Strategic Update

RNS Number : 1950F

Hansa Trust PLC

22 April 2014

 



HANSA TRUST PLC (the "Company")

Strategic Update

Investment Strategy Review

The Company's investment policy is to invest in a portfolio of quoted and unquoted special situations, with the objective to achieve growth of shareholder value. Historically the Investment Manager, Hansa Capital Partners, has sought to implement this policy on behalf of the Company through the identification of special situations in UK equities and a strategic stake in Ocean Wilsons Holdings Ltd ("OWHL").

The Board of Directors of the Company has conducted a review of the way in which the Company executes its investment strategy and its offering to shareholders.  Whilst continuing to make investments in special situation UK equities, the Board is broadening its strategy to include exposure to other asset classes and geographies through a dynamic asset allocation process.

As a consequence of this review the Board, in conjunction with its Investment Manager, has begun making a number of changes to the way in which the portfolio is invested.  These changes, whilst not new to the Company's investment approach, represent the exciting next steps in the Company's evolution.

These changes have been driven by both developments in the global marketplace and a desire to take better advantage of the expertise and resource available to us at our Investment Manager.    The Company will retain its natural bias towards equities, reflecting the Company's long-term investment horizon; however, the flexibility to hold other asset classes that help preserve capital will be increasingly valuable as valuations in equity markets from time to time become extended and the business cycle matures.

Typically, the non-UK equity exposure will be through funds managed by third party managers with whom the Investment Manager has a well-developed network of contacts.  Importantly, these funds will complement our UK equity exposure, as we seek to identify those managers whose funds have superior long term returns. Many of these funds will not be readily available to the individual investor. We are always on the lookout for unconventional investments, which larger, more traditional funds do not normally invest in.  These more eclectic investments range from those sectors benefiting from structurally higher growth to assets which we believe stand on unwarranted discounts to their true intrinsic value, including other investment trusts.

This investment approach has led us to consider our portfolio across four different areas: UK Equities; Core Funds; Eclectic & Diversifying Funds; and Strategic Assets, each of which is expected to represent approximately 25% of the portfolio in due course; the weightings will vary reflecting the opportunities that exist at that time.

In light of this, the Company will in future show its holding in OWHL as two separate investments. Our indirect investment in Wilson Sons, the Brazilian maritime services provider, via our holding in OWHL, will be shown as a Strategic Asset; our interest in the investment portfolio held by OWHL's subsidiary, Ocean Wilsons Investments Ltd, will be reported within the Eclectic & Diversifying investment portfolio to give shareholders greater clarity of their underlying exposure through the Company.

Dividends

The Company has always sought to enhance shareholder value by distributing most of its net income annually by way of dividends. As the portfolio profile changes, and in light of the fact that some of the investments may not distribute any income, the level of cash income received by the Company may vary.

The Board wishes to provide shareholders with a greater degree of certainty in the level of dividends which they can expect to receive, by declaring annually a minimum dividend which the Company expects to pay, barring unforeseen circumstances, for the following financial year and to pay it by way of two similar interim dividends per year. The first will be paid in November during the financial year with the second being paid in the May following the end of the financial year. The Company expects the dividend to grow over time reflecting the longer term returns of the portfolio. If circumstances are such that the level of cash income generated by the portfolio is insufficient to meet the dividend commitment, the shortfall may be made up by the Company's reserves to maintain the level of dividends. Under certain circumstances an extra, and final, dividend may be proposed at the Company's Annual General Meeting.

In light of this revised dividend policy, the Company will propose, at the upcoming AGM, a resolution to change the Company's Articles of Association, which will include a provision for the payments of dividends from capital reserves to provide the necessary flexibility.

 

END

 

 

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