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Hansa Trust Plc - Annual Financial Report

Chairman's Report to the Shareholders




The Strategic Report has been prepared in accordance with requirements of The Companies Act 2006 and incorporates the Chairman's Report to the Shareholders, the majority of the former Directors' Report and elements from the Directors' Remuneration Report.




The Net Asset Value (total return):       Ten years:   + 157.3%
                                                                Five Years:  + 25.5%

Shareholders entrust the Board and the investment manager to earn good returns over the long-term. We usually use five years for determining whether it has been achieved and we compare the returns against our three key performance indicators ("KPIs") - being the returns on UK government stocks, inflation and a world equity index. The Board is accountable to shareholders for achieving those returns and so that is what this statement focuses on. Alec Letchfield's Portfolio Manager's Report focuses on the year's returns and the circumstances surrounding them.

We have enjoyed a quite extraordinarily extended bull market over the last ten years, the start of which heralded the end of the equity bear market brought about by the 2007/09 financial crisis. We thought it might be interesting to look back over these last ten years (as well as the last five years), putting in perspective what has happened.

America's S&P 500 Composite Index, has led the way, having increased over the past ten years at the rate of 13.5% per annum - driven by rising profits (accounting for 12.5% of the increase) and by an increase in the valuation of the Index (accounting for 1% of the increase). However, after the payment of dividends, the Index has risen by circa 16% per annum (c. 17% in Sterling terms). These are, by most historical standards, extraordinary returns and reflect the very favourable conditions equity markets have enjoyed over the period, boosted by very easy monetary conditions and rising corporate profits, in turn driven importantly by rising corporate profit margins.

Ten Years to March 2019

Sterling Return

USA (S&P Comp)

17.0% p.a.


11.1% p.a.

World (MSCI World)

13.5% p.a.

Brazil (BOVESPA)

4.3% p.a.




Returns from other parts of the developed world have tended not to match those in America (they don't have the large tech companies which have so driven American equity market values) but even so they have benefited from much the same influences - rising profits and price earnings ratios. As the table reflects, in the case of Brazil, the equity markets of emerging markets haven't fared as well, bogged down by politics, commodity and currency weaknesses.

It has been - and may continue to be - a golden age for equities driven by the benefits globalisation has brought upon corporations and the profits they have earned. While there is concern amongst investors about valuation levels, the fact remains that equity markets have been driven up by rising corporate profits, with valuations not hugely higher than they were ten years ago. That may or may not provide some protection to markets in the event of any untoward developments.


The statistics in the table below are the ones that the Board of Directors focuses on in assessing the progress of the Company. First and foremost, as we aim to do, we continue to produce positive total returns over five year periods, as seen below.


The next table shows the raw statistics for the last five years:


31 Mar 14

31 Mar 19

Capital Return

Total Return

NAV per share





NAV per share (excl. OWHL)





OWHL per Hansa Trust share










FTSE UK Gilts All Stocks TR Index





UK CPI Inflation










Share Prices

Ord Shs






'A' Ord shs






Ord Shs






'A' Ord shs












It was just over five years ago that we adjusted the portfolio by coming out of our holdings in big blue chip UK companies and focusing our international exposure rather more sharply in certain selected funds. It took us a year or so to change the portfolio, so that in a year's time we will make our first five year assessment of the new portfolio. As the table shows, our progress has been hindered by the returns from our strategic holding in Ocean Wilsons, albeit its Brazilian subsidiary has continued to build its business and the politics of Brazil look somewhat more promising now than they have at any time in the last five years.

Shareholders will be aware that we have embarked upon a course of building investor awareness of the Hansa Trust story, as part of our programme to reduce the discount from its relatively high levels. While there are now a number of new shareholders on board, it will take time to build sufficient buying to bring the discount down. The key to success will be the returns we earn.


To be held at 1.00pm on Monday 29 July at the Washington Mayfair Hotel, Curzon Street, London.

The agenda for the Annual General Meeting consists of the normal proposals for shareholders. We always have an excellent turnout at our AGMs and I do encourage all shareholders who can attend to come and join us. We receive plenty of questions, comments and advice at the meetings, all of which are recorded and subsequently discussed by the Directors.

Shareholders may note that there is no proposal for a final dividend, which is because the two equal interim dividend payments for the year of 8p each, totalling 16p (the same as last year) have already been announced and paid.

While the Annual Report and the Annual General Meeting each year serve the purpose of providing information about the Company and its progress, I do encourage shareholders to stay in touch with their investment by visiting the website ( from time to time. It contains a lot of information and updates occurring during the course of the year and helps, I believe, give shareholders an extra understanding of the progress of the Company.

At the Annual General Meeting, the Board will present a resolution to shareholders to appoint PricewaterhouseCoopers LLP ("PwC") as the Company's Auditor. Regulation now provides that there has to be rotation of Auditor every ten years, which means that Grant Thornton must stand down as Auditor. On behalf of shareholders I would like to thank the firm for its work over many years, work that is essential to the confidence of shareholders in the Company's business.


In an attempt to provide would-be investors with information about potential investment funds, the FCA has determined each such fund and each class of share in such fund should provide a "Key Investment Document" ("KID"). This provides investors with certain basic investment information to help him/her make an informed decision about making an investment. Unfortunately, the FCA-defined method behind the production of the numbers has attracted a certain amount of controversy, because the numbers produced don't always appear logical. In looking at our two KIDs (one for each class of our shares), we would suggest that shareholders/investors scrutinise a broad range of information about Hansa Trust, including that posted on our website in making any assessment about Hansa Trust as an investment.