Strategic Report / Company Performance


Net asset value
('NAV') per share on
a total return basis
increased by 31.0%


Benchmark index
increased by
28.0% 1


Total ordinary
dividends maintained
at 11.7p


Share price total
return increase
of 34.3%

1 The lead benchmark is the MSCI All Country World ex-US Index.

Net asset value per share (total return) for the year to 30 September 20162 31.0
Share price total return for the year to 30 September 2016 34.3
30 September
30 September
% Change
MSCI All Country World ex-US Index (£ adjusted total return)1
MSCI All Country ex-US Value Index (£ adjusted total return)
Morningstar Investment Trust Global Index3
MSCI All Country World Index (£ adjusted total return)
(difference between share price and net asset value)4
-9.64% -11.59%
Earning and Dividends
Investment income
Revenue earnings per share
Capital earnings per share
Total earnings per share
Ordinary dividends per share
Special dividends per share
Ongoing Charges Ratio
Management, marketing and other expenses
(as percentage of average shareholders' funds)
0.89% 0.89%
2016 Year's Highs/Lows
Net asset value per share
Net asset value per share (debt at fair value)
Share price (mid market)

1 The lead benchmark is the MSCI All Country World ex-US Index.

2 As per guidelines issued by the AIC, performance is calculated using net asset values per share inclusive of accrued income and debt marked to fair value.

3 The Morningstar Investment Trust Global Index (total return basis), formerly known as Fundamental Data Global Growth Investment Trust Index, is subject to revision and the figures are as at 25 October 2016.

4 As per guidelines issued by the AIC, the discount is calculated using the net asset value per share inclusive of accrued income and with the debt at fair value.

During the year, the Company purchased 8,394,546 Ordinary Shares, all of which have been placed into treasury, at a cost of £42.3m.

Historical Record
Year ended 30 September
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Net revenue return £'000* 18,747 16,268 13,827 21,775 24,050 18,405 12,712 12,774 13,548 9,046
Revenue earnings per share (p)* 14.32 11.75 9.29 13.90 15.06 11.50 7.94 7.98 8.46 5.65
Ordinary dividends per share (p) 11.70 11.70 10.50 10.50 9.50 8.50 7.50 6.00 5.75 5.00
Special dividend per share (p) 2.80 2.50 3.50 2.00 1.25 1.50 0.50
Net assets £'000 843,973 697,542 826,984 844,455 791,225 740,385 829,670 735,188 633,856 815,124
Basic net asset value per share (p) 670.52 519.53 575.92 551.97 500.47 462.51 518.28 459.26 395.96 509.19

* * The figures for 2007 to 2014 are Group returns and earnings, those for 2015 and 2016 are the Company return and earnings.
These are comparable on a like-for-like basis.

The Company’s net asset value relative to the MSCI All Country World ex-US Index (£ adjusted total return), the MSCI All Country World ex-US Value Index (£ adjusted total return), the Morningstar Investment Trust Global Index and the MSCI All Country World Index (£ adjusted total return)

Net Asset Graph

Look-through geography

Look throug geography map
Look-through country exposure %
United Kingdom 6.4
North America 19.3
Europe 36.7
Asia 16.6
Japan 9.1
Latin America, Africa & Emerging Europe 7.8
Other 4.0

Source Asset Value Investors.

Strategic Report / Chairman's Statement

This report covers the period from 1 October 2015 to 30 September 2016. As in previous years, we have elected to include the Chairman’s Statement in the Strategic Report in order to minimise duplication.

Investment Performance
I reported last year that Joe Bauernfreund became the portfolio manager of British Empire on the first day of the accounting year under review. Joe is also the Chief Executive of our Investment Manager, AVI.

I am pleased to say that, having achieved a return of 5.6% at the half year, the performance in the second half has again been encouraging. British Empire outperformed its benchmark by 6.2%, the peer group by 7.2% and the World Index by 6% over the second half of the year. The NAV increased over the full year by 29.1%, resulting in a NAV total return of 31.0% for the year, some 3% better than the benchmark index.

Strone Macpherson

Strone Macpherson - Signature

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Strategic Report / Ten Largest Equity Investments

The top ten equity investments make up 50.6% of total assets, with underlying businesses
spread across a diverse range of sectors and regions.­

Strategic Report / At a glance


The Investment Manager focuses on capital growth, but the Company has either maintained or increased its ordinary dividends for the past 30 years. When there are exceptionally high income receipts, the Company occasionally pays a special dividend.


The Company’s shares have been trading at a discount to their net asset value of 9.6% at the year end. We have continued to buy back shares to limit volatility in the discount and during the year bought back a total of 8.4m shares.


The Company is geared by its Debenture Stock and by Loan Notes which were issued in January 2016. Taking account of the £15m debenture liability and the Loan Notes, the Company’s debt-to-equity ratio as at 30 September 2016 was 8.4%
(2015: 2.2%).

Look-through country exposure

Look through pie chart

Equity portfolio value by market capitalisation

Equity pie chart

Portfolio value by sector

Portfolio value pie chart

Investment Review / Investment Manager's Review

Performance Review

Over the financial year, the total net asset value return was 31.0%, which marks one of the best years of performance for your Company (our formal benchmark returned 28.0% while the Morningstar Investment Trust Global Index returned 27.0% and the MSCI All Country World Index returned 31.3%). The largest contributions came from Aker (which increased returns by +5.2%), Vietnam Phoenix Fund (+1.9%), Symphony International (+1.9%), conwert (+1.8%) and Investor (+1.8%). The only significant detractor was Dolphin Capital, which reduced returns by 0.9%. The mark to market effect of the debt and Japanese Yen hedge had adverse impacts of 1.2% and 0.5% respectively.

We live in interesting times. The continued quantitative easing experiment adopted by many Central Banks around the world, along with zero – and even negative – interest rate policies continues to distort asset prices. Talk of helicopter money and debt monetisation gathers momentum. Concerns over the health of the Chinese economy surface at regular intervals. As far as the stock market is concerned, the European Central Bank appears to have largely papered over the cracks in the Eurozone for now, recent fears over the health of Germany’s largest bank notwithstanding. Not least, of course, the impacts of the Brexit vote in the UK and the exact form the UK’s exit from the EU will take remain hotly debated and controversial topics. What is unarguable, however, is that the fall in the value of Sterling following the vote has been a positive for your Company as the translation effect on our overseas assets (98% of NAV) was substantially boosted by Sterling weakness.

Joe Bauernfreund
Chief Investment Officer

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Investment Review / Investment Manager's Review

Portfolio Review

The outlook for the portfolio is promising. On a weighted average discount of 32%,
the portfolio is cheaper than it was a year ago notwithstanding the fact that there
are several situations where we are confident discounts will narrow materially in
the near-term. There are likely to be transactions within the unlisted portfolios
of various holding companies as well as an expected IPO and potential trade sale
of two significant companies held by our closed-end funds. We also continue to
work with the boards of our holdings to explore various avenues to reduce discounts.

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