Hansa Investment Co Hansa Investment Co Hansa Invest-HANA - Half-year Report
16/11/2023 15:05
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RNS Number : 7370T Hansa Investment Company Limited 16 November 2023
Chairman's Report
Dear Shareholder
Shareholder returns
The past six months have shown an increase in net asset value ("NAV") from
305.8p per share at 31 March 2023 to 317.4p per share at 30 September 2023. In
addition, shareholders have also received a dividend of 1.6p during the
period.
There has also been a reduction of the discount from 43.1% to 40.6% for the
Ordinary shares and from 44.2% to 41.6% for the 'A' non-voting Ordinary
shares. The Ordinary share price has increased from 174.0p to 188.5p whilst
the 'A' non-voting Ordinary share price has increased from 170.5p to 185.5p.
More details about our results and longer-term performance can be found
further below as well as in our Portfolio Manager's detailed review of markets
and portfolio performance in his Report below.
Strategy
The near-zero inflation and interest rates experienced by many for the last
decade are giving way to a, historically, more normal backdrop for markets.
Mindful of this, Alec Letchfield and his team at Hansa Capital Partners ("the
Manager"), supported by the Board, have continued to look for opportunities to
broaden and diversify the portfolio by including more exposure to Value
holdings as well as looking outside of the US market, whose returns have
dominated the last decade, to others such as Japan where there are more
attractive valuations. Additionally, our exposure to Private Markets has
continued to grow with commitments made to several more funds since our Annual
Report. Alec expands on these topics in his Report.
Ocean Wilsons Holdings Limited
As I have mentioned previously, our 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 about 70% of the value of Ocean Wilsons as at 30 September 2023
and an investment portfolio which makes up the balance.
On 12 June 2023, OWHL announced it was undertaking a strategic review
involving its investment in Wilson Sons and that it will consider all
strategic options. At the time of writing there have been no further
announcements on this matter. It is, however, encouraging to see that Wilson
Sons continues to meet investor expectations and that the Brazilian Real
continues to perform well against the US Dollar. The Board awaits further
updates, as I am sure do all shareholders. It should be borne in mind that as
stated by Ocean Wilsons, there can be no certainty as to the outcome of its
deliberations and decisions.
Please rest assured that the Hansa Investment Company Limited ("HICL") board
remains vigilant on this very important issue for all our shareholders and
continues to review and update potential strategic options.
Prospects
As in my past recent reports, I continue to be cautious about the future
direction of both equity and bond markets. I have been surprised by the
strength of the US equity markets and the continuing divergence of the bond
and equity markets.
My own view is that there are some hard yards ahead in the drive to get back
to the 2% inflation era. In no particular order, I think service industry
inflation is going to remain sticky, El Niño will be a threat to food prices
next year and the present problems in the Middle East probably mean oil prices
are unlikely to fall very far.
Rising interest rates, creating a lowering of demand, will help to reduce
inflationary pressures, although the ever-increasing debt levels in most parts
of the world, particularly those of many governments, will tend to keep
longer-term interest rates higher than they otherwise would be, causing a
certain degree of crowding out, thereby creating challenges for the private
sector.
It will be interesting to see if Chairman Powell starts to make any comments
about the substantial increases in US government debt at a time of full
employment. Apart from wartime, the combination of accelerating government
borrowing at a time of very low unemployment has never been seen before. None
of the large problems facing governments have gone away, whether it is
conflicts, higher interest rates to combat inflation, the reduction in
globalisation or trade spats.
Let us hope Europe can get through the coming winter without too many
difficulties with gas supplies. The positives are that the storage tanks are
full and the price much lower than last year. However, problems in the Straits
of Hormuz or with Israeli gas supply could cause difficulties.
Discount Management
Whilst our discount has reduced slightly, the Board remains cognisant that it
has not narrowed more. However, a combination of jittery markets and details
of the outcome of the Ocean Wilsons review of its strategic options in Wilson
Sons still awaited, has resulted in slow progress.
The Board has considered a programme of share buybacks but has repeatedly
concluded it would not have a significant effect on the discount at which the
shares trade in the medium term, the main reason being that buybacks would
reduce the number of shares of the Company in the market, and hence their
liquidity. The Company would also need to hold a more liquid investment
portfolio to fund such buybacks. Furthermore, any buyback increases the
percentage of the Ocean Wilsons holding in the portfolio. In current markets
there are several examples of other investment trusts that recently have tried
and failed to improve their discounts using share buy back programmes.
Dividends
Your Board has decided to continue with its existing dividend policy, which is
to pay four similar interim dividends, each of 0.8p per share (annually, in
total, 3.2p per share), until it is fully covered by net revenue income and
then increase it in line with any increase in the net revenue income of the
Company. Currently the income generated by the portfolio is insufficient to
meet this dividend commitment and the shortfall is made up from the Company's
reserves. In principle, your Board does not believe it to be in the Company's
best interests to use capital as a source from which to pay dividends.
Company Bye-Laws
At the Company's AGM on 27 July 2023, a resolution was passed to adopt new
Company Bye-Laws. One of the changes made requires shareholders to supply, if
requested, information relating to their tax residency. As I explained in the
Annual Report, globally tax authorities and government agencies require
financial institutions, including investment companies such as ours, to
collect and report certain tax information in relation to their shareholders.
Failure by those shareholders to supply the required information, causes the
Company to submit incomplete returns, with the consequent risk of penalties or
censure by the authorities. The Bye-Law changes enable the Company to take the
necessary measures in relation to those few shareholders who refuse to provide
the information required, so as to enable the Company to satisfy its reporting
requirements. In principle, this should only affect a very small number of our
shareholders who are personally on our share register, approximately 140
shareholders holding collectively less than 1% of our share capital across
both share classes.
The Company, through its Registrar Computershare, is in the process of writing
to this small group of shareholders again to seek the required information. I
urge you to respond if you receive such a letter. If you are in doubt about
its veracity, please contact Computershare directly who can explain the
situation and the steps you need to take.
Company Auditor
Also, at the Company's most recent AGM in July 2023, PricewaterhouseCoopers
Ltd of Bermuda ("PwC") was appointed to audit the Company for the financial
year ended 31 March 2024.
Shareholder Event
As many of you will know, we held a shareholder presentation event at The
Mayfair Hotel in London on 27 September 2023. The presentation was also
live-streamed via our website for those who couldn't attend in person.
As well as presentations by myself, William Salomon and Alec Letchfield, we
received a number of questions from attendees. The event was well received and
the Board will look to host a similar event in September 2024.
For those of you who were not able to attend, the video of that event is
available via the Company website.
As I mentioned at our shareholder meeting on 27 September 2023, the Board
plans to review both our present discount management policy and our dividend
policy whatever the outcome of the Ocean Wilsons strategic review.
ESG Matters
The Board is responsible for the Company's ESG policy. In 2020, the Board
adopted our Manager's Responsible Investing Policy which it continues to
develop and refine in line with the evolving nature of ESG's integration
within Financial Services. As we have previously reported, in 2022 the
Hanseatic Group, of which our Manager is part, became signatories to the UN
PRI, a UN-supported network of investors that works to promote sustainable
investment. I am pleased to report our Manager has recently completed its
first annual submission to the UN PRI and has also implemented a new
operational due diligence procedure that has been integrated into the
investment process.
Jonathan Davie
Chairman
16 November 2023
Portfolio Manager's Report
Rise of the machines.
Market review
The first half of the financial year started positively before we saw a number
of cracks develop in this rather rosy picture. Having rallied sharply up to
the end of July, buoyed by the goldilocks combination of waning inflation,
with the US seeing its inflation rate falling from 6.5% at the beginning of
the calendar year to 3.7% in September and a growing expectation that interest
rates would peak and ultimately fall in early 2024 combined with economic
growth that remained robust - the latter half of the period saw investors
start to question if they had been somewhat premature in their expectations.
Whilst headline inflation has undoubtedly been rattling back in the US, many
commentators still fear that core, underlying, inflation is stickier and will
remain higher than deemed acceptable by central bankers. Similarly, markets
also appear to have got ahead of themselves on the outlook for interest rates.
Initially, as headline inflation started to fall, expectations for the peak in
rates were pulled forward and the US Federal Reserve was expected to start
cutting rates in the early part of next year. Latterly, this has been pushed
back with the Fed sounding more hawkish, raising their 'dot plot' median rate
by 50bps, suggesting there would be fewer cuts and, at the same time, the
European Central Bank ("ECB") lifted their deposit rate to an all-time high of
4% in September.
The net effect of this re-evaluation of inflation and interest rates was a
significant sell off in bond markets, sending bond yields to multi-year highs
around the world. The all-important US 10-year Treasury yield rose by 110bps
to 4.57% during the half, with the 30-year bond yield seeing its biggest
quarterly increase in Q3 2023 since Q1 2009. Much the same story was seen
elsewhere, with the German 10-year bund yield nearing 3%, a yield we haven't
seen since 2011 and even the moribund Japanese 10-year bond yield moved away
from zero, rising to 0.76%, which is the highest since 2013.
The scale and rapidity of the rise in bond yields also served to reawaken
fears of contagion amongst those areas of the financial world that had binged
on cheap debt. From private equity to banking to the insurance world, we are
seeing questions being asked as to where the next collapse might appear. To
date we haven't seen a replay of the challenges faced in the US regional
banking market earlier this year, or the UK liability pension issues catalysed
by the Truss government late last year, but this might just be a question of
time.
Unsurprisingly the blend of higher inflation and rates, softening growth and,
for the first time in many years, bond yields looking far more attractive saw
equities also come off the boil later in the half, but performance was still
largely positive. Global equities increased by 3.8% and US equities by 6.1%
while European equities fell by 1.2%. The UK, which has a disproportionate
exposure to energy markets and Japan, where the change process continues to
gain traction, increased 1.8% and 5.9%, respectively. Post the quarter end US
Treasury yields continued to rise with the 10-year Treasury yield reaching a
16-year high pushed by strong US economic data. The outbreak of war in Israel
and Gaza has the potential to be the spark that ignites an already volatile
region. While markets have so far viewed the impact of the conflict on world
markets as minimal and the conflict itself has remained relatively contained,
any wider conflagration would no doubt significantly stress several markets,
particularly oil and natural gas.
Outlook
Despite these questions being asked about markets, our view on the wider
market backdrop is little changed. We continue to believe the outlook is
better now than it was last year with rates and inflation nearing their peaks,
even if there is the inevitable debate on exactly when and where this peak is,
combined with growth that looks more robust than many of the doomsayers would
have you believe. This is not to say that the prospects for markets are not
without their risks and, in particular, we would highlight two very real
dangers. Number one is that central banks remain too hawkish for too long,
keeping policy too tight and ultimately catalysing a recession. Unfortunately,
central bankers have form here having often overtightened historically,
pushing economies into recession in the process. Time will tell.
The second concern is the adjustment from a low inflation/interest rate
economy to a higher, more normal, interest rate and inflation economy. We are
not in the camp of believing we are entering a period of structurally very
high inflation and rates, but do view the last ten years of near zero rates as
being something of an anomaly and the current process is actually a return to
normality. Nonetheless, the adjustment process could prove a painful one.
Already we have seen problems in the US regional banking sector and the UK
pension LDI market, but these have been relatively contained and failed to
cause a systemic problem within markets. Other areas that have used copious
amounts of cheap debt include the commercial real estate sector and private
equity. Certainly the former looks to be vulnerable and both will need to be
watched carefully for signs of structural contagion. Banks will also need to
be monitored, albeit they have significantly improved their balance sheets
post the Global Financial Crisis which will hopefully ensure they avoid a
black hole this time around.
From a portfolio positioning perspective, we are increasingly running a more
balanced approach. Whilst equities remain our core exposure, a zero-rate
backdrop turbo charged markets and in particular favoured focusing almost
entirely on longer duration assets such as technology. In the current higher
rate world we have been adding more diversity in the form of value at the
sector level and countries such as Japan at the country level. Similarly,
whilst historically our defensive silo has been almost entirely populated by
hedge funds and, importantly, having little exposure to bonds when rates were
zero and inflation low, again we are looking to broaden this out. We have
recently added a major position in insurance, given the surge in insurance
rates with returns buoyed by a dearth of capital, as many insurance investors
nursed losses from high levels of claims in recent years. Perhaps most notably
though, with bonds suffering significant falls in the prices over the last 18
months and now showing positive real yields for the first time in many years,
we are currently running our slide rule over the space with a view to
re-entering. As ever, given our view that market timing is challenging to
impossible, with few to no investors persistently doing it well, we will be
gently and progressively leaning in as opportunities present themselves.
Rise of the machines
In general, stock markets exhibit variations of similar themes, all with their
own nuances, but essentially more or less a repeat of what has been seen
before. Occasionally, however, something comes along which is game-changing -
having the potential to lead to a structural shift in the way in which we live
and creating new opportunities for investing. We may be on the cusp of just
such a moment with the advent of Artificial Intelligence ("AI").
Whilst the concept of AI has been around for decades, essentially since neural
networks came to the fore, this year has seen something of an 'iPhone moment'
with a sharp acceleration in its use. As a result, many AI linked companies
have seen their share prices surge exponentially and fears have increased that
AI would mean the beginning of the end for much of the workforce and, at the
extreme, an existential challenge for mankind.
For this half's commentary we try to address some of these issues, albeit
recognising that predicting the impact of new technologies is challenging and
has the scope to make commentators look extremely foolish with hindsight!
What is AI and why is this AI's moment?
AI as a concept has been around since the 1940s/50s and is defined as the
ability for a computer or computer-controlled robot to perform tasks commonly
associated with humans. Initially, AI was very narrow in its application with
computers being trained to perform very specific tasks, but importantly they
didn't have the ability to learn and evolve. Examples include simple
recommendation engines, such as which film you should watch on Netflix or
recommendations for other products you may like on Amazon, to more complex
forms such as IBM's Deep Blue chess machine which was sufficiently advanced
that it was able to win a match against a reigning chess world champion.
In contrast what we are seeing now is Deep Learning whereby computers have the
ability to learn and plan, eliminating much of the need for human
intervention. This is a key progression. A further subset of this is
Generative AI whereby computer models can generate new, original content that
resembles existing data and is indistinguishable from what might be generated
by humans. A further subset of this is Large Language Models (LLM) which are
designed to generate text-based models.
Given that the concept of AI has been discussed since the days of Alan Turing
(who proposed a 'learning machine'), it might be asked why has AI suddenly
exploded in its use over the last year? Well, like many technological
advancements, they reach an 'iPhone moment' when all the necessary component
parts come into existence. Take, for example, the invention of the aeroplane.
Whilst the Wright Brothers were credited with inventing the plane in the early
part of the 20th century, in practice many of the principles on the concept of
flying machines were discovered by a little-known British inventor called
George Cayley who was born over 100 years before the Wright brothers' first
flight. The Wright brothers' success however was largely dependent on the
invention of the combustion engine and, in particular, motorcycle engines due
to their lightness essential for successful motorised flight. In contrast
Cayley only had the steam engine at his disposal which, unfortunately for him,
was far too heavy for flight!
In much the same way, AI has benefited from the coming together of large data
sets, computers with the processing power to work with vast volumes of data
and an acceleration in the development of machine learning algorithms.
The poster child for this revolution has been ChatGPT. Developed by OpenAI,
Chat Generative Pre-Trained Transformer is a LLM designed to mimic human
conversation. It is able to answer questions in a conversational way, answer
follow-up questions, learn from its interactions and challenge incorrect
premises. Following the launch of GPT-3.5 in late 2022, ChatGPT became the
fastest growing consumer software application in history, gaining one million
users within just five days and reaching over 100 million users in two months,
all with zero marketing spend. The latest version, GPT-4 was released in March
2023. Moreover, its success has started an arms race with all the major tech
groups launching their own versions, including Google, Baidu and Meta, hoping
no doubt to monetise on ChatGPT's achievements, but also to prevent themselves
being disintermediated just as they did to other companies in the past. Nobody
wants to be tomorrow's Nokia!
Why is AI important?
Much hyperbole surrounds the potential impact of AI but is this just a fad, in
the same vein as most cryptocurrencies, or is it really the game changer that
many are predicting?
Spoiler alert, we think it is the real deal as we do see AI having the
potential to revolutionise many areas of work and the way in which we live,
albeit predicting how it evolves is challenging, just as few predicted the
spectacular growth in the app economy post the invention of the iPhone.
Already, we are seeing AI make breakthroughs in processes previously the
domain of humans and seemingly impossible for computers to replicate. Ranging
from facial recognition to understanding speech, AI driven systems have now
caught up with, and even exceeded in some cases, the results produced by
humans.
This though just scratches the surface. As AI systems evolve, the newer forms
of generative AI can learn from large sets of images and can create new,
unique images based on trained data. Companies engaging in marketing campaigns
will no longer have to retain graphic designers to create their images or buy
photos from image photobanks but instead AI systems will create precisely the
image they require at minimal cost. This newfound creativity doesn't stop here
and will also extend to video and music synthesis and even social media
content generation. AI and machine learning algorithms are also the perfect
candidates for quantum processing when the questions are more complicated than
classical computers can calculate, though this field is still at a very early
stage of development. This will eventually increase the speed with which AI
can solve problems.
AI also has the potential to advance mankind. Autonomous vehicles are becoming
a reality, as deep learning enables self-driving cars to detect and recognise
objects, lane detection, pedestrian tracking and to respond to their
surroundings, albeit driving has proven to be more difficult for AI to master
than many of its creators anticipated. Similarly, in the field of healthcare
AI can assist in diagnosing diseases, analysing medical images and predicting
data outcomes, contributing to more accurate diagnosis and personalised
treatment plans. No longer will a patient have to wait to book an appointment
with a doctor in an already overstretched healthcare system. Instead, AI
driven computers will instantly, and more accurately, assess their symptoms
and make better diagnosis of their illness based on vast datasets of
up-to-date medical data rather than information taught to a doctor 30 years
ago at medical school. Their treatment will then be personalised to that
individual rather than, for example, assuming that a 15-year-old male child is
the same as an elderly female with a multitude of other conditions.
Extrapolating the impact of this from the specific to the general is,
unsurprisingly, challenging. In terms of where we are now, a recent survey by
the Harris Poll showed that approximately 70% of US companies now report using
generative AI in their operations. As to the future, Goldman Sachs believes
that widespread AI adoption could result in a 10-year period where annual
productivity growth is as much as 1.5% higher than it otherwise would have
been and that generative AI alone could form a $7 trillion market or increase
global GDP by 7%. To put this into context, this would be comparable to the
two largest productivity booms since 1900, namely the widespread adoption of
electricity and the PC/internet. Geographically, the US would likely lead the
way given its head start in many areas of AI development. China may well be
catching up given its investment in AI related technology, albeit much depends
on the success of the US's campaign to restrict China's access to cutting edge
technology and vital components. In terms of asset classes, the natural
beneficiary would be equities due to higher earnings from the productivity
boom, although the drivers of stock market performance will vary significantly
depending on which sectors are deemed winners and which are seen as losers.
Will AI lead to mass unemployment and a fundamental change to the way in which we work?
Whilst much has been discussed on the potential positive impacts of AI, there
is an increasingly vocal part of society who are warning of the negative
effects from AI, ranging from fears of mass unemployment to the abuse of how
AI is used and even to threats to the existence of mankind. This then leads
onto the thorny subject as to whether AI should be restricted in any way and
its regulation.
From a jobs' perspective the threat from AI has turned technology disruption
on its head. Previously it was the low paid, unskilled manual workers who were
most at risk from technology, with their jobs under threat from either
automation or robotics. This saw a multitude of manual workers, such as those
in the textile industry, agriculture, or car production, being replaced by
machines. AI, however, is affecting a different part of society. Initially AI
was impacting those in jobs that require repetitive tasks, some level of data
analysis and routine decision making. Now, however, with the development of
advanced LLMs, we are seeing jobs which are further up the food chain
vulnerable to being replaced. Notably those jobs that involve writing,
calculating and high-level analysis are all increasingly susceptible to
replacement, with people working in accountancy, administration, call centres
and primary care likely to see part or all of their jobs being replaced or
augmented by AI. In contrast we have the rather binary situation whereby those
working in lower end, manual or service-related industries such as mechanics,
hairdressers and painters, being hard to replace as are those in higher end,
more complex jobs or requiring high-touch human interaction and personalised
decision making.
Our view however is that AI should not be restricted in order to protect jobs.
The advancement in human thinking and technology has been replacing jobs for a
millennia and in the process raised the standard of living many thousands of
times. We suspect few would want to go back to living in mud huts and
surviving through subsistence farming. Instead we should see this as an
opportunity to improve the way in which people live and, if history is
anything to go by, new jobs will evolve and provide people with better life
outcomes. Undoubtedly governments and society will need to think carefully as
to how economies remain sufficiently dynamic, such that those affected can
retrain as opposed to creating areas of mass unemployment and prevent an even
bigger income inequality gap from forming. However, with many developed
countries facing aging populations and crippling labour shortages in certain
industries, AI is likely to be a more palatable solution than increasing
immigration or retirement ages.
More challenging is how we deal with AI being used for nefarious reasons. This
ranges from school children using AI to cheat on their homework, to enabling
terrorists to create bioweapons. This is likely to result in changes to how
society works and greater regulation which may ultimately stymie some of the
good uses AI can be used for. Teachers, for example, are already having to use
AI to produce mock answers for the homework they set to check if children are
using it and it may mean the end of coursework for setting grades, penalising
those children who perform less well under exam conditions. Similarly, whilst
AI is a wonderful enabler and can be used, for example, to code by a person
who previously had no coding ability, it also facilitates such evils as
bioweapon development for terrorist groups who previously lacked the ability.
Clearly bad people will always find a way of doing bad things but much like
the gun, AI does have the scope to magnify their actions. Whilst we are
generally anti-regulation, with governments typically bad at regulating new
tech and pressure groups using it for their own purposes, we suspect
regulation will ultimately prove inevitable, and to some extent desirable, in
this area.
Is AI a bubble?
If we are right and AI is the real deal, is this already reflected in share
prices and, indeed, are we already in bubble territory? Well, unfortunately,
new paradigms and bubbles almost invariably go hand in hand and whilst many
new paradigms meet, if not exceed, some of the wildest expectations, making
money from them can be very challenging if all the good news is in the price.
Take for example the internet boom of the late 90s. Few would deny the
internet has evolved in ways that were barely conceivable at the time.
However, as illustrated below, if we look at the top ten tech names of 1999,
the peak of the dotcom bubble, only one of those names, Microsoft, has
exceeded the performance of the S&P over the subsequent 23 years. The
simple fact is that even if a new epoch in technology is upon us, valuations
matter, and if they're already priced for perfection, generating returns to
investors is likely to be impossible even if they meet these lofty
expectations.
All is not lost, however. Whilst many names such as Nvidia have already seen
their share prices surge exponentially, given we are still at the dawn of AI's
development there will be many companies that are not overpriced and indeed
there will be many companies who are yet to evolve who will play a leading
role in the AI revolution.
It is also not just about playing those companies which are at the forefront
of developing the AI technologies but also those companies in more traditional
industries who intelligently adopt AI to streamline their own processes,
improving efficiency and margins within their businesses. Many management
teams will prove to be immobile and resistant to change, or unable to evolve
due to other factors such as trade union influence, and will likely see their
businesses fall by the wayside versus more forward-looking companies who are
early adopters.
An area to watch closely will be that of big tech. It is very rare for
yesterday's successful companies to become tomorrow's winners. Inevitably
large companies become intransient as they become bound down by committees and
processes and often the founders who had the vision to build the group are
replaced by less visionary professional CEOs. This time may be different. The
current big tech companies know all too well the dangers of disintermediation,
after all they did exactly this to many other companies in the past. AI is
also in their ballpark with companies such as Microsoft and Google at the
forefront of AI development. They are blessed with very deep pockets and even
if they see the technology pivoting in a direction which is different from the
route they have been pursuing, they have demonstrated their willingness to buy
companies in their desire to stay ahead.
Perhaps the biggest danger, however, is not which company succeeds, but which
country succeeds. The current AI development has a whiff of the atomic bomb
race with both the US and China racing to become the dominant player in the
field. The danger may be that a country becomes overly dominant and rather
than using AI for good, uses it for advancing its own success at the expense
of others.
Conclusion
2023 has seen two important themes playing out. First, the normalisation
process from the excesses of the past ten years whereby we exit a zero
inflation/interest rate world and return to a more normal backdrop and,
second, the acceleration of the AI trend. In the former, we watch carefully
for signs of dysfunctionality, aware that such events can lead to systemic
risks especially in those areas that have binged on cheap debt, including real
estate and private equity. We have also been broadening out our portfolios,
especially at the sector level, where we have been adding value exposure to
our growth holdings. Whilst still of the view we are mid-change in the
technological revolution that has been playing out in recent years, we also
believe that a higher rate backdrop makes value investing a far more
profitable enterprise. Similarly, at the country level we are increasingly
seeing opportunities outside the US, in countries such as Japan which is
undergoing a period of change combined with attractive valuations. In the more
defensive space we have added to our insurance exposure and, for the first
time in a decade, we are running our slide rule over bonds having studiously
avoided them for many years.
In terms of how we capitalise on the acceleration of the AI trend, we are
following a two-pronged approach. In the public space our model of using
specialist external managers to invest on our behalf should stand us in good
stead. We are blessed in having great managers such as Ben Rogoff at Polar
Capital, who has been at the forefront of technology investing for many years.
Importantly he has managed money through both the good and the bad times and
has the scars to bear for it when markets move from bubble to bust. Secondly,
we are playing the private space through investing in venture capital. We have
long believed in the concept that the one thing you can be certain about is
change and have sought to protect ourselves and, indeed, capitalise on this
through investing in venture capital. The managers of these funds, such as
Khosla Ventures, specialise in identifying and investing in new technologies
and concepts. These types of managers are at the cutting edge of this change
process and AI will likely form a cornerstone of their funds in the years to
come.
Portfolio Review and Activity
During the first half of the financial year the NAV total return of your
Company was 4.3%, ahead of the 3.8% rise of the MSCI ACWI NR Index (GBP) and
strongly ahead of the 6.0% decline of the FTSE UK Gilts All Stocks TR Index.
While they rose over the period, global equity markets have been somewhat
bumpy, as investors have become more concerned about the prospect of rates
remaining higher for longer. Many of the large tech stocks (the so-called
Magnificent Seven - Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and
Tesla) that have driven market returns this year started to decline over the
summer, which weighed on the overall market. Sterling weakness against a
strong dollar boosted returns measured in sterling. Government bonds continued
their decline as yields rose, especially at the long end in the US Treasury
market. Commodities were a notable outperformer, with energy gaining as oil
production cuts were implemented by Saudi Arabia and Russia.
Over the last 12 months the NAV total return was 8.5%, while the MSCI ACWI NR
Index gained 10.2%, UK CPI is up 6.7% and the FTSE UK Gilts All Stocks TR
Index has fallen 2.5%. Over both the half year and the last 12 months the
performance has compared very favourably with the classic 60:40 equity/bond
balanced portfolio, which fell 0.2% over six months and is up 5.0% over 12
months.
The position in Ocean Wilsons Holdings gained a strong 14.5% over the first
half of the year and it is now up 26.5% for the past year. We believe its
investment portfolio offers very useful diversification benefits, with
significant exposure to private equity including venture capital. The
Brazilian market has performed more strongly recently, helped by improving
sentiment towards the country, which should be supportive of its Wilson Sons
position. Increasing global trade and more activity in the offshore energy
sector are helping to drive improved operational results for the company.
The Company's net asset value per share rose from 305.8 pence at the end of
March 2023 to 317.4 pence at the end of September 2023, with 1.6 pence per
share being paid out as a dividend during the period.
Core and Thematic Funds
The Core Regional silo made a gain of 3.2% during the first half of the
financial year, while the Thematic silo rose 1.9%. For the last 12 months, the
two silos' returns were 5.8% and 1.4%, respectively.
Most of the North American holdings made positive returns over the first half
of the financial year. The weakness of the large cap technology names in the
second quarter, that had driven index returns earlier in the year, made it
somewhat easier for active managers to begin to outperform. Findlay Park
American and Pershing Square Holdings made returns of 9.1% and 6.4%,
respectively. Select Equity delivered a gain of 3.3%, iShares Core S&P 500
ETF increased 7.6%, while Armistice Capital, a position that was added in June
and which invests long and short in the healthcare, consumer and TMT sectors,
was down 1.7%. Beutel Goodman US Value lagged the other holdings with a fall
of 0.7%. The Findlay Park fund owns just three of the mega-cap tech stocks
(Microsoft, Alphabet and Nvidia), with a combined weighting of 9.2% versus
25.4% for the Russell 1000 benchmark. The managers continue to find better
opportunities in mid-cap companies with compelling growth and quality
characteristics, but without the rising competitive intensity and regulatory
pressures that face the mega-cap companies. Some of the fund's top active
positions that contributed to its positive performance over the first half
included EOG Resources (oil and gas), Arthur J. Gallagher (insurance broker)
and Intuit (accounting software). The Select fund had some strong contributors
in its technology, industrials and financials exposures, with names such as
Morningstar (information services), Martin Marietta Materials (construction
materials) and Brown & Brown (insurance brokers) performing well.
Performance in Japan was mixed, with Indus Japan being flat while Goodhart:
Hanjo fell 5.6%. Over 12 months the Indus fund is up 5.2%, while the Hanjo
fund has declined 2.6%. The Indus fund is fairly concentrated with 36 names
and holdings such as Nippon Shinyaku (pharmaceutical manufacturer) and Pan
Pacific (discount stores) performed well later in the period. While the Indus
fund has substantial exposure to large-cap names, the Hanjo fund focuses on
small and mid-cap names and unfortunately has not kept pace with the broader
Japan market this year.
Egerton Long-Short Fund has returned 2.9% during the first half of the
financial year, and is up 1.6% over 12 months. There was strong performance
from energy positions, such as Cenovus Energy that gained over 20%. The
manager believes this Canadian company is undervalued as a low-cost oil
producer, with long reserve life that should deliver strong cash flow
generation and returns to shareholders. Its reserves require limited capital
spending, as they have low decline rates, and their method of extraction
involves less environmental impact than mining or fracking. While investors
are grappling with the valuation of traditional energy sources against the
backdrop of carbon-free technologies, the manager notes that Canadian oil
companies and the government are negotiating the world's largest carbon
capture project which could sequester up to 12m tons of CO2 per year. Another
theme in the fund is travel, with positions such as Ryanair, Booking Holdings
and Hilton Worldwide, which delivered strong gains over the first half of the
year.
Within the emerging and frontier market holdings, NTAsian Discovery and
BlackRock Frontiers Investment Trust have performed strongly during the first
half of the financial year with returns of 4.7% and 9.5%, respectively. Over
the last 12 months the BlackRock trust has performed very well, being up
16.2%, while the NTAsian fund is up just 0.1%. The NTAsian fund has its
largest country weight in Vietnam, where the economy is showing accelerating
growth. The largest position is FPT, an IT conglomerate which has reported
strong revenue growth led by its global IT services division. The company has
recently announced plans to invest $100m into the US market, as well as a new
contract with the European Union Aviation Safety Agency. The stock gained 35%
during the first half of the year. The BlackRock Frontiers Trust's good
performance has been aided by some of its financials holdings, which is its
largest sector exposure at 38%. Banks such as National Bank of Greece and
Commercial International Bank Egypt contributed good performance, with other
strong performers being Elm Co, an IT services business in Saudi Arabia and
the Philippine property developer Ayala Land.
There were mixed performances in the Thematic holdings during the first half
of the financial year, although they included some very strong returns. RA
Capital International Healthcare gained 12.9%, although Worldwide Healthcare
Trust was flat. The portfolio's exposures to commodity equities diverged as
iShares MSCI World Energy ETF rose by 11.5%, taking it to a 15.4% return over
the last year, while iShares MSCI Global Metal and Mining Producers ETF fell
back 4.5%, although it too has been strong over the last 12 months, with a
return of 10.6%. Polar Capital Global Insurance Fund returned 8.3% which
brings its 12 month return to 13.0%.
Diversifying Funds
The Diversifying holdings provide an alternative source of returns whilst
dampening volatility and displaying low beta to the equity market. While their
longer-term performance has been positive, they delivered a slight decline of
0.4% in the first half of the financial year and have fallen by 2.2% over the
last 12 months. However, the returns over both periods have beaten the losses
in the bond markets, with the UK Gilt Index being down 6.0% in the past six
months and down 2.5% over the year.
Many of the holdings in this part of the portfolio performed well during the
quarter, although DV4 Limited, the private real estate vehicle that is
gradually liquidating its assets, declined by 10.4% owing to some asset
markdowns earlier in the period which reflected rising property yields. In the
trend-following CTA funds, Schroder GAIA BlueTrend displayed strong
performance with a rise of 9.0%, but GAM Systematic Core Macro fell by 0.3%.
However, both remain down over 12 months given the difficult period of
performance they endured in late 2022. The event-driven fund Global Event
Partners returned 1.4% this half year, leaving it down just 0.2% over the last
year.
Nephila Iron Catastrophe Fund, the specialist strategy fund investing in
catastrophe bonds and other insurance-related securities, which we added to
the portfolio last quarter, has performed strongly, with a return since
purchase of 12.3%. It is pleasing to see this performance in the early days of
owning the fund. Strong returns are not surprising given that valuations in
the space appear extremely attractive, however, we are now in the most active
period of the year for US hurricanes and how the season develops will have a
significant influence on the fund's performance.
Despite the very difficult environment for sovereign bond investors, with
steeply rising yields affecting the US Treasury curve, several of the
diversifying fixed income holdings managed to deliver positive performance.
Brevan Howard Absolute Return Government Bond Fund made a gain of 1.3%, as it
recovers from its difficult period of performance in March 2023 and it is down
1.5% over 12 months. Selwood Liquid Credit Strategy has continued its period
of excellent performance, with a gain of 8.7% over six months and is now up
36.7% over the last year. Apollo Total Return Fund also gained, being up
another 3.8% to be up 5.4% over 12 months. The position in the passive
Vanguard US Government Bond Index Fund lost 4.8% during the first half of the
financial year and is down 1.9% over the last year.
Global Equities
The portfolio rose 2.4% over the first half, with the biggest contributors
being Subsea 7, Interactive Brokers and Arch Capital. The biggest detractors
were Orion, Dollar General and ViaSat.
In addition to buying Eurowag, we added to our positions in Interactive
Brokers, GCO, Subsea 7, Bergman & Beving, Glencore and CTT. To fund these
purchases, we sold our positions in CVS, Dollar General and Viasat, and
reduced our holdings in Arch, EXOR and CK Hutchison.
Ocean Wilsons Holdings
As the largest integrated provider of port and maritime logistics in Brazil,
we believe the Ocean Wilsons' subsidiary, Wilson Sons, is well-placed to
perform in the coming years. The business has a strong competitive position,
being 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: Rio Grande and Salvador. 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.
There has been further evidence of improving results across the business, with
the second quarter results (released in August) showing strong revenue growth.
Results in the towage division were particularly strong, with higher volumes,
a larger deadweight of ships attended and an increase in average revenue per
manoeuvre. In the container terminal division, operational growth has been
mainly driven by robust volume recovery at the Rio Grande terminal.
Operational data for the first nine months of the year show strong growth,
with total volumes in the container terminals division being 12.0% higher than
last year and the number of vessel turnarounds in the offshore support bases
being more than 50% higher than the previous period, thanks to markedly higher
demand for the company's offshore energy-linked services. In the second
quarter Wilson Sons' shipyard delivered WS Rosalvo, the third of a series of
six tugboats which will add over 90 tonnes of bollard pull to the fleet by
2024. The vessel is already operational in the port of Açu.
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
portfolio delivered a return of 4.5% over the first six months of 2023, with
particularly strong performance coming from its core regional exposures. The
most recent valuation for the investment portfolio was $299.7m as at end June
2023, which represents an increase of 0.5% from March 2023 and an increase of
2.0% from December 2022. Performance has been helped by thematic exposures to
energy and commodities, as well as the private market investments which have
demonstrated resilience. Some of the largest private equity positions include
venture capital funds of funds managed by Stepstone, US buyout and growth
funds managed by KKR and TA Associates and a financials-focused fund managed
by Reverence Capital. Dividends totalling $5.5m, in two tranches, were paid to
the parent company from the portfolio in May and June.
On 12 June 2023, the Board of Ocean Wilsons Holdings made an announcement in
which they confirmed they are undertaking a strategic review involving their
investment in Wilson Sons. The review, which will consider all potential
strategic options, is currently at an early stage and there can be no
certainty as to its outcome. There have been no further announcements
regarding the progress of this review, but we will report on any developments
as they are made known.
Alec Letchfield
Chief Investment Officer
October 2023
Case Study
Eurowag
In this quarter, we welcomed a new addition to our portfolio - Eurowag.
Historically known as a pure-play fuel card and toll payment provider for the
European trucking industry, Eurowag has undergone a remarkable transformation
over the last few years. Since 2017, the company has shifted its strategic
focus towards becoming an end-to-end provider of software solutions for the
industry, spanning from payments to fleet management and telematics.
It has a diverse client base given the fragmentation in the market and it now
enjoys 28% of revenue coming from subscriptions. Management has a very
sizeable ownership stake, while the growth outlook is promising. Drivers of
growth include increased market penetration within the fragmented customer
base, as well as the untapped potential to provide additional services to
existing customers, facilitated by a forthcoming integrated platform. We
believe the company is conservatively valued, with the integrated platform's
success effectively being provided as a free option, given the 10% free cash
flow yield.
Our view on the company differs from others', as we foresee a future in which
the company could multiply in size if the transition proves successful. We
believe the market currently undervalues this potential, largely due to a
challenging IPO in late 2021 and investor caution surrounding UK small/midcap
companies, with limited stock market history and Eastern European exposure.
It's important to acknowledge the associated risks. Eurowag carries higher
leverage than we would ideally prefer, with a net debt to EBITDA ratio of
2.9x. Moreover, the success of integrating new businesses and the ability to
deliver the new platform are not guaranteed and may potentially divert
management's attention from the cash-generating payments business. We have
opted to take a measured approach by establishing a smaller position, guided
by our belief in limited downside risk. We plan to lay out a series of
milestones to monitor the progress of our thesis, including reducing debt
below 2.5x, increasing average revenue per user and expanding the number of
trucks served. In the journey ahead, we remain cautiously optimistic about
Eurowag's potential and we are committed to making informed, milestone-driven
decisions in the best interest of our investors.
The Portfolio
As at 30 September 2023
Investments Fair value % of net
£000 assets
Core regional funds
Findlay Park American Fund 26,749 7.0
iShares Core S&P 500 UCITS EFT 22,978 6.0
Select Equity Offshore Ltd 18,991 5.0
BlackRock Strategic Hedge Fund 14,472 3.8
Schroder ISF Asian Total Return 10,374 2.7
Pershing Square Holdings Ltd 9,862 2.6
iShares Core MSCI Europe UCITS ETF 8,246 2.2
Schroder ISF Global Recovery 8,082 2.1
BA Beutel Goodman US Value Fund 7,914 2.1
Indus Japan Long-Only Fund 7,179 1.9
Armistice Capital Offshore Fund Ltd 6,790 1.8
Goodhart Partners: Hanjo Fund 6,061 1.6
KLS Corinium Emerging Markets Equity Fund 4,486 1.2
NTAsian Discovery Fund 4,262 1.1
iShares Core EM IMI UCITS ETF 4,121 1.1
BlackRock Frontiers Investment Trust PLC 3,808 1.0
164,375 43.2
Strategic
Wilson Sons (through our holding in Ocean Wilsons Holdings Limited)(1) 54,209 14.2
Ocean Wilsons (Investments) Limited (through the holding in Ocean Wilsons Holdings Limited)(1) 36,139 9.5
90,348 23.7
Global equities
Interactive Brokers Group Inc 5,103 1.3
Subsea 7 4,142 1.1
Grupo Catalana Occidente SA 4,101 1.1
Orion Engineered Carbons SA 3,658 1.0
Arch Capital Group Ltd 3,478 0.9
Exor NV 2,731 0.7
Coats Group PLC 2,511 0.7
Bergman & Beving 2,371 0.6
CK Hutchison 1,865 0.5
Glencore PLC 1,856 0.5
CTT Correios de Portugal 1,327 0.3
Eurowag 1,288 0.3
34,431 9.0
Diversifying
Global Event Partners Ltd 7,853 2.1
DV4 Ltd(2) 7,778 2.0
Hudson Bay International Fund Ltd 5,266 1.4
MKP Opportunity Offshore Ltd 3,274 0.9
Schroder GAIA BlueTrend 3,143 0.8
GAM Systematic Core Macro (Cayman) Fund 3,114 0.8
Nephila Iron Catastrophe Fund Ltd 2,841 0.7
Selwood AM - Liquid Credit Strategy 2,682 0.7
Apollo Total Return Fund 2,505 0.7
Keynes Dynamic Beta Strategy Offshore Fund Limited 2,467 0.6
Prana Absolute Return Fund 2,016 0.5
Brevan Howard Absolute Return Government Bond Fund 1,753 0.5
Vanguard US Government Bond Index Fund 1,431 0.4
BioPharma Credit PLC 1,279 0.3
Lazard Convertible Global 714 0.2
48,116 12.6
Thematic assets
Polar Capital Funds - Global Insurance Fund 7,451 2.0
Polar Capital Funds - Global Technology Fund 5,902 1.5
GAM Star Fund PLC - Disruptive Growth 4,302 1.1
Impax Environmental Markets Fund 3,276 0.9
Worldwide Healthcare Trust PLC 3,011 0.8
RA Capital International Healthcare Fund 2,984 0.8
iShares MSCI World Energy Sector UCITS ETF 2,387 0.6
iShares MSCI Global Markets & Mining Producers ETF 1,728 0.5
BB Biotech AG 1,570 0.4
32,611 8.6
Total investments 369,881 97.1
Net current assets 11,000 2.9
Net assets 380,881 100.0
(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 2023 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
2023.
(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 2023. All other valuations are either derived from information
supplied by listed sources, or from pricing information supplied by third
party fund
managers.
Half-Year Management Report
The Directors present their Report and Condensed Financial Statements for the
period to 30 September 2023.
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 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. 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 2023
The Business Review includes a discussion of important events which occurred
within the period to 30 September 2023 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
four 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 2024
The key risks and uncertainties relating to the period ended 30 September 2023
and for the year ending 31 March 2024 are materially the same as those
reported in the Annual Report for the Company for the year ended 31 March
2023. 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 2023
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 £1,439,000
excluding VAT (six months to 30 September 2022: £1,406,000; year to 31 March
2023: £2,824,000). Amounts outstanding at 30 September 2023 were £239,000
(30 September 2022: £231,000; 31 March 2023: £241,000).
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 16 November 2023 and was signed
on its behalf by:
Jonathan Davie
Chairman
16 November 2023
Income Statement
For the six months ended 30 September 2023
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 2023 30 September 2022 31 March 2023
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Gains/(losses) on investments held at fair value through profit or loss - 12,324 12,324 - (30,520) (30,520) - (14,924) (14,924)
Foreign exchange (losses)/gains - (335) (335) - 346 346 - 327 327
Investment income 6,186 - 6,186 6,003 - 6,003 6,892 - 6,892
6,186 11,989 18,175 6,003 (30,174) (24,171) 6,892 (14,597) (7,705)
Portfolio management fees (1,439) - (1,439) (1,406) - (1,406) (2,824) - (2,824)
Other expenses (900) - (900) (659) - (659) (1,527) - (1,527)
(2,339) - (2,339) (2,065) - (2,065) (4,351) - (4,351)
Income/(losses) before finance costs 3,847 11,989 15,836 3,938 (30,174) (26,236) 2,541 (14,597) (12,056)
Finance costs - - - (1) - (1) (1) - (1)
Income/(losses) for the period 3,847 11,989 15,836 3,937 (30,174) (26,237) 2,540 (14,597) (12,057)
Return per Ordinary and 'A' non-voting 3.2p 10.0p 13.2p 3.3p (25.2)p (21.9)p 2.1p (12.2)p (10.1)p
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 2023
(Unaudited) (Unaudited) (Audited)
30 September 2023 30 September 2022 Year ended
£000 £000 31 March 2023
£000
Non-current assets
Investments held at fair value through profit or loss 369,881 343,518 353,262
369,881 343,518 353,262
Current assets
Trade and other receivables 5,615 93 128
Cash and cash equivalents 5,845 11,406 13,987
11,460 11,499 14,115
Current liabilities
Trade and other payables (460) (312) (412)
Net current assets 11,000 11,187 13,703
Net assets 380,881 354,705 366,965
Capital and reserves
Called up share capital 1,200 1,200 1,200
Contributed surplus 322,839 323,799 323,799
Retained earnings 56,842 29,706 41,966
Total equity shareholders' funds 380,881 354,705 366,965
Net asset value per Ordinary and 'A' non-voting Ordinary share 317.4p 295.6p 305.8p
Statement of Changes in Equity
For the six months ended 30 September 2023 (unaudited) Share Contributed Retained Total
capital surplus earnings £000
£000
reserve £000
£000
Net assets at 1 April 2023 1,200 323,799 41,966 366,965
Profit 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 six months ended 30 September 2022 (unaudited) Share Contributed Retained Total
capital surplus earnings £000
£000
reserve £000
£000
Net assets at 1 April 2022 1,200 324,759 56,903 382,862
Loss for the period - - (26,237) (26,237)
Dividends - (960) (960) (1,920)
Net assets at 30 September 2022 1,200 323,799 29,706 354,705
For the year ended 31 March 2023 (audited) Share Contributed Retained Total
capital surplus earnings £000
£000
reserve £000
£000
Net assets at 1 April 2022 1,200 324,759 56,903 382,862
Loss for the year - - (12,057) (12,057)
Dividends - (960) (2,880) (3,840)
Net assets at 31 March 2023 1,200 323,799 41,966 366,965
Cash Flow Statement
For the six months ended 30 September 2023
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
30 September ended 31 March
2023 30 September 2023
£000 2022 £000
£000
Cash flows from operating activities
Profit/(loss) before finance costs 15,836 (26,236) (12,056)
Adjustments for:
Realised gains on investments (1,369) (1,646) (5,571)
Unrealised (gains)/losses on investments (10,955) 32,166 20,495
Foreign exchange 335 (346) (327)
(Increase)/decrease in trade and other receivables (5,487) 108 73
Increase/(decrease) in trade and other payables 48 (56) 44
Purchase of non-current investments (40,892) (49,695) (78,568)
Sale of non-current investments 36,597 55,643 90,368
Net cash (outflow)/inflow from operating activities (5,887) 9,938 14,458
Cash flows from financing activities
Interest paid on bank loans - - -
Dividends paid (1,920) (1,920) (3,840)
Net cash outflow from financing activities (1,920) (1,921) (3,841)
(Decrease)/increase in cash and cash equivalents (7,807) 8,017 10,617
Cash and cash equivalents at start of period 13,987 3,043 3,043
Foreign exchange (335) 346 327
Cash and cash equivalents at end of period 5,845 11,406 13,987
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 on 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 International Financial Reporting Standards
("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
an historical cost and going concern basis in line 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 principal accounting policies adopted
are 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 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, 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
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.
(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 current Bermuda law, the Company is not
required to pay taxes in Bermuda on either income or capital gains. The
Company has received an undertaking from the Bermuda government exempting it
from all local income, withholding and capital gains taxes being imposed and
will be exempted from such taxes until 31 March 2035.
(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 gain or loss arising from a change
in exchange rates, subsequent to the date of the transaction, is included as
an exchange gain or losses 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.
(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 2023. The most recent valuation statement was received
on 18 September 2023, stating the value of the Company's holding as at 30 June
2023. In the absence of a valuation for 30 September 2023 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 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 the
prior year are still the same used now. In addition, the Company has compared
the historic valuation movements of DV4 to the FTSE350 Real Estate Index and
CBRE Monthly 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 2023. It is believed the value of DV4 as at 30
September 2023 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
2023).
· IFRS 17, 'Insurance contracts' (effective for accounting periods
beginning on or after 1 January 2023).
· Amendments to IAS 8 'Definition of Accounting Estimates'
(effective for accounting periods on or after 1 January 2023).
· Amendments to IAS 1 and IFRS Practice Statement 2 'Disclosure of
Accounting Policies' (effective for accounting periods on or after 1 January
2023).
· Amendments to IAS 12 'Deferred Tax related to Assets and
Liabilities arising from a Single Transaction' (effective for accounting
periods on or after 1 January 2023).
There is no material impact on the Financial
Statements or the amounts reported from the adoption of these amendments to
the standards.
(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
2023 30 September 2023
£000 2022 £000
£000
Income from investments
Dividends 6,186 6,003 6,892
Total income 6,186 6,003 6,892
Note: the significant majority of Income received from investments relates to
dividends paid by Ocean Wilsons Holdings Limited. As such, income does not
accrue evenly throughout the year.
3 Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
30 September ended 31 March
2023 30 September 2023
£000 2022 £000
£000
Fourth interim dividend for 2023 (paid 26 May 2023): 0.8p (2022: 0.8p) 960 960 960
First interim dividend for 2024 (paid 25 August 2023): 0.8p (2023: 0.8p) 960 960 960
Second Interim dividend for 2023 (paid 25 November 2022): 0.8p - - 960
Third Interim dividend for 2023 (paid 24 February 2023): 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 2024
was announced on 10 October 2023. The payment totalling 0.8p per share
(£0.96m) was paid on 24 November 2023.
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 2023 (Unaudited) 3,847 3.2p 11,989 10.0p 15,836 13.2p
Six months ended 30 September 2022 (Unaudited) 3,937 3.3p (30,174) (25.2p) (26,237) (21.9p)
Year ended 31 March 2023 (Audited) 2,540 2.1p (14,597) (12.2p) (12,057) (10.1p)
5 Financial information
The financial information for the six months ended 30 September 2023 was
approved by a committee of the Board of Directors on
16 November 2023.
6 Net asset value per share
The NAV per share is based on the net assets attributable to equity
shareholders of £380,881,000 (30 September 2022: £354,705,000; 31 March 2023
£336,965,000) and on 120,000,000 shares being the number of shares in issue
at the period ends.
7 Commitments and contingencies
The Company has the following outstanding commitments as at 30 September 2023
(30 September 2022: £nil; 31 March 2023: £2.0m).
Fund Commitment in local currency Converted to GBP
GGV Discovery IV - Asia $600,000 £491,562
GGV Discovery IV - US $600,000 £491,562
Khosla Ventures VIII $1,200,000 £983,123
TA Associates XV $3,600,000 £2,949,369
Triton VI €1,740,000 £1,509,368
TrueBridge Direct Fund III $300,000 £245,781
Total £6,670,765
None of these commitments had been drawn down as at 30 September 2023. As at
the time of signing of this Report, TrueBridge Direct Fund III had drawn a net
amount of $105,000 and Khosla Ventures VIII had drawn $84,000.
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 2023. 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 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
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
31 March 2023 (audited) Level 1 Level 2 Level 3 Total
£000 £000 £000 £000
Financial assets at fair value through profit or loss
Quoted equities 136,942 - - 136,942
Unquoted equities - - 9,132 9,132
Fund investments 37,826 169,362 - 207,188
Fair Value 174,768 169,362 9,132 353,262
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
2023 2022 2023
equity equity equity
investments investments investments
£000 £000 £000
Opening Balance 9,132 8,917 8,917
Purchase - - -
Sale - - -
Total (losses) or gains included in gains on investments in the Income Statement:
on assets held at period end (1,354) 638 215
Closing Balance 7,778 9,555 9,132
As at 30 September 2023, 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 2023. The most recent valuation statement was received on 18
September 2023, with an estimated NAV based on the unaudited capital statement
of DV4 as at 30 June 2023. If the value of the unquoted Level 3 equity
investments were 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 2022 would have increased or decreased by
£778,000 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
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
Apex Fund Administration Services (UK) Ltd, formerly named 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
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.
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 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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