Hansa Investment Co Hansa Investment Co Hansa Invest-HANA - Half-year Report
01/12/2022 16:05
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RNS Number : 3250I Hansa Investment Company Limited 01 December 2022
Chairman's Report
Dear Shareholder
Shareholder returns
The past six months to 30 September 2022 have shown a decrease in net asset
value ("NAV") from 319.1p per share to 295.6p per share. The discounts on both
of our share classes have widened during the last six months, from 37.8% to
38.4 % for the Ordinary shares and from 39.5% to 41.3 % for the 'A' non-voting
Ordinary shares. This mirrors a trend seen across the whole UK Investment
Trust sector, as markets have reacted in a volatile manner to the rapidly
shifting economic outlook. More detail on these and the longer-term
performance can be found within our Portfolio Manager's detailed review of
markets and portfolio performance in his Report.
Our Portfolio Manager, Alec Letchfield and his team at Hansa Capital Partners
LLP ("the Portfolio Manager"), continue to shape the portfolio, with
adjustments made in recognition of the changing economic landscape; all within
the context of our longer-term investment horizon. Alec and his team have
increased our exposure to metals, mining and energy during the year-to-date
within the Thematic silo; asset classes which were out of favour until
recently, which have now come into sharp focus given energy uncertainty and
the environmental challenges facing the world. Alec and his team have also
allocated further capital to their diversifying strategy during the last 12
months. This is to remove an element of volatility and to provide the
portfolio with a return stream less correlated with equity markets. I note the
diversifying silo within the portfolio has produced a pleasing gain (in the
context of current markets) of 2.7% in sterling terms over the past six months
and 5.5% over the past 12 months. Alec and his team have been successful in
identifying a number of strong managers and funds in this area with highlights
noted in his Portfolio Manager's Report. Their thoughtful and diversified
approach has produced an overall return on the managed portfolio of -4.7% in
sterling terms in a difficult and volatile environment. Core Regional and
Thematic strategies fell 6.3% and 8.2% respectively, compared to a 7.2% fall
in the global equity index.
Alec Letchfield and his team continue to monitor our investments very
carefully and retain a defensive element to the strategy until more clarity
appears about the outcomes of the present problems. He has been particularly
underweight in UK investments which has assisted performance.
Ocean Wilsons Holdings Limited
Our strategic holding in Ocean Wilsons Holdings Limited ("Ocean Wilsons",
"OWHL") consists of two parts: an investment in the Brazilian maritime and
port operator Wilson Sons Limited ("Wilson Sons"), equating to approximately
2/3 of the value of Ocean Wilsons, as well as an investment portfolio making
up the balance. Wilson Sons continues to perform with stable financial returns
in a market segment where logistics and international trade remains
challenging. It is pleasing to see the performance of Wilson Sons, which is
assisted by the long- anticipated strengthening of the Brazilian Real against
the Pound. I note the Brazilian presidential election has resulted in a very
close result, returning Luiz Inácio Lula da Silva ("Lula") as President of
Brazil for a third term albeit there were initial fears that the previous
president, Jair Bolsonaro, would not cede power. It is encouraging to note
that Jair Bolsonaro has now conceded the election by accepting the
transmission process and that Lula will be constrained by the make up of
Congress to pursue irresponsible fiscal measures.
The Ocean Wilsons investment portfolio has similarities to our own portfolio
including a selection of defensive assets. However, it also has a significant
element of private equity. Whilst the portfolio has reduced in value from
$313m at the end of April to $297m at the end of June, this is in part due to
dividend payments.
Discount Management
Discounts across the investment trust spectrum have widened as markets have
become increasingly jittery. We have not been immune despite the less volatile
results. The discount remains a source of frustration to the Board, but we
continue to believe buy-backs are not in the Company's long-term interest, as
this would increase ownership concentration to Ocean Wilsons, given that any
buy-back of shares would need to be funded from the Company's pool of liquid
assets. Instead, we believe transparent and clear communications on the
portfolio; that strategic investment activity will deliver broader
understanding and interest, expand the shareholder base, improve liquidity,
and eventually positively impact the discount. To this end, we have embarked
on a programme of refreshing communications across all platforms, including
the Company's website, Annual and Half-Year Financial Reports and factsheets.
We hope these ongoing changes will be well received.
The Board continues to work with our marketing partner. The initial focus is
to refresh the Company's image including its website, factsheets, Annual and
Half-Year Reports. Those of you who have followed our Company for a number of
years will have noticed the 'new look' of the Company's Half-Year Report. This
will be followed shortly by our new website. In future, our marketing partner
and our research broker will be considering how we can further expand our
shareholder base, making the Company better known in the market, in particular
within the active "self-select" investor community.
Prospects
I mentioned in the most recent Annual Report the investment challenges when
there are so many moving parts in the financial world.
Although the majority of economic forecasters suggest we may be getting near
the inflationary peak in this cycle, there seems to be a notable dispersion of
opinion as to how quickly a decline may take place. The Federal Reserve,
European Central Bank and Bank of England all recognise they have been slow to
react to this inflationary cycle and seem determined to crush it now. It will
be interesting to measure the strength of their determination when the
inevitable pain creates political difficulties for incumbents. My own view
remains that recessions are inevitable in the US, UK and Continental Europe
and unless interest rates reach heights not presently anticipated, a
meaningful fall in inflation rates is unlikely. Their depth should be
cushioned by the continuing loose monetary policy in Japan and inevitable
easing of monetary policy in China.
I mentioned in the Annual Report in June that equity markets still had some
way to fall. This has duly come to pass and it is difficult to see a final
bottoming out process until there is more clarity on the depth of the
forthcoming corporate earnings recession, the peaking of inflation, the end of
quantitative tightening and a sense that the present conflict in Ukraine is
moving towards some sort of resolution.
The coming winter will sadly be very damaging for Europe, as industry may be
badly affected and all environmental plans postponed due to the increase in
coal and oil consumption. The worst outcomes may be avoided by above average
winter temperatures and the consequential decline in seasonal energy
consumption, particularly gas, with the main storage facilities presently
being completely full.
Corporate governance
Senior Independent Director
I am pleased to report the Board has appointed Nadya Wells as Hansa Investment
Company's Senior Independent Director to assist and give guidance to the
Chairman.
ESG Matters
With ever-growing global concerns and developments surrounding matters such
has climate change, social inequalities and ethical corporate strategy and
governance, the Board believes there is a communal duty for meaningful and
effective action to be taken and are committed to doing so.
It is the Board's belief that responsible investing and a well-run sustainable
business model aids in generating superior long-term returns and our Portfolio
Manager shares these beliefs. As long-term investors, the Portfolio Manager
has a natural desire to be a responsible investor and good corporate citizen.
It is likely that such businesses and investors are likely to generate
superior long-term returns and, furthermore, consideration of such issues is
an important element to potential risks. The Portfolio Manager does not
operate an exclusionary policy, as it is not believed that excluding whole
sectors or countries is a sustainable, or reasonable approach to its
investment activities. Each fund manager or company is assessed as an
individual, taking into account the sector and country within which it
operates and its direction of travel in ESG enhancements.
You will have seen over the last two years that the Portfolio Manager has been
developing its own Responsible Investing framework and, more recently, working
closely with the UN Principles for Responsible Investing Initiative ("UNPRI")
considering the requirements of the investor initiative, in particular
considering its impact on a portfolio such as ours. If you are not familiar
with the initiative, the UNPRI encourages investors to use responsible
investment to enhance returns and better manage risks, but does not operate
for its own profit; it engages with global policymakers, but is not associated
with any government; and is supported by, but not part of, the United Nations.
It consists of six principles that all signatories must agree with:-
1. Incorporate ESG issues into investment analysis and
decision-making processes.
2. Be active owners and incorporate ESG issues into ownership
policies and practices.
3. Seek appropriate disclosure on ESG issues by the entities
invested in.
4. Promote acceptance and implementation of the Principles
within the investment industry.
5. Work together to enhance effectiveness in implementing the
Principles.
6. Each report on activities and progress towards implementing
the Principles.
The Manager has kept the Board closely informed at each stage and the Board
has been supportive of its proposals. Therefore, I am pleased to report that
our Portfolio Manager is now a confirmed signatory to the UNPRI initiative and
I look forward to seeing how this develops.
Shareholder presentation
Following the release of this Half-Year Report, we are planning to hold a
shareholder information presentation. Given the success of the virtual
meetings in recent years, we intend to keep holding these events online to
enable broad participation. More details will be published on our website and
via RNS.
Finally, may I wish you all seasonal good wishes and much good health and
prosperity for 2023.
Jonathan Davie
Chairman
1 December 2022
Half-Year Management Report
The Directors present their Report and Condensed Financial Statements for the
period to 30 September 2022.
The Board's objectives
The Board's primary objective is to achieve growth of shareholders' value over
the medium to long-term.
The Board
Your Board consists of the following persons, each of whom brings certain
individual and complementary skills and experience to the Board's workings:
Jonathan Davie (Chairman of the Board and Management Engagement Committee);
Richard Lightowler (Chairman of the Audit Committee); Simona Heidempergher
(Chairman of the Remuneration Committee); William Salomon; and Nadya Wells
(Chairman of the Nomination Committee and Senior Independent Director).
Individual profiles for each member of the Board can be found in the Company's
Annual Report each year and on our website.
Business Review for the period to 30 September 2022
The Business Review includes a discussion of important events which occurred
within the period to 30 September 2022 and is covered in the Chairman's Report
to the Shareholders 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"). As a company, HICL has limited financial history, only having taken
on the business of Hansa Trust in August 2019. Therefore, when discussing the
medium and longer-term financial performance of the Company and its portfolio,
the Board will continue to incorporate the financial performance from Hansa
Trust, as well as HICL where relevant. Hansa Trust was liquidated in November
2021.
Key risks for the financial year to 31 March 2023
The key risks and uncertainties relating to the period ended 30 September 2022
and for the year ending 31 March 2023 are materially the same as those
reported in the Annual Report for the Company for the year ended 31 March
2022. The Board, with the Portfolio Manager, continues to focus on the likely
future economic impacts of the developing geopolitical tensions and
inflationary pressures currently shaping the global markets.
Going Concern basis of accounting for the period to 30 September 2022
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 company secretarial fees to the Company, amounting to £1,481,000
excluding VAT (six months to 30 September 2021: £1,601,000; year to 31 March
2022: £3,177,000). Amounts outstanding at 30 September 2022 were £231,000
(30 September 2021: £261,000; 31 March 2022: £236,000).
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 1 December 2022 and was signed
on its behalf by:
Jonathan Davie
Chairman
1 December 2022
Portfolio Manager's Report
How high? How low? How bad?
Market backdrop
Having ebbed and flowed, the first half of the financial year saw market
bearishness reach a crescendo. Initially, in a classic head-fake, investors
started to believe the US Federal Reserve would tone down some of its hawkish
rhetoric on interest rates. In the belief that rates were high enough to start
bringing inflation down, investors were increasingly of the view they could
start to think about interest rates falling again. With it we saw both a rally
in stock markets and a rotation back into some of the longer duration names
and out
of value.
The chair of the Federal Reserve, Jay Powell, had a different view and, at the
annual Jackson Hole symposium, quickly put investors back into their box.
Having only a short-while back argued that inflation was transitory, he now
views rate rises as open-ended and doesn't even want to discuss
when and where they might pause until inflation is back to target. This wasn't
just rhetoric but also backed up by action. Over the half the US increased
rates by 2.75%, the ECB by 1.25% and the Bank of England by 1.5%.
Reinforcing this stance, inflation proceeded to reach levels last seen in the
70s/80s, hitting 8.3%, 9.1% and 9.9% in the US, Europe and the UK
respectively. Rather counter-intuitively, however, many of the underlying
constituents of inflation softened during the period. Oil prices fell from
$100/barrel to $79, container shipping prices fell by 50% and many metal
prices fell over the period.
Rounding off this turbulent backdrop, geopolitics also remained challenging.
Confounding the belief that Russian success in Ukraine was inevitable, the
Ukrainian armed forces delivered a spectacular counteroffensive. Russia, on
its part, conducted several sham referenda in an effort to legitimise the
invasion. China was relatively quiet ahead of its 20th Communist Party
congress in October, albeit President Xi remained steadfast in his efforts to
maintain a zero COVID policy. Perhaps the most surprising geopolitical shock
came from the UK. In what was a dream for the pundits the new Prime Minister,
Liz Truss, and Chancellor, Kwasi Kwarteng, delivered an unorthodox
mini-budget, increasing spending and cutting taxes at a time when inflation
was rampant and debt levels high. Markets subsequently dealt the pair bloody
noses by forcing up gilt yields and crushing sterling, leading to an
embarrassing about-turn in policy and headlines such as 'Not so Great
Britain'! The fallout ultimately led to Truss dismissing Kwarteng and then
resigning herself. Subsequently Rishi Sunak was elected to lead the
Conservative party and hence became the new Prime Minister. Hopefully he
will prove to be a more stable pair of hands.
Unsurprisingly investors were less than impressed by these events, sending
markets on a roller coaster ride over the half. World equities fell 7.2%, US
equities declined 6.7% and Europe lost 9.0% taking their performances over 12
months to -4.1%, -0.1% and -9.0% respectively. Frontier markets were generally
slightly better, while emerging markets also struggled. Ex-Asia emerging
markets fell 6.2% for the half, LATAM declined by 4.4% while frontier markets
fell 4.8%.
Bonds were also weak, albeit again with significant variation across the
board. Global treasuries fell by 1.0% which, perhaps surprisingly, was less
than the high yield market which rose by 2.1%. Emerging market debt fell by
14.3% and convertibles by 0.7%. Standouts amongst the group however were UK
government bonds which fell 19.3% in the half and 25.4% for index-linked
bonds, as sterling fell 15.0% against the dollar. So much for the defensive
characteristics of sovereign bonds!
Amongst the alternative asset classes, despite still being up for the year,
commodities were mixed over the half, with copper down 15.1% and oil down by
6.4% (WTI). In contrast, hedge funds, having been in the doldrums for many
years, are enjoying life more in the current environment with positive returns
across several different strategies.
Finally, the all-important US dollar continued to strengthen. Through a blend
of the Federal Reserve being ahead of many other central banks in raising
rates and removing liquidity and the defensive nature of the dollar, investors
have been retreating to the dollar as a safe haven. On a Purchasing Power
Parity basis the dollar is now looking very expensive, which has important
implications for many other assets which are often valued in dollars.
Unfortunately, whilst currencies typically return to their fair values over
the long-term, they can remain mispriced for a protracted period of time.
How high? How low? How bad?
There really can be no doubt now that we are in the midst of a bear market.
The key question however is how deep is the bear market likely to be and over
what period? This, we believe, is a function of three key factors: How high do
rates and inflation rise? How low do economies fall? How bad does the
geopolitical situation become? These are not necessarily mutually exclusive
questions but intertwined in many cases and, depending on how they pan out,
will have important implications for the nature and severity of the downturn.
1. How high do rates and inflation rise?
We would start by nuancing this question. Whilst inflation is currently at
nosebleed levels it is our belief that this will not remain the case over the
longer term. Undoubtedly there are some circumstances that may lead to
inflation being higher for longer and we see some kind of repeat of the 1970s,
but our expectation is that inflation will start to fall over the coming
months and we are not facing a protracted period of high single digit/low
double-digit inflation. Instead our key concern is where do inflation and
interest rates end up in the medium to longer term and what are the market
implications of this?
There are two schools of thought here. The first, perhaps the status quo
perspective, is that with the Fed having pivoted from viewing inflation as
transitory and with Powell having a Volcker moment, he will raise rates to
whatever level is required to bring inflation back to its 2% target level and
ultimately return markets to how they were previously, i.e. a return to when
markets were supported by copious amounts of liquidity, the Fed Put is
reinstated and long-duration stocks can continue to thrive again. Indeed there
are some who are starting to wonder if the outcome of the Fed's renewed vigour
in combating inflation is deflationary. Inflation measures are typically
backward looking and fail to capture the fact that a number of important
inflationary drivers are already heading south. As highlighted earlier,
commodity prices have come back sharply over recent weeks, supply chains have
eased in a number of important areas and soon the higher rates and bond yields
will start to dampen the important housing market, all of which are
deflationary in nature. It is not inconceivable then that having been late to
appreciate inflation was more ingrained than originally thought, the Fed is
again behind the curve and will let the inflationary pendulum swing too far in
the other direction.
The alternative view however is that the new norm for inflation and rates is
higher than we have become used to in recent years with the days of zero rates
now past. As discussed in prior House Views, underlying this shift are a
variety of structural and philosophical factors as to how best economies
should be managed and resources allocated. Globalisation, which for many years
was deemed as the optimal way to produce goods at ever lower prices and which
was instrumental in the rise of China and emerging markets more generally, is
now in reverse. Security of supply and a desire to control one's own destiny
rather than leave one's economy exposed to weaknesses elsewhere in the supply
chain are now seen as more important than ever lower prices. Similarly, having
lived in a backdrop which favoured rising corporate profitability over labour
remuneration, this now seems to be in reverse. With unemployment rates
remaining historically low and many choosing to exit the labour force
post-COVID, we have started to see significant wage increases and widespread
strikes as trade unions flex their muscles again after many years of
inactivity. The net effect of all of this is that inflation doesn't return to
the sub-2% levels it has experienced over recent years and instead the neutral
rate for inflation and interest rates is above 4%/5%. The key question of
course is just how high is this new neutral rate?
The implications for markets are likely to be very different under these two
scenarios and potentially profoundly so. The first scenario of a return to 2%
inflation and low rates is broadly a positive one for world stock markets.
Yes, there may well be a meaningful recession and a corresponding impact on
stock markets if the Fed is overzealous in its efforts to return us back to a
low rate/low inflation world, but if successful this is probably a price worth
paying for the beneficial impact such an environment has on global asset
prices over the longer term.
The second scenario however, of sustainably higher inflation and interest
rates, is much harder to gauge and potentially has dramatic ramifications for
many asset prices. Your experienced investment team has seen these scenarios
before, navigating double digit inflation and interest rates in the past and
we see no reason why economies and stock markets cannot ultimately cope with
these new levels. The challenge, however, is that many people in markets
haven't operated under such conditions and many areas of the economy have
adjusted such that they assumed the current backdrop of zero rates and low
volatility would last into perpetuity. Take the housing market for example. It
is perhaps of little surprise that house prices have been so robust in many
economies, when the cost of servicing mortgages was next to zero in most
cases. This encouraged homeowners to take out ever higher mortgages, as they
leveraged up to buy bigger homes in the belief such actions boosted their
wealth with little risk. The prospect then of a variable rate mortgage or a
two-year fixed mortgage coming to maturity and shifting from historically low
levels to 6% plus will result in a dramatic change in monthly mortgage
payments. Coming at a time when many households are already struggling with
higher utility and fuel bills this will likely have major consequences for
spending patterns and household wealth.
The excesses are, however, unlikely to be restricted to the housing market. It
seems likely many areas of the economy and assets will have been boosted by
this era of free money. Cryptocurrencies are probably the posterchild for
these excesses, albeit we suspect that whilst there will be some notable
casualties they remain an asset class for mainly young investors and not a
source of wider contagion. Areas we would be more concerned about would
include private equity, which for years has ridden a wave of abundant
liquidity and low rates. Through leveraging up deals at almost zero cost (and
risk as the balance of power shifted from the lender to the PE firm) PE firms
have been able to gobble up assets, make outsized returns and then often sell
them onto one another at the end of the process. With PE returns barely
changed this year, at a time when public sector returns have collapsed, one
has to wonder if this is the next shoe to drop and what are the wider
implications for associated areas of the market.
It is likely then that the use of ever lower rates and abundant liquidity runs
much deeper than commonly assumed and, for this reason, if the neutral rate
winds up higher than anticipated the ramifications are likely to be more
painful, as economies go cold turkey and investors learn to live under this
new backdrop. We will come back to this subject in more detail in subsequent
House Views.
2. How low do economies fall?
To date it's been all about rates and inflation. Increasingly, however, we see
the narrative switching to the impact of the higher rate environment on the
broader economy and company profitability.
So far the economic and corporate impact has been relatively muted. Whilst the
US did exhibit two consecutive quarters of mildly negative economic growth,
the National Bureau of Economic Research deemed the US not to have entered
recession based on a broader basket of factors. Indeed certain important areas
of the economy, notably unemployment, remain remarkably resilient,
highlighting the strength of economies, especially that of the US.
Similarly, corporate sector earnings have again been robust this year all
things considered. Company earnings are forecast to grow 7.0% in 2022 with US
corporate margins expected to be 13.3%. This compares to 9.0% growth and 12.8%
margins forecast at the beginning of the year.
This however is, to a large degree, looking in the rear-view mirror. With
central banks having put up rates sharply already and with the Fed seemingly
prepared to sacrifice the economy in its desire to maintain control over
inflation, it seems an inevitability that economies will start to slow as the
year progresses. The lead indicators would seem to agree with this view. The
US ISM New Orders Index went from being expansionary to contractionary,
falling from 53.8 to 47.1. Similarly, in China export orders are weak and
shipping rates between China and the US have collapsed in recent months.
The key question again is not will economies fall, but rather just how far
will they fall in the months ahead? Unfortunately the answer to this is very
much dependent on just how exuberant central bankers will be in their desire
to stymie higher inflation. Whilst only time will tell, fortunately there are
a couple of mitigating factors.
First, whilst we worry about the prospect of moving back to a higher neutral
position in interest rates and inflation, the US and to a lesser extent
European economies are in relatively robust health going into the downturn.
Having been badly burnt during the Global Financial Crisis both regions set
about rebuilding their banking systems (albeit with the US being far more
successful at this than Europe) and personal balance sheets with rising
savings levels and deleveraging of the housing markets (but notably not the UK
housing market). With the banking, consumer and housing sectors normally
playing central roles within any downturn, it is therefore helpful that they
are starting from relatively robust positions this time around all things
considered.
The second point to consider is at what point do central bankers come off the
brake in their desire to dampen inflation. Ultimately, whilst the Fed is
currently laser focused on inflation, it should not be forgotten that it has a
dual mandate to maximise employment as well as to control inflation. Indeed,
whilst central bankers are currently keen to demonstrate their
inflation-busting credibility, it seems likely that this will be tested if
unemployment rises sharply in the process; rising prices are not the key worry
for someone who no longer has a job. Combined with political pressure, with
the independence of central banks being somewhat diminished over the past
couple of years, it seems likely there will be a point where the current
Volker-like characteristics start to waver.
Hence,whilst we see weakness in growth becoming the centre of the conversation
in the months ahead, we do see some mitigating factors that will hopefully
prevent a repeat of the Global Financial Crisis. Certainly we see the
all-important US economy as being in more robust shape than many others in
view of past efforts to shore up the banking sector and consumer balance sheet
and being largely energy self-sufficient.
3. How bad does the geopolitical situation become?
Having for many years lived in a world of relative geopolitical stability this
is rapidly being turned on its head. The Russian invasion of Ukraine and
China's decision to adopt a different model as to how it deals with COVID and
a heavy-handed approach to the regulation of the consumer internet and
education sectors, are all indicative of how the geopolitical landscape is
evolving in a different direction. Previously the view in the West was that
other, often non-capitalist, economies would gravitate towards this over time.
It was seen as only a matter of time before China, Russia and emerging markets
more generally morphed from their current models to this new framework.
Recent events however have shown that this view was misguided. China never
intended to adopt the US model, but instead wanted elements of the free-market
approach but within a one-party, centrally driven economy. Similarly Russia is
embarking on a process of attempting to turn back time on the disbandment of
the old Soviet Union in an effort to 'make Russia great again'. Rather than
unifying the world, the fissures between East and West have become greater
than ever and there is a growing divide with the US global hegemony likely to
become increasingly challenged as the rise of China marches on.
Managing this from an investment perspective is challenging. Under the old
framework, leaders and central bankers could be relied upon to act rationally
according to the accepted rules of play. Now though, decisions are being made
that often go contrary to this framework. National boundaries are no longer
being respected and the threat from nuclear weapons has reared its ugly head
again. Increasingly we need to add an additional risk premium when considering
investments into these less stabile regimes and thought must be given to the
worst-case scenario coming to fruition and the implications this may have for
economies and stock markets.
Positioning portfolios
Investing in stock markets for much of the current cycle really was very
monotonal in style. An environment of low interest rates both inflated risk
assets such as equities, but also drove longer duration stocks such as
technology higher. Really all one had to do was invest in technology companies
and specifically the US stock market given its dominance in this area.
The past year however has turned this all on its head. Higher inflation and
the resultant increase in interest rates has been the catalyst for both a bear
market in equities and bonds. Value has surged at the expense of growth and
commodities have come in from the cold.
So what now? Well first one must retain a certain intellectual flexibility as
the current environment unfolds. In reality one can never truly predict how
central bankers will react to the current economic backdrop, or the actions of
unconventional leaders such as Putin or Xi, and instead it will be necessary
to adapt as the economic outlook, the policy response and the geopolitical
situation develop.
Diversification and balance within a portfolio will be key. Never has it been
so important as now to hold a wide spread of assets to help protect portfolios
from the different permutations of outcomes and some of the more dire
geopolitical outcomes. Holding a mixture of quality, value and growth seems
appropriate as we learn what the new neutral interest rate and inflation rates
are and the depth and length of the coming economic decline.
At this stage we see it as a little premature to dive back into risk assets
such as equities. Valuations are starting to look far more interesting, with
the US stock market back to its recent historical average and Europe and
emerging markets arguably looking cheap by past standards. We worry in the
near term however that earnings are yet to adjust to the coming downturn and
this winter may well be challenging for Europe, as higher energy and utility
bills weigh on both consumers and corporates. For the time being we continue
to favour the US in light of its relative economic robustness and being
largely energy self-sufficient. Whilst it wouldn't classically be the time to
invest in emerging markets in the face of a recession, dollar strength and
declining corporate profitability, we do wonder if the region is in practice
in a more robust position having not gorged themselves on the copious amounts
of free money like the West. Increasingly we are inclined to take a contrarian
view here. Equally Japan is looking very cheap with the yen extremely oversold
at current levels. A shift to a more rationale monetary policy would likely
lead to a sharp reversal in Japan's fortunes.
Sovereign bonds are also beginning to look interesting again. Clearly in a
backdrop of rising inflation and higher rates, bonds were deeply unattractive,
especially in light of their low starting yields. Now, however, with yields
being higher and inflation potentially peaking and, most importantly, with
economic growth coming under pressure, defensive assets such as government
bonds will likely become more attractive again. Investors should be mindful
however that governments need to maintain credibility in their policy measures
and debt management, as was illustrated by the recent debacle in the UK, and
we would still be wary of corporate bonds with default levels still
historically low and many companies taking (excessive) advantage of the cheap
funding.
Finally, absolute return hedge funds such as trend following, systematic and
macro funds are also now viable investments. For years the combination of low
interest rates (they couldn't earn a decent return on their cash positions),
low volatility and high fees meant they delivered muted returns at best and
certainly looked poor when compared to risk assets such as equities. Now,
however, with interest rates higher, abundant volatility and opportunity, they
are looking a viable asset class again and add an important diversifying
element to portfolios at a time when diversification is key.
Conclusion
In many ways what we are currently facing is a classic, old-school bear
market. Central bankers, as they normally do, let economies run too hot,
inflation jumped and now they are having to ramp interest rates up and remove
excess liquidity from markets. We fully expect them to pivot too far in the
opposite direction and a recession to be the end result. The resultant bear
markets are typically meaningful, albeit usually not as severe or protracted
as structural bear markets such as we saw during the Global Financial Crisis.
There are, however, a couple of nuances that make us pause. The first is that
it increasingly looks like we are seeing the end of the zero-rate and
inflation-less world we have lived in for many years now. It's not a given,
and it is possible that Jay Powell and central bankers globally will do
whatever it takes, regardless of the impact on global economies, to put
inflation back into its box. However, with a number of the structural drivers
behind the zero-rate world now in reverse, the probability it is ending now is
meaningful. The second is that we have gone from a period of relative
geopolitical stability to one where geopolitics can no longer be ignored when
making investment decisions. Most notably countries seem to be aligning into
different groups both economically and, in some cases, from a war footing.
It's not all doom and gloom however. Mitigating factors include the fact that
we are working our way through the process. Valuations have adjusted for both
equities and bonds and whilst we might not quite be there just yet (especially
as profitability falls as growth slows), we are starting to see value in a
number of cases. Also, many of the important sectors of the global economy are
actually in relatively good health, primarily due to the pain they went
through during the Global Financial Crisis.
So often problems within these sectors shift the bear market from cyclical to
structural when they are in less robust health. In particular, we would note
the strength of the banking sectors, the consumer in the US and the housing
markets in both the US and Europe.
Managing periods of regime change, as we appear to be going through at
present, is challenging. Predicting the actions of central bankers, who will
be key to the process, is fraught with difficulty and the unintended
consequences of years of free money will be hard to predict with certainty, at
least at the outset. Almost certainly this will lead to more volatility in
global assets and the potential for meaningful drawdowns. Core to our response
to this new environment is greater diversification. No longer is it right to
be purely positioned towards growth and instead a balance of value and growth
is required, along with geographic diversification and the use of hedge funds.
We will start to run our slide rule over bonds, having been bearish for some
time now, and we are fortunate that diversification runs central to the
Company's approach.
Portfolio Review and Activity
With market volatility continuing during the first half of the financial year,
your Company produced a return of -6.9% and a -10.1% return over the last 12
months. Both returns are ahead of a traditional 60:40 equities and bonds
portfolio, which would have returned -12.1% and -11.7% over the same periods,
respectively. Ocean Wilsons declined 14.2% during the half, whilst the rest of
the portfolio fell 4.7%. With significant sterling weakness during the half,
the MSCI ACWI NR Index declined 7.2% in sterling, leaving it down 4.0% over 12
months. Bonds have suffered, as high inflation and rising central bank rates
have pushed yields higher and the FTSE UK Gilts All Stocks TR Index was down
19.3% over the financial year-to-date, taking its decline over the past 12
months to a steep -23.3%. The UK CPI, meanwhile, rose another 5.7% this half
and is up 10.1% over the past 12 months. The Company's NAV per share fell from
319.1p at the end of March to 295.6p at the end of September, with 1.6p per
share being paid out as a dividend during the half.
Core and Thematic Funds
The Core Regional silo fell 6.3% in the first half of the financial year,
while the Thematic silo declined 8.2%, with both results being comparable to
the 7.2% fall of the global equity index. Over the past 12 months the returns
have been -13.5% for the Core Regional silo and -14.3% for the Thematic silo.
There were strong returns for several of the holdings within the Core Regional
silo over the half, with many of the North American holdings performing well
on a relative basis. Findlay Park American fell 2.0% this half, ahead of the
US index, as the fund has shown again its tendency to outperform in difficult
markets. Among Findlay Park's top contributors this half were CoStar, Amazon
and Keysight, which had all been added to early in the half and have since
reported solid earnings growth.
Pershing Square Holdings had a weaker half with a loss of 9.9%, although its
holdings in restaurant groups Chipotle Mexican and Restaurant Brands (which
owns leading brands including Burger King, Tim Hortons and Popeyes) held up
well as sales growth has been returning post-COVID.
The two Japan funds, Indus Japan Long Only and Goodhart Partners: Hanjo
declined 2.8% and 3.4%, respectively, and over the past 12 months are now down
17.5% and 16.5%. Within the Indus fund, the largest contributors over the half
included the pharmaceutical and medical equipment company Daiichi Sankyo and
the electro-optical component supplier Hoya. The global developed funds both
had stronger halves. Egerton Long-Short Fund was up a strong 3.3% as it
benefited from a long position in First Citizens BancShares and from some
short positions in materials and information technology companies. BlackRock
Strategic Equity Fund fell 2.2%, partly as a result of currency moves, but
also benefiting from short positions in industrial cyclical and defensive
names, with the manager highlighting short positions in a UK food delivery
company and a CRM cloud company. As the half went on the manager de-risked the
short book by exiting positions in profitless technology businesses, and by
late August the fund was running at a net exposure level of -7%.
The emerging and frontier market holdings have been more of a mixed bag so far
this financial year, although the NTAsian Discovery continued its period of
good performance, rising 6.4% to be up a strong 11.4% over the last twelve
months. The KLS Corinium Emerging Markets fund declined 3.6% to be down 7.0%
since it was purchased last December while the iShares Core MSCI Emerging
Markets ETF was down 7.5%. The frontier market position in BlackRock Frontiers
Investment Trust gained 1.1% and is up 8.1% over the past year.
Most of the holdings within the Thematic bucket made gains, although the
technology holding had a difficult start to the financial year, with GAM Star
Disruptive Growth being down 17.0%. The positions in the energy and commodity
sectors produced mixed performance this half, with iShares MSCI World Energy
ETF up 8.9% while the iShares MSCI World Metals and Mining Producers ETF
declined 18.9%. Healthcare positions performed well, notably RA Capital
International Healthcare Fund that gained 16.0%, leaving it down 12.6% for the
past twelve months. The Polar Global Insurance Fund, which was bought in May,
also made gains, being up 6.3% since purchase.
Diversifying Funds
The diversifying holdings have continued to do their job, which is to dampen
volatility and provide the portfolio with a return stream that shows lower
correlation to the equity market. During the half, the Diversifying silo
produced a strong gain of 2.7%, taking its return for the past twelve months
to 5.5%, in a period when both equity and bond indices have suffered
significant declines.
The trend-following CTA funds have been among the strongest performers
recently, and the Schroder GAIA BlueTrend continued to be so this half with a
gain of 19.0% taking it to be up an excellent 32.3% over the past twelve
months. The GAM Systematic Core Macro also had a good half, up 7.6%, takings
its return to 6.7% over the past year. Global Event Partners has been solid
this year declining just 1.0% gain this half leaving it up 1.9% over the past
twelve months. It benefited during the period from a number of mergers
closing, and its position in the NortonLifeLock/Avast merger contributed to
performance as it was provisionally approved by the UK regulators. Keynes
Systematic Absolute Return Fund has continued to be a strong performer, with
its relative value strategies contributing more than its directional
strategies this half. The Keynes fund rose 11.4% this half to leave it up
14.3% over the past year.
Both macro trading funds continue to produce steady returns, with MKP
Opportunity being up 4.8% this half, while Hudson Bay was up 1.6%. For the
past year, the MKP fund has produced a strong 9.8%, while Hudson Bay has risen
1.6%.
There were strong returns from some of the diversifying holdings in the fixed
income space, although there were also some losses as yields and credit
spreads widened. Brevan Howard Absolute Return Government Bond Fund delivered
a pleasing 1.8% despite the volatility in government bonds and BioPharma
Credit made a strong 10.9%, helped by exposure to the strengthening US dollar.
The BioPharma Credit portfolio is 89% invested in senior secured loans, of
which 75% are floating rate which provides some protection against rising
yields. It was announced after the half-end that Pfizer had completed its
acquisition of GBT, which led to BioPharma receiving $175m including $43m in
accrued income, prepayment and make-whole fees, realising an IRR on the
investment of 27.6%. During the half the Vanguard US Government Bond Index
Fund fell 8.6%, leaving it down 13.7% for the past year. The other significant
decline was registered by Selwood Liquid Credit Strategy which fell 14.8% and
is down 16.3% for the last 12 months, as credit default swaps continued to
widen.
Global Equities
The portfolio returned -0.5% over the half, with the biggest positive
contributors being Interactive Brokers, EXOR and CVS Health. The biggest
detractors were CK Hutchison, Coats and Grupo Catalana Occidente.
It was another volatile half for global equity markets as they attempt to come
to terms with meaningful interest rate rises for the first time in many years.
The extremely low rates of the past decade have had many unintended
consequences, but most relevant to our direct equity holdings has been the
misallocation of capital. When the cost of capital drops close to zero
companies find worthwhile projects to invest in and investors are prone to
speculation, we are seeing the results of this with bubbles deflating
everywhere from Chinese property to NFTs.
However, where there is speculation there is often opportunity. Historically
when industries are heading toward the lows of the cycle, investor interest
diminishes, business investment declines, firms consolidate and businesses
exit either through choice or bankruptcy. This decline in supply eventually
leads to higher returns for the survivors. The low interest rates we have seen
have not only caused bubbles but the reach for yield also led investors to
support companies that would normally have gone bankrupt, by allowing them to
refinance their debt at ever lower rates. This has caused the capital cycle to
become elongated, but we believe that the end of "free money" will lead to
capital destruction, thereby leading to the survivors earning higher
returns.
We believe the portfolio is well positioned as a significant portion of our
holdings are in this stage of their cycle. These are mostly found in "old
economy" companies investors have ignored for years because they were not high
growth tech companies. It intuitively makes sense that if the market values
the company below its asset value, they believe any investment made will
destroy value. We believe the market is not factoring in the capital cycle and
the higher returns our companies will earn in the future. Our positioning is
demonstrated by the fact 39% of the portfolio currently trades below book
value and the whole portfolio trades on 1.1x book value.
The clearest examples of this are in the mining and energy sectors, where
years of underinvestment are finally showing up in higher prices in the
underlying commodities, benefiting our holdings in Glencore and Subsea 7.
It is similar for our insurance holdings, where the past few years have seen
excess capital leave the reinsurance market where Arch Capital operates, which
has led to considerably better pricing for those that remain.
Other holdings are in the earlier stages of the cycle, such as Orion
Engineered Carbons. The carbon black industry has been forced to spend
hundreds of millions to upgrade plants to comply with new EPA guidelines which
led to several facilities being permanently shut down. This supply reduction
has been exacerbated by the invasion of Ukraine, as 40% of Europe's carbon
black came from Russia. We believe Orion will use this opportunity to lock in
long-term customer agreements, rather than gouge their customers on price,
which will strengthen the business for years to come. This capacity to focus
on the long-term gains rather than destroy relationships for a short-term
benefit is an attribute we look for across all our companies and management
teams.
The only addition was a small additional purchase of CTT Correios de Portugal
following a decline in the share price. A portion of CK Hutchinson was sold to
finance this.
Ocean Wilsons Holdings
The operating business continues to deliver resilient financial results
despite the difficult worldwide trade environment and logistical bottlenecks.
It is hoped that this challenging scenario could show some signs of
improvement in the latter half of the year, depending on the resolution of
port closures in China. Towage revenues are increasing and in May the shipyard
delivered WS Centaurus, the most powerful tugboat in Brazil and the first of a
series of six, 80-ton bollard pull tugboats that will join the fleet over the
next two years. These tugboats benefit from increased hydrodynamic efficiency,
which allows a reduction of up to 14% in greenhouse gases compared to previous
technology. The Ocean Wilsons Holdings' share price fell 14.2% for the first
half of the financial year. The share price represents a discount to the
look-through NAV of 55.5%, based on the market value of the Wilson Sons'
shares, together with the latest valuation of the investment portfolio. The
shares of Wilson Sons underwent a six-for-one share split in May.
The investment portfolio shares many characteristics with the portfolio held
directly within HICL, with a preference for funds with clearly-defined
strategies run by managers with skin in the game. The portfolio has declined
in recent months as markets have fallen, although by significantly less than
broad equity indices. The valuation declined to $296.9m at the end of June
2022, down from $312.9m at the end of April 2022 and from $351.8m at the end
of December 2021. Dividends of $5m, in two equal tranches, have been paid out
from the portfolio since April 2022, with the first payment in May and the
second at the end of July. The portfolio's private assets investments have
contributed significantly to performance in recent years and these have so far
held up well through the market falls, although a lag would be expected
between private and public assets. Meanwhile, the defensive part of the
portfolio continues to
be resilient.
The second quarter (calendar year) results for Wilson Sons (released in
August) showed revenues increasing, but earnings for the first six months of
the year were 2.2% lower than the prior year, on account of higher costs.
However, in US dollar terms the earnings number was 4.0% higher than last
year. Towage results remained robust thanks to higher average revenue per
manoeuvre as the proportion of lower-priced containership calls fell.
Container terminal operating volumes continue to be impacted by the limited
availability of empty containers and worldwide logistics bottlenecks, although
cabotage volumes increased at both ports during the quarter. Despite the
pressures on volumes, revenues remained resilient because of increased
warehousing revenues, partly because of longer dwell times for both imports
and exports.
Alec Letchfield
Hansa Capital Partners LLP
October 2022
The Portfolio
As at 30 September 2022
Investments Fair value % of net
£000 assets
Core regional funds
Findlay Park American Fund 28,148 7.9
iShares Core S&P 500 UCITS ETF 22,894 6.5
Select Equity Offshore Ltd 19,080 5.4
iShares Core MSCI Europe UCITS ETF 14,291 4.0
BlackRock Strategic Hedge Fund 13,615 3.8
Schroder ISF Asian Total Return 10,682 3.0
Pershing Square Holdings Ltd 8,858 2.5
Indus Japan Long-Only Fund 6,825 1.9
Egerton Long-Short Fund Ltd 6,740 1.9
Goodhart Partners: Hanjo Fund 6,223 1.8
KLS Corinium Emerging Markets Equity Fund 5,102 1.4
NTAsian Discovery Fund 4,257 1.2
iShares Core EM IMI UCITS ETF 3,988 1.1
BlackRock Frontiers Investment Trust PLC 3,418 1.0
154,121 43.5
Strategic
Wilson Sons (through our holding in Ocean Wilsons Holdings Limited)1 44,697 12.6
Ocean Wilsons (Investments) Limited (through the holding in Ocean Wilsons 31,061 8.8
Holdings Limited)1
75,758 21.4
Global equities
Interactive Brokers Group Inc 4,128 1.2
Exor NV 3,156 0.9
Arch Capital Group Ltd 2,703 0.8
CVS Health Corp 2,649 0.7
Subsea 7 2,595 0.7
Orion Engineered Carbons SA 2,510 0.7
CK Hutchison 2,397 0.7
Dollar General 2,159 0.6
Grupo Catalana Occidente SA 2,134 0.6
Glencore PLC 1,721 0.5
Coats Group PLC 1,232 0.4
Viaset Inc 1,177 0.3
CTT Correios de Portugal 806 0.2
29,367 8.3
Diversifying
Global Event Partners Ltd 10,466 3.0
DV4 Ltd2 9,555 2.7
Hudson Bay International Fund Ltd 5,025 1.4
Schroder GAIA BlueTrend 3,517 1.0
MKP Opportunity Offshore Ltd 3,345 0.9
GAM Systematic Core Macro (Cayman) Fund 3,230 0.9
Keynes Systematic Absolute Return Fund 2,809 0.8
Apollo Total Return Fund 2,378 0.7
Prana Absolute Return Fund 2,122 0.6
Selwood AM - Liquid Credit Strategy 1,962 0.6
Brevan Howard Absolute Return Government Bond Fund 1,781 0.5
BioPharma Credit PLC 1,523 0.4
Vanguard US Government Bond Index Fund 1,458 0.4
Lazard Convertible Global 722 0.2
49,893 14.1
Thematic assets
GAM Star Fund PLC - Disruptive Growth 11,579 3.3
Polar Capital Global Insurance Fund 6,593 1.8
Impax Environmental Markets Fund 4,491 1.3
Worldwide Healthcare Trust PLC 3,226 0.9
RA Capital International Healthcare Fund 2,697 0.8
iShares MSCI World Energy Sector UCITS ETF 2,149 0.6
BB Biotech AG 2,032 0.6
iShares MSCI Global Markets & Mining Producers ETF 1,612 0.4
34,379 9.7
Total investments 343,518 96.9
Net current assets 11,187 3.2
Net assets 354,705 100.0
1 Hansa Investment Company Limited owns 9,352,770 shares in
Ocean Wilsons Holdings Limited ("OWHL"). The two subsidiaries of OWHL, Wilson
Sons and Ocean Wilsons (Investments) 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 2022 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 2022.
2 DV4 Ltd is an unlisted Private Equity holding. As such,
its value is estimated as described in Note 1(k) to the Statutory Financial
Statements and is listed as a Level 3 Asset in note 20 of the Statutory
Financial Statements 31 March 2022. All other valuations are either derived
from information supplied by listed sources, or from pricing information
supplied by third party fund managers.
Financial Statements
Income Statement
For the six months ended 30 September 2022
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 2022 30 September 2021 31 March 2022
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
(Losses)/gains on investments held at fair value through profit or loss 9 - (30,520) (30,520) - 29,472 29,472 - 17,065 17,065
Foreign exchange gains - 346 346 - 6 6 - 80 80
Investment income 2 6,003 - 6,003 5,157 - 5,157 5,904 - 5,904
6,003 (30,174) (24,171) 5,157 29,478 34,635 5,904 17,145 23,049
Portfolio management fees 3 (1,406) - (1,406) (1,519) - (1,519) (3,010) - (3,010)
Other expenses 4 (659) - (659) (662) - (662) (1,227) - (1,227)
(2,065) - (2,065) (2,181) - (2,181) (4,237) - (4,237)
Income/(losses) before finance costs 3,938 (30,174) (26,236) 2,976 29,478 32,454 1,667 17,145 18,812
Finance costs 5 (1) - (1) - - - - - -
Income/(losses) for the period 3,937 (30,174) (26,237) 2,976 29,478 32,454 1,667 17,145 18,812
Return per Ordinary and 'A' non-voting 7 3.3p (25.2)p (21.9)p 2.5p 24.5p 27.0p 1.4p 14.3p 15.7p
Ordinary share
The Company does not have any income or expense not included in the Profit for
the period. Accordingly the "Income/(losses) for the period" is also the
"Total Comprehensive Income for the period", as defined in IAS 1 (revised) and
no separate Statement of Comprehensive Income has been presented.
The total column of this Statement represents the Income Statement, prepared
in accordance with IAS 34. The supplementary revenue and capital return
columns are both prepared under guidance published by the Association of
Investment Companies.
All revenue and capital items in the above Statement derive from continuing
operations.
Balance Sheet
As at 30 September 2022
Note (Unaudited) (Unaudited) (Audited)
30 September 2022 30 September 2021 Year ended
£000 £000 31 March 2022
£000
Non-current assets
Investments held at fair value through profit or loss 9 343,518 392,377 379,986
343,518 392,377 379,986
Current assets
Trade and other receivables 11 93 17 201
Cash and cash equivalents 12 11,406 6,450 3,043
11,499 6,467 3,244
Current liabilities
Trade and other payables 13 (312) (420) (368)
Net current assets 11,187 6,047 2,876
Net assets 354,705 398,424 382,862
Capital and reserves
Called up share capital 14 1,200 1,200 1,200
Contributed surplus 15 323,799 325,719 324,759
Retained earnings 16 29,706 71,505 56,903
Total equity shareholders' funds 354,705 398,424 382,862
Net asset value per Ordinary and 'A' non-voting Ordinary share 17 295.6p 332.0p 319.1p
Statement of Changes in Equity
For the six months ended 30 September 2022 (unaudited) Note Share Contributed Retained Total
capital surplus earnings £000
reserve
£000
£000
£000
Net assets at 1 April 2022 1,200 324,759 56,903 382,862
Losses for the period - - (26,237) (26,237)
Dividends 6 - (960) (960) (1,920)
Net assets at 30 September 2022 1,200 323,799 29,706 354,705
For the six months ended 30 September 2021 (unaudited) Note Share Contributed Retained Total
capital surplus earnings £000
reserve
£000
£000
£000
Net assets at 1 April 2021 1,200 326,019 40,671 367,890
Profit for the period - - 32,454 32,454
Dividends 7 - (300) (1,620) (1,920)
Net assets at 30 September 2021 1,200 325,719 71,505 398,424
For the year ended 31 March 2022 (audited) Note Share Contributed Retained Total
capital surplus earnings £000
reserve
£000
£000
£000
Net assets at 1 April 2021 1,200 326,019 40,671 367,890
Profit for the year - - 18,812 18,812
Dividends 6 - (1,260) (2,580) (3,840)
Net assets at 31 March 2022 1,200 324,759 56,903 382,862
Cash Flow Statement
For the six months ended 30 September 2022
Note (Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
30 September ended 31 March
2022 30 September 2022
£000 2021 £000
£000
Cash flows from operating activities
(Loss)/profit before finance costs (26,236) 32,454 18,812
Adjustments for:
Realised gains on investments 9 (1,646) (1,601) (5,440)
Unrealised losses/(gains) on investments 9 32,166 (27,871) (11,625)
Foreign exchange (346) (6) (80)
Decrease/(increase) in trade and other receivables 11 108 160 (24)
(Decrease)/increase in trade and other payables 13 (56) 32 (20)
Purchase of non-current investments (49,695) (3,894) (30,840)
Sale of non-current investments 55,643 6,257 33,187
Net cash inflow from operating activities 9,938 5,531 3,970
Cash flows from financing activities
Interest paid on bank loans (1) - -
Dividends paid 6 (1,920) (1,920) (3,840)
Net cash outflow from financing activities (1,921) (1,920) (3,840)
Increase in cash and cash equivalents 8,017 3,611 130
Cash and cash equivalents at start of period 3,043 2,833 2,833
Foreign exchange 346 6 80
Cash and cash equivalents at end of period 12 11,406 6,450 3,043
Notes to the Financial Statements
1 Accounting policies
(a) Basis of preparation
The Financial Statements of the Company have been
prepared in accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and with
International Accounting Standard 34 ("IAS 34"), 'Interim Financial
Reporting', as adopted by the European Union ("EU"). The Half-Year Financial
Statements should be read in conjunction with the Company's Annual Report for
the year ended 31 March 2022, which have been prepared in accordance with
International Financial Reporting Standards ("IFRS") adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the EU. IFRS means standards and
interpretations issued (or adopted) by the International Accounting Standards
Board (IASB) (they comprise: IFRS, International Accounting Standards ("IAS")
and Interpretations developed by the IFRS Interpretations Committee or the
former Standing Interpretations Committee ("SIC")) or IFRS that have been
adopted in the relevant jurisdiction.
These Financial Statements are presented in sterling
because that is the currency of the primary economic environment in which the
Company operates.
The Financial Statements have been prepared on an
historical cost and going concern basis and also in line with the Board's
analysis of the impact of COVID-19 on the Company except for the valuation of
investments. The Financial Statements have also been prepared in accordance
with the AIC Statement of Recommended Practice ("SORP") for investment trusts,
issued by the AIC in July 2022, to the extent that the SORP does not conflict
with IFRS. The principal accounting policies adopted are set out below.
(b) Basis of non-consolidation
IFRS 10 stipulates that subsidiaries and associates of
Investment Entities are not consolidated but, rather, stated at fair value
unless the conditions for certain exemptions from this treatment are met.
Hansa Investment Company Limited meets all three characteristics of an
Investment Entity as described by IFRS 10. The Company had one, 100% owned,
subsidiary, Hansa Trust Ltd. The Company became the 100% owner of Hansa
Trust's shares as part of the Scheme of Arrangement on 29 August 2019. On 9
November 2021, Hansa Trust Ltd was dissolved and removed from the Register of
Companies held at UK Companies House.
(c) 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.
(d) Non-current investments
As the Company's business is investing in financial
assets, with a view to profiting from their total return in the form of income
received and increases in fair value, investments are classified at fair value
through profit or loss on initial recognition in accordance with IFRS 9. The
Company manages and evaluates the performance of these investments on a fair
value basis, in accordance with its investment strategy and information about
the investments is provided on this basis to the Board of Directors.
Investments are recognised and de-recognised on the
trade date. For listed investments fair value is deemed to be bid market
prices, or closing prices for stocks sourced from a regulated exchange such as
the London Stock Exchange and Euronext.
Fund investments are stated at fair value through
profit or loss as determined by using the most recent available valuation. In
some cases, this will be by reference to the most recent valuation statement
or price estimate supplied by the fund's manager. In other cases, values may
be available through the fund being listed on an exchange or via pricing
sources such as Bloomberg.
Private equity Investments are stated at fair value
through profit or loss as determined by using various valuation techniques, in
accordance with the International Private Equity and Venture Capital Valuation
Guidelines. In the absence of a valuation at the balance sheet date,
additional procedures to determine the reasonableness of the fair value
estimate for inclusion in the Financial Statements may be used. These could
include direct enquiries of the manager of the investment to understand,
amongst others, the valuation process and techniques used, external experts
used in the valuation process and updated details of underlying portfolio. In
addition, the Company can obtain external independent valuation data and
compare this to historic valuation movements of the asset. Further, recent
arms-length market transactions between knowledgeable and willing parties
where available might also be considered.
Unrealised gains and losses, arising from changes in
fair value, are included in net profit or loss for the period as a capital
item in the Income Statement and are ultimately recognised in the Capital
Reserves.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank,
short-term deposits and cash funds with an original maturity of three months
or less and are subject to an insignificant risk of changes in capital value.
(f) Investment Income and return of capital
Dividends receivable on equity shares are recognised on
the ex-dividend date. Where no ex-dividend date is quoted, dividends are
recognised when the Company's right to receive payment is established.
Dividends and Real Estate Investment Trusts' ("REIT") income are all stated
net of withholding tax. In many cases, Bermudan companies cannot recover
foreign incurred taxes withheld on dividends and capital transactions. As a
result, any such taxes incurred will be charged as an expense and included
here.
When an investee company returns capital to the
Company, the amount received is treated as a reduction in the book cost of
that investment and is classified as sale proceeds.
(g) Expenses
All expenses are accounted for on an accruals basis.
Expenses are charged through the revenue column of the Income Statement except
expenses which are incidental to the acquisition or disposal of an investment,
which are included in gains on investments held at fair value through profit
or loss in the Income Statement.
(h) Taxation
Under current Bermudan law, the Company is not required
to pay taxes in Bermuda on either income or capital gains. The Company has
received an undertaking from the Bermuda government exempting it from all
local income, withholding and capital gains taxes being imposed and will be
exempted from such taxes until 31 March 2035.
(i) Foreign Currencies
Transactions denominated in foreign currencies are
recorded in the local currency, at the actual exchange rates as at the date of
the transaction. Assets and liabilities denominated in foreign currencies at
the balance sheet date are reported at the rate of exchange prevailing at the
balance sheet date. Any gain or loss arising from a change in exchange rates,
subsequent to the date of the transaction, is included as an exchange gain or
loss in the capital or revenue column of the Income Statement, depending on
whether the gain or loss is of a capital or revenue nature respectively.
(j) Retained Earnings
Contributed surplus
The following are credited or charged to this reserve
via the capital column of the Income Statement:
gains and losses on the disposal of investments;
exchange differences of a capital nature;
expenses charged to the capital column of the Income Statement in accordance
with the above accounting policies; and
increases and decreases in the valuation of investments held at the balance
sheet date.
Revenue Reserves
The following are credited or charged to this reserve
via the revenue column of the Income Statement:
net revenue recognised in the revenue column of the Income Statement.
(k) Significant Judgements and Estimates
The key significant estimate to report, concerns the
Company's valuation of its holding in DV4 Ltd. DV4 is valued using the most
recent estimated NAV as advised to the Company by DV4, adjusted for any
further drawdowns, distributions or redemptions between the valuation date and
30 September 2022. The most recent valuation statement was received on 16
September 2022 stating the value of the Company's holding as at 31 March 2022.
In the absence of a valuation for 30 September 2022 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 2022 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 by DV4's manager that the valuation procedures discussed in July
2022 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 2022. It is
believed the value of DV4 as at 30 September 2022 will not be materially
different, but this valuation is based on historic valuations by DV4, does not
have a readily available third party comparator and, as such, is an estimate.
There are no significant judgements.
(l) Operating Segments
The Company considers it has one operating segment for
the purposes of IFRS8.
(m) Capital Loss
The loss for period to 30 September 2022 of £30.52m is
a general loss due to market conditions, rather than relating to the specific
impairment of one or more assets.
2 Income
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
30 September ended 31 March
2022 30 September 2022
£000 2021 £000
£000
Income from quoted investments
Dividends 6,003 5,157 5,904
Total income 6,003 5,157 5,904
3 Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
30 September ended 31 March
2022 30 September 2022
£000 2021 £000
£000
Fourth interim dividend for 2022 (paid 27 May 2022): 0.8p (2021: 0.8p) 960 960 960
First interim dividend for 2023 (paid 26 August 2022): 0.8p (2022: 0.8p) 960 960 960
Second Interim dividend for 2022 (paid 26 November 2021): 0.8p - - 960
Third Interim dividend for 2022 (paid 28 February 2022): 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 2023
was announced on 11 October 2022. The payment totalling 0.8p per share
(£0.96m) was paid on 25 November 2022.
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 2022 (Unaudited) 3,937 3.3p (30,174) (25.2p) (26,237) (21.9p)
Six months ended 30 September 2021 (Unaudited) 2,976 2.5p 29,478 24.5p 32,454 27.0p
Year ended 31 March 2022 (Audited) 1,667 1.4p 17,145 14.3p 18,812 15.7p
5 Financial information
The financial information for the six months ended 30 September 2022 was
approved by a committee of the Board of Directors on
1 December 2022.
6 Net asset value per share
The NAV per share is based on the net assets attributable to equity
shareholders of £354,705,000 (30 September 2021: £398,424,000; 31 March 2022
£382,862,000) and on 120,000,000 shares being the number of shares in issue
at the period ends.
7 Commitments and contingencies
The Company has no outstanding commitments as at 30 September 2022 (30
September 2021: £nil; 31 March 2022: £nil).
8 Principal risks and uncertainties
The principal financial and related risks faced by the Company fall into the
following broad categories - External and Internal. External risks to
shareholders and to their returns are those that can 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 Review.
Information on each of these areas is given in the Strategic Report within the
Annual Report for the year ended 31 March 2022. 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 Balance
Sheet are grouped into the fair value hierarchy, as detailed below:
30 September 2022 (unaudited) Level 1 Level 2 Level 3 Total
£000 £000 £000 £000
Financial assets at fair value through profit or loss
Quoted equities 138,909 - - 138,909
Unquoted equities - 2,122 9,555 11,677
Fund investments 36,799 156,133 - 192,932
Fair Value 175,708 158,255 9,555 343,518
30 September 2021 (unaudited) Level 1 Level 2 Level 3 Total
£000 £000 £000 £000
Financial assets at fair value through profit or loss
Quoted equities 144,579 - - 144,579
Unquoted equities - - 8,870 8,870
Fund investments 14,537 224,391 - 238,928
Fair Value 159,116 224,391 8,870 392,377
31 March 2022 (audited) Level 1 Level 2 Level 3 Total
£000 £000 £000 £000
Financial assets at fair value through profit or loss
Quoted equities 136,771 - - 136,771
Unquoted equities - - 8,917 8,917
Fund investments 27,328 206,970 - 234,298
Fair Value 164,099 206,970 8,917 379,986
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
2022 2021 2022
equity equity equity
investments investments investments
£000 £000 £000
Opening Balance 8,917 11,234 11,234
Liquidation of Hansa Trust Ltd* - (3,179) (3,179)
Capital Distribution - - (648)
Total Gains included in gains on investments in the Income Statement:
on assets held at period end 638 815 1,510
Closing Balance 9,555 8,870 8,917
*The Intercompany loan was repaid as part of the Strike-Off process. In the
prior year-end the remaining value of Hansa Trust Ltd was transferred to HICL
via a capital reduction process.
As at 30 September 2022, the investment in DV4 Ltd has been classified as
Level 3. The investments in DV4 has been valued using the most recent
estimated NAV as advised to the Company by DV4, adjusted for any further
drawdowns, distributions or redemptions between the valuation date and 30
September 2022. The most recent valuation statement was received on 16
September 2022, with an estimated NAV based on the unaudited capital statement
of DV4 as at 31 March 2022. If the value of the unquoted Level 3 equity
investments were to increase or decrease by 10%, while all other variables had
remained constant, the return and net assets attributable to shareholders for
the period ended 30 September 2022 would have increased or decreased by
£956,000 respectively.
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
Nadya Wells
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 LTD
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
Maitland Administration Services Limited
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
Announcement of half-year results
November
Half-year Report sent 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
Link Market Services (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St. Sampson
Guernsey
GY2 4LH
Email: enquiries@linkgroup.co.uk
www.linkassetservices.com
If you do not have internet access you can call the Shareholder Support Centre
on +44 (0) 371 664 0300. Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the UK will be charged at the applicable
international rate.
The Registrars are open between 09:00 - 17:30, Monday to Friday excluding
public holidays in England and Wales.
Register for updates
To receive the latest news and views on the Company, please register at
https://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
31 March 2022
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 have introduced legislation from 1 January 2023 to
amend some of the disclosures in the KID for UK shareholders. The Company's
AIFM will be producing both UK KIDs and European KIDs 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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