust Ltd was dissolved and removed from the Register of Companies held at UK Companies House.

Unrealised gains and losses, arising from changes in fair value, are included in net profit or loss for the period as a capital item in the Income Statement and are ultimately recognised in the Capital Reserves.

(e) Cash and cash equivalents

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

(f) Investment Income and return of capital

Dividends receivable on equity shares are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends are recognised when the Company's right to receive payment is established. Dividends and Real Estate Investment Trusts' ("REIT") income are all stated net of withholding tax. In many cases, Bermudan companies cannot recover foreign incurred taxes withheld on dividends and capital transactions. As a result, any such taxes incurred will be charged as an expense and included here.

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

(g) Expenses

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

(i) expenses which are incidental to the acquisition or disposal of an investment are included in gains on investments held at fair value through profit or loss in the Income Statement.

(h) Taxation

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

(i) Foreign Currencies

Transactions denominated in foreign currencies are recorded in the local currency, at the actual exchange rates as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rate of exchange prevailing at the balance sheet date. Any gain or 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) Retained Earnings

Contributed surplus

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

· gains and losses on the disposal of investments;

· exchange differences of a capital nature;

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

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

Revenue Reserves

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

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

(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 30 September 2021. The most recent valuation statement was received on 2 August 2021 stating the value of the Company's holding as at 31 March 2021. The Company has considered the ongoing impact of Covid-19, the associated financial impact on certain industries and its potential impact on asset values. In the absence of a valuation for 30 September 2021 from DV4, the Company performed additional procedures to determine the reasonableness of the fair value estimate for inclusion in the Financial Statements. Direct enquiries of the manager of DV4 were made in July 2020 to understand, amongst others, valuation process and techniques used, external experts used in the valuation process and updated details of underlying property portfolio. It has been confirmed with DV4's manager that the valuation procedures discussed in July 2020 are still the same used now. In addition, the Company has compared the historic valuation movements of DV4 to the FTSE350 Real Estate Index. Based on the information obtained and additional analysis performed the Company is satisfied that DV4 is carried in these Financial Statements at an amount that represents its best estimate of fair value at 30 September 2021. It is believed the value of DV4 as at 30 September 2021 will not be materially different, but this valuation is based on historic valuations by DV4, does not have a readily available third party comparator and, as such, is an estimate. There are no significant judgements.

(l) Intercompany loan

The intercompany loan was recognised at cost, being the fair value of the consideration receivable. The amounts falling due for repayment within one year were Included under current liabilities In the Balance Sheet. The Intercompany loan was repaid as part of the dissolution process. Since the prior year-end, the remaining value of Hansa Trust Ltd was transferred to HICL via a capital reduction process, leaving a negligible value on 30 September 2021. On 9 November 2021, Hansa Trust Ltd was dissolved and removed from the Register of Companies held at UK Companies House.

(m) Operating Segments

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

2 INCOME

	(Unaudited) Six months ended 30 September 2021 £000	(Unaudited) Six months ended 30 September 2020 £000	(Audited) Year ended 31 March 2021 £000
Income from quoted investments
Dividends	5,157	2,817	6,350
Total income	5,157	2,817	6,350

3 DIVIDENDS PAID

	(Unaudited) Six months ended 30 September 2021 £000	(Unaudited) Six months ended 30 September 2020 £000	(Audited) Year ended 31 March 2021 £000
Fourth interim dividend for 2021 (paid 28 May 2021): 0.8p (2020: 0.8p)	960	960	960
First interim dividend for 2022 (paid 31 August 2021): 0.8p (2021: 0.8p)	960	960	960
Second interim dividend for 2021 (paid 30 November 2020): 0.8p	-	-	960
Third interim dividend for 2021 (paid 28 February 2021): 0.8p	-	-	960
	1,920	1,920	3,840

Where there has been no revenue available for distribution by way of dividend for the year, dividends have been paid from contributed surplus which is permitted by Bermudan company law.

Note: The second interim dividend payable for the period ended 31 March 2022 was announced on 7 October 2021. The payment totalling 0.8p per share (£0.96 million) was paid on 26 November 2021.

4 RETURN PER SHARES

The returns stated below are based on 120,000,000 shares, being the weighted average number of shares in issue during the period.

	Revenue		Capital		Total
	£000	Pence per share	£000	Pence per share	£000	Pence per share
Six months ended 30 September 2021 (Unaudited)	2,976	2.5	29,478	24.5	32,454	27.0
Six months ended 30 September 2020 (Unaudited)	994	0.8	38,263	31.9	39,257	32.7
Year ended 31 March 2021 (Audited)	2,580	2.2	92,851	77.4	95,431	79.6

5 FINANCIAL INFORMATION

The financial information for the six months ended 30 September 2021 was approved by a committee of the Board of Directors on 23 November 2021.

6 NET ASSET VALUE PER SHARE

The NAV per share is based on the net assets attributable to equity shareholders of £398,424,000 (30 September 2020: £313,636,000; 31 March 2021 £367,890,000) and on 120,000,000 shares, being the number of shares in issue at the period ends.

7 COMMITMENTS AND CONTINGENCIES

The Company has no outstanding commitments as at 30 September 2021 (30 September 2020: £nil; 31 March 2021: £nil.)

8 PRINCIPAL RISKS AND UNCERTAINTIES

The principal financial and related risks faced by the Company fall into the following broad categories - External and Internal. External risks to shareholders and to their returns are those that can significantly influence the investment environment within which the Company operates, including: government policies, taxation, economic recession, declining corporate profitability, rising inflation and interest rates and excessive stock market speculation. Internal and operational risks to shareholders and to their returns are: portfolio (stock and sector selection and concentration), balance sheet (gearing), and/or administrative mismanagement.

A review of the current period and the outlook for the Company can be found in the Chairman's Report to the Shareholders and in the Portfolio Manager's Review.

Information on each of these areas is given in the Strategic Report within the Year End Report for the year ended 31 March 2021. In the view of the Board these principal risks and uncertainties are applicable to the remaining six months of the financial year as they were to the six months under review.

9 FAIR VALUE HIERARCHY

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 asset 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 are grouped into the fair value hierarchy, as detailed below:

30 September 2021 (Unaudited)	Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Financial assets at fair value through profit or loss
Quoted equities	144,579	-	-	144,579
Unquoted equities	-	-	8,870	8,870
Fund investments	14,537	224,391	-	238,928
Fair value	159,116	224,391	8,870	392,377

30 September 2020 (Unaudited)		Level 1 £000		Level 2 £000		Level 3 £000		Total £000
Financial assets at fair value through profit or loss
Quoted equities		115,807		-		-		115,807
Unquoted equities		-		-		8,447		8,447
Fund investments		-		183,298		-		183,298
Investment in subsidiary		-		-		3,179		3,179
Fair value		115,807		183,298		11,626		310,731

	31 March 2021 (Audited)		Level 1 £000		Level 2 £000		Level 3 £000		Total £000
	Financial assets at fair value through profit or loss
	Quoted equities		136,680		-		-		136,680
	Unquoted equities		-		-		8,055		8,055
	Fund investments		14,188		206,345		-		220,533
	Investment in subsidiary		-		-		3,179		3,179
	Fair value		150,868		206,345		11,234		368,447

There have been no transfers during the period between levels.

The Company's policy is to recognise transfers into and out of the different fair value hierarchy levels at the date of the event or change in circumstances that caused the transfer to occur.

A reconciliation of fair value measurements in Level 3 is set out in the following table:

	(Unaudited) 30 September 2021 Equity investments £000	(Unaudited) 30 September 2020 Equity investments £000	(Audited) 31 March 2021 Equity investments £000
Opening Balance	11,234	12,455	12,455
Liquidation of Hansa Trust Ltd*	(3,179)	-	-
Total gains or losses included in gains on investments in the Income Statement:
- on assets held at year end	815	(829)	(1,221)
Closing Balance	8,870	11,626	11,234

* The Intercompany loan was repaid as part of the Strike-Off process. Since the prior year-end, the remaining value of Hansa Trust Ltd had been transferred to HICL via a capital reduction process leaving a negligible value at 30 September 2021.

As at 30 September 2021, the investment in DV4 Ltd has been classified as Level 3. The investments in DV4 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 30 September 2021. The most recent valuation statement was received on 2 August 2021, with an estimated NAV based on the unaudited capital statement of DV4 as at 31 March 2021. If the value of the unquoted Level 3 equity investments were to increase or decrease by 10%, while all other variables had remained constant, the return and net assets attributable to shareholders for the period ended 30 September 2021 would have increased or decreased by 887,000 respectively.

Investor Information

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

Investor Disclosure

AIFMD

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

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

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

Capital Structure

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

Contact Details

Email: hiclenquiry@hansacap.com

Website: www.hansaicl.com

Company Secretary (and Company's Registered Office)

Conyers Corporate Services (Bermuda) Limited

Clarendon House, 2 Church Street

PO Box HM666, Hamilton HM CX

Bermuda

Phone: +1 441 279 5373

Website: www.conyers.com

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

Portfolio Manager

Hansa Capital Partners LLP

50 Curzon Street

London W1J 7UW

Telephone: +44 (0) 207 647 5750

Email: hiclenquiry@hansacap.com

Website: www.hansagrp.com

The Company's website includes the following:

- Monthly Fact Sheets

- Stock Exchange Announcements

- Details of the Board Statements

- Annual and Interim Reports

- Share Price Data Reports
- Shareholder Presentations

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

Registrars

Link Market Services (Guernsey) Limited

Mont Crevelt House

Bulwer Avenue

St. Sampson

Guernsey GY2 4LH

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

The Registrars are open between 09:00 - 17:30, 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.

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

ISIN Code

Ordinary shares BMG428941162

'A' non-voting Ordinary shares BMG428941089

SEDOL

Ordinary shares BKLFC18

'A' non-voting Ordinary shares BKLFC07

Reuters