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EthicalManaged Funds

Hunter HallGlobal Value LimitedACN 107 462 966

Annual Report2008

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Corporate Directory

Principal and Registered OfficeHunter Hall Global Value LimitedLevel 2, 60 Castlereagh StreetSydney NSW 2000Australia

Telephone: +61 2 8224 0300

Facsimile: +61 2 8224 0333

Email: [email protected]

Website: www.hunterhall.com.au

DirectorsPeter James MacDonald HallExecutive Chairman

Jack Theseus LowensteinExecutive Director

David Ian ScottNon-executive Director

Adam Paul BlackmanNon-executive Director

Alex KoroknayNon-executive Director

Company SecretaryOuafaa Karim

AuditorGrant Thornton NSWLevel 17, 383 Kent StreetSydney NSW 2000Australia

Share RegistryComputershare Investor Services Pty LimitedLevel 3, 60 Carrington StreetSydney NSW 2000Australia

Printed on recycled paper. ISO 14001 Environmental Accreditation.

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Contents

Hunter Hall Global Value Limited ACN 107 462 966 Annual Report 2008 1

Chairman’s Report 2

Investment Managers’ Report 5

Directors’ Report 14

Corporate Governance Statement 20

Income Statement 30

Balance Sheet 31

Statement of Changes in Equity 32

Cash Flow Statement 33

Notes to the Financial Statements 34

Directors’ Declaration 50

Auditor’s Independence Declaration 51

Independent Auditor’s Report 52

Shareholder Information 55

Corporate Directory 61

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Chairman’s Report

Dear fellow shareholder,

I am pleased to report on the results for Hunter Hall Global Value Limited (the Company, HHV) for the year to 30 June 2008.

Financial Performance In the 12 months to 30 June 2008 the Company reported a net loss after tax of $57.7m (down from a profit of $57.9m inthe year to 30 June 2007) which included investment losses before tax of $83.5m. This compares with the investment gainsbefore tax of $88.3m reported in the year to 30 June 2007.

Net Tangible Assets (NTA) were $360.5m compared to $474.7m a year earlier. The after tax NTA per share at 30 June 2008was $1.0077 calculated on 357,785,272 ordinary shares on issue. The pre-tax NTA after allowing for Deferred Tax items of$8.073m, was $352.5m or $0.9851 per share. The NTA is calculated using bid price to value investments.

The Australian Securities Exchange requires investment companies to report their Net Tangible Asset Backing each monthusing “net market value”. This calculation differs from the NTA used for Financial Reporting, as referred to above, in that ituses last sale price less realisation costs to value investments. The Company considers the Net Tangible Asset Backing figureusing last sale price less realisation costs is the more appropriate measure of its performance.

The following table details the investment performance of the Company, assuming reinvestment of dividends:

To 30 June 2008 (%) HHV MSCI Relative Performance (1) (2) (1-2)

6 Months -16.1% -18.2% +2.1%

1 Year -19.9% -21.0% +1.1%

2 Years -2.0% -7.6% +5.6%

3 Years +6.6% +0.8% +5.8%

Compound Annual Return since inception (19.03.2004) +7.2% +2.9% +4.3%

Source: Hunter Hall. ‘MSCI’ refers to the MSCI World Total Return Index, Net Dividends Reinvested, in A$. The results for the Company represent past performance only. No guarantee of future returns is implied. Returns beyond 1 year are compound annual returns.

DividendThe amount of fully franked dividend for the full year amounted to 5.0 cents per share (2007: 7.0 cents per share). No finaldividend is to be paid. The interim fully franked dividend of 5.0 cents per share was paid on 31 March 2008.

Buy-backIn the 12 months to 30 June 2008, the Company bought back and cancelled 30.1m shares. The average price for the buy-back was $0.9003 each for a total consideration of $27.1m. Between listing and 30 June 2008, the Company has boughtback and cancelled 60.6m shares at an average price of $0.9473 per share.

In the two months since 30 June 2008 the Company has bought back and cancelled a further 6.9m shares at an averageprice of $0.8119 per share.

2 Hunter Hall Global Value Limited ACN 107 462 966 Annual Report 2008

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Chairman’s Report


Portfolio StructureAt 30 June 2008, the Company held 94 stocks which accounted for 85.4% of the portfolio. The balancing 14.6% was cashheld in Australian dollars. At 30 June 2008, hedging was in place for 50% of the Company’s foreign currency exposure.

30 June 2008 30 June 2007

Net Liquids 15% 8%

Equities 85% 92%

Equities Breakdown:

Australia/New Zealand 27% 18%

Europe 14% 18%

Asia (ex Japan, ex Korea) 11% 12%

Japan 2% 5%

Korea 17% 26%

UK 4% 4%

USA 5% 9%

Canada 5% -

% of international equities hedged 50% 53%

Number of Stocks 94 82

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Chairman’s Report

Stocks as at 30 June 2008

PortfolioCompany Country Main Business Cost ($m) Market ($m) Weight %

PA Resources Sweden oil and gas producer 16.443 21.503 6.1%

Woongjin Thinkbig Korea education services 6.202 14.250 4.0%

Vallourec France steel tubes 11.171 14.111 4.0%

Samchully Korea energy distributor 10.837 13.642 3.9%

NZ Farming Systems Uruguay NZ dairy farming 9.196 12.793 3.6%

Atlas Iron Australia iron ore producer 5.532 12.516 3.5%

Woongjin Coway Korea water purifiers 12.653 11.796 3.3%

Sirtex Medical Australia liver cancer treatments 8.034 10.372 2.9%

Great A&P USA supermarket chain 15.505 9.147 2.6%

RCR Tomlinson Australia engineering services 17.061 7.328 2.1%

Oilexco Canada oil and gas producer 5.320 7.232 2.0%

Timminco Canada metal fabricator 4.794 6.506 1.8%

Key Energy Services USA oil drilling services 6.513 6.408 1.8%

Gold Australia gold 6.000 5.777 1.6%

SK Telecom Korea mobile telecommunications 6.423 5.685 1.6%

Steel Partners Japan Japanese strategic fund 5.578 5.671 1.6%

PO Valley Australia oil and gas explorer 4.040 5.316 1.5%

Jackgreen Australia energy retailer 6.822 4.866 1.4%

Noble Group Singapore commodity trader 4.203 4.716 1.3%

Customers Australia electronic transaction services 6.903 4.441 1.3%

Other 164.137 118.534 33.5%

Total Equities 333.367 302.610 85.4%

Net Liquids 51.528 14.6%

Net Assets Pre-Tax 354.138 100.0%

Australian Equities 80.389 22.7%

International Equities 222.221 62.7%

% foreign currency exposure hedged 50.0%

These figures differ from those shown in the financial statements as they are based on last traded price not bid price.

Peter James MacDonald HallExecutive Chairman


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Investment Managers’ Report


The Company’s portfolio declined over the year to 30 June 2008 by 19.9%; however, it outperformed world markets by1.1%. The year to June 2008 was an exceptionally tough period with markets enduring the sub-prime mortgage crisis andthe doubling in the oil price to US$140/bbl. The latter, combined with other strongly rising inputs especially food and utilityprices, saw global inflation surge to its highest levels for nine years.

In Australia and New Zealand rising interest rates saw real estate prices peak. In most other developed economies evenfalling interest rates could not halt sharp falls in house prices. This adverse wealth effect, exacerbated by falling stockmarkets and reduced spending power, is cutting personal consumption levels and starting to hurt both the manufacturingand retail sectors.

Over the year, our focus on oil and gas stocks, education stocks and iron-ore stocks paid off handsomely. However, this wasoutweighed by the poor performance of the financial and healthcare sectors.

Despite announcing record order books and an optimistic medium term outlook, Australian engineering service company,RCR Tomlinson declined 66% over the year. The company was the largest detractor from performance, attributable to acombination of delays, resulting in inactive staff and a reduction in profit margins on fixed price contracts.

Indian public-sector banks, which have a combined 4% weighting in the Fund, were hit hard. The largest detractors wereCanara Bank (-34%), Indian Overseas Bank (-32%), Allahabad Bank (-32%), and Indian Bank (-31%). Indian inflationhitting a thirteen year high of 11.3%, escalating fuel prices, rising food costs and escalating bond yields all conspired to sendthe Indian market considerably lower.

US based supermarket chain Great Atlantic and Pacific Tea Company (GAP) fell 32% over the year, despite above consensusresults for the March 2008 Quarter. The merger integration benefits from the Pathmark acquisition are proceeding asexpected; the weak share price reflects macro concerns regarding the US consumer. Interestingly, GAP’s largest shareholder,Tengleman, has recently applied to lift its 38% shareholding.

Despite winning a crucial legal case with the University of Western Australia (UWA) in the Federal Court, cancer treatmentprovider Sirtex fell 13% in sympathy with other healthcare stocks. Judgement handed down by Justice French ordered UWAto pay the associated legal costs of Sirtex and former director Dr Gray, and saw Sirtex succeed in its cross claim against DrGray. This ruling ended a major distraction for the company. Also in the healthcare sector, pharmaceutical company Biotafell 59% on weaker than expected sales of flu vaccine Relenza and delays in the court proceedings with its marketing anddistribution provider, GlaxoSmith Kline. Several orders to replenish Government stockpiles are expected this year includingthe UK, which has already been announced.

Other detractors included Australian independent ATM operator Customers Limited (-60%), which withdrew from Chinaand the proceeds from the sale of its Fintronics shareholding was used to cut debt, Korean diesel particle filter companyForhuman (-38%), Australian printing and distribution company PMP (-48%), Australian insurance company Calliden (-23%),New Zealand clean-technology company Wellington Drive Technology (-14%), Chinese infrastructure business ShenzhenInternational (-15%) and Korean telecommunications company SK Telecom (-11%).

Australian iron ore explorer, Atlas Iron (+157%) entered the portfolio at $1.43 in August 2007, and rose to finish thefinancial year at $3.68. The Company also participated in a placement at $2.00 per share to fund the accelerateddevelopment of the Abydos haematite mine in the Pilbara region of Western Australia. The production and shipping ofdirect shipping ore/haematite (DSO) is on track for December 2008 and is forecast to hit 6-9 million tonnes by fiscal 2010/11.

A large portion of HHV’s performance came from Canadian specialty metals firm Timminco (+35%), which was added inApril. The company aims to be a world leader in purifying metallurgical grade silicon metal for use in the solar photovoltaic(PV) industry. Timminco’s metallurgical process uses considerably less silicon and energy than its competitors. By 2010 thecompany plans to produce at least 12,000 tonnes of silicon at an average selling price of US$45/kg to US$65/kg, generatingan operating margin of at least 50%.

The Company’s largest holding, Swedish oil company PA Resources rose 6% over the year, following news of an upgrade ofits Didon petroleum reserves, the start up of both the Volve field in Norway and El Bibane field, off Tunisia and theacquisition of 35% interest in exploration license in Mer Profond Sur and Azurite Marine fields in the Congo.

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US oil and gas explorer Mariner Energy (+52%), US company Key Energy Services (+5%) and Australian gas explorer POValley (+6%) also enjoyed excellent industry conditions. Key Energy continued with its stock buy-back program. Canadianlisted oil and gas explorer Oilexco was also added to the portfolio in April 2008. Its share price has since increased 72%following a significant dual zone oil and gas condensate discovery at Moth in the UK’s North Sea, in which Oilexco has a50% working interest.

Korean education material provider Woongjin Thinkbig and Brazilian educational provider Kroton Educational SA, rose10% and 16%, respectively. Thinkbig’s flagship businesses, tutoring-at-home and educational materials, continue tostrengthen while its new business ventures, book publishing, tutoring-at-school and book rental businesses, are likely toprovide new growth opportunities. Kroton continues to consolidate the Brazilian education industry, purchasing smallerbusinesses on lower multiples.

Our exposure to the soft commodity producers of milk and tea delivered solid results. Dairy producer New Zealand FarmingSystems Uruguay, has risen 39% since entering the portfolio. Its land holding is now approaching 40,000 hectares and we areincreasingly confident with its business model. India’s largest tea producer McLeod Russel, rose 11% over the financial year.

French steel tubes manufacturer Vallourec fell sharply over the first half of the financial year, however rose from its January2008 low of €120 to finish at €224 (down 5% for the financial year). The company further increased its raw materialsurcharges to avoid being squeezed from sharply rising coal and iron-ore prices. Management also announced a €200m perannum cost-savings program to be fully implemented by 2010 and the buy-back of up to 10% of its issued capital. Vallourecis trading at a substantial discount to its peer group, and with an open share register and ungeared balance sheet, it is ripefor takeover.

Over the financial year we exited a number of international holdings, including SK Chemicals, Matsushita Electric, DaewooMotor Sales, KCC Corp, Suzuki Motor, France Telecom and Friedman, Billings and Ramsey, while in Australia we exitedTelstra Instalment Receipts.

OutlookThe fall out from the US sub-prime crisis and the decline of many property markets is continuing. In the US and Europeeconomic growth will remain pedestrian at best as successive waves of bad financial news depress the two main drivers of theeconomy: consumption and investment. Consumers are being challenged by tighter credit and higher living expenses.Companies, faced with softer demand and higher input costs especially from rising energy and commodity prices, will seemargins squeezed – reducing their appetite for capital spending even when they can afford it.

The slowing in capital expenditure will probably also hurt Japan, which is facing increasing competition from China for itsexports of less sophisticated machinery. On the consumption front it, like much of Europe, faces ugly demographics, with itspopulation set to start falling from next year.

In Australia we believe the stock market is still too blasé about the potential for the major banks to experience their worstcorporate bad debt crisis since the early 1990s. As this spreads to the housing sector, particularly in the poorer suburbs ofSydney and Melbourne and the more speculative areas of Queensland, the divergence in prospects between the easternstates and Western Australia will widen even further.

In our view stock markets in many developed markets are at levels that imply too much optimism about the immediatefuture – and we expect that a large number of companies and the analysts who cover them will spend much of the yearahead steadily revising down their earnings forecasts.

The picture for the larger emerging market economies, especially in Asia, is more complex. Many are still growing strongly but most face some difficult choices on how to deal with pressures that are in part at least a consequence of this growth. In the short term the most pressing of these is inflation. In the medium term they may be tested in their ability to maintainrapid growth by retrenchment in the OECD countries. In the longer term the biggest issues, and the most intractable, – will probably relate to pollution and other environmental factors.


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However, amidst what might be recurring mini-panics, great investment prospects are starting to emerge. In the small andmiddle capitalisation range in Australia we are seeing opportunities in companies we believe have great long term earningpower that will see strong growth through the cycle. This growth will be both organic and also from takeovers, which wesuspect may be a major theme for the year ahead.

Following the recent falls in many commodity prices, especially base metals and some broad acre crops, we believe much ofthe speculative excess in these markets has been eliminated, and some bargains are starting to emerge.

Further volatility in currency markets seems inevitable. The A$/US$ exchange rate reached a likely peak in July afterdoubling from US$0.48 to US$0.98 over the past seven and half years. However, the recent moves by the Australian dollaragainst other most other major currencies were less dramatic.

The US dollar rally seems to have reflected the belief – or hope – that the US economy might be near a bottom, and theworst of the financial crisis over. However with Washington having been forced to take onto its own books the massiveliabilities of two federally sponsored housing loan guarantors, the fragility of the US fiscal position is getting more and moreattention. As a result the recently stronger US currency could reverse. This will probably exacerbate the inflationary pressuresin many of the countries that still formally or informally tie themselves to the US dollar to such an extent that several maycut these ties. If this happens further damage – perhaps terminal – may be done to the de facto US dollar standard ‘brandvalue’ that we have all taken for granted for 75 years.

Taken as a whole, another year of low to negative investment returns is possible. But we believe that falls in the prices ofmany of the stocks in our current portfolio mostly reflect ‘quotational fluctuations’ rather than permanent loss of value – andthe number of new stocks offering good long term value is increasing. Hunter Hall has been a global investor for over adecade and we feel this period of share market weakness will provide an opportunity to build on what we already feel is agood quality, value oriented portfolio.

While it is always hard to call a bottom to markets amidst banking failures, gigantic asset write-downs, slowing economicgrowth and earnings downgrades we are seeing increasing numbers of opportunities where share prices scarcely reflectpresent value, let alone future growth potential.

We therefore regard this environment as one that offers great opportunity to value investors, possibly equal to that of the late1980s and early 1990s or the banking and inflation crisis of 1973-75. Our portfolio is well positioned to take advantage ofthese opportunities with net cash of 17%.

Major HoldingsWe present here some more detailed information of the Company’s larger holdings.

PA Resources Oil and gas producer PA Resources’ (PA) share price had a volatile year after announcing production problems at its Didonfield in Tunisia. This was concerning since the field accounted for 90% of production at the time. Fortunately the companyrectified the problem by drilling new wells. It also acquired a 35% interest in the Mer Profond Sud exploration licence inCongo Brazzaville (the old French Congo and not to be confused with the more turbulent former Belgian Congo also knownas Zaire) that will begin production in mid 2009. PA has become considerably less reliant on the Didon field as a result ofthis acquisition.

We continue to the like PA based on its strong production growth and exciting exploration outlook. Production currentlystands at 15,000 barrels per day and the company hopes to achieve 30,000 per day in 2009 and 50,000 by 2011. Proven andprobable reserves stand at 120m barrels of oil equivalent, 87 of which are in Tunisia, 8m in Norway and 25m in West Africa.In 2008 and 2009 the company plans to drill a further 17 wells adding considerable exploration upside. The oil tax regimein Tunisia is favourable with taxes of 50% compared to more than 80% in many countries. Tunisia is unlikely to raise taxessignificantly since it is a net importer of crude oil and is trying to encourage exploration and production.

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We envisage a number of catalysts for the stock’s performance during the year ahead. Naturally, the first catalyst is thedrilling of further production wells at the Didon field. Didon 9, which will come on-stream before the end of September2008, is to be the second production well from the field. This will be followed by two exploration wells at Didon North andZarat. The second catalyst will be the sale of its 6% stake in Block I in Equatorial Guinea which is likely to be valued atUS$200-300m. Glencore and Noble Energy, which also hold stakes in the block, are the mostly likely buyers. Finally, thecompany will commence drilling exploration and production wells under its new licence in Congo Brazzaville withproduction expected from mid-2009. PA has a market capitalisation of US$1.1b. At an oil price of US$100 per barrel thecompany should generate US$300m in net income in 2009, putting the company on a prospective PE of 3.7x.

The company has net debt of US$530m giving an enterprise value of US$1.6b or US$1.4b if we assume proceeds ofUS$200m for the sale of Block I. This adjusted enterprise value represents US$11.60 per barrel of P1 and P2 reserves(US$1.4b/120m barrels), with considerable potential to add to reserves.

Woongjin Group Korean sister companies Woongjin Thinkbig (Thinkbig) and Woongjin Coway (Coway) reflect our attraction to companiesoffering defensive growth at modest valuations in the current environment. Also pleasing is the way the Woongjin companieshave added new growth engines to their businesses, both organically and via acquisition. As a general rule, high qualitymanagements will allocate capital better than their competitors, in turn allowing their businesses to grow more rapidly.

Woongjin Thinkbig is a leading provider of home educational material for Korean pre-school and primary school students.About 9,000 tutors visit students at home every week for 15 minutes to supply material and provide tuition. A further 5,000door to door salesman, sell books and encyclopaedias. These established businesses are highly cash generative. In recentyears the company has entered new markets including book publishing, book rentals, after school computer classes, Englishand other language centres and adult education.

Perhaps the most interesting development in 2008 is in the After School Class division. Thinkbig is currently restricted tooffering computer classes only on school campuses. However, the newly elected Grand National Party government is keen tolower education costs through an expansion of after school classes at public schools for other subjects. Many students leaveschool after class and attend expensive off campus private education institutes.

Thinkbig will now offer further after hour classes in public school, starting with English. The exciting part is that Englishclasses are three times the price of computer classes. In future years other subjects may also be taught. This business shoulddrive significant growth in 2008 and 2009.

Also benefiting the company is a 6% price hike on its core home tutoring business in March 2008.

Finally, the company has an exciting adult education subsidiary, Woongjin Passone, focusing on study material for CivilServants, accounting and legal qualification exams. The company has ambitious targets of achieving ₩25b of 2010 operatingprofits up from ₩8.8b in 2008. This compares with the company’s expected operating profit for 2008 of 70b. Interestingly,very few analysts have included any contribution from this business in their forecasts, and some strong upward revisionsappear likely. We feel the company still offers strong potential trading on just 10x 2009 earnings (5.2x EV/EBITDA) with asmall amount of debt (₩20b). Thinkbig and Coway both offer 50% dividend payout ratios and are two of the highestyielding companies in Korea.

Woongjin Thinkbig

Market Value of Equity ₩598b (24.7m shares on issue x ₩24,200)

Net Debt at 30 June 2008 ₩20b

Enterprise Value ₩618b

2007 EBITDA ₩69b (EV/EBITDA of 9.0x)

2008 EBITDA (HH forecast) ₩111b (EV/EBITDA of 5.6x)



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Woongjin Coway’s business continues to develop positively. Coway rents water purifiers to subscribers for a monthly fee andprovides the service of ‘Codies’ or Coway Ladies, who visit the subscribers house monthly to change the filters. In recentyears the company has added air purifiers and bidets to its range of products. The company has 99% market share in theprovision of serviced water purifiers but the share is closer to 54% if you consider filters sold without home service. Itsformidable network of 11,000 Codies, make it almost impossible for a competitor to enter the service business.

Bottled water, both the personal kind and the large office delivered variety may face environmental and cost challenges.Home and office water filters offer a very neat solution to this problem. Rising oil prices will no doubt increase thecompetitive position of filters as transportation costs soar.

Although penetration of water purifiers per household in Korea currently stands at 28% (4.2m homes), Coway believes thereis still significant scope for domestic growth as Japanese penetration stands at 55-60%. In mid-2007 the company expandedits sales network through the Lotte Group’s department stores which is now delivering substantial returns. Coway hasconsistently leveraged its large network of service representatives to launch innovative products. The product which is nowoffering exciting growth potential is Waste Food Processing units.

These products are popular since they remove food odours, some even dry and grind the waste into a powder form. Themarket is growing rapidly with domestic Korean sales reaching ₩200b and is expected to surpass ₩1 trillion by 2009.Woongjin Coway is well positioned to capture a good portion of this market.

Coway is expanding aggressively overseas forecasting US$50m (₩50b) of sales in 2008 growing to US$170m (₩170b) in2010. Coway’s overseas expansion strategy involves replicating its Korean serviced water filters model in China and the USA.In other regions it is using third party dealer networks such as Siemens, Whirlpool and Bosch.

Coway has low net debt of ₩110b, a modest PE of 12x 2009 earnings and should be able to grow earnings by at least 15%per annum over the medium term. We believe this is a good price for a very high quality defensive business with growth.

Woongjin Coway

Market Value of Equity ₩2,284b (74.4m shares on issue x ₩30,700)

Net Debt at 30 June 2008 ₩110b

Enterprise Value ₩2,394b

2007 EBITDA ₩303b (EV/EBITDA of 7.9x)

2008 EBITDA (HH forecast) ₩ 326b (EV/EBITDA of 7.3x)


Vallourec Vallourec is the second largest global producer of seamless steel pipe. At the high end of the market an oligopoly existsbetween the largest players Tenaris, Vallourec and Sumitomo Metal Industries. This market is defined by products thatincorporate special metal alloys to provide resistance to extreme temperature and pressure. Pipe coupling technology is alsoproprietary and offers a barrier to entry.

Oil and gas fields are increasingly being found in deep water with extreme temperature conditions making Vallourec’s highquality pipe essential. As an example, Petrobras’s recent huge oil discovery Tupi, which lies in Brazilian waters, is some 8kmbelow the surface (2km of water, 4km of rock and then 2km of salt) with temperatures reaching more than 500ºC.

Vallourec is the dominant supplier of seamless pipe in Brazil and has a new factory opening in 2010 that will be well timedto supply this field.

Almost half of the company’s revenue is derived from the oil and gas sector. The outlook here has improved considerablyover the last 6 months following the high natural gas price in the US and falling pipe inventories. Competition pressuresmay also ease as it’s likely that antidumping duties will be levied on Chinese pipe producers in coming months. Vallourec has recently announced a series of price rises which will allow it to pass on rising raw material costs and the impact of thestrong Euro.

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At €223 per share Vallourec is trading on 11.3x 2008 PE and 7x EV/EBITDA. This compares favourably with larger rivalTenaris which trades on 17x and 10x respectively and Sumitomo Metal Industries on 15x and 9x. This seems illogical,especially when you consider that Vallourec is the only one of the three that is a likely takeover target. Even in the currentcredit conditions, the acquisitive ArcelorMittal Pty Ltd, for example, would have no trouble financing the purchase of thecompany. On several occasions ArcelorMittal has stated that it wants to expand its seamless pipe business and by far theeasiest way of doing this would be to buy Vallourec.

Vallourec

Market Value of Equity €11,729b (52.6m shares on issues x €223)

Net Debt at 30 June 2008 €483b

Enterprise Value €12,212b

2007 EBITDA €1,741b (EV/EBITDA of 7.0x)

2008 EBITDA (HH forecast) €1,716b (EV/EBITDA of 7.1x)

Samchully Samchully started life in 1955 as Samchully Briquette Industries, a producer of coal briquettes, a major source of domesticenergy prior to reticulated gas networks. In 1982 the company acquired Kyoungin City Gas giving it a foothold in thereticulated gas market. The company now boasts a 4,300km gas pipeline network accessing 2.1m households. Samchully isthe largest city gas provider in South Korea with a 20% market share, primarily in Gyunggi and Incheon provinces.

We like Samchully because of its defensive growth prospects, its provision of clean burning natural gas and, mostimportantly, its low valuation. The penetration rate on its pipeline network is only 83%. This compares with penetrationcloser to 90% in the Seoul area so growth is likely, even without adding new pipe to the network.

The company continues to invest heavily, spending ₩120b per year on capital expenditure. Roughly ₩70b is being used togrow its pipeline network, adding about 200km per annum, while W50b is being spent on gas-cogeneration plants. Thislatter area should materially boost profits from 2009.

Valuation is still outstanding. At ₩202,500 per share Samchully has a market value of ₩821b. The company will finish 2008with ₩200b of cash, ₩40b of treasury shares, land worth ₩200b and non-core investments worth another ₩200b. In essence,we are paying very little for the core business of this company which generates some ₩120b in EBITDA and ₩70b inoperating profit. Prospective 2009 PE is 9x.

Our reason for this low valuation is that Samchully has shown market reluctance to share its strong cashflow with itsshareholders. Whereas globally utility companies tend to have high dividend payout ratios and trade on high yields,Samchully pays out just 10% of its profit in dividends. In addition, its corporate structure is looking increasingly oldfashioned by Korean standards. We are pleased however, that on our most recent company visit, we met a new highlyexperienced Senior Vice President and part of his remit seems to be to address these issues.

Great Atlantic & Pacific Tea Company We started acquiring Great Atlantic & Pacific Tea Company (GAP) in May 2007 at an average price of US$32.50. So far thisinvestment has been a disaster, as a result of concerns about indebtedness and consumer sentiment, and recently fell belowUS$13. However, we continue to assess its intrinsic value at above US$50.

Founded in 1859, GAP is the oldest food retailer in the US. Primarily located in the more affluent North-Eastern areas ofthe US, GAP operates stores under the names A&P, Super Fresh, Food Emporium and Waldbaum’s. In late 2004, thecompany sold its share in Metro Inc., an extremely profitable, market-leading Canadian business, to focus on furtherexpansion in the Northeast including the recent acquisition of competitor Pathmark Pty Ltd (Pathmark).

A&P completed its Pathmark acquisition in December 2007 for approximately US$1.3b in cash, debt and equity. ThePathmark acquisition was certainly the highlight for the year and has served as the capstone to GAP’s strategic transformation.


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The combined company now has approximately 450 stores in the Northeast primarily in the New York, New Jersey andPhiladelphia areas with sales of about US$9.4b. To help repay debt related to the acquisition GAP offered US$380m insenior convertible notes in December 2007. The merger is expected to yield synergies of more than US$150m over 2008and 2009, primarily from overhead, advertising expense reduction, and improved supply and distribution logistics.

The US sub-prime credit crisis, rising food price inflation and decreases in US retail spending has inevitably had an affect oncompany performance. Supermarket chains have been raising prices to offset the higher cost of commodities such as dairyfoods and grain, but the company feels it is well positioned to deal with the effects of a slower economy

Great Atlantic & Pacific Tea Company

Market Value of Equity US$650m (57.6m shares on issue x US$11.28)

Convertible Notes US$380m

Net Debt at 14 June 2008 US$677m

Enterprise Value US$1,707m

2008 EBITDA US$331.6m (EV/EBITDA of 5.1x)

2009 EBITDA (HH forecast) US$432m (EV/EBITDA of 4.0x)

Indian Public Sector Banks The weak share price performance of our Indian bank holdings does not reflect participation in the banking practises nowregretted by their foreign peers. Bank of India (BOI), Indian Overseas Bank (IOB), Indian Bank (INBK), Canara Bank(CBK), Allahabad Bank (ALBK) and Syndicate Bank (SNDB) remain beautifully stodgy lenders to lower risk customers. Notfor them are the arcane worlds of sub-prime or CDOs, CDIs and the other alphabet soup of financial ruin that hasdevastated the former stars of US and European banking.

Nor do they have much exposure to the bubbly Indian real estate sector. The bulk of their customer base is local small tomedium enterprise. With loan to deposit ratios of 70% or lower, these banks face limited funding challenges. By contrastmany banks in developed markets lend substantially more than they receive from depositors, making up the differencethrough access to global wholesale markets where supply is very tight and pricing punitive.

What has hurt the banks is inflation and the measures adopted to fight it.

Inflation in India is mainly related to rising oil and food prices as well as steel and cement. In response, the Reserve Bank ofIndia (RBI) has tightened money supply in a bid to slow credit growth which in recent years has expanded at more than 30%per annum.

The RBI is only trying to quieten the party, not take the punch bowl away altogether. Credit, as a percentage of the economyor Gross Domestic Product (GDP), is still less than 50% in India, scarcely more than a third of the level in Australia. The lowamount of credit in the Indian economy implies that a high rate of loan growth could be tolerated for many years, even if itexceeds the country’s nominal economic (GDP) growth rate of 14% - and the RBI seems happy for growth to stay in the 20-25% range – which means the fundamental growth story for Indian banks remains intact.

Tentative signs are also emerging that the soaring iron ore and coal prices that have driven up steel and cement costs maysoon peak. The oil price has also started to fall heavily, meaning that non-subsided products such as jet fuel will start to fall, while the cost of government subsidies for petrol, diesel, kerosene and LPG will ease, reducing fears about India’s fiscal position.

Ultimately prices will stabilise and interest rates will start to ease. Post elections, due in early 2009, there may be a resumptionof the reform process required to achieve India’s real economic growth target of 10%. In the meantime, we expect loangrowth to continue well in excess of nominal GDP.

The Indian bank stocks are now cheaper on both a price to book and price earnings ratio basis than they have been forseveral years, and they are considerably cheaper than their peers in slower growth economies. We remain enthusiasticholders for the long term.

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Sirtex Medical Each year about 560,000 new cases of primary liver cancer and about 940,000 new cases of secondary liver cancer appearglobally. Secondary liver cancer occurs when cancerous cells originate in another part of the body such as the prostate andare carried to the liver by the bloodstream where they develop into liver cancer.

Sirtex’s core product is SIR-Spheres, which are radioactive microspheres (32 microns, about one-third of the diameter of ahuman hair) that can cause liver cancer tumours to stop growing, or shrink to such an extent that they can be surgicallyremoved.

The SIR- Spheres are injected into the hepatic artery which supplies blood to the liver where they lodge in and near thetumours and, to use a non-scientific term, zap them with radiation before decaying over a period of two or three days tonon-radioactive zirconium. The beauty of SIR-Spheres is that radiation doses of up to 40 times that of conventional externalradiotherapy can be applied in a targeted way to the tumours. Most patients are released from hospital after 24 hours. Inmost cases the treatment is a stay of execution rather than a cure, with life being extended for a matter of months or a fewyears. However, about 5% of patients have experienced a complete cure.

Sirtex has been commercialising the technology for more than 20 years and to date about 7,000 patients have been treated.In 2005 the company sold about 750 doses of SIR-Spheres but we expect in the coming year it will sell 2,500 to 3,500 doses.It has been a long, slow road but the company finally appears to be gaining serious traction. With millions of peoplesuffering from liver cancer, SIR-Spheres has enormous potential.

The economics of SIR-Spheres are attractive. Doses are sold for between $8,000-$16,000, with a gross margin of up to 85 percent. We speculate that Sirtex’s therapy could be used by tens of thousands of patients each year and generate annual profitsof well over $100 million.

Of course those ‘juicy’ profits will attract competition, but Sirtex has a head start and is developing a number of otherinteresting products and enhancements to SIR-Spheres. Given the large sales potential, a major drug company could valueSirtex’s technology at $1.5b, equivalent to $26 per share, compared with the current share price of less than $3.

Over the past four years Sirtex has been engaged in complicated litigation with the University of Western Australia and Dr Bruce Gray who is the largest Sirtex shareholder and the developer of the technology. This court case has now beenconcluded with Sirtex victorious on all counts and free to pursue recovery of legal costs of about $5m. It is also able to focusall its energies on developing into a significant global medical devices company which could mean a status change and asignificant upwards revaluation.

Sirtex Medical

Market Value of Equity $167.4m (55.8m shares on issue x $3.00)

Net Cash $7.1m

Enterprise Value $160.3m

2008 EBITDA $4.4m (EV/EBITDA of 36.4x)

2009 EBITDA (HH forecast) $15.1m (EV/EBITDA of 10.6x)


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Agricultural InvestmentsGrowing populations and rising incomes have convinced us that rising food prices could be a feature of the global economyfor many years to come, especially if production of biofuels continues to compete with food for agricultural production.

Our first investment seeking to capitalise on this was New Zealand Farming Systems Uruguay (NZFSU), a dairy cattlefarming business operating in Uruguay. The investment thesis relied on rising demand for milk, mainly from China andother developing economies, combined with the cheaper land and operating costs available in South America.

Over the year our confidence in the fundamentals of many agricultural products has firmed, seeing us increase the numberand diversity of stocks in the space. These include Singapore listed Noble Group, which trades and processes a wide varietyof commodities, Australian broadacre farm buyer PrimeAg, sugar millers and refiners CSR, Sao Martinho and AcucarGuarani, Ukrainian farm company Landkom, and Indian tea grower McLeod Russel.

World population growth has risen by 1.7% p.a. over the last four decades. Food consumption however is rising even faster:growth in grain consumption has averaged 2.2% p.a. over the same period. United Nations population forecasts indicatethat the 1.7% p.a. rate will slow to 1.0% p.a. for the next 25 years, but this is still an additional 60-80m people to feed eachyear – and we feel sure that this growing population will also be richer and hungrier for the better things in life as calorieintake rises sharply as populations emerge from extreme poverty.

China and India are the headline examples of rising per capita incomes. Analysts expect one-quarter of the world’spopulation may join the middle class, defined as an income between US$6,000 and US$30,000, by 2030. Those living onless than US$1,000 per annum declined from 30% of the world’s population to 17% over the last ten years. Rising incomescontribute to increased demand for meat, which in turn requires more grain for animal feed. As an example, Chinaconsumed 2.4 times as much meat in 2005 as it did in 1990, implying an annualised growth rate exceeding 6%.

We believe production will struggle to keep up with this. Global grain production growth averaged 2.1% p.a. over the lastfour decades but slowed to 1.2% p.a. over the most recent decade. Grain production is a function of the total arable acreagefarmed and the average yield achieved on that acreage. Both acreage and yield have been rising in recent times, but atgreatly reduced rates.

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Directors’ Report

Your Directors present their report on Hunter Hall Global Value Limited for the financial year ended 30 June 2008.

DirectorsThe names of Directors in office at any time during or since the end of the year are:

Peter James MacDonald Hall (Executive Chairman)

Jack Theseus Lowenstein (Executive Director)

David Ian Scott (Non-executive Director)

Adam Paul Blackman (Non-executive Director)

Alex Koroknay (Non-executive Director)

Directors have been in office since the start of the financial year to the date of this report, unless stated otherwise.

Information on DirectorsPeter James MacDonald Hall B.A.

Executive Chairman, Executive Director

Mr Hall is Executive Chairman of Hunter Hall Global Value Limited. He is also Executive Chairman of Hunter HallInternational Limited and a Director of Hunter Hall International Ethical Fund plc, both of which are publicly listed entities.He is Executive Chairman and Group Investment Manager of Hunter Hall Investment Management Limited and of theinternational research subsidiary Hunter Hall International (UK) Pty Limited and is a Trustee of the Hunter Hall CharitableTrust, a member of the Hunter Hall Charity Committee and the Remuneration and Nomination Committee.

Mr Hall has over 25 years experience in investment markets. Previously he was Investment Manager of Hancock & GoreLimited, Portfolio Manager and Analyst with Mercantile Mutual Holdings Limited, Industrial Analyst with PembrokeSecurities Limited, Investment Analyst with New Zealand South British Insurance Limited and a journalist with John Fairfax& Sons Limited.

Mr Hall completed the Harvard Business School Owner/President Management Program in 2003.

Jack Theseus Lowenstein M.A. (Oxon)

Executive Director

Mr Lowenstein is Deputy Chairman of Hunter Hall Global Value Limited. He is also Executive Director of Hunter HallInternational Limited, a publicly listed entity. He is Executive Director and Portfolio Manager of Hunter Hall InvestmentManagement Limited, monitoring and researching Australian and Asian companies and advising on matters relating tocorporate governance in the Hunter Hall Funds’ Australian investments. He is also a member of the Hunter Hall AuditCommittee and Risk Management Committee.

Mr Lowenstein is also Chairman of Kontiki Capital Limited, a Fiji based investment bank, and is a Director of CallidenGroup Limited and a former Director of Kresta Holdings Limited.

Mr Lowenstein has 15 years experience in investment and corporate finance. Previously he had eight years researching andreporting on international markets for the Euromoney Publications magazine group.


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Directors’ Report


David Ian Scott B.Bus., Dip. Law, Grad. Dip. Art

Non-executive Director

Mr Scott is a Non-executive Director of Hunter Hall Global Value Limited and a member of its Audit Committee. He is aformer Director of Hunter Hall International Limited and Hunter Hall Investment Management Limited.

Mr Scott has 19 years experience in finance, taxation and corporate management and was previously employed in legal andchartered accounting firms, including Coopers & Lybrand.

Adam Paul Blackman B.Econ., FCA., JP.


Mr Blackman is a Non-executive Director of Hunter Hall Global Value Limited and Chairman of its Audit Committee. He isalso a Non-executive Director of Hunter Hall Superannuation Company Pty Limited and is a Consultant to the Hunter HallInternational Limited Audit Committee.

Mr Blackman is a chartered accountant with 20 years experience in public practice and has been a partner of SothertonsSydney since 1996 where he is primarily involved in business and taxation planning services. He has had several yearsexperience in reviewing and advising on compliance issues in the financial services industry.

Mr Blackman is a Fellow of the Institute of Chartered Accountants in Australia.

Alex Koroknay B.A., LLM. (Hons)


Mr Koroknay is a Non-executive Director of Hunter Hall Global Value Limited and a member of its Audit Committee. He isalso a Non-executive Director of Hunter Hall Superannuation Company Pty Limited and is a Trustee of the Hunter HallCharitable Trust.

Mr Koroknay is also a Director of the listed entity Fiducian Portfolio Services Limited.

Mr Koroknay is a practising solicitor specialising in managed investments, superannuation and venture capital financing,and is experienced in the requirements of the Corporations Act and Superannuation Industry (Supervision) Act. He iscurrently working for HWL Ebsworth and acts for a number of fund managers. Previously he was a Partner with NashO’Neill Tomko; Dibbs Crowther and Osborne; Manager - Corporate Securities at Allen Allen Hemsley and a consultant toToomey, Pegg and Drevikovsky.

Company SecretaryOuafaa Karim B.A., M.Com Law, Grad Dip (Corp Management), SIA (Aff).

Group Company Secretary, Compliance & Risk Manager

Ms Karim has been the Group Company Secretary of Hunter Hall International Limited since 1998 and Company Secretaryfor Hunter Hall Global Value Limited since its listing in 2003. Ms Karim is also an Executive Director of Hunter HallSuperannuation Company Pty Limited and Bennelong Administration Services Pty Limited. She is a Trustee of the HunterHall Charitable Trust, a member of the Hunter Hall Charity Committee and the Compliance Committee.

Ms Karim has over 22 years experience in the finance industry including corporate management, company secretarial, unittrust administration, compliance, operations and custody. Previously Ms Karim was employed by Aetna Funds Management(Australia) Limited, Permanent Trustee Company Limited and State Street Australia Limited.

Ms Karim is also President of the Responsible Investment Association Australasia and is a member of the IFSA RegulatoryAffairs Board Committee and the AFSA NSW Executive Committee.

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Directors’ Report

Directors’ InterestsAs at the date of this report, the relevant interests of Directors and their related parties in the shares of the Company are:

Shares

Mr P Hall 500,000

Mr D Scott 20,000

Mr J Lowenstein 80,000

Mr A Blackman 20,000

Mr A Koroknay 10,000

Principal activitiesHunter Hall Global Value Limited was incorporated on 22 December 2003 to invest in a portfolio of permitted investments.

The Company provides investors with the opportunity to invest in a medium to long term concentrated portfolio, and gainaccess to a defined investment process and the experience of the investment management team of the Manager, Hunter HallInvestment Management Limited. The Company predominantly invests in international and ASX listed securities. Somelate-stage private equity companies may also be part of the Company’s investment universe.

Operating resultsThe loss of the Company after providing for income tax amounted to $57,652,343 (2007: profit $57,947,264).

Financial PositionNet assets at 30 June 2008 totalled $360,529,025 (2007: $474,714,260).

At 30 June 2008 the Company’s net asset backing after provision for tax on unrealised capital gains was $1.0077 per sharecompared to a net asset backing of $1.2267 at 30 June 2007. The company paid dividends to shareholders of 3.0 cents pershare (18 October 2007) and 5.0 cents per share (31 March 2008).

Cash holdings at 30 June 2008 were $45,140,350 (2007: $43,900,561) before payment of income tax.

The Company’s financial and operational review is further covered in the Chairman’s Report on page 2 and the InvestmentManager’s Report on page 5.

Earnings per ShareBasic earnings per share for the year to June 2008 was (15.20) cents per share (2007: 21.12), while fully diluted earnings pershare was (15.20) cents per share (2007: 20.55).

Dividends Paid or Recommended

Final 2007 ordinary dividend of $0.03 per share paid on 18 October 2007 $11,609,217

Interim ordinary dividend of $0.05 per share paid on 31 March 2008 $18,769,926

The total dividend for the year was 5.0 cents fully franked (2007: 7.0 cents).


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Directors’ Report


Likely DevelopmentsThe Company will continue to seek to meet its financial objective to increase intrinsic value per share as set out in the InitialPublic Offer Prospectus.

Events Subsequent to Balance DateSince the close of the financial year to 30 June 2008, the Australian and international markets have continued to experiencehigh volatility. For the two months to 31 August 2008 the Company’s pre-tax NTA declined by 0.8%, underperforming the benchmark MSCI World total Return Index, Net Dividends Reinvested, in $A by 8.5%. As at 31 August 2008 theCompany’s net assets were $345.3 million.

There were no other matters or circumstances which have arisen since the end of the financial year which significantlyaffected, or may significantly affect, the operations of the Company, the results of those operations or the state of affairs ofthe Company in future financial years.

Significant Changes the State of AffairsThere were no significant changes in the state of affairs of the Company during the financial year other than as noted in theChairman’s Report.

Environmental IssuesThe Company’s operations are not subject to any environmental regulation under the law of the Commonwealth and State.

Proceedings on Behalf of the CompanyNo person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings towhich the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of thoseproceedings. The Company was not a party to any such proceedings during the year.

Indemnifying and Insurance of Directors and OfficersThe Company has paid premiums to insure each of the Directors and officers in office against liabilities for costs andexpenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity ofDirectors and officers of the Company, other than conduct involving a wilful breach of duty in relation to the Company.

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Directors’ Report

Remuneration ReportThe information which follows through to the end of the section titled Executive Directors and other Key ManagementPersonnel is subject to audit by the external auditor.

Key Management PersonnelNames and positions held of Directors and Other Key Management Personnel of the Company in office at any time duringthe financial year are:

Peter James MacDonald Hall Executive Chairman

Jack Theseus Lowenstein Executive Director

David Ian Scott Non-executive Director

Adam Paul Blackman Non-executive Director

Alex Koroknay Non-executive Director

David Barclay Buckland Chief Executive Officer of Hunter Hall Investment Management Limited

Ouafaa Karim Company Secretary

Paula Ferrao Manager – Finance and Administration

There were no other employees meeting the definition of a Key Management Personnel.

Non-executive DirectorsThe Non-executive Directors received the following remuneration from the Company during the financial year:

Short Term Benefits Post Employment BenefitsDirector’s Fees Superannuation Contributions Total

2008 $ $ $

Non-executive Directors

Mr D I Scott 22,936 2,064 25,000

Mr A P Blackman 29,650 - 29,650

Mr A Koroknay 22,936 2,064 25,000

75,522 4,128 79,650

Short Term Benefits Post Employment BenefitsDirector’s Fees Superannuation Contributions Total

2007 $ $ $

Non-executive Directors

Mr D I Scott 22,691 2,042 24,733

Mr A P Blackman 24,446 2,200 26,646

Mr A Koroknay 22,691 2,042 24,733

69,828 6,284 76,112

Executive Directors and other Key Management PersonnelExecutive Directors of the Company are also Directors of Hunter Hall International Limited (HHL), and their services to the Company form part of an investment management agreement for the provision of services by Hunter Hall InvestmentManagement Pty Limited to the Company. As such only Non-executive Directors are paid directly from the Company.

The Company does not remunerate its Executive Directors and other Key Management Personnel. Remuneration is paid by HHL.


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Directors’ Report


Meetings of DirectorsDuring the financial year, 7 meetings of Directors (including committees) were held. Attendances were:

Director’s Meetings Committee MeetingsAudit Committee

Number eligible Number Number eligible Numberto attend Attended to attend Attended

Peter James MacDonald Hall 4 3 - -

Jack Theseus Lowenstein 4 3 - -

David Ian Scott 4 4 3 3

Adam Paul Blackman 4 4 3 3

Alex Koroknay 4 4 3 3

Auditor IndependenceA copy of the Auditor’s Independence Declaration as required under s307c of the Corporations Act 2001 in relation to theaudit of the financial report for the year ended 30 June 2008 is set out on page 51 and forms part of this report.

Non-Audit ServicesNo non-audit services were provided by the Company’s auditors, Grant Thornton NSW or its related entities, to theCompany for the year to 30 June 2008 (2007: $nil).

Rounding of AmountsThe Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and InvestmentsCommission (ASIC), relating to the rounding off of amounts in the Directors’ Report. Amounts in the Directors’ Reporthave been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to thenearest dollar.

Signed in accordance with a resolution of the Board of Directors.


Dated this 26th day of September 2008For

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Corporate Governance Statement

The ASX Corporate Governance Council released revised Corporate Governance Principles and Recommendations on 2August 2007. This Statement complies with those revised principles and outlines the main corporate governance practices inplace throughout the financial year.

Having regard to the size of the Company and the nature of its business, the Board are of the view that the Company compliesas far as possible with the spirit and intentions of the Corporate Governance Principles and Recommendations as appropriate.

The table below sets out a summary of the Principles and Recommendations, and the Company’s status of Compliance inrespect of each recommendation. The table is followed by comments and extracts from policies adopted by the Board whichdemonstrate how compliance has been achieved for each Principle.

No. Principle Recommendations Status of Compliance1. Lay solid foundations for management Recommendation 1.1: Comply

and oversight Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions

Recommendation 1.2: Not applicableCompanies should disclose the process for evaluating the performance of senior executives

Recommendation 1.3: Comply where applicableThe following material should be included in the Corporate Governance Statement in the Annual Report:

• an explanation of any departure from Recommendations 1.1, 1.2 or 1.3

• whether a performance evaluation for senior executives has taken place in the reporting period and whether it was in accordance with the process disclosed

2. Structure the Board to add value Recommendation 2.1: Do not ComplyA majority of the Board should be independent Directors

Recommendation 2.2: Do not ComplyThe Chair should be an independent Director

Recommendation 2.3: Do not ComplyThe roles of Chair and Chief Executive Officer should not be exercised by the same individual

Recommendation 2.4: Do not ComplyThe Board should establish a Nomination Committee

Recommendation 2.5: ComplyCompanies should disclose the process for evaluating the performance of the Board, its committees and individual Directors

Recommendation 2.6: ComplyDisclose the following material in the Corporate Governance Statement in the Annual Report:

• the skills, experience and expertise relevant to the position of Director held by each Director in office at the date of the Annual Report

• the names of the Directors considered by the Board to constitute independent Directors and the Company’s materiality thresholds

• a statement as to whether there is a procedure agreed by the Board for Directors to take independent professional advice at the expense of the Company

• the period of office held by each Director in office at the date of the Annual Report

• the names of members of the Nomination Committee and their attendance at meetings of the Committee, or where a company does not have a Nomination Committee, how the functions of a Nomination Committee are carried out

• whether a performance evaluation for the Board, its committees and Directors has taken place in the reporting period and whether it was in accordance with the process disclosed

• an explanation of any departures from Recommendations 2.1, 2.2, 2.3, 2.4, 2.5 or 2.6


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No. Principle Recommendations Status of Compliance3. Promote ethical and responsible Recommendation 3.1: Comply

decision making Companies should establish a Code of Conduct and disclose the Code or a summary of the Code as to:

• the practices necessary to maintain confidence in the Company’s integrity

• the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders

• the responsibility and accountability of individuals for reporting and investigating reports of unethical practices

Recommendation 3.2: ComplyCompanies should establish a Trading Policy concerning trading in company securities by Directors, senior executives and employees, and disclose the Policy or a summary of that Policy

Recommendation 3.3: ComplyThe following material should be included in the Corporate Governance Statement in the Annual Report:

• An explanation of any departure from Recommendations 3.1, 3.2 or 3.3

4. Safeguard integrity in financial reporting Recommendation 4.1: ComplyThe Board should establish an Audit Committee

Recommendation 4.2: ComplyThe Audit Committee should be structured so that it:

• consists only of Non-executive Directors

• consists of a majority of independent Directors

• is chaired by an independent Chair, who is not Chair of the Board

• has at least three members

Recommendation 4.3: ComplyThe Audit Committee should have a formal charter


• the names and qualifications of those appointed to the Audit Committee and their attendance at meetings of the Committee or, where a Company does not have an Audit Committee, how the functions of an Audit Committee are carried out

• the number of meetings of the Audit Committee

• explanation of any departures from Recommendations 4.1, 4.2, 4.3 or 4.4

5. Make timely and balanced disclosure Recommendation 5.1: ComplyCompanies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance, and disclose those policies or a summary of those policies


• an explanation of any departures from Recommendations 5.1 or 5.2

6. Respect the rights of shareholders Recommendation 6.1: ComplyCompanies should design a Communications Policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their Policy or a summary of that Policy


• An explanation of any departure from Recommendations 6.1 or 6.2

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No. Principle Recommendations Status of Compliance7. Recognise and manage risk Recommendation 7.1: Comply

Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies

Recommendation 7.2: ComplyThe Board should require management to design and implement the Risk Management and Internal Control System to manage the Company’s material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks

Recommendation 7.3: ComplyThe Board should disclose whether it has received assurance from the Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks


• explanation of any departures from Recommendations 7.1, 7.2 7.3 or 7.4

• whether the Board has received the report from management under Recommendation 7.2

• whether the Board has received assurance from the Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) under Recommendation 7.3

8. Remunerate fairly and responsibly Recommendation 8.1: Not ApplicableThe Board should establish a Remuneration Committee.

Recommendation 8.2: ComplyCompanies should clearly distinguish the structure of Non-executive Directors’ remuneration from that of Executive Directors and senior executives

Recommendation 8.3: Not ApplicableThe following material or a clear cross-reference to the location of the material should be included in the Corporate Governance Statement in the Annual Report:

• the names of the members of the Remuneration Committee and their attendance at meetings of the Committee, or where a company does not have a Remuneration Committee, how the functions of a Remuneration Committee are carried out

• the existence and terms of any schemes for retirement benefits, other than superannuation, for Non-executive Directors

• an explanation of any departures from Recommendations 8.1, 8.2 or 8.3


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Principle 1: Lay solid foundations for management and oversightThe Board has the responsibility for ensuring the Company is properly managed so as to protect and enhance shareholders’interests in a manner which is consistent with Company’s responsibility to meet its obligations to all parties with which itinteracts. To this end, the Board has adopted appropriate Corporate Governance policies and practices to lay solidfoundations for management and oversight. The Board has formalised its role and responsibilities into a Board Charter. Theareas of responsibility reserved for the Board under the Charter are:

• ensuring the Company is properly managed so as to protect and enhance shareholders’ interests

• appointing and retiring Non-executive Directors

• creating Board Committees

• adopting the Continuous Disclosure Protocol

• identifying and managing significant business risks

• adopting a Share Trading Policy for Directors and employees

• adopting a Code of Ethical Standards

• ensuring Auditor independence

• reviewing the performance of the Board, the Company and management

• reviewing the allocation of work between the Board and management

• oversight of the Company, including its control and accountability systems

• appointing and removing the Chief Executive Officer (or equivalent)

• ratifying the appointment and, where appropriate, the removal of the Chief Financial Officer (or equivalent) and theCompany Secretary

• input into and final approval of management’s development of corporate strategy and performance objectives

• reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct and legalcompliance

• monitoring senior management’s performance and implementation of strategy, and ensuring appropriate resources areavailable

• approving and monitoring the progress of major capital expenditure, capital management and acquisitions anddivestitures

• approving and monitoring financial and other reporting

The Company has not appointed any senior executives. Senior executive functions are provided by the Investment Manager,Hunter Hall Investment Management Limited (HHIML) and its parent, Hunter Hall International Limited (HHL), inaccordance with the terms of the Investment Management Agreement. The Board has satisfied itself that the InvestmentManager and its Parent Company have a process for evaluating the performance of senior executives and an inductionprogram to ensure that senior executives are able to gain an understanding of:

• the Company’s financial position, strategies, operations and risk management policies

• the respective rights, duties, responsibilities and roles of the Board and senior executives

It is the Board’s policy that the Board should at least annually review the performance of the Board, the Company andHHIML, and the allocation of work between the Board and management.

The Board encourages Directors to own shares in the Company.

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It is the Board’s policy that committees of the Board dealing with corporate governance matters should:

• be entitled to obtain independent professional or other advice at the cost of the Company, unless the Board determinesotherwise

• be entitled to obtain such resources and information from the Company, including direct access to employees of andadvisors to the Company as they may require

• operate in accordance with the terms established by the Board

The Board has established an Audit Committee, Chaired by Adam Blackman (Independent, Non-executive Director).

Principle 2: Structure the board to add valueBoard Composition

The Board is made up of three Non-executive and two Executive Directors. Two of the Non-executive Directors are alsoconsidered to be independent, on the basis they:

• are Non-executive

• are not a substantial shareholder of the Company or an officer of, or otherwise associated with, a substantial shareholderof the Company

• have not been employed in an executive capacity by the Company or another group member, or been a Director afterceasing to hold any such employment, within the past three years

• have not been a principal of a material professional advisor or a material consultant to the Company or another groupmember, or an employee materially associated with the service provided, within the past three years

• are not a material supplier or customer of the Company, or an officer of or otherwise associated directly or indirectlywith a material supplier or customer

• have no material contractual relationship with the Company other than as a Director of the Company

• have not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with theDirector’s ability to act in the best interests of the Company

• are free from any interest in any business or other relationship which could, or could reasonably be perceived to,materially interfere with the Director’s ability to act in the best interests of the Company

The Directors of the Company as at the date of this Statement are:

• Peter James MacDonald Hall (Executive Chairman), appointed 22 December 2003

• Jack Theseus Lowenstein (Executive Director), appointed 22 December 2003

• David Ian Scott (Non-executive, Independent Director), appointed 22 December 2003

• Adam Paul Blackman (Non-executive, Independent Director), appointed 30 January 2004

• Alex Koroknay (Non-executive Director), appointed 22 December 2003

Peter Hall is both Executive Chairman and Managing Director of the Company. Whilst this means that the Boardcomposition does not comply with ASX Corporate Governance principles recommendations 2.2 and 2.3, the Board is of theview that the existing Board structure is suitable to its business and changing it would not add value for shareholders.

In accordance with the Company’s Constitution, one third of the number of Directors retire by rotation each year and offerthemselves for re-election.

For further details on the Directors, including qualifications; skills and experiences please refer to the Information onDirectors section in the Directors’ Report, on page 14 of this Annual Report.


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Nomination Committee

The Company does not have a Nomination Committee. The Board is of the view that the Company’s size and structure doesnot lend itself to requiring a separate committee. Instead the Board considers the issues that would otherwise be consideredby a Nominations Committee, including:

• setting the terms and conditions relating to the appointment and re-election of Directors

• assessing the necessary, and desirable, competencies of Directors

• Board succession plans

• evaluation of the performance of the Board, its committees and Directors

• the appointment and re-election of Directors

• ensuring Directors have access to continuing education to update and enhance their skills and knowledge

• establishing a process to ensure the Directors are provided with the information they need to discharge responsibilitieseffectively

• providing Directors with access to the Company Secretary and other resources as required.

The Company adopts an informal process for evaluating the performance of the Board, its committees and individualDirectors.

Directors’ Access to Independent Professional Advice

For the purpose of the proper performance of their duties, Directors are entitled to seek independent professional advice atthe Company’s expense, unless the Board determines otherwise.

Principle 3: Promote ethical and responsible decision-makingCode of Conduct

The Company recognises the need for Directors and employees to observe the highest standards of behaviour and businessethics when engaging in corporate activity.

The Board has adopted a Code of Conduct which sets out the principles and standards with which all officers and employeesare expected to comply in the performance of their respective functions.

All employees and Directors of the Company are expected to observe the highest standards of ethics, integrity and behaviourduring the course of their employment with the Company. Each person has responsibility and accountability for reporting andinvestigating reports of behaviour that is in breach of the Code of Conduct or otherwise considered to be unethical behaviour.

The standards expected include:

• compliance with all Company policies, procedures and contracts

• compliance with all reasonable and legal instructions of management

• to be honest and fair in dealings with clients, colleagues, management, the Board and the general public

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Specifically, employees and Directors are expected to:

• act with integrity in the performance of their duties

• maintain client confidentiality

• exercise proper courtesy, consideration and sensitivity in their dealings with clients and colleagues

• comply with the provisions of relevant legislation and ethical requirements of their profession

• respect the Company’s ownership of all Company funds, equipment, supplies, records and property

• maintain during employment with the Company, and after the termination of employment, the confidentiality of anyinformation acquired during the course of employment with the Company

• not make any unauthorised statements to the media about the Company’s business

• refrain from sexual or other unlawful harassment in the workplace

• observe occupational health and safety rules

• not bring drugs into the workplace

Breaches of the Code of Conduct will be dealt with in accordance with the Company’s Termination Policy.

Share Trading Policy

Share trading by Directors, employees and their associates (the designated officers) is restricted in accordance with theCompany’s Share Trading Policy.

The designated officers of the Company may not acquire or dispose of shares in the Company except during the period ofsix weeks commencing on the day that the Company makes a trading statement to the ASX.

The designated officers of the Company shall not acquire shares or other securities in any of the companies that are listedon the Company's Excluded Stocks List.

The Excluded Stocks List shall be compiled by HHIML and shall comprise the securities of companies that are held, or maybe held in the foreseeable future, in the Investment Portfolio of the Company.

The list may be updated by HHIML at any time, and at least monthly.

The onus will be on the designated officers to consult the current list whenever they or their associates wish to acquire sharesor securities. The list will be held and maintained by the Company Secretary of the Company and shall be available to allDirectors and employees upon request.

Where a designated officer already owns securities in a company that is subsequently placed on the Excluded Stocks List, thedesignated officer shall not trade in those securities (except by way of a rights issue by the company or the exercise ofoptions) without approval from the Chairman of the Company.


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Principle 4: Safeguard integrity in financial reportingAudit Committee

Whilst the Board has not adopted a formal charter for the Audit Committee, it has accepted and follows the followingprinciples:

Functions of Audit Committee

The primary objective for the Committee is to assist the Company in fulfilling its responsibilities relating to accounting andreporting practices. In addition, the Committee will:

• through active and open communication with the external Auditors, ensure that audits are conducted in a manner that isappropriate to the nature of the Company’s activities

• oversee and appraise the quality of the audits conducted by the Company’s external Auditors

• perform an independent and objective review of financial information presented by management to shareholders,regulators and the general public

• monitor and assess compliance with the Company’s Corporate Governance controls, including its operating,administrative and accounting controls

• monitor the Company’s Corporate Governance policies, controls and its compliance therewith

In carrying out its functions, the Audit Committee may commission independent legal, accounting or other professionaladvice or assistance at the reasonable expense of the Company.

The Audit Committee must inform the Board if it believes that it does not have adequate resources to properly perform itsfunctions as an Audit Committee.

Appointment

The Board of Directors of the Company is responsible for appointing members to the Audit Committee. The AuditCommittee must be made up of at least three Directors of the Company with the majority being Non-executive Directors.Audit Committee members should be suitably qualified. The Board has responsibility for reviewing the qualifications ofprospective Audit Committee members and for ensuring that the appointees are suitably qualified.

Members are appointed until further notice from the Board.

Replacement, removal and retirement

If an Audit Committee member resigns, is removed, ceases to be a Non-executive Director or is otherwise unable to performtheir duties, the Board may fill the vacancy and must do so if failure to appoint an appropriate person would cause a breachof the ASX Corporate Governance Principles.

The Board may remove an Audit Committee member by giving at least one month’s written notice to that Audit Committeemember.

Audit Committee members may retire by providing at least one month’s written notice to the Audit Committee and the Board.

Minutes, reports and recommendations

Meetings are formally minuted. The Chair must ensure that minutes of the Audit Committee meetings are kept and includedetails of all records, recommendations and actions required. The minutes shall be made available to Audit Committeemembers and the Board of the Company.

Meeting and reporting frequency

The Audit Committee shall meet bi-annually or more frequently, as determined by the Audit Committee. Meetings may alsobe called at the request of the Chair or the Board. The Audit Committee will report to the Board after each meeting.

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Disclosure of interests

An Audit Committee member must disclose any direct or indirect pecuniary interest that they may have in a matter beingconsidered, or about to be considered, by the Audit Committee, if their interest could conflict with the proper performanceof their duties in relation to the consideration of the matter.

This disclosure must occur at the first meeting of the Audit Committee after the relevant facts have come to the AuditCommittee member’s knowledge and must be recorded in the minutes of the meeting.

Rights to information and reports

The Audit Committee members have the right to receive such reports as they deem necessary to carry out their functionsand responsibilities.

Members

At the date of this Annual Report the Audit Committee comprised three Non-executive Directors, two of whom are alsoindependent:

Adam Paul Blackman (Non-executive, independent Director, Chairman)

Alex Koroknay (Non-executive Director)

David Ian Scott (Non-executive, independent Director)

Details of the members’ qualifications and their attendance at meetings can be found in the Directors’ Report on page 15 ofthis Annual Report.

Auditor Independence

It is the Board’s policy that, in order to maintain the independence of the audit function, the external Auditor shall not beengaged to perform consulting work for the Company. It is however, the Board’s policy that, in addition to the audit of theyear end financial report and review of the half-year financial report, the external Auditor may be engaged to provide adviceand assistance in relation to compliance with financial reporting requirements, to act as tax agent, perform the group’s taxcompliance work (including any related tax advice needed) and perform other ad hoc assurance assignments. The abovepolicy helps the Board to ensure that the Auditor is independent at the same time as ensuring that professional services arerendered to the group in a cost effective and efficient manner.

The Auditor is invited to attend each Annual General Meeting of the Company, and to be available to answer shareholderquestions about the conduct of the audit as well as the preparation and content of the Auditor’s Report.

Principle 5: Make timely and balanced disclosureThe Company is a ‘disclosing entity’ pursuant to section 111AC of the Corporations Act 2001 and complies with thecontinuous disclosure requirements as set out in the ASX Listing Rules and the Corporations Act 2001.

The Company discloses to the ASX any information concerning the Company which a reasonable person would expect tohave a material effect on the price or value of securities of the Company unless certain exemptions from the obligation todisclose apply. The Company applies a continuous disclosure protocol and has appointed Ouafaa Karim, the CompanySecretary, as Disclosure Officer of the Company.

The Company is committed to giving all shareholders comprehensive and equal access to information about its activities andto fulfilling its continuous disclosure obligations to the wider market.

The Board is responsible for making decisions on what should be disclosed publicly under the market disclosure policy andfor developing and maintaining relevant guidelines. The Company Secretary has responsibility for ensuring compliance withcontinuous disclosure requirements in the ASX Listing Rules and overseeing and co-ordinating information disclosure to theASX, shareholders, the media and the public.

The Company also publishes the Company Annual Reports, profit announcements, notices of meetings, media releases andany other information that is relevant to the performance and activities of the Company on the Hunter Hall website.


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Principle 6: Respect the rights of shareholdersThe Company Code of Conduct and its Disclosure Policy both recognise its legal and other obligations to shareholders andother stakeholders.

By adhering to the continuous disclosure requirements, and ensuring clear and timely release of information, the Companyaims to provide shareholders with a clear and balanced understanding of the aims and objectives of the Company.

Together with its mandatory monthly Net Tangible Asset reporting, the Company also provides details of its portfolioperformance which includes a narrative by HHIML on the investments held in the portfolio that have contributed positivelyand/or negatively to portfolio performance over that period.

Further cementing the Company’s commitment to ensuring shareholders are kept properly informed, all shareholders areinvited to attend an annual investor update. This provides an opportunity for shareholders to obtain information on theinvestment portfolio, the performance of the underlying investments and an opportunity for shareholders to hear directlyfrom the Investment Manager. This forum is made available on annual basis and is held separately to the Company AnnualGeneral Meeting.

At each Annual General Meeting the Chairman opens the floor for general question time and provides the shareholderswith the opportunity to be heard and to ask questions of their Directors.

Principle 7: Recognise and manage riskThe Board is responsible for identifying assessing, monitoring and managing the areas of potential business and legal riskfor the Company.

The identification, monitoring and, where appropriate, any change to significant risk to the Company are monitored directlyby the Board.

The Board reviews and monitors the parameters under which such risks are managed and is done by way of compliance andrisk management reporting from HHIML, as it is the entity responsible for the provision of investment management,administration and general operations of the Company.

The Board also receives an annual assurance from HHIML’s Chief Executive Officer and Chief Financial Officer (orequivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a soundsystem of risk management and internal control and that the system is operating effectively in all material respects inrelation to financial reporting risks.

Principle 8: Remunerate fairly and responsiblyThe Company does not employ any executives, therefore it does not have a Remuneration Committee nor does it have aRemuneration Policy to disclose.

The only remuneration paid by the Company is to the Non-Executive Directors. Director’s fees are paid to Non-executiveDirectors at a level that is considered to be in keeping with the size of the Company. Non-executive Directors are remuneratedby way of fees in the form of cash and superannuation contributions. The Non-executive Directors do not receive options orbonus payments and, other than their superannuation benefits, they are not provided with retirement benefits.

The Executive Directors are employees of Hunter Hall International Limited and are remunerated under its remuneration policy.

For details of the level of fees paid to the Non-Executive Directors please refer to the Remuneration Report in the Directors’Report, on page 18 of this Annual Report. For details of the fees paid to the Executive Directors please refer to the AnnualReport of Hunter Hall International Limited, a copy of which may be obtained from the Hunter Hall website atwww.hunterhall.com.au.

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Income Statement

30 June 2008 30 June 2007Note $’000 $’000

Revenues 2 8,913 7,984

Administration fees (105) (96)

Management fees 3 (6,779) (5,456)

Directors’ fees (77) (76)

Performance fees 3 - (7,418)

Professional fees (111) (129)

Registry fees (198) (246)

Foreign exchange losses (849) (460)

Other expenses (763) (793)

Profit/(loss) before income tax and gains from investments 31 (6,690)

Realised gains from investments 46,868 47,576

Unrealised (losses)/gains from investments (130,356) 40,733

(Loss)/profit before income tax (83,457) 81,619

Income tax revenue/(expense) 4 25,805 (23,672)

Net (loss)/profit after income tax expense (57,652) 57,947

Basic (loss)/earnings per share (cents per share) 5 (15.20) 21.12

Diluted (loss)/earnings per share (cents per share) 5 (15.20) 20.55

The Income Statement should be read in conjunction with the accompanying Notes


for the year ended 30 June 2008

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Balance Sheet


30 June 2008 30 June 2007Note $’000 $’000

ASSETS

Cash and cash equivalents 6 45,140 43,901

Trade and other receivables 7 1,551 6,204

Investments 8 305,653 473,104

Tax assets 9 10,359 341

TOTAL ASSETS 362,703 523,550

LIABILITIES

Trade and other payables 10 1,939 14,324

Tax liabilities 9 - 3,339

Deferred tax liabilities 9 235 31,173

TOTAL LIABILITIES 2,174 48,836

NET ASSETS 360,529 474,714

EQUITY

Contributed equity 11 357,710 383,864

Retained earnings 2,819 90,850

TOTAL EQUITY 360,529 474,714

The Balance Sheet should be read in conjunction with the accompanying Notes

as at 30 June 2008

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Statement of Changes in Equity

Contributed RetainedEquity Earnings Total

Note $’000 $’000 $’000

Balance as at 1 July 2006 213,729 50,850 264,579

Net profit attributable to shareholders - 57,947 57,947

Total recognised income and expense - 57,947 57,947

Options exercised 11 190,270 - 190,270

Shares bought back 11 (20,135) - (20,135)

Net income recognised directly in equity 170,135 - 170,135

Dividends paid 12 - (17,947) (17,947)

Balance as at 30 June 2007 383,864 90,850 474,714

Balance as at 1 July 2007 383,864 90,850 474,714

Net loss attributable to shareholders - (57,652) (57,652)

Total recognised income and expense - (57,652) (57,652)

Shares issued under the Dividend Reinvestment Plan 11 964 - 964

Shares bought back 11 (27,118) - (27,118)

Net expense recognised directly in equity (26,154) - (26,154)

Dividends paid 12 - (30,379) (30,379)

Balance as at 30 June 2008 357,710 2,819 360,529

The Statement of Changes in Equity should be read in conjunction with the accompanying Notes



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Cash Flow Statement


30 June 2008 30 June 2007Note $’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received 2,690 2,016

Dividends received 6,290 5,025

Sundry payments (341) (692)

Management and performance fees paid (15,191) (7,265)

Payment to suppliers (966) (2,134)

Income tax paid (18,490) (7,543)

Net cash outflow from operating activities 13 (26,008) (10,593)

CASH FLOWS FROM INVESTING ACTIVITIES

Investments purchased (204,741) (276,208)

Proceeds from investments sold 288,461 166,940

Net cash inflow/(outflow) from investing activities 83,720 (109,268)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of shares - 190,270

Payments for share buybacks (27,118) (20,134)

Dividends paid (29,414) (23,890)

Net cash (outflow)/inflow from financing activities (56,532) 146,246

Net increase in cash held 1,180 26,385

Cash at beginning of year 43,901 17,586

Effect of currency translations 59 (70)

Cash at end of year 6 45,140 43,901

The Cash Flow Statement should be read in conjunction with the accompanying Notes


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Notes to the Financial Statements

1: Statement of Significant Accounting PoliciesThe financial report is a general purpose financial report that has been prepared in accordance with Australian AccountingStandards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian AccountingStandards Board and the Corporations Act 2001. The financial report complies with all Australian equivalents toInternational Financial Reporting Standards (AIFRS) in their entirety. As a result of complying with AIFRS, the financialreport also complies with International Financial Reporting Standards (IFRS).

The Company is a listed public company, incorporated and domiciled in Australia.

The financial report has been prepared on an accruals basis and is based on historical costs and does not take into accountchanging money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values ofthe consideration given in exchange for assets.

Summary of Significant Accounting PoliciesThe following is a summary of the material accounting policies adopted by the Company in the preparation of the financialreport. They have been consistently applied unless otherwise stated.

a. Revenue and other income

Dividend income is recognised on a receivable basis on the date shares are quoted ex-dividend. Distribution income isrecognised on a receivable basis as of the date the unit value is quoted ex-distribution.

Interest from fixed interest and discount securities is recognised as income on the basis of the accumulated entitlement thatwould be received on the disposal of the security according to the trading practices accepted by the market for the relevantsecurity. Interest on cash on deposit is recognised in accordance with the terms and conditions which apply to the deposit.All revenue is stated net of the amount of Goods and Services Tax (GST).

b. Cash and cash equivalents

Cash and cash equivalents include cash on hand and in banks, and money market investments readily convertible to cashwithin two working days, net of outstanding overdrafts.

For the purpose of the Cash Flow Statement, cash includes cash on hand and at call deposits with banks or financialinstitutions, net of bank overdrafts.

c. Investments

All investments are initially recognised at cost, being the fair value of the consideration given including acquisition chargesassociated with the investment. After initial recognition, investments have been classified as designated “fair value throughprofit or loss”. Gains and losses on investments are recognised in the Income Statement. Investment performance ismeasured and evaluated by Key Management Personnel on the basis of fair value movement and managed in accordancewith the documented investment strategy.

d. Fair values of financial assets and liabilities

Financial assets and liabilities are valued at fair value. Fair values of financial instruments are determined on the followingbases:

i. Financial instruments traded in an organised financial market (traded securities) - current quoted market bid price for anasset or offer price for a liability. Quoted market prices are available for listed shares, options, debentures and otherequity and debt securities.

ii. Monetary financial assets and liabilities not traded in an organised financial market - cost basis carrying amounts fortrade debtors, trade accounts payable, accruals and dividends payable (which approximates fair value).

iii. Fixed rate loans, bills of exchange, promissory notes and debentures issued - current risk adjusted market rates.


For the year ended 30 June 2008

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e. Foreign currency translation

Transactions denominated in foreign currencies are translated into Australian currency at the rates of exchange ruling onthe date of the transaction. All realised exchange gains and losses are taken to account in the period in which they arise.

Foreign currency monetary assets and liabilities existing at balance date are revalued at the rates of exchange ruling at balancedate. The resulting unrealised exchange differences are brought to account in determining the profit or loss for the year.

f. Derivative financial instruments

The company uses derivative financial instruments such as foreign currency contracts to hedge its risks associated withforeign currency fluctuations. Such derivative financial instruments are stated at fair value.

The fair value of forward contracts is calculated by reference to current forward exchange rates for contracts with similarmaturity profiles. The fair value of interest rate swap contracts is determined by reference to market values for similarinstruments.

Gains and losses arising from changes in fair value are taken directly to the Income Statement.

g. Income Tax

The income tax expense (revenue) for the year comprises current income tax expense (revenue) and deferred tax expense(revenue).

The Company adopts the liability method of tax-effect accounting whereby the income tax expense is based on the profitfrom ordinary activities adjusted for any non-assessable or disallowed items.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising betweenthe tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will berecognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect onaccounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability issettled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly toequity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available againstwhich deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adversechange will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient futureassessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

h. Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is notrecoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition ofthe asset or is expensed. Receivables and payables in the Balance Sheet are shown inclusive of GST.

i. Critical accounting estimates and judgements

The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge andbest available current information. Estimates assume a reasonable expectation of future events and are based on currenttrends and economic data, obtained both externally and within the Company.


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Notes to the Financial Statements for the year ended 30 June 2008 continued

1: Statement of Significant Accounting Policies continued

Key estimates – impairment

The Company assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead toimpairment of assets. When an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-usecalculations performed in assessing recoverable amounts incorporate a number of key estimates.

No impairment has been recognised in respect of any assets for the year ended 30 June 2008.

j. Rounding of amounts

Unless otherwise shown in the financial statements, amounts have been rounded to the nearest thousand dollars and areshown in A$’000.

Hunter Hall Global Value Limited is a company of the kind referred to in the Australian Securities and InvestmentsCommission Class Order 98/100 issued 10 July 1998.

2: Revenue2008 2007

$’000 $’000

Interest received 2,724 2,188

Dividends received 6,108 5,655

Other revenue 81 141

8,913 7,984

3: Expensesa. Management FeesIn accordance with the Investment Management Agreement (outlined in the Shareholder Information section of this AnnualReport), the Investment Manager is entitled to a management fee of 1.5% per annum of the gross value of the Company,payable on a monthly basis.

The Investment Manager is also entitled to a performance fee when the Company outperforms the MSCI Total Return Index,Net Dividends in Australian dollars. The method of calculating the fee is detailed in the Investment Management Agreement.

The amounts paid and payable to the Investment Manager in accordance with the Investment Management Agreement were:

2008 2007$’000 $’000

Management fees 6,779 5,456

Performance fees - 7,418

6,779 12,874


For the year ended 30 June 2008 continued

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b. Indirect Cost Ratio (ICR) The ICR is a measure of the additional expense incurred by shareholders as a result of investing in the Company. Themajority of these expenses comprise fees paid to the Investment Manager and the custodian. Expenses that would otherwisebe incurred by a direct investor, such as transaction costs, brokerage, government taxes and charges on purchases and sales,are excluded.

The ICR of the Company calculated in accordance with the Corporation Amendment Regulations 2005, is shown in thefollowing table. The table combines the expenses incurred directly by the Company and those incurred indirectly throughinvestments in other managed investment schemes.

2008 2007ICR related expenses incurred by the Company $’000 $’000Excluding performance fees 8,033 6,593

2008 2007ICR related expenses incurred by the Company as a % of average net assets % %Including performance fees 1.73 3.81

Excluding performance fees 1.73 1.77

c. Auditor’s Remuneration2008 2007

$ $

Remuneration of the auditor of the Company for:

Audit of year end financial report 33,500 35,000

Review of half year financial report 20,000 18,000

Other audit and assurance service 5,220 6,125

58,720 59,125


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4: Income Tax Expense2008 2007

Note $’000 $’000

The components of tax expense comprise:

Current tax 13,383 11,420

Deferred tax 9 (39,188) 12,459

(Over)/under provision in respect of prior years - (207)

(25,805) 23,672

The prima facie tax on profit before tax is reconciled to the income tax expense provided

in the financial report as follows:

Prima facie tax (receivable)/payable on profit before income tax of 30% (25,037) 24,486

Add tax effect of:

Foreign withholding tax 190 136

Imputation credits 139 124

(Over)/under provision for income tax in prior year - (207)

Less tax effect of:

Tax credits (1,097) (867)

Income tax attributable to entity (25,805) 23,672

The applicable weighted average effective tax rates are as follows: 31% 29%

5: (Loss)/Earnings Per Share2008 2007

$’000 $’000

(Loss)/earnings used in the calculation of both basic and dilutive EPS (57,652) 57,947

No. No.

Weighted average number of ordinary shares outstanding during the year used in calculation of basic EPS 379,231,819 274,328,926

Effect of dilutive share options - 7,685,698

Weighted average number of ordinary shares and potential ordinary shares outstanding during the

year used in calculation of dilutive EPS 379,231,819 282,014,624

Weighted average number of potential ordinary shares outstanding during the year treated as non dilutive

in calculation of basic EPS - 4,777

6: Cash and Cash Equivalents2008 2007

$’000 $’000Cash at bank 45,140 43,901

45,140 43,901



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7: Trade and Other Receivables2008 2007

$’000 $’000Dividends accrued 537 719

Interest accrued 268 231

GST receivable 119 715

Other amounts receivable on investments sold 627 4,539

1,551 6,204

8: Investments2008 2007

$’000 $’000Equity securities at fair value 297,005 464,845

Fixed interest securities at fair value 3,100 -

Derivative financial instruments at fair value 5,548 8,259

305,653 473,104

Details of the Company’s largest 10 investments as at 30 June 2008 are as follows:

Carrying valueName of entity Principal activities $’000 Ownership %

PA Resources energy 21,503 1.1

Woongjin Thinkbig Co Ltd children’s educational material 14,250 2.4

Vallourec steel tubes 14,103 0.1

Samchully Co Ltd energy 13,710 1.7

NZ Farming Systems Uruguay dairy farming 12,720 3.8

Atlas Iron Ltd mining 12,516 1.2

Woongjin Coway Co Ltd water purifying manufacturer 11,720 0.5

Sirtex Medical Ltd therapeutics 9,819 6.2

Great Atlantic and Pacific Tea Co food retail 9,147 0.7

RCR Tomlinson Limited engineering services 7,279 7.8

Details of the Company’s largest 10 investments as at 30 June 2007 are as follows:

Carrying valueName of entity Principal activities $’000 Ownership %

Vallourec steel tubes 26,552 0.1

PA Resources energy 25,475 1.7

RCR Tomlinson Limited engineering services 19,984 8.0

SK Chemicals Co chemicals 16,387 0.8

Woongjin Thinkbig Co Ltd children’s educational material 16,211 2.4

Daewoo Motor Sales automobile retail 15,387 1.2

Great Atlantic and Pacific Tea Co food retail 15,133 0.9

Samchully Co Ltd energy 14,522 1.6

Sirtex Medical therapeutics 11,868 6.2

Suzuki Motor automobiles 11,691 0.1


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9: Taxa. Assets

2008 2007$’000 $’000

CURRENT

Income tax receivable 2,051 -

2,051 -

NON CURRENT

Deferred tax assets comprise:

Transaction costs on equity issue 6 289

Fair value gain adjustments 8,195 -

Other 107 52

8,308 341

Total Tax Assets 10,359 341

b. Liabilities2008 2007

$’000 $’000

CURRENT

Income tax payable - 3,339

- 3,339

NON CURRENT

Deferred tax liability comprises:

Fair value gain adjustments 18 30,912

Other 217 261

235 31,173

Total Tax Liabilities 235 34,512

c. Reconciliations2008 2007

$’000 $’000

i. Gross Movements

Opening balance 30,832 18,090

Deductible in financial year 283 283

(Charged)/credit to the income statement (39,188) 12,459

Closing balance (8,073) 30,832



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Transaction costs Fair value gainon equity issue adjustments Other Total

Movements $’000 $’000 $’000 $’000

ii. Deferred Tax Assets

At 1 July 2006 572 - 72 644

Deductible in financial year (283) - - (283)

Credited to the income statement - - (20) (20)

At 30 June 2007 289 - 52 341

Deductible in financial year (283) - - (283)

Credited to the income statement - 8,195 55 8,250

At 30 June 2008 6 8,195 107 8,308

iii. Deferred Tax Liabilities

At 1 July 2006 - 18,689 45 18,734

Charged/(credited) to the income statement - 12,223 216 12,439

At 30 June 2007 - 30,912 261 31,173

Charged to the income statement - (30,894) (44) (30,938)

At 30 June 2008 - 18 217 235

10: Trade and Other Payables2008 2007

$’000 $’000

Amounts owing on investments purchased 1,077 5,333

Sundry accruals 351 174

Payable to director related entities:

Manager’s account 502 8,808

Payable to other Director related parties 9 9

1,939 14,324


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11: Contributed Equity2008 2007

Number Number

Issued ordinary shares at the beginning of the reporting period 386,973,889 216,355,654

Shares issued under the Dividend Reinvestment Plan 931,810 -

Options exercised - 190,269,989

Share buy backs (30,120,427) (19,651,754)

Issued ordinary shares at reporting date 357,785,272 386,973,889

Share RightsOrdinary shares participate in dividends and the proceeds on winding up the Company in proportion to the number ofshares held. At shareholder meetings each ordinary share is entitled to one vote when a poll is called, otherwise eachshareholder has one vote on a show of hands.

OptionsUpon listing of the Company, shareholders received one tradeable option for each share purchased. These options wereexercisable up to 30 April 2007, for $1 for one ordinary share in the Company. On exercise these shares have the samerights as the existing ordinary shares. All options were exercised in the prior year. No options remain outstanding as at 30June 2008 (2007: nil).

Share Buy Backs During the year the Company bought back 30,120,427 (2007: 19,651,754) ordinary shares on issue at an average of $0.9003each (2007: $1.0246). The total purchase consideration of the buy-back was $27,118,009 (2007: $20,134,228). The buy backsoccurred on market at the same terms available to other shareholders. Shares were bought back if trading at a 10% or greaterdiscount to NTA. The shares bought back have been cancelled and the full amount of the buy-back debited to issued capital.

Capital ManagementThe Company manages its capital to ensure that it is able to continue as a going concern while maximising the return toshareholders and benefits for other stakeholders. The Board also aims to maintain a capital structure that ensures the lowestcost of capital available to the entity.

During 2008, the Company paid dividends of $30,379,143 (2007: $17,947,581).

The Company’s overall strategy remains unchanged from 2007.

The capital structure of the Company consists of cash and cash equivalents and equity attributable to equity holders of theparent, comprising issued capital, reserves and retained earnings as disclosed in the Statement of Changes of Equity.

The Company is not subject to externally imposed capital requirements.

Operating cash flows are used to maintain and expand the Company’s investment portfolio, as well as to make the routineoutflows of tax and dividends.

The Board has no current plans to issue further shares on the market but intends to continue to buy-back shares on market,where the shares are trading at a 10% discount to NAV, in accordance with the share buy-back plan approved byshareholders.



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12: Dividends2008 2007

$’000 $’000

Fully franked final ordinary dividend of 3.0 cents per share (2007: 1.6 cents) franked at the tax rate of 30% 11,609 3,593

Fully franked interim ordinary dividend of 5.0 cents per share (2007: 4.0 cents) franked at the tax rate of 30% 18,770 14,354

30,379 17,947

a. Final fully franked dividend of nil cents per share (2007: 3.0 cents) franked at the tax rate of 30% - 11,609

b. Balance of franking account at year end adjusted for franking credits arising from payment of

provision for income tax and dividends recognised as receivables, franking debits arising from

payment of dividends provided for and franking credits that may not be distributable in subsequent

financial years. 5,798 5,256

c. Subsequent to year-end, the franking account would be reduced by the final dividend as follows: 5,798 281

13: Cash Flow Information2008 2007

$’000 $’000

Reconciliation of net cash provided by operating activities to net (loss)/profit after income tax:

Net (loss)/profit after income tax (57,652) 57,947

Changes in market value 83,325 (88,240)

Changes in assets and liabilities:

Decrease/(increase) in assets 741 (1,239)

(Decrease)/increase in liabilities (52,422) 20,939

Net cash used by operating activities (26,008) (10,593)

14: Financial Risk ManagementThe Company’s financial instruments consist mainly of deposits with banks, investments, accounts receivable and payable,and derivatives. Derivatives are used by the Company for economic hedging purposes. Such instruments include forwardexchange contracts. The Company does not speculate in the trading of derivative instruments.

The Company holds the following financial instruments:

2008 2007$’000 $’000

Financial Assets

Cash and cash equivalents 45,140 43,901

Trade and other receivables 1,551 6,204

Financial assets at fair value through profit or loss 300,105 464,845

Derivative financial instruments 5,548 8,259

352,344 523,209

Financial Liabilities

Trade and other payables 1,939 14,324

1,939 14,324


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14: Financial Risk Management continued

Financial Risk Exposures and ManagementThe main risks the Company is exposed to through its financial instruments are foreign exchange risk, price risk, interestrate risk, credit risk and liquidity risk.

a. Market Risk

i. Foreign exchange risk

With approximately 63% (2007: 74%) of the Company’s portfolio held in foreign stocks there is a risk associated withmovements in foreign exchange rates. The Company has adopted a policy to hedge against exchange rate movementsthrough short term forward contracts. This resulted in a realised gain of $14,074,008 in the year to 30 June 2008 (2007:gain of $7,539,730).

The accounting policy in regard to forward exchange contracts is details in Note 1f.

The Company’s total net exposure to fluctuations in foreign currency exchange rates at the balance date was as follows:

2008 2007$’000 $’000

Assets

Brazilian Real 125 -

Canadian Dollar 16,619 -

Euro 19,101 51,049

British Pound 11,860 21,392

Hong Kong Dollar 6,580 5,181

Indian Rupee 425 -

Japanese Yen 8,876 27,457

South Korean Won 64,012 134,513

Malaysian Ringit 119 -

Norwegian Krone 28,199 39,157

New Zealand Dollar 16,245 7,980

Swedish Krona 3,120 -

Singapore Dollar 10,990 4,768

Taiwan Dollar 4,990 561

US Dollar 43,927 105,093

235,188 397,152

Liabilities

Hong Kong Dollar 27 -

South Korean Won - 3,216

Singapore Dollar 84 -

US Dollar - 704

111 3,920



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At balance date, the details of outstanding forward exchange contracts are:

Buy Australian Dollars Average Exchange Rate2008 2007 2008 2007

$’000 $’000

Canadian Dollar 6,320 - 0.9258 -

Euro 11,714 30,074 0.6007 0.5928

British Pound 8,580 13,598 0.4666 0.4040

Indian Rupee 12,472 - 40.5322 -

Japanese Yen 6,447 15,753 96.5267 95.5456

South Korean Won 28,437 68,478 917.6164 745.8443

Norwegian Krone 11,550 17,517 4.7452 4.9023

New Zealand Dollar 11,231 - 1.2465 -

Swedish Krona 2,608 - 5.4155 -

Singapore Dollar 1,634 1,654 1.2242 1.2098

Taiwan Dollar 1,073 7,058 27.9015 25.7129

US Dollar 17,788 55,302 0.8730 0.8090

Sensitivity analysis

A 10% strengthening/(weakening) of the AUD against the following currencies at 30 June would have increased/(decreased)the net assets attributable to shareholders and profit or loss from operating activities by $11,479,004 (2007: $18,742,751).The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on thesame basis for 2007.

ii. Price risk

The Company is exposed to equity securities price risk. This arises from investments held by the Company and classified onthe balance sheet as fair value through profit or loss.

To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. The majority ofthe Company’s equity investments are publicly traded.

Sensitivity analysis

At reporting date, if the equity prices had been 10% p.a. higher or lower net profit and equity of the Company would havebeen $30,014,235 higher/$30,014,235 lower (2007: $46,484,434 higher/$46,484,434 lower).

The sensitivity to equity prices has not changed significantly from the prior year.

iii. Interest rate risk

The majority of the Company’s financial assets are non-interest bearing. Interest is accrued daily based on market rates,therefore the Company is not materially exposed to interest rate risk.

b. Credit riskCredit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financialinstitutions, as well as outstanding receivables. The Company minimises concentrations of credit risk by undertakingtransactions with a number of customers and counter parties on recognised and reputable exchanges. The Company is notmaterially exposed to any individual counterparty.

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date in respect ofrecognised financial assets is the carrying amount, net of any provisions for doubtful debts of those assets, as disclosed in theBalance Sheet and Notes to the Financial Statements.


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14: Financial Risk Management continued

c. Liquidity riskThe Company manages liquidity risk by monitoring forecast cash flows and ensuring that adequate uninvested cash levelsare maintained.

Maturities of financial liabilities

Financial liabilities held by the Company include management fees payable to the Investment Manager, brokerage and othersundry accruals. All liabilities are due and payable within one month.

d. Net fair valuesThe net fair values of listed investments have been valued at the quoted market bid price at balance date. For unlistedinvestments where there is no organised financial market, the net fair value has been based on either cost or the redemptionprice published by the issuer at balance date. The net fair value of loans and amounts due approximates their carryingvalue. For other assets and other liabilities the net fair value approximates their carrying value. No financial assets andfinancial liabilities are readily traded on organised markets in standardised form other than listed investments. Financialassets where the carrying amount exceeds net fair values have not been written down as the Company believes thediminution to be temporary.

e. Specific instrumentsDerivative financial instruments

A derivative is a financial contract the value of which depends on or is derived from the value of underlying assets, liabilitiesor indices. Derivative transactions include a wide assortment of instruments, such as forwards, futures, options and swaps.Derivatives are considered to be part of the investment process. The use of derivatives is an essential part of the Company’sportfolio management. In particular the Company utilises short term forward contracts to manage its risk associated withmovements in foreign exchange rates.

For details of forward exchange contracts outstanding at the balance date refer to note 14 a. i.



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15: Related Party Transactions2008 2007

$’000 $’000

Transactions between related parties are on normal commercial terms and conditions no more favourable

than those available to other parties unless otherwise stated.

Director-related entities:

a. Hunter Hall International Ltd

Expense reimbursements paid in relation to cost incurred on behalf of the Company (784,101) (811,570)

b. Hunter Hall Investment Management Ltd

Pursuant to the Investment Management Agreement:

Performance fees paid and payable - (7,417,740)

Management fees paid and payable (6,779,332) (5,455,934)

c. Bennelong Administration Services Pty Ltd

Administration fees paid and payable pursuant to administration services provided by Bennelong

Administration Services Pty Ltd to the Company (105,360) (96,299)

d. Rushcutter Investments Pty Ltd

Conversion of 2,200,000 options in the Company to ordinary shares - (2,200,000)

Sale of 2,200,000 shares in the Company - 2,400,092

Purchase of 4,568,155 options in the Company - (43,920)

Conversion of 4,568,155 options in the Company to ordinary shares - (4,586,115)

Sale of 4,568,155 shares in the Company - 5,007,899

e. Share and option transaction of Directors:

Directors and Director-related entities hold, directly, indirectly or beneficially as at the reporting date equity interest in the Company, in the form of ordinary shares and options over ordinary shares in the Company. Movements in equity interests during the period were as follows:

Number Number

Shares Options

1-Jul-07 Movement 30-Jun-08 1-Jul-07 Movement 30-Jun-08

Mr A Blackman 20,000 - 20,000 - - -

Mr P Hall 300,000 200,000 500,000 - - -

Mr J Lowenstein 80,000 - 80,000 - - -

Mr D Scott 20,000 - 20,000 - - -

Mr A Koroknay 10,000 - 10,000 - - -

Number Number

Shares Options

1-Jul-06 Movement 30-Jun-07 1-Jul-06 Movement 30-Jun-07

Mr A Blackman 10,000 10,000 20,000 10,000 (10,000) -

Mr P Hall 300,000 - 300,000 - - -

Mr J Lowenstein 10,000 70,000 80,000 - - -

Mr D Scott 20,000 - 20,000 - - -

Mr A Koroknay - 10,000 10,000 - - -


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16: Statement of Operations by SegmentThe Company operates in one business segment, being investment in securities. The Company operates from Australia onlyand therefore has only one geographical segment. The Company invests in securities listed or to be listed on foreign anddomestic stock exchanges, unlisted securities and fixed interest securities. As at 30 June 2008, 63.1% (2007: 73.7%) of theCompany’s portfolio was held in foreign stocks. The Company has investment exposures in different countries which areshown below:

Realised Unrealised Fair Value of PortfolioRevenue Gains/(Losses) Gains/(Losses) Portfolio Share

2008 $’000 $’000 $’000 $’000 %

Investments listed in:

Australia 1,455 1,041 (32,499) 78,681 22.4

Great Britain 486 (223) (6,223) 12,492 3.6

United States of America 600 (10,253) (10,197) 17,239 4.9

Brazil - 18 15 59 0.0

Canada 5 680 3,642 16,591 4.7

Japan 131 (988) (4,212) 8,404 2.4

Korea 1,098 19,771 (39,721) 61,861 17.6

New Zealand - (30) 2,232 16,090 4.6

Euro zone 1,007 9,683 (9,211) 18,941 5.4

Switzerland - 26 - - 0.0

Norway - - (7,373) 27,999 8.0

Sweden 184 1,125 (800) 2,952 0.8

Other Asia 1,142 11,944 (23,298) 38,796 11.1

Other 81 - - - 0.0

Foreign Exchange Contracts - 14,074 (2,711) 5,548 1.6

Sub Total 6,189 46,868 (130,356) 305,653 87.1

Cash 2,724 (908) 59 45,140 12.9

Total 8,913 45,960 (130,297) 350,793 100.0

Realised Unrealised Fair Value of PortfolioRevenue Gains/(Losses) Gains/(Losses) Portfolio Share

2007 $’000 $’000 $’000 $’000 %

Investments listed in:

Australia 1,042 3,782 3,553 83,504 16.2

Great Britain 683 2,766 (736) 20,806 4.0

United States of America 175 713 982 45,357 8.8

Japan 98 828 (847) 26,039 5.0

Korea 999 19,854 11,413 133,312 25.8

New Zealand - - 778 7,980 1.5

Euro zone 1,070 7,694 (2,210) 49,871 9.6

Norway - 2,846 4,332 38,988 7.5

Other Asia 1,588 1,553 12,315 58,988 11.5

Other 141 - - - 0.0

Foreign Exchange Contracts - 7,540 11,153 8,259 1.6

Sub Total 5,796 47,576 40,733 473,104 91.5

Cash 2,188 (389) (71) 43,901 8.5

Total 7,984 47,187 40,662 517,005 100.0



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17: Change in Accounting StandardsThere have been new Australian Accounting Standards and Australian Accounting Interpretations issued or amended andare applicable but not yet effective. An assessment of the impact has been completed with no material quantitative effect onthe Company’s financial reporting however, there will be some changes to the disclosures.

18: Subsequent EventsSince the close of the financial year to 30 June 2008, the Australian and international markets have continued to experiencehigh volatility. For the month to 31 August 2008 the Company’s pre-tax NTA declined by 0.8%, underperforming thebenchmark MSCI World Index in Australian dollars by 8.5 %. As at 31 August 2008 the Company’s net assets were $345.3million.

There were no other events subsequent to year end that require disclosure other than those matters referred to elsewhere inthis report.

The financial report was authorised for issue on 29 August 2008 by the Board of Directors.

19: Contingent LiabilitiesThere were no contingent liabilities at year end that require disclosure.


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Directors’ Declaration

The Directors of the Company declare that:

1. the Financial Statements and Notes, as set out on pages 30 to 49 are in accordance with the Corporations Act 2001, including:

i. complying with Accounting Standards and the Corporations Regulations 2001; and

ii. giving a true and fair view of the financial position as at 30 June 2008 and performance of the Company for the 12 months ended on that date;

2. the Chief Executive Officer and Chief Financial Officer have declared that:

i. the financial records of the Company for the financial year have been properly maintained in accordance with Section 286 of the Corporations Act;

ii. the financial statements and notes for the financial year comply with the Accounting Standards; and

iii. the financial statements and notes for the financial year give a true and fair view;

3. in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.


Dated this 26th day of September 2008


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AUDITOR’S INDEPENDENCE DECLARATION

TO THE DIRECTORS OF HUNTER HALL GLOBAL VALUE LIMITED

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of HunterHall Global Value Limited for the year ended 30 June 2008, I declare that, to the best of my knowledge and belief, therehave been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON NSW

Chartered Accountants

G S LaylandPartner

Sydney, 26 September 2008

Grant Thornton NSWABN 25 034 787 757

Level 17, 383 Kent StreetSydney NSW 2000PO Locked Bag Q800QVB Post OfficeSydney NSW 1230

T +61 2 8297 2400F +61 2 9299 4445E [email protected] www.grantthornton.com.au

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, togetherwith its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards legislation.

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INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF HUNTER HALL GLOBAL VALUE LIMITED

Report on the Financial Report

We have audited the accompanying financial report of Hunter Hall Global Value Limited which comprises the balance sheetas at 30 June 2008, and the income statement, statement of changes in equity and cash flow statement for the year ended onthat date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration.

Directors’ responsibility for the financial report

The Directors of the company are responsible for the preparation and fair presentation of the financial report in accordancewith Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001.This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentationof the financial report that is free from material misstatement, whether due to fraud or error; selecting and applyingappropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1 theDirectors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, thatcompliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report,comprising the financial statements and notes, complies with International Financial Reporting Standards.

Grant Thornton NSWABN 25 034 787 757

Level 17, 383 Kent StreetSydney NSW 2000PO Locked Bag Q800QVB Post OfficeSydney NSW 1230

T +61 2 8297 2400F +61 2 9299 4445E [email protected] www.grantthornton.com.au

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, togetherwith its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards legislation.

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TO THE MEMBERS OF HUNTER HALL GLOBAL VALUE LIMITED (cont)

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordancewith Australian Auditing Standards, which require us to comply with relevant ethical requirements relating to auditengagements and plan and perform the audit to obtain reasonable assurance as to whether the financial report is free ofmaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatementof the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internalcontrol relevant to the entity’s preparation and fair presentation of the financial report in order to design audit proceduresthat are appropriate in the circumstance, but not for the purpose of expressing an opinion on the effectiveness of the entity’sinternal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Electronic Presentation of Audited Financial Report

This auditor’s report relates to the financial report of Hunter Hall Global Value Limited for the year ended 30 June 2008included on the Hunter Hall Group web site. The company’s directors are responsible for the integrity of the Hunter HallGroup web site. We have not been engaged to report on the integrity of the Hunter Hall Group web site. The auditor’sreport refers only to the statements named above. It does not provide an opinion on any other information which may havebeen hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising fromelectronic data communications they are advised to refer to the hard copy of the audited financial report to confirm theinformation included in the audited financial report presented on this web site.

Independence

In conducting our audit, we complied with applicable independence requirements of the Corporations Act 2001.

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TO THE MEMBERS OF HUNTER HALL GLOBAL VALUE LIMITED (cont)

Auditor’s opinion

In our opinion:

a the financial report of Hunter Hall Global Value Limited is in accordance with the Corporations Act 2001, including:

i giving a true and fair view of the company’s financial position as at 30 June 2008 and of its performance for the year ended on that date; and

ii complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and

b the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the Remuneration Report included on pages 18 and 19 of the directors’ report for the year ended 30 June2008. The directors of the company are responsible for the preparation and presentation of the Remuneration Report inaccordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the RemunerationReport, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Hunter Hall Global Value Limited for the year ended 30 June 2008, complieswith section 300A of the Corporations Act 2001.

GRANT THORNTON NSW

Chartered Accountants

G S LaylandPartner

Sydney, 26 September 2008

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Shareholder Information


As at 31 August 2008 there were 11,492 shareholders.

Distribution of ShareholdersNumber of Number of

Category (size of holding) shareholders ordinary shares

1 – 1,000 270 121,768

1,001 – 5,000 1,724 6,331,857

5,001 – 10,000 2,448 20,915,065

10,001 – 100,000 6,689 205,990,343

100,001 and over 361 117,798,003

TOTAL 11,492 351,157,036

The number of shareholders holding less than a marketable parcel is 168.

Substantial ShareholdersThere are no substantial holdings as at 31 August 2008. A substantial holding is one which holds 5% or more of the totalvotes attached to the voting shares in the entity.

Net Tangible Assets (NTA) Reconciliation of Monthly ASX Announcement to Financial Statements

30 June 2008 30 June 2007

NTA as announced to ASX 361,627,261 475,319,767

Adjustment to bid price valuation (2,467,421) (2,284,489)

Reversal of accrual for realisation costs 898,512 1,401,479

Tax adjustments 470,673 264,903

Other - 12,600

NTA as per financial statements 360,529,025 474,714,260

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20 Largest Shareholders – Ordinary SharesNumber of % of total issued

Name ordinary shares ordinary shares

1. Cogent Nominees Pty Ltd 15,511,755 4.42

2. UBS Wealth Management Australia Nominees Pty Ltd 10,585,891 3.01

3. RBC Dexia Investor Services Australia Nominees Pty Limited <MLCI A/C> 3,497,774 1.00

4. Forbar Custodians Limited <Forsyth Barr Ltd - Nominee A/C> 2,661,870 0.76

5. Perpetual Trustees Consolidated Limited <c_l a/c> 1,762,137 0.50

6. UBS Nominees Pty Ltd 1,294,638 0.37

7. Australian Executor Trustees Limited <No 1 Account> 1,288,658 0.37

8. Equity Trustees Limited <Allocated Pension Account> 1,250,000 0.36

9. Aust Executor Trustees Ltd <LIC Fund A/C> 1,194,845 0.34

10. Bond Street Custodians Limited <McGol - CP0114 A/C> 1,100,000 0.31

11. Brazil Farming Pty Ltd 1,000,000 0.28

12. E G Holdings Pty Limited 1,000,000 0.28

13. Tree Pot Pty Ltd <Tree Pot A/C> 1,000,000 0.28

14. Ms Thelma Joan Martin-Weber 1,000,000 0.28

15. Favermead Pty Ltd <Fitzpatrick s/F A/C> 950,000 0.27

16. Mr Christopher James Piggott + Mrs Shirley Janice Piggott 910,000 0.26

17. RBC Dexia Investor Services Australia Nominees Pty Limited <NMSMT A/C> 849,043 0.24

18. Fernwaye Pty Ltd <Folie Staff Super Fund A/C> 841,000 0.24

19. Equity Trustees Limited <Accumulation Account> 750,000 0.21

20. Mr Carl Brendan Skipworth 722,000 0.21

Transactions in Securities30 June 2008 30 June 2007

Total number of transactions in securities during the year 1,258 1,030

Total brokerage paid or accrued during the year 1,299,978 1,170,987

Voting RightsSubject to the Company’s Constitution:

• At meetings of shareholders, each shareholder is entitled to vote in person, by proxy, by attorney or by representative

• On a show of hands, each shareholder present in person, by proxy, by attorney or by representative is entitled to one vote

• On a poll, each shareholder present in person, by proxy, by attorney or by representative is entitled to one vote for everyshare held by the shareholder

In the case of joint holdings, only one joint holder may vote.

Voting by ProxyShareholders may appoint a proxy or attorney to represent them at a shareholder meeting. If a proxy is appointed and theshareholder attends the meeting then that proxy is automatically revoked.

A corporate shareholder may appoint a proxy, an attorney or a corporate representative.


continued

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Dividend PaymentsThe Company offers shareholders the following choices of how dividend entitlements can be received:

• Cash – a cheque is mailed to the shareholder’s registered address

• Direct Credit Deposit – the dividend is paid directly to the nominated bank account. Direct credits avoid delay in postaldelivery and the possibility of lost cheques and are therefore a preferred option.

Principal Registered Address of the CompanyThe principal registered office is Level 2, 60 Castlereagh Street, Sydney NSW 2000. Telephone (02) 8224 0300.

RegistryComputershare Investor Services Pty Limited, Level 3, 60 Carrington Street, Sydney NSW 2000. Investor Enquiries 02 8216 5700.

Stock Exchange ListingQuotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the AustralianSecurities Exchange Limited (ASX). The company shares are traded under the symbol HHV. Details of trading activity arepublished in most daily newspapers and also obtainable from the ASX website at www.asx.com.au.

Investment Management AgreementThe Company has appointed Hunter Hall Investment Management Limited (the Manager, HHIML), under an InvestmentManagement Agreement dated 29 January 2004, to manage the investment portfolio of the Company. The Manager managesand supervises all investments of the Company, including providing monthly valuations, for the term of the contract.

TermThe Investment Management Agreement is for an initial period of 25 years commencing on the date the Company listed onthe ASX, unless terminated earlier in accordance with terms of the Investment Management Agreement.

Powers of ManagerFor the purpose of carrying out its functions and duties under the Investment Management Agreement, HHIML has thepowers of a natural person and absolute and unfettered discretion to manage the investment portfolio and to do all thingsand execute all documents necessary for the purpose of managing the investment portfolio.

Management FeeIn return for the performance of its duties as Manager of the Company’s investment portfolio, HHIML is entitled to be paida monthly management fee equal to 0.125% of the gross value of the investment portfolio calculated on the last day of themonth (equivalent to a fee of 1.5% per annum of the average value of the investment portfolio).

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Performance FeeHHIML is also entitled to a Performance Fee, equal to 15% of any outperformance of the investment portfolio compared toits benchmark the MSCI World Accumulation Net Return Index, Net Dividends Reinvested, in Australian Dollars. The fee isaggregated daily and paid annually, subject to the following:

i. if the aggregate Performance Fee for a Financial Year (including any amounts accrued from a previous year) is a positiveamount but the investment return of the investment portfolio is not greater than zero, then that Performance Fee shallbe carried forward (as an accrual) to the following Financial Year,

ii. if the aggregate Performance Fee for a Financial Year (including any positive or negative amount carried forward fromthe previous year) is a positive amount but the payment of the accrued Performance Fee would cause the adjustedinvestment return of the investment portfolio for the year to be negative, that portion of the Performance Fee that wouldcause the investment return of the investment portfolio to be negative shall be carried forward (as an accrual) to thefollowing Financial Year,

iii. if the aggregate Performance Fee for a Financial Year is a negative amount, no Performance Fees shall be payable toHHIML in respect of that Financial Year, and the negative amount shall be added to the Performance Fee of thesucceeding year.

Reimbursement of ExpensesThe Company must reimburse to HHIML, in addition to its remuneration and rights of indemnification or reimbursementconferred under any other provision of the Investment Management Agreement or by law, all charges and expensesreasonably and properly incurred by the Manager in respect of the Company.


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Corporate Directory

Principal and Registered OfficeHunter Hall Global Value LimitedLevel 2, 60 Castlereagh StreetSydney NSW 2000Australia

Telephone: +61 2 8224 0300

Facsimile: +61 2 8224 0333

Email: [email protected]

Website: www.hunterhall.com.au

DirectorsPeter James MacDonald HallExecutive Chairman


David Ian ScottNon-executive Director

Adam Paul BlackmanNon-executive Director

Alex KoroknayNon-executive Director

Company SecretaryOuafaa Karim

AuditorGrant Thornton NSWLevel 17, 383 Kent StreetSydney NSW 2000Australia

Share RegistryComputershare Investor Services Pty LimitedLevel 3, 60 Carrington StreetSydney NSW 2000AustraliaF

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EthicalManaged Funds

Hunter Hall Investment Management Limited

Investor Relations 1800 651 674www.hunterhall.com.au

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