Ordinary A Ordinary

Transcription

1 Company Fact Sheet HEADLINE DATA (Discount)/ Share Price (p) NAV (p) (#) Premium (%) Gross Yield (%) Ordinary A Ordinary Share Price Performance on ( ): 1 Year 3 Years 5 Years 1 Years Ordinary A Ordinary THE COMPANY The Company announced its first interim dividend for its financial year ended 31 March 215 to the market on 22 October 214. The first interim dividend will amount to 8.p per share ( 1.92m). The ex-div date will be 3 October 214, the corresponding record date will be 31 October 214 and the payment date will be 28 November 214. PORTFOLIO MANAGER S REPORT THE GREAT DIVERGENCE 214 started in a rather unusual fashion. Typically it is rare for all asset classes to rise simultaneously, since they have different underlying characteristics and there is a resultant tendency for prices to move in opposite directions. This though is just what happened in the first half of the year with equities rising by 6.2%, sovereign bonds by 5.2% and gold and oil by 1.1% and 7.1% respectively. As the third quarter progressed, however, we saw something of a return to normality. Against a backdrop of diverging economic performance, geo-political concerns and deflationary fears, markets started to behave differently with US equities rising by.8% in September compared to falls of 5.8% for Asia and 2.8% for the UK. Underlying this divergence lie some important developments in the evolution of the stock market cycle. In recent years markets have been driven up by the trend towards zero interest rates. In response to the global credit crunch, monetary authorities around the world pushed rates down in an effort to kick-start the global economy. This primary objective largely failed with consumers and business choosing to rebuild their balance sheets, while a damaged banking system was reluctant to lend. Hence whilst economies started to recover, the rate of recovery was much slower than in previous cycles. What zero rates did achieve, however, was an almost universal rise in asset prices. Investors, faced with near zero returns from bank accounts and sovereign bonds, sought out higher yielding debt and moved up the risk spectrum into equities. This helped stabilise stock markets and raised asset prices generally, in addition to injecting much needed confidence into the financial system. Increasingly, we are nearing a point where the leaders in this process the US and the UK are achieving growth rates that make a change in monetary policy likely. The US is currently ending its quantitative easing (QE) programme and commentators suggest that both the US and the UK are likely to see rates rise in 215. In contrast, Europe, which has chosen not to implement a full QE programme and has failed to restructure its banking system, is seeing growth move in the opposite direction to that of the US and the UK. It seems increasingly likely that Europe will have to implement a full QE programme to combat deflationary trends, just as the US and UK are ending theirs! Similarly Japan, which was late to engage in QE and has much deeper rooted structural problems, is unlikely to end its programme in the foreseeable future. MARKET IMPLICATIONS These divergences raise some important questions for stock markets, in particular whether or not the benign backdrop of asset price rises across the board, combined with low volatility, is coming to an end. Volatility, which as long-term investors is not something we are unduly worried about, has been notably low. Partly this is the result of economies moving out of the recession of 28/9, but also there appears to be a link between QE and low volatility. With QE now ending in the US and UK, and economies diverging, it does seem likely that market volatility (short-term noise!) will start to pick-up, albeit perhaps not excessively so as we do not foresee a global recession any time soon. 1

2 CHART 1: Market volatility has been low Number of trading days to end S&P 5 moved > +/-1% 1Y Treasury yield moved > +/-5bps Sep Source: Bloomberg From an equity perspective, rising global liquidity through low rates and QE has undoubtedly been a key driver of higher equity prices. Whilst it is tempting to believe that any change here will lead to a fall in markets, in practice, history suggests that initial rate rises do not impact economic growth or stock markets. It is only at higher levels that rates start to negatively impact growth and ultimately set the scene for the next recession and bear market. Bonds are slightly more nuanced. Short-dated bonds are clearly vulnerable to a change in interest rates. Similarly, longer-dated sovereign bonds also look horrendously overvalued on any reasonable time horizon with current yields in many cases near multi-decade lows. The caveat to this though is the prospect of deflation. With European policymakers failing to act decisively, both in terms of fiscal and monetary policy, the probability of deflation looks ever more likely. Whilst persistent, Japanese style deflation is not our central scenario, we acknowledge that investors may well hold bonds for portfolio diversification and capital preservation purposes (rather than income maximisation), at least in the short-term. CHART 2: Collapsing Eurozone inflation (%) Jan-97 Nov-97 Sep-98 Jul-99 May- Mar-1 Jan-2 Nov-2 Sep-3 Jul-4 May-5 Mar-6 Jan-7 Nov-7 Sep-8 Jul-9 May-1 Mar-11 Jan-12 Nov-12 Sep-13 Jul-14 Eurozone inflation (%) Source: Bloomberg / Eurostat 2

3 CHART 3: US 1 year bond yields are close to 14 year lows The outlook for pricing in the credit market is driven by the level of government bond yields in addition to a premium for corporate defaults. Hence, whilst not hugely optimistic about government bond yields in the longer term, we do not worry excessively about credit in the short-term with default rates unlikely to change dramatically in the coming months US 1-year bond yields Source: Thomson Reuters, Credit Suisse research PORTFOLIO UPDATE We continue to make good progress in transitioning the Trust into its new format. In the Core Regional silo we added three new names: NTAsian Discovery, Schroder Asian Total Return and Goodhart Partners Longitude Fund: Hanjo Fund ( Hanjo Japan Fund ). NTAsian Discovery is a long-only manager focused on identifying opportunities in emerging Asia. It is managed by two highly experienced portfolio managers, Kenneth Ng and John Thompson, who focus on identifying small and mid-sized companies with low valuations, high growth and strong cash flows. We like the fact that the managers construct a high conviction portfolio by investing in just 25 to 4 names. Schroder Asian Total Return is a well-established fund managed by the excellent Robin Parbrook and Lee King Fuei. The investment process is unusual in that it adopts an absolute return approach that combines a bottom-up portfolio construction with a topdown derivatives macro overlay. The resultant performance track record is excellent with a tightly controlled risk profile. Hanjo Japan Fund is a new name to Hansa. The fund is biased towards smaller capitalisation Japanese companies and typically holds between 25 and 5 companies. Importantly, given the complexity of the Japanese market, the portfolio manager, Sean Lenihan, has lived in Japan for 24 years, immersing himself in the culture and language. We are generally positive on the change programme in Japan (albeit with some healthy scepticism!), viewing the aspiration to improve corporate governance, increase the focus on high returns on equity and a trend towards increased investment into equities, as positive. Even without this background, the manager s ability to identify cheap companies with excellent growth prospects presents opportunities that have been created in this market that has been neglected over the past two decades. In the Eclectic/Diversifying silo we added GAM Star Technology and JLP Credit Opportunities. The technology sector has experienced a high level of volatility in 214 with investors treating it as a geared play on markets while there have been valuation concerns in some sub-sectors. In practice the technology sector s valuation is attractive versus both its own history and other sectors, especially when growth is taken into consideration. Managed by an experienced portfolio manager, Mark Hawtin, we view the fund as an excellent way of playing the changes brought about in day-to-day life by the adoption of new technologies. We invested in JLP Credit Opportunities fund which is focused on the debt of stressed US companies. The manager, Jeff Peskind, conducts thorough credit analysis and seeks to identify mispriced bonds of companies that, though stressed, he expects will avoid bankruptcy. CHART 4: Silo exposure as at 3 September 214 Eclectic & Diversifying Assets 19.9% Core Regional Funds 22.5% Cash & Other Items.3% Strategic 24.5% UK Equity 32.8% Funding these purchases, we sold a number of mainly large capitalisation UK equities, including BHP Billiton, Centrica and Experian. On the purchase side we added to the holding in Hansteen and a new holding in Hilton Foods. The latter is an extremely well managed group that acts as a supply chain manager, providing meat packaging and processing facilities to major retailers. The group is global and following a new five year agreement with Tesco in the UK will represent some 7% of Tesco s meat business. 3

4 Lastly our Strategic investment in Wilson Sons, through our holding in Ocean Wilsons Holdings, continues to make good progress. Wilson Sons is one of the largest providers of maritime services in Brazil and is at a major turning point in its evolution. PERFORMANCE AND OUTLOOK Having invested around $1bn since flotation in 27 the group is nearing the end of this phase of capital expenditure which will result in a large increase in free cash flow and uplift in dividends. This has been very well received by markets. For the calendar year to 3 September 214, the reported NAV grew by 3.5% to 1,198.5p per share. The final dividend payment for the year to 31 March 214 was paid in August, representing a distribution of.9% of NAV (11p per share). The Performance Benchmark increased by 2.4% during the same period. The Company s Ordinary share price rose by 16.3%, while the FTSE All Share Index dropped 2.1%. The overall discount was 21.5% at 3 September 214, although if Ocean Wilson Holdings is valued at the look through value i.e. market value of the quoted subsidiary plus the investment portfolio, the implied discount was 23.7%. Overall, the third calendar quarter was a period of intense activity for the Trust and we are nearing an end to the restructuring programme. This, we believe, positions the portfolio well for the testing, but ultimately rewarding, conditions we see ahead. Top Five Contributors pence per share Calendar Year to Sept 214 Ocean Wilsons Holdings 39.2 Weir Group 8. Kofax 5.2 NCC Group 5.2 DV4 4.5 Total

5 TOP TEN HOLDINGS (%) Ocean Wilsons Holdings 35.9 Findlay Park American Fund 4. NCC Group 3.6 GAM Star Technology 3.2 DV4 3.2 Hansteen Holdings 2.6 Vulcan Value Equity Fund 2.5 Adelphi European Select Equity Fund 2.4 JO Hambro Japan Fund 2.4 BG Group 2.4 Total 62.2 No. of Holdings 44 SECTOR ANALYSIS (%) Strategic - Wilson Sons 24.5 UK Equity 32.8 Eclectic & Diversifying Assets 19.9 Core Regional Funds 22.5 Cash Funds.3 Commitments & Financing. of which Unquoted 9.6 ANALYSIS OF ASSETS ( M) Total Investment Net current assets/(liabs) -.6 Total assets Short-term borrowing -3.1 YTD revenue / (loss) 3.9 Net assets Gearing 1% Net Cash 1% Listed Investment Company holdings where the investee company has a policy that does not limit them to investing less than 15% of gross assets in other listed Investment Companies (%): NONE 1 YEAR SHAREHOLDERS TOTAL RETURN RECORD NET ASSET VALUE TOTAL RETURN (%) 1 YEAR SHARE PRICE TOTAL RETURN (%) SEP4 SEP5 SEP6 SEP7 SEP8 SEP9 SEP1 SEP11 SEP12 SEP13 SEP SEP4 SEP5 SEP6 SEP7 SEP8 SEP9 SEP1 SEP11 SEP12 SEP13 SEP14 NAV cum income Benchmark Ord. Share A Ord. Share FTSE All Share MSCI ACW + FM Sources: Hansa Trust internal, unaudited, data; Morningstar; FTSE FINANCIAL PERFORMANCE STATISTICS (%) Last Quarter YTD 1 Yr 3 Yrs 5 Yrs 1 Yrs Net Asset Value (#) Total Return on Net Asset Value(#) Benchmark Share Price Ordinary Total Return on Ord. Shs (#) Share Price A Ordinary Total Return on A Ord. Shs (#) FTSE All-Share Index Total Return FTSE All-Share (#) MSCI ACW & FM Index Sources: Hansa Trust internal, unaudited, data; Morningstar; FTSE FCA STANDARDISED PERFORMANCE INFORMATION 29Q3 to 21Q3 to 211Q3 to 212Q3 to 213Q3 to 21Q3 211Q3 212Q3 213Q3 214Q3 Total Return %age Ord Total Return %age A Ord Sources: Hansa Trust internal, unaudited, data; Morningstar; FTSE 5

6 LAUNCH DATE 1912 (name changed to Hansa Trust in October 21) INVESTOR SECTOR UK Growth CAPITAL STRUCTURE 8,, Ordinary shares of 5p and 16,, A non voting Ordinary shares of 5p. 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. YEAR END 31st March DIVIDEND Interim(s) ex date 3 October & payment date 28 November and ex date April & payment date May Final ex date June, payment date August. DIRECTORS R.A. Hammond-Chambers, Chairman. W.H. Salomon, J. Davie, Lord Oxford, Prof. G.E. Wood OWNERSHIP Board of Directors and connected parties own or are interested in 52.49% of the Ordinary shares. PORTFOLIO MANAGER Hansa Capital Partners LLP authorised and regulated by the Financial Conduct Authority (FCA) MANAGEMENT FEE 1% p.a. of NAV (excluding the holding in Ocean Wilsons) payable monthly BENCHMARK 3 year rolling average composite of 5 year Govt.Bond Yield (with interest being re-invested semi annually) + 2% from 1 April 23 INVESTMENT GOALS & POLICY To achieve growth of shareholder value, Hansa Trust PLC invests in a portfolio of special situations where individual holdings or specific sectors may constitute a significant proportion of the portfolio or that of the equity of the companies concerned. This investment approach may produce returns which are not replicated by movements in any market indices. Performance is measured against an absolute benchmark. Investments are intended to add value over the medium to longer term through a non-market correlated, conviction based investment style. FCA INVESTMENT RESTRICTION It is the stated policy of the Board not to limit investments in Investment Companies to less than 15% of gross assets as detailed in the FCA Listing Rules Chapter 21.2 (i) INVESTOR INFORMATION The Company currently manages its affairs, so as to be a qualifying investment trust for ISA purposes for both the Ordinary and A non voting Ordinary shares. It is the present intention that the Company will conduct its affairs so as to continue to qualify for ISA products. In addition, the Company currently conducts its affairs so that the shares issued by Hansa Trust PLC can be recommended by Independent Financial Advisers to ordinary retail investors, in accordance with the Financial Conduct Authority s (FCA s) rules in relation to non-mainstream investment products, and intends to continue to do so for the foreseeable future. The shares are excluded from the FCA s restrictions which apply to non-mainstream investment products, because they are shares in an investment trust. FATCA Hansa Trust is registered as a Reporting Financial Institution with the US IRS for FATCA purposes. CONTACT DETAILS For further information from Portfolio Manager & Corporate Secretary Hansa Capital Partners LLP 5 Curzon Street London W1J 7UW AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY Phone: Fax: hansatrustenquiry@hansacap.com Website: INVESTMENT ROUTES Hansa Trust PLC does not provide access for investment into the Company AVAILABLE WITHIN ISA & Savings Schemes WRAPPER PRODUCTS (through third party Plan Managers) AVAILABLE OUTSIDE Direct Dealing through investors own stockbroker/ WRAPPER bank facilities Current and historic factsheets, current share prices and published reports are available on our website at FUND CODES Sedol No: O AO ISIN No: O GB AO GB RIC Code: HAN.L (Ordinary) HANA.L ( A Ordinary) Bloomberg Code: HAN LN (Ordinary) HANA LN ( A Ordinary) # IMPORTANT INFORMATION With effect from 1 June 28 Net Asset Values and returns have been restated on a cum income basis in accordance with the practice of the Association of Investment Companies of which Hansa Trust PLC is a member. Total Returns on Net Asset Value and Shares have been sourced from unaudited internal management information and from the Close WINS Investment Trusts database, and assumes all dividends are re-invested. Other than Standardised Performance Information prices quoted are mid price and performance returns are mid to mid. Risk Warning: The information provided here has been issued by Hansa Capital Partners LLP, which is authorised and regulated by the Financial Conduct Authority. Share and performance information has been compiled by Hansa Capital partners LLP. Past performance is not necessarily a guide to future performance as market and exchange rate movements may cause the value of shares and income from them to fall as well as rise, and an investor may not get back the amount invested. Investment Trust share prices may not fully reflect underlying net asset values. The spread on Investment Trusts typically averages 1-2% each way on the mid-market price (the price half way between the bid and offer prices). However, investors wishing to invest in Hansa Trust A shares should note that the market for these shares is at times quite illiquid which leads to a large spread between the buying and selling prices, the bid to offer spread. For example, for the A shares, as at 3 September 214 the bid to offer spread was 1.19%*. *Source: Bloomberg 6