Established in 1889, the Company’s investment objective is to achieve capital growth through a focused portfolio of investments, particularly in companies whose shares stand at a discount to estimated underlying net asset value.
AVI aims to deliver superior returns and specialises in securities that, for a number of reasons, may be selling on anomalous valuations.
AVI continues to seek (and find) investment opportunities with real value and excellent prospects for good medium to long-term capital appreciation.
About british empire
AT A GLANCE
AVI'S INVESTMENT APPROACH
- They have high-quality underlying assets and strong balance sheet
- Their shares trade at discounts to net asset value
- There is likely to be an event that will narrow the discount
- Investment Holding Companies
- Investment Companies
- Asset-backed Companies
It is possible that, in the future, there will be periods of underperformance when compared with the target benchmark but, over the longer term, the Board believes that the Investment Manager’s style of investment will provide higher-than-average returns for investors.
The comparator benchmark (the ‘benchmark’) isused for performance measurement purposes. The Investment Manager is not required to follow the sector or geographic allocations of the benchmark and, as such, British Empire Trust’s portfolio will likely differ significantly from the benchmark.
In exceptional circumstances, a special dividend may be paid.
GOVERNANCE AND RISK
DISCOUNTS AND BUYBACKS
The Company is an investment trust. Its investment objective is to achieve capital growth through a focused portfolio of mainly listed investments, particularly in companies whose shares stand at a discount to estimated underlying net asset value.
The Company’s assets are managed by Asset Value Investors Limited. AVI aims to deliver superior returns and specialises in investment in securities that for a number of reasons may be selling on anomalous valuations.
The Investment Manager has the flexibility to invest around the world and is not constrained by any fixed geographic or sector weightings, but does seek to maintain a concentrated yet diversified portfolio. No more than 10% of the Company’s investments may be in unlisted securities. AVI’s investment philosophy is described in more detail on page 18, and the Company’s Investment Policy is set out on page 38, of the Annual Report.
TEN LARGEST EQUITY INVESTMENTS
PERSHING SQUARE HOLDINGS
TOKYO BROADCASTING SYSTEM
THIRD POINT OFFSHORE
AKER /AKER BP
Although its roots can be traced back to the formation of Norway’s first oil company in 1971, Aker BP in its current form was established just two years ago through the merger of Det Norske Oljeselskap ASA and BP Norge.
Aker BP operates as a fully-fledged oil company, involved in the exploration, development and production of petroleum resources on the Norwegian continental shelf. Measured by production, Aker BP is one the largest independent oil companies in Europe.
PERSHING SQUARE HOLDINGS /CHIPOTLE MEXICAN GRILL
Chipotle Mexican Grill operates in the fast-casual dining segment, offering customers a range of all -natural Mexican-themed food, with a focus on burritos and tacos.
Founded in 1993 with a single restaurant, the brandrapidly expanded across the United States and todayoperates over 2,400 restaurants.
Pershing Square invested in Chipotle in September2016 following a near-50% share price decline drivenby an e-coli outbreak, with the rationale being that theopportune time to buy into a quality business is whentemporary factors are depressing the share price.
JAPAN SPECIAL SITUATIONS BASKET
14% of your company's assets are invested in a basket of cash-rich Japanese companies, which has been a focus area over the past year. We have continued to develop this basket of undervalued, asset-backed quality companies and are engaging with management to initiate discussions about improving shareholder value.
Corporate governance reform has firmly taken hold in Japan – pushed as one of the “Three Arrows” of Prime MinisterShinzo Abe’s economic reform plan – and the culture of change is now ingrained in the mind-set of the regulatorsand institutions alike. Several key institutions have supported the reforms, including the Ministry of Economy, Trade &Industry; the Financial Services Agency; the Panasonic Pension Scheme; and foreign activist investors (including AVI).
30 September 2018
30 September 2017
NUMBER OF INVESTMENTS
(of which 16 are held in Japanese Special Situations)
ESTIMATED PERCENTAGE ADDED TONET ASSET VALUE PER SHARE FROM BUYBACKS
TOP TEN INVESTMENTS REPRESENT
of total assets less current liabilities
ONGOING CHARGES RATIO