Hansa Trust. Endowment-style fund with a flexible approach. Investment strategy: Broader, still equity biased

Transcription

1 Hansa Trust Endowment-style fund with a flexible approach Investment trusts Hansa Trust is differentiated by its focus on special situations and significant indirect holding in Wilson Sons, the quoted Brazilian maritime services business. These features remain but the recent evolution of investment strategy will lead to a broader exposure both geographically and by asset class, achieved primarily through funds that are not readily available to individual investors. This has the potential to widen the appeal of the trust and, together with a strengthening of NAV performance over the last 12 months, to contribute to a narrowing of the 22% discount. 12 months ending Share price NAV Absolute benchmark FTSE All-Share Bovespa 31/5/ /5/12 (23.8) (17.5) 2.9 (8.) (29.4) 31/5/ (5.4) 31/5/ (17.7) Note: All total return in % and in sterling terms. Investment strategy: Broader, still equity biased Following a review by Hansa Trust s board and the timely appointment of Alec Letchfield as CIO at manager Hansa Capital Partners, the trust is broadening its investment mandate, reducing its UK equity focus and moving towards a roughly even split between four silos: (1) UK equity special situations (managed by John Alexander); (2) strategic (Wilson Sons); (3) eclectic and diversifying assets (funds); and (4) core funds. The investment approach is benchmark unaware, fundamentally based, long-term and high conviction. A framework of asset class valuation measures and indicators is used to help provide a consistent basis for decision making. The manager believes that long-term strategic allocations should be driven by valuation, while tactical adjustments will be made depending on a view of the economy s position within the business cycle. Hansa Capital Partners is the family office of the Salomon family, whose trust has a 52.3%, holding in the ordinary voting shares of Hansa Trust. This means there is an alignment of interest between manager and shareholders while the network and experience of the manager give access to third party managers that would not generally be available to individual investors. There is also a natural emphasis on long-term wealth preservation and hence an equity bias. Outlook: Multi-asset approach mitigates equity risk While there are fluctuating macroeconomic and geopolitical concerns, the trend in economic growth globally has been generally favourable. This should be encouraging for equities. The Brazilian background appears more difficult but expectations have already adjusted to reflect this, while Wilson Sons itself has reported strong progress and is set to reap the benefits of large investments over recent years, especially in the form of higher dividends. Valuation: Scope for persistent discount to narrow The discount has narrowed to the low end of its recent range at c 22% (or about 28% on a look-through NAV basis). Continued NAV performance improvement and wider appreciation of the revised investment approach could be catalysts for a further narrowing. 9 June 214 Price Ord 942.p Price A share 94.p Market cap 227m AUM 293m NAV* 1,23.74p Discount to NAV (A shares) 21.9% NAV** 1,232.65p Discount to NAV (A shares) 23.7% Yield 1.75% *Excluding income. ** Including income. Data at 5 June 214. Ord. voting shares in issue A shares in issue Code Ord/A shares Primary exchange AIC sector 8m 16m HAN/HANA LSE UK Growth Share price/discount performance* Share Price 1,2 1, Five-year cumulative perf. graph week high/low 11p 735p NAV* high/low 1,242.2p 99.78p *Excluding income. Gearing Gross % Net cash 4% Analysts May/13 Jun/13 Jul/13 Aug/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14 Feb/14 Mar/14 Apr/14 May/14 HAN Equity Discount May/9 Sep/9 Jan/1 May/1 Sep/1 Jan/11 May/11 Sep/11 Jan/12 May/12 Sep/12 Jan/13 May/13 Sep/13 Jan/14 May/14 HAN Equity Absolute benchmark Andrew Mitchell +44 () Martyn King +44 () investmenttrusts@edisongroup.com Discount (%) Hansa Trust is a research client of Edison Investment Research Limited

2 Exhibit 1: Trust at a glance Investment objective and fund background Recent developments Hansa Trust seeks to achieve growth of shareholder value through investing in a combination of quoted and 22 April 214: Strategic update announced with the unquoted special situations together with exposure to asset classes and geographies, primarily through board deciding to broaden strategy and change the investment in third party-managed funds. The Salomon family trust has a majority holding in the ordinary way the portfolio is managed with the intention that (voting) shares of 52.3% and also exercises influence over the largest investment, Ocean Wilsons, through UK equities (currently over 5%), core funds, eclectic the combination of the Hansa Trust holding and a direct holding giving a shareholding of over 5%. Ocean and diversifying funds and strategic assets will Wilsons in turn owns 58.25% of Wilson Sons, a quoted Brazilian marine services company. Both Hansa account for roughly 25% each. Trust and Ocean Wilsons are run with a long-term view. The trust has an absolute benchmark: the rolling three-year average of a five-year UK government bond plus 2%. Forthcoming Capital structure and fees Fund details AGM July 214 Ongoing charge.94% Group Hanseatic Asset Management LBG Preliminary results June 214 Net cash 4% Manager Hansa Capital Partners Year end 31 March Annual mgmt fee 1% of NAV ex Ocean Wilsons Address 5 Curzon Street, Dividends paid December, August Performance fee None London, W1J 7UW Launch date 1919 Trust life Indefinite Phone +44 () Continuation vote No Loans, facilities 3m facility Website Dividend policy and history Shareholder base (as at 31 March 214) The company aims to grow dividends over the long term, paying out earnings meaning that dividends can fluctuate, as in Salomon family & trusts (17.8%) 25 Alliance Trust Savings (8.1%) 2 Henderson Global Inv. (5.%) Capital Ptrs (4.7%) Brewin Dolphin (4.1%) Scottish Widows Inv. Ptr (2.8%) DPS (p) Full year div payment Special dividends Smith & Williamson IM (2.8%) Other (54.7%) Hansa Trust portfolio by silo (as at 3 April 214) Strategic - Wilson Sons (23.%) Hansa Trust indicative portfolio following changes in progress Strategic - Wilson Sons (25%) UK equity special sits. (51.2%) UK equity special sits. (25%) Eclectic & diversifying (14.5%) Core funds (7.%) Eclectic & diversifying (25%) Cash funds (4.4%) Core funds (25%) Top 1 holdings in Hansa Trust portfolio (as at 3 April 214) Company Country Sector Industry Portfolio weight % 3 April April 213* Ocean Wilsons Holding Bermuda Industrials Transportation and logistics Of which: Wilson Sons Industrials Transportation and logistics 24.3 OWIL portfolio Fund 11.3 Cash Deposits 4.6 Weir Group London Industrials Machinery Findlay Park American Fund US Fund 3.8 NCC Group London Technology Software Experian Group London Technology Technology services Herald Investment Trust London Investment Trust BG Group London Energy Oil, Gas & Coal Hansteen Holdings London Financials REIT 2.7 DV4 London Financials Unquoted property fund 2.7 Top 1 companies 66.7 Source: Hansa Trust, Bloomberg, Edison Investment Research. *Note: Top 1 table - where no figure shown for 213 not in top 1. Hansa Trust 9 June 214 2

3 Market outlook: Valuations ambivalent but still upside Prospectively, Hansa Trust will have three main geographical portfolio exposures (see page 5): UK approximately 33% (c 5% currently), Brazil 27% and US 23%. Economically, the exposures are and will be broader than this, given the international nature of many companies operations. In this context the broadly favourable trend in economic growth is encouraging for equities, despite continuing concerns over a wide range of issues including the level of growth in China, the threat of deflation in Europe and geopolitical risks (Ukraine, for example). The latest IMF projections (April) were little changed with world output expected to see growth of 3.6% and 3.9% for 214 and 215 respectively. Within this, UK forecasts were raised (2.9% and 2.5%) while Brazil s were trimmed (1.8% and 2.7%). In comparison with equities it seems reasonable, albeit consensual, to argue that the medium- to long-term risks are on the downside for many fixed income assets. It is appropriate to focus on Brazil briefly given the importance of Hansa s indirect strategic holding in Wilson Sons, the ports, maritime and logistics business. Brazilian GDP growth has been disappointing and there is a mixture of public discontent and political uncertainty ahead of the election in October. Having said this, market expectations appear to be low following a peak in 21 (Exhibit 2) so delivery of a government commanding greater confidence or any improvement in economic trend would be likely to be seen as clear positives for the market. In terms of valuation, Exhibit 3 illustrates that both P/E and price to book ratios are generally above their 1-year averages but, with the exception of the UK forward P/E, are not close to their high points. Emerging markets stand out as being relatively attractively valued (but not Brazil). Taken together this suggests that, while valuation alone is unlikely to cap equity performance, a more muted period is likely with stock-specific factors becoming more influential. This is likely to be particularly true for Hansa given the portfolio exposures, which are set to remain differentiated from market indices. Exhibit 2: World and Brazilian equity indices May-4 May-6 May-8 May-1 May-12 May-14 BOVESPA MSCI World Exhibit 3: Selected valuation measures P/E (forward) Last High Low 1 year ave. Last % of average World % UK % US % Brazil % Emerging Markets % Price to book World % UK % US % Latam % Emerging Markets % Source: Thomson Datastream. Note: Total return terms. Source: Thomson Datastream as at 4 June 214 Fund profile: Differentiated but now broader approach Launched in 1919, Hansa Trust has the Salomon family trust as a majority, 52.3%, shareholder of the ordinary voting shares (these account for 8m out of a total of 24m shares in issue). In 23 the trust adopted an absolute benchmark and put the whole of the investment process under the management of Hansa Capital Partners. The investment approach is characterised by a long-term view, investment in core and diversifying funds that would not otherwise be easy for individual investors to access, a portfolio of special situation UK equities and a significant exposure to one investment, Ocean Hansa Trust 9 June 214 3

4 Wilsons 1 (and hence, indirectly, Wilson Sons, a quoted Brazilian maritime services company). Portfolio allocation is moving towards approximately 25% in each of four silos: strategic (Wilson Sons), UK equity special situations, eclectic and diversifying assets, and core funds. This evolution in approach encompasses a willingness to broaden the asset class and geographical exposure of the trust and the introduction of a greater emphasis on consistency of process. As before, the absolute, rather than equity index, benchmark reflects a focus on wealth protection/creation. The benchmark used is the rolling three-year average of a five-year UK government bond plus 2%. Exhibits 4 and 5 set out the ownership structure of Hansa Trust/Ocean Wilsons and an indication of the current underlying NAV exposures. The Ocean Wilsons fund portfolio (OWIL), accounting for c 12% underlying NAV, is managed with a long-term outlook and a bias towards global and emerging market equities and private assets. It is categorised within Hansa Trust s eclectic and diversifying silo. Exhibit 4: Hansa asset ownership structure Exhibit 5: Hansa Trust look-through NAV exposure 26.4% Ocean Wilsons Holdings Hansa Trust 1% Fund and equity holdings Ocean Wilsons Holdings Hansa Trust 58.25% 1% Wilson Sons Marine svcs. 3% OWIL Fund portfolio 12% Fund and equity holdings 58% Wilson Sons OWIL (Fund portfolio) Market value = 386p NAV = 162p NAV = 752p = total 13p Source: Edison Investment Research Source: Edison Investment Research. Note: % figures based on look-through values. OWIL based on end December 213 value. Fund manager view: A broader allocation Alec Letchfield joined Hansa Capital Partners as chief investment officer (CIO) in September 213 from HSBC where, as CIO for Wealth, he led the development of a multi-asset class offering for private clients and ran a substantial multi-asset portfolio including direct equity and bond investments in the UK together with global exposure, primarily through funds. Letchfield comments that this experience and the expertise of the existing Hansa Capital investment team in small/mid-cap UK equities and fund selection fed into the evolution of strategy for managing Hansa Trust investments announced in April this year. He lays emphasis on the benefit of the well-established network of contacts with third party fund managers which provides access to funds that would not be available to individual investors. The new four-silo format will have broadly similar allocations to: (1) core allocations to highly regarded, frequently difficult to access, funds providing regional exposure according to the managers top-down view; (2) eclectic and diversifying primarily funds that will diversify the equity exposure and including the Ocean Wilsons fund portfolio; (3) UK equities special situations, run by existing manager John Alexander; and (4) strategic stakes Wilson Sons. The manager monitors a dashboard of market valuations and indicators on a consistent basis providing a disciplined framework within which to assess portfolio position through market cycles (see Investment process section below). Currently the manager sees current equity values, which have been broadly stable since the start of the year, as being reasonable and within past ranges. Equities therefore remain the favoured asset class particularly given the lack of a viable alternative for investors. The prospects for developed market government bonds are seen as unpromising, in private equity high valuations on completed deals are noted, and commodities are generally seen as having weak prospects. 1 Further discussion of Ocean Wilsons Holdings and Wilson Sons can be found in the Edison research notes published 31 January 214: Oceans of potential and 14 May 214: Higher cash flow drives increased payout. Hansa Trust 9 June 214 4

5 Asset allocation Investment process: Looking for long-term potential Hansa Capital Partners follows an investment process based on a number of core beliefs/characteristics: a focus on long-term returns, a belief in fundamental analysis, conviction investing (not over-diversifying), exclusivity (relating to fund holdings, which are not generally available to retail investors), benchmark unaware, alignment (directors and investment managers invested alongside other shareholders) and a global, multi-asset class view. Implementation follows a disciplined approach from asset allocation through equity and fund selection to portfolio construction. Long-term strategic allocations are driven by valuations and tactical positions by the business cycle, with a willingness to move between asset classes as these change. Equity selection is typically of special situations and outside the mega-cap stocks. For the core fund investments the manager seeks to identify managers capable of providing compound growth over many periods taking into account a range of factors including performance, manager experience, process, fund structure, fees, liquidity and key man risk. Current and pro-forma portfolio positioning The end April portfolio by silo is illustrated in the right hand column in Exhibit 6, with UK equity special situations 51% and the strategic holding in Wilson Sons (23% via Ocean Wilsons) accounting for over 7% of the total. As already highlighted, under the new, broader, strategic approach each silo (excluding cash funds) will account for broadly a quarter of the portfolio; the manager expects the revised structure to be in place by the end of the year. Therefore, for investors, the more relevant analyses are probably the pro-forma exposures by sector, geography and asset class given in the first three columns of Exhibit 6. These highlight the influence of Wilson Sons on the sector prominence of industrials and the contribution from Latam geographically. The UK special situations segment is set to become both smaller and more focused on genuine special situations while increased fund holdings will lend greater diversity as well as giving access to funds that are not normally available to individual investors. Exhibit 6: Pro-forma and existing portfolio analysis (%) Pro-forma Sector Pro-forma Geography Pro-forma Asset class End April 214 by silo Industrials (incl Transport) 35 UK 33 Direct equity 28 UK equity special sits. 51 Financials 19 Latin America 27 Wilson Sons 26 Strategic - Wilson Sons 23 Information Technology 16 US 23 Long-only equity 2 Eclectic & diversifying 15 Telecommunications 8 Developed Europe 6 Long/short equity 1 Core funds 7 Consumer Discretionary 7 Japan 5 Ocean Wilsons Investments 9 Cash funds 4 Healthcare 5 Asia Pacific 5 Long/short credit 3 Materials 4 Middle East & Africa 1 Listed investment trust 3 Energy 3 Emerging Europe 1 Global macro 2 Consumer Staples 3 Utilities Source: Hansa Trust. Note: Ecletic & diversifying includes Ocean Wilsons Investments. Rounding differences mean totals do not reconcile. Performance: Long-term benchmark outperformance The trust s NAV total return performance has been ahead of its absolute benchmark over one, five and 1 years, and only modestly behind over three years. The manager notes that the benchmark is primarily seen as a comparative measure over the stock-market cycle rather than shorter periods while performance is also viewed in the context of stock market indices. The Brazilian exposure, through Ocean Wilsons/Wilson Sons, has tended to act as a brake on performance given the weak performance of the Bovespa over three years. As a result Hansa s NAV return lagged the FTSE All Hansa Trust 9 June 214 5

6 Share over three and five years and the MSCI World over three years. Encouragingly, Wilson Sons (and Ocean Wilsons) outperformed the Bovespa index over this period, particularly in the last six months. With the benefit of this and the investment portfolio performance the trust has generated positive returns in all the periods shown and over ten years generated an annualised return of 12.9% compared with 8.9% for the FTSE All Share index. Exhibit 7: Investment trust performance Price, NAV and benchmark total return performance, one-year rebased Price, NAV and benchmark total return performance (%) May/13 Jun/13 Jul/13 Aug/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14 Feb/14 Mar/14 Apr/14 May/14 Performance m 3 m 6 m 1 y 3 y 5 y 1 y HAN Equity HAN NAV Absolute benchmark HAN Equity HAN NAV Absolute benchmark Source: Thomson Datastream, Hansa Trust, Edison Investment Research. Note: Three-, five- and 1-year figures are annualised. Exhibit 8: Share price and NAV total return relative performance (geometric calculation) 1 month 3 months 6 months 1 year 3 years 5 years Price relative to Absolute benchmark (1.4) (1.8) 23.6 NAV relative to Absolute benchmark (2.2) 56.2 Price relative to FTSE AllSh (2.4) (26.4) (25.3) NAV relative to FTSE AllSh (.9) (19.3) (5.6) Price relative to Bovespa (.7) NAV relative to Bovespa.9 (8.5) Price relative to MSCI World (3.8) (28.9) (25.9) NAV relative to MSCI World (2.2) (22.) (6.3) Source: Thomson Datastream, Hansa Trust, Edison Investment Research. Note: Data to end-may 214, cumulative performance. Discount: Narrower but still wide The board s discount policy is to encourage market demand for the shares both by ensuring that the company has an investment policy likely to produce above average returns over the long term and by promoting the company to the same end. The company has also sought to make clear the level of discount to the look-through NAV (this includes the market value of Wilson Sons and the NAV of the OWIL portfolio rather than the market price of Ocean Wilsons). The gap between the look-through NAV and the stated NAV has narrowed as the discount on which Ocean Wilsons trades has fallen and currently the look-through discount is 28% for the A shares versus the stated NAV discount of 22%. This compares with 34% and 25% respectively when we published our initiation note on Hansa Trust 8 October 213 (Patient investor, wide discount). Exhibit 9: Discount over 1 years (NAV ex-income) May/4 Nov/4 May/5 Nov/5 May/6 Nov/6 May/7 Nov/7 May/8 Nov/8 May/9 Nov/9 May/1 Nov/1 May/11 Nov/11 May/12 Nov/12 May/13 Nov/13 May/14 Source: Datastream, Edison Investment Research. Note: Positive values indicate a discount. Hansa Trust 9 June 214 6

7 Even though the double discount to the underlying NAV has narrowed and, as Exhibit 9 shows, the stated discount is at the lower end of its recent range (three-year average 23%), there is still significant potential for a further narrowing of discount when seen from a longer-term perspective (1-year average 11%). Continuation of the stronger NAV performance seen over the last year and the potential for the revised investment strategy to create a broader investor base for the shares could well see a new, lower, discount range established. Capital structure and fees Hansa Trust has 8m ordinary shares and 16m A non-voting shares and is authorised to repurchase up to 14.99% of its A non-voting ordinary shares. The trust may employ gearing and has a borrowing facility of 3m, which has not been drawn on significantly in recent periods. The trust has an unlimited life. Hansa Trust pays a flat management fee of 1% per year of the NAV, excluding the value of Ocean Wilsons. There is no performance fee. The total expense ratio for the last financial year was.94%. Dividend policy The company has previously paid out most of its earnings as dividends meaning that payments fluctuated according to income. Reflecting the fact that it has completed a large investment cycle, Wilson Sons in March announced a new dividend policy under which it will pay out 5% of earnings rather than the previous 25% and declared a near 5% increase in dividend payment relating to 213. Reflecting this Ocean Wilsons increased its dividend by 43%. Following the adoption of the revised investment strategy, the Hansa Trust portfolio will include increased fund holdings, some of which may earn but not distribute dividends suggesting a potential reduction in cash income. As a result the board has said it wishes to provide greater certainty by declaring annually a minimum level of dividend the company expects to pay by way of two interim dividends. In some circumstances an extra, final dividend may be paid. The company aims to increase dividends over the long term and is prepared to look through near-term cash income shortfalls and, to provide additional flexibility, will seek permission to pay dividends from capital reserves at the forthcoming AGM. We note that the significant increase in the Wilson Sons dividend payout ratio has the potential (subject to earnings) to more than offset the impact on cash income of increased fund holdings in the portfolio. The dividend policy at Ocean Wilsons is to pay out the full dividend it receives from Wilson Sons plus a percentage of the assets employed in the investment portfolio, as determined by the board. Peer group comparison The absolute mandate, presence of the strategic holding in Ocean Wilsons and its revised, broader geographical and asset allocation approach qualifies any comparison of Hansa Trust with other investment companies in its AIC UK category. In Exhibit 1 we have addressed this in two ways: by selecting trusts with absolute/real growth/multi-manager approaches, largely from the Global sector; and by showing, for reference, the averages for the UK and Global sectors. Hansa s NAV total return is ahead of the selected peer averages for one and 1 years while the Sharpe ratio (measure of risk adjusted return) is above average over one year but lower than the average over three years and (not shown) similar to the average of 1. at.9 over five years. In trying to explain the unusually wide discount to NAV of over 2% the majority holding of the Salomon family in the ordinary shares and the unusual makeup of the portfolio are likely to be cited Hansa Trust 9 June 214 7

8 as factors. Against this, there is a strong alignment of interests between the family and other shareholders while the change in investment approach has the potential to broaden the appeal of the shares. The strengthening of NAV performance over last year and the respectable longer-term record would also be grounds for a significant narrowing of the discount. Exhibit 1: Hansa Trust peer group comparisons Mkt Cap NAV TR NAV TR NAV TR 5 NAV TR Sharpe1y Sharpe Discount Ongoing Perf Net Yield m 1 Year 3 Years Years 1 Years (NAV) 3y (NAV) (cum fair) Charge Fee Gearing (%) British Empire Securities Yes EP Global Opportunities No Establishment Inv. Trust Yes Fidelity Special Values No Hansa Trust No Independent No Lindsell Train Yes Personal Assets No RIT Capital Partners Yes Ruffer Investment Co No Witan Yes Selected average Global sector average UK sector average Source: Morningstar. Notes: TR=total return. The Sharpe ratio is a measure of risk-adjusted return. The ratios we show are calculated by Morningstar for the past 12- and 36-month periods by dividing a fund s annualised excess returns over the risk-free rate by its annualised standard deviation. Net gearing is total assets less cash/cash equivalents as a percentage of shareholders funds. As at 2 June 214. The board The board comprises five directors, all non-executive and, with exception of William Salomon, independent of the manager. With year of appointment to the board in brackets they are: Alex Hammond-Chambers (chairman, 22), William Salomon (the senior partner of Hansa Capital Partners LLP: the investment manager and company secretary), Jonathan Davie (213), Lord Oxford (213) and Geoffrey Wood (1997). Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 1 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 4 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority ( Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 24755) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [ ] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [ ]. DISCLAIMER Copyright 214 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Miton Worldwide Growth Investment Trust and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 22(a)(11) of the Investment Advisers Act of 194 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison's solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are "wholesale clients" for the purpose of the Financial Advisers Act 28 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). It is not intended for retail clients. This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a "personalised service" and, to the extent that it contains any financial advice, is intended only as a "class service" provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited ("FTSE") (c) FTSE [213]. "FTSE(r)" is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE's express written consent. Frankfurt +49 () Hansa Schumannstrasse Trust 34b 9 June High Holborn 245 Park Avenue, 39th Floor Level 25, Aurora Place Level 15, 171 Featherston St Frankfurt Germany London +44 () London, WC1V 7EE United Kingdom New York , New York US Sydney +61 () Phillip Street, Sydney NSW 2, Australia Wellington +64 () Wellington 611 New Zealand