Annual Financial Report

RNS Number : 9248O

British Empire Trust PLC

11 November 2016

 

BRITISH EMPIRE TRUST PLC

('British Empire' or the 'Company')

Annual Financial Report for the year to 30 September 2016

A copy of the Company's Annual Report for the year ended 30 September 2016 will shortly be available to view and download from the Company's website, www.british-empire.co.uk. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

Printed copies of the Annual Report will be sent to shareholders shortly. Additional copies may be obtained from the Corporate Secretary, Capita Company Secretarial Services Limited, on 01392 477500. 

The Annual General Meeting of the Company will be held on 20 December 2016 at 11.00am at 11 Cavendish Square, London, W1G 0AN

The Directors have proposed the payment of a final dividend of 9.7p per Ordinary Share and a special dividend of 2.8p per Ordinary Share which, if approved by shareholders at the forthcoming Annual General Meeting, will both be payable on 6 January 2017 to shareholders whose names appear on the register at the close of business on 2 December 2016 (ex-dividend 1 December 2016).

The following text is copied from the Annual Report & Accounts (page references refer to pages in the Annual Report and Accounts):

STRATEGIC REPORT/COMPANY PERFORMANCE

Financial Highlights

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

- Benchmark¹ index increased by 28.0%

- Total ordinary dividends maintained at 11.7p

- Special dividend of 2.8p

- Share price total return increase of 34.3%

Performance Summary

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 2016	30 September 2015	% change
Indices
MSCI All Country World ex-US Index (£ adjusted total return)1	387.51	302.67	28.0
MSCI All Country ex-US Value Index (£ adjusted total return)	227.09	180.95	25.5
Morningstar Investment Trust Global Index3	190.94	150.38	27.0
MSCI All Country World Index (£ adjusted total return)	621.20	473.10	31.3
Discount
(difference between share price and net asset value)4	-9.64%	-11.59%
	Year to 30 September 2016	Year to 30 September 2015
Earnings and Dividends
Investment income	£20.69m	£20.93m
Revenue earnings per share	14.32p	11.75p
Capital earnings per share	141.72p	(59.95p)
Total earnings per share	156.04p	(48.20p)
Ordinary dividends per share	11.70p	11.70p
Special dividends per share	2.80p	-
Ongoing Charges Ratio
Management, marketing and other expenses (as percentage of average shareholders' funds)	0.89%	0.89%
2016 Year's Highs/Lows	High	Low
Net asset value per share	670.54p	470.96p
Net asset value per share (debt at fair value)	661.83p	470.96p
Share price (mid market)	598.00p	412.00p

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.

Buy-backs

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.

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.

The Investment Manager's report sets out in detail the reasons for this encouraging performance.

Following Joe's appointment, there have been some important changes in emphasis in the portfolio, but there has been no change in British Empire's fundamental value investing philosophy and no "style drift".

Stock selection was a major contributor to outperformance. With a significant proportion of its portfolio exposed to non-Sterling assets, British Empire has also benefited from Sterling's weakness following the Referendum vote to leave the EU.

The portfolio has become more concentrated with 10 core holdings accounting for 50% of the portfolio and includes some 30 higher conviction positions.  In addition, the deployment of the fixed-rate borrowings drawn down in January this year has been beneficial.

Income and Dividend

Your Company's total revenue per share this year was higher than last year, but the difference was due to a one-off receipt of a series of withholding tax rebates, which we have been pursuing with tax advisers for some time. Underlying earnings were marginally lower. The Board has therefore elected to pay an unchanged final dividend of 9.7 pence per share and a special dividend of 2.8 pence per share. On the assumption that this is approved by shareholders at the AGM, the total dividend for the year will then be 14.5 pence per share, or 11.7 pence per share excluding the special dividend.

As I have noted in previous years, the Investment Manager's primary focus remains on total investment returns rather than targeting a particular level of income.

Discount

The discount to net asset value at which the Company's shares trade has improved and at the year end was 9.6%. 

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, enhancing NAV per share by 0.82%.

We have also encouraged the managers at AVI to visit a considerable number of institutions and wealth managers to continue the process of explaining how British Empire's investment process and philosophy is differentiated - our programme will be maintained for the foreseeable future. The Board continues to welcome communication with shareholders.

Board

Your Board carries out an annual formal review of its effectiveness. This year, the review was carried out using the Board's own internal resources. The review concluded that the Directors' qualifications, effectiveness, performance and contribution to the Board are of a high standard. In compliance with best practice, all Directors are required to stand for re-election each year and this year's review concluded that each should stand again.

As part of our review, it was agreed that we would continue to refresh the Board and we have retained recruitment consultants to facilitate this process.

Outlook

There are an unusually large number of risks for investors at the time of writing.  On the geopolitical front, the consequences of the outcome of the US election, the Brexit arrangements to be negotiated, the German, French and other European elections in the year ahead, and the turmoil in the Middle East, are all major uncertainties.

The risk of significant policy errors by Central Banks also remains high. However, despite all these difficulties, and the volatility that they bring to the investment markets, such volatility often produces pricing anomalies for value investors such as British Empire.

This year's results have been encouraging and it is important to recognise that we have a portfolio of investments which contains a large store of unrealised value reflected in the considerable see-through discount. Your Board believes that shareholders will continue to be well served over time by maintaining the current value investment approach.

Annual General Meeting

I look forward to seeing shareholders at our AGM, which this year will be held on Tuesday, 20 December at 11.00am at 11 Cavendish Square, London W1G 0AN.

Your attention is drawn to page 72 dealing with the proposed change of Auditor.

In line with increasingly common practice and in order to save costs, the Board has decided that, in future, the half-yearly results will be published on the Company's website and no longer in printed form.

Copies of the recently published booklet describing the history of British Empire, covering over 125 years from 1889 to 2016, are available online at www.british-empire.co.uk. A limited number of printed copies are available. If you would like a copy please contact Asset Value Investors whose address is on the inside back cover.

The Strategic Report has been approved and signed on the Board's behalf.

Strone Macpherson

Chairman

10 November 2016

STRATEGIC REPORT/OVERVIEW OF STRATEGY

Total returns to 30 September 2016

Company
1 Year	10 Years
31.0%	82.0%
Benchmark
MSCI All Country World ex-US Index
1 Year	10 Years
28.0%	86.4%
Other Comparators
Morningstar Investment Trust Global Index
1 Year	10 Years
27.0%	122.8%
MSCI All Country World Index
1 Year	10 Years
31.3%	132.0%
MSCI All Country ex-US Value Index
1 Year	10 Years
25.5%	70.4%

Aim

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.

Investment Approach

The Company's assets are managed by Asset Value Investors Limited. AVI aims to deliver superior returns while managing risks 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 15 of the Annual Report, and the Company's Investment Policy is set out on page 36.

Key Performance Indicators ('KPIs')

The Company's Board of Directors meets regularly and at each meeting reviews performance against a number of key measures.

Net asset value total return

The Directors regard the Company's net asset value total return as being the overall measure of value delivered to shareholders over the long term. Total return reflects both net asset value growth of the Company and also dividends paid to shareholders. The Investment Manager's investment style is such that performance is likely to deviate materially from that of any broadly based equity index. The Board considers the most important comparator to be the MSCI All Country World ex-US Index, which was adopted as the Company's benchmark from 1 October 2013. The Company will also continue to report performance against the MSCI All Country World Index and the Morningstar Investment Trust Global Growth Index, which is a peer group index and was the Company's benchmark index until 30 September 2013.

A full description of performance and the investment portfolio is contained in the Investment Review, commencing on page 15 of the Annual Report.

The discount at which the Company's shares trade compared with net asset value

The Board believes that an important driver of an investment trust's discount or premium over the long term is investment performance. However, there can be volatility in the discount or premium. Therefore, the Board seeks shareholder approval each year to buy back and issue shares with a view to limiting the volatility of the share price discount or premium.

During the year under review, the discount has moved in a range from 15.3% to 8.9% based on closing prices and, as at 30 September 2016, stood at 9.6%.

During the year under review, no new shares were issued and 8.4m shares were bought back and placed into treasury, adding an estimated 0.8% to net asset value per share to the benefit of continuing shareholders. The shares were bought back at an average discount of 12.5%.

Value for money

The Board continues to be conscious of expenses and works hard to maintain a sensible balance between strong service and costs.

For the year ended 30 September 2016, the ongoing charges ratio was 0.9%, unchanged from the prior year.

Principal Risks

When considering the total return of the investments, the Board must also take account of the risk which has been taken in order to achieve that return. There are many ways of measuring investment risk, and the Board takes the view that understanding and managing risk is much more important than setting any numerical target. The Board looks at risk from many different angles, an overview of which is set out below. It has carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.

The Investment Manager presents reports on portfolio returns and a set of contribution and risk statistics at each Board meeting. The objective of using these techniques is not to be prescriptive, but to understand levels of risk and how they have changed over time. The purpose of this focus on risk is to ensure that the returns earned are commensurate with the risks assumed. The investment approach followed by the Investment Manager aims, over the long term, to achieve returns in excess of those produced by the market.

Portfolio diversification

Conventional wisdom holds that the most effective way of reducing risk is to hold a diversified portfolio of assets. The Company typically now holds 30-40 positions. The Investment Manager has reduced the number of positions over the past year, and this range could be considered a relatively concentrated (and therefore risky) portfolio. It is important to note that, in line with its investment objective, the Company's holdings are mostly in stocks which are themselves owners of multiple underlying businesses. Thus, the portfolio is much more diversified on a look-through basis than if it were invested in companies with a single line of business, for example. For the same reason, the top 10 portfolio positions, representing 50.6% of total assets at the year end, are in practice highly diversified on a look-through basis. This diversification is evident at country, sector and currency levels.

Investment strategy

The Manager has a clear investment strategy, as set out on page 15. There will be periods when this strategy underperforms in comparison to its benchmark and its peer group. The Board monitors performance at each Board meeting, and reviews the investment process thoroughly at least annually.

Gearing

The Company is permitted to use gearing, and has had a £15m debenture in place for many years. During the year, the Company also issued two tranches of fixed-rate, long-dated Loan Notes, denominated in Sterling (£30m) and Euros (€30m).

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%).

There is a degree of risk associated with gearing. While gearing should enhance investment outperformance, it is likely to exacerbate any investment underperformance. There are covenants attached to both the Loan Notes and the Debenture, which could be breached in extreme market conditions and could require early repayment, which could be expensive. Total return results, when issued on the basis of debt being marked to estimated market value, are likely to be more volatile. The value of the Euro tranche of the Loan Notes will fluctuate with currency movements, although it should be noted that the portfolio contains a significant amount of Euro denominated assets. It is possible that the investment returns will not match the borrowing cost over time, and therefore the gearing will be dilutive.

The Board manages this risk by setting its fixed gearing at a prudent level. It obtained the additional 20 year borrowing at a blended annualised rate of 3.79%, which the Board and AVI consider to be attractive over the long term. The covenants are set at levels with substantial headroom. The two significant covenants on the Loan Notes are that total indebtedness should not exceed 40% of net assets and net assets should not fall below £300m, whilst the Debenture specifies that borrowings shall not exceed 150% of adjusted capital and reserves.

Foreign exchange

Foreign exchange risk is an integral part of a portfolio which is invested across a range of currencies. This risk is managed by the Investment Manager mainly by way of portfolio diversification but the Investment Manager may, with Board approval, hedge currency risk.

Discount

The shares of investment trusts frequently trade at a discount to their published net asset value. The Board seeks to manage the risk of any widening of the discount by regularly reviewing the level of discount at which the Company's shares trade, and it will, if necessary and appropriate, limit any significant widening through measured buybacks of shares. The value of the Company's shares will additionally be subject to the interaction of supply and demand, prevailing net asset values and the general perceptions of investors. The share price will accordingly be subject to unpredictable fluctuations and the Company cannot guarantee that the share price will appreciate in value.

Other risks

Further risks which can impact on performance are a loss of key personnel (especially within the investment management team); regulatory (principally breaches of either UKLA Listing Rules, Disclosure Guidance and Transparency Rules or Section 1159 of the Corporation Tax Act 2010) and failure of systems or controls. In managing these risks, the Company reviews staffing and succession planning of the Investment Manager at least annually to ensure that there are adequate qualified staff/capacity available, and in particular requires the Investment Manager to notify the Board promptly of any changes in senior staff. The Company also reviews the relevant systems and controls, including their cyber-crime controls, at the Investment Manager and at other third party suppliers, including the Custodian and Administrator. The Board monitors the risks inherent in the changing of a supplier, and also considers the risk controls at new suppliers.

There were no material changes to the Company's risk profile during the year, other than normal movements in market risk.

The principal financial risks are examined in more detail in note 16 to the financial statements on pages 62 to 68.

Environmental, Social and Governance Issues

The Company recognises that social, human rights, community, governance and environmental issues can have an effect on some of its investee companies. AVI's Stewardship Policy also recognises that the social and environmental consequences of corporate activity are important factors in determining the creation and maximisation of shareholder value over the long term.

The Company is an investment trust and so its own direct environmental impact is minimal. The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

The Company is an investment company and has no employees. The Directors are satisfied that, to the best of their knowledge, the Company's principal suppliers, which are listed on the inside back cover of this report, comply with the provisions of the UK Modern Slavery Act 2015.

The Directors do not have service contracts. There are five Directors, four male and one female. Further information on the Board's policy on recruitment of new Directors is contained on page 41.

Future Strategy

The Board and the Investment Manager have long believed in their focus on investment in high quality undervalued assets and that, over time, this style of investment has been well rewarded.

The Company's overall future performance will, inter alia, be affected by: the Investment Manager's decisions; investee companies' earnings, dividends and asset values; and by stock market movements globally. Stock markets are themselves affected by a number of factors, including: economic conditions; central bank and other policymakers' decisions; political and regulatory issues; and currency movements.

The Company's performance relative to its peer group and benchmark will depend on the Investment Manager's ability to allocate the Company's assets effectively, and manage its liquidity or gearing appropriately. More specifically, the Company's performance will be affected by the movements in the share prices of its investee companies in comparison to their own net asset values.

The overall strategy remains unchanged.

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.

1.   AKER ASA

Nature of business: Investment Holding Company

Valuation: £61.0m

Discount: -30.9%

% of total assets less current liabilities: 6.67%

Aker ASA (Aker) traces it roots back to 1841, to a smithy with industrial ambitions on the banks of the Akerselva river in Christiania (Oslo). For the past 175 years, Aker has led the development of internationally focused, knowledge-based industry in Norway. Aker's holdings are ownership interests in Aker BP, Aker Solutions, Akastor, Kvaerner, Ocean Yield and Aker BioMarine.

2.   AP ALTERNATIVE ASSETS

Nature of business: Investment Company

Valuation: £54.6m

Discount: -43.5%

% of total assets less current liabilities: 5.97%

Originally established to co-invest alongside Apollo's private equity funds, the company now owns just one asset following a restructuring: a stake in unlisted Athene Insurance. Athene is a leading retirement services company that issues, reinsures and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs, and has a particular focus on fixed indexed annuities.

3.   WENDEL

Nature of business: Investment Holding Company

Valuation: £50.8m

Discount: -32.5%

% of total assets less current liabilities: 5.55%

Wendel is a French-listed holding company with exposure to a diverse range of industrial sectors. Major business lines include industrial certification and inspection services, building material production and mobile telephone infrastructure through their investments in Bureau Veritas, Saint-Gobain and IHS.

4.   INVESTOR AB 'A'

Nature of business: Investment Holding Company

Valuation : £50.6m

Discount : -24.2%

% of total assets less current liabilities: 5.54%

A Swedish industrial holding company which owns significant shareholdings in public multi-national companies and private companies. Investor takes an active ownership role in its portfolio companies.

5.   VIETNAM PHOENIX FUND*

Nature of business: Investment Company

Valuation: £42.2m

Discount: -19.3%

% of total assets less current liabilities: 4.61%

An Irish-listed OTC-traded closed-end fund investing in listed and unlisted Vietnamese companies. Recently approved restructuring proposals will result in the listed assets being placed into an open-ended vehicle and the private equity assets being spun-off into a stand-alone realisation fund.

* On 30 September 2016, the company changed its name from DWS Vietnam Fund.

6.   NB PRIVATE EQUITY PARTNERS

Nature of business: Investment Company

Valuation: £42.0m

Discount: -22.5%

% of total assets less current liabilities: 4.60%

A London and Euronext-listed closed-end fund investing mostly in US-based private equity co-investments and debt. The manager, Neuberger Berman, has $35bn of private equity assets under management, ensuring a steady flow of co-investment opportunities for the fund and aiding their investments via the primary and secondary market in junior debt issued by private equity-backed companies.

7.   INVESTMENT AB KINNEVIK 'B'

Nature of business: Investment Holding Company

Valuation: £41.3m

Discount: -21.3%

% of total assets less current liabilities: 4.52%

Kinnevik is a Swedish holding company that focuses on building digital consumer brands with investments in unlisted and listed assets. Investments are made around four key areas: Communication, E-commerce & Marketplaces, Entertainment and Financial Services.

8.   JPEL PRIVATE EQUITY

Nature of business: Investment Company

Valuation: £41.1m

Discount: -26.4%

% of total assets less current liabilities: 4.49%

JPEL Private Equity is a London-listed closed-end fund investing in private equity investments primarily in the US and Europe. The portfolio is well-balanced between mature legacy funds and more recent secondary direct investments - the former generate prodigious cashflows that will now be distributed to shareholders under the new realisation policy; the latter are largely high growth companies bought at attractive valuations that have produced compelling NAV growth.

9.   SYMPHONY INTERNATIONAL HOLDINGS

Nature of business: Investment Company

Valuation: £23.0m

Discount: -39.0%

% of total assets less current liabilities: 4.35%

Symphony is a London-listed closed-end fund with a focus on the Asian consumer. The shares trade on a deep discount to the value of the investment portfolio, half of which is invested in fast-growing Minor International, a Thai-listed hotels and restaurants group with a global footprint. Other exposures include real estate and healthcare.

10.  PARGESA

Nature of business: Investment Holding Company

Valuation: £39.4m

Discount: -36.2%

% of total assets less current liabilities: 4.30%

Through Pargesa's stake in GBL it holds interests in a number of listed companies. The portfolio is concentrated on a limited number of major holdings, with the aim of creating long-term value through active ownership.

STRATEGIC REPORT/INVESTMENT PORTFOLIO

AT 30 SEPTEMBER 2016

Company	Nature of business	% of investee company	Cost £'000	Valuation £'000	% of total assets less current liabilities
Aker ASA	Investment Holding Company	3.12	36,443	61,027	6.67
AP Alternative Assets	Investment Company	2.93	33,982	54,614	5.97
Wendel	Investment Holding Company	1.20	43,056	50,758	5.55
Investor AB 'A'	Investment Holding Company	0.59	21,507	50,613	5.54
Vietnam Phoenix Fund*	Investment Company	17.49	24,048	42,195	4.61
NB Private Equity Partners	Investment Company	9.99	29,524	42,016	4.60
Investment AB Kinnevik 'B'	Investment Holding Company	0.90	38,589	41,327	4.52
JPEL Private Equity	Investment Company	15.26	28,281	41,100	4.49
Symphony International Holdings	Investment Company	12.67	28,075	39,786	4.35
Pargesa	Investment Holding Company	0.97	32,394	39,361	4.30
Top ten investments			315,899	462,797	50.60
Adler Real Estate	Real Estate Company	6.53	37,140	38,281	4.18
Toyota Industries	Investment Holding Company	0.31	35,871	35,862	3.92
Riverstone Energy	Investment Company	3.57	25,059	34,646	3.79
Hudson's Bay	Retail Holding Company	1.91	28,824	34,252	3.74
Better Capital (2009)	Investment Company	17.44	26,659	34,075	3.73
Swire Pacific 'B'	Investment Holding Company	0.66	26,856	29,644	3.24
DIC Asset	Real Estate Company	5.24	22,621	27,972	3.06
Mitsui Fudosan	Real Estate Company	0.15	27,446	24,662	2.70
SC Fondul Proprietatea	Investment Company	0.02	19,083	21,451	2.35
Digital Garage	Investment Holding Company	2.94	19,162	20,422	2.23
Top twenty investments			584,620	764,064	83.54
Empiric Student  Property	Real Estate Investment Trust	3.41	18,191	19,832	2.17
Bollore	Investment Holding Company	0.23	18,237	17,726	1.94
GP Investments	Investment Company	9.52	13,829	16,839	1.84
First Pacific	Investment Holding Company	0.63	18,883	14,769	1.61
Pantheon International	Investment Company	1.40	7,905	11,719	1.28
Tetragon Financial	Investment Company	0.77	9,030	8,742	0.96
LMS Capital	Investment Company	12.05	8,225	6,798	0.74
Ecofin Global Utilities & Infrastructure Trust	Investment Company	5.54	6,963	6,167	0.67
Dragon Capital Vietnam Property Fund	Real Estate Company	15.40	3,526	6,044	0.66
conwert Immobilien	Real Estate Company	0.37	3,521	5,406	0.59
Top thirty investments			692,930	878,106	96.00
Dolphin Capital Investors	Real Estate Company	7.19	21,352	3,577	0.39
Ashmore Global Opportunities - GBP	Investment Company	12.41	2,455	3,047	0.34
EF Realisation Company	Investment Company	8.44	1,698	1,639	0.18
Total equity investments			718,435	886,369	96.91
Total investments			718,435	886,369	96.91
Net current assets				28,280	3.09
Total assets less current liabilities				914,649	100.00

* On 30 September 2016, the company changed its name from DWS Vietnam Fund.

INVESTMENT REVIEW/INVESTMENT MANAGER'S REVIEW

OVERVIEW OF AVI'S INVESTMENT PHILOSOPHY

British Empire is managed by Asset Value Investors Limited.

The aim of AVI is to deliver superior investment returns while managing risks. AVI specialises in investing in securities that for a number of reasons may be selling on anomalous valuations.

AVI's investment philosophy is to:

1	Invest in companies trading at discounts to net asset value. Our focus is to find listed companies that own assets such as listed securities, property, cash and other businesses. We then estimate the value of all of those assets. After deducting any liabilities such as debt or pension liabilities, we arrive at an estimate of net asset value for that company. We will consider investing in companies where the discount between the current share price and our estimate of the value of that business is wide.
2	Identify good quality underlying assets with appreciation potential at compelling valuations. There are many companies trading at discounts to net asset value. Our aim is to identify companies that own high-quality businesses where there is not only a wide discount, but also where we consider there to be a reasonable likelihood of those assets appreciating in value.
3	Look for catalysts to narrow discounts. Once we find a good quality business on an attractive valuation, we then consider whether it is likely that the discount will narrow. Many companies trade at a discount for a reason and if that reason persists, then the discount may persist. Catalysts differ for the various types of company in which we invest. For example, in the case of a closed-end fund, where we are a large shareholder we can influence a board to pursue a strategy for discount narrowing. In the case of a family controlled company, we would rely on the family to be the activist. Our analysis would involve trying to understand the interests and objectives of the controlling shareholder, and whether our interests were aligned with theirs.
4	Focus on balance sheet strength. Debt works very well when markets are appreciating. However, debt can also destroy a lot of value when markets are falling and the business environment for a particular company deteriorates. We consider very carefully the balance sheet strength of the companies in which we invest. Factors which we look at include the actual quantum of debt relative to the assets of the companies, the maturity profile of the debt and the cashflows that the businesses generate.
5	Focus on bottom-up stock picking. We are not asset allocators attempting to invest a pool of money across various asset classes. We are equity investors focusing on a particular style of value investing. We do not hug benchmarks and we will not own a company just because it is in a benchmark. We seek to invest in companies that meet the criteria described above.

Our focus on buying high-quality businesses trading at wide discounts to their net asset value has served us well over the long term. There are periods of time, however, when our style is out of favour and the types of companies in which we invest are ignored by the broader market. This requires us to be patient and to remain true to our style, so that when other investors begin to appreciate the value in those companies, we are well placed to benefit. In the short term, this means that there could be some volatility in our returns. However, we are confident that we own high-quality businesses, which are trading on cheap valuations.

Members of the investment team at AVI invest their own money in funds which they manage. As at 30 September 2016, AVI, its directors and staff owned approximately 947,931 (2015: 900,800) shares in British Empire Trust plc.

PERFORMANCE REVIEW

Joe Bauernfreund

Joe is Chief Executive Officer and Chief Investment Officer of Asset Value Investors Limited. Joe became British Empire's named portfolio manager with effect from 1 October 2015, continuing the natural progression that has seen only three portfolio managers at British Empire in the last 30 years.

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.

The current broad macro-economic and monetary policy environment has been in place since the aftermath of the financial crisis of 2008/2009. Wiser heads than ours have debated the implications and repercussions ad nauseum yet the bears, so far, have been proved wrong and missed out on the longest bull market in history. However, we need to be conscious that this bull run will end at some stage. We manage this risk by ensuring that the investments we own are genuinely good value and likely to generate strong returns over the long term, through a combination of growth in value and events that narrow or eliminate discounts.

Following my appointment as sole manager of British Empire, the Company saw a shift in the manner in which the portfolio was constructed. Whilst remaining steadfast to our long-established investment philosophy, following a period of lacklustre returns, I felt it was important to ensure the portfolio reflected the conviction and the opportunities the investment team had identified. As an expression of that conviction we chose to increase weightings in the select few investments which, after rigorous fundamental analysis, we believed had the greatest upside from a combination of NAV growth and discount contraction. The former would come from the quality or mispricing of the businesses we owned, whilst the latter would be determined to a large extent by the events that we foresaw.

We have reduced the number of holdings in the portfolio, boosting concentration. The top 20 holdings now make up 90.5% of the portfolio, compared to 69.5% at this time last year, and we took on additional gearing for the first time since 1996. Although, in headline performance, the increase in fair value of this debt has cost us 1.2% of NAV during the year, we believe we will achieve long-term returns substantially above the cost of that debt. It has already proved beneficial through the returns made from investing the proceeds of this debt. We put most of that gearing to work towards the end of January 2016 after the market had fallen 21%*. This meant that we were adding substantially to companies in which we had strong conviction, and were doing so at attractive levels. We have continuously utilised the gearing since that time. The Yen hedge cost us, when looked at in isolation, 0.5% of NAV, but only a part of our Japanese exposure was hedged, and the currency gain from the investments since the time the hedge was closed, far outweighed the cost of the hedge.

* MSCI All Country World ex-US, Sterling adjusted total return

The most encouraging aspect of this past year's performance has been that the contributors to return have been an eclectic mix of stocks (our top five contributors being a Norwegian oil focused holding company, a Vietnamese closed-end fund, an Asian consumer-focused closed-end fund, a German real estate company and a Swedish holding company). It was pleasing that almost half of the year's return came from the strong NAV growth of the companies we own and the events that have occurred, or will occur, in the coming months, rather than from currency effects. A full description of these follows in the next section of this report.

After a year in which your Company's share price has risen by more than 30% and the NAV has increased by a similar amount, it is natural to wonder whether there is any scope for further upside from here. In response to this, I would highlight several facts. The portfolio weighted average discount at 30 September 2016 was 32%. This compares to a level of 28% one year ago. Despite the strong performance, therefore, we have not seen a compression of discounts. Rather, discount widening was a headwind to our performance for the year. This leaves us confident about the prospects for further outperformance in the portfolio. Moreover, a number of the near-term events we expect have yet to materialise and the share prices of the companies concerned remain on attractive discounts despite the prospect of substantial upside. I would highlight Better Capital, Vietnam Phoenix Fund and AP Alternative - all of which are described in greater detail in the next section.

This has also been a year where constructive activism has played a part in delivering performance. In the case of Aker (our largest contributor to performance by a long way), the management team carried out a number of transformative and value enhancing corporate transactions at their portfolio companies that have added substantially to Aker's NAV. At the other end of the spectrum, in the case of Vietnam Phoenix Fund, it was our own activism that has resulted in shareholders being offered the option to exit their shares at NAV. We continue to engage with many boards and management teams in the pursuit of shareholder value and with the goal of enhancing returns. Some of these investments will play out in the coming months, whilst others will take longer. These examples highlight how our returns are generated from a combination of both strong NAV growth and discount contraction. We seek both of these sources of return when determining whether to invest in a stock.

In summary, therefore, as I look back over the past 12 months it is gratifying to see how the changes we have implemented have added value. The entire investment team has worked hard researching hundreds of companies and engaging with management and boards. The portfolio companies have driven strong NAV growth and, on top of this, we have benefited from several events that have closed the gap between share prices and market value. There is still much value in this portfolio and much to look forward to from further discount contraction and attractive NAV returns.

PORTFOLIO REVIEW

AKER

Description: Norwegian Holding Company

Weight in NAV at year-end: 7.3%

Total return on position FY16 (local)*:+90.0%

Total return on position FY16 (GBP): +134.9%

Contribution (GBP)**: +517bps

Discount: 31%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

Last year, Aker was our single largest detractor. This year, it has been our greatest contributor, and by a long way. We have held Aker since mid-2008, first making an investment when the share price had fallen 40% from its peak with the discount widening substantially from a near premium to a high 30s discount. We have added to our position every year since, including this financial year when we increased our position size by 22% at an average price of NOK 149. Our high level of conviction about the company has allowed us to add opportunistically when Aker is most unloved and we have achieved an average buy price of NOK 154 and an average entry discount of some 44%. The share price at year end was NOK 275.

Aker started the year as a 3.1% position on a 44% discount and, through a combination of NAV growth, discount contraction and additional purchases, ended the year with a 7.3% weight on a 31% discount.

The most significant in a series of transactions in 2016 came in the second week of June when Aker's Exploration & Production company, DetNor, announced a merger with BP Norway to form Aker BP (now 58% of Aker's NAV). The transaction is truly transformational and positions the combined company as a major producer on the Norwegian Continental Shelf. The deal doubles production, brings forward by several years the commencement of dividend payments, strengthens the balance sheet and fully covers the funding of their major low cost asset, Johan Sverdrup (all-in break-even cost of less than $25 per barrel).

In addition to this, a number of smaller transactions took place towards the end of the year. First, we saw the sale of Aker's 20 year old holding in offshore fishing company, Havfisk, which has appreciated in value by 610% over the past five years; second, an investment in Solstad Offshore which provides a platform for Aker to begin a consolidation of the offshore support vessel industry; and finally, a loan to Ocean Yield ('OCY'), the ship chartering business, to allow further diversification and de-risking of its portfolio.

Aker's willingness to sell mature assets to replace them with cheaper, more rapidly growing businesses should be applauded. It is something that we have encouraged them to do over the past few years and we are surprised that the discount has remained so wide. We commented in the annual report last year that we saw Aker as one of the survivors of the oil industry. Not only is Aker surviving - it is thriving. The activity at Aker is a textbook example of the value that engaged long-term owners can create throughout market cycles without having the short-term pressure from either redemptions or index conscious shareholders.

VIETNAM PHOENIX FUND***

Description: Investment Company

Weight in NAV at year-end: 5.1%

Total return on position FY16 (local)*: +21.1%

Total return on position FY16 (GBP): +39.5%

Contribution (GBP)**: +191bps

Discount: 19%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

*** On 30 September 2016, the company changed its name from DWS Vietnam Fund.

Our position in Vietnam Phoenix Fund is now in the final innings of what has been a very successful investment (in GBP +80% total return, +30% IRR), yet we see scope for further upside given the current discount. Your Company first invested in Vietnam Phoenix Fund in July 2013. Despite a successful track record, the company's shares languished on a near-40% discount due to an egregious fee structure, poor corporate governance, a conflicted board and the absence of any discount control measures.

AVI have since accumulated an 18% stake in the company and, over the life of our holding, have removed the three management representatives from the board and had two of our nominees appointed as directors. The company has cancelled the 10% of its shares held in treasury and begun a new buyback programme. Most significantly, we extracted a public commitment from the board that the manager's contract would not be extended on the same terms and to hold restructuring proposals to open-end the fund. On the last day of the financial year, these restructuring proposals were passed at the company's AGM with 92% of votes in favour.

All shareholders will receive a closed-end 'private equity run-off' share class (c.1/3 of NAV), while the liquid assets (c.2/3 of NAV) will be split between an open-ended realisation class and an open-ended continuation class, depending on shareholder preferences. The assets in the open-ended realisation class will be liquidated over a 2-3 month period and cash returned at NAV. The fee structure on the private equity vehicle ensures a strong alignment of interests between the manager and shareholders, and is well-designed to incentivise the manager not only to achieve exits in a speedy fashion, but also to increase NAV. The manager's acceptance of these terms is, in our view, a substantial vote of confidence in the unlisted assets and their carrying values, which are also supported by a record of achieving significant uplifts upon exits.

Over the year, the company's NAV grew 28% as the cheap Vietnamese market performed strongly in the wake of continued strong economic growth and the introduction of measures to further open up the country's capital markets. The discount only narrowed modestly over the period, moving in from 20% to 19%, and represents a store of additional future returns.

SYMPHONY INTERNATIONAL

Description: London-listed Closed-End Fund

Weight in NAV at year-end: 4.7%

Total return on position FY16 (local)*: +24.3%

Total return on position FY16 (GBP): +43.7%

Contribution (GBP)**: +185bps

Discount: 39%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

Symphony International, the London-listed Asian consumer focused closed-end fund, generated healthy returns over the year despite ending the year on exactly the same discount to NAV on which it began (39%). This statistic, however, masks the positive impact of a $0.0625 distribution that equated to a near-9% yield on the undisturbed share price prior to the announcement. The return of such a large sum at an effective zero discount boosted returns, as did superior NAV growth (+20% adjusting for the distribution).

This is the third year in a row that Symphony has paid a substantial distribution, and should help counter the perception that management are oblivious to the very wide discount to NAV at which the company's shares trade. Over the course of our current financial year, we have increased our shareholding in Symphony by almost a third to reflect our high level of conviction and the compelling valuation.

We still believe the company's shares to be mis-priced on a 39% discount to NAV. The current share price is covered 1.15 times by cash and listed securities, with the 8% stake in Minor International (a Thai-listed hotel and retail operator) alone covering 83% of the share price. We believe the listed assets are attractive, and see hidden upside in the private holdings (mainly real estate in Bangkok and Malaysia). Management has a good track record, and the long-term alignment of interests that results from their 15% stake and options is a clear positive. In the meantime, Symphony pays an 8% dividend yield and there is a wind-up vote scheduled for late 2017 that will be triggered if the discount is wider than 35%. We are also cognisant of the 83 million management warrants expiring in 2018 that are worthless at the current share price but have an intrinsic value of $19m at NAV. We continue to engage constructively with management to explore additional ways to unlock the trapped value.

CONWERT

Description: Austrian-listed Property Company

Weight in NAV at year-end: 0.6%

Total return on position FY16 (local)*: +31.8%

Total return on position FY16 (GBP): +52.4%

Contribution (GBP)**: +184bps

Discount: 2%

ADLER

Description: German Property Company

Weight in NAV at year-end: 4.5%

Total return on position FY16 (local)*: +10.7%

Total return on position FY16 (GBP: +24.5%

Contribution (GBP)**: +107bps

Discount: 18%

DIC

Description: German Property Company

Weight in NAV at year-end: 3.31%

Total return on position FY16 (local)*: +14.8%

Total return on position FY16 (GBP): +33.6%

Contribution (GBP)**: +104bps

Discount: 26%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

We have had exposure to German residential assets since 2013 as we have found this asset class to be cheap, with reported values well below replacement costs and ever-improving fundamentals helping drive NAVs higher. Over the last financial year, we have continued this theme with our holding in Adler Real Estate and a new investment in conwert Immobilien, an Austrian-listed company, with exposure to German residential assets.

We initiated our investment in conwert, one of the few companies in the sector not trading on a premium, in November 2015 at a 17% discount to our estimated NAV.

Through asset optimisation with the sale of non-German residential assets and refinancing its expensive loans, we believed the company, under new leadership, would trade in line with its German peers (at or above NAV). We also believed the portfolio was valued conservatively when compared to peers and that we would see strong NAV growth. The company, in our view, was a prime target for M&A activity in a sector which saw numerous corporate transactions in 2015.

Over the course of the year, the company improved operations as identified, closing the discount to 6% on an increasing NAV as at the end of August (NAV up 9.5% over our holding period). At the beginning of September, Vonovia, Germany's largest listed residential landlord, made an offer for the company, which at the time of announcement valued conwert at €17.58 per share in an all share transaction. This equated to a premium of 7% to last reported NAV. We had identified Vonovia as a potential acquirer of conwert as an ex-Vonovia employee was appointed CEO of conwert in 2015. Voting on the deal occurs towards the end of 2016 and, given the premium at which Vonovia trades versus NAV, we have sold some of our position at elevated levels. Some of the proceeds have been used to add to our position in Adler, our other holding owning German residential assets.

Adler is a highly geared company which traded at a 17% discount to NAV as at our year end. They own c.50k residential units in Germany, in addition to a 26% stake in conwert. While many market participants believed a rights issue would be required to reduce gearing, we were confident management would use their stake in conwert to help reduce debt to a more palatable level. They have agreed to tender their shares in conwert to Vonovia, and we would expect them to sell their Vonovia position in the early part of 2017. A sale of this stake would reduce their Loan-to-Value ratio ('LTV') to c.60%, removing the immediate need for a capital increase. The company's aim is to reduce their LTV to c.55%, which they believe will attract interest from new investors who had shied away from the company on the grounds of its leverage. Adler is now the only investable German residential company trading at a discount to NAV and we continue to have a dialogue with management regarding the best path to improve returns.

We also have exposure to German commercial property through DIC. This sector has been neglected over the last few years as the German residential market has stolen the limelight. However, investor interest is improving and we expect further M&A and corporate activity to increase the sector's weighting in the relevant indices. DIC owns €1.8bn of commercial properties and has a further €1.4bn of assets under management in joint ventures and co-investments. They also own a 24.9% stake in WCM, another German commercial property owner. The two companies are in discussions about how best to proceed and we would hope any transaction agreed would see the 26% discount to NAV at which DIC trades, narrow significantly.

INVESTOR AB

Description: Swedish Holding Company

Weight in NAV at year-end: 6.0%

Total return on position FY16 (local)*: +14.3%

Total return on position FY16 (GBP): +29.3%

Contribution (GBP)**: +176bps

Discount: 24%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

Investor continues to create value for shareholders in the same manner in which it has done for the past 100 years, compounding value through pragmatic active ownership. We have held a position in Investor since 2002, a period over which the family have compounded returns for themselves and us at an impressive 18.7% per annum compared to the MSCI All Country World's return of 8.5% per anum, both in Swedish Krona.

While Investor's engaged attitude to portfolio investments remains unchanged, they intend new investments to be made in private rather than listed markets. The portfolio is currently split 73%/27% between listed and unlisted holdings based on our valuations. We frequently find unlisted assets held within holding company portfolios to be sources of hidden value. One such overlooked company in Investor's portfolio is health care business Mölnlycke, the world leader in wound care treatment and specialist in disposable surgical products. The company has achieved an average EBITDA growth rate of 9% over the past six years and in the first half of 2016 recorded organic sales growth of 8%. We have valued the business conservatively in our proprietary NAV model. The prospect of Investor either selling or listing this business in the near term remains low and for this reason the market overlooks its true value. But it is one of Investor's "crown jewels" and whether or not there is an actual monetisation event in the near term, is largely irrelevant. We believe it will continue to contribute strongly to Investor's NAV in coming years.

Over the year, Investor's discount narrowed slightly while its NAV grew by 13%. Investor is a "best-in-class" family controlled holding company, active and engaged with its listed companies and with a record of value creation at its privately owned businesses. Dividends have grown at a compound rate of 11% over the last 10 years. A transaction in the unlisted portfolio that crystallises some of the hidden value would likely result in Investor's discount narrowing quite substantially. Until such a moment in time, we are happy to allow Investor and the family to compound our capital at attractive rates in a vehicle that incurs only 15bps of running costs per year.

PARGESA

Description: Swiss Holding Company

Weight in NAV at year-end: 4.7%

Total return on position FY16 (local)*: +16.3%

Total return on position FY16 (GBP): +35.8%

Contribution (GBP)**: +173bps

Discount: 36%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

We completed our switch from GBL to Pargesa in September 2015 when Pargesa's discount widened on both an absolute and relative basis to levels not seen for over a decade.

Pargesa's sole asset is its stake in GBL, so the underlying assets are identical: stakes in listed companies LafargeHolcim, Imerys, SGS, Adidas, Pernod-Ricard, Umicore, Engie and Ontex account for substantially all of both companies' NAVs. We believe the divergence in discounts between GBL and Pargesa is a pricing anomaly that is due to an overhang of stock from two exchangeable bonds issued by BNP Paribas against Pargesa shares, maturing in September 2015 and September 2016. Exchangeable bond holders have the right to convert before maturity and we saw larger than average volumes trading in the weeks preceding the bond maturing in late September 2016. Once this hangover of stock has been worked through, we expect normality to be restored and Pargesa's discount to converge with GBL's. Pargesa's discount was 36% at year-end vs 23% for GBL, with the average spread between the two over the long run being just 1% and with Pargesa having traded at some points on more than a 15% premium to GBL.

Of course, while the return from Pargesa's discount reverting to its mean is attractive in its own right, we pursue a long-only strategy and so we must have a constructive view on the underlying assets to justify an investment. Pargesa/GBL's long-term track record under the control of the Frère and Desmarais families has been impressive, and we are supportive of the measures taken by the current managing directors since their appointment in 2012 to shift the portfolio from being a collection of fairly passive stakes in purely French businesses to a more pan-European portfolio with a clear active value-creating strategy. Although their performance suffered during the initial transitionary period, the new strategy has borne fruit over the last couple of years. We have benefited from this, with Pargesa's NAV including dividends growing by 24% over the year.

While we wait for our thesis regarding the discount to play out, we have aligned ourselves with a long-term orientated family owner who we think will provide superior returns on our capital. We like situations where time is our friend, not our enemy.

RIVERSTONE ENERGY

Description: London-listed Closed-End Fund

Weight in NAV at year-end: 4.1%

Total return on position FY16 (local)*: +38.6%

Total return on position FY16 (GBP): +38.6%

Contribution (GBP)**: +138bps

Discount: 13%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

A new position was established in the first quarter of the financial year in Riverstone Energy, a London-listed closed-end fund investing in private equity opportunities in the oil & gas sector, at a 23% discount to NAV. Riverstone Energy co-invests alongside Riverstone's unlisted private equity funds.

Our view was that with 40% of NAV in cash, the experienced managers were particularly well-placed to take advantage of the low oil price to acquire high-quality assets from distressed operators. Hedges in place provided some cushion against the continuing oil price slump on the invested portion of the assets.

We "held our nose" to invest in the company as part of a placing of shares at a discount to NAV, an action to which we are opposed on principle. After investing, we wrote to the Chairman advising him that the company risked trading with a permanent corporate governance discount due to such actions. We were pleased to see that the company's annual results released shortly afterwards contained a statement from the board assuring shareholders that further equity raises at a discount would only occur under "truly exceptional circumstances".

Two key changes in the company's portfolio occurred in the second half of the year, one purchase and one sale. The first, announced in late July, saw Riverstone intervene in the IPO process for Permian Delaware Basin player Centennial Resource Development ('CRD') to acquire the company from its private equity owners. Riverstone then transferred the holding for shares in a listed entity (Silver Run - 'SRAQ') managed by "Godfather of Shale" Mark Papa of EOG Resources fame.

By structuring the deal in this way, CRD began life under its new management debt-free and with a substantial cash balance, and has achieved a listing without any IPO discount being required. For investors in Riverstone Energy, the added NAV transparency of having a listed holding is helpful at the margin, and SRAQ's share price is already almost 60% higher than the price Riverstone Energy is paying for its shares, which adds 5% to our estimated NAV after taxes and performance fees.

August saw the first exit from the portfolio with the sale of Rock Oil (c.25k acres in the Midland sub-basin in the Permian) at a 55% uplift to carrying value and a 2.08x multiple on cost. The sale added a further 3% to our estimated NAV after taxes and performance fees. Aside from the uplift, the deal was important for two reasons. Firstly, the substantial uplift over carrying value validated Riverstone's valuations, about which there had been some (we believe largely mis-placed) scepticism. Secondly, it showed that returns are not entirely dependent on the oil price. The capital invested in Rock Oil was invested when the average oil price was $51 vs $42 at the time the sale agreement was signed. While we believe Riverstone Energy's performance fee structure is flawed (deal-by-deal rather than based on NAV), this is mitigated somewhat by the requirement that performance fees are reinvested in Riverstone Energy shares to be acquired in the market. Reinvestment of the performance fee from the sale of Rock Oil will add another 0.6% to Riverstone's existing 5.9% stake in the company.

We still see Riverstone Energy as a compelling investment despite its rerating - the managers have assembled a high-quality portfolio focused on low-cost basins with attractive IRR from drilling at current spot prices, with the headline average oil "in-price" of $51 for the portfolio rendered even more appealing by the collapse in oil service costs and also drilling & completion costs from technological breakthroughs. Assets in the low-cost Permian basin account for 31% of the portfolio and so the company is well-placed to benefit from the frenzy of M&A activity seen there over the last few months. We believe several key holdings are undervalued in the NAV relative to where comparable listed companies are trading and where transactions are being struck in the market. Since our acquired a position in the company, the Sterling NAV has grown by 26% (8% in USD) and the discount has reduced from 23% to 13%, to give a total return of 45%.

JPEL PRIVATE EQUITY

Description: London-listed Closed-End Fund

Weight in NAV at year-end: 4.9%

Total return on position FY16 (local)*: +11.2%

Total return on position FY16 (GBP): +29.2%

Contribution (GBP)**: +132bps

Discount: 26%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

The listed private equity sector has been fertile ground for value investors since the financial crisis. Over-extended balance sheets in terms of both leverage and commitments in several high-profile cases led to forced sales, capital raisings and ballooning discounts across the sector. While discounts recovered from the highly distressed levels witnessed at the market nadir, they have remained persistently wide, despite much of the sector now boasting robust balance sheets, low commitment levels, earnings growth greater than public markets, conservative valuation multiples, NAVs validated by uplifts on exits and strong NAV performance.

While we have generated excellent returns from a number of investments in the sector over the last few years, our preference is for situations where we do not require the sector to once again find favour for us to benefit from discount narrowing in addition to NAV growth. JPEL Private Equity is one such example.

The board of JPEL Private Equity had committed to a restructuring in early-2016 that would have seen the assets split pro rata into two pools: Continuation and Realisation, with the latter shares receiving regular redemptions at NAV as exit proceeds are distributed.

Along with other large shareholders, we entered into discussions with the board and management prior to this restructuring. It became apparent that the proposals were sub-optimal given the potential conflicts of interest related to potential future sales of fund interests in the secondary market amongst others, and so we were pleased when the board agreed to abandon the proposed dual share class structure, instead putting forward proposals that will see the whole portfolio move into realisation.

A run-off of the portfolio guarantees the discount will be eliminated over time and represents an attractive source of potential growth. Crucially, we also like the portfolio and expect recent NAV growth to continue. The portfolio is well-balanced between mature legacy funds and more recent secondary direct investments - the former generate prodigious cash-flows (34% of opening value for the 2016 financial year) that will now be distributed to shareholders under the new policy; the latter are largely high growth companies bought cheaply that have produced compelling NAV growth (JPEL's NAV was up +14% in the second half of our financial year).

WENDEL

Description: French Holding Company

Weight in NAV at year-end: 6.0%

Total return on position FY16 (local)*: +2.8%

Total return on position FY16 (GBP): +19.2%

Contribution (GBP)**: +118bps

Discount: 33%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

Wendel's share price performance over the year failed to reflect both its solid 6% NAV growth (in Euro terms) and a series of material transactions in the portfolio. As such, its discount ended the year at 33%, wider than the 29% at which it began, but narrower than the 42% it traded on in February. We took advantage of this weakness to almost double our holding.

One of the key criticisms levelled at Wendel has been their level of gearing. The management team, however, have taken great strides this year to tackle this, with a nominal net debt reduction of €1.6bn to end the year at €1.9bn, and a LTV reduction of 16 percentage points to 18% achieved over the first nine months of 2016. We believe a long-term LTV of around 20% is sustainable.

There is also a negative perception surrounding the concentration of Wendel's portfolio, and a complaint that it is too static with excessive exposure to Bureau Veritas and Saint Gobain. While there was some merit to this given these two holdings accounted for 60% of the investment portfolio as at 30 September 2015, management have shown their willingness to address this problem through the sale of €1.2bn of Saint Gobain shares. The two stocks now account for 52% of the portfolio and Saint Gobain's weight will decrease further upon maturity of the exchangeable bond issued against 27% of Wendel's current Saint Gobain position.

By focusing so narrowly on these two issues, it is our contention that the market overlooks the potential in the unlisted portfolio which accounts for more than half of Wendel's NAV. For example, IHS, the African mobile towers business, accounts for 30% of the unlisted portfolio and achieved a 220% EBIT growth rate in the first half of 2016, largely on the back of significant margin expansion. Stahl, the speciality chemicals business, makes up 24% of the unlisted portfolio and achieved 24% EBITDA growth in the first half of 2016 on the back of greater synergies and a healthy 6.6% organic growth rate in sales. We are conservative in our valuations for the unlisted positions and think there is potential for a 17% write-up in NAV solely on the back of less cautious valuations.

Wendel should benefit from a number of potential events (e.g., an IPO of IHS in the coming years and further bolt-on M&A activity at security business AlliedUniversal). We are confident that as these events occur, the discount will narrow. In the meantime, we applaud the value being created in the unlisted portfolio and the actions management are taking to reposition the company and combat the discount. We believe Wendel's rating to be anomalous and have expressed our conviction through a large position in the company.

JARDINE MATHESON/STRATEGIC

Description: Asian Holding Companies

Weight in NAV at year-end: 0%/0%

Total return on position FY16 (local)*: +22.1%/+4.4%

Total return on position FY16 (GBP): +15.4%/+8.7%

Contribution (GBP)**: +89bps/+27bps

Discount: 21%/37%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

We sold out entirely from both our Jardine Matheson and Jardine Strategic investments during the year. The two companies own substantially the same assets, with Jardine Strategic historically trading on a wider discount to NAV than Jardine Matheson due to the latter's higher dividend yield and closer alignment with the controlling Keswick family. Over the last 10 years, Strategic has traded on an average discount of 35% vs 27% for Jardine Matheson. Since the start of 2016, Jardine Matheson's discount narrowed dramatically on what proved to be well-founded speculation of its inclusion in the MSCI indices, moving from 21% at the start of the year to as narrow as 6%. We took this opportunity to sell our Jardine Matheson stake over January and February at an average discount of 11.5%, which compares to the discount at 30 September 2016 of 21%.

With the spread, at the time, between Jardine Matheson and Strategic discounts at such abnormally wide levels, we kept the same asset exposure by using part of the proceeds to establish a position in Strategic. This position was not held for very long as the Brexit fallout provided ample opportunities to better place our capital.

The Jardine companies have been a key part of our portfolio for over 10 years now and over that holding period, our position in Jardine Matheson recorded an IRR of +20%. Despite this long relationship, it is important not to become emotionally attached to companies and we will deploy capital where we see the best opportunities.

BETTER CAPITAL 2009

Description: London-listed Closed-End Fund

Weight in NAV at year-end: 4.0%

Total return on position FY16 (local)*: +18.9%

Total return on position FY16 (GBP): +18.9%

Contribution (GBP)**: +88bps

Discount: 17%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

We increased our shareholding in Better Capital 2009 almost threefold over the year as a reflection of our conviction in the value of Gardner Aerospace, by far the largest holding at 90% of Better Capital's NAV. We first invested in Better Capital 2009 in December 2014 after a material and badly-communicated write-down in one of its previously strong-performing portfolio companies resulted in the evaporation of the premium rating previously enjoyed by the company. Having traded at times in excess of a 20% premium, we were able to acquire stock on discounts exceeding 20%.

While our investment in Better Capital has generated a respectable 24% IRR over its life so far, we are optimistic on the prospects of further upside from here. In keeping with Better Capital's turnaround strategy, Gardner Aerospace was acquired from its lending banks in 2010 who had seized control from Carlyle, its previous private equity owners. Better Capital then invested heavily in the business to fund four bolt-on acquisitions, build out new factories, and to provide a working capital facility.

Gardner manufactures detailed metal components for the aerospace industry, predominantly for civil aircraft manufacturers. At the time of Gardner's purchase by Better Capital, Airbus was an immaterial part of revenues yet now represents c60% of Gardner's total sales, with contracts for the A350, A380, A330, A330neo, A320, A320neo, and the A400 military plane. Gardner is the 6th biggest supplier of metallic parts to Airbus, selling a huge number of essential parts which account for a very low portion of the total cost of an aircraft. A key part of the turn-around strategy has been a focus on building low-cost production capacity - in addition to Gardner's five sites in the UK and two in France, it also has two factories in Poland and one in India. The business is protected by very high barriers to entry due to regulations and required site/process approvals from the aircraft manufacturers, and customer retention is exceptionally high.

Gardner has been a successful investment for Better Capital, and is now carried at 8.7x cost. The sector in which Gardner operates has far higher visibility on future sales than in many others, as revenue from signed contracts is earned as and when aircraft deliveries are made. The ramp up of production of the A350 has resulted in Gardner's revenues and earnings increasing dramatically, and we expect this growth to continue over the coming years. The devaluation of Sterling in the wake of the UK's vote to leave the European Union is positive for Gardner, as its revenues are earned in US Dollars yet 55% of its costs are in Pounds.

The sales process for Gardner began earlier this year with advisors appointed in February. The aerospace components sector has seen frenetic M&A activity over the last few years, led by buyers attracted by the sector's strong growth prospects and the preference of the aircraft manufacturers for dealing with larger and better-financed suppliers. We see Gardner as being attractive to both trade and private equity buyers, and our analysis suggests a value for the business in excess of its current carrying value.

AP ALTERNATIVE ASSETS

Description: London-listed Closed-End Fund

Weight in NAV at year-end: 6.5%

Total return on position FY16 (local)*: +0.6%

Total return on position FY16 (GBP): +11.2%

Contribution (GBP)**: +78bps

Discount: 44%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

AP Alternative Assets' share price fell 11% from $35.8 to $32.0 over the year despite a 12% increase in published NAV. We more than doubled our shareholding over the period by accumulating additional shares at an average price of $28.6, resulting in a small gain in local currency on our overall position (+0.6% in USD; +11.2% in GBP).

We have owned AP Alternative Assets, managed by private equity group Apollo, since mid-2012, first acquiring stock at just $11 on a near-40% discount when the company was much closer to its original form than it is today. A typical bull-market launch, the company was established in 2006 to co-invest alongside Apollo's private equity and special situations funds. We saw the shares as attractive due to the deep discount, the visibility on valuations due to a high proportion of the NAV being in listed securities, the exposure to a fast-growing life insurance company that accounted for 27% of the investment portfolio, and the manager's unambiguous statement that they saw no more attractive investment than the company's own shares.

Today, following a restructuring less than six months after we initiated our position, AP Alternative Assets now owns just one asset, Athene Insurance, and we believe we are now approaching the end of what has to date been a highly profitable investment (IRR of +32% in USD; +39% in GBP). Athene made its IPO filing in May 2016 and we expect it to debut on the NY Stock Exchange before the end of this year, market conditions permitting.

Founded by Apollo in 2009, Athene was set up to capitalise on dislocation and distress in the life insurance markets. Expensive liabilities written in times of higher interest rates and increased regulatory burdens relating to capital requirements led to a wave of retrenchment across the sector and allowed Athene to buy blocks of long duration liabilities at low cost. Today, Athene has grown to $70bn of invested assets up from $8.5bn at the time of our initial investment, and has compounded book value at 18% per annum over the last three years.

As a provider of fixed annuities, Athene can be looked at as essentially a spread lending business, earning the difference between the rate it pays out on the annuities it issues and the investment returns it earns on the premiums paid by policy-holders. Its liabilities are significantly lower cost than peers, and importantly have a weighted average life of 7.5 years and are largely protected by early surrender charges, granting Athene the ability to earn an illiquidity premium on the assets in which it invests. Athene's balance sheet is very strong, and its $1bn of excess capital and undrawn $1bn credit facility provide it with a war-chest to make further opportunistic acquisitions.

AP Alternative carries Athene at a valuation equating to a 1.2x price-book multiple in their published NAV. AP Alternative's share price implies a valuation of less than 1x book for Athene. Our analysis suggests Athene should trade in excess of carrying value.

DOLPHIN CAPITAL

Description: London-listed Property Company

Weight in NAV at year-end: 0.4%

Total return on position FY16 (local)*: -61.7%

Total return on position FY16 (GBP): -61.7%

Contribution (GBP)**: -86bps

Discount: 78%

* Weighted returns adjusted for buys and sells over the year.

** Figure is an estimate by the managers and sum of contributions will not equal quoted total return over the financial year.

Dolphin Capital, the high end hotel and resort developer, was our largest detractor in another disappointing year for the company. At the beginning of 2015, we added to our position in a heavily discounted fund raising of €75m as the company sought to shore up its cash position. At the time we, along with other major shareholders, pushed for a dramatic reduction in the management fee, change in strategy to focus on five core projects and for a change in board composition, all of which were implemented. The money raised allowed the company to continue operations until the beginning of 2017 assuming no further asset sales.

Disappointingly, we have seen very little in the form of sales since then, and the share price has continued its downward trend as the company approaches the moment when it will need fresh capital.

While the investment has been very disappointing (down 84% since original purchase), some respite arrived at the end of September when the company announced a sale of their 49% stake in Aristo, a Cypriot villa developer, for €45m, alongside the arrangement of a €7.5m credit facility which has been agreed in principle. While the sale of Aristo was at a large discount to carrying value, it extends the time horizon the company has to initiate asset sales and restructurings with a view to returning capital to shareholders. The company has a continuation vote before the end of 2016, however, in effect, the company is already in realisation mode, as they look to sell assets down.

TOP 30 LOOK-THROUGH HOLDINGS British Empire invests in holding companies and closed-end funds that in turn invest in listed and unlisted companies. We show below the top 30 holdings on a "look-through basis", i.e., the underlying companies to which we have exposure. For example, British Empire owns a stake in Better Capital 2009, a London-listed private equity fund, that accounts for 3.7% of British Empire's portfolio (4.0% of its NAV). Better Capital 2009's largest holding is Gardner Aerospace, which accounts for 90% of its own NAV. This translates to an effective exposure of British Empire to Gardner Aerospace of 3.6% of British Empire's NAV.
Look-through holding	Parent company	Underlying look-through weight	Look-through holding sector
Athene Holding	AP Alternative Assets	6.4%	Insurance
Aker BP	Aker ASA	3.9%	Oil & Gas Exploration & Production
Gardner Aerospace	Better Capital 2009	3.6%	Aerospace & Defense
Bureau Veritas	Wendel	2.8%	Professional Services
Swire Properties	Swire Pacific 'B'	2.6%	Real Estate Management & Development
Minor International	Symphony International Holdings	2.4%	Hotels, Restaurants & Leisure
Toyota Forklifts & Handling Equipment	Toyota Industries	2.0%	Capital Goods
Zalando	Kinnevik B	1.8%	Retailing
Toyota Motor Corp	Toyota Industries	1.7%	Automobiles & Components
Ocean Yield	Aker ASA	1.5%	Diversified Ship Leasing
Kakaku.com	Digital Garage	1.4%	Internet Software & Services
St Gobain	Wendel	1.1%	Building Products
Millicom	Kinnevik B	1.1%	Wireless Telecommunication Services
I.H.S	Wendel	1.0%	Wireless Communications Towers
Atlas Copco A	Investor AB A	1.0%	Industrial Machinery
Canadian Intl Oil Corp (CIOC)	Riverstone Energy	0.9%	Oil & Gas Exploration & Production
LafargeHolcim	Pargesa	0.9%	Construction Materials
ABB	Investor AB A	0.9%	Electrical Components & Equipment
Indofood	First Pacific	0.8%	Packaged Foods & Meats
Stahl	Wendel	0.8%	Speciality Chemicals
Aker Solutions	Aker ASA	0.8%	Oil & Gas Equipment & Services
Imerys	Pargesa	0.8%	Construction Materials
Greenfeed	Vietnam Phoenix Fund	0.8%	Animal Feed
Mölnlycke	Investor AB A	0.8%	Health Care Supplies
Bollore Africa Logistics	Bollore Group	0.8%	Air Freight & Logistics
SEB	Investor AB A	0.8%	Diversified Banks
Centennial Resource Development	Riverstone Energy	0.7%	Oil & Gas Exploration & Production
SGS	Pargesa	0.7%	Professional Services
Adidas	Pargesa	0.7%	Apparel
Vietnam Dairy Products	Vietnam Phoenix Fund	0.6%	Dairy Products

OUTLOOK

In the previous section of this report we have highlighted how our actions and those of the companies in which we invest have unlocked some of the value in the portfolio over the past 12 months. The emphasis on building up high-conviction positions in companies where we see scope for both NAV growth and discount contraction will continue, as will our hard work and that of the management teams we back in finding ways to realise value. Despite a satisfactory year for both absolute and relative performance, we are confident that the portfolio contains further potential upside from a series of events.

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. We look forward to your continued support.

Joe Bauernfreund

Chief Executive Officer

10 November 2016

CAPITAL STRUCTURE AS AT 30 SEPTEMBER 2016

The Company's capital structure comprises Ordinary Shares, Debenture Stock and Loan Notes.

Ordinary Shares

At 30 September 2016, there were 160,014,089 (2015: 160,014,089) Ordinary Shares of 10p each in issue, of which 34,145,424 (2015: 25,750,878) were held in treasury and therefore the total voting rights attaching to Ordinary Shares in issue were 125,868,665.

Income entitlement

The profits of the Company (including accumulated revenue reserves) available for distribution and resolved to be distributed shall be distributed by way of interim, final and (where applicable) special dividends among the holders of Ordinary Shares, subject to the payment of interest to the holders of Debenture Stock and Loan Notes.

Capital entitlement

After meeting the liabilities of the Company and the amounts due to Debenture Stock and Loan Note holders on a winding-up, the surplus assets shall be paid to the holders of Ordinary Shares and distributed among such holders rateably according to the amounts paid up or credited as paid up on their shares.

Voting entitlement

Each Ordinary shareholder is entitled to one vote on a show of hands and, on a poll, to one vote for every Ordinary Share held.

The Notice of Meeting and Form of Proxy stipulate the deadlines for the valid exercise of voting rights and, other than with regard to Directors not being permitted to vote their shares on matters in which they have an interest, there are no restrictions on the voting rights of Ordinary Shares.

Transfers

There are no restrictions on the transfer of the Company's shares other than a) transfers by Directors and Persons Discharging Managerial Responsibilities and their connected persons during closed periods under the Market Abuse Regulation or which may constitute insider dealing, b) transfers to more than four joint transferees and c) transfers of shares which are not fully paid up or on which the Company has a lien provided that such would not prohibit dealings taking place on an open and proper basis.

The Company is not aware of any agreements between shareholders or any agreements or arrangements with shareholders which would change in the event of a change of control of the Company.

Debenture Stock

At 30 September 2016, there was in issue £15,000,000 (2015: £15,000,000) 8⅛% Debenture Stock 2023, repayable on 2 July 2023.

Income entitlement

Holders of the Debenture Stock are entitled to interest paid half-yearly at the rate of 8⅛% per annum.

Capital entitlement

The Debenture Stock holders are entitled to repayment of principal and outstanding interest on the redemption date or, if earlier, on the occurrence of an event of default. The Debenture Stock is secured by a floating charge on all of the assets of the Company. If the Company is liquidated the Debenture Stock is redeemable by the Company at a price which is the higher of par and the price at which the Gross Redemption Yield on the date of redemption is equivalent to the yield on a reference UK government bond, together with interest accrued up to and including the date of redemption. Had the Company been liquidated on 30 September 2016, the redemption premium would have amounted to £4.5m over and above the mid-market price.

The mid-market price of the Debenture Stock as at 30 September 2016 was 129.80p (2015: 128.50p).

Voting entitlement

The holders of Debenture Stock have no right to attend or to vote at general meetings of the Company.

Loan Notes

At 30 September 2016, there was in issue fixed rate 20 year unsecured private placement notes (the 'Loan Notes'). The Loan Notes were issued in two tranches on 15 January 2016, Series A: £30m and Series B: €30m.

Income entitlement

Interest is payable half yearly at 4.184% per annum on the Sterling Loan Notes and 3.249% per annum on the Euro Loan Notes.

Capital entitlement

The Loan Note holders are entitled to repayment of principal and outstanding interest on the redemption date or, if earlier, on the occurrence of an event of default. The Loan Notes are unsecured. If the Company is liquidated the Loan Notes are redeemable by the Company at a price which is the higher of par and, for the Series A Loan Notes, the price at which the Gross Redemption Yield on the date of redemption is equivalent to the yield on a reference UK government bond and, for the Series B Loan Notes, the price at which the Gross Redemption Yield on the date of redemption is equivalent to the yield on a reference German government bond, both together with interest accrued up to and including the date of redemption. Had the Company been liquidated on 30 September 2016, the redemption premium would have amounted to £23.0m over and above the market values.

The estimated market values of the Loan Notes as at 30 September 2016 were Series A: £32.9m and Series: B £29.3m, being £2.9m and £3.4m respectively above the amortised values excluding interest.

Voting entitlement

The holders of the Loan Notes have no right to attend or to vote at general meetings of the Company.

DIRECTORS

Strone Macpherson - Chairman

Steven Bates - Senior Independent Director

Andrew Robson - Chairman of the Audit Committee

Susan Noble

Nigel Rich

All Directors are non-executive and independent of the Investment Manager.

Results and Dividends

Company profit for the year was £204,238,000, which included a profit of £18,747,000 attributable to revenue (2015: loss of £66,711,000, which included a profit of £16,268,000 attributable to revenue). The profit for the year attributable to revenue has been applied as follows:

	Company  £'000
Current year revenue available for dividends	18,747
Interim dividend of 2.0p per Ordinary Share paid on 30 June 2016	2,591
Recommended final dividend payable on 6 January 2017 to shareholders on the Register as at 2 December 2016 (ex dividend 1 December 2016):
- Final dividend of 9.7p per Ordinary Share	12,057*
- Special dividend of 2.8p per Ordinary Share	3,480*
	18,128

* Based on shares in circulation on 9 November 2016.

MANAGEMENT ARRANGEMENTS

Asset Value Investors Limited is the Company's appointed Alternative Investment Fund Manager, and is engaged under the terms of an Investment Management Agreement ('IMA') dated 17 July 2014. The IMA is terminable by one year's notice from either party, other than for "cause".

The Investment Manager is entitled to a management fee of 0.70% of the net assets of the Company, calculated quarterly by reference to the net assets at the preceding quarter end and paid monthly.

J.P. Morgan Europe Limited was appointed as Depositary under an agreement with the Company and AVI dated 2 July 2014, and is paid a fee on a sliding scale between 0.5 basis points and 4 basis points based on the assets of the Company. The Depositary Agreement is terminable on 90 calendar days' notice from either party.

JPMorgan Chase Bank, National Association, London Branch, has been appointed as the Company's Custodian under an agreement dated 2 July 2014. The agreement will continue for so long as the Depositary Agreement is in effect and will terminate automatically upon termination of the Depositary Agreement, unless the parties agree otherwise.

Capita Company Secretarial Services Limited was appointed as corporate Company Secretary on 1 April 2014. The current annual fee is £55,995, which is subject to an annual RPI increase. The Agreement may be terminated by either party on six months' written notice.

With the Board's consent, AVI has sub-contracted certain fund administration services to Capita Asset Services. The cost of these sub-contracted services is borne by AVI from its own resources and not by the Company.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable United Kingdom law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they are required to prepare financial statements in accordance with International Financial Reporting Standards as adopted by the EU (‘IFRS’).

Under Company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit and loss of the Company for that period.

In preparing the financial statements the Directors are required to:

·      select suitable accounting policies and apply them consistently in accordance with International Accounting Standard ('IAS') 8 Accounting Policies, Changes in Accounting Estimates and Errors;

·      make judgements and estimates which are reasonable and prudent;

·      state whether the financial statements have been prepared in compliance with IFRS, subject to any material departures disclosed and explained therein;

·      provide additional disclosures where compliance with the specific requirements of IFRS are considered to be insufficient to enable users to understand the impact of particular transactions, events and conditions on the financial position and performance; and

·      prepare financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with relevant laws and regulations, and for ensuring that the Annual Report includes information required by the Disclosure Rules of the UK Listing Authority.

The financial statements of the Company are published on the Company's website at www.british-empire.co.uk. The Directors are responsible for ensuring the maintenance and integrity of the information relating to the Company published on this website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

GOING CONCERN

The Directors have carefully reviewed the current financial resources and the projected expenses of the Company for the next 12 months. On the basis of that review and as the majority of net assets are securities which are traded on recognised stock exchanges, the Directors are satisfied that the Company's resources are adequate for continuing in business for the foreseeable future and that it is appropriate to prepare the financial statements on a going concern basis.

VIABILITY

The Directors consider viability as part of their continuing programme of monitoring risk. The Directors consider three years to be a reasonable time horizon to consider the continuing viability of the Company, reflecting a balance between a longer-term investment horizon and the inherent shorter-term uncertainties within equity markets, although they do have due regard to viability over the longer term and particularly to key points outside this time frame, such as the due date for the repayment of long-term debt. The Company is an investment trust whose portfolio is invested in readily realisable listed securities and with some short-term cash deposits. The following facts support the Directors' view of the viability of the Company:

·          In the year under review, expenses (including finance costs and taxation) were covered some 2 times by investment income.

·          The Company has a liquid investment portfolio.

·          The Company has long-term debt of £15m which falls due for repayment in 2023 and £30m and €30m which both fall due for repayment in 2026. This debt was covered some 13 times as at the end of September 2016 by the Company's total assets. The Directors are of the view that, subject to unforeseen circumstances, the Company will have sufficient resources to meet the costs of annual interest and eventual repayment of principal on this debt.

·          The Company has a large margin of safety over the covenants on its debt.

The Company's viability depends on the global economy and markets continuing to function. The Directors do also consider the possibility of a wide ranging collapse in corporate earnings and/or the market value of listed securities. To the latter point, it should be borne in mind that a significant proportion of the Company's expenses are in ad valorem investment management fees, which would naturally reduce if the market value of the Company's assets were to fall.

In order to maintain viability, the Company has a robust risk control framework which, following guidelines from the FRC, has the objectives of reducing the likelihood and impact of: poor judgement in decision-making; risk-taking that exceeds the levels agreed by the Board; human error; or control processes being deliberately circumvented.

Taking the above into account, and the potential impact of the principal risks as set out on pages 9 to 11, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of approval of this Annual Report.

DECLARATION

The Directors listed above, being the persons responsible, hereby confirm to the best of their knowledge:

●	that the financial statements have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
●	the Strategic Report and the Investment Manager's Review include a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that the Company faces.

In the opinion of the Board, the Annual Report and Accounts taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's position and performance, business model and strategy.

By Order of the Board

Capita Company Secretarial Services Limited

Corporate Secretary

10 November 2016

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the year ended 30 September 2016 but is derived from those accounts. Statutory accounts for the year ended 30 September 2016 will be delivered to the Registrar of Companies in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditors' report can be found in the Company's full Annual Report and Accounts on the Company's website at

www.british-empire.co.uk.

STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 September 2016

		2016   Revenue   return	2016   Capital   return	2016   Total	2015    Revenue   return	2015   Capital   return	2015    Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Income
Investment income	2	20,689	-	20,689	20,934	-	20,934
Gains/(losses) on investments held at fair value	8	-	196,289	196,289	-	(76,232)	76,232
Foreign exchange forward contract loss		-	(3,557)	(3,557)	-	(27)	(27)
Exchange losses on currency balances		-	(371)	(371)	-	(294)	(294)
		20,689	192,361	213,050	20,934	(76,553)	(55,619)
Expenses
Investment management fee	3	(1,511)	(3,527)	(5,038)	(1,707)	(3,983)	(5,690)
Other expenses (including irrecoverable VAT)	3	(1,524)	-	(1,524)	(1,366)	-	(1,366)
Profit/(loss) before finance costs and tax		17,654	188,834	206,488	17,861	(80,536)	(62,675)
Finance costs	4	(815)	(1,930)	(2,745)	(375)	(883)	(1,258)
Exchange losses on Loan Notes	4	-	(2,992)	(2,992)	-	-	-
Profit/(loss) before taxation		16,839	183,912	200,751	17,486	(81,419)	(63,933)
Taxation	5	1,908	1,579	3,487	(1,218)	(1,560)	(2,778)
Profit/(loss) for the year		18,747	185,491	204,238	16,268	(82,979)	(66,711)
Earnings/(loss) per Ordinary Share		14.32p	141.72p	156.04p	11.75p	(59.95p)	(48.20p)

The total column of this statement is the Income Statement of the Company prepared in accordance with IFRS, as adopted by the European Union. The supplementary revenue and capital columns are presented in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies ('AIC SORP').

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.

There is no other comprehensive income, and therefore the profit for the year after tax is also the total comprehensive income.

The accompanying notes are an integral part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

for the year ended 30 September 2016

	Ordinary share capital	Capital redemption reserve	Share premium	Capital  reserve	Merger reserve	Revenue  reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
For the year ended 30 September 2016
Balance as at 30 September 2015	16,001	2,934	28,078	573,862	41,406	35,261	697,542
Ordinary Shares bought back and held in treasury (see note 14)	-	-	-	(42,302)	-	-	(42,302)
Total comprehensive income for the year	-	-	-	185,491	-	18,747	204,238
Ordinary dividends paid (see note 6)	-	-	-	-	-	(15,505)	(15,505)
Balance as at 30 September 2016	16,001	2,934	28,078	717,051	41,406	38,503	843,973
For the year ended 30 September 2015
Balance as at 30 September 2014	16,001	2,934	28,078	704,809	41,406	33,756	826,984
Ordinary Shares bought back and held in treasury (see note 14)	-	-	-	(47,968)	-	-	(47,968)
Total comprehensive income for the year	-	-	-	(82,979)	-	16,268	(66,711)
Ordinary dividends paid (see note 6)	-	-	-	-	-	(14,763)	(14,763)
Balance as at 30 September 2015	16,001	2,934	28,078	573,862	41,406	35,261	697,542

The accompanying notes are an integral part of the financial statements.

BALANCE SHEET

as at 30 September 2016

		2016	2015
	Notes	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss	8	886,369	707,047
		886,369	707,047
Current assets
Other receivables	10	22,454	4,121
Cash and cash equivalents		13,799	6,649
		36,253	10,770
Total assets		922,622	717,817
Current liabilities
Foreign exchange forward contracts		-	(3,181)
Other payables	11	(7,973)	(2,151)
		(7,973)	(5,332)
Total assets less current liabilities		914,649	712,485
Non-current liabilities
8⅛% Debenture Stock 2023	12	(14,950)	(14,943)
4.184% Series A Sterling Unsecured Loan Notes 2036	12	(29,871)	-
3.249% Series B Euro Unsecured Loan Notes 2036	12	(25,855)	-
		(70,676)	(14,943)
Net assets		843,973	697,542
Equity attributable to equity shareholders
Ordinary share capital	14	16,001	16,001
Capital redemption reserve		2,934	2,934
Share premium		28,078	28,078
Capital reserve		717,051	573,862
Merger reserve		41,406	41,406
Revenue reserve		38,503	35,261
Total equity		843,973	697,542
Net asset value per Ordinary Share - basic		670.52p	519.53p
Number of shares in issue excluding Treasury Shares		125,868,665	134,263,211

The financial statements were approved by the Board of British Empire Trust plc on 10 November 2016 and were signed on its behalf by:

PSS Macpherson

Chairman

The accompanying notes are an integral part of the financial statements.

Registered in England & Wales No. 28203

STATEMENT OF CASH FLOWS

for the year ended 30 September 2016

	Notes	2016  £'000	2015 £'000
Reconciliation of profit/(loss) before taxation to net cash inflow from operating activities
Profit/(loss) before taxation		200,751	(63,933)
Realised exchange losses on currency balances		7,102	325
(Gains)/losses on investments held at fair value through profit or loss		(196,289)	76,232
Purchases of investments		(431,807)	(454,845)
Sales of investments		433,687	508,265
Dividend from subsidiary		-	250
Increase in other receivables		(513)	(40)
Increase in creditors		558	2,729
Taxation		4,089	(3,634)
Amortisation of Debenture issue expenses		16	7
Exchange rate loss on Loan Notes		2,992	-
Net cash inflow from operating activities		20,586	65,356
Financing activities
Dividends paid	6	(15,505)	(14,763)
Issue of loans net of costs		52,726	-
Payments for Ordinary Shares bought back and held in treasury		(40,373)	(49,613)
Cash outflow from financing activities		(3,152)	(64,376)
Increase in cash and cash equivalents		17,434	980
Reconciliation of net cash flow movement in funds:
Cash and cash equivalents at beginning of year		6,649	5,994
Exchange rate movements		(10,284)	(325)
Increase in cash and cash equivalents		17,434	980
Increase in net cash		7,150	655
Cash and cash equivalents at end of year		13,799	6,649
Cash and cash equivalents received/(paid) during the period includes:
- dividends received		18,998	20,883
- interest received		30	22
- interest paid		(2,717)	(1,251)

The accompanying notes are an integral part of the financial statements.

NOTES TO THE FINANCIAL STATEMENTS

1.   General information and accounting policies

British Empire Trust plc is a company incorporated and registered in England and Wales. The principal activity of the Company is that of an investment trust company within the meaning of Section 1158/1159 of the Corporation Tax Act 2010 and its investment approach is detailed in the Strategic Report.

The financial statements of the Company have been prepared in accordance with IFRS as adopted by the European Union, which comprise standards and interpretations approved by the International Accounting Standards Board ('IASB'), and as applied in accordance with the provisions of the Companies Act 2006. The annual financial statements have also been prepared in accordance with the AIC SORP for the financial statements of investment trust companies and venture capital trusts, except to any extent where it is not consistent with the requirements of IFRS.

Basis of preparation

The functional currency of the Company is Pounds Sterling because this is the currency of the primary economic environment in which the Company operates. The financial statements are also presented in Pounds Sterling rounded to the nearest thousands, except where otherwise indicated.

Going concern

The financial statements have been prepared on a going concern basis and on the basis that approval as an investment trust company will continue to be met.

The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future (being a period of 12 months from the date these financial statements were approved). Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.

Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company primarily invests in companies listed in the UK and other recognised international exchanges.

Accounting developments

The accounting policies are consistent with those of the previous financial year. The following accounting standards and their amendments were in issue at the period end but will not be in effect until after this financial year end. The Directors are considering the impact these accounting standards will have on the financial statements.

International Financial Reporting Standards	Effective date
IFRS 7 Financial Instruments (IFRS 9 Disclosures)	1 January 2018
IFRS 9 Financial Instruments	1 January 2018
IFRS 15 Revenue from Contracts with Customers	1 January 2018
IFRS 16 Leases	1 January 2019

Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts in the Balance Sheet, the Statement of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future period if the revision affects both current and future periods. There were no significant accounting estimates or significant judgements in the current period.

Investments

The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis in accordance with the documented investment strategy and information is provided internally on that basis to the Company's Board of Directors.

Upon initial recognition, the investments held by the Company are designated 'at fair value through profit or loss'. They are included initially at fair value, which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the Statement of Comprehensive Income, and 'allocated' to capital at the time of acquisition). When a purchase or sale is made under a contract, the terms of which require delivery within the time-frame of the relevant market, the investments concerned are recognised or derecognised on the trade date. Subsequent to initial recognition, investments are valued at fair value through profit or loss. For listed investments this is deemed to be bid market prices or closing prices for Stock Exchange Electronic Trading Service - quotes and crosses ('SETSqx').

Fair values for unquoted assets, or investments for which the market is inactive, are established by using various valuation techniques in accordance with the International Private Equity and Venture Capital Valuation (the 'IPEV') guidelines. These may include recent arm's length market transactions, the current fair value of another instrument which is substantially the same, discounted cash flow analysis and option pricing models. Where there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, that technique is utilised. Where no reliable fair value can be estimated for such instruments, they are carried at cost subject to any provision for impairment.

Changes in the fair value of investments are recognised in the Statement of Comprehensive Income as a capital item. On disposal, realised gains and losses are also recognised in the Statement of Comprehensive Income as capital items.

All investments for which a fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy in note 16.

Foreign currency

Transactions denominated in currencies other than Pounds Sterling are recorded at the rates of exchange prevailing on the date of the transaction. Items which are denominated in foreign currencies are translated at the rates prevailing on the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue account depending on whether the gain or loss is capital or revenue in nature.

Changes in fair value of forward foreign exchange contracts are recognised as they arise in the capital column of the Statement of Comprehensive Income.

Cash and cash equivalents

Cash comprises cash in hand and demand deposits. Cash equivalent are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts when applicable.

Other receivables and payables

Trade receivables, trade payables and short-term borrowings are measured at amortised cost and approximate fair value.

Income

Dividends received from UK registered companies are accounted for net of inputed tax credits. Dividends from overseas companies are shown gross of any non-recoverable withholding taxes which are disclosed separately in the Statement of Comprehensive Income.

Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Fixed returns on non-equity shares are recognised on a time-apportioned basis using the effective interest method.

Special dividends are taken to the revenue or capital account depending on their nature. In deciding whether a dividend should be regarded as a capital or revenue receipt, the Board reviews all relevant information as to the reasons for the sources of the dividend on a case-by-case basis.

When the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend forgone is recognised as income. Any excess in the value of the cash dividend is recognised in the capital column.

All other income is accounted on a time-apportioned accruals basis using the effective interest rate method and is recognised in the Statement of Comprehensive Income.

Expenses and finance costs

All expenses are accounted on an accruals basis. On the basis of the Board's expected long-term split of total returns in the form of capital and revenue returns of 70% and 30% respectively, the Company charges 70% of its management fee and finance costs to capital.

Expenses incurred directly in relation to arranging debt finance are amortised over the term of the finance.

Expenses incurred in buybacks of shares to be held in treasury are charged to the capital reserve through the Statement of Changes in Equity.

Taxation

The charge for taxation is based on the net revenue for the year and takes into account taxation deferred or accelerated because of temporary differences between the treatment of certain items for accounting and taxation purposes.

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes at the reporting date. Deferred tax assets are only recognised if it is considered more likely than not there will be suitable profits from which the future reversal of timing differences can be deducted. In line with recommendations of the SORP, the allocation method used to calculate the tax relief on expenses charged to capital is the 'marginal' basis. Under this basis, if taxable income is capable of being offset entirely by expenses charged through the revenue account, then no tax relief is transferred to the capital account.

Dividends payable to shareholders

Dividends to shareholders are recognised as a liability in the period in which they are paid or approved in general meetings and are taken to the Statement of Changes in Equity. Dividends declared and approved by the Company after the Balance Sheet date have not been recognised as a liability of the Company at the Balance Sheet date.

Non-current liabilities: Debenture and Loan Notes

The non-current liabilities are valued at amortised cost under the effective interest method. Costs in relation to arranging the debt finance have been capitalised and are amortised over the term of the finance. Hence, amortised cost is the par value less the amortised costs of issue.

The Euro Loan Note is shown at amortised cost with the exchange difference on the principal amounts to be repaid reflected. Any gain or loss arising from exchange rate change is included in the capital reserves and shown in the capital column of the Statement of Comprehensive Income.

Further details of the non-current liabilities are set out in notes 12 and 16.

Revenue reserves

The revenue reserve represents the surplus of accumulated profits and is distributable by the way of dividends.

Capital reserve

Capital reserve - other - The following are taken to this reserve:

·      gains and losses on the disposal of investments;

·      amortisation of issue expenses;

·      costs of share buybacks;

·      exchange difference of a capital nature; and

·      expenses, together with the related taxation effect, allocated to this reserve in accordance with the above policies.

Capital reserve - investment holding gains - The following are taken to this reserve:

·      increase and decrease in the valuation of investments held at the year end.

Merger reserve

The merger reserve represents the share premium on shares issued on the acquisition of Selective Assets Trust plc on 13 October 1995.

Share premium

The share premium account represents the accumulated premium paid for shares issued in previous periods above their nominal value less issue expenses. This is a reserve forming part of the non-distributable reserves. The following items are taken to this reserve:

·      costs associated with the issue of equity; and

·      premium on the issue of shares

Investments in subsidiaries

The subsidiary is not consolidated due to it being dormant in the year. Investment in the subsidiary is stated at fair value. See note 9.

2. Income

	2016  £'000	2015 £'000
Income from investments
Listed investments	19,473	20,883
Other income
Deposit interest	30	22
Underwriting commission	77	-
Other income	1,109*	29
	1,216	51
Total income	20,689	20,934
Income from investments
Equity securities	19,473	20,877
Fixed interest securities	-	6
	19,473	20,883
Total income comprises:
Dividends	19,473	20,877
Interest	672*	28
Underwriting income	77	-
Other income	467	29
	20,689	20,934

* Includes £634,000 interest received on the recovery of French withholding tax 2009 to 2014.

3. Investment management fee and other expenses

	2016	2016		2015	2015
	Revenue	Capital	2016	Revenue	Capital	2015
	return	return	Total	return	return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Management fee	1,511	3,527	5,038	1,707	3,983	5,690
	1,511	3,527	5,038	1,707	3,983	5,690
Other expenses:
Directors' emoluments - fees	133	-	133	135	-	135
Auditor's remuneration - audit	29	-	29	30	-	30
Auditor's remuneration - taxation	9	-	9	13	-	13
Auditor's remuneration - withholding tax, interim review and debenture review services	29	-	29	32	-	32
Marketing and savings scheme costs	536	-	536	424	-	424
Printing and postage costs	121	-	121	110	-	110
Registrar fees	77	-	77	71	-	71
Custodian fees	124	-	124	123	-	123
Depositary fees	134	-	134	127	-	127
Advisory and professional fees	187	-	187	140	-	140
Irrecoverable VAT	73	-	73	88	-	88
Other expenses	72	-	72	73	-	73
	1,524	-	1,524	1,366	-	1,366

For the year ended 30 September 2016, the fee calculated in accordance with the IMA amounted to 0.7% (2015: 0.7%) of the net asset value calculated on a quarterly basis.

Details of the IMA and fees paid to the Investment Manager are set out in the Report of the Directors.

4. Finance costs

	2016	2016		2015	2015
	Revenue	Capital	2016	Revenue	Capital	2015
	return	return	Total	return	return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Bank overdraft interest	1	-	1	10	23	33
Other expenses	-	11	11	-	-	-
Loan and debenture interest
Debenture loan	366	858	1,224	365	853	1,218
4.184% Series A Sterling Unsecured Loan Notes 2036	268	625	893	-	-	-
3.249% Series B Euro Unsecured Loan Notes 2036	180	420	600	-	-	-
	814	1,903	2,717	365	853	1,218
Amortisation
Debenture loan	-	7	7	-	7	7
4.184% Series A Sterling Unsecured Loan Notes 2036	-	5	5	-	-	-
3.249% Series B Euro Unsecured Loan Notes 2036	-	4	4	-	-	-
	-	16	16	-	7	7
Total	815	1,930	2,745	375	883	1,258
Exchange loss on Loan Notes*	-	2,992	2,992	-	-	-

* Revaluation of Euro Loan Notes.

5. Taxation

	Year ended 30 September 2016			Year ended 30 September 2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Analysis of charge for the year:
Overseas tax not recoverable	1,079	-	1,079	1,218	-	1,218
Overseas tax - reversal of prior year tax withheld*	-	(1,579)	(1,579)	-	1,579	1,579
Overseas tax recovered previously expensed**	(2,987)	-	(2,987)	-	-	-
Deferred tax release	-	-	-	-	(19)	(19)
Tax (recovery)/cost for the year	(1,908)	(1,579)	(3,487)	1,218	1,560	2,778

* Tax deducted on receipt of capital on acquisition of Westgrund by Adler, subsequently returned.

** Receipts from the recovery of French withholding tax 2009 to 2014.

The tax assessed for the year differs from the standard rate of corporation tax in the United Kingdom of 20%. The differences are explained below:

	Year ended 30 September 2016			Year ended 30 September 2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return on ordinary activities after interest payable but before appropriations	16,839	183,912	200,751	17,486	(81,419)	(63,933)
Theoretical tax at UK corporation tax rate of 20%	3,368	36,782	40,150	3,585	(16,691)	(13,106)
Effects of the non-taxable items:
- UK franked investment income	(535)	-	(535)	(690)	-	(690)
- Tax-exempt overseas investment income	(3,252)	-	(3,252)	(3,497)	-	(3,497)
- Other non-taxable income	(93)	-	(93)	(7)	-	(7)
- (Losses)/gains on investments, exchange gains on capital items and movement on fair value of derivative financial instruments	-	(37,871)	(37,871)	-	15,693	15,693
- Excess management expenses carried forward	505	1,089	1,594	604	998	1,602
- Expenses not deductible for tax	-	-	-	-	-	-
- Overseas tax not recoverable	1,068	(1,579)*	(511)	1,218	1,579*	2,797
- Overseas tax recovered previously expensed	(2,987)	-	(2,987)	-	-	-
- Overseas tax expensed as DTR	11	-	11	12	-	12
- Accrued income taxable on receipt	7	-	7	(7)	-	(7)
- Deferred tax	-	-	-	-	(19)	(19)
Tax (recovery)/credit for the year	(1,908)	(1,579)	(3,487)	1,218	1,560	2,778

* Tax deducted on receipt of capital on acquisition on acquisition of Westgrund by Adler, subsequently returned.

At 30 September 2016, the Company had unrelieved management expenses of £48,565,000 (30 September 2015: £40,457,000) that are available to offset future taxable revenue. A deferred tax asset of £9,713,000 has not been recognised because the Company is not expected to generate sufficient taxable income in future periods in excess of the available deductible expenses and accordingly, the Company is unlikely to be able to reduce future tax  liabilities through the use of existing surplus losses.

Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an investment trust company.

Unrecognised tax losses

The Company has a tax loss of £48,534,000 (2015: £40,896,000) carried forward at the Balance Sheet date which is available indefinitely for offset against future taxable profits. A potential deferred tax asset of £9,707,000 (2015: £8,179,000) (based on 20% tax rate) has not been recognised in respect of this tax loss as there is uncertainty over whether there will be sufficient future taxable profits against which this tax loss can be offset.

6. Dividends

	2016	2015
	£'000	£'000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 30 September 2015 of 9.70p (2014: 8.50p) per Ordinary Share	12,914	12,023
Interim dividend for the year ended 30 September 2016 of 2.00p (2015: 2.00p) per Ordinary Share	2,591	2,740
	15,505	14,763

Set out below are the interim, final and special dividends paid or proposed on Ordinary Shares in respect of the financial year, which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered.

	2016	2015
	£'000	£'000
Interim dividend for the year ended 30 September 2016 of 2.00p (2015: 2.00p) per Ordinary Share	2,591	2,740
Proposed final dividend for the year ended 30 September 2016 of 9.70p (2015: 9.70p) per Ordinary Share	12,057*	12,976
Proposed special dividend for the year ended 30 September 2016 of 2.80p (2015: nil) per Ordinary Share	3,480*	-
	18,128	15,716

* Based on shares in circulation on 9 November 2016.

7. Earnings per Ordinary Share

The earnings per Ordinary Share is based on Company net profit/(loss) of £204,238,000 (2015: (£66,711,000)) and on 130,884,588 (2015: 138,417,127) Ordinary Shares, being the weighted average number of Ordinary Shares in issue (excluding shares in treasury) during the year.

The earnings per Ordinary Share detailed above can be further analysed between revenue and capital as follows:

	2016			2015
Basic and diluted	Revenue	Capital	Total	Revenue	Capital	Total
Net profit (£'000)	18,747	185,491	204,238	16,268	(82,979)	(66,711)
Weighted average number of Ordinary Shares			130,884,588			138,417,127
Earnings per Ordinary Share	14.32p	141.72p	156.04p	11.75p	(59.95p)	(48.20p)

There are no dilutive instruments issued by the Company (2015: none).

The distributable reserves of the company are £38,503,000 (2015: £35,261,000).

8. Investments held at fair value through profit or loss

	2016	2015
	£'000	£'000
Securities
Opening book cost	733,891	766,514
Opening investment holding (losses)/gains	(26,844)	72,519
Opening fair value	707,047	839,033
Movement in the year:
Purchases at cost:
Equities	435,141	288,772
Bonds	-	163,993
Sales - proceeds:
Equities	(406,171)	(331,160)
Bonds	(45,937)	(177,109)
- realised gains on sales	1,512	23,130
Distribution from subsidiary	-	(250)
Movement in investment holding gains	194,777	(99,362)
Closing fair value	886,369	707,047
Closing book cost	718,435	733,891
Closing investment holding gains/(losses)	167,934	(26,844)
Closing fair value	886,369	707,047
	2016	2015
	£'000	£'000
Transaction costs
Costs on acquisition	960	764
Costs on disposals	790	659
	1,750	1,423

	2016	2015
	£'000	£'000
Analysis of capital gains
Gains on sales of securities based on historical cost	1,512	23,130
Movement in investment holding gains for the year	194,777	(99,362)
Net gains/(losses) on investments	196,289	(76,232)

9. Subsidiary undertaking

The Company has one wholly owned subsidiary, BEST Securities Limited.

Name of undertaking	Principal activity	Country of incorporation and operation	Description of shares held	Proportion of nominal value of issued shares and voting rights held by Company (%)
BEST Securities Limited	Dealing Subsidiary	England	Ordinary	100

BEST Securities Limited is dormant and an application has been made to strike off the company. The fair value of the company is £1 (2015: £1).

10. Other receivables

	2016	2015
	£'000	£'000
Amounts due from brokers	18,422	-
Overseas tax recoverable*	2,796	3,398
Prepayments and accrued income	1,205	709
VAT recoverable	31	14
	22,454	4,121

* This relates to withholding tax in a number of countries which is in the process of being reclaimed and which the Company expects to receive in due course.

No amounts are past due or impaired. The carrying value approximates to fair value.

11. Other payables

	2016	2015
	£'000	£'000
Purchases for future settlement	3,334	-
Amounts owed for share buybacks	3,059	1,130
Unrealised forward exchange rate contracts	-	3,181
Other creditors	1,580	1,021
	7,973	5,332

The carrying value approximates to fair value.

12. Non-current liabilities

	2016	2015
	£'000	£'000
8⅛% Debenture Stock 2023	14,950	14,943
4.184% Series A Sterling Unsecured Loan Notes 2036	29,871	-
3.249% Series B Euro Unsecured Loan Notes 2036	25,855	-
Total	70,676	14,943

The amortised costs of issue expenses are set out in note 4.

The market value of the Debenture Stock and the Loan Notes are set out in note 16.

The Debenture Stock is secured by a floating charge over all of the assets of the Company. Under the terms of the Debenture Stock, total borrowings are not to exceed 150% of adjusted capital and reserves.

The Company issued two Loan Notes on 15 January 2016:

£30,000,000      4.184% Series A Sterling Unsecured Loan Notes due 15 January 2036

€30,000,000      3.249% Series B Euro Unsecured Loan Notes due 15 January 2036

Under the terms of the Loan Notes, the net assets of the Company shall not be less than £300,000,000 and total indebtedness shall not exceed 40% of net assets.

Further information on the Debenture Stock and Loan Notes are set out on page 33.

13. Provision for deferred tax

	2016	2015
	£'000	£'000
Provided
In respect of the origination and reversal of temporary differences	-	19
	-	19
The movement in the provision for deferred taxation is as follows:
Opening balance	-	19
Release to capital account	-	(19)
Closing balance	-	-

14. Called-up share capital

	Ordinary Shares of 10p each
		Nominal
	Number	value
	of  shares	£'000
Allotted, called up and fully paid:	160,014,089	16,001
Treasury Shares:
Balance at beginning of year	25,750,878
Buyback of Ordinary Shares into treasury	8,394,546
Balance at end of year	34,145,424
Total Ordinary Share capital excluding Treasury Shares	125,868,665

During the year, 8,394,546 (2015: 9,331,661) Ordinary Shares with a nominal value of £839,454.60 (2015: £933,166.10) and representing 5.25% of the issued share capital, were bought back and placed in treasury for an aggregate consideration of £42,301,575 (2015: £47,967,720). No Ordinary Shares were bought back for cancellation (2015: nil).

15. Net asset value

The net asset value per share and the net asset value attributable to the Ordinary Shares at the year end are calculated in accordance with their entitlements in the Articles of Association and were as follows:

	Net asset value per share attributable
	2016	2015
Ordinary Shares (basic)	670.52p	519.53p
	Net asset value attributable
	2016	2015
	£'000	£'000
Ordinary Shares (basic)	843,973	697,542

Basic net asset value per Ordinary Share is based on net assets and on 125,868,665 Ordinary Shares (2015: 134,263,211), being the number of Ordinary Shares in issue excluding Treasury Shares at the year end.

At the year end, the net asset value per Ordinary Share adjusted to include the Debenture Stock and Loan Notes at fair value was 661.81p (2015: 516.31p).

16.  Financial instruments and capital disclosures

Investment objective and policy

The investment objective of the Company is to achieve capital growth through a focused portfolio of investments, particularly in companies whose share prices stand at a discount to estimated underlying net asset value.

The Company's investment objective and policy are detailed on page 36.

The Company's financial instruments comprise equity and fixed interest investments, cash balances, receivables, payables and borrowings. The Company makes use of borrowings to achieve improved performance in rising markets. The risk of borrowings may be reduced by raising the level of cash balances or fixed interest investments held.

Risks

The risks identified arising from the financial instruments are market risk (which comprises market price risk, interest rate risk and foreign currency risk), liquidity risk and credit and counterparty risk. The Company may also enter into derivative transactions to manage risk.

The Board and Investment Manager consider and review the risks inherent in managing the Company's assets which are detailed below.

Market risk

Market risk arises mainly from uncertainty about future prices of financial instruments used in the Company's business. It represents the potential loss the Company might suffer through holding market positions by way of price movements, interest rate movements and exchange rate movements. The Investment Manager assesses the exposure to market risk when making each investment decision and these risks are monitored by the Investment Manager on a regular basis and the Board at quarterly meetings with the Investment Manager.

Market price risk

Market price risk (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the value of investments.

The portfolio is managed with an awareness of the effects of adverse price movements through detailed and continuing analysis with the objective of maximising overall returns to shareholders. If the fair value of the Company's investments at the year end increased or decreased by 10%, then it would have had an impact on the Company's capital return and equity of £88,637,000 (2015: £70,705,000).

Foreign currency

The value of the Company's assets and the total return earned by the Company's shareholders can be significantly affected by foreign exchange rate movements as most of the Company's assets are denominated in currencies other than Pounds Sterling, the currency in which the Company's financial statements are prepared. Income denominated in foreign currencies is converted to Pounds Sterling upon receipt.

A 5% rise or decline of Sterling against foreign currency denominated (i.e. non Pounds Sterling) assets and liabilities held at the year end would have increased/decreased the net asset value by £36,813,000 (2015: £27,073,000).

The currency exposure is as follows:

Currency risk
	GBP	Euro	USD	SEK	JPY	NOK	Other	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30 September 2016
Other receivables	17,671	2,114	222	-	431	1,668	348	22,454
Cash and cash equivalents	13,689	-	-	-	110	-	-	13,799
Other payables	(5,061)	(185)	(1,071)	-	-	-	(1,656)	(7,973)
8⅛% Debenture Stock 2023	(14,950)	-	-	-	-	-	-	(14,950)
4.184% Series A Sterling Unsecured Loan Notes 2036	(29,871)	-	-	-	-	-	-	(29,871)
3.249% Series B Euro Unsecured Loan Notes 2036	-	(25,855)	-	-	-	-	-	(25,855)
Currency exposure on net monetary items	(18,522)	(23,926)	(849)	-	541	1,668	(1,308)	(42,396)
Investments held at fair value through profit or loss - equities	121,500	140,143	255,948	91,940	80,946	61,027	134,865	886,369
Total net currency exposure	102,978	116,217	255,099	91,940	81,487	62,695	133,557	843,973
This exposure is representative at the Balance Sheet date and may not be representative of the year as a whole. The balances are of the holding investment and may not represent the actual exposure of the subsequent underlying investment.
	GBP	Euro	USD	SEK	JPY	NOK	Other	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30 September 2015
Other receivables	37	2,381	222	-	431	1,017	33	4,121
Cash and cash equivalents	6,514	-	-	-	-	-	135	6,649
Other payables	(2,151)	-	-	-	(3,181)	-	-	(5,332)
8⅛% Debenture Stock 2023	(14,943)	-	-	-	-	-	-	(14,943)
Currency exposure on net monetary items	(10,543)	2,381	222	-	(2,750)	1,017	168	(9,505)
Investments held at fair value through profit or loss - equities	157,253	135,960	167,736	69,442	61,764	21,716	93,176	707,047
Total net currency exposure	146,710	138,341	167,958	69,442	59,014	22,733	93,344	697,542

Interest rate risk

Interest rate movements may affect:

• the fair value of investments in fixed-interest rate securities;

• the level of income receivable on cash deposits;

• the interest payable on variable rate borrowings; and

• the fair value of the Company's long-term debt.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions. The Company, generally, does not hold significant cash balances, with short-term borrowings being used when required.

The Debenture Stock and Loan Notes issued by the Company as a planned level of gearing, pay a fixed-rate of interest and are carried in the Company's Balance Sheet at amortised cost rather than at fair value. Hence, movements in interest rates will not affect net asset values, as reported under the Company's accounting policies, but may have an impact on the Company's share price and discount/premium.

The exposure at 30 September of financial assets and financial liabilities to interest rate risk is shown by reference to floating interest rates.

	At 30 September 2016 £'000	At 30 September 2015 £'000
Exposure to floating interest rates: Cash and cash equivalents	13,799	6,649

If the above level of cash was maintained for a year, a 1% increase in LIBOR would increase the revenue return and net assets by £138,000 (2015: £66,000). Management proactively manages cash balances. If there was a fall by 1% in LIBOR, it would potentially impact the Company by turning positive interest to negative interest. The total effect would be a cost increase/revenue reduction of £138,000.

	At 30 September 2016
	Book cost £'000	Fair value £'000
8⅛% Debenture Stock 2023	14,950	19,470
4.184% Series A Sterling Unsecured Loan Notes 2036	29,871	32,888
3.249% Series B Euro Unsecured Loan Notes 2036	25,855	29,284
Total	70,676	81,642

The impact of holding the Debenture Stock and Loan Notes at fair value would be to reduce the Company's net assets by £10,966,000.

The Company's fixed income portfolio at the year end was valued at £nil (2015: £14,978,000). A 1% increase/decrease in relevant market interest rates would be expected to decrease/increase the portfolio's value by approximately £nil (2015: £150,000), all other factors being equal. The weighted average effective interest rate on these investments is 0% (2015: 0%).

The fair value of the Company's Debenture Stock and Loan Notes at the year end was £81,642,000 (2015: £19,275,000). A 1% increase/decrease in the applicable interest rates would be expected to decrease/increase the fair values of the Debenture Stock and Loan Notes by approximately £9.0m (2015: £1.1m), all other factors being equal.

Liquidity risk

The Company's assets mainly comprise readily realisable securities which can be easily sold to meet funding commitments, if necessary. Unlisted investments, if any, in the portfolio are subject to liquidity risk. The risk is taken into account by the Directors when arriving at their valuation of these items.

The remaining contractual payments on the Company's financial liabilities at 30 September, based on the earliest date on which payment can be required, were as follows:

	In 1 year or  less  £'000	In more than 1 year but not more than 2 years  £'000	In more than 2 years but not more than 3 years £'000	In more than 3 years but not more than 10 years £'000	Total  £'000
At 30 September 2016
8⅛% Debenture Stock 2023	(1,219)	(1,219)	(1,219)	(19,571)	(23,228)
4.184% Series A Sterling Unsecured Loan Notes 2036	(1,255)	(1,255)	(1,255)	(8,786)	(12,551)
3.249% Series B Euro Unsecured Loan Notes 2036	(843)	(843)	(843)	(5,903)	(8,432)
Other payables	(7,973)	-	-	-	(7,973)
	(11,290)	(3,317)	(3,317)	(34,260)	(52,184)

		In more than	In more than	In more than
		1 year but	2 years but	3 years but
	In 1 year	not more	not more	not more
	or less £'000	than 2 years £'000	than 3 years £'000	than 10 years   £'000	Total  £'000
At 30 September 2015
8⅛% Debenture Stock 2023	(1,219)	(1,219)	(1,219)	(20,788)*	(24,445)
Other payables	(5,332)	-	-	-	(5,332)
	(6,551)	(1,219)	(1,219)	(20,788)	(29,777)

* Comprises the remaining interest payments to 2023, together with the principal to be repaid in 2023.

Credit risk

Credit risk is mitigated by diversifying the counterparties through whom the Investment Manager conducts investment transactions. The credit standing of all counterparties is reviewed periodically with limits set on amounts due from any one counterparty.

The total credit exposure represents the carrying value of fixed income, cash and receivable balances and totals £36,253,000 (2015: £25,748,000).

Fair values of financial assets and financial liabilities

Financial Liabilities

The Company's 8⅛% Debenture Stock 2023 and Loan Notes are carried at amortised cost (see note 1). The other financial assets and financial liabilities of the Company are carried in the Balance Sheet at an approximate to their fair value. The fair value is the amount at which the asset could be sold or the liability transferred in an orderly transaction between market participants, at the measurement date, other than a forced or liquidation sale.

	At 30 September 2016		At 30 September 2015
	Amortised cost  £'000	Fair value  £'000	Amortised cost  £'000	Fair value  £'000
8⅛% Debenture Stock 2023	(14,950)	(19,470)	(14,943)	(19,275)
4.184% Series A Sterling Unsecured Loan Notes 2036	(29,871)	(32,888)	-	-
3.249% Series B Euro Unsecured Loan Notes 2036	(25,855)	(29,284)	-	-
Total	(70,676)	(81,642)	(14,943)	(19,275)

Quoted market prices have been used to determine the fair value of the Company's Debenture Stock and therefore it would be categorised as Level 1 under the fair value hierarchy. As there is no publicly available price for the Company's Loan Notes, their fair market value has been derived by calculating the relative premium (or discount) of the loan versus the publicly available market price of the reference market instrument and exchange rates. As this price is derived by model, using observable inputs, it would be categorised as Level 2 under the fair value hierarchy.

Valuation of financial instruments

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements. Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant assets as follows:

●	Level 1 - valued using quoted prices unadjusted in active markets for identical assets or liabilities.
●	Level 2 - valued by reference to valuation techniques using observable inputs for the asset or liability other than quoted prices included within Level 1.
●	Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data for the asset or liability.

The tables below set out fair value measurements of financial instruments as at the year end, by the level in the fair value hierarchy into which the fair value measurement is categorised.

Financial assets at fair value through profit or loss at 30 September 2016

	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Equity investments	838,130	48,239	-	886,369
	838,130	48,239	-	886,369

Financial assets at fair value through profit or loss at 30 September 2015

	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Equity investments	687,750	4,319	-	692,069
Fixed interest bearing securities	14,978	-	-	14,978
	702,728	4,319	-	707,047

The valuation techniques used by the Company are explained in the accounting policies note on page 53.

The financial liabilities in the table below are shown at fair value, being the amount at which the liability may be transferred in an orderly transaction between market participants. These liabilities are presented in the Balance Sheet at amortised cost in accordance with IFRS. The costs of early redemption of the Debenture Stock and Loan Notes are set out on page 33. The Debenture Stock is valued by reference to the price prevailing on an active market, so is determined as Level 1. The market values of the Loan Notes are determined by the calculation above (on page 66) using observable inputs, and they are considered as Level 2. The foreign exchange contracts are valued by means of using observable data, being the prevailing exchange rates together with market value of the forward exchange premium/discount values to close out the contracts held by the Company, so are determined as Level 2.

Financial liabilities at fair value through profit or loss at 30 September 2016

	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Debenture Stock	(19,470)	-	-	(19,470)
Loan Notes	-	(62,172)	-	(62,172)
	(19,470)	(62,172)	-	(81,642)

Financial liabilities at fair value through profit or loss at 30 September 2015

	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Debenture Stock	(19,275)	-	-	(19,275)
Foreign exchange contracts	-	(3,181)	-	(3,181)
	(19,275)	(3,181)	-	(22,456)

Level 2 financial assets at fair value through profit or loss at 30 September

	2016 £'000	2015 £'000
Opening fair value	4,319	-
Transfer from Level 1 to Level 2	42,195	4,319
Movement in unrealised appreciation	1,725	-
Total	48,239	4,319

Level 3 financial assets at fair value through profit or loss at 30 September

	2016 £'000	2015  £'000
Opening fair value	-	2,616
Sales - proceeds	-	(137)
Total losses included in gains on investments in the Statement of Comprehensive Income on sold assets	-	(5,032)
Movement in unrealised investment holding gains - reversal of unrealised depreciation upon realisation	-	2,553
Closing fair value	-	-

Capital management policies and procedures

The structure of the Company's capital is described in note 14 and details of the Company's reserves are shown in the Statement of Changes in Equity on page 49.

The Company's capital management objectives are:

●	to ensure that it will be able to continue as a going concern; and
●	to achieve capital growth through a focused portfolio of investments, particularly in companies whose share prices stand at a discount to estimated underlying net asset value, through an appropriate balance of equity capital and debt.

The Board, with the assistance of the Investment Manager, regularly monitors and reviews the broad structure of the Company's capital on an ongoing basis. These reviews include:

●	the level of gearing, which takes account of the Company's position and the Investment Manager's views on the market; and
●	the extent to which revenue in excess of that which is required to be distributed should be retained.

The Company's objectives, policies and processes for managing capital are unchanged from last year.

The Company is subject to externally imposed capital requirements:

a)	as a public company, the Company is required to have a minimum share capital of £50,000; and
b)	in accordance with the provisions of Sections 832 and 833 of the Companies Act 2006, the Company, as an investment company:
	i)	is only able to make a dividend distribution to the extent that the assets of the Company are equal to at least one and a half times its liabilities after the dividend payment has been made; and
	ii)	is required to make a dividend distribution each year such that it does not retain more than 15% of the income that it derives from shares and securities.

These requirements are unchanged since last year and the Company has complied with them at all times.

17. Contingencies, guarantees and financial commitments

At 30 September 2016, the Company had no financial commitments (2015: £nil).

At 30 September 2016, the Company had no contingent liability in respect of any investments carrying an obligation for future subscription or underwriting commitments (2015: £nil).

18.  Related party disclosure

The related party transaction pursuant to the IMA with AVI is set out in the Report of the Directors on page 37. Management fees for the year amounted to £5,038,000 (2015: £5,690,000).

As at the year end, the following amounts were outstanding in respect of management fees: £443,000 (2015: £454,000).

Strone Macpherson is Chairman of Close Brothers Group plc, the ultimate parent of Winterflood Securities Limited which acts as the Company's Corporate Broker and which is entitled to a retainer of £25,000 per annum by the Company. £nil was outstanding at the year end. Commissions earned by Winterflood Securities Limited in managing the Company's buyback programme are offsettable against this retainer. Commissions of £84,000 were earned in the financial year, fully offsetting the retainer.

Fees paid to the Company's Directors are disclosed in the Report on Remuneration Implementation on page 75. At the year end, £nil was outstanding due to Directors (2015: £5,000).

19.  Post balance sheet events

Since the year end, the Company has completed the following transactions in its own shares:

Shares bought back and held in treasury

Date	Number of Ordinary Shares	Cost £'000
7 October 2016	435,000	2,640
14 October 2016	404,000	2,471
21 October 2016	288,000	1,780
28 October 2016	244,500	1,551
4 November 2016	192,500	1,220
	1,564,000	9,662

There are no further post balance sheet transactions that require disclosure or adjustment in the financial statements.

NATIONAL STORAGE MECHANISM

A copy of the Annual Report and Accounts will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/nsm 

 

END

 

 

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