Hansa Investment Co Hansa Invest-HANA - Half-year Report
22/11/2024 13:39
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RNS Number : 3793N Hansa Investment Company Limited 22 November 2024
Hansa Investment Company Ltd
Half-Year Report
30 September 2024
Financial Summary
As at 30 September 2024
NAV per share
388.5p
Total assets
£466.2m
ordinary shares
Share price
227.0p
Discount
41.6%
Gross yield
1.4%
'A' non-voting ordinary shares
Share price
221.0p
Discount
43.1%
Gross yield
1.4%
Chairman's Report
Shareholder returns
The past six months have shown an increase in net asset value (NAV) from
378.8p at 31 March 2024 to 388.5p per share at 30 September 2024. In addition,
shareholders have also received dividends of 1.6p per share during the period.
There has been a reduction of the discount from 44.6% to 41.6% for the
Ordinary shares and from 46.1% to 43.1% for the 'A' Ordinary shares. More
details about our results and longer-term performance can be found on further
below as well as in our Portfolio Manager's detailed review of markets and
portfolio performance in his Report below.
Strategy
Alec Letchfield and his team at Hansa Capital Partners, supported by the
Board, continue to search for new investment themes and opportunities with a
view to diversification in these more uncertain times, manifested by a
combination of high stock market valuations and a number of actual and
potentially new hotspots of military activity. His recent moves into insurance
and Japan have proven to be judicious.
Ocean Wilsons Holdings Limited
I am sure all shareholders will have seen the announcement on 21 October 2024
that Ocean Wilsons Holdings Limited (OWHL, "Ocean Wilsons") has agreed to sell
its 56.47% holding in Wilson Sons Limited ("Wilson Sons") to SAS Shipping
Agencies Services, a wholly owned subsidiary of MSC Mediterranean Shipping
Company for R$4.4bn - the equivalent of R$17.50 per share.
The OWHL board have indicated that they intend to return a 'meaningful'
percentage of the proceeds to shareholders, whilst reinvesting the balance
into new opportunities. I, like all interested parties, look forward to
receiving further clarification as events unfold.
I should remind all shareholders that the proposed deal will not become a
reality until all regulatory requirements are finalised, which will probably
be the second half of next year. The OWHL board must be congratulated on
getting a good result for shareholders after a very protracted process, with
particular reference to the break fee of $80m in the event of the deal not
being finalised.
I should also like to put the Hansa Investment Company Limited (HICL, "the
Company") investment in OWHL into some historical perspective. The Company's
investment in Ocean Wilsons was made in 1959. Modern market data systems did
not exist at that time, but market data does exist for Wilson Sons from its
listing in 2007. Between April 2007 and October 2024, Wilson Sons has
generated a total return to its shareholders of 721% in R$ (annualised 12.8%)
and 193% in USD (annualised 6.3%).
Market data for Ocean Wilsons exists for a longer period of time - since July
1992. Between July 1992 and October 2024, Ocean Wilsons has delivered a total
return to its shareholders, in GBP, of 12,549% (annualised 16.2%). To put that
excellent return into context, £10k invested in Ocean Wilsons in July 1992,
with dividends reinvested, would now be worth a very respectable £1.25m,
versus a mere £67k for the FTSE100.
Looking back to 1959, we do not know the exact date of, or initial price paid
for, the investment into Ocean Wilsons but published evidence in the form of
audited company accounts from around that time would indicate an initial cost
of between £400k and £630k. Taking the latter value to be conservative, on a
simple comparison of purchase price in 1959 to the current-day valuation, this
would represent a 204x increase in the value of the OWHL holding and an
annualised return of 8.5%. If we had modern data points available to us from
the original purchase date, a total return could be calculated, which would be
higher, but data with that level of granularity was simply not kept prior to
1992.
Our return from OWHL (in GBP) has not been linear, in part because the value
of Wilson Sons within OWHL's portfolio has, at times, fluctuated significantly
due to movements in the relative value of the Brazilian currency, driven by
the wider Brazilian economic and political landscape. However, it is clear
that the Company's investment in OWHL has delivered significant returns for
our shareholders over an extended period of time and the divestment of Wilson
Sons by OWHL is an opportunity to crystalise the value of the investment.
Please rest assured that the HICL Board will be considering the options
available following the OWHL announcement.
Prospects
As my fellow shareholders may recall, I have been too cautious about markets
in the recent past. With credit spreads at historically very tight levels, the
gold price at record highs and many stock markets at or near all time highs
and the anticipation of further interest rate reductions, it does seem to me
that everything is pretty much priced to perfection.
Although I anticipate one or perhaps two more interest rate cuts in the US,
Torsten Slok of Apollo constantly reminds his readers that wage growth is
accelerating, the unemployment rate declined in September, retail sales remain
solid, debit card transactions continue to accelerate, default rates and
bankruptcies continue to decline, whilst the GDP is forecast to increase by
2.4% in 2024. All in all, not much sign that a US recession is imminent.
If, by some chance, the anticipated rate cuts do not come to pass, there could
be quite a setback in stock market and bond valuations.
The price of gold continues to advance further than most financial
commentators had forecast. The oil price, whilst volatile on a daily basis,
continues to be held up by all the difficulties in the Middle East and
increasing global consumption.
All in all a very challenging time for investors. I remain very confident that
our team led by Alec Letchfield and his team will continue to find interesting
risk-adjusted opportunities for shareholders.
Discount Management
The Board remains disappointed that the discount has narrowed so little,
particularly during a period of solid portfolio performance. Now that the
potential sale of Wilson Sons by OWHL has become clearer, the Board will be
giving active consideration to its present policy on this particular matter
and will make an announcement on its deliberations as soon as practicable.
Dividends
The Board will continue with its existing policy of paying quarterly interim
payments of 0.8p per share, being an annual total of 3.2p per share. As
promised in my last Chairman's Report, as a result of the recent OWHL
announcement about the potential sale of Wilson Sons, the Board will be
reviewing its dividend policy. As I have mentioned before, the Board does not
believe it to be in the Company's best interest to pay dividends out of
capital.
As with our Discount Management policy, the Board will make an announcement on
its deliberations as soon as practicable.
Bye-laws
Following shareholder approval of the Company's Bye-laws at the 2024 Annual
General Meeting and as previously advised, from February 2025 the Company will
change the way it pays dividends to shareholders and will no longer pay
dividends by cheque. If you currently receive your dividends by cheque, you
need to provide the Company's Registrar (Computershare Investor Services PLC)
with your UK bank or building society details as soon as possible, but no
later than 20 January 2025, to have your dividends paid directly to your UK
bank or building society.
Computershare:
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol, BS99 6ZZ
Shareholder helpline: +44 (0)370 702 0000
Asset Reunification
The Company has engaged Georgeson (a trading name of Computershare Investor
Services PLC) to locate and unite gone-away and lost shareholders with their
shareholdings and any unclaimed dividends. Georgeson's services are voluntary
and as such any shareholders may contact the Company's Registrar directly. If
you are contacted, it is important you respond to Georgeson or Computershare
to claim shareholdings and any unclaimed dividends. In accordance with its
Bye-laws, the Company will sell the shares of those shareholders it was unable
to reunite. The net proceeds from the sales and any unclaimed cash
entitlements will be forfeited and will belong to the Company.
Georgeson:
Tel: 0800 953 0077
Int tel: +44 (0) 370 703 0067
Web: www.georgeson.com/unclaimed
Email: assetreunification@georgeson.com
New director search
Many investors will be aware that Nadya Wells left the Board at the last AGM.
The Board is advanced in the process of appointing a new director to the
Board.
Cost Disclosures
The Board welcomes the recently announced temporary exemption for most
Investment Companies from select PRIIPs rules and MiFID cost disclosures,
while the FCA considers the points that the industry has raised. The Board is
in agreement that the previous rules were potentially misleading to current
and prospective investors in closed-ended investment vehicles. The Board is
considering guidance from the Association of Investment Companies (AIC) as to
what changes it can make during this period of temporary exemption noting
that, whilst many Independent Financial Advisors carry out their own research
into companies, the majority of the platforms supporting retail investors
automate their data gathering processes. As a result of the latter, it is not
as simple a matter as to just remove the current Key Information Documents
(KIDs) from circulation until new rules are in place.
Company Auditor
At the Company's most recent AGM, PricewaterhouseCoopers LLP was appointed to
audit the Company for the financial year ended 31 March 2025.
Shareholder Event
Many of you will know we held a shareholder presentation event at Brown's
Hotel on 25 September 2024. The presentation was live-streamed for those who
were unable to attend in person, a recording of which can be viewed on the
Company website.
The Board will hold a similar event in September 2025.
Jonathan Davie
Chairman
22 November 2024
Portfolio Manager's Report
Executive Summary
The first half of the year saw a broadening of the market with most equity
markets performing well with China experiencing somewhat of a catch up after
the government announced a substantial stimulus. Bonds somewhat lagged,
although they picked up towards the end of the period, while commodities were
stronger with oil the exception. Inflation continued to head downwards in most
markets and central banks signalled rates may start to fall more quickly.
Despite having had another strong quarter continuing a good period of
performance, it is at exactly these times when it usually pays to consider
whether the market is getting complacent. We have split our thoughts into five
questions we think are especially important to consider going forward.
Q1. Is it right to worry about complacency at this juncture?
The data gives a mixed picture here, with volatility largely being low and
credit markets not showing any signs of concern about the economic outlook.
Equity markets have broadly been very stable which often signals the calm
before the storm.
Q2. Are geopolitical concerns misplaced?
Geopolitically, the backdrop has sharply worsened with significant conflicts
in Europe and the Middle East. Trump's victory has been a boon for equity
markets while bond yields have significantly increased in the US. Longer term,
it is likely that Trump's desire for lower rates and more stimulus will lead
to a boom/bust scenario, sending stock markets violently up and down in the
process.
Q3. Economic outlook: Recession vs soft-landing and inflation vs deflation?
We still think a soft-landing is the most likely outcome, with inflation lower
but not at the levels seen pre-COVID. We are of the view that we are late in
the cycle, rather than heading for a recession. While inflation continues to
fall in much of Europe, it is possible that inflation in the US may trend
higher, particularly if import tariffs are increased post-election.
Q4. Will AI and the Magnificent 7 catalyse the next downturn just as tech
companies did in the early 2000s?
We are broadly believers in the AI revolution but accept that everything has a
price. Many of these companies are already very profitable (in contrast to the
1990s tech bubble) but the journey is unlikely to be linear.
Q5. Are the current market issues captured in valuations?
At face value markets look expensive, but when you dig down only pockets of
the US market look excessively overvalued and indeed many countries and
sectors look very cheap. Within the US only the Magnificent 7 (M7) are looking
fully valued but most of these companies have huge cash reserves.
Discussing these risks and being aware of the impact they can have on
portfolios is important at this point of the cycle, but we have not changed
from our default position of being fully invested in markets. However, we
acknowledge that the journey is likely to become more precarious going forward
and have looked to diversify our portfolios by country, asset class and style
to help to mitigate some of these risks. The opportunity cost of leaving
markets too early towards the end of a cycle can be significant.
Alec Letchfield
Portfolio Manager
Market review
One of the most remarkable features of markets this year has been their
strength and relative stability. Despite the volatile geopolitical backdrop,
the US election, fears of a hard landing in the US and ongoing inflation/rates
uncertainty, markets have continued to surge ahead. Partly this is a function
of the distortions caused by the performance of the M7, with the market cap
weighted S&P 500 rising by 21.7% this year reflecting the 44.4% rise in
the M7 names, but even without this the equal-weighted index has risen by a
more than credible 15.2%. Further, this is not just an equity phenomenon with
other asset classes such as commodities and hedge funds also producing decent
returns year-to-date.
Whilst pleasing that markets have produced another period of good returns,
experience tells us that now is exactly the right time to pause and ask the
question as to whether or not markets are slipping into complacency. Just as
suggested by the old Buffett adage that one should "be fearful when others are
greedy and be greedy when others are fearful", we think now is the point to
ask if investors are correct to be dismissive of the risks currently faced by
global stocks markets.
Q1. Is it right to worry about complacency at this juncture?
On the face of it, a resounding yes! As noted above, markets have delivered
robust returns despite an array of concerns, ranging from the geopolitical to
economic to valuation. Moreover, the returns have been generated with little
volatility as measured by indicators such as the VIX. The VIX, which measures
the expected volatility of the US stock market and is commonly referred to as
the 'fear gauge', is the most widely used measure of market risk, fear and
stress. It would be natural to expect that the VIX would be elevated at this
time, given the risks faced by markets, whereas in practice it currently sits
at historically low levels suggesting a high degree of complacency.
The VIX reading is not alone. Another measure reinforcing this view of
complacency are the spreads between corporate credit yields and government
bonds which are currently very tight by historic standards. Typically, when
concerns are rising over recession, or markets get worried in general, spreads
tend to widen as anticipated defaults rise and investors seek solace in
government bonds for their defensive characteristics. Similarly, during
periods of complacency stock markets usually do not exhibit major selloffs
which has indeed been the case with the S&P 500 not having fallen by more
than 2% in a day between February 2023 and July 2024.
Q2. Are geopolitical concerns misplaced?
Whilst most would accept that markets do currently appear complacent, the
bulls typically respond by arguing that the risks are being overplayed and it
is correct for markets to be complacent at this juncture.
The geopolitical backdrop, as we discussed in last quarter's commentary, has
been relatively benign for the past couple of decades, a period characterised
by the absence of major military conflicts and led by US hegemony in its role
as the global policeman. Free trade was the order of the day as countries
sought to become increasingly intertwined, with the developing nations
becoming more prosperous and developed nations benefiting from the inflow of
cheap goods and services. It appeared that the US capitalist, free trade model
had become the blueprint for the emerging nations as they engaged with the
wider world.
This backdrop has however taken a turn for the worst. Military conflict is
happening in the heart of Europe and the Middle East is a tinderbox that has
the potential to flare up into a wider regional war. Similarly, the US appears
to be stepping back from its desire to extend its power globally and instead
has taken a more hostile approach to the outside world through tariffs and
trade wars to bolster its position as the globally dominant superpower. With
China and India now of a size that they feel emboldened, alongside a nostalgic
Russia, to exert themselves in an equally hostile fashion, the globally
intertwined world which we have enjoyed over the last couple of decades
appears to be unravelling.
What is unclear however, is how this changing backdrop affects world stock
markets. With the US still the dominant superpower and stock market, this
undoubtedly helps mitigate these dangers at the portfolio level, with the US
currently around 70% of the MSCI World. The US dollar will remain the global
reserve currency for the foreseeable future, with no real alternatives, and
the dominance of its technology companies should ensure that the US, with its
rule of law and capitalist model, remains the primary driver of world stock
markets. Nonetheless, global trade is unlikely to drive returns with the same
vigour as in the past, especially if countries such as the US look to onshore
production - with a corresponding spike in inflation - and the escalation of
military conflict is largely unknowable and hard to mitigate at the portfolio
level.
The other major geopolitical risk is the US election. On first blush, another
Trump presidency appears to be a major risk to markets. Almost inevitably he
will impose further tariffs, not just on China but also more friendly regions
such as Europe, with tighter immigration policies likely to ultimately be a
negative for US growth and inflation. With Trump likely to adopt an even more
vindicative stance on how he conducts policy, as he seeks retribution against
those that he feels have wronged him, this doesn't bode well for global stock
markets!
In practice, however, we suspect there would have been little difference at
the stock market level between a Harris or Trump presidency, at least
initially, with markets mainly wanting certainty on the outcome. Whilst there
are undoubtedly micro differences, such as Trump taking a more free market
approach to competition versus Kamala being largely anti-consolidation, most
importantly both remained advocates of spending and showed no willingness to
reduce the US debt overhang. With little desire to tackle this ticking bomb,
at least in the near term, markets should remain underpinned by a wall of
liquidity. Indeed, we would see the main risk as a Trump induced bubble,
especially if he leans on Federal Reserve chair Jay Powell to reduce interest
rates both faster and to a greater extent (and possibly replacing him with a
more dovish governor if he fails to deliver). Ultimately, it is very possible
and indeed, likely that this descends into a boom/bust scenario, sending stock
markets violently up and down in the process.
Q3. Economic outlook: Recession vs soft-landing and inflation vs deflation?
One of the characteristics of the current cycle has been the volatility of the
economic backdrop and the apparent inability for economists to forecast the
outcome. Inflation surged post-COVID and then fell equally as fast. Rate
setters were behind the curve initially in raising rates and now many fear
they have left their rate cuts too late and are not being aggressive enough
raising the spectre of recession. With recessions and bear markets going hand
in hand it again seems odd that markets are so complacent in the face of such
a major risk.
Our view is that, whilst the market's complacency on this issue is unhelpful,
giving itself little margin for error if economic growth does take a turn for
the worse, we would tend to agree that a soft-landing seems the most likely
outcome. There was little need for the US government giveaways post-COVID,
with the economy in remarkably robust health, which in turn required the
Federal Reserve to be more aggressive in raising rates, something which
historically almost always resulted in policy overshoot and a corresponding
recession and bear market. This time around however, we just do not see the
excesses normally associated with recession which are almost invariably
characterised by large structural imbalances. In particular, we look for
stretched household or corporate balance sheets, excessive residential or
corporate investment and a banking sector that engages in excessive, imprudent
lending. None of these appear present at this point. Hence, on balance it
appears we are late cycle but not yet in recession territory. Even if a
recession were to occur the odds are that it would be mild and short-lived and
would not need the painful purging of excesses such as we saw during the
Global Financial Crisis.
An area that is looking more nuanced is that of inflation. Inflation has been
much debated post-COVID, with many market commentators arguing that inflation
would be structurally much higher in the future, necessitating higher interest
rates and a corresponding negative impact on growth and general liquidity
levels. We were never in this camp, instead believing inflation would revert
back nearer to central bank targets, albeit not to the zero-percent level of
the last decade which we saw as an aberration rather than the norm.
We are beginning to wonder, however if the structural biases of US versus
European inflation are diverging. Europe remains moribund, suffering from a
lack of productivity and an inability to innovate. With its historic growth
engine, Germany, increasingly looking like the sick man of Europe given its
dependence on Chinese growth to prop up its important export sector, combined
with the flawed approach of previous administrations to rely on Russian oil
and gas, the outlook is challenging. In contrast, US economic exceptionalism
remains firmly in place in light of its corporate culture, technology
leadership and strong labour markets. Hence, we sense that European inflation
is trending towards deflation, whereas the US, despite the slackening of the
labour market, is tending towards higher inflation. We do not see these as
major issues at this point but will watch their development closely in the
coming months.
Q4. Will AI and the Magnificent 7 catalyse the next downturn just as tech
companies did in the early 2000s?
It is often the case that what leads markets up typically leads them down.
Today's euphoria on all things AI, and the corresponding exponential
performance of the M7, resonates strongly with the late 90's tech bubble
which, ended very badly for markets. Just as then, when the internet was in
its infancy and technology companies were bid-up to extraordinary valuations
in the anticipation of how the internet would change the way in which we live,
we are now seeing companies with an AI linkage surging as investors bet on the
boost to productivity growth through AI. Such technology transitions often
prompt over-investment and over-extrapolation as infrastructure is
hyper-scaled to meet future demand. Unfortunately, this creates the danger of
an air-pocket as the AI infrastructure buildout runs ahead of corporate demand
and consumer take-up with adoption nearly always taking longer than markets
initially forecast.
There are, though, some mitigating circumstances versus the 90s tech bubble.
Unlike many companies in the late 90s, which were aspirational in nature and
often loss-making, the M7 are highly profitable in most cases with proven,
compelling business models. Moreover, they appear to benefit from a flywheel
affect with the larger they become, the more successful they become. For
example, it is increasingly the case that in order to develop the next
generation large language models (such as ChatGPT) it will require the
spending power of a small nation. Only a handful of companies such as the M7
will be able to commit this kind of capital, effectively creating a moat and
ensuring they become even more profitable and powerful in the future.
Hence, whilst we are broadly believers in the AI revolution, we also
acknowledge there will be points of over-investment which, combined with
mismatches between corporate demand and the normal corporate failures en route
(Google vs Yahoo!), will undoubtedly lead to volatility in the short-term even
if the long-term lives up to expectations.
Q5. Are the current market issues captured in valuations?
The relationship between market performance, risks and valuations is a complex
one. Optically the current high market valuations seem at odds with the
abundance of risks. In practice though, it is the time horizon that is
important. In the short term there is typically little relationship between
valuations, risk and returns, with it perfectly possible to have high
valuations or above-average risks and good performance. In the longer term,
however, the relationship becomes much stronger with highly-valued markets
with above-average risk levels typically generating lower returns. This is one
of the key reasons why we believe market returns over the coming 10 years will
be somewhat lower than the prior 10 years.
It is also worth noting that whilst the headline market valuations look
expensive, below the surface the picture is more nuanced. From a country
perspective, only the US stock market looks worryingly expensive, with Europe,
Japan, China and the emerging markets all looking much closer to their
historical averages. Furthermore, the primary driver of the high valuations in
the US is the M7. If one strips out the high valuations of the M7, the rest of
the US market looks much closer to its average and even cheap at the smaller
cap level. Hence whilst we would argue that overall valuations leave little
room for misstep should any of the risks materialise, we do see many pockets
of markets that offer excellent value.
Portfolio Positioning and Conclusion
Drawing these threads together leaves a rather mixed picture. It would be
perfectly reasonable to argue that the high valuations on offer, combined with
market complacency and the very real risks faced, calls for a more defensive
positioning. On balance, however, we advocate remaining fairly fully invested.
Whilst geopolitical risks are undoubtedly greater, they typically tend to be
low probability but high impact events, as was illustrated by Russia's
invasion of Ukraine. Instead, we remain of the view that the positives
outweigh these risks at this stage. If, as we expect, the US is able to
engineer a soft landing, combined with liquidity injections through lower
rates, this remains a constructive backdrop for equities. As we have said many
times in the past, remaining fully invested should be the neutral point for
longer-term investors such as ourselves given our ability to ride out more
challenging markets.
It is not the case though that we are simply sitting on our hands. We
acknowledge that the margin of safety is lower, which may make for a rather
volatile journey even if the end point is a higher one. Instead, we are
looking to increasingly diversify our portfolio by country, asset class and
style. At the country level we remain unashamedly bulls of the US stock
market, believing in US exceptionalism, but are adding other regions to this
in the form of the emerging markets, due to their lower valuations and
offering protection were the expensive dollar to start to fall. Stylistically,
we have already added more value managers due to the exceptional value we see
on offer in many markets across the world and especially within the mid and
smaller cap spaces. Finally, we are adding to those areas that have different
economic drivers, notably in the insurance arena which was recently tested,
and passed, a jump in hurricane activity in the form of Helene and Milton. In
summary, it is a time to be active and alert in managing portfolios, but there
is still the potential for a significant opportunity cost if investors flee
equity markets to safety too early.
Portfolio Review and Activity
Over the course of the first half of the year, global equity markets delivered
gains, although these were dampened by sterling's strength over the period.
Early August saw markets drop off, as weaker US economic data and an interest
rate hike in Japan combined with thin summer liquidity to hit stocks. However,
in September the Federal Reserve started its long-awaited rate cutting cycle
which soothed investor concern and boosted stock prices, as did a less hawkish
tone from Japanese policymakers and a new stimulus in China. The MSCI ACWI NR
Index (GBP) gained 3.3%, while bonds benefited from the falling yield
environment, with the FTSE UK Gilts All Stocks TR Index adding 1.4%. The
Company's NAV total return over the period was 3.0%, bringing its one-year
return to a strong 23.5%.
The portfolio's gains over both the half-year and 12 months are ahead of the
returns a traditional 60:40 equities and bonds portfolio would have achieved
(2.5% and 15.1%, respectively). Looking at the three KPIs over the year, there
were returns of 20.0% for the MSCI ACWI NR Index, 1.7% for UK CPI and 7.9% for
the FTSE UK Gilts All Stocks TR Index.
The Company's position in Ocean Wilsons Holdings has continued to be a strong
contributor to performance over recent time periods, with the holding
returning 10.7% in the first half of the financial year and 59.3% over 12
months.
The Company's NAV per share rose from 378.8p at the end of March 2024 to
388.5p at the end of September, with 1.6p per share being paid out as a
dividend during this period. The NAV has increased from 317.4p at the end of
September 2023, with 3.2p per share having been paid out in dividends during
that time.
Core and Thematic Funds
The Core Regional silo was almost flat over the half-year, being down just
0.4%, while the Thematic silo rose 0.1%. For the last 12 months, Core Regional
returned 15.1%, whilst the Thematic silo was up 17.2%.
The Company's North American holdings delivered mixed performances over the
first half of the financial year. Armistice Capital gained 2.5%, which was
largely driven by its core healthcare long positions, while the manager took
advantage of some sell-offs in high conviction small-cap biotech names to add
to its positions. Beutel Goodman US Value was flat, making up for some earlier
losses with gains later in the period, when it benefited from the announcement
in August that one of its largest positions, Kellanova, reached an agreement
to be taken over by Mars for $36bn in one of the biggest deals of the year.
The deal valued the snack and cereal manufacturer at a 45% premium over where
its shares were trading at the end of June. Gen Digital, a cyber security
service provider that is now the fund's second largest holding, also performed
well in the period. Findlay Park American and Select Equity experienced
declines, being down by 1.7% and 6.8%, respectively, while the passive holding
in iShares Core S&P 500 ETF gained 3.5%. Over the last year these holdings
have gained 16.1%, 11.3% and 22.5%, respectively. Pershing Square Holdings
lagged, falling 12.7%, with its position in Universal Music Group being the
biggest detractor as the company announced disappointing results in July. The
manager, however, believes the disappointing subscription and streaming growth
is due to idiosyncratic factors that will prove to be short-term in nature,
and remains confident that the industry will improve monetization through new
products and services. Pershing Square also announced two new holdings in Nike
and Brookfield Corporation, with the former detracting from performance this
quarter, whilst the latter was a positive contributor. Over 12 months,
Pershing Square has delivered a gain of 20.0%.
Despite significant volatility in the Japanese market in August, most of the
Japan holdings delivered gains over the six months, while the MSCI Japan Index
declined 4.7%. Indus Japan Long Only was up 2.8% to bring it to be up 12.8%
over one year. The strongest contributor for Indus was Fujitsu, its largest
holding, while JTOWER received an acquisition bid in August that saw it make
up most of its losses from the prior quarter. Simplex Value Up Trust gained
5.3%, Alma Eikoh Japan was up 0.2% while Arcus Japan fell 1.2%.
In the Global Developed holdings, Schroder Global Recovery produced a return
of 2.9%, and it is now up 12.3% over 12 months. This value fund has relatively
large exposure to Japan, the UK and Europe, whilst being underweight the US
and with almost no IT exposure. Contributors to recent performance included
positions in BT Group, Continental (tyres) and Dentsu Group (Japanese
advertising group). In August a new position was added in Helikon Long Short
Fund, a concentrated, value-driven long-short fund, with a bias to European
securities. The fund has a long bias and currently has 23 core positions. It
has gained 7.6% since purchase, with its largest contributors being
International Consolidated Airlines Group and Playtech.
There were positive returns for most of the emerging market holdings, with
Schroder Asian Total Return Fund up 6.6% to take it to 18.3% over the year,
and NTAsian Discovery up 1.6% to 4.5% over the year. Tencent was a strong
contributor for the Schroder fund, as was the Indonesian holding Bank Mandiri.
The NTAsian fund also benefited from strong contributions from its Hong Kong
listed names following the Chinese stimulus package at the end of September,
with names such as AIA Group and Minth being among the best performers.
Redwheel Next Generation Emerging Markets, which focuses on smaller emerging
markets declined by 0.1% during the six-month period while BlackRock Frontiers
Investment Trust fell 2.5%.
There were mixed returns in the Thematic silo during the period with Polar
Capital Global Technology rising 0.7% while the iShares Expanded Tech Sector
ETF, bought in late June, was down 4.5%. Over 12 months the Polar fund is up
33.3%. The RA Capital International Healthcare Fund made a modest loss of 3.2%
this quarter, leaving it up an impressive 22.3% over 12 months. The fund's
public equity positions have contributed strongly to performance, including
Verona, which had its inhaled drug ensifentrine approved by the FDA at the end
of June. The manager believes this drug is poised to become a blockbuster for
the treatment of chronic obstructive pulmonary disease, for which the
company's commercial team has significant previous experience of marketing
successful drugs. The share price of Verona almost doubled over the period. BB
Biotech declined 16.7% before it was sold in early September, while Worldwide
Healthcare Trust gained 3.9% to leave it up 12.4% over one year. Polar Global
Insurance Fund continued its good performance with a gain of 6.4% this quarter
and is up 19.2% for the year.
Diversifying Funds
The diversifying holdings are intended to provide an alternative source of
returns whilst dampening volatility and displaying low beta to the equity
market. During the first half of the financial year the Diversifying silo was
flat, but it has gained a respectable 5.6% over the last year. Longer-term
performance relative to bonds has compared very favourably given the strongly
negative returns from bonds in that period. Over three years, the Diversifying
silo has returned 9.0%, far ahead of the 19.3% loss of the Gilts Index over
that period.
With declining yields so far this year, the portfolio's diversifying fixed
income holdings made gains, with BioPharma Credit one of the strongest with a
4.6% return to take it to be up 13.0% over one year. The share price was
particularly strong in July, when the company announced the successful closing
of the acquisition of a majority of LumiraDx's assets by Roche, through which
the company has already received an initial payment of $165.3m. During the
last six months, Selwood Liquid Credit also returned 4.6% to take its annual
return to 10.2% and Apollo Total Return Fund was up 3.9% to bring its 12-month
return to 8.6%. CQS Credit Multi Asset Fund was a new position at the start of
July and this global credit fund, with a bias towards sub-investment grade
credit, has returned 1.9% since purchase.
Nephila Iron Catastrophe Fund had a more modest six months, being up 2.4% to
extend its good performance over the year to 13.2%. This is a specialist
strategy investing in catastrophe bonds and other insurance-related securities
and our investment was made on account of the pricing in these areas being at
extremely attractive levels. The recent significant US hurricanes, Helene and
Milton, have proved testing for the fund, but these have justified the
manager's decision earlier in the year to hedge against large hurricane loss
events and reduce allocations to peak hurricane risk zones, on account of
their view that the 2024 hurricane season was likely to see above average
hurricane activity. While it is early days, initial information suggests the
fund will have weathered these events well.
The event-driven fund Global Event Partners gained 1.9% over the six-month
period and is up 7.3% over the year. Trend-driven CTA funds had a more
difficult time, with Schroder GAIA BlueTrend being down 11.1% and GAM Core
Macro falling 6.7%. During the quarter a review of these funds was completed,
with the GAM fund being sold at the end of the quarter and BlueTrend being
slightly reduced, while two new funds were added in early October. Of the two
macro trading funds, Hudson Bay gained 3.4%, while MKP Opportunity rose 0.4%
during the first half of the year, leaving them up 6.3% and 2.0%,
respectively, over one year.
Private Equity
One further commitment of $1.3m was made during the first half of the year, to
the Gryphon VI Top-Up Co-Investment Fund, which is the latest offering from
this high quality US mid-market fund. Several of the private equity funds we
have committed to have begun to draw capital, although we expect them to take
several years until they are fully drawn. We believe the funds we have
committed to will form the basis of a high quality group of funds in the
private equity arena that will add differentiated exposures to the portfolio.
It takes several years to build a private equity portfolio and it is important
not to rush to reach a target allocation and risk overcommitting. Private
equity investing requires a long-term mindset that we think sits well with the
portfolio's structure.
Global Equities
The portfolio rose 8.9% over the first half, with the biggest contributors
being Coats, Interactive Brokers, and Bergman & Beving. The biggest
detractors were Subsea 7, EXOR and Orion.
As many markets reach or approach all-time highs, it is easy to get caught up
in the euphoria of celebrating winners and counting gains. However, we remain
steadfast in our focus on absolute risk. Our primary concern is not short-term
market volatility but the permanent impairment of capital. We constantly
assess each individual position by asking, "How much could we lose if we're
wrong?" The potential sources of impairment are many; from balance sheet
write-downs to a permanent loss of earnings power, or paying too high a price.
While we believe we own high-quality businesses, the latter risk is currently
of greatest concern, especially after the portfolio has appreciated nearly 50%
over the past two years.
A case in point is our second-largest holding, the Spanish insurer GCO. This
company offers traditional property and casualty insurance to Spanish
households, as well as credit insurance to global businesses. Over the past 30
years, GCO has consistently delivered an average Return on Equity (ROE) of
15%, translating into a 30-fold increase in book value per share. Though its
ROE has dipped to 12% over the past decade, we believe the return to higher
interest rates could push it back into the teens. The book value is €46 per
share, providing a solid backstop in a worst-case scenario. Included in this
figure is €1.2bn of cash in excess of regulatory requirements, which
reflects the company's conservatism but also gives room for shareholder
returns or potential acquisitions. Trading at €38 per share, or 0.8x book
value, we have a margin of safety. If the stock continues to trade at this
multiple, we would still expect a 12% annual growth in book value and a 3%
dividend, implying a 15% annual return. However, if the stock returns to more
historically normal valuations of 1.5x book, it could be worth €69,
suggesting it trades at just 55% of intrinsic value today. While a return to
pre-financial crisis multiples of 2-4x book is unlikely, with downside risk
limited, the outcomes to the upside range from good to excellent.
Our focus on downside protection has its trade-offs. In euphoric markets like
those in 2020 and 2021, we likely won't keep pace with broader indices. But
when the reckoning comes, as it did in 2022, the portfolio showed resilience
and gained significantly. We believe the key to long-term compounding is
avoiding deep drawdowns-after all, a 50% fall requires a 100% gain just to
break even. This is why we always look down before we look up.
During the first half we added to our positions in Eurowag and Orion and
reduced our positions in EXOR, Bergman & Beving and Interactive Brokers.
Ocean Wilsons Holdings
As the largest integrated provider of port and maritime logistics in Brazil,
the Ocean Wilsons' subsidiary, Wilson Sons, has a strong competitive position.
It is the leading provider of towage services in Brazil with the largest and
most modern fleet, as well as operating major container terminals in the north
and south of the country: Salvador and Rio Grande. The company is benefiting
from the continuing recovery in global trade as well as a rebounding demand
for its offshore energy-linked services, which should provide the basis for
improved performance of the firm's assets.
Wilson Sons continues to delivery exceptionally strong growth and operational
excellence, as shown in its results for the second quarter of 2024 (released
in August 2024), which built on strong performances in the first quarter and
in 2023. Revenue for the first six months of 2024 reached an all-time high as
it increased 14.7% compared to the same period in the prior year, while
earnings (EBITDA) were 12.0% higher. Performance this year has been boosted by
especially strong growth in container terminals, where earnings surged 47.4%
driven by robust growth in transshipment and gateway volumes, higher revenues
from ancillary services and fixed cost dilution. Both terminals produced
excellent results, with aggregate volumes up 24.7%. In May 2024, Rio Grande
launched a new deep-sea route and feeder solution for cargo from Argentina,
Uruguay and southern Brazil, further enhancing its position as a key hub port
on South America's east coast. In July 2024, Salvador received Brazil's first
regular call by a New Panamax vessel, establishing a direct link to Asian
markets and positioning the terminal to handle significant volumes from
Brazil's northern and northeastern regions. There continues to be evidence of
improved demand for offshore energy-related services, with offshore support
vessel earnings up 6.6% and number of operating days 5.9% higher. In September
2024 the fleet welcomed WS Onix, the sixth and final tugboat in the 2513
class, boasting 90-tonnes of bollard pull, which has started operations at the
Port of Santos.
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. The most
recent valuation for the investment portfolio was $319.6m as at the end of
June 2024, down slightly from $322.8m as at the end of March 2024, but up from
$310.9m at the end of December 2023. For the first six months of 2024,
performance of 3.9% was driven by the strong performance of the public asset
portfolio, including directional hedge funds, as well as good returns in the
defensive portfolio, particularly when compared to government bonds.
Positioning in the US market and the technology sector continued to be
significant contributors as many names benefited from the surge in investor
interest in AI. Private markets have lagged behind public markets more
recently, but there was noticeably strong performance from financials
specialist Reverence Capital Partners Opportunities Fund V and healthcare
specialist OrbiMed Private Investment IX, which both saw material valuation
increases. Some of the largest private equity positions include venture
capital funds of funds managed by Stepstone, and US buyout and growth funds
managed by KKR, Silver Lake and TA Associates. The annual dividend payment to
shareholders was made on 14 June 2024, when the board of Ocean Wilsons
Holdings increased it from 70 cents to 85 cents per share.
Following the strategic review initiated in June 2023, it was announced on 21
October 2024 that Ocean Wilsons has agreed to sell its 56.47% interest in
Wilson Sons to a subsidiary of MSC Mediterranean Shipping Company. The sale is
for a cash consideration of R$4.352bn (equivalent to R$17.50 per share). The
transaction is conditional on regulatory clearances and is expected to
complete during the second half of 2025. At the current exchange rate, the
purchase price is equivalent to US$768m. There will be Brazilian withholding
tax payable and the Company expects that after costs and taxes it will realise
net cash proceeds of at least US$593m. The Board has stated that a meaningful
proportion of these proceeds will be returned to shareholders, and it is
currently reviewing options with respect to the remainder, which could include
reinvesting some or all of the remainder into Ocean Wilsons (Investments)
Limited.
The Portfolio
As at 30 September 2024
Investments Price Dealing Fair value % of net
date
frequency
£000 assets
Core Regional / Thematic Funds
iShares Core S&P 500 UCITS ETF 30 Sep 24 Daily 35,264 7.6
Findlay Park American Fund 27 Sep 24 Daily 31,038 6.7
Select Equity Offshore Ltd 20 Sep 24 Monthly 21,142 4.5
BlackRock Strategic Equity Hedge Fund 27 Sep 24 Monthly 17,236 3.7
Schroder ISF Asian Total Return 30 Sep 24 Daily 12,276 2.6
Pershing Square Holdings Ltd 30 Sep 24 Daily 11,699 2.5
Polar Capital Fund - Global Technology 27 Sep 24 Daily 10,114 2.2
BA Beutel Goodman US Value Fund 27 Sep 24 Daily 9,338 2.0
Schroder ISF Global Recovery 30 Sep 24 Daily 9,077 1.9
Polar Capital Global Insurance Fund 27 Sep 24 Daily 8,886 1.9
iShares Core MSCI Europe UCITS ETF 30 Sep 24 Daily 7,384 1.6
Armistice Capital Offshore Fund Ltd 31 Aug 24 Quarterly 6,760 1.4
Helikon Long Short Equity Fund ICAV 20 Sep 24 Monthly 6,080 1.3
Simplex Value Up Trust 31 Aug 24 Monthly 6,040 1.3
Indus Japan Long Only Fund 27 Sep 24 Monthly 5,491 1.2
iShares Expanded Tech Sector ETF 30 Sep 24 Daily 5,445 1.2
Redwheel Next Generation Emerging Markets Equity Fund 27 Sep 24 Daily 4,853 1.0
iShares Core EM IMI UCITS ETF 30 Sep 24 Daily 4,695 1.0
RA Capital International Healthcare Fund 01 Sep 24 Quarterly 4,561 1.0
NTAsian Discovery Fund 30 Sep 24 Monthly 4,456 1.0
BlackRock Frontiers Investment Trust PLC 30 Sep 24 Daily 3,876 0.8
Worldwide Healthcare Trust PLC 30 Sep 24 Daily 3,357 0.7
Arcus Japan Fund 30 Sep 24 Daily 2,940 0.6
Alma Eikoh Japan Large Cap Equity Fund 30 Sep 24 Daily 2,889 0.6
234,894 50.4
Strategic
Ocean Wilsons Holdings Limited(1) 30 Sep 24 Illiquid 137,018 29.4
Wilson Sons - - 97,164 20.8
Ocean Wilsons (Investments) Limited - - 39,854 8.5
137,018 29.4
Diversifying
Global Event Partners Ltd 27 Sep 24 Quarterly 8,429 1.8
DV4 Ltd(2) 31 Mar 24 Fixed Life 7,559 1.6
Selwood AM - Liquid Credit Strategy 31 Aug 24 Monthly 4,069 0.9
MKP Opportunity Offshore Ltd 30 Sep 24 Monthly 3,340 0.7
Nephila Iron Catastrophe Fund Ltd 31 Aug 24 Half yearly 3,215 0.7
GAM Systematic Core Macro (Cayman) Fund 31 Aug 24 Daily 3,136 0.7
Schroder GAIA BlueTrend 27 Sep 24 Daily 2,913 0.6
Apollo Total Return Fund 31 Aug 24 Quarterly 2,721 0.6
Prana Absolute Return Fund 27 Sep 24 Quarterly 2,030 0.4
BioPharma Credit PLC 30 Sep 24 Daily 1,711 0.4
Vanguard US Government Bond Index Fund 27 Sep 24 Daily 1,565 0.3
Hudson Bay International Fund Ltd 20 Sep 24 Quarterly 1,398 0.3
CQS Credit Multi Asset Fund 31 Aug 24 Monthly 1,375 0.3
Lazard Convertible Global 27 Sep 24 Daily 717 0.2
44,178 9.5
Global Equities (direct)
Interactive Brokers Group Inc 30 Sep 24 Daily 7,169 1.5
Grupo Catalana Occidente SA 30 Sep 24 Daily 5,146 1.1
Arch Capital Group 30 Sep 24 Daily 4,442 1.0
Subsea 7 30 Sep 24 Daily 4,413 0.9
Bergman & Beving 30 Sep 24 Daily 4,230 0.9
Coats Group PLC 30 Sep 24 Daily 3,432 0.7
Orion SA 30 Sep 24 Daily 3,081 0.7
EXOR NV 30 Sep 24 Daily 2,359 0.5
Eurowag 30 Sep 24 Daily 2,184 0.5
CK Hutchison 30 Sep 24 Daily 1,829 0.4
Glencore PLC 30 Sep 24 Daily 1,689 0.4
CTT Correios de Portugal 30 Sep 24 Daily 1,607 0.3
41,580 8.9
Private Assets(2)
Khosla Ventures VIII LP 30 Aug 24 Fixed life 328 0.0
BPEA EQT Mid-Market Growth Partnership 30 Jun 24 Fixed life 89 0.0
GGV Discover IV-US 02 Jul 24 Fixed life 54 0.0
TrueBridge Direct Fund III L.P 05 Aug 24 Fixed life 36 0.0
TrueBridge Capital Partners Fund VIII L.P 30 Sep 24 Fixed life 99 0.0
606 0.1
Total investments 458,276 98.3
Net current assets 7,967 1.7
Net assets 466,243 100.0
(1) Hansa Investment Company Ltd owns 9,352,770 shares in Ocean Wilsons
Holdings Limited (OWHL). In order to better reflect Hansa Investment Company's
exposure to different market silos, the two subsidiaries of OWHL, Wilson Sons
and Ocean Wilsons (Investments) Limited (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 2024 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
2024.
(2) The holdings within the private assets silo are unlisted Private Equity
holdings. Further, DV4 Ltd is an evergreen private investment structure but is
considered part of the Diversifying silo. For both, their values are estimated
and disclosed as Level 3 Assets in the Annual Financial Statements.
Half-Year Management Report
The Directors present their Report and Condensed Financial Statements for the
period to 30 September 2024.
The Board's objectives
The Board's primary objective is to achieve growth of shareholders' value over
the medium to long term by investing in a diversified and multi-strategy
portfolio.
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 Nomination Committee and Chairman of the Remuneration
Committee); and William Salomon. The Board is advanced in the process of
appointing a new director to the Board and, at the time of writing, hope to
announce the successful candidate soon.
Individual profiles for each member of the Board can be found in the Company's
Annual Report each year. These can also be found on our website, together with
summaries of each of the Governance Committees of the Board.
Business Review for the period to 30 September 2024
The Business Review includes a discussion of important events which occurred
within the period to 30 September 2024 and is covered in the Chairman's Report
and the Portfolio Manager's Report.
Hansa Investment Company Limited (HICL, "the Company") is a Bermudan company
formed in June 2019 to take on the business of Hansa Trust Ltd ("Hansa Trust")
which transferred to it in August 2019. As a company, HICL has approximately
five years of direct financial history. 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.
Principal risks for the financial year to 31 March 2025
The key risks and uncertainties relating to the period ended 30 September 2024
and for the year ending 31 March 2025 are materially the same as those
reported in the Annual Report for the Company for the year ended 31 March
2024. The principal risks and uncertainties identified are:
External
Market risk - long-term company share performance
Performance risk, share price, liquidity and discount monitoring
Tax, accounting, legal and regulatory risks
Reputational risk
Internal
Operational risk
Gearing/balance sheet risk
Going Concern basis of accounting for the period to 30 September 2025
The Directors consider it appropriate to adopt the going concern basis of
accounting in preparing these Half-Year 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 administrative services fees to the Company, amounting to £1,702,000
excluding VAT (six months to 30 September 2023: £1,497,000; year to 31 March
2024: £3,065,000). Amounts outstanding at 30 September 2024 were £280,000
(30 September 2023: £248,000; 31 March 2024: £285,000).
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 Half-Year
Financial Report have been prepared in accordance with International
Accounting Standard 34 'Interim Financial Reporting' and on a going concern
basis.
This Half-Year 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 Half-Year Management Report, including the Statement of the Board's
Responsibilities, was approved by the Board on 22 November 2024 and was signed
on its behalf by:
Jonathan Davie
Chairman
22 November 2024
Financial Statements
Income Statement
For the six months ended 30 September 2024
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 2024 30 September 2023 31 March 2023
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Gains on investments held at fair value through profit or loss - 8,828 8,828 - 12,324 12,324 - 88,760 88,760
Foreign Exchange gains/(losses) - 201 201 - (335) (335) - (492) (492)
Investment income 7,145 - 7,145 6,186 - 6,186 7,780 - 7,780
7,145 9,029 16,174 6,186 11,989 18,175 7,780 88,268 96,048
Portfolio management fees (1,644) - (1,644) (1,439) - (1,439) (2,950) - (2,950)
Other expenses (914) - (914) (900) - (900) (1,676) - (1,676)
(2,558) - (2,558) (2,339) - (2,339) (4,626) - (4,626)
Income before finance costs 4,587 9,029 13,616 3,847 11,989 15,836 3,154 88,268 91,422
Finance costs - - - - - - - - -
Income for the period 4,587 9,029 13,616 3,847 11,989 15,836 3,154 88,268 91,422
Return per Ordinary and 'A' non-voting Ordinary share 3.8p 7.5p 11.3p 3.2p 10.0p 13.2p 2.6p 73.6p 76.2p
The Company does not have any income or expense not included in the above
Statement. Accordingly, the "Income/(losses) for the Year" is also the "Total
Comprehensive Income/(expense) 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 Income Statement, prepared
in accordance with IFRS Accounting Standards ("IFRS").
All revenue and capital items in the above Statement derive from continuing
operations.
The accompanying notes below are an integral part of this Statement.
Balance Sheet
As at 30 September 2024
(Unaudited) (Unaudited) (Audited)
30 September 2024 30 September 2023 Year ended
£000 £000 31 March 2024
£000
Non-current assets
Investments held at fair value through profit or loss 458,276 369,881 449,153
458,276 369,881 449,153
Current assets
Trade and other receivables 4,749 5,615 1,463
Cash and cash equivalents 3,716 5,845 4,352
8,465 11,460 5,815
Current liabilities
Trade and other payables (498) (460) (421)
Net current assets 7,967 11,000 5,394
Net assets 466,243 380,881 454,547
Capital and reserves
Called up share capital 1,200 1,200 1,200
Contributed surplus 322,839 322,839 322,839
Retained earnings 142,204 56,842 130,508
Total equity shareholders' funds 466,243 380,881 454,547
Net asset value per Ordinary and 'A' non-voting Ordinary share 388.5p 317.4p 378.8p
The accompanying notes below are an integral part of this Statement.
Statement of Changes in Equity
For the six months ended 30 September 2024 (unaudited) Share Contributed Retained Total
capital surplus earnings £000
reserve
£000
£000
£000
Net assets at 1 April 2024 1,200 322,839 130,508 454,547
Profit for the period - - 13,616 13,616
Dividends - - (1,920) (1,920)
Net assets at 30 September 2024 1,200 322,839 142,204 466,243
For the six months ended 30 September 2023 (unaudited) Share Contributed Retained Total
capital surplus earnings £000
reserve
£000
£000
£000
Net assets at 1 April 2023 1,200 323,799 41,966 366,965
Loss for the period - - 15,836 15,836
Dividends - (960) (960) (1,920)
Net assets at 30 September 2023 1,200 322,839 56,842 380,881
For the year ended 31 March 2024 (audited) Share Contributed Retained Total
capital surplus earnings £000
reserve
£000
£000
£000
Net assets at 1 April 2023 1,200 323,799 41,966 366,965
Loss for the year - - 91,422 91,422
Dividends - (960) (2,880) (3,840)
Net assets at 31 March 2024 1,200 322,839 130,508 454,547
The accompanying notes below are an integral part of this Statement.
Cash Flow Statement
For the six months ended 30 September 2024
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
30 September ended 31 March
2024 30 September 2024
£000 2023 £000
£000
Cash flows from operating activities
Income/(loss)* 13,616 15,836 91,422
Adjustments for:
Realised gains on investments (4,329) (1,369) (6,228)
Unrealised (gains)/losses on investments (4,499) (10,955) (82,532)
Foreign exchange (201) 335 492
Increase in trade and other receivables (3,286) (5,487) (1,335)
Increase in trade and other payables 77 48 9
Purchase of non-current investments (25,170) (40,892) (69,313)
Sale of non-current investments 24,876 36,597 62,182
Net cash (outflow)/inflow from operating activities 1,084 (5,887) (5,303)
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)
Decrease in cash and cash equivalents (837) (7,807) (9,143)
Cash and cash equivalents at start of financial period 4,352 13,987 13,987
Effect of foreign exchange rate changes 201 (335) (492)
Cash and cash equivalents at end of period 3,716 5,845 4,352
* Includes dividends received of £6,981,000 (30
September 2023: £5,981,000; 2024: £7,602,000) and interest received of £nil
(30 September 2023: £nil; 2024: £nil).
The accompanying notes below are an integral part of this Statement.
Notes to the Financial Statements
1 Accounting policies
Hansa Investment Company Limited is a company limited by shares, registered
and domiciled in Bermuda with its registered office shown further on. The
principal activity of the Company is an investment vehicle.
(a) Basis of preparation
The Financial Statements of the Company have
been prepared in accordance with IFRS Accounting Standards ("IFRS"). IFRS
means standards and interpretations issued (or adopted) by the International
Accounting Standards Board (they comprise: International Reporting Standards,
International Accounting Standards (IAS) and Interpretations developed by the
IFRS Interpretations Committee or the former Standing Interpretations
Committee (SIC)).
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
a going concern basis under the historic cost convention, modified by
financial assets held at fair value through profit or loss with the assertion
of the Board further on in the report. 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 July 2022, to the extent that the
SORP does not conflict with IFRS. The material accounting policy information
adopted is set out below.
(b) Presentation of Income Statement
In order to better reflect the activities of an
investment company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Income Statement between items of
a revenue and capital nature, has been presented alongside the Income
Statement.
(c) 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 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 which is considered to be fair value at the Balance Sheet date. 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 in accordance with the International Private
Equity and Venture Capital Valuation Guidelines. Private equity investments
are carried at the fair value as reported by the Private Equity Fund Manager
(PEFM). In the absence of a valuation by the PEFM at the balance sheet date,
additional procedures to determine the reasonableness of the fair value
estimate for inclusion in the Financial Statements are performed. These may
include direct enquiries of the PEFM of the investment to understand, amongst
others, valuation process and techniques used, external experts used in the
valuation process and updated details of the underlying portfolio. In
addition, the Company can obtain external independent valuation data and
benchmarks to validate fair value estimates. Further, recent arms-length
market transactions between knowledgeable and willing parties where available
might also be considered. Subsequent to the balance sheet date, the
Administrator, will review subsequent valuations released by the Private
Equity fund to look for consistency with the estimations made as described
above.
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.
(d) 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.
(e) 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.
(f) Expenses
All expenses are accounted for on an accruals
basis. Expenses are charged through the revenue column of the Income
Statement except expenses which are incidental to the acquisition or
disposal of an investment which are charged to the capital column of the
Income Statement.
(g) Taxation
Under Bermuda law, to the extent the Company
remains out of scope of the Corporate Income Tax Act 2023 (the "CIT Act"), the
Company is not required to pay taxes in Bermuda on either income or capital
gains.
Bermuda enacted the CIT Act on 27 December
2023. Entities subject to tax under the CIT Act are the Bermuda constituent
entities of multi-national groups. A multi-national group is defined under the
CIT Act as a group with entities in more than one jurisdiction with
consolidated revenues of at least EUR750mm for two out of the four previous
fiscal years. If Bermuda constituent entities of a multi-national group are
subject to tax under the CIT Act, such tax is charged at a rate of 15 per cent
of the net taxable income of such constituent entities as determined in
accordance with and subject to the adjustments set out in the CIT Act
(including in respect of foreign tax credits applicable to the Bermuda
constituent entities).
Consolidated revenues of the Company's group
are less than EUR750mm in each previous fiscal year. On this basis, the
Company is not, and neither is it expected to be, in scope of the CIT Act
regime.
(h) 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 gains or losses arising from a
change in exchange rates, subsequent to the date of the transaction, are
included as exchange gains or losses in the capital or revenue column of the
Income Statement, depending on whether the gains or losses are of a capital or
revenue nature respectively.
(i) 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.
Under Bermuda Company Law, Retained Earnings
and Contributed Surplus Reserve are both distributable.
(j) 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 2024. The most recent valuation statement was received
on 23 August 2024, stating the value of the Company's holding as at 31 March
2024. In the absence of a valuation for 30 September 2024 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 2024.
It is believed the value of DV4 as at 30 September 2024 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.
(k) Adoption of new and revised standards
At the date of authorisation of these Financial
Statements there were no standards and amendments to standards, which have not
been applied in these Financial Statements.
In the current financial period the Company has
applied the following amendments to standards:
Amendments to IAS1 'Classification of liabilities as current or non-current'
(effective for accounting periods beginning on or after 1 January 2024).
Amendments to IAS1 'Classification of liabilities with covenants' (effective
for accounting periods beginning on or after 1 January 2024
There is no material impact on the Financial
Statements or the amounts reported from the adoption of these amendments to
the standards.
Relevant International Accounting Standards
that have yet to be adopted:
There are no relevant international accounting standards that are yet to be
adopted.
(l) Operating Segments
The Company considers it has one operating
segment for the purposes of IFRS 8.
2 Income
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
30 September ended 31 March
2024 30 September 2024
£000 2023 £000
£000
Income from investments
Dividends 7,145 6,186 7,780
Total income 7,145 6,186 7,780
Note: Of the dividend income received during the financial period, £6.2m was
received from the Company's Strategic Holding in OWHL by way of a dividend
received on 14 June 2024. The remainder was received from holdings within the
Global Equity (direct) & Core Regional silos.
3 Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
30 September ended 31 March
2024 30 September 2024
£000 2023 £000
£000
Fourth interim dividend for 2023-2024, paid 25 May 2024: 0.8p (2023: 0.8p) 960 960 960
First interim dividend for 2024-2025, paid 30 August 2024: 0.8p (2024: 0.8p) 960 960 960
Second interim dividend for 2023-2024, paid 24 November 2023: 0.8p - - 960
Third interim dividend for 2023-2024, paid 23 February 2024: 0.8p - - 960
Total income 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 2025
was announced on 08 October 2024. The payment totalling 0.8p per share
(£0.96 million) was paid on 29 November 2024.
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 £000 Pence £000 Pence
per share
per share
per share
Six months ended 30 September 2024 (Unaudited) 4,587 3.8p 9,029 7.5p 13,616 11.3p
Six months ended 30 September 2023 (Unaudited) 3,847 3.2p 11,989 10.0p 15,836 13.2p
Year ended 31 March 2024 (Audited) 3,154 2.6p 88,268 73.6p 91,422 76.2p
5 Financial information
The financial information for the six months ended 30 September 2024 was
approved by a committee of the Board of Directors on
22 November 2024.
6 Net asset value per share
The NAV per share is based on the net assets attributable to equity
shareholders of £466,278,000 (30 September 2023: £380,881,000; 31 March 2024
£454,547,000) and on 120,000,000 shares being the number of shares in issue
at the period ends.
7 Outstanding commitments and contingencies
The Company has the following outstanding commitments as at 30 September 2024
(30 September 2023: £6.7m; 31 March 2024: £8.3m).
Fund Commitment in local currency Converted to GBP
BPEA EQT Mid-Market Growth Partnership $1,774,644 £1,323,077
GGV Discovery IV - US $528,000 £393,648
GGV Discovery IV - Asia $600,000 £447,327
Gryphon VI Top-Up Co-Investment Fund $1,300,000 £969,209
Khosla Ventures VIII L.P $738,000 £550,212
TA Associates XV-B L.P $3,600,000 £2,683,963
Triton VI SCSP €1,740,000 £1,447,708
TrueBridge Direct Fund III L.P $157,500 £117,423
TrueBridge Capital Partners Fund VIII L.P $837,000 £624,021
Total £8,556,588
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 severely 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 and in the Portfolio Manager's Report.
Information on each of these areas is given in the Strategic Report within the
Annual Report for the year ended 31 March 2024. 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
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 2024 (unaudited) Level 1 Level 2 Level 3 Total
£000 £000 £000 £000
Financial assets at fair value through profit or loss
Quoted equities 199,241 - - 199,241
Unquoted equities - - 8,165 8,165
Fund investments 52,788 198,082 - 250,870
Fair Value 252,029 198,082 8,165 458,276
30 September 2023 (unaudited) Level 1 Level 2 Level 3 Total
£000 £000 £000 £000
Financial assets at fair value through profit or loss
Quoted equities 144,308 - - 144,308
Unquoted equities - - 7,778 7,778
Fund investments 39,461 178,334 - 217,795
Fair Value 183,769 178,334 7,778 369,881
31 March 2024 (audited) Level 1 Level 2 Level 3 Total
£000 £000 £000 £000
Financial assets at fair value through profit or loss
Quoted equities 192,221 - - 192,221
Unquoted equities - - 8,040 8,040
Fund investments 42,692 206,200 - 248,892
Fair Value 234,913 206,200 8,040 449,153
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) (Unaudited) (Audited)
30 September 30 September 31 March
2024 2023 2024
equity equity equity
investments investments investments
£000 £000 £000
Opening Balance 8,040 9,132 9,132
Purchase 919 - 367
Sale - - (402)
Total (losses) or gains included in gains on investments in the Income
Statement:
on assets held at period end (794) (1,354) (1,057)
Closing Balance 8,165 7,778 8,040
As at 30 September 2024, the investment in DV4 has been classified as Level 3.
This is because the investment has been valued using the most recent estimated
NAV as advised to the Company by DV4, adjusted for any further drawdowns,
distributions or redemptions between the valuation date and 30 September 2024.
The most recent valuation statement was received on 23 August 2024 and relates
to the DV4 portfolio at 31 March 2024. Additionally, the underlying assets of
DV4 are all Real Estate in nature and, as such, there is not a readily
comparable market of identical assets for valuation purposes. In the absence
of a valuation for 30 September 2024 from DV4, the Company performed
additional procedures to determine the reasonableness of the fair value
estimate for inclusion in the Financial Statements. Direct enquiries of the
manager of DV4 were made in July 2020 to understand, amongst others, valuation
process and techniques used, external experts used in the valuation process
and updated details of underlying property portfolio. In addition, the Company
has obtained external independent valuation data and compared the historic
valuation movements of DV4 to that data. It has been confirmed with DV4's
manager that the valuation procedures discussed in July 2020 are still the
same used now. In addition, the Company has compared the historic valuation
movements of DV4 to the FTSE350 Real Estate Index. Based on the information
obtained and additional analysis performed the Company is satisfied that DV4
is carried in these Financial Statements at an amount that represents its best
estimate of fair value at 30 September 2024. It is believed the value of DV4
as at 30 September 2024 will not be materially different, but this valuation
is based on historic valuations by DV4, does not have a readily available
third party comparator and, as such, is an estimate. If the value of the
investment was to increase or decrease by 10%, while all other variables
remained constant, the return and net assets attributable to shareholders for
the period ended 30 September 2024 would have increased or decreased by
£755,000 (2023: £778,000). The Board considers 10% to be a potential
movement between valuation periods borne out by historic valuation trends.
However, this does not preclude the valuation moving a greater amount than 10%
in the future.
Investor Information
Company 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.
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.
Secretary and registered office
Conyers Corporate Services (Bermuda) Limited
Clarendon House
2 Church Street PO Box HM666
Hamilton HM CX Bermuda
Board of Directors
Jonathan Davie, Chairman
Simona Heidempergher
Richard Lightowler
William Salomon
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.
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 be found on the Company's website:
www.hansaicl.com.
Service providers
Independent Auditor
PricewaterhouseCoopers LLP
Solicitors - Bermuda
Conyers Dill & Pearman Limited
Solicitors - UK
Dentons UK and Middle East LLP
Custodian
Banque Lombard Odier & Cie SA
Stockbroker
Winterflood Investment Trusts
Administrator
Apex Fund Administration Services (UK) Ltd,
Alternative Investment Fund Manager
Hanseatic Asset Management LBG
Financial calendar
Company year end
31 March
Annual Report sent to shareholders
June
Annual General Meeting
July/August
Shareholder presentation
September
Announcement of half-year results
November
Half-year Report released to shareholders
December
Interim dividend payments
August, November, February and May
Share price listings
The price of your shares can be found on our website. In addition, share price
information for Ordinary shares / 'A' non-voting Ordinary shares can be found
via the following codes:
ISIN
BMG428941162 / BMG428941089
SEDOL
BKLFC18 / BKLFC07
Reuters
HAN.L / HANA.L
Bloomberg
HAN LN / HANA LN
TIDM
HAN / HANA
Legal Entity Identifier
213800RS2PWJXS2QDF66
Further information about Hansa Investment Company Limited, including monthly
fact sheets, Stock Exchange announcements and shareholder presentations, can
be found on the Company's website: www.hansaicl.com
Please contact the Portfolio Manager, as below, if you have any queries
concerning the Company's investments or performance.
Portfolio Manager and additional administrative services provider
Hansa Capital Partners LLP
50 Curzon Street
London
W1J 7UW
Telephone: +44 (0) 207 647 5750
Email: hiclenquiry@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.
Registrar
Computershare Investor Services (Bermuda) Limited
c/o 13 Castle Street
St Helier
Jersey
JE1 1ES
Telephone: +44 (0) 370 707 4040
Email: info@computershare.co.je
Website: www.computershare.com/je
If you have a query, you can call our Shareholder helpline on +44 (0) 370 707
4040. Calls are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 08:30 - 17:30, Monday to Friday
excluding public holidays in England and Wales.
Register for updates
To receive the latest news
and views on the Company, please register at
www.hansaicl.com
Glossary of Terms
Association of Investment Companies (AIC)
The Association of Investment Companies is the UK trade association for
closed-ended investment companies (www.theaic.co.uk). Despite the Company not
being UK domiciled, the Company is UK listed and operates in most ways in a
similar manner to a UK Investment Trust. Therefore, the Company follows the
AIC Code of Corporate Governance and the Board considers that the AIC's
guidance on issues facing the industry remains very relevant to the operations
of the Company.
Alternative Investment Fund Managers Directive
(AIFMD)
The AIFMD is a regulatory framework for alternative investment fund managers
(AIFMs), including managers of hedge funds, private equity firms and
investment trusts. Its scope is broad and, with a few exceptions, covers the
management, administration and marketing of alternative investment funds
(AIFs). Its focus is on regulating the AIFM rather than the AIFs.
Annual Dividend / Dividend
The amount paid by the Company to shareholders in dividends (cash or
otherwise) relating to a specific financial year of the Company. The Company's
dividend policy is to announce its expected level of dividend payment at the
start of each financial year. Barring unforeseen circumstances, the Company
then expects to make four interim dividend payments each year - at the end of
August, November and February during that financial year and at the end of May
following the end of the financial year.
Bid Price
The price at which you can sell shares determined by supply
and demand.
Capital Structure
The stocks and shares that make up a company's capital i.e. the amount of
ordinary and preference shares, debentures and unsecured loan stock etc. which
are in issue.
Closed‑ended
A company with a fixed number of shares in issue.
Depositary/Custodian
A financial institution acting as a holder of securities for safekeeping.
Discount
When the share price is lower than the NAV, it is referred to as trading at a
discount. The discount is expressed as a percentage of the NAV.
Expense Ratio
An expense ratio is determined through an annual calculation, where the
operating expenses are divided by the average NAV. Note there is also a
description of an additional PRIIPs KID Ongoing Charges Ratio explained in the
Annual Report.
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. The Company will continue to quote results from its predecessor, Hansa
Trust Ltd,as part of that reporting so shareholders can see the longer-term
performance of the portfolio.
Gearing
Gearing refers to the level of borrowing related to equity capital.
Hedging
Strategy used to reduce risk of loss from movements in interest rates, equity
markets, share prices or currency rates.
Issued Share Capital
Issued share capital is the total number of shares subscribed to by the
shareholders.
Key Information Document (KID)
This is a document of a form stipulated under the PRIIPs Regulations. It
provides basic, pre-contractual, information about the Company and its share
classes in a simple and accessible manner. It is not marketing material. The
UK regulatory authorities introduced legislation from 1 January 2023 to amend
some of the disclosures in the KID for UK shareholders. The FCA has
subsequently issued a temporary exemption for most Investment Companies from
producing a UK KID document. However, the Company understands that the
automated systems for many investment platforms still require a KID to be
produced. Therefore, the Company's AIFM will be producing an amended UK KID
and a standard European KID going forward.
Key Performance Indicators (KPIs)
A set of quantifiable measures a company uses to gauge its performance over
time. These metrics are used to determine a company's progress in achieving
its strategic and operational goals and also to compare a company's finances
and performance against other businesses within its industry. In the case of
historic information, the KPIs will be compared against data of both the
Company and, prior to the Company's formation, from Hansa Trust Ltd.
Market Capitalisation
The market value of a company's shares in issue. This figure is found by
taking the stock price and multiplying it by the total number of shares
outstanding.
Mid Price
The average of the Bid and Offer Prices of a particular
traded share.
Net Asset Value (NAV)
The value of the total assets minus liabilities of a company.
Net Asset Value Total Return
See Total Return.
Offer Price
The price at which you can buy shares determined by supply
and demand.
Ordinary Shares
Shares representing equity ownership in a company allowing investors to
receive dividends. Ordinary shareholders have the pro-rata right to a
company's residual profits. In other words, they are entitled to receive
dividends if any are available after payments to financial lenders and
dividends on any preferred shares are paid. They are also entitled to their
share of the residual economic value of the company should the business
unwind.
Hansa Investment Company Limited has two classes of Ordinary shares - the
Ordinary shares (40 million shares) and the 'A' non-voting Ordinary shares (80
million shares). Both have the same financial interest in the underlying
assets of the Company and receive the same dividend per share, but differ only
in that only the former shares have voting rights, whereas the latter do not.
They trade separately on the London Stock Exchange, nominally giving rise to
different share prices at any given time.
Premium
When the share price is higher than the NAV it is referred to as trading at a
premium. The premium is expressed as a percentage of the NAV.
Packaged Retail and Insurance‑based Investment Product (PRIIP)
Packaged retail investment and insurance-based products (PRIIPs) make up a
broad category of financial assets that are regularly provided to consumers in
the European Union. The term PRIIPs, created by the European Commission to
regulate the underlying market, is defined as any product manufactured by the
financial services industry, to provide investment opportunities to retail
investors, where the amount repayable is subject to fluctuation because of
exposure to reference values, or the performance of underlying assets not
directly purchased by the retail investor. See also Key Information Document
(KID).
Shareholders' Funds/Equity Shareholders' Funds
This value equates to the NAV of the Company. See NAV.
Spread
The difference between the Bid and Ask price.
Tradable Instrument Display Mnemonics (TIDM)
A short, unique code used to identify UK-listed shares. The TIDM code is
unique to each class of share and to each company. It allows the user to
ensure they are referring to the right share. Previously known as EPIC.
Total Return
When measuring performance, the actual rate of return of an investment or a
pool of investments over a given evaluation period. Total return includes
interest, capital gains, dividends and distributions realised over a given
period of time.
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. In the case of historic
information, the Total Return will include data against data of both the
Company and, prior to the Company's formation, from Hansa Trust Ltd.
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