20
Nov

Nov 2018: Richemont – Scarcity value

November 20, 2018

Download PDF

Richemont – Scarcity Value

Nov 2018 (CHF65)

 

One of the fascinating aspects of our job is to assess how companies evolve over time – how they endure the inevitable shocks and stresses of the marketplace. If we are doing our job well, the true prospects of those businesses that we identify as Franchises, ought to remain undimmed, resilient or perhaps even enhanced in the face of such external shocks. The last few years have been an interesting test for one such Franchise of ours. In 2016 we noted that:

“(the business) is run by an exceptional industrialist whose stewardship of this family business over 30+ years has been exemplary. It is also a high return business with excellent and unique mega brands that thinks counter-cyclically. Best of all its management has shown itself to be extremely careful with capital”[1]

Notwithstanding such credentials, the last two to three years have tested the mettle of luxury goods behemoth Richemont and its inimitable Chairman Johann Rupert. Two years on, after a period of painful retrenchment and reorganisation, we are convinced that this is a great business and possibly, a cheap one too. Richemont’s shares at c.15.7x adjusted[2] P/E offer value (and optionality) for the investor seeking a quality, long-standing business with an excellent capital steward at the helm. A rare bird indeed.

2016-18: A review in five bullets
  1. It is now clear to us (and the company) that Richemont was unequivocally over-earning in the years 2010-2015 thanks to ‘exceptional’ Chinese corporate demand. The good news is that the then 15-20% sales cagr trend has now reverted to what we think is a more realistic, but still attractive, >7.5% sales cagr opportunity.
  2. Yet, observers of the business still seems confused, unsettled or indeed sceptical about luxury goods demand in general and especially in China. Having thought much about this, we are sanguine that “status” will forever remain a strong human desire. Richemont’s Maisons will offer plenty of status signalling opportunity for future generations.
  3. Some will say, Richemont got greedy in the infamous era of Chinese corporate ‘gifting’. Perhaps; but at least it had the fortitude to make the difficult decision to acknowledge the resulting over-earning and, more importantly, to revive and enforce the volume scarcity that is needed in this unique business. The company has reinstated its pricing power.
  4. Some might also say that we were wrong too to rely on Johann Rupert’s assertion that Richemont would only build, not acquire goodwill and that the €2.7bn YNAP[3] e-commerce stake buyout disproves our point. We would suggest that acquiring the 50% remaining stake in YNAP was very strategic with much optionality. Crucially, the stake reflects distribution assets and not brand goodwill of an acquired luxury brand. We remain very trusting in Rupert’s capital allocation skills and stewardship.
  5. Richemont’s core margins have now recovered. We estimate its long term compounding prospects are restored also.
Reflections on a business that was over-earning

Below, we expand in more detail on each of the five areas of focus referenced above. First though, a high level reminder on what attracted us to this share back in 2016. We point you to re-read our original in-depth work, but in simplistic terms, at that time, we saw:

  1. A portfolio of organically built, exceptional luxury brands which drove great returns.
  2. A great owner-manager who understood what was needed to protect those brands.
  3. And a long track record of executing on those strategies.

All three combine to form a rarity: a branded European Franchise with high returns that allocates capital very well. It’s a great business and we think its shares are cheap for the quality they offer.

So, a reflection of 2016-18 in some more detail:

1. Are we back on-trend?

The story of the Chinese sales slowdown experienced by Richemont and the luxury watch industry is not new news and we don’t feel the need to rehash the period in great detail here. However, we would like to comment on the impressive way in which Richemont learned from and dealt with the whole episode. In short, Johann Rupert showed impressive industry leadership in facing-up to the stark reality that his industry had ‘stuffed the channel’ so to speak. After a 2-year period of self-inflicted pain and enforced supply chain austerity, the Richemont business is today in far better shape. The period has caused major changes in management personnel of the Maisons, revised supply chain management (inventory tracking) and more brand protection (aka control of pricing).

Fig.1: Reversion to mean

 Source: Bloomberg, Holland Advisors

A few points on over-stocking, China etc.:

  • The Chinese market was clearly distorted as luxury goods were used as a ‘currency’ of sorts. Our experience has taught us that the Chinese market is opaque at the best of times, but it seems clear that subsequent government clampdowns on bribery and “gifting” did have a huge rebalancing effect – especially on the watch market. Here is an amusing perspective from an industry participant:

“Rolex is the watch you want on your wrist when you’re in a Third World country and revolution breaks out and there’s only one seat on the plane and there’s a guy standing there with a machine gun. You give him a Rolex and he will give you the seat. It’s kind of its own currency.” – Alexander Linz, Watch Advisor, on Rolex (but the same applies to Cartier)

  • The luxury goods industry – with its understandable aversion to disclosing granular prices and volumes – does not lend itself to hard quantitative analysis from the outside. Yet, a cursory look at Fig.1 clearly shows the over-build which really only became obvious with hindsight.
  • Richemont’s underlying sales growth trend today – at 5-10% rather than 15-20% seen in 2010-15 – is once again representative of retail end demand, we believe.
  • To his credit, Johann Rupert led the watch industry in forcefully reverting the business’ growth back to trend via the drastic action to repurchase stock from distributors throughout the supply chain. We discuss this enforced scarcity later in the note.

We also note that the high growth levels had, with hindsight, caused the supply chain to become too unwieldly, making it harder for producers to assess ‘sell-in’ (wholesale) and ‘sell-through’ (retail) mismatches. Supply and demand should be more in balance from now on.

  • Actual H1 2019 sales growth in now back to +8% YoY. In other words, the bulk of the excess looks to have been purged and Richemont is now in a better starting position to grow organically.

Perhaps, Richemont is even in a stronger position than before. In particular, we suggest the work done on supply chain management will benefit the company’s ability to closer track true demand and therefore, in the future allow more control over volume and pricing.

“Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better” – N.N. Taleb

2. The enigma of quantifying luxury goods demand

It seems to us that observers of the luxury goods market in 2018 remain very confused or sceptical about the industry’s prospects.

We mentioned earlier that the luxury goods market does not lend itself to quantitative analysis. But the problem that observers face in assessing future demand goes much further than a lack of financial disclosure or supply chain complexities.

Buying a Cartier Tank watch for say $10,000 is surely the extreme case of a discretionary purchase – and yet, we also know that over decades, luxury goods is a very resilient market due to the social signalling that it represents for its purchasers. Income distributions are more unequal than ever these days, but actually that is likely to only increase the need for social status markers.

So, first we look at the long-term track record (as per Fig.1) which has been realised with broadly the same portfolio over that period of time.

Then we go back to first principles to assess demand qualitatively and we ask ourselves – what is Richemont selling?

“Luxury products’ latent social function is to recreate a social stratification, especially needed in countries that cultivate the idea that they are classless societies (such as China or the United States)” – The Luxury Strategy

So, Richemont sells prestige and status (let’s leave aside the use as a currency for plane tickets!). Its medium for the delivery of such sought-after social standing is watches and jewellery created by artisans and valued for their scarcity, craftsmanship and longevity.

Then read the following definition of a luxury product (Fig.2) and ask yourself – will these attributes remain in demand ten or twenty years from now?

Fig.2: Defining luxury

The definition of a luxury product or service (via The Luxury Strategy) The luxury brand definition is comprehensive and consists Of 6 criteria: • a very' qualitative hedonistic experience or product made to last offered at a price that far exceeds what their mere functional value would command • tied to a heritage, unique and culture attached to the brand • available in purposefully restricteci and controlleci distribution • offered with petsonalized accompanying services xprcsenting a social marker, making the owner or beneficiary fee/ special, With a sense of privilege.  Source: The Luxury Strategy 

Another complication in quantifying demand today’s world is that the location of purchase of the bulk of luxury goods is typically not the same as the nationality of the consumer! Much of luxury spending is done by tourists – about one third of the c.$250bn global luxury goods market (i.e. c.$80bn) is derived from Chinese customers. Yet only a quarter to one third of this is actually spent on the Chinese mainland, the remaining $60bn spent by Chinese customers is done whilst travelling[4]. These Chinese customers are very sophisticated and are extremely well versed on pricing and currency arbitrage opportunities (hence the strong luxury goods demand in the UK post-Brexit when Sterling weakened!). Tiffany’s results last week are instructive in this regard – the company experienced strong demand from mainland China but weak demand from Chinese tourists. The following commentary from last week’s FT is also representative of the nuance of the Chinese luxury market and the “unease” that observers have in assessing demand.

“Shares of fashion and cosmetics groups were hard hit last month amid reports that Chinese authorities were stepping up border checks on travellers as part of a crackdown on the “daigou” trade, in which a network of Chinese tourists and Chinese nationals living overseas sell on highly sought-after consumer goods purchased abroad at prices lower than in shops in China… the ramp up in customs scrutiny — with social media reports of returning tourists being hit with eye watering import taxes on their suitcases of goods — has added further unease about the sustainability of the country’s demand for luxury goods. It is not clear how long the clampdown will last, however… China imposes hefty import tariffs on luxury goods. For example, it levies a 50 per cent duty on cosmetics, one of the dominant daigou categories, and that is before the imposition of the standard 17 per cent value added tax that is added to imported luxury products.” – FT, Nov 28, 2018

The Chinese authorities are striving to shift aggregate spending whilst abroad back to the mainland via taxes and tariffs. Our sense is that Richemont is fully aware of this trend and the YNAP and Aliababa JV deals are key elements in its reaction to this trend.

A wider point could also be observed here, and this is the lengths people are willing to go to, to acquire these items (risking arrest). This is not an ex-growth industry – on that point we are sure.

3. Enforcing scarcity aka “doing the difficult thing”

“The luxury industry is built on a paradox: the more desirable the brand becomes, the more it sells but the more it sells, the less desirable it becomes” – Patrick Thomas, former CEO of Hermès

Richemont and the luxury goods sector are the polar opposites of those low-cost, high volume businesses that we love so well – the Ryanair’s, Wetherspoons and Costco’s of the world. A €9.99 flight or a £5.99 lunch compares starkly with a $10,000 watch. Ryanair sells to c.120m customers, we think Richemont sells about 0.4m Cartier watches in a year. So this is a very different beast to analyse. Both possess moats we conclude but one is of scale and the other brand rarity.

The corollary of these huge price points is that the truly great luxury companies, therefore, have to be extremely disciplined and exercise great restraint in limiting their production volume in order to preserve their price points. Ferrari is a great example of successfully limiting production in the past. In this regard, it does seem likely that Richemont let a little indiscipline creep-in and allowed its production to fill what it perceived as market demand.

Fig.3: The 2016 “glut”

“In some ways, I think much of the industry has lost sight of the fact that we are making luxury goods, and that means things which should be desirable and at least relatively rare. But when I see the big groups pushing so hard to increase production, to make ever more models and to open mono-brand stores which squeeze traditional retailers, I start to become a little bit afraid — because what will happen if the customer suddenly realises that this hard sell indicates that he or she is being encouraged to buy something that is not really rare at all, but that is more-or-less mass produced?…Scarcity must remain the key — lose that, and I think the attraction [of a luxury watch] is gone”

Source: Watch maker Jorn Werdelin, The FT, March 2016

To say that Richemont subsequently ‘grasped the nettle’ in this regard is maybe an understatement. Over FY17 and FY18, the company took a c.€500m hit to sales and almost €400m hit to gross margin in its efforts to retrieve a semblance of pricing power in its over-stocked supply-chain.

What really marked Rupert’s leadership on correcting this problem was his willingness to not care about a short term drop in profits.

“Journalist: Richemont has a rock solid balance sheet, with a net cash position of over 5 billion. Any plans with that pile of money?

Johann Rupert: “I have seen several of those unexpected train crashes. It’s like an insurance policy or a cash fortress, as we call it. A similar slowdown like the one we saw in the last two years already happened around 14 years ago. There is one difference: Today the cash position and cash flow is still at a good level. I don’t really care about a short-term drop in profits.” [March 24, 2017]

4. Revisiting Rupert’s ‘Building goodwill, not buying it” proclamation

“I see moats and barriers to enter this market. I don’t want to wake up some morning to see a new technology or some disruptor has killed my business. It is a very rewarding business. I have recognized: If you do your job well, there is no real threat. You can kill your business only through your own stupidity.” – Johann Rupert

In our original work on Richemont, we made a big deal about Johann Rupert’s capital allocation prowess and specifically, his stated intention to build rather than buy goodwill. So, has this changed? In short, no. At that time (July 2016), Richemont already owned 50% of the Yoox-Net-a-Porter entity – an accumulated stake which had cost in aggregate close to €500m. The purchase of the remaining 50% stake earlier this year (for €2.7bn) is clearly substantial but, we suggest not, a marked deviation from Rupert’s longstanding approach to brand-building.

As mentioned above, the YNAP acquisition reflects Richemont attempts to adapt to changing industry dynamics. The need to preserve brand strength and pricing power relies heavily on volume containment and thus clear insight into true demand. A more simple supply chain helps this – a supply chain more internally owned helps even more. Online channels fit both bills. Fig.4 shows this industry focusing on growth in a channel it can control (i.e. retail) over one it historically has not (i.e. wholesale).

YNAP is also clearly an attempt to get younger consumers on the luxury ‘ladder’ and the JV announced with Alibaba and the acquisition of Watchfinder are further extensions of this.

Fig.4: Distributing the goods

Luxury's increasing vertical integration of distribution  Source: Bain & Co

Consistent with the investment in omni-channel is the 7.5% (c.€400m) stake building in Swiss-based duty free company Dufry. Similarly, luxury peer LVMH has owned the Asia-focussed duty-free business DFS since acquiring a majority stake in 1996. Overall, we note again, the broad and significant effort that Richemont is making to better understand and control their supply chain post its experiences in 2012-2016 in China.

“I am not going to buy anything for the time being. Our goal is to create our own goodwill, not to pay goodwill to other shareholders. If I am going to do something then I will allocate more resources to some of the existing Maisons. We can give our brands funding on above their request.” – Johann Rupert, March 2017 (repeating himself from some years earlier)

5. Valuation – this share could compound at 17% p.a.

We first ought to point out that Richemont enjoys a great balance sheet, a “Cash Fortress”. Net Cash at the end of H1 this year was still €1.5-2bn after almost €3bn of acquisitions (YNAP and watchfinder.co.uk).

On a headline basis, Richemont shares trade on c.12.6x EV/EBITA (simply derived from an annualised H1 FY19 EBITA). This level of profitability takes into account the revived profitability of the main Jewelery Maison whose margin is now running at c.34% – i.e. close to historical peak levels.

Fig.5 shows how severe the group margin hit that Richemont bore in 2015 and 2016 and that this was mirrored by Swatch. We also include the Richemont watch division (called ‘Specialist Watchmakers’ – this excludes Cartier) which shows that margins here could have further upside. In aggregate, Richemont group operating margins excluding the online businesses are c.23% versus the previous peak of c.26% as shown in the Appendix.

Fig.5: The margin cycle

R R R R R R R R R R R R R R R R R R R EBITMargIns  Source: Holland Advisors

Also show in the Appendix is our calculations on valuation. This shows a PE of 16.4x to December 2018 earnings (derived from H1 levels of margin). Investors should note that this figure however includes some one off costs and losses incurred in the online division (Yoox– Net-a-Porter). Stripping these loses out reduces the PE to 15.7x, an attractive multiple for a branded franchise of this pedigree that makes a return on tangible capital of c.20-25%. However even this multiple ascribes no value to YNAP, an asset that Richemont just purchased for an implied $5.4bn. This all suggests we are being offered a margin of safety to protect our downside.

As for the upside? We are prepared to assume longer term revenue growth for this collection of brands at 5% or above as prudent (this beig derived from a world with just a few wealthier people who wish to demonstrate their success to others just a little). If 6-7% were assured but no margin improvement and good capital allocation (dividends and buy backs) then intrinsic value might grow at 11-13%pa. A very agreeable outcome.

Things get a little more interesting if Mr Market reassesses this business as he tends to do after a few years of resumed growth. A PE of say 18x 3 years out and YNAP being valued at what they paid for it results in an investor IRR of 20%. Very agreeable indeed.

Conclusion

Great business managers sometimes need to take remedial actions to correct past errors. They also should be looking to learn from mistakes evolving and improving the business they oversee as a result.

Whilst investors have worried about issues such as Chinese demand for luxury goods and threats from technology groups like Apple, Richemont has been busy evolving. Its efforts in buying-in watch inventory and then taking steps to improve its understanding and control of its future distribution chain we think should be seen in this light and applauded.

The brand equity of Cartier, Cleef & Arpels is long established and now we believe has been reinforced. Future demand for mass-market watches around the world may be altered by Apple type innovators, but we feel strongly that demand for status symbols like a Ferrari or Cartier watch will remain intact.

Richemont once again looks well set to profit from this long term organic growth in demand. Its valuation does not reflect its quality nor its growth prospects.

Buy Richemont.

Andrew Hollingworth & Mark Power

The Directors and employees of Holland Advisors may have a beneficial interest in some of the companies mentioned in this report via holdings in a fund that they also act as advisors to.

Appendix

Disclaimer

This document does not consist of investment research as it has not been prepared in accordance with UK legal requirements designed to promote the independence of investment research. Therefore even if it contains a research recommendation it should be treated as a marketing communication and as such will be fair, clear and not misleading in line with Financial Conduct Authority rules. Holland Advisors is authorised and regulated by the Financial Conduct Authority. This presentation is intended for institutional investors and high net worth experienced investors who understand the risks involved with the investment being promoted within this document. This communication should not be distributed to anyone other than the intended recipients and should not be relied upon by retail clients (as defined by Financial Conduct Authority). This communication is being supplied to you solely for your information and may not be reproduced, re-distributed or passed to any other person or published in whole or in part for any purpose. This communication is provided for information purposes only and should not be regarded as an offer or solicitation to buy or sell any security or other financial instrument. Any opinions cited in this communication are subject to change without notice. This communication is not a personal recommendation to you. Holland Advisors takes all reasonable care to ensure that the information is accurate and complete; however no warranty, representation, or undertaking is given that it is free from inaccuracies or omissions. This communication is based on and contains current public information, data, opinions, estimates and projections obtained from sources we believe to be reliable. Past performance is not necessarily a guide to future performance. The content of this communication may have been disclosed to the issuer(s) prior to dissemination in order to verify its factual accuracy. Investments in general involve some degree of risk therefore Prospective Investors should be aware that the value of any investment may rise and fall and you may get back less than you invested. Value and income may be adversely affected by exchange rates, interest rates and other factors. The investment discussed in this communication may not be eligible for sale in some states or countries and may not be suitable for all investors. If you are unsure about the suitability of this investment given your financial objectives, resources and risk appetite, please contact your financial advisor before taking any further action. This document is for informational purposes only and should not be regarded as an offer or solicitation to buy the securities or other instruments mentioned in it. Holland Advisors and/or its officers, directors and employees may have or take positions in securities or derivatives mentioned in this document (or in any related investment) and may from time to time dispose of any such securities (or instrument). Holland Advisors manage conflicts of interest in regard to this communication internally via their compliance procedures.

  1. Holland Views – Richemont – Building goodwill, not buying it – CHF55 (July 2016) ↑
  2. adjusted for amortisation charges and assuming Online business is just breakeven. ↑
  3. Yoox Net a Porter ↑
  4. As relayed from Richemont’s CFO in a recent conference call and Tiffany made a similar disclosure on its most recent conference call. ↑

 

Holland_logo_RGB Agree

Welcome to Holland Advisors

By continuing to use this website you:
Terms and Conditions
Disclaimer
Privacy Notice

Agreement

Please confirm the following Please confirm that you have read and understood the following terms of use of this website. THIS PORTION OF THE WEBSITE IS ONLY MADE AVAILABLE TO NON-US INVESTORS AND PROFESSIONAL CLIENTS OR ELIGIBLE COUNTERPARTIES. The content of this website has been prepared by Holland Advisors (London) Ltd on the basis of information and sources believed to be reliable. Under no circumstances should any part of this website be construed as an offering or solicitation of an offer for any investment in the products on this site Holland Advisors (London) Limited is authorised and regulated by the Financial Conduct Authority (FRN 538932). 1. Not for U.S. Persons The provision of the information in this website does not constitute an offer of securities to any person in the United States or to any U.S. Person as such term is defined under the Securities Act of 1933, as amended. The information contained in this site about Holland Advisors (London) Ltd is not directed to any person in the United States. Funds referred to herein are neither registered under the Securities Act 1933 of the USA, nor are they registered under the Investment Company Act of 1940. Consequently, they cannot be offered for sale or be sold in the USA, its territories, possessions or protectorates under its jurisdiction, nor to nationals, citizens or residents in any of those areas. No investments or services mentioned on this website are directed at US Persons who are not Eligible Counterparties as defined by the UK Financial Conduct Authority (FCA) Handbook or Qualified Purchasers as defined under the Investment Company Act of 1940. The information contained herein does not constitute a distribution, an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction in which such distribution or offer is not authorised. 2. Terms and Conditions of Use IMPORTANT LEGAL NOTICE THE FOLLOWING TERMS AND CONDITIONS OF USE (“TERMS OF USE”) APPLY TO YOUR ACCESS TO AND USE OF THE HOLLAND ADVISORS (LONDON) LTD WEBSITE (THE “WEBSITE”). EACH TIME YOU ACCESS OR USE THIS WEBSITE, YOU AGREE TO COMPLY WITH, AND BE BOUND BY, THE TERMS OF USE AND ACKNOWLEDGE THAT WE MAY RELY UPON YOUR AGREEMENT. PLEASE READ THE FOLLOWING TERMS OF USE CAREFULLY AND IF YOU DO NOT ACCEPT ANY TERMS OR CONDITIONS, PLEASE DO NOT ACCESS OR USE THIS WEBSITE. 3. Information on the Website Except where stated otherwise, the information, content and services on this Website (the “Information”) are provided by Holland Advisors (London) Ltd (referred to as “we” and “us”) as at the date indicated on the relevant material. The Information is provided for personal use and information purposes only. The Information does not take account of the investment objectives, financial situation and particular needs of any particular person and is not general advice to any class of persons. Therefore, you should not rely on the Information and should obtain relevant and specific professional advice in making any investment decision. Furthermore, nothing on this Website constitutes or should be construed to constitute: (i) an offer, advice, invitation or solicitation from us or our affiliates to buy or sell any investments or securities, futures, options or other financial instruments; (ii) an invitation or inducement to engage in investment activity or a financial promotion of any kind; or (iii) investment advice or recommendation. 4. Stock exchange prices and exchange rates The prices/values shown on this Website in relation to different underlying securities are based on the prices notified to Holland Advisors (London) Ltd as the last sale price of the relevant securities on the stock exchange on which they are traded as at the time and date shown. Those figures may vary throughout the course of, and between, stock exchange trading days, market trading times and business days in general. Holland Advisors (London) Ltd has not verified the figures with the relevant stock exchange and you should verify the accuracy of those figures separately before relying on them. 5. Permitted users of the Website The laws and regulations of the country from which you access this Website may include restrictions on the distribution of the Information. This Website is not directed at or intended for distribution to or use by any person or entity in any jurisdiction where (by reason of that jurisdiction’s applicable securities laws, person’s nationality, residence or otherwise) such distribution, publication, availability or use of this Website or any part of its contents would be contrary to applicable law or regulation or would subject Holland Advisors (London) Ltd to any registration or licensing requirement within such jurisdiction. If you are such a person or entity, you are not authorised to enter the Website. It is your responsibility to ensure that your use of this Website complies with any restrictions or any applicable local laws regarding use of the Information on this Website. Persons or entities in respect of whom such restrictions apply must not access the relevant pages on this Website. The Information displayed on this Website contains material that may be interpreted by the relevant authorities in the country where you are viewing this Website as a financial promotion or an offer to purchase securities. Accordingly, if you reside in any such country or fall within the scope of any law that seeks to regulate financial promotions in the country of your residence or in the country in which you are viewing this Website, please cease accessing or using this Website immediately. If you are uncertain about your position under the laws of the country in which you are viewing this Website, then you should seek clarification by obtaining legal advice from a lawyer practicing in the country of your residence or in the country in which you are viewing this Website before accessing this Website. You may not use any part of the material or Information on this Website to establish, maintain or provide or assist in establishing, maintaining or providing a stock market for trading in securities. 6. Investment Performance and Accuracy of Information The Site contains material about the past performance of our Funds. The value of an investment in a Fund may go up as well down so that an investor’s investment in a Fund, when redeemed, may be more or less than the original investment amount. By its nature, investment in a Fund managed by Holland Advisors (London) Ltd is only suitable for sophisticated investors who do not require immediate liquidity for their investment, for whom an investment in a Fund does not constitute a complete investment programme and who fully understand and are willing to assume the high risk involved in the investment programme of a Fund. THE PAST PERFORMANCE OF ANY INVESTMENT, INVESTMENT STRATEGY OR INVESTMENT STYLE IS NOT INDICATIVE OF FUTURE PERFORMANCE. Whilst the information contained on the Website has been given in good faith and every effort has been made to ensure its accuracy, the Information may not be complete or accurate for your purposes. This Website and the Information is provided on an “as is” basis and Holland Advisors (London) Ltd may not, and has no obligation to, update the Information or correct any inaccuracy which subsequently becomes apparent. The Information and/or opinions and estimates comprised in the Information may be changed or withdrawn without notice and may become outdated. You, therefore, should verify any information or other material obtained from this Website before you use it. HOLLAND ADVISORS (LONDON) LTD, ITS DIRECTORS OR OFFICERS DISCLAIM ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BY WAY OF EXAMPLE BUT NOT LIMITATION AS TO RELIABILITY, COMPLETENESS, FITNESS FOR PURPOSE OR ACCURACY OF THE INFORMATION ON THIS WEBSITE OR ON ANY THIRD PARTY WEBSITE LINKED TO THIS WEBSITE. IN ADDITION, WE DO NOT REPRESENT OR WARRANT THAT THIS WEBSITE OR THE SERVERS THAT MAKE THE WEBSITE AVAILABLE WILL BE UNINTERRUPTED, ERROR FREE, OR FREE FROM INFECTION, VIRUSES, WORMS OR ANY OTHER HARMFUL CODE WHICH MAY HAVE CONTAMINATING OR DESTRUCTIVE PROPERTIES. YOU ARE FULLY RESPONSIBLE FOR ENSURING PROTECTIVE STEPS TO BE TAKEN SUCH AS VIRUS CHECKING. The Information is assembled from material prepared by Holland Advisors (London Ltd) or its agents but may not include Information made known to Holland Advisors (London) Ltd officers (or agents) subsequent to the date of publication of the Information indicated on the Website. If you use the Information, you do so at your own risk. Please recognise that the previous performance of securities or other instruments does not guarantee or predict future performance. 7. Exclusion of liability TO THE FULLEST EXTENT PERMITTED BY LAW, HOLLAND ADVISORS (LONDON) LTD ACCEPT NO LIABILITY TO YOU OR ANY THIRD PARTY FOR ANY LOSSES OR DAMAGES, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT DAMAGES, CONSEQUENTIAL OR SPECIAL DAMAGES, LOSS OF USE, DATA OR PROFITS, COSTS OR EXPENSES INCURRED OR SUFFERED BY YOU OR THIRD PARTY, WHETHER IN CONTRACT OR DUE TO NEGLIGENCE OR OTHER TORTIOUS ACTION, ARISING OUT OF OR IN CONNECTION WITH THE ACCESS TO, USE OF, RELIANCE ON, OR PERFORMANCE OF THIS WEBSITE OR ANY INFORMATION CONTAINED ON THIS WEBSITE, WHETHER DUE TO INACCURACY, ERROR, OMISSION OR ANY OTHER CAUSE AND WHETHER ON THE PART OF US, OUR SERVANTS, AGENTS OR ANY OTHER PERSON. NOTHING IN THE TERMS OF USE EXCLUDES, RESTRICTS OR MODIFIES ANY CONDITION, WARRANTY OR LIABILITY WHICH MAY AT ANY TIME BE IMPLIED BY STATUTE OR ANY OTHER APPLICABLE LAW WHERE TO DO SO IS ILLEGAL OR WOULD RENDER ANY PROVISION OF AN AGREEMENT VOID. 8. Third Party Websites We may provide, on our Website, links to websites operated by third parties as a convenience to you. If you use these other sites, you will leave this Website. If you decide to visit any linked site, you do so at your own risk and it is your responsibility to take all protective measures to guard against viruses or other destructive elements. Holland Advisors (London) Ltd makes no representations, warranties or guarantees of any kind about any of the content of any other website which you may access by hypertext link through this Website. When you access any other website by means of a link from this Website, you should understand that your access to that other website is independent of Holland Advisors (London) Ltd and Holland Advisors (London) Ltd has no control over the content of the website, nor does Holland Advisors (London) Ltd in any way endorse or approve the content of that website. In no event will Holland Advisors (London) Ltd in any way be liable to you or any other person(s) or organisation(s) for loss or damage (whether direct, indirect, consequential, special or other) for any use of any site linked to it by means of hypertext or otherwise. 9. Indemnity You agree to indemnify Holland Advisors (London) Ltd and its officers from and against any claim brought by third parties against Holland Advisors (London) Ltd and its officers as a consequence of your breach of the Terms of Use. Furthermore, if your use of this Website results in the need for servicing, repair or correction of equipment, software or data, you assume all costs thereof. 10. Intellectual Property Rights and Licence The copyright, trade mark or any other intellectual property rights in the Website and the Information are owned by or licensed to Holland Advisors (London) Ltd. You may download or print out a hard copy of individual pages and/or sections of this Website provided you do not remove any copyright or other proprietary notices. Any downloading or other copying from this Website will not transfer title to any software or material to you. You may not reproduce (in whole or in part), transmit (by electronic means or otherwise), modify, link to or use for any public or commercial purpose this Website without the prior written permission of Holland Advisors (London) Ltd. Any rights not expressly granted in the Terms of Use are reserved. 11. Operation of the Website You should be aware that the internet, being an open network, is not secure. If you choose to send any electronic communications by means of this Website, you do so at your own risk. Holland Advisors (London) Ltd cannot guarantee that such communications will not be intercepted or changed or that they will reach the intended recipient safely. 12. Privacy Any personal data relating to you will be collected, used and recorded by us in accordance with current data protection legislation, the Terms of Use and our Privacy Policy. You must read our Privacy Policy as it forms part of the Terms of Use. 13. Governing law The Terms of Use are governed by the laws of England and Wales and the courts of England and Wales will have exclusive jurisdiction over any disputes arising under them. 14. Waiver If you breach the Terms of Use and we take no action, we will still be entitled to use our rights and remedies in any other situation where you breach the Terms of Use. 15. Our details This website is owned and operated by Holland Advisors London Ltd. You can contact us at: Holland Advisors London Ltd, The Granary, 1 Waverley Lane, Farnham, Surrey, GU9 8BB. Updated and effective as of  31st March 2024
Disclaimer
Please read the following conditions of use of this website. This website is directed at high net worth experienced investors and institutional investors who understand the risks involved with the investments being promoted and it should not be relied upon by retail clients (as defined by Financial Conduct Authority). The information on this website is issued by Holland Advisors (London) Limited (hereafter referred to as “Holland Advisors”), a limited liability company (7431314) incorporated in England and Wales, which is authorised and regulated by the Financial Conduct Authority (FRN: 538932). This website is for information purposes only and does not constitute an offer or solicitation to buy or sell securities, funds or any other financial instrument. The information is directed inside the United Kingdom and is not directed at any persons in jurisdictions where it would be against local law or regulation.  In particular, information on this site is not directed at any person, partnership or corporation being resident in the United States of America. Holland Advisors disclaims all responsibility if you access or download any information in breach of any law or regulation of the country in which you reside. Information on this site The information provided does not constitute advice. Holland Advisors believes that the sources of the information in this website are reliable. However it cannot and does not guarantee, either expressly or implicitly, and accepts no liability for, the accuracy, validity, timeliness or completeness of any information or data (whether prepared by it or by any third party) for any particular purpose or use or that the information or data will be free from error. Holland Advisors does not undertake any responsibility for any reliance which is placed by any person on any statements or opinions which are expressed herein. Neither Holland Advisors nor any of its directors, officers or employees will be liable or have any responsibility of any kind for any loss or damage that any person may incur resulting from the use of this information. This does not exclude or restrict any duty of liability that Holland Advisors has to its customers under the regulatory system in the United Kingdom. All Information may be changed or amended without prior notice although Holland Advisors does not undertake to update this site regularly. Marketing Communications Documents on this site do not constitute investment research as they have not been prepared in accordance with UK legal requirements designed to promote the independence of investment research. Therefore, even if they contain research recommendations they should be treated as marketing communications and as such will be fair, clear and not misleading in line with Financial Conduct Authority rules. These communications are not personal recommendations to you and any opinions cited are subject to change without notice. Holland Advisors takes all reasonable care to ensure that the information on this site is accurate and complete; however no warranty, representation, or undertaking is given that it is free from inaccuracies or omissions. Documents on this site are based on, and contain, current public information, data, opinions, estimates and projections obtained from sources we believe to be reliable. Past performance is not necessarily a guide to future performance. The content of these documents may have been disclosed to the issuer(s) prior to dissemination in order to verify their factual accuracy. Investments in general involve some degree of risk, therefore Prospective Investors should be aware that the value of any investment may rise and fall and you may get back less than you invested. Value and income may be adversely affected by exchange rates, interest rates and other factors. The investments discussed on this website may not be eligible for sale in some states or countries and may not be suitable for all investors. If you are unsure about the suitability of an investment given your financial objectives, resources and risk appetite, please contact your financial advisor before taking any further action. Holland Advisors and/or its officers, directors and employees may have or take positions in securities, funds or derivatives mentioned on this site (or in any related investment) and may from time to time dispose of any such securities (or instrument). Holland Advisors manages these potential conflicts of interest internally via its compliance procedures. Fund Information Parts of this site may refer to Funds managed or advised by Holland Advisors. These are not solicitations to invest and any potential investors should refer to the “Our Funds” section of the website in order to learn more about these Funds and find out how and where to obtain the relevant full legal documentation. Linked Websites This site may be linked to third party websites or contain information provided by third parties. Holland Advisors does not make any representation as to the accuracy or completeness of such websites or information, has not and will not review or update such websites or information, and cautions browsers that any use made of such websites or information is at their own risk. Holland Advisors does not accept any liability arising out of the information contained on any linked website or Information provided by a third party and the use of such sites and information is at your own risk. This does not exclude or restrict any duty or liability that Holland Advisors has to its customers under the regulatory system in the United Kingdom. Indemnity You agree to indemnify and defend Holland Advisors, its affiliates and licensors, and the officers, directors, employees, and agents of Holland Advisors and its affiliates and licensors, from and against any and all claims, liabilities, damages, losses, or expenses, including legal fees and costs, arising out of or in any way connected with your access to or use of this website and the Information. Use of Cookies If you agree to these terms and conditions a “cookie” might be placed on your computer. A cookie is a packet of information that does not identify individual users of a website, but allows the collection of website activity (such as the number of users who visit our website, the date and time of visits, the number of pages viewed, navigation patterns, what country and what systems users have used to access the site). We can use this information for statistical purposes, which allows us to analyse and improve our website. The cookie will expire automatically after 6 months or you can manually remove cookies in your browser settings. Copyright, Trademarks and Other Rights Copyright, trademarks, database rights, patents and all similar rights in this site and the information contained in it are owned by Holland Advisors or relevant third party providers. You may use the Information and reproduce it in hard copy for your personal reference only. The information contained herein and any supplemental documentation provided is confidential and should not be copied, reproduced or redistributed without the prior consent of Holland Advisors. Governing Law You agree that your use of this site and any dispute arising from this use is subject to English law and you submit to the jurisdiction of the Courts of England & Wales.
Privacy Notice
This is the privacy notice of Holland Advisors London Ltd our company number is 07431314. Our registered office is at The Halt, Smugglers Way, The Sands, Farnham, Surrey, GU10 1NB.
Introduction
This notice describes how we collect, store, transfer and use personal data. It tells you about your privacy rights and how the law protects you. In the context of the law and this notice, ‘personal data’ is information that clearly identifies you as an individual or which could be used to identify you if combined with other information. Acting in any way on personal data is referred to as ‘processing’. This notice applies to personal data collected through our website www.hollandadvisors.co.uk. Except as set out below, we do not share, or sell, or disclose to a third party, any information collected through our website.
Data Protection Officer
We have appointed a data protection officer (‘DPO’) who is responsible for ensuring that our privacy policy is followed. If you have any questions about how we process your personal data, including any requests to exercise your legal rights, please contact our DPO, Claire Brunt at  claire@hollandadvisors.co.uk.
Personal data we process
1. How we obtain personal data The information we process about you includes information:
  • you have directly provided to us
  • that we gather from third party databases and service providers
  • as a result of monitoring how you use our website or our services
2. Types of personal data we collect directly When you use our website, you may provide personal data by submission of data by our Sign Up or Contact Us forms. This can be categorised into the following groups:
  • personal identifiers, such as your first and last names
  • contact information, such as your email address and your telephone number for communication
  • records of communication between us including messages sent through our website, email messages and telephone conversations
  • marketing preferences that tell us what types of marketing you would like to receive
3. Types of personal data we collect from your use of our services By using our website and our services, we process:
  • technical information about the hardware and the software you use to access our website and use our services, including your Internet Protocol (IP) address, your browser type and version and your device’s operating system
  • usage information, including the frequency you use our services, the pages of our website that you visit, whether you receive messages from us and whether you reply to those messages
  • your preferences to receive marketing from us; how you wish to communicate with us; and responses and actions in relation to your use of our services.
4. Our use of aggregated information We may aggregate anonymous information such as statistical or demographic data for any purpose. Anonymous information is that which does not identify you as an individual. Aggregated information may be derived from your personal data but is not considered as such in law because it does not reveal your identity. For example, we may aggregate usage information to assess whether a feature of our website is useful. However, if we combine or connect aggregated information with your personal data so that it can identify you in any way, we treat the combined information as personal data, and it will be used in accordance with this privacy notice. 5. The bases on which we process information about you The law requires us to determine under which of six defined bases we process different categories of your personal data, and to notify you of the basis for each category. If a basis on which we process your personal data is no longer relevant then we shall immediately stop processing your data. If the basis changes then if required by law we shall notify you of the change and of any new basis under which we have determined that we can continue to process your information. 6. Information we process with your consent Through certain actions when there is no contractual relationship between us, such as when you browse our website or ask us to provide you more information about our business, you provide your consent to us to process information that may be personal data. Wherever possible, we aim to obtain your explicit consent to process this information, for example, we ask you to agree to our use of non-essential cookies when you access our website. We continue to process your information on this basis until you withdraw your consent or it can be reasonably assumed that your consent no longer exists. You may withdraw your consent at any time by instructing us  claire@hollandadvisors.co.uk. 7. Information we process for the purposes of legitimate interests We may process information on the basis there is a legitimate interest, either to you or to us, of doing so. Where we process your information on this basis, we do after having given careful consideration to:
  • whether the same objective could be achieved through other means
  • whether processing (or not processing) might cause you harm
  • whether you would expect us to process your data, and whether you would, in the round, consider it reasonable to do so
For example, we may process your data on this basis for the purposes of:
  • improving our services
  • record-keeping for the proper and necessary administration of our business
  • responding to unsolicited communication from you to which we believe you would expect a response
  • preventing fraudulent use of our services
  • exercising our legal rights, including to detect and prevent fraud and to protect our intellectual property
  • insuring against or obtaining professional advice that is required to manage business risk
  • protecting your interests where we believe we have a duty to do so
How and when we process your personal data
8. Your personal data is not shared We do not share or disclose to a third party, any information collected through our website.
Use of information we collect through automated systems
9. Cookies Cookies are small text files that are placed on your computer’s hard drive by your web browser when you visit a website that uses them. They allow information gathered on one web page to be stored until it is needed for use at a later date. They are commonly used to provide you with a personalised experience while you browse a website, for example, allowing your preferences to be remembered. They can also provide core functionality such as security, network management, and accessibility; record how you interact with the website so that the owner can understand how to improve the experience of other visitors. Some cookies may last for a defined period of time, such as one visit (known as a session), one day or until you close your browser. Others last indefinitely until you delete them. Your web browser should allow you to delete any cookie you choose. It should also allow you to prevent or limit their use. Your web browser may support a plug-in or add-on that helps you manage which cookies you wish to allow to operate. The law requires you to give explicit consent for use of any cookies that are not strictly necessary for the operation of a website. 10. Personal identifiers from your browsing activity Requests by your web browser to our servers for web pages and other content on our website are recorded. We record information such as your geographical location, your Internet service provider and your IP address. We also record information about the software you are using to browse our website, such as the type of computer or device and the screen resolution. We use this information in aggregate to assess the popularity of the webpages on our website and how we perform in providing content to you.
Other matters
11. Your rights The law requires us to tell you about your rights and our obligations to you in regard to the processing and control of your personal data. We do this now, by requesting that you read the information provided at  http://www.knowyourprivacyrights.org 12. Communicating with us When you contact us, whether by telephone, through our website or by email, we collect the data you have given to us in order to reply with the information you need. We record your request and our reply in order to increase the efficiency of our business. We may keep personally identifiable information associated with your message, such as your name and email address so as to be able to track our communications with you to provide a high quality service. 13. Complaining If you are not happy with our privacy policy, or if you have any complaint, then you should tell us. When we receive a complaint, we record the information you have given to us on the basis of consent. We use that information to resolve your complaint. 14. Retention period Except as otherwise mentioned in this privacy notice, we keep your personal data only for as long as required by us to provide you with the services you have requested. 15. Compliance with the law Our privacy policy complies with the law in the United Kingdom, specifically with the Data Protection Act 2018 (the ‘Act’) accordingly incorporating the EU General Data Protection Regulation (‘GDPR’) and the Privacy and Electronic Communications Regulations (‘PECR’). 16. Review of this privacy policy We shall update this privacy notice from time to time as necessary.

Agree Disagree