6 Jul 2010 07:00
06 July 2010
Hansteen Holdings PLC ("Hansteen" or the "Company")
DIVIDEND POLICY AND CURRENCY HEDGING
Hansteen Holdings (LSE:HSTN), the investor in UK and continental European real estate, announces that it has adopted a new dividend policy and that it has put in place Euro/Sterling currency hedging.
Dividend Policy
Hansteen will now pay two dividends each financial year instead of the single annual payment which has been its practise to date.
For the financial year to 31 December 2010, the Company intends to pay an interim dividend representing approx. 40% of the year's total dividend on 25 November 2010. The second dividend will be payable on 26 May 2011.
The total dividend paid in the previous year was 3.2 pence per share.
Currency Hedging
Approximately 70% of Hansteen's net assets are currently Euro denominated, with the result that the Sterling value of its net assets vary with the movement in the exchange rate. In order to mitigate the risk of a substantial fall in Sterling values due to devaluation of the Euro against Sterling, Hansteen has today entered into a currency option giving it the right to buy Sterling at a level of €1.42 to the £ in three years time. Details of the deal are as follows:
This is a Euro put / Sterling call for a value of €200million, for a three year period. The strike price is €1.42 to the £. The premium paid for this option was €5.62million (£4.6million). The counterparties are Goldman Sachs (€100million) and Natixis (€100million).
As these instruments are options, the maximum potential loss the Company can record from these financial instruments, would be the premium paid.
The net effect of the option is that it provides a form of downside protection should there be a collapse in the Euro (i.e. the Euro falls by more than 15%). In this event a substantial majority of the group's net assets will be protected from the effect of further falls.
Morgan Jones and Ian Watson, Joint Chief Executives of Hansteen said: "Payment of a twice yearly dividend improves the manageability of our cash flow and recognises that a majority of our shareholders value income. It also underlines our continued confidence in the Company's ability to generate distributable cash.
"In the light of the recent volatility of the Euro, we have been monitoring the situation carefully and taken expert advice. We believe it was the right time to put a hedge in place to provide a floor in the event the Euro continues to suffer".
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