Final Results

RNS Number : 0526V

Hansa Trust PLC

02 July 2009

 



HANSA TRUST PLC

Announcement of Annual Financial Report

for the year ended 31 March 2009

Hansa Trust PLC announces its Annual Financial Report for the year ended 31 March 2009.

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 2009 (unaudited)	Year ended 31 March 2008 (audited)
Net Asset Value - Total Return	(30.2%)	(10.5%)
Performance Benchmark	6.7%	6.8%
Capital return per equity share	(294.8p)	(116.2p)
Revenue return per equity share	18.3p	13.8p
Net asset value per equity share	635.0p	924.5p
Total dividend per equity share for the year	18.0p	13.0p
Total income (£000's)	6,479	5,541
Revenue before taxation (£000's)	4,474	3,448

A final dividend of 14.5p per share (amounting to £3,480,000) is to be proposed on 30 July 2009 at the Annual General Meeting. This dividend will be paid out of the Company's revenue reserves of £5,324,000.

Ex-dividend date: 24 June 2009

Record date: 26 June 2009

Payment date: 10 August 2009

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

THE YEAR'S RESULTS

NAV: -31.3% to 635.0p per share

Our year to 31 March 2009 proved to be frustrating (and very disappointing) in that we didn't do better and in that we lost money for shareholders. Of course there will be years when we lose money, that is the nature of investing, but good investment managers are concerned about preservation of capital as well as earning returns and that is what was frustrating about the year's net asset value loss. The importance of preservation of capital is one of the reasons the Company's benchmark is based on a fixed interest return. By contrast to the fall in our net asset value of 30.17% on a total return basis, our benchmark returned a positive 6.7%. In any good year a fixed interest benchmark can prove easy to beat, but over the long term (five or even ten years) it is a lot tougher (more of which below). The UK stock market (the FTSE All‑Share Index) fell 32.2%.

As is his wont, John Alexander, our portfolio manager, has done an excellent job in writing his Investment Manager's Report (pages 23 - 35) laying out the course of the year's events (economic and financial), the activity and performance within the portfolio and then finally his view of the stock market outlook. While it makes quite sombre reading, your Board believes it is a realistic assessment of the difficulties that the stock market, investors generally and he, as our portfolio manager, face in looking after our affairs. John covers the background to the year and its various - largely negative - influences on our net asset value - so I won't go into it any further.

OCEAN WILSONS

Value of Holding: -33.3% at £48.6m

Our largest holding, of which shareholders will be well aware, is the investment we have in Ocean Wilsons, a Bermuda based company with two lines of business - its 58.25% holding in Wilson Sons (a Brazilian operator of ports, tugs and other maritime services) and its subsidiary, Ocean Wilsons (Investments) (a portfolio company with investments largely focused on companies operating in the higher growth economies). The value of our holding accounted for 31.9% of our total assets at the end of the year. 

Investors generally discovered that there was nowhere to hide during the past year and that included investing in Brazil, whose BOVESPA stock market index declined by 29.5% (expressed in sterling). Ocean Wilsons' share price declined by one third, which cost our net asset value 101.3p per share, reduced to 93.3 p per share by the dividend we received from our holding. In return terms the two parts performed rather differently; the share price of Wilson Sons declined by 39.0% (expressed in sterling) but the investment portfolio, aided by not investing some of the cash raised in the previous year, lost 21.2%. We continue to be excited by the prospects for Brazil generally and Wilson Sons' port operations specifically and by the prospects for good returns from Ocean Wilsons (Investments) portfolio of companies operating in higher growth economies. I should also emphasise that, although the size of the holding (£48.6m) represents a considerable one company risk within the portfolio, we regard it as an important diversification from the risks of UK plc and its stock markets.

DIVIDEND

+38.5% to 18.0p per share

Our investment income for the year rose by £0.9m to £6.5m (16.9%). The portfolio benefitted from some good increases in dividend income during the course of the year, most notably from the holding in Ocean Wilsons, from which we received £1.9m; an increase of £0.8m or 69.0%. The investment management fee fell (£0.6m) but there was no benefit this year from any VAT reclaim (£0.7m), while other costs and taxes were £0.3m lower - all of which ended up with distributable profits after tax increasing by £1.1m or 32.8% to £4.4m (18.3p per share).

I would not normally go into the detail of the revenue account but these increases were material and the subsequent final dividend we are recommending to shareholders - 14.5p per share - means that the total dividends for the year would amount to 18.0p per share. In a year when capital losses were significant, it is at least some small compensation that shareholders should receive a much larger dividend. I should, however, re-emphasise that the portfolio is managed for capital growth so the amount of income generated will vary with whatever happens to be in the portfolio in any given year. As a consequence the dividend can rise or fall in any given year, although over the very long-term it should rise as the general level of dividends grow.

SHARE PRICE PERFORMANCE

Ordinary Shares:	-37.8% to 510p per share	Discount to NAV: 19.7%
'A' Ordinary Shares:	-39.9% to 490p per 'A' share	Discount to NAV: 22.8%

It is, I am afraid, a feature of investment trusts that discounts at which their share prices sell in relation to their underlying net asset values tend to rise in bear markets. The discount on the Ordinary shares increased from 11.3% to 19.7% during the course of the year - with the result that Ordinary shareholders suffered a loss in the value of their shares of even more than that stemming from the fall in the net asset value. The numbers for the 'A' Ordinary shares were somewhat similar, the discount increasing from 11.8% to 22.8%.

It is difficult to attribute any particular reason for this decline other than to note that - as is highlighted on page 3 - the discount of the Trust has varied quite a lot over the years and the latest experience is not enormously different from that of previous bear markets. The Board understands that there are many investors who do not like such discount volatility because it affects their short term performance, the level of their fees and their track records. For such investors the shares of Hansa Trust may therefore not be a suitable investment. The Company is run for the long-term shareholder whose return will depend very largely on the performance of the portfolio and the returns it earns (not on the volatility of its discount). Over the long-term the change in the level of the discount does not tend to add or subtract materially from shareholder returns.

The table below provides a breakdown of shareholders' total return over the course of the year:

Attribution of Shareholders' Return

	Ordinary Shares	'A' Ordinary Shares
Change in the NAV	-289.5p	-289.5p
Change in the premium/discount	-20.5p	-35.5p
Dividends	+18.0p	+18.0p
Shareholders' Return	-292.0 p (-35.6%)	-307.0p (-37.7%)

LONG-TERM TOTAL RETURNS

5 Years: NAV: +59.6%; Benchmark: +33.5%; FTSE A-s Index: - 9.3%

Ordinary share price: +57.1%; 'A' Ordinary Share Price: +52.9%

Forgive me if I reiterate the long-term nature of the goal of the Company - to earn above average returns over the long-term, which the Board adjudges to correspond to rolling five year periods. As can be seen from the figures above, the net asset value has risen by nearly one half (59.6%), an annualised rate of 8.3% per annum; it compares with the return of our benchmark (the three year rolling average return of a five year government bond plus 2%) of 33.5% or 6.0% per annum. The question of the appropriateness of our fixed interest benchmark is raised from time to time at our Annual General Meetings. Apart from the fact that, in attempting to achieve positive returns for shareholders, having a positive return benchmark is the obvious comparator, fixed interest investments do sometimes outperform equities over longish periods; much as in the fable of the tortoise and the hare, the former is often rather hard to beat. Indeed over the last ten years our fixed interest benchmark has risen by 71.4% while the FTSE All‑Share Index total return has fallen 2.7% (our net asset value total return, by the way, rose 157.4%).

We are also asked from time to time how the rest of the portfolio - excluding the holding in Ocean Wilsons - has performed. I am happy to report those numbers are positive. Over the last five years the net asset value (ex Ocean Wilsons) per Hansa share has risen by 20.9%, not as good as our benchmark (+33.5%), but certainly better than the market which fell 9.3%. Indeed even over this last ghastly year, the net asset value (ex Ocean Wilsons) outperformed the stock market (-30.3% v. -32.2%).

The Listing Rules of the London Stock Exchange require boards of directors of investment companies to review the ongoing engagement of the manager. We, the independent directors of Hansa Trust, have no difficulty in concluding that it is very much in your interests that Hansa Capital, our manager, remains as the Company's manager. It isn't just the excellent long-term returns - important though they undoubtedly are - but it is also the excellent management and administration of the Company's affairs generally that persuades us we are 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 for all they do for us and the returns they have earned for us over the years. Thank you.

LLOYDS BANKING GROUP

At the beginning of our year our sixth largest investment was in Lloyds TSB Group (now renamed Lloyds Banking Group ('Lloyds')). The rationale for owning the shares was that, although it had, like most banks, a highly leveraged balance sheet, the bank had - by and large - not made the bad and (at times) highly irresponsible loans and investments other banks had made. In those circumstances its relatively stronger balance sheet gave it a material competitive advantage over its rivals. It looked as though it had been sensibly managed. That was until it acquired HBOS (Halifax Bank of Scotland). In acquiring HBOS it may have made an even worse investment than that of the Royal Bank of Scotland when it bought the Dutch bank, ABN AMRO. It is your Board's view - and judging by the 78% decline in its share price over the course of the bid, it was also the stock market's view - that the acquisition has crippled the business of Lloyds and it is not impossible that it turns out to be fatal. We will see. The performance of the share price alone should have sent a warning signal to the bank's board of directors. But it appears not to have done; indeed the directors appear to have remained in denial.

The reason for raising this in my Chairman's Statement is that your Board was actively involved in correspondence with the board of Lloyds in an attempt to persuade the board that not only was it not in the interest of Lloyds shareholders to acquire HBOS, but also that it would prove to be very injurious to the value of Lloyds and its shareholders. So far that does appear to be the case: its stock market value has been decimated, it is now not paying a dividend and finally it had to resort to financial support from the Government in order to survive. A quote from the Report of the House of Commons Treasury Committee included in its comments the following:

    'The merger between Lloyds and HBOS has been described in some quarters as a 'shotgun wedding'.'

•    'Lloyds Group Chief Executive Eric Daniels conceded that the merger proceeded swiftly on the basis of relatively little due diligence …'

•    'Nevertheless, from the evidence we have received, if the merger has had injurious consequences for Lloyds TSB we consider that the responsibility for this lies primarily with the Lloyds Board.'

Your Board of Directors became concerned that the board of one of its largest investee companies was about to commit an enormous blunder. In the spirit of Lord Myners, who has been urging investors to become more active in telling boards of companies how to run their businesses (on the whole not a sensible proposition), we wrote to Sir Victor Blank, Lloyds' chairman; we did not benefit from the courtesy of a reply from him but rather we received a short and rather curt response from someone else. Not, I would have thought, a sensible way to treat the legitimate concerns of a shareholder.

When we concluded that Sir Victor Blank seeemed unlikely to acknowledge, let alone respond to our letter, I wrote, on behalf of the Hansa Trust Board, to another Lloyds' director, Ewan Brown; he is an eminent banker from Edinburgh whom I have known for many years. While he was courteous enough to acknowledge receipt of the letter and assure me that the concerns I had raised had been dealt with by the board, he passed the letter on to someone else to answer. Sir Victor Blank was copied in on all of the correspondence.

Your Board of Directors is very angry about what has happened. The value of our holding of 1.2m shares declined from £5.4m to £0.8m during the year - we consider in the main because of the behaviour and decisions of the Lloyds' board. We think their actions indicate that the board of Lloyds Banking Group is contemptuous of the views of its shareholders, that the letters we did receive made certain assertions at least one, the issue of due diligence, concerns us greatly. The reasons for the merger appear to us to be all about getting bigger, not better and finally that their standards of governance (involving sound business judgements and taking responsibility for decisions) appear lamentable (box ticking apart, of course).

It leaves us with a decision to make regarding our holding of 1.2m shares. We could, may be we should, just sell it, consigning it to the 'good riddance to bad rubbish' out tray. But we believe this issue should not be allowed to rest. William Salomon attended the recent AGM held in Glasgow at which he aired your Board's views and concerns. He also, on our behalf, voted against the re-election of Sir Victor Blank as a director and against the remuneration report. However both these resolutions were passed following support from the Government and the block votes of investing institutions. We feel we should - both as a duty towards our own shareholders and also as a matter of good shareholder practice - see what we can do to retrieve some of the value for the losses we have incurred. We are examining what, if any, other courses of action may be available to us.

ANNUAL GENERAL MEETING

30 July 2009 at 11.30am at the Washington Hotel, Curzon Street

The Annual General Meeting ('AGM') will be held at the Washington Hotel, Curzon Street, London (Green Park tube station, see map on page 57) at 11.30am on Thursday 30 July 2009. Your attendance is important to us because it gives us, the Directors and Management, the chance to hear your views, concerns and suggestions. Please, please come and join us. John Alexander 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 the Management should you wish to do so.

OUTLOOK

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

(a) Shorter-term risks:

John's assessment of the Market Outlook in his Investment Manager's Report is comprehensive but, in summary, amounts to the short strap line above; 'shorter-term very difficult to assess but longer-term optimistic'. In the previous two years the strap line had read 'short-term cautious, long-term bullish' but I fear that the word 'cautious' proved to be rather too bullish! In the first paragraph of my statement on the outlook last year (written some three months before the Lehman Brothers bomb went off), I left no doubt about the gravity of the situation; it was quite a pessimistic opening paragraph and yet it turned out to be a lot short of the mark. Each year the Directors meet for a strategy session during which we look at the outlook for stock markets and the risks inherent in them and we consider how best to take advantage of the opportunities and mitigate the risks. We identify those risks within the Report of the Directors; last year we highlighted the risks of global recession, of rising inflation, of incompetent government (particularly in the UK), of the spreading of the bad debt crisis and of falling corporate profits. While inflation was rearing its ugly head, it was quickly knocked on that ugly head by the financial crisis, which in the short-term, at least, is thoroughly deflationary. The rest came to pass. I do not think we were complacent about them but we simply didn't imagine the consequences of what was unfolding would be anything like as dramatic as they proved to be.

In assessing the risks we now face (outlined on page 13) we are rather more sanguine. Certain of last years risks - recession, incompetent Government, a broad based financial crisis and falling corporate profits - are now events (rather than risks). The major risk we face is that the polices of this incompetent, untrustworthy and populist Government, involving a truly massive economic pump priming financed by huge increases in the National Debt, don't work and that we end up with a long period - rather akin to that which Japan endured in the 1990s and early 2000s - of deflation and no economic growth (if we are lucky) or in extremis of depression (if we are unlucky). In May 1939 Mr Morgenthau, Secretary to the US Treasury, described the results of America's economic policies in the 1930s thus: 

'We have tried spending money. We are spending more than we have ever spent before and it does not work … We have never made good on our promises … I say after eight years of this administration we have just as much unemployment as when we started … and an enormous debt to boot.

Given that this financial crisis is debt induced and given that this Government's idea of a cure is to incur yet more debt, the scenario above is not far-fetched. In truth the Government's policies appear to us to be aimed squarely at trying to win the next election with no care of their consequences; the recent budget made financial assumptions which are widely regarded as fanciful but the policies behind which - if those assumptions are not realised - will aggravate an already grave situation.

However the rather more common view in the City is that the Government's extravagance will kick start the economy, will overcome the recession, but will inevitably result in high rates of inflation. That too is a plausible outcome but not necessarily more realistic than the other one. The problem with high rates of inflation, as with deflation, is that they are both very difficult to control. In neither scenario is lasting and real wealth created.

It is very difficult to know which of these two scenarios will play out. Hence the 'Shorter-term very difficult to assess ...'. The risk investors generally face is that the process of getting the economy on to an even keel is drawn out, made all the more difficult because savers, who naturally re-liquify the financial system, are being punished with almost non-existent interest rates, cut dividends and (in some cases) higher taxes. What is reasonable to assert is that in any highly indebted society, company, stock market, etc there will be high levels of volatility in their performance; we live in a highly indebted society and it is getting worse. So we can expect even more volatility than we have become used to - involving for us periods of severe rises and falls in stock market values over short periods of time. 

(b) Longer-term opportunities:

The old Chinese adage that risk has two components - danger and opportunity - surely applies to these highly risky and turbulent times. One day - probably later rather than sooner - there will have been a thorough cleansing of the financial system with the bad debts and bad assets written down - or even written off - and a much less indebted society. That then will provide the background for healthy economic and thence corporate growth. Given the severity of the financial mess that exists in Britain, other parts of the world are likely to recover earlier than Britain. Given the international nature of the business of most of the larger companies quoted on the London Stock Exchange, those companies should benefit earlier than those wholly dependent on the UK economy.

The countries with high savings and investment rates, with stable and sound government, with a good work ethic, with good demographics and finally with good educational standards are those that will fare best over the longer-term. While no country is perfect in all of these respects China fits most of this bill best. Much as we have suggested in the past, China, along with other emerging market economies, is likely to emerge as the driver of global economic growth and those British companies exposed to that growth directly or indirectly are likely to provide their shareholders with good returns. Ocean Wilsons is particularly well positioned to take advantage of this.

In respect to home grown opportunities in Britain, much will depend on the result of the forthcoming general election and then on the efficacy of the Government that follows this one. The present Government has done so much to kill off the many excellent aspects of the British economy it inherited in 1997, that it will inevitably take time to rebuild them. It looks as though a Conservative Government is likely to be returned and, if David Cameron and his colleagues have the necessary courage to do what's needed rather than what's popular (not a given) and do it with a modicum of efficiency, then good investment opportunities will emerge domestically, particularly amongst smaller companies.

Most of all I would like to stress that opportunities need to be found. They are not found following the index hugging herd nor the portfolio churning traders, but rather through proper investment thinking about what is going on and identifying the long-term opportunities that others ignore. That is what William, John and their colleagues have been good at, along with providing an investment portfolio for shareholders that they cannot easily reproduce for themselves. That, more than anything else, gives your Board the confidence to believe that Hansa Trust can earn good positive returns for its shareholders over the long-term.

Signature

Alex Hammond-Chambers
Chairman    

26 June 2009

  Report of the Directors 

for the year ended 31 March 2009

The Directors present their Report and Financial Statements for the year ended 31 March 2009.

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

Your current Board consists of the following, each of whom 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.

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 Trust 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 Manager), 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

The 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 in one 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 (co-incidently as required by Section 842 of the Income and Corporation Taxes Act 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 Memorandum and Articles of Association allow 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 41.

The dividends paid and proposed are as follows:

		2009	2008
		£000	£000
Ordinary and 'A' non-voting Ordinary shares
Interim paid of 3.5p (2008: 3.5p) per share		840	840
Final proposed of 14.5p (2008 paid: 9.5p) per share		3,480	2,280
Total dividends		4,320	3,120

The final dividend will, if approved, be paid on 10 August 2009 to Ordinary and 'A' non-voting Ordinary shareholders registered at the close of business on 26 June 2009. 

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.

	2009	2006	2004	1999
	(1 year)	(3 years)	(5 years)	(10 years)
Share Price
Ordinary shares	36.66%	37.22%	57.10%	162.63%
'A' non-voting Ordinary shares	38.76%	37.41%	52.86%	193.28%
Company's benchmark	6.75%	20.24%	33.55%	71.36%

ii) Company - Total Returns

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

	2009	2006	2004	1999
	(1 year)	(3 years)	(5 years)	(10 years)
Net Asset Value	-30.17%	-19.20%	59.64%	157.35%
Absolute comparison
Company's benchmark	6.75%	20.24%	33.55%	71.36%
Relative comparison
FTSE All-Share Index	-28.99%	-26.70%	9.29%	-2.69%
Peer Group Average	-33.70%	-33.80%	10.90%	35.10%

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.

	2009	2006	2004	1999
	(1 year)	(3 years)	(5 years)	(10 years)
Discount
Ordinary shares	19.70%	-3.60%	18.00%	20.20%
'A' non-voting Ordinary shares	22.80%	0.00%	18.80%	30.80%
Peer Group Average	13.20%	4.50%	11.80%	14.20%
AIC Average	9.40%	6.20%	9.40%	11.90%

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.

	2009	2006	2004	1999
	(1 year)	(3 years)	(5 years)	(10 years)
Total expense ratio per annum	1.01%	0.88%	0.91%	1.00%
NAV Total Return per annum	-30.17%	-6.40%	11.93%	15.74%

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: include government policies, economic recession, declining corporate profitability, rising inflation and interest rates and excessive stockmarket speculation. At the annual strategy meeting, the Directors and Management highlighted certain risks that concerned them, including:

•    The wrong economic policies being adopted by the Government; 

•    The spreading of the UK's recession into a longer lasting depression;

•    A protraction of the global recession;

•    High levels of inflation as a consequence of the economic policies both in the UK (domestic risk) and in the USA (international risk);

•    Rising taxation;

•    High interest rates being caused by high inflation;

•    A decline in the sterling exchange rate;

•    Falling profits and reduced dividends; and

•    Threatened interference by the European Union in the status of investment trusts.

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.842 ICTA 1988 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.842; 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.842 ICTA 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 53 to 56.

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 Barings Bank; 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 re-purchase 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 and timing of dividends payable to shareholders

The Board's policy is to distribute to shareholders the majority of the Company's income by way of an interim dividend, normally paid in December each year and a final dividend paid as soon as is practically possible following the approval by shareholders at the Company's Annual General Meeting.

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. The investment management fee outstanding at the year end amounted to £88,268 excluding VAT (2008: £125,857). 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 (2008: £100,000).

Administrator

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

BOARD STATEMENTS AND DISCLOSURES

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

Publication of Financial Statements on a website

The Financial Statements are made available on the HansaTrust website www.hansatrust.com. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of the website, and accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the Financial Statements since they were initially presented on the website. Visitors to the website need to be aware that the legislation in the UK governing the preparation and dissemination of the Financial Statements may differ from legislation in their jurisdiction.

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 families in the Company at 31March 2009 are shown below: 

	Ordinary shares of 5p each		'A' non-voting Ordinary shares of 5p each		Nature of
					interest
	2009	2008	2009	2008
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	7,000	7,000	Beneficial

Mr Salomon is senior partner of Hansa Capital Partners LLP. Fees payable to Hansa Capital Partners LLP, amounted to £1,276,271 (2008: £1,836,690). 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 2009 was £139,027,000 (2008: £235,366,000). Taking these investments at this valuation, the net assets attributable to each Ordinary and 'A' non-voting Ordinary share amounted to 635.0p at 31March 2009 (2008: 924.5p).

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 2009 outstanding trade creditors amounted to £Nil (2008: £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 842 of the Income and Corporation Taxes Act 1988. The Company has received approval as an investment trust for the year ended 31 March 2008. 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.

Charitable and Political Donations

The Company did not make any charitable or political donations in the year (2008: Nil).

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 ('NAV') 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 

26 June 2009 

  Corporate Governance

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 mis-statement or loss. 

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 21, 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 an independent director.

•    A majority of the Board should be independent of the Manager

With the exception of Mr Salomon, who is employed by the 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37.

•    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 and 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 Report, Half Yearly Report, 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.

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 2009 and 15 June 2009 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	% of
	voting shares	voting shares
Nicholas B. Dill, Jr. & Codan Trust Company Limited (note)	4,096,350	51.20

Note: 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 paragraph Directors' Interests on page 15.

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 37.

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.

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:

•    Proper 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 1985.

•    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:

    •    select suitable accounting policies and apply them consistently;

    •    make judgements and estimates that are reasonable and prudent;

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

    •    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.

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
26 June 2009

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

We have audited the group and parent company financial statements (the 'financial statements') of Hansa Trust Plc for the year ended 31 March 2009 which comprise the group income statement, the group and parent company statement of changes in equity, the group and parent company balance sheets, the group cash flow statement, and notes 1 to 23. These financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the Directors' Remuneration Report that is described as having been audited.

This report is made solely to the company's members, as a body, in accordance with Section 235 of the Companies Act 1985. 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

The directors' responsibilities for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are set out in the Directors Responsibilites statement on page 22.

Our responsibility is to audit the financial statements and the part of the Directors' Remuneration Report to be audited in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Directors' Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985 and, as regards the group financial statements, Article 4 of the IAS Regulation. We also report to you whether in our opinion the information given in the Report of the Directors is consistent with the financial statements. The information given in the Report of the Directors includes that specific information presented in the Chairman's Statement that is cross-referred from the Report of the Directors.

In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions is not disclosed. 

We review whether the Corporate Governance statement reflects the company's compliance with the nine provisions of the 2006 Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the board's statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the group's corporate governance procedures or its risk and control procedures.

We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. The other information comprises only the Key Information, the Ten Year Performance Statistics, the Chairman's Statement, the Report of the Directors, the Investment Manager's Report, the Portfolio Information, and the unaudited part of the Directors' Remuneration Report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the Directors' Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation ofthefinancial statements, and of whether the accountingpolicies are appropriate to the group's and company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the Directors' Remuneration Report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Directors' Remuneration Report to be audited.

Opinion

In our opinion: 

•    the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the group's affairs as at 31 March 2009 and of its loss for the year then ended;

•    the parent company financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 1985, of the state of the parent company's affairs as at 31 March 2009; 

•    the financial statements and the part of the Directors' Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985 and, as regards the group financial statements, Article 4 of the IAS Regulation; and

•    the information given in the Report of the Directors is consistent with the financial statements.

Grant Thornton UK LLP

Registered Auditor & Chartered Accountants

London

26 June 2009

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 2009

		Revenue		Capital		Total		Revenue		Capital		Total
		2009		2009		2009		2008		2008		2008
	Notes	£000		£000		£000		£000		£000		£000
Losses on investments	11	-		(72,631)		(72,631)		-		(28,112)		(28,112)
Gain on derivative		-		1,891		1,891		-		221		221
Exchange gains/(losses) on currency balances
		-		1		1		-		(1)		(1)
Investment income	2	6,479		-		6,479		5,541		-		5,541
		6,479		(70,739)		(64,260)		5,541		(27,892)		(22,351)
Investment Management fee	3	(1,276)		-		(1,276)		(1,838)		-		(1,838)
Write back of prior years' VAT		-		-		-		674		-		674
Other expenses	4	(616)		-		(616)		(729)		-		(729)
		(1,892)		-		(1,892)		(1,893)		-		(1,893)
Profit/(loss) before finance costs
and taxation		4,587		(70,739)		(66,152)		3,648		(27,892)		(24,244)
Finance costs	5	(113)		-		(113)		(200)		-		(200)
Profit/(loss) before taxation		4,474		(70,739)		(66,265)		3,448		(27,892)		(24,444)
Taxation	6	(87)		-		(87)		(144)		-		(144)
Profit/(loss) for the year		4,387		(70,739)		(66,352)		3,304		(27,892)		(24,588)
Return per Ordinary and 'A'
non-voting Ordinary share	8	18.3p		(294.8p)		(276.5p)		13.8p		(116.2p)		(102.4p)

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.

The accompanying notes are an integral part of this statement.

  Statement of Changes in Equity - Group

For the year ended 31 March 2009

				Capital								Capital
		Share		redemption		Retained				Share		redemption		Retained
		capital		reserve		earnings		Total		capital		reserve		earnings		Total
		2009		2009		2009		2009		2008		2008		2008		2008
	Note	£000		£000		£000		£000		£000		£000		£000		£000
Net assets at 1 April		1,200		300		220,378		221,878		1,200		300		247,966		249,466
Loss for the year		-		-		(66,352)		(66,352)		-		-		(24,5880		(24,588)
Dividends paid	7	-		-		(3,120)		(3,120)		-		-		(3,000)		(3,000)
Net assets at 31 March		1,200		300		150,906		152,406		1,200		300		220,378		221,878

Statement of Changes in Equity - Company

For the year ended 31 March 2009

				Capital								Capital
		Share		redemption		Retained				Share		redemption		Retained
		capital		reserve		earnings		Total		capital		reserve		earnings		Total
		2009		2009		2009		2009		2008		2008		2008		2008
	Note	£000		£000		£000		£000		£000		£000		£000		£000
Net assets at 1 April		1,200		300		220,378		221,878		1,200		300		247,966		249,466
Loss for the year		-		-		(66,352)		(66,352)		-		-		(24,588)		(24,588)
Dividends paid	7	-		-		(3,120)		(3,120)		-		-		(3,000)		(3,000)
Net assets at 31 March		1,200		300		150,906		152,406		1,200		300		220,378		221,878

The accompanying notes are an integral part of this statement.

  Balance Sheet of the Group and Company

as at 31 March 2009

		Group		Group		Company			Company
		2009		2008		2009			2008
	Notes	£000		£000		£000			£000
Non-current investments
Investment in subsidiary	10	-		-		635			637
Investments at fair value through
profit and loss	11	139,027		235,366		139,027			235,366
		139,027		235,366		139,662			236,003
Current assets
Trade and other receivables	13	1,150		2,398		1,150			2,398
Cash and cash equivalents	14	12,452		251		12,452			251
		13,602		2,649		13,602			2,649
Current liabilities
Trade and other payables	15	(223)		(16,137)		(858)			(16,774)
Net current assets/(liabilities)		13,379		(13,488)		12,744			(14,125)
Net assets		152,406		221,878		152,406			221,878
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	150,906		220,378		150,906			220,378
Total equity shareholders' funds		152,406		221,878		152,406			221,878
Net asset value per Ordinary and
'A' non-voting Ordinary share	19	635.0p		924.5p		635.0p			924.5p

The Financial Statements on pages 40 to 56 were approved by the Board of Directors on 15 June 2009 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 2009

		Group		Group		Company		Company
		2009		2008		2009		2008
	Notes	£000		£000		£000		£000
Cash flows from operating activities
Loss before finance costs & taxation		(66,152)		(24,244)		(66,152)		(24,244)
Adjustments for:
Realised gains on investments	11	(13,181)		(6,646)		(13,181)		(6,646)
Unrealised losses on investments	11	85,812		34,758		85,814		34,759
Effect of foreign exchange rate changes		(1)		1		(1)		1
Interest paid		-		-		-		-
Decrease in current asset investments		-		-		-		-
(Decrease)/increase in trade and other
receivables	13	1,248		(1,661)		1,248		(1,661)
(Decrease)/increase in trade and other
payables	15	(114)		42		(116)		41
Taxes paid		(87)		(144)		(87)		(144)
Purchase of non-current investments		(6,974)		(42,801)		(6,974)		(42,801)
Sale of non-current investments		30,682		22,256		30,682		22,256
Net cash inflow/(outflow) from
operating activities		31,233		(18,439)		31,233		(18,439)
Cash flows from financing activities
Interest paid on bank loans		(113)		(200)		(113)		(200)
Dividends paid		(3,120)		(3,000)		(3,120)		(3,000)
(Repayment)/drawdown of loans		(15,800)		15,800		(15,800)		15,800
Net cash (outflow)/inflow from
financing activities		(19,033)		12,600		(19,033)		12,600
Increase/(decrease) in cash and cash equivalents		12,200		(5,839)		12,200		(5,839)
Cash and cash equivalent at 1 April		251		6,091		251		6,091
Effect of foreign exchange rate changes		1		(1)		1		(1)
Cash and cash equivalents at 31 March	14	12,452		251		12,452		251

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, but the Board do not consider they will have an 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 230 of the Companies Act 1985, an income statement for the Company has not been presented in the financial statements.

(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 2003 (and revised in December 2005), 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 2009. 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.

(c)    Presentation of income statement

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 section 842 of the Income and Corporation Taxes Act 1988.

(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 and 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 realised capital reserve, 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 Section 842 ICTA 1988 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 - Realised 

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

-    gains and losses on the realisation of investments; 

-    realised 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 - Unrealised 

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; 

-    unrealised exchange differences of a capital nature; and

-    unrealised gains from quoted investments.

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; and

-    dividends paid.

  2. INCOME

	Revenue		Revenue
	2009		2008
	£000		£000
Income from listed investments
Dividends	3,474		3,840
Overseas dividends	2,454		1,564
	5,928		5,404
Other operating income
Placement and underwriting income	-		25
Interest receivable on AAA rated money market funds	487		108
Other interest receivable	64		4
	551		137
Total income	6,479		5,541
Total income comprises:
Dividends	5,928		5,404
Interest	551		112
Other income	-		25
	6,479		5,541

3. INVESTMENT MANAGEMENT FEE

	Revenue		Revenue
	2009		2008
	£000		£000
Periodic fees	1,276		1,682
VAT incurred thereon	-		156
	1,276		1,838

Details of the management agreement are disclosed in the Report of the Directors on page 15. 

4. OTHER EXPENSES

	Revenue		Revenue
	2009		2008
	£000		£000
Secretarial services	117		117
Directors' remuneration	88		88
Auditor's remuneration for the audit of the Group and Company	26		24
Auditor's remuneration for the review of the Half Yearly Report	3		2
Administration fees	117		126
Production and distribution of Annual and Half Yearly Report	16		43
Registrar's fees	30		40
Bank charges	125		58
Marketing	-		71
Savings scheme	(7)		75
Other	101		85
	616		729

5. FINANCE COSTS

	Revenue		Revenue
	2009		2008
	£000		£000
Interest payable	113		200
	113		200

6. TAXATION

(a)    Taxation Charge on Ordinary Activities

	Revenue		Revenue
	2009		2008
	£000		£000
UK corporation tax @ 28%	-		-
Irrecoverable foreign tax	87		144
	87		144

(b)    Factors affecting tax charge for period 

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

The tax charge for the period is lower than the standard rate of corporation tax in the UK of 28% (2008: 30%). The differences are explained below:

	2009		2008
	£000		£000
Total loss before taxation	(66,265)		(24,444)
Loss multiplied by standard rate of corporation tax	(18,554)		(7,333)
Effects of:
Non-taxable UK capital losses	19,807		8,367
Non-taxable UK investment income	(973)		(1,152)
Excess administration expenses (used) /unused	(278)		95
Irrecoverable foreign tax	87		144
Disallowed expenses	(2)		23
Current tax charge	87		144

(c)    Provision for deferred taxation

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 £1,252,000 (2008: £1,577,000), arising as a result of having unutilised management expenses and loan relationship deficits. In addition, there are unrecognised deferred tax assets of £7,000 (2008: £7,000) 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
	2009		2008
	£000		£000
Amounts recognised as distributions to equity holders in the year:
Final dividend for 2008: 9.5p (2007: 9.0p)	2,280		2,160
Interim dividend for 2009: 3.5p (2008: 3.5p)	840		840
	3,120		3,000

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 Section 842 of the Income and Corporation Taxes Act 1988 are considered. The Company's revenue available for distribution by way of dividend for the year is £4,389,000 (2008: £3,305,000).

	Revenue		Revenue
	2009		2008
	£000		£000
Interim dividend for 2009: 3.5p (2008: 3.5p)	840		840
Proposed final dividend for 2009: 14.5p (2008: 9.5p)	3,480		2,280
	4,320		3,120

The proposed final dividend is subject to approval by shareholders at the AGM and has not been included as a liability in these financial statements.

8. RETURN ON ORDINARY SHARES (EQUITY)

	Revenue		Capital		Total		Revenue		Capital		Total
	2009		2009		2009		2008		2008		2008
Returns per share	18.3p		(294.8p)		(276.5p)		13.8p		(116.2p)		(102.4p)

Returns

Revenue return per share is based on the revenue attributable to equity shareholders of £4,387,000 (2008: £3,304,000).

Capital return per share is based on the capital loss attributable to equity shareholders of £70,739,000 (2008: £27,892,000 loss).

Total return per share is based on the combination of revenue returns and capital losses attributable to equity shareholders, amounting to a net loss of £66,352,000 (2008: £24,588,000 loss).

Both revenue and capital return are based on: 8,000,000 Ordinary shares (2008: 8,000,000) and 16,000,000 'A' non-voting Ordinary shares (2008: 16,000,000), in issue throughout the year.

9. PROFIT OF THE COMPANY ATTRIBUTABLE TO SHAREHOLDERS

The loss for the year after taxation dealt with in the accounts of the Company is £66,352,000 (2008: £24,588,000 loss).

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 AND LOSS

	Listed £000		AIM & OFEX £000		Unquoted £000		Group and Company 2009 Total £000		Group and Company 2008 Total £000
Cost at 1 April 2008	114,324		54,528		1,464		170,316		143,833
Unrealised appreciation at 1 April 2008	76,144		(13,455)		2,361		65,050		99,808
Valuation at 1 April 2008	190,468		41,073		3,825		235,366		243,641
Movements in the year:
Purchases at cost	3,942		2,122		910		6,974		42,093
Sales - proceeds	(30,682)		-		-		(30,682)		(22,256)
- realised gains on sales	13,181		-		-		13,181		6,646
Movement in unrealised appreciation	(62,897)		(20,336)		(2,579)		(85,812)		(34,758)
Valuation as at 31 March 2009	114,012		22,859		2,156		139,027		235,366
Cost at 31 March 2009	100,765		56,650		2,374		159,789		170,316
Unrealised appreciation at 31 March 2009	13,247		(33,791)		(218)		(20,762)		65,050
	114,012		22,859		2,156		139,027		235,366

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
	2009		2008
	£000		£000
Purchases	29		194
Sales	-		14
	29		208

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: 

					Exc. Minority Interest
	Country of incorporation or registration	Class of capital	% of class held	Latest available audited accounts	Total capital and reserves	Loss after tax for the year
Non-investment company
					US$000	US$000
Ocean Wilsons Holdings Limited	Bermuda	Ordinary	26.4	31.12.08	424,524	(26,700)

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	5.43
Work Group Plc	Ordinary	4.89
BV Group Plc	Ordinary	4.72
Helesi Plc	Ordinary	4.6
Leadcom Integrated Solutions Plc	Ordinary	4.57
Acertec Plc	Ordinary	4.38
Cap-XX Plc	Ordinary	4.28
Media Square Plc	Ordinary	4.03
Morson Group Plc	Ordinary	3.86
Hargreaves Services Plc	Ordinary	3.79
NCC Group Plc	Ordinary	3.71
Engel East Europe NV	Ordinary	3.13
Ark Therapeutics Group Plc	Ordinary	3.09

13. OTHER RECEIVABLES

	Group		Group		Company		Company
	2009		2008		2009		2008
	£000		£000		£000		£000
Derivatives at fair value held for trading	869		1,103		869		1,103
Prepayments and accrued income	253		1,285		253		1,285
Recoverable domestic tax	28		10		28		10
	1,150		2,398		1,150		2,398

14. CASH AND CASH EQUIVALENTS

	Group		Group		Company		Company
	2009		2008		2009		2008
	£000		£000		£000		£000
Cash funds	12,434		251		12,434		251
Cash at bank	18		-		18		-
	12,452		251		12,452		251

15. CURRENT LIABILITIES

	Group		Group		Company		Company
	2009		2008		2009		2008
	£000		£000		£000		£000
Bank loans and overdrafts	-		15,800		-		15,800
Due to subsidiary undertaking	-		-		639		640
Other creditors and accruals	223		337		219		334
	223		16,137		858		16,774

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

16. SHARE CAPITAL

	Company		Company
	2009		2008
	£000		£000
Authorised
300,000 7.5% cumulative preference shares of £1	-		-
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
Allotted, called up 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
	2009		2008
	£000		£000
Balances at 31 March 2009 and 31 March 2008	300		300

18. RETAINED EARNINGS

	Revenue 2009 £000		Realised Capital 2009 £000		Unrealised Capital 2009 £000		Revenue 2008 £000		Realised Capital 2008 £000		Unrealised Capital 2008 £000
Group
Opening balance at 1 April	4,689		150,639		65,050		4,385		143,773		99,808
Profit for the year	4,387		15,073		(85,812)		3,304		6,866		(34,758)
Dividend paid	(3,120)		-		-		(3,000)		-		-
Closing balance at 31 March	5,956		165,712		(20,762)		4,689		150,639		65,050

			Realised Capital 2009 £000		Unrealised Capital 2009 £000		Revenue 2008 £000		Realised Capital 2008 £000		Unrealised Capital 2008 £000
	Revenue 2009 £000
Company
Opening balance at 1 April	4,055		150,639		65,684		3,750		143,773		100,443
Profit for the year	4,389		15,073		(85,814)		3,305		6,866		(34,759)
Dividend paid	(3,120)		-		-		(3,000)		-		-
Closing balance at 31 March	5,324		165,712		-20,130		4,055		150,639		65,684

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

19. NET ASSET VALUE

	2009		2008
Net asset value per Ordinary and 'A' non-voting Ordinary share	635.0p		924.5p

The net asset value per Ordinary and 'A' non-voting Ordinary share is based on the net assets attributable to equity shareholders of £152,406,000 (2008: £221,878,000) and on 8,000,000 Ordinary shares (2008: 8,000,000) and 16,000,000 'A' non-voting Ordinary shares (2008: 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 2009 was £327,438 (2008: £807,438).

During 2007/08 the Company 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 2009 was £8,268,873 (2008: £8,699,704).

The Company continues to pursue the outstanding VAT recoverable following the HMRC's acceptance of the European Court of Justice Judgement, from its former investment managers and whilst the Board is confident it will recover further amounts, the level and timing of these amounts remains uncertain.

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.

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 Group 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 2009 is 2.8% of the portfolio (2008: 2.8%) and therefore the portfolio valuation is not materially sensitive to foreign currency fluctuations. 

	Direct foreign currency risk		No direct foreign currency risk		Total		Direct foreign currency risk		No direct foreign currency risk
											Total
	2009		2009		2009		2008		2008		2008
	£000		£000		£000		£000		£000		£000
Investments	4,256		134,771		139,027		6,634		228,732		235,366
Other receivables excluding prepayments	-		1,129		1,129		-		2,381		2,381
Cash funds	-		12,434		12,434		-		251		251
Cash at bank	-		18		18		-		-		-
Current liabilities	-		(223)		(223)		-		(337)		(337)
Bank loan	-		-		-		-		(15,800)		(15,800)
	4,256		148,129		152,385		6,634		215,227		221,861

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 (2008: £30m) which are available for the Investment Manager to use in purchasing investments, the costs of which are base rate plus a margin. The Group 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 £Nil (2008: £158,000). The level of banking facilities utilised at 31 March 2009 was £Nil (2008: £15.8m).

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 1.3% on bank balances and 4.3% on cash funds.

	Cash flow interest rate risk		No interest rate risk		Total		Cash flow interest rate risk		No interest rate risk		Total
	2009		2009		2009		2008		2008		2008
	£000		£000		£000		£000		£000		£000
Investments	-		139,027		139,027		-		235,366		235,366
Other receivables excluding prepayments	-		1,129		1,129		-		2,381		2,381
Cash funds	12,434		-		12,434		251		-		251
Cash at bank	18		-		18		-		-		-
Current liabilities	-		(223)		(223)		-		(337)		(337)
Bank loan	-		-		-		(15,800)		-		(15,800)
	12,452		139,933		152,385		(15,549)		237,410		221,861

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 (£48.6m) and as a proportion of the portfolio (35.0%). Shareholders should recognise 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 London Stock Exchange Index. Should the portfolio of the Company, as detailed on page 36, 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 £13.9m (2008: £23.5m). The Group gearing, which is currently at 0.15% (2008: 6.8%), would increase to 0.16% (2008: 7.5%) 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 were four OTC Put Spread FTSE 100 Index Options open as detailed below. These provide 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.

Index	Notional Value	Upper Strike Price	Lower Strike Price		Market Value as at 31-Mar-09	Expiry Date
FTSE 100	8,895,030	5,571.00	4,952.00		£869,383	05-May-09
					£869,383

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 2009 are shown in Note 13.

The Company's maximum exposure to credit risk on OTC options and cash funds is £13,321,000 (2008: £1,354,000). Amounts receivable in relation to options open at the year end amounted to £869,383 (2008: £1,102,639). 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. The majority of the Company's portfolio is held in liquid quoted investments; however there is a large holding in Ocean Wilsons Holdings Ltd of 35.0% (2008: 31.0%), and in other holdings in AIM and unquoted investments of 16.4% (2008: 17.5%).

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 2009 is shown on page 36, 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 Group's financial liabilities at 31 March 2009 consist of a short-term bank loan amounting to £Nil (2008: £15.8m) that would bear interest based on the prevailing LIBOR rate plus an agreed margin. This loan is part of a total revolving credit facility with ING Barings Plc of £30m (2008: £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 Group has undrawn loans from this facility of £30m (2008: £14.2m). The Company holds this facility for use at short notice for its investment activities. If fully drawn the loan would form 21.6% (2008: 12.7%) 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. 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 2009 are disclosed in the Report of the Directors page 15 and in Note 3 above.

23. CONTROLLING PARTIES 

At 31 March 2009 Nicholas B. Dill, Jr and Codan Trust Company Limited held 51.20% of the issued Ordinary shares. Additional information is disclosed in the Report of the Directors, 'Substantial Shareholders' on page 20. 

 

END

 

 

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