Strategic Report / Company Performance

-8.3%

Net asset value
('NAV') per share on
a total return basis
decreased by 8.3%

-5.6%

Benchmark index
decreased by
5.6%

11.7p

Total ordinary
dividends increased
to 11.7p – an
increase of 11.4%

-9.2%

Share price total
return decrease of 9.2%

30 September
2015
30 September
2014
% Change
Net asset value per share (total return) (8.31)
Share price total return (9.23)
Indices
Morgan Stanley Capital International All Country World
ex-US Index (£ adjusted total return)1
Morningstar Investment Trust Global Index2
Morgan Stanley Capital International All Country World
Index (£ adjusted total return)
302.67
147.35
 
473.10
320.56
142.10
 
471.07
(5.58)
3.69
 
0.43
Earning and Dividends
Revenue Income
Revenue earnings per share
Capital earnings per share
Total earnings per share
Ordinary dividends per share
£20.93m
11.75p
(59.95p)
(48.20p)
11.70p
£19.97m3
10.47p3
22.58p3
33.05p3
10.50p
Discount
(difference between share price and net asset value)4
11.59% 10.28%
Ongoing Charges Ratio
Management, marketing and other expenses
(as percentage of average shareholders' funds)
0.89% 0.90%
2015 Year's Highs/Lows
Net asset value per share
Net asset value per share (debt at fair value)
Share price (mid market)
High
622.93p
619.78p
555.0p
Low
515.83p
512.61p
446.0p

1 The lead benchmark is the Morgan Stanley Capital International All Country World ex-US Index.

2 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 20 October 2015.

3 The revenue return figures for 2014 include an amount of £1.76 million from the reserves of the subsidiary company, offsetting capital returns by the same amount. Revenue earnings per share at the overall group level were 9.29p. See page 51 of the Annual Report for more information.

4 As per guidelines issued by the Association of Investment Companies (‘AIC’), the discount is calculated using the net asset value per share inclusive of accrued income and with the debt at fair value.

Buy-backs
During the year, the Company purchased 9,331,661 Ordinary Shares, all of which have been placed into treasury.

Historical Record
Year ended 30 September
2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
Net revenue return £'000* 16,268 13,827 21,775 24,050 18,405 12,712 12,774 13,548 9,046 8,520
Revenue earnings per share (p)* 11.75 9.29 13.90 15.06 11.50 7.94 7.98 8.46 5.65 5.32
Ordinary dividends per share (p) 11.70 10.50 10.50 9.50 8.50 7.50 6.00 5.75 5.00 4.00
Special dividend per share (p) - - 2.50 3.50 2.00 - 1.25 1.50 0.50 1.00
Net assets £'000 697,542 826,984 844,455 791,225 740,385 829,670 735,188 633,856 815,124 701,291
Basic net asset value per share (p) 519.53 575.92 551.97 500.47 462.51 518.28 459.26 395.96 509.19 438.08

* The figures for 2006 to 2014 are Group returns and earnings, those for 2015 are the Company return and earnings. These are comparable on a like for like basis.

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

Net Asset Graph

Net Asset Graph Key

Portfolio value by country of listing

2015
%
2014
%
United Kingdom 29.4 22.8
Sweden 9.9 6.2
Japan 8.9 5.3
Netherlands 8.0 5.8
France 7.5 6.7
Canada 7.0 10.3
Belgium 4.9 8.8
Switzerland 4.4 2.1
Germany 3.9 4.0
Singapore 3.9 7.2
2015
%
2014
%
Cayman Island 3.3 2.3
Norway 3.1 4.6
Spain 3.0 0.0
Hong Kong 2.0 2.9
Liquidity 0.8 1.7
Australia 0.0 2.0
Austiria 0.0 2.2
Korea 0.0 2.0
Romania 0.0 1.1
Turkey 0.0 2.0

Source Asset Value Investors. Percentages are of net asset value, calculated after deducting liabilities to Debenture Stock 2023.

Strategic Report / Chairman's Statement

This report covers the period from 1 October 2014 to 30 September 2015. As in previous years, we have elected to include the Chairman’s Statement within the Strategic Report in order to minimise duplication. In addition, we have announced two initiatives since the Company’s year-end, which I shall report on first.

Investment Manager
Joe Bauernfreund became the portfolio manager of British Empire Trust (‘BTEM’) with effect from 1 October 2015, continuing the natural progression that has seen only three portfolio managers in the last 30 years. Joe joined BTEM’s Investment Manager, Asset Value Investors (‘AVI’), in 2002 and has been an influential member of the investment team assisting the previous portfolio manager, John Pennink...

Strone Macpherson
Chairman

Strone Macpherson - Signature

Read full statement

Strategic Report / Ten Largest Equity Investments

The top ten equity investments make up 40% of the portfolio, with underlying businesses
spread across a diverse range of sectors and regions.

Strategic Report / Investment Portfolio

Investments at 30th September 2015

Top Ten Investments

Company Nature of business % of investee company Cost
£'000
Valuation
£'000
% of
total assets
less current
liabilities
Investor AB 'A' Investment Holding Company 0.67 21,707 41,256 5.79
Sofina Investment Holding Company 1.37 24,812 34,489 4.84
NB Private Equity Partners Investment Company 5.38* 26,075 32,229 4.52
Harbourvest Global Private Equity Investment Company 4.62 21,865 30,635 4.30
Investor AB Kinnevik 'B' Investment Holding Company 0.64 30,548 28,186 3.96
Jardine Matheson Holdings Investment Holding Company 0.13 18,627 27,497 3.86
Mitsui Fudosan Real Estate Company 0.13 24,478 23,644 3.32
AP Alternative Assets Investment Company 1.30 7,829 23,523 3.30
Wendel Investment Holding Company 0.62 22,680 23,001 3.23
DWS Vietnam Fund Investment Company 14.15 17,862 22,862 3.21
Top ten investments     216,483 287,322 40.33

* Represents % of total voting rights of the company.

Top Twenty Investments

Company Nature of business % of investee company Cost
£'000
Valuation
£'000
% of
total assets
less current
liabilities
JP Morgan Private Equity Investment Company 11.06 19,193 22,755 3.19
Symphony International Holdings Investment Company 9.57 20,746 22,439 3.15
Aker ASA Investment Holding Company 2.55 31,189 21,716 3.05
Eurazeo Investment Holding Company 0.67 20,752 21,356 3.00
Pargesa Investment Holding Company 0.70 24,055 20,840 2.92
Toyota Industries Investment Holding Company 0.19 22,827 19,446 2.73
Hitachi Conglomerate 0.12 27,169 18,674 2.62
Marwyn Value Investors Investment Company 13.42 14,986 18,216 2.56
Ecofin Water and Power Opportunities Investment Company 6.87 21,931 16,437 2.31
DIC Asset Real Estate Investment Company 4.01 17,880 16,343 2.29
Top twenty investments     437,211 485,544 68.15

Top Thirty Investments

Company Nature of business % of investee company Cost
£'000
Valuation
£'000
% of
total assets
less current
liabilities
Power Corp of Canada Investment Holding Company 0.25 17,755 14,146 1.98
First Pacific Investment Holding Company 0.82 24,476 14,040 1.97
LMS Capital Investment Company 13.18 13,547 13,972 1.96
Inmobiliaria Colonial Real Estate Investment Company 0.88 12,615 12,880 1.81
SC Fondul Proprietatea Investment Company 0.02 14,241 12,112 1.70
Better Capital (2009) Investment Company 5.99 10,788 12,008 1.68
Adler Real Estate Real Estate Investment Company 2.71 17,654 11,314 1.59
Empiric Student Property Real Estate Investment Company 3.35 10,821 11,053 1.55
Dundee Corporation Investment Holding Company 4.55 27,602 10,674 1.50
BlackRock World Mining Trust Investment Company 2.87 16,663 10,458 1.47
Top thirty investments     603,373 608,201 85.36

Top Forty Investments

Company Nature of business % of investee company Cost
£'000
Valuation
£'000
% of
total assets
less current
liabilities
Pantheon International Participations - Redeemable Shares Investment Company 2.51 6,951 9,851 1.38
Dolphin Capital Investors Real Estate Investment Company 7.19 21,352 9,593 1.35
Private Equity Holding Investment Company 8.60 8.028 9,584 1.35
Brookfield Canada Office Properties Real Estate Investment Company 2.87 13,319 9,079 1.28
Sacyr Investment Holding Company 1.12 15,578 8,430 1.18
Detour Gold Gold Mining Company 0.70 7,920 8,402 1.18
Rallye SA Investment Holding Company 1.55 19,077 8,147 1.14
Dorel Industries ‘B’ Consumer Goods Conglomerate 1.48 9,512 6,411 0.90
SVG Capital Investment Company 0.76 5,405 6,085 0.85
Dragon Capital Vietnam Property Fund Real Estate Investment Company 15.40 4,729 4,319 0.61
Top forty investments     715,244 688,102 96.58

Total Equity Investments

Company Nature of business % of investee company Cost
£'000
Valuation
£'000
% of
total assets
less current
liabilities
Ashmore Global Opportunities - GBP Shares Investment Company 11.8* 3,666 3,967 0.56
Total equity investments     718,910 692,069 97.14

* Represents % of total voting rights of the company.

Fixed Income Investments

Company Nature of business % of investee company Cost
£'000
Valuation
£'000
% of
total assets
less current
liabilities
UK Government Treasury Bill - 04/01/2016 UK Government Security 0.00 14,981 14,978 2.10
Fixed Income Investments     733,891 707,047 99.24

Net Current & Total Assets

        Valuation
£'000
% of
total assets
less current
liabilities
Net current assets       5,438 0.76
Total assets less current liabilities       712,486 100.00

Investment Manager's Review