Annual Financial Report

RNS Number : 6208O

Hansa Trust PLC

01 July 2010

HANSA TRUST PLC

Announcement of Annual Financial Report

for the year ended 31 March 2010

Hansa Trust PLC announces its Annual Financial Report for the year ended 31 March 2010

This document is compiled from extracts from the Company's Annual Financial Report but does not form the full Report. A full copy of the Company's Annual Financial Report can be found on the Company's website at www.hansatrust.com

Financial Highlights	Year ended 31 March 2010 (unaudited)	Year ended 31 March 2009 (audited)

Net Asset Value - Total Return	48.0%	(30.2%)
Performance Benchmark	6.2%	6.7%
Capital return per equity share	272.9	(294.8p)
Revenue return per share	27.4	18.3p
Net asset value per share	895.9	635.0p
Total dividend per equity share for the year	25.0	18.0p

Total income (£000's)	8,370	6,479
Revenue before taxation (£000's)	6,584	4,474

The following are attached:

· Chairman's Statement

· Report of the Directors

· Corporate Governance

· Statement of Directors' Responsibilities

· Group Income Statement

· Statement of Changes in Equity-Group and Company

· Balance Sheet for the Group and Company

· Cash Flow Statement

· Notes to the Financial Statements

For further information please contact:

Peter Gardner Hansa Capital Partners LLP 020 7647 5750

Chairman's Statement

2009-2010: Stock Market Recovers, Volatility Continues

A year ago all was gloom and doom; a year on there is a sense of relief that there has been no doom, but no conviction that it hasn't just been postponed. Stock markets remain volatile and edgy. It is interesting to look back over the last ten years (31 March 2000 to 2010) and remind ourselves how volatile stock markets have been. Volatility may be born of many things but three certainly contribute to it: volatile interest rates, excessive amounts of debt and nervousness about the future (caused I believe by - as much as anything - lack of credibility in our political leadership and its policies).

The decade began with the bursting of the dot.com boom. Indices had become thoroughly distorted by small and often worthless companies being valued as large, while larger well established businesses were demoted to the junior leagues. The UK stock market duly collapsed and over circa three years between 31 March 2000 and its subsequent low on 12 March 2003, just before the invasion of Iraq, it fell by 48.9%. The Federal Reserve, the US central bank, had reduced its interest rate from 6% to 1%, in an almost panic like fashion; markets worldwide became flush with money.

In response to very easy global monetary conditions stock markets recovered, the FTSE All-Share Index rising by 119% in the space of just over four years. However the loose money had also triggered what proved to be property and housing bubbles of volcanic proportions; like all volcanoes, they do eventually burst and it did - in spectacular fashion. Between an intra-day high on 13 July 2007 and the eventual bottom nearly two years later on 9 March 2009 the UK stock market fell 49.6%. Now, just over one year on, the stock market, once again swimming in oceans of money, had recovered by no less than 65.7% at our year end. It all amounted to one hell of a roller coaster.

Given that over the full ten years the UK stock market declined by 6.4%, it can be said that Macbeth's "full of sound and fury signifying nothing" aptly describes what has been going on. The point of all of this is that we live in volatile times and we are likely to continue to do so; the three causes outlined above are still very much in play. Our own net asset values and therefore our two share prices have also experienced volatility (although we have been fortunate enough to make money over the ten year period); the volatility is likely to continue.

THE YEAR'S RESULTS

NAV: +41.1% to 895.9p per share

After the disappointment of not making any money last year - during which the net asset value declined by 31.3% - we enjoyed the benefit of the recovery in the world's stock markets. Our net asset value rose after dividend payments by 260.9p per share (41.1%) to 895.9p per share, driven once again by a stellar performance by our holding in Ocean Wilsons - it contributed 167.6p of the rise and ended the year accounting for 39.4% of the Trust's net asset value. Most of the rest of the portfolio chipped in but to a lesser extent, the individual holdings being much smaller than that in Ocean Wilsons. We suffered just a few losses, most notably from our holding in Ark Therapeutics.

We have stressed many times that it is our aim to make money for shareholders over the longer-term (which I will return to later) and so it is that we have an absolute benchmark (described on page 2) that reflects that money making goal. During the year it returned 6.2%. The FTSE All‑Share Index, which we keep an eye on, rose by 46.7%. John Alexander's portfolio management commentary, which starts on page 23, is his usual excellent account of what has been going on in stock markets and in our portfolio and his observations about the outlook for stocks and shares in the UK. It is a good read and I do encourage shareholders to peruse it; very few portfolio managers provide such a thorough resume of their activities.

OCEAN WILSONS

Value of Holding: +74.0% at £84.6m

Our investment in the shares of Ocean Wilsons, as I mentioned above, had a cracking good year; the value of it rose by 74% and stood at £84.6m at our year end (accounting for 39.4% of the net asset value). The company continues to do well and its prospects remain exciting. Again, John's commentary provides a good review of its progress.

We should remember that Ocean Wilsons' business (market capitalisation 31 March 2010: £325.3m) now consists of:-

i. its 58.25% owned subsidiary, Wilson Sons Ltd which is involved in maritime services in Brazil and which had a stock market value at our year end of $922.4m; and

ii. a portfolio of investments with a market value of $245 m (of which 41% is invested in quoted equities, 9% in bonds, 25% in unquoted investments and 25% is held in cash) - invested in different countries but with an emphasis on the emerging economies (including the Americas 41%, Asia 30%, Europe 5%, and the UK 10%).

It is not our policy to trade in and out of our holding in Ocean Wilsons. One of the reasons for achieving the quotation for Wilson Sons shares two years ago, realising some cash from Ocean Wilsons' investment in it, was to make Ocean Wilsons a geographically more diversified company. So, although our holding of 26.4% of Ocean Wilsons accounts for 39.4% of our net asset value (as mentioned above) the exposure to any one country or to any single investment is much less.

DIVIDEND

+38.9% to 25.0p per share

We experienced a particularly good year in terms of the investment income from our portfolio; it rose from £6.5m to £8.4m, an increase of 29.2%. Declines in the interest and tax paid meant that the earnings rose by even more - by 50% - from 18.28p to 27.42p per share. The investment income benefited from increased dividends, most notably that from Ocean Wilsons, which increased its dividends by 40% - from US$0.30 to US$0.42 per Ocean Wilsons share.

In respect of this year the Board of Directors has declared interim dividends - one of 3.5p per share and one of 21.5p per share, totaling 25.0p per share (18.0p per share was paid in respect of last year). Details of the payments can be found in note 7 to the accounts on page 44.

As I mentioned last year, the portfolio is managed for capital growth so that the amount of income generated will vary with whatever happens to be in the portfolio in any given year and when the companies concerned pay their dividends. As a consequence the dividend may rise or fall from one year to the next, although over the very long term it should rise as the general level of dividends grows (over the last ten years it has risen from 5p to 25p per share).

SHARE PRICE PERFORMANCE

Ordinary Shares:	+49.0% to 760p per share;	Discount to NAV: 15.2%
"A" Ordinary Shares:	+53.1% to 750p per share;	Discount to NAV: 16.3%

As confidence returned to the stock market and share price valuations recovered, so the discounts on investment trust shares declined, thereby providing even better returns for shareholders than those of their underlying net asset values. In our case the discounts declined from the very depressed levels of March 2009.

The table below provides an attribution of shareholders' return over the course of the year - after taking into consideration the dividends paid during the course of the year, amounting to 39.5p per share:

Attribution of Shareholder Returns	Ordinary Shares	"A" Ordinary Shares
Share price change due to change in NAV	+209.5p	+201.3p
Share price change due to change in discount	+40.5p	+58.7p
Dividends paid during the year	+39.5p	+39.5p
Shareholders' Return	+289.5p	+299.5p

We do take powers to buy back shares and will do so if the circumstances make it particularly attractive. But, as I will expound upon later, we do not seek to manage the share price over the short term with buy back programmes, content in the knowledge that over the long term the share price return will not be materially different from the net asset value return.

LONG-TERM TOTAL RETURNS

5 Years: NAV: +53.5%; Benchmark: +33.0%; FTSE All-Share Index: +18.4%

Ordinary share price: +34.3% (including dividends +49.1%)

"A" Ordinary share price: +37.2% (including dividends +52.7%)

As I stressed above, we manage the Company and its portfolio to make money over the longer-term, a period that we deem to be a rolling five years. So the Board of Directors, in assessing the performance of the Company, looks at returns that have been earned for shareholders as part of their annual assessment of the Management. As the numbers above show, the returns over the last five year period have been quite satisfactory, particularly given that it included the severe two year bear market that ended in March 2009. The net asset value has risen by 53.5% which is equivalent to 9.0% per annum, better than the benchmark, which in turn is rather better than the stock market (FTSE All-Share Index).

However, looking at how the five year rolling returns have worked out in the last ten years and the chart opposite illustrates that, by and large and with the exception of one period, the five year returns have been satisfactory - some very good periods, others not quite as good but, in nine out of the ten periods, money has been made for shareholders. For the first ten years of this new century the net asset value rose 101.3% (equivalent to 7.2% per annum). That's not bad considering the FTSE All-Share Index declined 6.5% over those years.

Having looked at the record referred to opposite, the independent Directors have had no difficulty in concluding that it is in shareholders' interests that Hansa Capital Partners remain as the Company's investment manager. It isn't just the long-term returns that we looked at in reaching the conclusion but also the management and administration of the Company's affairs generally. In that respect we are also in good hands. It is appropriate for us, on behalf of all shareholders, to thank William Salomon, John Alexander, Peter Gardner and all their colleagues at Hansa Capital Partners for all they do for us and the returns they have earned for us over the years. Thank you.

Five Year NAV Returns (pa) 2001 to 2010 - Chart

HANSA TRUST - an investment trust that is different

It is always risky to portray anything as unique, but I would describe Hansa Trust as very different from the vast majority of other investment trusts. The first and perhaps most fundamental difference lies in the capital structure of the Trust, with 16 million non-voting "A" Ordinary shares and 8 million voting Ordinary shares. The Directors and members of the investment manager have a significant interest in the shares of Hansa Trust PLC, which affords the Trust the protection from the corrosive influence of short-termism so prevalent in the activities of today's stock market. Hansa Trust really can and does take long term decisions when making investments.

Perhaps the most obvious illustration of our long-termism is provided by our investment in Ocean Wilsons. Our holding of 9,352,770 shares was acquired in 1958 and has never been changed since. As I have mentioned earlier, it is not our policy to trade this investment, largely because it is unlikely we will add value to our holding by trading in and out of it and it would compromise our tax status. While I would not suggest that all of the different holdings in the portfolio will be retained for decades on end, we do not seek to trade them just because there might be short term price movements. We believe that high portfolio turnover seldom adds value and that we certainly won't achieve extra returns from trading and of course having 39.4% of the Trust's assets invested in the shares of one rather unusual company - Ocean Wilsons - makes Hansa Trust's portfolio very different from most others.

Another feature of Hansa Trust, although by no means unique, is that its Investment Manager, Hansa Capital Partners is not in the asset gathering business. Hansa Capital Partners, concentrates solely on making money for its clients. The business model of most investment managers is focused on building the assets under management - so as to build their management fee revenues and profits. Although that is difficult to achieve without a good performance record, it is not quite the same thing. For them, making money from - rather than for - their clients is the priority. Nothing better reflects this than the fact that many managers charge performance fees for losing their clients' money - providing they lose them less than the market. Hansa Trust, with a large proportion of its shares in the hands of the Board and Management (an unusual feature within the investment trust world) benefits from that focus on making money.

Investment trusts are subject to the pressure not only to produce good short-term returns but also to ensure that their share prices are as high as possible - again in the short-term. Faced with the competition of the instant liquidity of unit trusts and open-ended investment companies, investment trusts have found themselves being forced to minimise their discounts - if possible at all times. Worse still the market making capacity for investment trusts has shrunk so that they find themselves playing the role of market maker of last resort. They are becoming hybrids - half investment trusts and half unit trusts - and are losing some of the benefits that accrue from proper long-term portfolio management. We do not engage in a policy of discount control management, believing that it is not the duty of any board of any company to engage in short-term share price fixing. However, we do retain the ability to buy back shares should an appropriate and very attractive opportunity to enhance the net asset value significantly present itself.

The point that I am guilty of going on and on about: the portfolio is managed to make money over the long-term. Nearly all investment trusts do in fact have an absolute return goal (usually expressed as capital gains) but they judge their performance on a relative basis by comparing their returns to that of an equity index. It is a perfectly well understood axiom that, if a benchmark for performance in any field is set (teaching, hospitals, etc and, of course, portfolio management), then beating it will ultimately become the goal. The fact that portfolio managers generally regard the risk in any holding to be its weighting relative to that within an index provides evidence of the relative portfolio management bias. We regard the risk in any holding as the risk that we have made a bad investment and will lose money for shareholders.

I should make one final point and make it emphatically. Just because we are different does not mean we will always perform better than others. We won't. However, we are not different just for the sake of it but rather because we believe it is the better way to do things and that, over the long-term, it will produce good results for our shareholders - whatever anyone else may achieve.

ANNUAL GENERAL MEETING

3 August 2010 at 11.30am at the Washington Hotel, Curzon Street

The Annual General Meeting will be held at the Washington Hotel, Curzon Street, London (Green Park tube station, see map on page 55) at 11.30am on Tuesday 3 August 2010. Your attendance is important to us because it gives us, the Directors and Management, the chance to hear your views, concerns and suggestions. Please come and join us. John will give his usual presentation of the events of the past year and the prospects for the current one. Following the formal AGM you will have the chance to meet the Directors and Management and discuss any aspect of the Company's business - should you wish to do so.

OUTLOOK

Shorter-term very difficult to assess but longer-term optimistic

The strap line above is the same as that above last year's outlook statement. The fact that not much of a fundamental long-term nature has changed in the last year does perhaps justify repeating the statement. Governments in many countries all over the world have flooded markets with money and made their tax payers bail out their banking systems - so that the consequences of decades of living beyond our means have been alleviated for the time being: liquidity has been returned to the financial system, economies have stopped shrinking and stock markets have made remarkable recoveries. But the basic causes of the crisis have not been addressed, with governments frightened of doing anything too drastic or too quickly for fear of the political consequences. Macbeth's (again!) quote: "if it were done when 'tis done, then 'twere well it were done quickly" does not seem to resonate with our political masters.

In the statement last year I addressed the inflation/deflation conundrum, wondering which way it would go. Would we follow down the path of Japan which has still not fully recovered from its financial orgy of the 1980s? Or would we suffer the fate of high inflation as governments set about debasing their currencies as a solution to their debt repayment problems? The jury remains out on the conundrum and I suspect will remain so for quite some time.

But it isn't just this rather fundamental issue that creates uncertainty about the future. There are all sorts of paradoxes that abound within the writings of City commentators, which will be resolved in the longer-term but which add to the uncertainty of the moment. For instance:

• Economic growth will return but consumer expenditure will be restrained and government expenditure will be cut.

• Economic growth can return (to previous debt enhanced rates, even) but interest rates will remain low.

• Consumer expenditure (the biggest component of GNP) can grow but the consumer will be hit with higher taxes and repayment of debts.

• The Government will put its house in order (raise taxes and cut expenditure) but the economy will continue to grow.

• Interest rates will stay low but the government will be borrowing huge quantities of money.

• Inflation will stay low but the central bank will continue to buy government debt and thereby print money.

• Interest rates will stay low because of slow economic growth but company sales and profits will continue to grow.

• The City will prosper but the rest of the economy won't.

To be fair there are quite a number of commentators who are both realistic and logical in their assessments of the future; it is important to understand, however, that optimism is the oxygen of the City and that much of what is said drives stock market sentiment in the short term but suffers from the Mandy Rice-Davies syndrome - "he would say that, wouldn't he." So when reality slaps us in the face - the Greek Euro Tragedy, for instance - markets retreat very quickly indeed and so it is that volatility continues to dominate investing.

We really don't know how the future is going to pan out for our economy. As long as we go on believing that past economic policies and behaviour are the solution to the problems we face, the greater the problems we store up for ourselves. To quote Martin Wolf "The question is whether the country drives those adjustments [the ones necessary to address our structural problems] or is driven by them." At this stage it must be said that the second outcome is the more likely.

Having wallowed for a few paragraphs in gloom and doom, I think it is worth making a couple of very positive points about the corporate world in which we invest. While our Government seems to be frozen in indecision (or, where it does make a decision, it is usually too little rather late), companies have been anything but. They have been decisive and quick about putting their houses in order and preparing themselves for difficult times ahead (whether or not they occur). Costs have been slimmed down, debt has been repaid, equity has been raised and positive cash flow is being generated.

Secondly, British companies are - as a generalisation - very international in the structure of their businesses so that the woes of Britain don't affect them hugely. Something like two thirds of the sales and profits of quoted companies are earned abroad - providing an excellent hedge against our own problems but, better still, providing growth opportunities from exposure to more soundly financed countries with growing economies and from any decline in the exchange rate of the Pound.

Therein lies the opportunity for Hansa Trust. The right equities can provide a good safe haven in these troubled times and it is, in part at least, these two factors that have driven the recovery in the stock market. Despite having a portfolio of stocks and shares that are listed on the London Stock Exchange, our exposure to the UK economy is a little less than 30%. We undertook a portfolio exercise - by looking at the geographic breakdowns of the companies that are provided in their annual reports - which showed that circa 37% is exposed to the Americas (of which circa 29% is accounted for by Brazil), circa 20% to Europe, Middle East and Africa, circa 11% to the emerging markets of East Asia and circa 29% in the UK.

We have always stated that ultimately the prospects for Hansa Trust are in our own hands. Choosing the right companies to invest in can be very rewarding over the long-term. Patience in investing has always been rewarding generally and for our shareholders specifically. I think it will prove to be so in the future.

Signature

Alex Hammond-Chambers
Chairman 24 June 2010

Report of the Directors

for the year ended 31 March 2010

The Directors present their Report and Financial Statements for the year ended 31 March 2010.

THE BOARD'S OBJECTIVES

The Board is charged by the shareholders with the responsibility for looking after the affairs of the Company. It involves the 'STEWARDSHIP' of the Company's assets and liabilities and 'THE PURSUIT OF GROWTH OF SHAREHOLDER VALUE'. These responsibilities are discharged in many ways and are detailed below.

THE BOARD

The Directors who served in the year to 31 March 2010 are set out below. Each of them brings certain individual and complementary skills and experience to the Board's workings, as summarised below. All Directors resign at each Annual General Meeting and offer themselves for re-election. The Board endorses the re-appointment of each of the Directors based on their continuing contribution to the Company and its shareholders.

The Company's Articles of Association include a general power for the Directors to authorise any matter which would or might constitute or give rise to a breach of the duty of a director under s.175 of the Companies Act 2006. Procedures have been established for the disclosure of any such conflicts and also for the consideration and authorisation of these conflicts by the Board, where relevant.

Mr Hammond-Chambers (Chairman)

Alex's career has been involved with portfolio management and investment trusts, from which he brings - inter alia - experience and understanding of investment policies, strategies, stock selection and risk management. Born in 1942, he joined the Board in 2002. He worked for Ivory & Sime for 27 years, retiring as chairman in 1991. He is chairman of three investment trust companies and a director of two others, as well as a number of other investment companies. He has served as a chairman of the Association of Investment Companies and as a governor of the NASD (NASDAQ).

Lord Borwick

Jamie's business life has been involved with the automotive industry particularly and manufacturing generally, as well as involvement with the property sector. He brings his experience of industry and property to the Board's stewardship. Born in 1955, he joined the Board in 1984. He is chairman of Modec Limited which makes battery powered vans and of route2mobility Limited which finances wheelchairs and scooters as part of the Motability Scheme. He is also a partner of Federated Investments LLP and an investor in property in the UK and Florida.

Mr Salomon

William's career in investment banking and management has involved working on and understanding corporate strategies. His own skills and experience are important to the Board in developing and monitoring investment in special investment themes and in strategic investments. Born in 1957, both a German and British citizen, he joined the Board in 1999. He is the senior partner of Hansa Capital Partners LLP (the Investment Manager and Company Secretary), chairman of New India Investment Trust PLC, deputy chairman of Ocean Wilsons Holdings Limited and its listed subsidiary Wilson Sons Limited.

Professor Wood

Geoffrey has great knowledge of economics generally and monetary and fiscal policy issues specifically. His skills and experience are important to the Board, particularly in understanding the effect of such policy issues on the markets. Born in 1945, he joined the Board in 1997. He is Professor of Economics at Cass Business School, in the City of London, and a visiting Professorial Fellow at the Centre for Commercial Law at Queen Mary and Westfield College of London University. He has been visiting Professor at the University of South Carolina and at the National Bureau for Economic Research at Harvard. In addition he is and has been an adviser to a number of Central Banks and City of London financial firms.

BUSINESS REVIEW

A review of the performance and development of the business, including an analysis using the KPIs listed below, is given in the Chairman's Statement on pages 4 to 9.

Investment Policy

The investment policy adopted by the Board is to invest in a portfolio of quoted and unquoted special situations, with the objective of achieving growth of shareholder value.

By the very nature of special situation investments, the opportunity to invest in them will arise at any time and often not for long periods. Sometimes a number of opportunities may arise at the same time, so any single investment may, on occasion, constitute a significant proportion of the portfolio or of that of the company concerned. The Investment Manager is charged by the Board with implementing the investment policy under its supervision and guidance. It is important for the Investment Manager to be able to vary any investment at any time in order either to protect shareholders' funds and/or to optimise shareholders' returns.

Portfolio Limits

The Board of Directors has set a limit of 15% of the portfolio of the Company that can be invested in any one company, the limit applying at the time of the acquisition of the holding, coincidently as required by s.1158 CTA 2010 (formerly s.842 ICTA 1988). The Board has not set a limit on the market value of an investment held in any company, which can therefore rise above 15%. The Board has not set a limit on the number or value of unquoted investments which can be held in the portfolio; nor has it set a limit on the number of companies it can invest in, however it would usually invest in at least 30 companies.

Likewise, the Board has set a limit of 30% of the value of the portfolio that can be invested into any one sector or theme at the time the investment is made, but has not set a formal limit on the market value that can be held in any one sector or theme. For the avoidance of doubt the Board, working with the Manager and other advisers, determines what constitutes a sector or theme. Again, although the Board has not set either a floor or a ceiling on the number of sectors invested in, it is expected that it would usually exceed four.

The investment policy enables the Investment Manager to invest worldwide, in either UK or foreign quoted or unquoted companies. The Board does not believe it is practical to impose limits on the geographical allocation of assets because, with the globalisation of businesses, it is an almost impossible task to monitor. While fully aware of the impact of geopolitical influences on the outcome of investment returns the Board, in conjunction with the Investment Manager, regularly reviews each investment on its individual merits. There is no geographical constraint on where and how much may be invested in any one country or currency.

Borrowing Limits

The Board believes that shareholders' returns will be enhanced if the Company borrows money at appropriate times for the purpose of investment. While the Constitution allows the Company to borrow up to 3.5 times shareholders' funds, the amount that can be borrowed at any time is normally subject to a constraint imposed in the lender's borrowing covenants. The Board will normally set an informal borrowing limit of approximately one half of the lender's covenanted constraint at the time the borrowings are made, allowing plenty of capacity for the value of the portfolio to fall without having to sell investments to conform with those covenants. However, in extreme circumstances, such as when it believes to be the bottom of a bear market, the Board may well borrow up to the full amount the lender's covenant allows.

Hedging Limits

The Investment Manager, in consultation with the Board, may from time to time put in place a hedging strategy in order to mitigate some of the stock market risks of the portfolio. It is not the intention of the Board to have in place a hedging strategy which would eliminate all adverse effects to shareholders' funds caused by a fall in general market prices, nor to protect the short-term value of the portfolio. Rather the aim is to realise, in circumstances of a severe and sudden fall in stock markets, a sum of money which can be used to take advantage of the fall and to purchase investments at prices which may add very good long-term value. No limit has been set on the proportion of the portfolio that might be hedged.

Results and Dividends

The results attributable to shareholders for the year and the transfer to reserves are shown on page 37.

The dividends paid and proposed are as follows:

	2010	2009
	£000	£000
Ordinary and 'A' non-voting Ordinary shares
Interims paid of 25.0p (2009: 3.5p) per share	6,000	840
Final proposed nil (2009 paid: 14.5p) per share	-	3,480
Total dividends	6,000	4,320

The Board are not proposing a final dividend.

Key Performance Indicators ('KPI')

The Board reviewed the risks from the point of view of the long-term shareholder, the principal one being that over the long-term (which we determined was five years) they do not make a return from their investment in the Company. The key performance indicator, against which the Board compared shareholders' share price and dividend returns, is the benchmark, which is in essence a proxy for the return from a risk free, five year investment. Other KPIs include the net asset value returns against those of the benchmark, against the Company's peer group average returns, against the market (the FTSE All-Share Index) and the total expense ratio in relation to the returns shareholders have received. The numbers are computed on a one, three, five and ten year basis - five years being the better time period over which to judge the progress of the Company.

i) Shareholder - Total Returns

A comparison is made between the 'Total Return' of each class of shares to that of the three-year average rolling rate of return of a five year UK Government bond, plus 2% with interest re-invested semi-annually (the Company's benchmark). This comparison illustrates how shareholders' returns compared with the returns of the benchmark.

To 31 March 2010	(1 year)	(3 years)	(5 years)	(10 years)
Share Price
Ordinary shares	57.4%	(26.3%)	50.1%	119.7%
'A' non-voting Ordinary shares	61.8%	(20.0%)	53.9%	137.7%
Company's benchmark	6.2%	19.7%	33.0%	69.2%

ii) Company - Total Returns

These comparisons are used to determine the effectiveness of the investment strategy and of the Investment Manager.

To 31 March 2010	(1 year)	(3 years)	(5 years)	(10 years)
Net Asset Value	48.0%	(7.1%)	70.0%	138.0%
Absolute comparison
Company's benchmark	6.2%	19.7%	33.0%	69.2%
Relative comparison
FTSE All-Share Index	52.8%	0.4%	44.0%	34.9%
Peer Group Average	56.8%	(11.7%)	48.2%	57.5%

iii) Discount/(Premium)

A comparison is made between the discounts/(premiums) of the Company's two classes of shares and those of the Company's Peer Group and of the AIC Average.

	2010	2007	2005	2000
Discount
Ordinary shares	15.2%	(8.0%)	3.0%	6.4%
'A' non-voting Ordinary shares	16.3%	1.6%	6.3%	14.0%
Peer Group Average	11.3%	6.4%	8.3%	12.8%
AIC Average	10.3%	5.2%	7.4%	13.7%

iv) Expense ratios

A comparison is made between the level of expenses (administrative and management) of the Company and the Net Asset Returns (both annualised) in order to assess the value for money that shareholders receive.

To 31 March 2010	(1 year)	(3 years)	(5 years)	(10 years)
Total expense ratio per annum	1.0%	0.9%	0.9%	1.0%
NAV Total Return per annum	48.0%	(2.4%)	14.0%	13.8%

Risks

The Board considers the risks the shareholders face can be divided into external and internal risks.

External risks to shareholders and their returns are those that can severely influence the investment environment within which the Company operates: including government policies, economic recession, declining corporate profitability, rising inflation and interest rates and excessive stock market speculation. At the annual strategy meeting, the Directors and Management highlighted certain risks that concerned them, including:

· A large rise in either long or short term interest rates.

· A collapse of Sterling.

· Currency instability, in particular the disintegration of the Euro.

· Uncertainty of outcome of recovery policies (particularly inflation or deflation), given they amount to a untried experiment.

· Aftershocks to the financial crisis, particularly in the continental European banking system.

· Unquantifiable risks in China.

· Risk of political paralysis stemming from the coalition government.

· Terrorism and international conflict.

· Regulatory change, particularly from the EU.

It should be stressed that these are the risks which most concern the Directors and Management, not forecasts of future events.

The management of these risks is achieved by sensible stock and sector diversification, the use of investment restrictions and guidelines and monthly reporting to the Board of the Company's adherence to these restrictions and guidelines.

Internal risks to shareholders and their returns are: portfolio (stock and sector selection and concentration), balance sheet (gearing), and/or administrative mis-management. In particular the Board has identified the exposure to Ocean Wilsons Holdings Limited as a notably large single investment risk. In respect to the risks associated with administration, continuing compliance with s.1158 CTA 2010 would have the greatest impact if it ceased to be complied with by the Company. The portfolio is continuously monitored by the Manager to ensure the Company is compliant with the key aspects of s.1158; any discrepancies are reported to the Board in the Manager's monthly compliance report.

The mitigation of these risks is achieved by the Board performing regular reviews of all service providers and monthly reviews of s.1158 compliance.

The Board considers the risks to the Company's two share prices, apart from those mentioned above, to include the level of discount or premium. The Board monitors the discount/premium and may take action when appropriate. However, given the Company's stated objective of increasing shareholder value over the medium to long-term, the Board does not consider short-term net asset value or share price volatility to be a material risk to long-term shareholders.

Details of how the principal risks arising from financial instruments are managed, have been summarised in Note 21 on pages 50 to 53.

THE PURSUIT OF GROWTH OF SHAREHOLDER VALUE

In pursuit of shareholder value, the Board:

• Contracts out the administration and management of the Company

The Board, in contracting out the administration and management of the Company, seeks to engage organisations which can provide the relevant levels of experience and expertise at an acceptable cost.

• Monitors third party suppliers, performance and costs

The Board at its regular meetings reviews reports prepared by both the Manager and the Administrator which enables it to monitor the performance and costs of the third party suppliers to the Company.

• Monitors investment performance and risks

The Board reviews reports prepared by the Manager at its regular meetings which enables it to monitor the investment performance and risks.

• Determines investment strategy, guidelines and restrictions

The Board determines the investment strategy in conjunction with the Manager. The strategy is monitored regularly and refinements are made to it as required, with formal review at the Board's annual strategy meeting.

The Board issues formal investment guidelines and restrictions; compliance with these are reported by the Manager's compliance officer on a regular basis.

• Determines gearing levels and capital preservation through the use of hedging instruments

The Board, taking account of advice from the Manager, determines the maximum level of borrowings that the Company will undertake at the time of borrowing. The Company has entered into a short-term loan facility with the ING Bank NV; currently the maximum level of the facility is £30m. The Board has approved the utilisation of hedging instruments in order to provide the portfolio with a limited degree of protection from extreme market declines.

• Monitors the share discount

The Board regularly monitors the level of discount and, whilst it has the option to repurchase shares, it considers that the best means of attaining a good rating for the shares is to concentrate on increasing shareholder returns.

• Determines the level of dividends payable to shareholders

The Board's policy is to distribute to shareholders the majority of the Company's income by way of dividends.

SERVICE PROVIDERS

The Board consists entirely of non-executive directors; it delegates the day to day implementation of its policies to third party service providers. The Board has contractually delegated to external organisations the management of the investment portfolio, the custodial services which include safeguarding of the assets and the day to day accounting and company secretarial requirements. Each of these contracts is only entered into after proper consideration of the quality and cost of services which are reviewed and monitored either by the Board or its Committees.

Investment Manager

Hansa Capital Partners LLP charges an investment management fee at an annual rate of 1% of the net assets of the Company (after any borrowings), but after deducting the value of the investment in Ocean Wilsons Holdings Limited on which no fee is payable. The terms of the investment management agreement permit either party to terminate the agreement by giving to the other not less than 12 months' notice or such shorter period as is mutually acceptable. In its annual assessment of the Investment Manager, the Board has concluded that, because of the calibre and commitment of the whole management team to the Company and the excellent long-term returns to shareholders it has produced, it is in the best interest of shareholders that the Manager remain in place under the present terms.

Auditor

The Auditor, Grant Thornton UK LLP have expressed their willingness to continue to act as Auditor to the Company and a resolution to re-appoint Grant Thornton UK LLP as Auditor to the Company will be proposed at the forthcoming Annual General Meeting.

Company Secretary

Secretarial services were provided by Hansa Capital Partners LLP at an annual rate of £100,000, excluding VAT (2009: £100,000).

Administrator

The Company engages BNP Paribas Services UK Limited as its Administrators.

CAPITAL STRUCTURE

The Company has 8,000,000 Ordinary shares of 5p and 16,000,000 'A' non-voting Ordinary shares of 5p each in issue. The Ordinary shareholders are entitled to one vote per Ordinary share held. The 'A' non-voting Ordinary shares do not entitle the holders to vote or receive notice of meetings but in all other respects they have the same rights as the Company's Ordinary shares.

Substantial Shareholders

As at 31 March 2010 and 14 June 2010 the Directors were aware of the following interests in the Ordinary shares of the Company, which exceeded 3% of the voting issued share capital of that class:

	No. of voting shares	% of voting shares
Nicholas B. Dill, Jr. & Codan Trust Company Limited	4,096,350	51.2

Of the shares held by Nicholas B. Dill, Jr & Codan Trust Company Limited, Mr Salomon is interested in 2,048,175 and Mrs Townsend is interested in 2,048,175, each holding representing 25.6% of the voting share capital. In addition, Mr Salomon has further interests in the Company's shares, the total interest is detailed in the Directors' Interests section on page 16.

BOARD STATEMENTS AND DISCLOSURES

In accordance with the Companies Act 2006 and Financial Services Authority UKLA Listing Rules, the Board is required to make the following statements and disclosures to shareholders:

Directors' Interests

The present members of the Board are shown on page 10, all of whom retired at the last Annual General Meeting and were duly re-elected. The Board's policy is that it is appropriate for all members to retire annually at the AGM and therefore Mr Hammond-Chambers, Lord Borwick, Mr Salomon and Professor Wood will retire again and offer themselves for re-election at the forthcoming AGM. The interests of Directors and their connected parties in the Company at 31 March 2010 are shown below:

	Ordinary shares of 5p each		'A' non-voting Ordinary shares of 5p each		Nature of interest
	2010	2009	2010	2009
Mr Hammond-Chambers	500	500	7,600	7,600	Beneficial
Lord Borwick	24,678	24,678	16,376	16,376	Beneficial
Mr Salomon	2,113,219	2,113,219	98,700	98,700	Beneficial
Professor Wood	5,500	5,500	7,100	7,000	Beneficial

Mr Salomon is the senior partner of Hansa Capital Partners LLP. Fees payable to Hansa Capital Partners LLP amounted to £1,264,413 (2009: £1,276,271). The investment management fee outstanding at the year end amounted to £110,829 (2009: £88,268). During the year, no rights to subscribe were granted to, or exercised by Directors, their spouses or infant children.

Fixed Asset Investments

The market value of the Group's investments at 31 March 2010 was £216,309,000 (2009: £139,027,000). Taking these investments at this valuation, the net assets attributable to each Ordinary and 'A' non-voting Ordinary share amounted to 895.9p at 31 March 2010 (2009: 635.0p).

Creditors' Payment Policy

While the Company does not follow a formal code, it is the Company's continuing policy to pay amounts due to creditors as and when they become due. Payments relating to investment transactions are made in accordance with the settlement practices of the relevant exchange. At 31 March 2010 outstanding trade creditors amounted to £Nil (2009: £Nil).

Directors' and Officers' Indemnity and Liability Insurance

The Company through its Articles has indemnified its Directors and Officers to the fullest extent permissable by law.

During the year the Company also purchased and maintained liability insurance for its Directors and Officers.

Going Concern

The Directors, having made relevant enquiries, are satisfied it is appropriate to prepare financial statements on a going concern basis as the assets of the Group consist of securities, the majority of which are traded on recognised stock exchanges.

Status and Activities

During the year under review the Company has operated as an investment company, under Section 833 of the Companies Act 2006 and in compliance with Section 1158 CTA 2010. The Company has received approval as an investment trust for the year ended 31 March 2009. The Directors are of the opinion that the Company has subsequently directed its affairs so as to enable it to continue to obtain HMRC approval as such. There has been no significant change in the activities of the Company and its subsidiary (the 'Group') during the year and the Directors anticipate the Group will continue to operate in the same manner during the current year.

Audit Information

The Directors confirm that, so far as they are aware having made such enquiries and having taken such steps as they consider they reasonably ought, they have provided the Auditor with all the information necessary for them to be able to prepare their report. In doing so each Director has made himself aware of any information relevant to the audit and established that the Company's Auditor is aware of that information. The Directors are not aware of any information relevant to the audit of which the Company's Auditor is unaware.

Social, Community, Employee Responsibilities and Environmental Policy

The Company does not have any employees. As an investment trust, the Company has no direct social, community, or environmental responsibilities. Its principal responsibility to shareholders is to ensure the investment portfolio is properly invested and managed.

Corporate Governance

The Corporate Governance Statement on pages 18 to 21 forms part of this Report of the Directors.

ANNUAL GENERAL MEETING

Special resolutions relating to the following items will be proposed at the forthcoming AGM:

(a) Authority to re-purchase 'A' non-voting Ordinary shares

A resolution will be proposed at the forthcoming AGM, seeking shareholder approval for the renewal of the authority for the Company to re-purchase its own 'A' non-voting Ordinary shares. The Board believes the ability of the Company to re-purchase its own 'A' non-voting Ordinary shares in the market will potentially benefit all equity shareholders of the Company. The re-purchase of 'A' non-voting Ordinary shares at a discount to the underlying net asset value will enhance NAV per share of the remaining equity shares and it may also enable the Company to address more effectively any imbalance between supply and demand for the Company's 'A' non-voting Ordinary shares.

The Company's Articles are drafted in such a way that the Company may from time to time purchase and cancel its own shares. However, company law requires that shareholders' approval to re-purchase shares be sought. At the AGM the Company will therefore seek the authority to purchase up to 2,398,400 'A' non-voting Ordinary shares (representing 14.99% of the Company's issued 'A' non-voting Ordinary share capital, the maximum permitted under the Listing Rules of the Financial Services Authority) at a price not less than 5p per share (the nominal value of each share) and not more than 5% above the average of the middle-market quotations for the five business days preceding the day of purchase. The authority being sought, the full text of which can be found in Resolution 9 in the Notice of Meeting, will last until the date of the next AGM.

It is proposed that the Company uses its realised capital reserve to re-purchase shares in the market. The decision as to whether the Company re-purchases any shares will be at the absolute discretion of the Board. Any shares purchased will be cancelled. The Directors consider that the creation of a facility to re-purchase the Company's own 'A' non-voting Ordinary shares is in the interests of shareholders as a whole and unanimously recommend all shareholders to vote in favour by ticking the appropriate boxes on the enclosed form of proxy. The proxy form should be returned to the Company's Registrar as soon as possible, but in any event so as to arrive no later than 48 hours before the time of the AGM.

By order of the Board

Hansa Capital Partners LLP

Secretary

24 June 2010

Corporate Governance Statement

This statement forms part of the Report of the Directors.

Internal Controls

The Combined Code requires the Directors to review the effectiveness of the Company's system of internal controls on an annual basis. The Directors, through the procedures outlined below, keep the system of internal controls under review. The Board has identified risk management controls in the key areas of business objectives, accounting, compliance, operations and secretarial as areas for the extended review.

The Board recognises its ultimate responsibility for the Company's system of internal controls and for monitoring its effectiveness. In order to perform this responsibility the Board receives regular reports on all aspects of internal control from the Company's service providers (including financial, operational and compliance controls, risk management and relationships with other service providers); the Board will authorise necessary action in response to any significant failings or weaknesses identified by these reports. However, it must be noted that this system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

Financial Reporting

The Board has a responsibility to present a balanced and understandable assessment of annual, half-yearly and other price sensitive public reports and reports to regulators, as well as to provide information required to be presented by statutory requirements. All such reports are reviewed and approved by the Board prior to their issue to ensure that this responsibility is fulfilled.

Compliance with the provisions of the Combined Code

The Board has considered the principles and recommendations of the AIC Code of Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in Section 1 of the Combined Code, as well as setting out additional principles and recommendations on issues of specific relevance to Hansa Trust PLC. The Board confirms it follows the Combined Code, except for those areas which the AIC Guide identifies as being irrelevant in a non self managed investment company: namely the role of the Chief Executive, Executive Director's remuneration and the need for an internal audit function.

The Board confirms, with the exception of the composition of the Audit Committee as detailed on page 20 and the existence of a Senior Independent Director, that it has in all respects followed the AIC Code in meeting its obligations under the Listing Rules and the Combined Code. The AIC Code can be found on The AIC website at www.theaic.co.uk.

The AIC Code has 21 principles, the vast majority of which the Board has been following for many years. However, modern corporate governance requires boards not only govern their companies sensibly and responsibly, but that they are seen to do so. Hence there is a requirement to follow a check list of principles, which in our case is drawn from the AIC Code. They include:

The Board

The Chairman should be independent

Mr Hammond-Chambers has been assessed by the Board to be independent.

A majority of the Board should be independent of the Manager

With the exception of Mr Salomon, who is a partner in the Investment Manager, all the other Board members are considered to be independent. Both Professor Wood and Lord Borwick, who have served as Directors of the Company for more than nine years, have been assessed as independent by virtue of their personal characteristics, their experience, their financial independence and their directorial performance.

Directors should be elected for a fixed term of no more than three years. Nomination for re-election should not be assumed but be based on disclosed procedures

All Directors resign at each AGM and where appropriate offer themselves for re-election.

There should be full disclosure of information about the Board

A brief biography of each member of the Board can be found on page 10. The Company Chairman does chair the Audit and Remuneration Committees as the Company considers he is the most appropriately qualified person on the Committees to fulfil these roles.

The Board should have a policy on tenure which is disclosed in the Annual Report

The Board has determined that neither age nor length of service necessarily compromise independence, rather that experience and knowledge gained in service normally strengthen independent performance. All Directors have contracts for services, details of which are contained in the Directors' Remuneration Report on page 33.

The Board should aim to have a balance of skills and experience, ages and length of service

The Board regularly reviews its requirements to direct the affairs of the Company. Where and when appropriate, individuals are identified who would strengthen the Board and put forward as candidates for board membership.

The Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual Directors

The Board undertakes a formal evaluation every three years. The other years the Board, at its strategy meeting, carries out an evaluation of the independence of each Director, the progress of the actions resulting from the previous reviews and of any new ideas for improving the returns to shareholders through improving the effectiveness of the Board. The Chairman is evaluated by Mr Salomon on behalf of the Board.

Directors' remuneration should reflect their duties and responsibilities and the value of their time spent

The level of Directors' fees is reviewed on a regular basis relative to other comparable companies, in light of the Directors' duties and responsibilities and the value of the time committed to the interests of the Company.

The Independent Directors should take a lead in the appointment of new Directors and the process should be disclosed in the Annual Report

The identification and appointment of a new board member is a matter for the whole Board. The Chairman would take the lead in all of the processes leading to the appointment of a new Director.

Directors should be offered relevant training and induction

When a new Director is appointed, he or she attends an induction seminar held by the Company Secretary and the Chairman. Directors are also provided on a regular basis with industry, regulatory and investment updates. Directors regularly participate in industry seminars and training courses where appropriate.

Board meetings and the relationship with the Manager:

Boards and Managers should operate in a supportive, co-operative and open environment

The Board and Manager operate in an environment of mutual trust and respect, both at formal Board meetings and during the year when ad-hoc communications are instigated by either party.

The primary focus at regular Board meetings should be the review of the investment performance and associated matters such as gearing, asset allocation, marketing/investor relations, peer group information and industry issues

At the regular Board meetings, discussions are held and reports and papers are reviewed, all of which cover the above mentioned aspects.

Boards should give sufficient attention to overall strategy

The Board holds an annual strategy meeting with the Manager to discuss the Company's future investment and corporate strategies.

The Board should regularly review both the performance of and contractual arrangements with, the Manager

The Board formally reviews the performance of the Manager each quarter, at which Board meeting the Manager presents a written report. At the annual review of the Manager all aspects of its service to the Board are reviewed, particularly the long-term returns to shareholders and the terms and conditions of its contract.

The Board should agree policies with the Manager covering key operational issues

Within the agreement, service levels are defined between the Manager and the Company. In addition the Board determines certain investment restrictions and guidelines for the Manager, on which the Manager reports monthly.

Boards should monitor the level of share price discount or premium (if any) and, if desirable, take action to reduce it

The Board continually monitors the levels of discount or premium and comments on it at its regular meetings. The Board also seeks authority to purchase up to 14.99% of the Company's 'A' non-voting Ordinary shares at the Company's AGM.

The Board should monitor and evaluate the other service providers

The Board, through its Audit Committee, receives independent reports from the auditors of the main service providers; these reports are called either AAF 01/06 or SAS 70 reports.

Shareholder Communication

The Board should regularly monitor the shareholder profile of the Company and put in place a system for canvassing shareholder views and for communicating the Board's views to shareholders

The Board reviews the shareholder profile at its regular meetings. The Company, through the Manager, has regular contact with its institutional shareholders. The Board supports the principle that the AGM should be used to communicate with all shareholders and promotes its website to them. The Company Secretary regularly receives and handles communications from shareholders. These communications are received by letter, email or telephone. Any matter requiring the Board's attention is referred to it for action.

The Board should normally take responsibility for, and have a direct involvement in, the content of communications regarding major corporate issues even if the Manager is asked to act as spokesman

The Board is responsible for all major corporate issues and as such would have a direct involvement in both the issue and the content of its communications.

• The Board should ensure shareholders are provided with sufficient information for them to understand the risk reward balance to which they are exposed by holding the shares

The Board, through the issuance of the Annual and Half Yearly Reports, Interim Management Statements and Monthly Fact Sheet, aims to ensure both shareholders and prospective shareholders are made fully aware of the investment aims and benchmark of the Company, the types of investments the Company is likely to enter into, the disposition of those investments in the portfolio, the gearing of the Company and the period over which its performance should be judged.

BOARD COMMITTEES

The Directors consider that in order for them to fulfil their responsibilities as Directors of the Company, all members of the Board should be members of all sub-committees, except where there is a conflict of interest.

Details of the Directors' attendance at Board, Strategy and Audit Committee meetings are in the Directors' Remuneration Report on page 33.

Audit Committee

The Audit Committee consists of all four Directors and is assisted by Mr Teideman, a former director whose skills and experience strengthen the Committee. The Committee is chaired by Mr Hammond-Chambers. The Smith Report's guidance to the Combined Code emphasises the need for 'Audit Committee arrangements to be proportionate to the task'. With such a small Board, it was deemed both proportionate and practical to involve all Directors in its workings even though Mr Salomon is not regarded as being independent.

The Company's Audit Committee meets representatives of the Investment Manager and its Compliance Officer, who report as to the proper conduct of business in accordance with the regulatory environment in which both the Company and the Investment Manager operate. The Company's Auditor also attends this Committee and reports on its work procedures, the quality and effectiveness of the Company's accounting records and its findings in relation to the Company's statutory audit. The responsibilities of the Audit Committee include reviewing the internal controls, the financial reporting process, the valuation of the unquoted investments, the management contract, the statutory audit and the Auditor's appointment, remuneration and independence (no non-audit services are provided by the Auditor). The Board has issued the Committee with Terms of Reference which are available from the Company Secretary at the registered address of the Company.

Following careful consideration of the independence, experience and value for money of the current Auditor, the Audit Committee has recommended that the Board re-appoint Grant Thornton UK LLP as Auditor to the Company.

Nomination Committee

The Board as a whole fulfils the function of the Nomination Committee. The Company's Articles of Association require newly appointed Directors to submit themselves for election by shareholders at the next AGM after appointment and that they will be subject to re-election at intervals of no more than three years. However, the Board has determined that all Directors will retire and offer themselves for re-election each year at the AGM.

Management Engagement Committee

The Board, with the exception of Mr Salomon, fulfils the function of this Committee. The level of management fees, level of service provided and the performance of the Manager, are reviewed on a regular basis to ensure that these remain competitive and in the best interests of shareholders.

Remuneration Committee

The Board as a whole fulfils the function of a Remuneration Committee and considers that the specific appointment of such a committee is not appropriate for an investment trust company. The level of Directors' fees is reviewed on a regular basis in the light of their duties and also relative to other comparable companies.

Statement of Directors' Responsibilities

In discharging its responsibilities of stewardship the Board is governed by the Companies Acts and the Financial Services Authority UKLA Listing Rules.

Under UK Company Law the Directors are responsible for ensuring that:

· Adequate accounting records are kept, which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006.

· The assets of the Company are safeguarded; and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

· The Directors' Report and other information included in the Annual Report is prepared in accordance with company law in the UK. The Directors are also responsible for ensuring the Annual Report includes information required by the Listing Rules of the Financial Services Authority.

· The Company has effective internal control systems, designed to ensure that proper accounting records are maintained, that the financial information on which the business decisions are made and which are issued for publication is reliable. Such a system of internal control can provide only reasonable, but not absolute, assurance against material mis-statement or loss.

· The Group Financial Statements for each financial year are prepared in accordance with IFRS, as adopted by the EU and have elected to prepare Company financial statements on the same basis. The Group and Company Financial Statements are required by law and IFRS as adopted by the EU to present fairly the financial position of the Company and the Group and the performance of the Group for that period. In preparing these financial statements the Directors are required to:

o select suitable accounting policies and apply them consistently;

o make judgements and estimates that are reasonable and prudent;

o state whether they have been prepared in accordance with IFRS as adopted by the EU; and

o prepare the financial statements on the going concern basis, unless it is inappropriate to presume the Company and Group will continue in business.

Under the Financial Services Authority, UKLA Listing Rules - Combined Code the Board is responsible for:

· Disclosing how it has applied the principles and complied with the provisions of the Combined Code or where not to explain the reasons for divergence.

· Reviewing the effectiveness of the Company's system of internal controls.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website www.hansatrust.com. Visitors to the website need to be aware that legislation in the UK governing the preparation and dissemination of the financial statements may differ from legislation in their own jurisdictions.

Responsibility Statement

The Board confirms that to the best of its knowledge:

· The financial statements, prepared in accordance with applicable international accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the Company.

· The Chairman's Statement and Directors' Report include a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties they face.

For and on behalf of the Board

Alex Hammond-Chambers

Chairman

24 June 2010

Report of the Independent Auditor to the Members of Hansa Trust PLC

We have audited the financial statements of Hansa Trust PLC for the year ended 31 March 2010 which comprise the group income statement, the group and parent company statements of changes in equity, the group and parent company balance sheet, the group and parent cashflow statement, and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors' Responsibilities set out on page 22 the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/UKP.

Opinion on financial statements

In our opinion:

· the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 March 2010 and of the group's profit for the year then ended;

· the financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;

· the parent company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provision of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

· the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

· the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns;

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

Under the Listing Rules, we are required to review:

· the directors' statement, set out on page 16 in relation to going concern; and

· the part of the Corporate Governance Statement relating to the company's compliance with the nine provisions of the June 2008 Combined Code specified for our review.

Marcus Swales

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

London

28 June 2010

This announcement only includes those sections of the annual financial report detailed on page 1. The full annual report is available at www.hansatrust.com

Group Income Statement

for the year ended 31 March 2010

		Revenue	Capital	Total	Revenue	Capital	Total
		2010	2010	2010	2009	2009	2009
	Notes	£000	£000	£000	£000	£000	£000

Gains/(losses) on investments	11	-	66,232	66,232	-	(72,631)	(72,631)
(Loss)/gain on derivatives		-	(744)	(744)	-	1,891	1,891
Exchange gains on currency
balances		-	-	-	-	1	1
Investment income	2	8,370	-	8,370	6,479	-	6,479

		8,370	65,488	73,858	6,479	(70,739)	(64,260)
Investment Management fee	3	(1,264)	-	(1,264)	(1,276)	-	(1,276)
Write back of prior years' VAT		97	-	97	-	-	-
Other expenses	4	(618)	-	(618)	(616)	-	(616)

		(1,785)	-	(1,785)	(1,892)	-	(1,892)

Profit/(loss) before finance costs
and taxation		6,585	65,488	72,073	4,587	(70,739)	(66,152)
Finance costs	5	(1)	-	(1)	(113)	-	(113)

Profit/(loss) before taxation		6,584	65,488	72,072	4,474	(70,739)	(66,265)
Taxation	6	(4)	-	(4)	(87)	-	(87)

Profit/(loss) for the year		6,580	65,488	72,068	4,387	(70,739)	(66,352)

Return per Ordinary and 'A'
non-voting Ordinary share	8	27.4p	272.9p	300.3p	18.3p	(294.8p)	(276.5p)

The Company does not have any income or expense that is not included in the profit for the year. Accordingly the "Profit for the year" is also the "Total comprehensive income for the year", as defined in IAS 1 (revised) and no separate Statement of Comprehensive Income has been presented.

The total column of this statement represents the Group's Income Statement, prepared in accordance with IFRS. The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations.

Statement of Changes in Equity - Group

for the year ended 31 March 2010

			Capital				Capital
		Share	redemption	Retained		Share	redemption	Retained
		capital	reserve	earnings	Total	capital	reserve	earnings	Total
		2010	2010	2010	2010	2009	2009	2009	2009
	Note	£000	£000	£000	£000	£000	£000	£000	£000

Net assets at 1 April		1,200	300	150,906	152,406	1,200	300	220,378	221,878

Profit/(loss) for the year		-	-	72,068	72,068	-	-	(66,352)	(66,352)
Dividends	7	-	-	(9,460)	(9,460)	-	-	(3,120)	(3,120)

Net assets at 31 March		1,200	300	213,514	215,014	1,200	300	150,906	152,406

Statement of Changes in Equity - Company

for the year ended 31 March 2010

			Capital				Capital
		Share	redemption	Retained		Share	redemption	Retained
		capital	reserve	earnings	Total	capital	reserve	earnings	Total
		2010	2010	2010	2010	2009	2009	2009	2009
	Note	£000	£000	£000	£000	£000	£000	£000	£000
Net assets at 1 April		1,200	300	150,906	152,406	1,200	300	220,378	221,878

Profit/(loss) for the year		-	-	72,068	72,068	-	-	(66,352)	(66,352)
Dividends	7	-	-	(9,460)	(9,460)	-	-	(3,120)	(3,120)

Net assets at 31 March		1,200	300	213,514	215,014	1,200	300	150,906	152,406

The accompanying notes are an integral part of this statement.

Balance Sheet of the Group and Company

as at 31 March 2010

		Group	Group	Company	Company
		2010	2009	2010	2009
	Notes	£000	£000	£000	£000

Non-current investments
Investment in subsidiary	10	-	-	634	635
Investments at fair value through
profit or loss	11	216,309	139,027	216,309	139,027

		216,309	139,027	216,943	139,662

Current assets
Trade and other receivables	13	631	1,150	631	1,150
Cash and cash equivalents	14	1,824	12,452	1,824	12,452

		2,455	13,602	2,455	13,602
Current liabilities
Trade and other payables	15	(3,750)	(223)	(4,384)	(858)

Net current (liabilities)/assets		(1,295)	13,379	(1,929)	12,744

Net assets		215,014	152,406	215,014	152,406

Capital and reserves
Called up share capital	16	1,200	1,200	1,200	1,200
Capital redemption reserve	17	300	300	300	300
Retained earnings	18	213,514	150,906	213,514	150,906

Total equity shareholders' funds		215,014	152,406	215,014	152,406

Net asset value per Ordinary and
'A' non-voting Ordinary share	19	895.9p	635.0p	895.9p	635.0p

The Financial Statements on pages 36 to 54 were approved by the Board of Directors on 14 June 2010 and were signed on its behalf by:

Signature

Alex Hammond-Chambers
Chairman

The accompanying notes are an integral part of this statement.

Cash Flow Statement

for the year ended 31 March 2010

		Group	Group	Company	Company
		2010	2009	2010	2009
	Notes	£000	£000	£000	£000

Cash flows from operating activities
Gain/(loss) before finance costs and taxation		72,073	(66,152)	72,073	(66,152)
Adjustments for:
Realised losses/(gains) on investments	11	1,704	(13,181)	1,704	(13,181)
Unrealised (gains)/losses on investments	11	(67,936)	85,812	(67,935)	85,814
Effect of foreign exchange rate changes		-	(1)	-	(1)
Interest paid		-	-	-	-
Decrease in current asset investments		-	-	-	-
Decrease in trade and other receivables	13	519	1,248	519	1,248
Increase/(decrease) in trade and other
payables	15	27	(114)	26	(116)
Taxes paid		(4)	(87)	(4)	(87)
Purchase of non-current investments		(16,075)	(6,974)	(16,075)	(6,974)
Sale of non-current investments		5,025	30,682	5,025	30,682

Net cash (outflow)/inflow from
operating activities		(4,667)	31,233	(4,667)	31,233

Cash flows from financing activities
Interest paid on bank loans		(1)	(113)	(1)	(113)
Dividends paid		(9,460)	(3,120)	(9,460)	(3,120)
Drawdown/(repayment) of loans		3,500	(15,800)	3,500	(15,800)

Net cash outflow from financing activities		(5,961)	(19,033)	(5,961)	(19,033)

(Decrease)/increase in cash and cash equivalents		(10,628)	12,200	(10,628)	12,200
Cash and cash equivalent at 1 April		12,452	251	12,452	251
Effect of foreign exchange rate changes		-	1	-	1

Cash and cash equivalents at 31 March	14	1,824	12,452	1,824	12,452

The accompanying notes are an integral part of this statement.

Notes to the Financial Statements

1. ACCOUNTING POLICIES

The financial statements of the Group and Company have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the International Accounting Standards Committee ("IASC") that remain in effect, to the extent that IFRS have been adopted by the European Union. New and changed standards in place, but not yet effective, have been reviewed and the Board do not consider they will have a material effect on the financial statements.

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. As permitted by Section 408 of the Companies Act 2006, an income statement for the Company has not been presented in the financial statements.

The Company adopted the extended disclosure requirements within IFRS7 for accounting periods beginning on or after 1 January 2009. The extended disclosure requirements introduced a fair value hierarchy and this is disclosed in note 22.

(a) Basis of preparation

The financial statements have been prepared on an historical cost basis, except for the valuation of investments and derivatives at fair value. The principal accounting policies adopted are set out below. Where presentational guidance, set out in the Statement of Recommended Practice ("SORP") for investment trusts issued by the Association of Investment Companies ("AIC") in January 2009 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

(b) Basis of Consolidation

The Financial Statements comprise the accounts of the Company and its subsidiary undertaking made up to 31 March 2010. In the Company's Financial Statements the investment in its subsidiary undertaking is stated at fair value. All accounting policies are applied consistently throughout the Group.

In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the income statement between items of a revenue and capital nature has been presented alongside the Income Statement. In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. Additionally, the net revenue is the measure the Directors believe to be appropriate in assessing the Company's compliance with certain requirements set out in s.1158 CTA 2010.

(d) Non-current investments

As the Company's business is investing in financial assets, with a view to profiting from their total return in the form of income received and increases in fair value, investments are designated as fair value through profit or loss on initial recognition in accordance with IAS 39. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy and information about the investments is provided on this basis to the Board of Directors.

Investments are recognised and de-recognised on the trade date. For listed investments fair value is deemed to be bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering most of the market including all FTSE 100 constituents and most liquid FTSE 250 constituents along with some other securities.

Unquoted investments are stated at fair value through profit or loss as determined by using various valuation techniques, in accordance with the International Private Equity and Venture Capital ("IPEVC") Valuation Guidelines. These include using recent arms length market transactions between knowledgeable and willing parties where available.

Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the income statement and are ultimately recognised in the Capital Reserves.

(e) Derivative Financial Instruments

Over the counter derivative options are measured at fair value as valued by the issuing broker at bid-market price.

(f) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank, short-term deposits and cash funds with an original maturity of three months or less and are subject to an insignificant risk of changes in capital value.

(g) Investment Income

Dividends receivable on equity shares are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends are recognised when the Company's right to receive payment is established. UK dividends are stated net of related tax credits, while overseas dividends and REIT income is stated gross.

Underwriting commission is recognised in the revenue column of the Income Statement insofar as it relates to shares not required to be taken up. Where a proportion of the shares underwritten are required to be taken up, the same proportion of the commission received is recognised in the capital column of the Income Statement, with the balance taken to the revenue column.

(h) Expenses

All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows:

(i) expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Income Statement; and

(ii) expenses are charged to the capital reserves, via the capital column of the Income Statement, where a connection with the maintenance or enhancement of the value of the investments can be demonstrated.

(i) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the Income Statement because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.

In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Income Statement is the "marginal basis". Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Income Statement, then no tax relief is transferred to the capital return column.

Deferred taxation is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Investment trusts which have approval under s.1158 CTA 2010 are not liable for taxation on capital gains.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Income Statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

(j) Foreign Currencies

Transactions denominated in foreign currencies are recorded in the local currency, at the actual exchange rates as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the year end are reported at the rate of exchange prevailing at the year end. Any gain or loss arising from a change in exchange rates, subsequent to the date of the transaction, is included as an exchange gain or loss in the capital or revenue column of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature respectively.

(k) Reserves

Capital reserves - Other

The following are credited or charged to this reserve via the capital column of the Income Statement:

- gains and losses on the disposal of investments;

- exchange differences of a capital nature; and

- expenses charged to the capital column of the Income Statement in accordance with the above accounting policies.

Capital reserves - Investment Holding Gains

The following are credited or charged to this reserve via the capital column of the Income Statement:

- increases and decreases in the valuation of investments held at the year end.

Revenue Reserves

The following are credited or charged to this reserve via the revenue column of the Income Statement:

- net revenue recognised in the revenue column of the Income Statement.

2. INCOME

	Revenue	Revenue
	2010	2009
	£000	£000
Income from quoted investments
Dividends	3,446	3,474
Overseas dividends	4,869	2,454

	8,315	5,928

Other operating income
Interest receivable on AAA rated money market funds	24	487
Other interest receivable	31	64

	55	551

Total income	8,370	6,479

Total income comprises:
Dividends	8,315	5,928
Interest	55	551

	8,370	6,479

3. INVESTMENT MANAGEMENT FEE

	Revenue	Revenue
	2010	2009
	£000	£000

Periodic fees	1,264	1,276

	1,264	1,276

Details of the Management Agreement are disclosed in the Report of the Directors on pages 15 and 16.

4. OTHER EXPENSES

	Revenue	Revenue
	2010	2009
	£000	£000
Secretarial services	116	117
Directors' remuneration	88	88
Auditor's remuneration for the audit of the Group and Company	26	26
Auditor's remuneration for the review of the Half Yearly Report	3	3
Administration fees	109	117
Production and distribution of Annual and Half Yearly Report	21	16
Registrar's fees	33	30
Bank fees and charges	125	125
Marketing	3	-
Savings scheme	-	(7)
Other	94	101

	618	616

The Group financial statements are required to comply with regulation 5(1)(b) of the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) Regulation 2008.

5. FINANCE COSTS

	Revenue	Revenue
	2010	2009
	£000	£000
Interest payable	1	113

	1	113

6. TAXATION

(a) Taxation Charge on Ordinary Activities

	Revenue	Revenue
	2010	2009
	£000	£000
UK corporation tax @ 28%	-	-
Irrecoverable foreign tax	4	87

	4	87

(b) Factors affecting tax charge for period

Approved investment trusts are exempt from tax on capital gains made by the Trust.

The tax charge for the period is lower than the standard rate of corporation tax in the UK of 28% (2009: 28%). The differences are explained below:

	2010	2009
	£000	£000
Total gain/(loss) before taxation	72,072	(66,265)

Gain/(loss) multiplied by standard rate of corporation tax	20,180	(18,554)
Effects of:
Non-taxable UK capital (gains)/losses	(18,336)	19,807
Non-taxable UK stock dividends	(9)	-
Non-taxable UK investment income	(1,732)	(973)
Excess administration expenses used	(68)	(278)
Income taxable in different years	(35)	-
Irrecoverable foreign tax	4	87
Disallowed expenses	-	(2)

Current tax charge	4	87

There is no requirement to make a provision for deferred taxation in the current or prior accounting period.

(d) Factors that may affect future tax charges

The Company has not recognised a deferred tax asset of £1,786,000 (2009: £1,252,000), arising as a result of having unutilised management expenses and loan relationship deficits. In addition, there are unrecognised deferred tax assets of £37,000 (2009: £36,000) relating to the subsidiary's unutilised tax losses. The expenses will only be utilised, to the extent that there is sufficient future taxable income, or if the tax treatment of the capital gains made by the Company or the Company's investment profile changes. The subsidiary has tax losses which will only be recoverable to the extent that there are sufficient future taxable profits.

7. DIVIDENDS PAID

	Revenue	Revenue
	2010	2009
	£000	£000
Amounts recognised as distributions to equity holders in the year:
Final dividend for 2009: 14.5p (2008: 9.5p)	3,480	2,280
Interim dividends for 2010: 25.0p (2009: 3.5p)	6,000	840
Unclaimed dividends refunded	(20)	-

	9,460	3,120

We set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of s.1158 CTA 2010 are considered. The Company's revenue available for distribution by way of dividend for the year is £6,581,000 (2009: £4,389,000).

	Revenue	Revenue
	2010	2009
	£000	£000
Interim dividends for 2010: 25.0p (2009: 3.5p)	6,000	840
Proposed final dividend for 2010: Nil (2009: 14.5p)	-	3,480

	6,000	4,320

The Board are not proposing a final dividend.

8. RETURN ON ORDINARY SHARES (EQUITY)

	Revenue	Capital	Total	Revenue	Capital	Total
	2010	2010	2010	2009	2009	2009
Returns per share	27.4p	272.9p	300.3p	18.3p	(294.8p)	(276.5p)

Returns

Revenue return per share is based on the revenue attributable to equity shareholders of £6,580,000 (2009: £4,387,000).

Capital return per share is based on the capital gain attributable to equity shareholders of £65,488,000 (2009 loss: £70,739,000).

Total return per share is based on the combination of revenue and capital returns attributable to equity shareholders, amounting to a net gain of £72,068,000 (2009 loss: £66,352,000).

Both revenue and capital return are based on: 8,000,000 Ordinary shares (2009: 8,000,000) and 16,000,000 'A' non‑voting Ordinary shares (2009: 16,000,000), in issue throughout the year.

9. PROFIT OF THE COMPANY ATTRIBUTABLE TO SHAREHOLDERS

The gain for the year after taxation dealt with in the accounts of the Company is £72,068,000 (2009 loss: £66,352,000).

10. INVESTMENT IN SUBSIDIARY

The Company owns 100% of the Ordinary share capital and voting rights of Consolidated Investment Funds Limited, an investment dealing company, registered and operating in England.

11. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

				Group and	Group and
				Company	Company
		AIM &		2010	2009
	Listed	OFEX	Unquoted	Total	Total
	£000	£000	£000	£000	£000
Cost at 1 April 2009	100,765	56,650	2,374	159,789	170,316
Investment holding gains/(losses) at 1 April 2009	13,247	(33,791)	(218)	(20,762)	65,050
Valuation at 1 April 2009	114,012	22,859	2,156	139,027	235,366
Movements in the year:
Purchases at cost	10,424	4,761	890	16,075	6,974
Sales - proceeds	(4,422)	(603)	-	(5,025)	(30,682)
- (Losses)/gains on sales	(1,637)	(67)	-	(1,704)	13,181
Movement in investment holding gains/(losses)	57,815	9,969	152	67,936	(85,812)

Valuation as at 31 March 2010	176,192	36,919	3,198	216,309	139,027

Cost at 31 March 2010	105,130	60,741	3,085	168,956	159,789
Investment holding gains/(losses) at 31 March 2010	71,062	(23,822)	113	47,353	(20,762)

	176,192	36,919	3,198	216,309	139,027

Transaction costs

During the year expenses were incurred in acquiring and disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Income Statement. The total costs were as follows:-

	Group and Company
	2010	2009
	£000	£000
Purchases	59	29
Sales	13	-

	72	29

12. SIGNIFICANT HOLDINGS

The Company's holdings of 10% or more of any class of shares in investment companies and 20% or more of any class of shares in non-investment companies are detailed below:

Non-investment company	Country of incorporation or registration	Class of capital	% of class held	Latest available audited accounts	Exc. Minority Interest Total capital and reserves	Profit after tax for the year
					US$000	US$000

Ocean Wilsons Holdings Limited	Bermuda	Ordinary	26.4	31.12.09	493,024	70,200

The above is included as part of the investment portfolio in accordance with IAS 28 - Investment in Associates.

The Company has material holdings in the following companies which represent more than 3% of any class of equity share capital:

Company	Class of capital	% of class held
Straight Plc	Ordinary	9.36
Polastar Plc	Ordinary	8.17
Altitude Group Plc	Ordinary	6.54
Robotic Technology Systems Plc	Ordinary	6.06
Andor Technology Plc	Ordinary	5.51
Work Group Plc	Ordinary	4.89
BV Group Plc	Ordinary	4.72
Leadcom Integrated Solutions Plc	Ordinary	4.55
Acertec Plc	Ordinary	4.38
Superglass Holdings Plc	Ordinary	4.05
Morson Group Plc	Ordinary	3.86
Helesi Plc	Ordinary	3.79
Hargreaves Services Plc	Ordinary	3.76
NCC Group Plc	Ordinary	3.71
All Leisure Plc	Ordinary	3.61
Media Square Plc	Ordinary	3.59
Goals Soccer Centres Plc	Ordinary	3.37
Engel East Europe NV	Ordinary	3.13
Cap-XX Ltd	Ordinary	3.09
Ark Therapeutics Group Plc	Ordinary	3.07

13. OTHER RECEIVABLES

	Group	Group	Company	Company
	2010	2009	2010	2009
	£000	£000	£000	£000

Derivatives at fair value held for trading	16	869	16	869
Prepayments and accrued income	581	253	581	253
Recoverable domestic tax	34	28	34	28

	631	1,150	631	1,150

14. CASH AND CASH EQUIVALENTS

	Group	Group	Company	Company
	2010	2009	2010	2009
	£000	£000	£000	£000

Cash funds	1,856	12,434	1,856	12,434
Cash at bank	(32)	18	(32)	18

	1,824	12,452	1,824	12,452

15. CURRENT LIABILITIES

	Group	Group	Company	Company
	2010	2009	2010	2009
	£000	£000	£000	£000

Bank loans and overdrafts	3,500	-	3,500	-
Due to subsidiary undertaking	-	-	638	639
Other creditors and accruals	250	223	246	219

	3,750	223	4,384	858

Details of the bank loan can be found in Note 21.

16. SHARE CAPITAL

	Company	Company
	2010	2009
	£000	£000
Issued and fully paid
8,000,000 Ordinary shares of 5p	400	400
16,000,000 'A' non-voting Ordinary shares of 5p	800	800

	1,200	1,200

The 'A' non-voting Ordinary shares do not entitle the holders to receive notices or to vote, either in person or by proxy, at any general meeting of the Company, but in all other respects rank pari passu with the Ordinary shares of the Company.

17. CAPITAL REDEMPTION RESERVE

	Group and Company
	2010	2009
	£000	£000

Balances at 31 March 2010 and 31 March 2009	300	300

18. RETAINED EARNINGS

	Capital Reserves	Capital Reserves
			Investment			Investment
			Gains/			Gains/
	Revenue	Other	(Losses)	Revenue	Other	(Losses)
	2010	2010	2010	2009	2009	2009
Group	£000	£000	£000	£000	£000	£000

Opening balance at 1 April	5,956	165,712	(20,762)	4,689	150,639	65,050
Profit/(loss) for the year	6,580	(2,627)	68,115	4,387	15,073	(85,812)
Dividend paid	(9,460)	–	–	(3,120)	–	–

Closing balance at 31 March	3,076	163,085	47,353	5,956	165,712	(20,762)

	Capital Reserves	Capital Reserves
			Investment			Investment
			Gains/			Gains/
	Revenue	Other	(Losses)	Revenue	Other	(Losses)
	2010	2010	2010	2009	2009	2009
Group	£000	£000	£000	£000	£000	£000

Opening balance at 1 April	5,324	165,712	(20,130)	4,055	150,639	65,684
Profit/(loss) for the year	6,581	(2,627)	68,114	4,389	15,073	(85,814)
Dividend paid	(9,460)	-	-	(3,120)	-	-

Closing balance at 31 March	2,445	163,085	47,984	5,324	165,712	(20,130)

Note: Only Revenue reserves are distributable, by way of dividends.

19. NET ASSET VALUE

	2010	2009

Net asset value per Ordinary and 'A' non-voting Ordinary share	895.9p	635.0p

The net asset value per Ordinary and 'A' non-voting Ordinary share is based on the net assets attributable to equity shareholders of £215,014,000 (2009: £152,406,000) and on 8,000,000 Ordinary shares (2009: 8,000,000) and 16,000,000 'A' non-voting Ordinary shares (2009: 16,000,000), in issue at 31 March 2009.

20. COMMITMENTS AND CONTINGENCIES

The Company has entered into a commitment agreement with DV3 Limited, an unquoted property investment company. The commitment was for £807,438 for a period of three years from 30 March 2008. The amount outstanding at 31 March 2010 was £327,438 (2009: £327,438).

The Company has entered into a further commitment agreement with DV4 Limited, also an unquoted property investment company. The commitment was for £10m for a period of five years from 7 March 2008 and the amount outstanding at 31 March 2010 was £7,379,111 (2009: £8,268,873).

In relation to the recovery of VAT following HMRC's acceptance of the European Court of Justice Judgement, the Company has received a further £97,000 during the year from its former investment managers. The Board does not now expect to recover any further amounts from its former investment managers. However, if the result of an action being brought against HMRC by others is successful, further amounts may become due from HMRC.

21. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS

Background

The Company's financial instruments comprise securities, cash balances, debtors and creditors arising directly from its operations. All financial assets and liabilities are either carried in the Balance Sheet at their fair value, or the Balance Sheet amount is a reasonable approximation of fair value. The risks that the Group as a whole is exposed to, are the same as those for the Company and are covered below.

Risk Objectives and Policies

The objective of the Company is to achieve growth of shareholder value commensurate with the risks taken, bearing in mind that the protection of long-term shareholder value is paramount. The policy of the Board is to provide a framework within which the Investment Manager can operate and deliver the objectives of the Company. In pursuing its investment objective, the Company is exposed to a variety of risks that could result in either a reduction in the Company's net assets and/or a reduction of the profits available for dividends.

These risks include those identified by the accounting standard IFRS7, being market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk and the Directors' approach to the management of them are set out below. The Board, in conjunction with the Investment Manager and Company Secretary, oversee the Company's risk management.

The objectives, policies and processes for managing the risks and the methods used to measure them are set out below; these have not changed from the previous accounting period.

Risks Associated with Financial Instruments:

Foreign currency risk

Foreign currency risks arise in two distinct areas which affect the valuation of the investment portfolio. 1) where an investment is denominated and paid for in a currency other than sterling; and 2) where an investment has substantial non-sterling cash flows. The Company does not normally hedge against foreign currency movements affecting the value of the investment portfolio, but takes account of this risk when making investment decisions. The Investment Manager monitors the effect of foreign currency fluctuations through the pricing of the investments by the various markets. The level of investments denominated in foreign currencies held by the Company at 31 March 2010 is 2.3% of the portfolio (2009: 2.8%) and therefore the portfolio valuation is not materially sensitive to direct foreign currency fluctuations.

	Direct	No direct		Direct	No direct
	foreign	foreign		foreign	foreign
	currency	currency	Total	currency	currency	Total
	risk	risk		risk	risk
	2010	2010	2010	2009	2009	2009
	£000	£000	£000	£000	£000	£000
Investments	4,861	211,448	216,309	4,256	134,771	139,027
Other receivables excluding prepayments	-	617	617	-	1,129	1,129
Cash funds	-	1,856	1,856	-	12,434	12,434
Cash at bank	-	(32)	(32)	-	18	18
Current liabilities	-	(250)	(250)	-	(223)	(223)
Bank loan	-	(3,500)	(3,500)	-	-	-

	4,861	210,139	215,000	4,256	148,129	152,385

Interest rate risk

Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on the Company's variable rate borrowings.

The Company has banking facilities amounting to £30m (2009: £30m) which are available for the Investment Manager to use in purchasing investments, the costs of which are base rate plus a margin. The Company does not normally hedge against interest rate movements affecting the value of the investment portfolio, but takes account of this risk when an investment is made utilising the facility. The level of banking facilities used is monitored by both the Board and the Investment Manager on a regular basis. The impact on the returns and net assets of the Company for every 1% change in interest rates based on the amount drawn down at the year end under the facility would be £35,000 (2009: Nil). The level of banking facilities utilised at 31 March 2010 was £3.5m (2009: £Nil).

Interest rate changes will always impact equity prices. The level and direction of change in equity prices is subject to prevailing local and world economic conditions as well as market sentiment, all of which are very difficult to predict with any certainty. The Company has floating rate financial assets consisting of bank balances and cash funds that have received average rates of interest during the year of 0.0% on bank balances and 0.2% on cash funds.

	Cash flow	No		Cash flow	No
	interest	interest		interest	interest
	rate risk	rate risk	Total	rate risk	rate risk	Total
	2010	2010	2010	2009	2009	2009
	£000	£000	£000	£000	£000	£000
Investments	-	216,309	216,309	-	139,027	139,027
Other receivables excluding prepayments	-	617	617	-	1,129	1,129
Cash funds	1,856	-	1,856	12,434	-	12,434
Cash at bank	(32)	-	(32)	18	-	18
Current liabilities	-	(250)	(250)	-	(223)	(223)
Bank loan	(3,500)	-	(3,500)	-	-	-

	(1,676)	216,676	215,000	12,452	139,933	152,385

Other price risk

By the nature of its activities, the Company's investments are exposed to market price fluctuations. Net asset values are calculated and reported daily to the London Stock Exchange. The Investment Manager and the Board monitor the portfolio valuation on a regular basis and consideration is given to hedging the portfolio against large market movements.

The Company's investment in Ocean Wilsons is large both in absolute terms, £84.6m (2009: £48.6m) and as a proportion of the portfolio, 39.1% (2009: 35.0%). Shareholders should be aware that if anything of a severe and untoward nature were to happen to this company, it could result in a significant reduction in the NAV and share price. However, it is an investment the Board pays close attention to and it should be pointed out that the risks associated with it are very different from those of the other companies represented in the portfolio. The Board itself has recently undertaken a thorough review of its business and prospects and determined that its future holds a lot of promise. As a consequence the Board believes the risk involved in the investment is worthwhile.

The performance of the portfolio as a whole is not designed to correlate with that of any market index. Should the portfolio of the Company, as detailed on page 32, rise or fall in value by 10% from the year end valuation, the effect on the Group profit and equity would be an equal rise or fall of £21.6m (2009: £13.9m). The Company gearing, which is currently at 1.76% (2009: 0.15%), would increase to 1.96% (2009: 0.16%) should the Company's portfolio fall in value by 10%. The impact of the Company's derivative strategies, which are detailed below, would not materially affect the value of the portfolio following a 10% fall in its value.

Derivatives

The Investment Manager may only use derivative instruments in order to mitigate the market risk to the portfolio. At the year end there was a Put Spread FTSE 100 Index Option open as detailed below, which provides a limited degree of protection from a fall in the value of the FTSE 100 Index of between 10% and 20% from their individual reference levels or between the Upper and Lower Strike Prices below.

				Market Value
		Upper	Lower	as at
Index	Notional Value	Strike Price	Strike Price	31 March 2010	Expiry Date
FTSE 100	£5,318,000	4,800	4,300	£16,000	18 June 2010

Credit Risk

The Company only transacts with regulated institutions on normal market terms, which are trade date plus one to three days. The levels of amounts outstanding from brokers are regularly reviewed by the Investment Manager. The duration of credit risk associated with the investment transactions is the period between the date the transaction took place, the trade date, the date the stock and cash are transferred and the settlement date. The level of risk during the period is the difference between the value of the original transaction and its replacement with a new transaction. The amounts due to/(from) brokers at 31 March 2010 are shown in Note 13.

The Company's maximum exposure to credit risk on OTC options and cash funds is £1,872,000 (2009: £13,321,000). Amounts receivable in relation to options open at the year end amounted to £16,000 (2009: £869,383). The related credit risk is managed by purchasing the options from a regulated institution. Surplus cash is placed in AAA-rated cash funds.

Liquidity Risk

The liquidity risk to the Company is that it is unable to meet its obligations as they fall due, due to a lack of available cash and an inability to dispose of investments in a timely manner. A substantial proportion of the Company's portfolio is held in liquid quoted investments; however there is a large holding in Ocean Wilsons Holdings Ltd of 39.1% (2009: 35.0%), and other holdings in AIM and unquoted investments of 18.5% (2009: 16.4%).

The Investment Manager takes into consideration the liquidity of each investment when purchasing and selling, in order to maximise the returns to shareholders by placing suitable transaction levels into the market. Special consideration is given to investments that represent more than 5% of the investee company. A detailed list of the top 30 investments held at 31 March 2010 is shown on page 32, together with a summary table detailing the markets on which the investments are quoted. This can be used broadly to ascertain the levels of liquidity within the portfolio, although liquidity will vary with each investment.

The Company's financial liabilities at 31 March 2010 consist of a short-term bank loan amounting to £3.5m (2009: Nil) that bears interest based on the prevailing LIBOR rate plus an agreed margin. This loan is part of a total revolving credit facility with ING Bank NV of £30m (2009: £30m). The facility is a committed facility repayable on or before 11 February 2011 and subject to a covenant requirement of a minimum adjusted net asset value of £80m. The Company has undrawn loans from this facility of £26.5m (2009: £30.0m). The Company holds this facility for use at short notice for its investment activities. If fully drawn the loan would form 13.9% (2009: 21.6%) of the current value of the investment portfolio.

Capital Management

The Company considers its capital to be its issued share capital and reserves. The Board regularly monitors its share discount policy and the level of discounts and whilst it has the option to re-purchase shares, it considers that the best means of attaining a good rating for the shares is to concentrate on good shareholder returns.

However, the Board believes the ability of the Company to re-purchase its own 'A' non-voting Ordinary shares in the market may potentially enable it to benefit all equity shareholders of the Company. The re-purchase of 'A' non-voting Ordinary shares at a discount to the underlying net asset value would enhance the net asset value per share of the remaining equity shares and it might also enable the Company to address more effectively any imbalance between supply and demand for the Company's 'A' non-voting Ordinary shares.

22. FAIR VALUE HIERARCHY

The Company adopted the amendments to IFRS 7 'Financial Instruments: Disclosures' effective from 1 January 2009. These amendments require an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

- Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy at 31 March 2010 as follows:

	Level 1	Level 2	Level 3	Total
	£000	£000	£000	£000
Financial assets at fair value through profit or loss
Quoted equities	213,111	-	-	213,111
Unquoted equities	-	-	3,832	3,832
Derivatives	-	22	-	22

Total	213,111	22	3,832	216,965

Financial liabilities at fair value through profit or loss
Derivatives	-	(6)	-	(6)

Net fair value	213,111	16	3,832	216,959

All amounts included above are valued in accordance with the accounting policies in Note 1.

There have been no transfers during the year between levels 1 and 2. A reconciliation of fair value measurements in Level 3 is set out in the following table.

	Equity
	investments	Total
	£000	£000
Opening Balance	2,791	2,791
Purchases	890	890
Sales	-	-
Total gains or losses included in gains on investments in the income statement:
- on assets sold	-	-
- on assets held at year end	151	151

Closing Balance	3,832	3,832

23. RELATED PARTIES

Details of the relationship between the Company and Hansa Capital Partners LLP, including amounts paid during the year and owing at 31 March 2010 are disclosed in the Report of the Directors pages 15 and 16 and in Note 3 above.

24. CONTROLLING PARTIES

At 31 March 2010 Nicholas B. Dill, Jr and Codan Trust Company Limited held 51.2% of the issued Ordinary shares. Additional information is disclosed in the Report of the Directors, "Substantial Shareholders" on page 15.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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