Annual Financial Report

RNS Number : 1841W

British Empire Sec & Gen Tst PLC

15 November 2010

 



BRITISH EMPIRE SECURITIES AND GENERAL TRUST PLC

Results for the full year to 30 September 2010

and availability of Report & Accounts

Objective   

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

Financial Highlights

• Uncertain economic conditions continue to prevail

• Net asset value ('NAV') on a total return basis increases by 14.7%

• NAV outperforms the Benchmark* Index by 0.6%

• Total dividend increased by 3.5%

• At the end of the year liquidity within the portfolio was 20.2%

30 September  2010		30 September 2009	% change
Capital Return
Net asset value per Share	518.28p	459.26p	12.9
Share price (mid market)	465.50p	431.50p	7.9
Total assets less current liabilities	£851.77m	£764.31m	11.4
Net asset value per Share (total return)			14.7
Indices
Morningstar Investment Trust Global Growth Index*	276.02	241.90	14.1
Morgan Stanley Capital International World Index (£ adjusted total return)	2,508.24	2,292.03	9.4
Revenue and Dividends
Income	£19.54m	£20.70m	(5.6)
Earnings per Share	7.94p	7.98p	(0.5)
Ordinary Dividends per Share	7.50p	6.00p	3.5†
Special Dividend per Share	-	1.25p	-
Discount
(difference between share price and net asset value)	10.18%	6.04%	-
Total Expense Ratio (as percentage of average shareholders' funds)
Management, marketing and other expenses	0.73%	0.80%	-
Performance fee	0.02%	0.38%	-
2010 Year's Highs/Lows	High	Low
Net asset value per Share	518.28p	441.07p	-
Share price (mid market)	466.25p	393.75p	-
* The Morningstar Investment Trust Global Growth Index (total return basis), formerly known as Fundamental Data Global Growth Investment Trust Index, is subject to revision and the figures are as at 8 October 2010. † Including the special dividend paid in 2009.
Buy-backs
During the year the Company purchased 77,703 units of Equities Index Unsecured Loan Stock 2013 for cancellation for £176,847. The Company did not purchase any of its Ordinary Shares or any of its Debenture Stock for cancellation during the year.

Chairman's Statement

The report covers the period from 1 October 2009 to 30 September 2010. During that period the Company's Net Asset Value (NAV) on a total return basis was up 14.7%, and the share price was up 9.8%. The Morningstar Investment Trust Global Growth Index, which is the benchmark, was up 14.1% and MSCI World Index up 9.4%. Your manager has again outperformed the benchmark.

The performance of the Company's Net Asset Value against the benchmark is particularly pleasing because, at the half-year stage, the Company had under-performed the benchmark. As I stated in my report at the time, the stock-market rally was being led by cyclical, highly geared stocks, while the Company remained focused on companies with little or no gearing, relatively low volatility and fundamental value. This strategy helped the second half performance.

Throughout the period under review, many central banks have continued with exceptionally easy monetary policies with interest rates at unprecedentedly low levels. These factors combined with continuing quantitative easing have resulted in a sharp fall in many government bond yields.

The Company's shares have traded over the past year at a discount to net asset value of between 5% and 11% - a narrower range than the previous year. We continue to monitor carefully the level of both premium and discount and will, if necessary and appropriate, take steps to limit the volatility of any discount through measured buybacks of shares. Therefore, the Board is again seeking to renew its powers to buy back the Company's shares.

The income from Fixed Income Investments has declined by some 11.6% during 2009/2010 as interest rates reduced further. Underlying dividend income has fallen by 0.7% with the result that gross revenues of £19.54m in 2009/2010 are slightly lower than the £20.70m achieved in 2008/2009. The base Investment Management fee is higher, however, because of the change in the value of the portfolio. Net revenue per share is down by 0.5% while earnings per share amount to 7.94p (2009 7.98p). The tax charge is significantly lower primarily due to the recent change in the tax treatment of overseas dividends.

The Company has this year again benefited from a VAT repayment. This amounted to £396,498, which compares to last year's repayment of £960,163. The VAT repayment amounts to 0.25p per share in total, of which 0.14p is attributable to income.

We are recommending a final dividend of 5.7p (5.45p in 2009 including the special dividend) which, together with the interim dividend of 1.80p (1.80p in 2009), brings the total dividends for the year to 7.5p (7.25p in 2009), an increase of 3.5%. We continue to caution that dividend progress in the future may be more difficult than in recent years, given the expected continuing challenges in the world economy and the low interest rate environment.

During what has been a turbulent year, liquidity levels have moved between a low of 14.5% (in September 2009) and about 20.2% at the year end.

The Board decided to reduce temporarily the Company's exposure to the Euro after a period of sterling weakness, and profits from this position, which has now been closed off, amounted to £1.95m.

At the Nomination Committee, the Board has again completed a formal evaluation of the Directors, the Chairman, the Board itself and its Committees. John May retires by rotation at this year's Annual General Meeting and will offer himself for re-election. The Nomination Committee has considered again his qualifications, performance and contribution to the Board and its Committees and confirms that he continues to be effective and demonstrates commitment to his role and the Board recommends to the shareholders that he be re-elected.

The Board is aware of the sensitivity surrounding Directors' remuneration in the current climate but there has been no change in fee levels since 2006. Therefore the Board decided to commission an independent review of the fee levels. As a consequence of the review, Directors' fees have been increased in aggregate by £18,360. This figure is considerably lower than the figure recommended by the independent consultant. The details of the increase are set out in the Directors' Remuneration Report on page 53.

Since the year-end, until 31 October, 2010, the Net Asset Value has risen from 518.28p to 519.31p, and the share price from 465.50p to 482.50p. This represents some under-performance against the benchmark, but over a very short period.

Given the easy monetary conditions referred to, many prudent savers are finding their incomes reduced as they receive much lower returns on deposits whereas borrowers are benefitting from unprecedentedly low borrowing costs. Signs are also emerging of bubbles in certain asset classes globally as investors seek to deploy resources away from nil or low yield cash deposits. There is a risk that an extended period of easy monetary conditions such as we are presented with could distort significantly the efficient allocation of long term capital.

Quantitative easing and these exceptionally low levels of interest rates are essentially an experiment; the path to unravelling the measures currently being deployed is unclear. Central banks are still implementing policies for what are emergency conditions and the return to a more normal interest rate environment may prove uncomfortable for some markets and asset classes. It is still not clear that a broadly based, fundamentally sound recovery is assured in many of the mature Western economies and the effects of the planned reduction in government expenditure in the UK and other countries are not yet fully assessable. However, the private sector will continue to need to be encouraged at all levels to invest, expand and create employment over the years ahead and in principle this should prove good for equities in many markets in the medium term.

Against this continuing difficult background, your Board and its Investment Manager have remained relatively cautious by, to repeat a phrase used last year, "sticking to their knitting". Your Company's portfolio has a good spread of high yielding assets (many at a discount) with a range of underlying currencies. The portfolio also has significant liquidity which allows flexibility going forward.

Strone Macpherson

Chairman

15 November 2010

Investment Manager's Report

During the year, British Empire's NAV (on a total return basis) increased 14.7% compared with an increase of 14.1% in the Company's benchmark (Morningstar Investment Trust Global Growth Index) and 9.4% in the MSCI World Index.

Overview

British Empire has performed well in an equity market still recovering from the credit crisis. At the Interim stage, the Company's NAV was 5.6% behind the benchmark and we commented that many of our large holdings had underperformed the recovery rally. However, we felt comfortable with them as they held good quality assets and were modestly valued. It is gratifying, therefore, to report that in the six months since the Interim Report, British Empire's NAV has risen 5.6% while its benchmark was down 0.5%. We ended the year 0.6% ahead of the benchmark index. The weighted average discount on the underlying portfolio stands at 23%, compared with 22% one year ago. We believe that there is still good value in the underlying portfolio. In addition, Central Banks in the developed world generally remain committed to reflationary policies which should be positive for asset prices albeit with an increasing risk of monetary policy mistakes.

Emergency measures initiated by Governments and Central Banks during the credit crisis in 2008 are still with us and look set to continue for some time. Ultra low rates and quantitative easing (QE) have helped to bring down yields on bonds. This in turn has made other asset classes more attractive relative to cash and fixed income and provided cheap funding for so called carry trades. In short, Central Banks are encouraging speculation and discouraging conservative saving strategies in an attempt to get both the market and the economy moving again. While we are sceptical as to the economic benefits of QE, the positive effects on commodity markets, bond markets and equity markets are apparent.

Japan offers an interesting historical parallel: it was 1999 when the authorities there first began a zero interest rate policy and 2001 when QE commenced. Ten years on, the Bank of Japan has cut overnight interest rates to less than 0.1% and intend to purchase a further £40 bn of bonds. These policies appear to be much easier to start than to stop. The Japanese market, meanwhile, is well below the level where it stood in 1999 despite occasional strong rallies. The return to QE by the Japanese as well as the prospects for further easing in the US and the UK has inspired a further rally in equity markets. This is concerning as it is a rally based on cheap money rather than on a fundamentally strong economy. There is a real possibility that the earnings level of companies may not be sufficient to support the current level equity market. In the meantime, Central Banks competing to keep their economies competitive have introduced an unwelcome measure of currency volatility to the valuation of shares.

As markets have risen, capital preservation has become more important and we have sold certain securities into this rise. We have sought paying companies as yield may become an increasingly important component of return. Our net liquidity position has increased from 14.1% at the Interim stage to 20.2% at the year end. We have increased the duration of our bond holdings in the UK and the US both to increase the income received and to take advantage of what is still perceived to be a positive environment for Government Bond returns in a deflationary environment.

We said last year that artificially low rates would likely create rallies as savers were forced out of cash. The liquidity created in the U.S. will naturally flow to whichever asset is perceived to offer the best returns. Emerging markets, less burdened by debt and offering greater growth potential than developed markets have benefitted. We are positive on emerging markets and will invest there if we can find companies on discounts to NAV with strong balance sheets and good businesses. We have investments in holding companies in Singapore, Hong Kong, South Korea, India and Turkey. Gold is another beneficiary of the debasement of currencies through QE and we have some exposure to gold mining equities.

Portfolio Review

The weighted average discount on the portfolio is now 23% versus 22% one year ago.

European Investment Holding Companies (32.6%)

Discounts on the European holding companies we own have widened slightly to 33% from 32% last year. In general, share price performance over the year has been lacklustre. Groupe Bruxelles Lambert (GBL) (4.7%) for example has fallen 1.9% over the year whilst the share price of Sofina (3.9%) has increased by only 2%. Discounts however, remain attractive and at the wider end of the historic range, which suggests this sector of the portfolio could benefit from discount narrowing in the future.

One positive exception has been Exor SpA Preference shares (3.4%) where the share price has increased by 114% over the period. Exor's main asset is its 30% stake in Fiat which makes up more than 50% of the value of the company. The discount on Exor SpA preference shares has narrowed to 50% from 75% a year ago as the Agnelli family has concentrated their buyback facility on the Preference shares and investor interest has been piqued by the proposed restructuring of Fiat.

Groupe Bruxelles Lambert is the listed holding company of Albert Frère that owns stakes in several large listed companies including Total, GDF Suez, Imerys and Lafarge. The poor share price performance of Lafarge which was forced to strengthen its balance sheet with a rights issue during 2009 has held back returns. Groupe Bruxelles Lambert traded on a 24% discount to its NAV as at 30 September 2010.

Orkla (3.2%) is a Norwegian conglomerate whose main business areas are Nordic branded consumer goods and the manufacture of aluminium products used across many industries. In recent years, the company has expanded into solar energy where it has had limited success. A streamlining of the business looks likely following the appointment of a new CEO and we expect this to narrow the discount to NAV which stands at 25%. The company has a strong balance sheet and the stable nature of the brands business allows it to pay an attractive dividend.

Asian Investment Holding Companies (18.4%)

Asian holding companies were the largest contributors to overall performance over the period. Stock markets in the region have benefitted from very strong returns as investors were attracted to the sustainable growth rates available in many Asian economies and the absence of the debt overhang plaguing many developed markets. Overall discounts on the Asian holding companies are 32% compared to 31% a year ago.

Jardine Matheson (5.5%) and Jardine Strategic (6.7%) combined are British Empire's largest investment. The performance of the underlying businesses continues to be strong. Dairy Farm and Jardine Cycle & Carriage continue do well on the back of the Asian domestic growth story, while Hong Kong Land has done well from the strength of the Hong Kong property market. The discount to NAV has narrowed somewhat over the period but we continue to believe this is an attractive way to gain exposure to the Asian markets while also offering the potential for a group restructuring which could lead to a narrowing of the discount at some point in the future.

Doosan Corporation (2.6%) is a South Korean holding company whose main asset is a 41% holding in Doosan Heavy Industries & Construction. The value of Doosan Heavy makes up over 90% of the market capitalisation of the holding company, while the value of other operating businesses and assets owned give it a discount to NAV of over 40%. Doosan Heavy is winning large overseas power plant orders and is a beneficiary of growing demand in the Middle East and other emerging economies for power plants.

Investment Trusts and Funds (3.7%)

Investment Trusts have become a smaller part of our portfolio as we have found it more difficult than in other areas to find high quality assets trading on wide discounts.

Electra (1.4%)

Electra is our largest investment trust holding. The company trades on a discount of over 20% to its last announced NAV. The assets are not highly geared by private equity standards and realisations may be expected to boost NAV further if the market continues to recover. Electra's conservative long term approach to investing has proven to be successful in the face of difficult market conditions.

Japan (4.4%)

Japan continues to offer significant value but in the absence of meaningful political and economic reform the opportunity to make investment returns has been elusive. We have been reducing our exposure to Japan opportunistically on strength as we see better investments in other markets.

Resources (8.7%)

Our resource exposure is made up of gold mining shares and oil and gas companies. With the ultimate effects of QE unknown, gold bullion may continue to attract attention as a hedge against currency instability.

Detour Gold (2.0%)

Detour Gold is developing the Detour Lake gold project in northeastern Ontario. The Detour Lake deposit is considered to be Canada's largest undeveloped gold reserve with 11.4m ounces. The value of the company should increase as it proceeds towards production in 2013.

Mitra Energy (0.7%)

Mitra Energy is our sole unlisted holding. Mitra is an independent oil and gas exploration company with assets in Southeast Asia. The company has been acquiring large working interests in high impact exploration plays and has attracted a high quality shareholder base. It is anticipated that the exit from the position may ultimately be through a listing of the shares or a takeover by a larger energy company.

Other (8.1%)

Vivendi (7.1%) is a French telecommunications and media conglomerate that trades on a discount of over 25% to the sum-of-its-parts. Vivendi owns stakes in SFR, Canal Plus, Maroc Telecom, Activision and NBC Universal. The minority position in NBC is in the process of being sold and the proceeds may be used to buy in the minorities of SFR and Canal Plus. This would serve to simplify the group structure and improve earnings. Vivendi trades at a PER of 8x and has a dividend yield of over 7%.

Net Liquidity (20.2%)

Our liquidity position is held mainly in government bonds in the UK and the US.

Outlook

We are still able to find interesting investment opportunities on wide discounts even after the sharp market rally. Reflationary policies from developed market Central Banks should create an ongoing positive environment for asset prices in the short term. What concerns us is that the challenges to economic growth are in many cases structural issues that require difficult and painful reform and are not going to be solved by QE and low interest rates. Central Bank reflationary policies may turn out to have harmful side effects that outweigh their benefits. The beneficiaries of low interest rates and QE are banks and other financial institutions but the average person will be hurt by low returns on savings, a stagnant job market and higher inflation. It is hard to build sustainable prosperity on this basis. As long as reflationary policies are seen to be working, however, the equity markets may continue to rise but we foresee periodic sharp corrections as market participants realise that developed economies remain stubbornly weak. Overall, the equity markets may not make much progress. In this sort of environment, the equities that we find appealing are those with strong balance sheets, high dividend yields and high discounts to NAV. It will pay to find those companies that have their own catalysts in terms of restructuring potential and unrecognised value. We are trying to find a mix of assets to allow us to ride out the as yet uncertain effects of this experiment with monetary easing.

John Pennink

Asset Value Investors Limited

15 November 2010

Consolidated Statement of Comprehensive Income

of the Group for the year ended 30 September 2010

	2010	2010		2009	2009
	Revenue	Capital	2010	Revenue	Capital	2009
	return	return	Total	return	return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Income
Investment income  (note 2)	19,535	-	19,535	20,702	-	20,702
Gains on investments held at fair value	-	97,769	97,769	-	96,382	96,382
Gains on forward currency contracts held at fair value	-	1,952	1,952	-	7,897	7,897
Losses on Equities Index Stock 2013  held at fair value	-	(1,635)	(1,635)	-	(380)	(380)
Loss on buyback of 10 3/8 per cent Debenture Stock 2011	-	-	-	-	(5)	(5)
Exchange losses on currency balances	-	(2,519)	(2,519)	-	(801)	(801)
	19,535	95,567	115,102	20,702	103,093	123,795
Expenses  (note 3)
Investment  management fee	(2,187)	(2,187)	(4,374)	(1,902)	(1,902)	(3,804)
Performance fee	-	(170)	(170)	-	(2,313)	(2,313)
Back VAT on management and performance fees	231	165	396	837	123	960
Other expenses (including irrecoverable VAT)	(1,114)	(1)	(1,115)	(1,061)	(5)	(1,066)
Profit before finance costs and tax	16,465	93,374	109,839	18,576	98,996	117,572
Finance costs (note 4)	(2,338)	(7)	(2,345)	(2,431)	(7)	(2,438)
Profit before taxation	14,127	93,367	107,494	16,145	98,989	115,134
Taxation (note 5)	(1,415)	8	(1,407)	(3,371)	1,254	(2,117)
Profit for the year	12,712	93,375	106,087	12,774	100,243	113,017
Earnings per Ordinary Share (note 6)	7.94p	58.33p	66.27p	7.98p	62.62p	70.60p

The Company did not have any income or expense that was not included in profit for the year. Accordingly, the "Profit for the year" is also the "Total comprehensive income for the year", as defined in IAS 1 (revised) and no separate Statement of Comprehensive Income has been presented.

The total column of this statement is the profit and loss account of the Group. The revenue return and capital return columns are supplementary to this and are prepared under the guidance published by the Association of Investment Companies.

All items in the above statement derive from continuing operations.

All income is attributable to the equity holders of British Empire Securities and General Trust plc. There are no minority interests.

Consolidated and Company Statements of Changes in Equity

for the year ended 30 September 2010

	Ordinary	Capital
	share	redemption	Share	Capital	Merger	Revenue
	capital	reserve	premium	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Group
For the year ended 30 September 2009
Balance as at 30 September 2008	16,008	2,927	28,078	522,684	41,406	22,753	633,856
Total comprehensive income for the year	-	-	-	100,243	-	12,774	113,017
Ordinary dividends paid	-	-	-	-	-	(9,284)	(9,284)
Special dividend paid	-	-	-	-	-	(2,401)	(2,401)
Balance as at 30 September 2009	16,008	2,927	28,078	622,927	41,406	23,842	735,188

For the year ended 30 September 2010
Balance as at 30 September 2009	16,008	2,927	28,078	622,927	41,406	23,842	735,188
Total comprehensive income for the year	-	-	-	93,375	-	12,712	106,087
Ordinary dividends paid	-	-	-	-	-	(9,604)	(9,604)
Special dividend paid	-	-	-	-	-	(2,001)	(2,001)
Balance as at 30 September 2010	16,008	2,927	28,078	716,302	41,406	24,949	829,670

Company
For the year ended 30 September 2009
Balance as at 30 September 2008	16,008	2,927	28,078	524,461	41,406	20,976	633,856
Total comprehensive income for the year	-	-	-	100,240	-	12,777	113,017
Ordinary dividend paid	-	-	-	-	-	(9,284)	(9,284)
Special dividend paid	-	-	-	-	-	(2,401)	(2,401)
Balance as at 30 September 2009	16,008	2,927	28,078	624,701	41,406	22,068	735,188

For the year ended 30 September 2010
Balance as at 30 September 2009	16,008	2,927	28,078	624,701	41,406	22,068	735,188
Total comprehensive income for the year	-	-	-	93,372	-	12,715	106,087
Ordinary dividends paid	-	-	-	-	-	(9,604)	(9,604)
Special dividend paid	-	-	-	-	-	(2,001)	(2,001)
Balance as at 30 September 2010	16,008	2,927	28,078	718,073	41,406	23,178	829,670

Consolidated and Company Balance Sheets

as at 30 September 2010

	Company		Group
	2010	2009	2010	2009
	£'000	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss	855,904	757,383	853,883	755,359
Current assets
Investments	-	-	-	-
Other receivables	2,686	5,161	2,687	5,163
Cash and cash equivalents	6,018	7,235	6,020	7,237
	8,704	12,396	8,707	12,400
Total assets	864,608	769,779	862,590	767,759
Current liabilities
Other payables	(4,356)	(5,466)	(2,338)	(3,446)
10 3/8 per cent Debenture Stock 2011	(8,484)	-	(8,484)	-
Total assets less current liabilities	851,768	764,313	851,768	764,313
Non-current liabilities
10 3/8 per cent Debenture Stock 2011	-	(8,484)	-	(8,484)
8 1/8 per cent Debenture Stock 2023	(14,907)	(14,900)	(14,907)	(14,900)
Equities Index Stock 2013 held at fair value through profit or loss	(7,144)	(5,686)	(7,144)	(5,686)
Provision for deferred tax	(47)	(55)	(47)	(55)
Net assets	829,670	735,188	829,670	735,188
Equity attributable to equity Shareholders
Ordinary share capital	16,008	16,008	16,008	16,008
Capital redemption reserve	2,927	2,927	2,927	2,927
Share premium	28,078	28,078	28,078	28,078
Capital reserve	718,073	624,701	716,302	622,927
Merger reserve	41,406	41,406	41,406	41,406
Revenue reserve	23,178	22,068	24,949	23,842
Total equity (note 7)	829,670	735,188	829,670	735,188
Net asset value per Ordinary Share - basic (note 7)	518.28p	459.26p	518.28p	459.26p
Number of shares in issue	160,080,089	160,080,089	160,080,089	160,080,089

Consolidated and Company Cash Flow Statements

for the year ended 30 September 2010

	Company		Group
	2010	2009	2010	2009
	£'000	£'000	£'000	£'000
Net cash inflow from operating activities
Profit before taxation	107,494	115,136	107,494	115,134
Losses on Equities Index Stock 2013 held at fair value	1,635	380	1,635	380
Loss on buyback of 10 3/8 per cent Debenture Stock 2011	-	5	-	5
Realised exchange losses on currency balances	2,519	801	2,519	801
Gains on investments held at fair value through profit or loss	(97,766)	(96,379)	(97,769)	(96,382)
Purchases of investments	(855,586)	(289,003)	(855,586)	(289,003)
Sales of investments	856,931	290,013	856,931	290,013
Decrease in other receivables	1,694	1,576	1,694	1,576
(Decrease)/increase in creditors	(2,139)	2,202	(2,136)	2,203
Taxation	(1,705)	(8,264)	(1,705)	(8,262)
Amortisation of Debenture issue expenses	7	7	7	7
Decrease in value of investments - current assets	-	-	-	3
Net cash inflow from operating activities	13,084	16,474	13,084	16,475
Financing activities
Dividends paid	(11,605)	(11,685)	(11,605)	(11,685)
Buyback of Equities Index Stock 2013	(177)	(97)	(177)	(97)
Buyback of 10 3/8 per cent Debenture Stock 2011	-	(36)	-	(36)
Cash outflow from financing activities	(11,782)	(11,818)	(11,782)	(11,818)
Increase in cash and cash equivalents	1,302	4,656	1,302	4,657
Exchange movements	(2,519)	(801)	(2,519)	(801)
Change in cash and cash equivalents	(1,217)	3,855	(1,217)	3,856
Cash and cash equivalents at beginning of year	7,235	3,380	7,237	3,381
Cash and cash equivalents at end of year	6,018	7,235	6,020	7,237

Notes

1. Accounting policies

The financial statements of the Group and the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS").

These comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the International Accounting Standards Committee ("IASC") that remain in effect, to the extent that IFRS have been adopted by the European Union.

The functional currency of the Group is pounds sterling because this is the currency of the primary economic environment in which the Group operates. The financial statements are also presented in pounds sterling.

(a) Basis of preparation

The principal accounting policies adopted are set out below. Where presentational guidance set out in the Statement of Recommended Practice ("the SORP") for investment trusts issued by the Association of Investment Companies ("the AIC") in January 2009 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

(b) Adoption of new and revised standards

At the date of authorisation of these financial statements, the following Standards which have not been applied in these financial statements were in issue but were not yet effective (and in some cases had not yet been adopted by the EU):

International Accounting Standards (IAS/IFRS)		Effective date
IAS 24	Related Party Disclosures (revised 2009)	1 January 2011
IFRS 1	Additional Exemptions for First-time Adopters	1 January 2010
IFRS 1	Limited Exemption from Comparative IFRS 7 disclosures	1 July 2010
IFRS 2	Amendments to IFRS 2 - Group cash settled share-based Payment transactions	1 January 2009
IFRS 9	Financial Instruments: Classification & Measurement	1 January 2013

(c) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiary) made up to 30 September each year. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

As permitted by Section 408 of the Companies Act 2006 no Company Statement of Comprehensive Income has been prepared.

(d) Presentation of Statement of Comprehensive Income

In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. In accordance with the Company's status as a UK investment company under Section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. Additionally, net revenue is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 1159 of the Corporation Tax Act 2010 (formerly Section 842 of the Income and Corporation Taxes Act 1988).

(e) Use of estimates

The preparation of financial statements requires the Group to make estimates and assumptions that affect items reported in the balance sheet and Consolidated Statement of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial statements. Although these estimates are based on management's best knowledge of current facts, circumstances and, to some extent, future events and actions, the Company's actual results may ultimately differ from those estimates, possibly significantly.

(f) Income

Dividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis. Where an ex-dividend date is not available, dividends received on or before the year end are treated as revenue for the year. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that discounts estimated future cash receipts through the expected life of the financial asset to the asset's net carrying amount. Interest receivable from cash and short-term deposits is accrued to the end of the year.

 (g) Expenses

All expenses and interest payable are accounted for on an accruals basis. Expenses have been charged to revenue except as follows:

• The base management fee has been allocated 50% to revenue and 50% to capital within the Consolidated Statement of Comprehensive Income.

The performance element of the management fee is charged 100% to capital within the Consolidated Statement of Comprehensive Income;

• Expenses which are incidental to the purchase or sale of an investment are recognised within the Consolidated Statement of Comprehensive Income as a capital item;

• Expenses are presented as capital where a connection with the maintenance or enhancement of the value of investments can be demonstrated.

(h) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that were enacted or substantially enacted by the balance sheet date.

In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Consolidated Statement of Comprehensive Income is the "marginal basis". Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Consolidated Statement of Comprehensive Income, then no tax relief is transferred to the capital return column.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is charged or credited in the Consolidated Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with within equity.

Investment trusts which have approval as such under Section 1158 of the Corporation Tax Act 2010 (formerly section 842 of the Income and Corporation Taxes Act 1988) are not liable for taxation on capital gains.

(i) Investments held at fair value through profit or loss

When a purchase or sale is made under a contract, the terms of which require delivery within the timeframe of the relevant market, the investments concerned are recognised or derecognised on the trade date.

In accordance with IFRS recognition and measurement principles, all the Group's investments are classified as investments designated at fair value through profit or loss and are described in these financial statements as investments held at fair value.

All investments are designated as held at fair value upon initial recognition and are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.

Fair values for unquoted investments, 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 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.

Investments held by the subsidiary undertaking are classified as "held for trading" and are valued at fair value in accordance with the policies above for listed and unlisted holdings. Profits or losses on investments "held for trading" are taken to revenue.

Foreign exchange gains and losses for fair value through profit or loss on investments are included within the changes in their fair value.

(j) Movements in fair value

Changes in fair value of investments not designated as held for trading are recognised in the Consolidated Statement of Comprehensive Income as a capital item. On disposal, realised gains and losses are also recognised in the Consolidated Statement of Comprehensive Income as capital items.

(k) Cash and cash equivalents

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

(l) Dividends payable

Interim and final dividends are recognised in the period in which they are paid.

(m) Foreign currency translation

Transactions in currencies other than sterling are recorded at the rates of exchange prevailing on the date of the transaction. Monetary items that are fair valued and are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income.

(n) Equities Index Unsecured Loan Stock 2013

In accordance with IFRS recognition and measurement principles, the Equities Index Unsecured Loan Stock 2013 is classified as a financial liability designated at fair value through profit or loss and is valued at the closing offer price. Changes in its fair value are recognised in the Consolidated Statement of Comprehensive Income as a capital item. On cancellation, gains and losses are also recognised through the Consolidated Statement of Comprehensive Income as capital items. Interest paid on the Index Stock is charged to the Consolidated Statement of Comprehensive Income as a revenue item.

(o) Finance costs

Finance costs are accounted for on an accruals basis and are recognised through the Consolidated Statement of Comprehensive Income as revenue items. This does not comply with the Statement of Recommended Practice for Financial Statements of Investment Trust Companies, which would require the finance costs of the Debenture Stocks and the Index Stock to be allocated between revenue and capital in the same proportions as the Management Fee. However, the Directors consider that the treatment adopted, which is consistent with previous years, is the most appropriate given the liquidity of the Company and the nature of the Index Stock.

(p) Debenture pricing

The 81/8 per cent Debenture Stock 2023 and 103/8 per cent Debenture Stock 2011 are valued at amortised cost under the effective interest method and secured by a floating charge over all assets of the Company. Costs in relation to arranging the debt finance of the 81/8 per cent Debenture Stock 2023 have been capitalised and are amortised over the term of the finance.

(q) Capital Reserve

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

• Gains and losses on the disposal of investments;

• Gains and losses on Equities Index Stock 2013;

• Amortisation of issue expenses;

• Exchange difference of a capital nature;

• Expenses, together with the related taxation effect, allocated to this reserve in accordance with the above policies: and

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.

(r) Segmental reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being the Investment business. Consequently, no business segmental analysis is provided.

2. Income

	2010	2009
	£'000	£'000
Income from investments
Listed investments	19,520	19,964
Other income
Deposit interest	15	741
Loss from dealing activities of subsidiary	-	(3)
	15	738
Total income	19,535	20,702
Income from investments:
Equity securities	17,094	17,219
Fixed interest securities	2,426	2,745
	19,520	19,964
Total income comprises:
Dividends	17,094	17,219
Interest	2,441	3,486
Other income	-	(3)
	19,535	20,702

3. Management fee and other expenses

	2010	2010		2009	2009
	Revenue	Capital	2010	Revenue	Capital	2009
	return	return	Total	return	return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Management fee	2,187	2,187	4,374	1,902	1,902	3,804
Performance fee	-	170	170	-	2,313	2,313
Back VAT on management fee	(231)	(165)	(396)	(837)	(123)	(960)
	1,956	2,192	4,148	1,065	4,092	5,157
Other expenses:
Directors' emoluments - fees	102	-	102	111	-	111
Auditor's remuneration: - audit	19	-	19	31	-	31
- taxation	3	-	3	15	-	15
- other services to the Group	12	-	12	13	-	13
Marketing costs	202	-	202	211	-	211
Printing and postage costs	73	-	73	62	-	62
Registrar fees	92	-	92	81	-	81
Sub-custodian fees	257	-	257	188	-	188
Other expenses (including irrecoverable VAT)	354	1	355	349	5	354
	1,114	1	1,115	1,061	5	1,066

For the year ended 30 September 2010, the fee calculated in accordance with the Investment Management Agreement amounted to 0.6195%. Any out-performance in excess of the cap of 1% or under-performance in any year will be carried forward for use in the next three years fee calculations on a first-in first-out basis. There is no out-performance or under-performance carried forward for the period ending 30 September 2011.

Brief details of the Investment Management Agreement and fees are contained in the Report of the Directors.

4. Finance costs

	2010	2010		2009	2009
	Revenue	Capital	2010	Revenue	Capital	2009
	return	return	Total	return	return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Bank overdraft interest	10	-	10	85	-	85
Interest on other loans	2,328	-	2,328	2,346	-	2,346
Amortisation of Debenture issue expenses	-	7	7	-	7	7
	2,338	7	2,345	2,431	7	2,438

5. Taxation 

	2010	2010		2009	2009
	Revenue	Capital	2010	Revenue	Capital	2009
	return	return	Total	return	return	Total
(a) Analysis of charge in year
Corporation tax	-	-	-	3,955	(1,246)	2,709
Double taxation relief	-	-	-	(1,343)	-	(1,343)
	-	-	-	2,612	(1,246)	1,366
Foreign withholding tax	2,133	-	2,133	1,996	-	1,996
Overseas tax reclaimable	(718)	-	(718)	(620)	-	(620)
Prior year adjustment	-	-	-	(370)	-	(370)
Total current tax for period	1,415	-	1,415	3,618	(1,246)	2,372
Deferred tax	-	(8)	(8)	(247)	(8)	(255)
Total deferred tax for year	-	(8)	(8)	(247)	(8)	(255)
Total tax for year	1,415	(8)	1,407	3,371	(1,254)	2,117

(b) Factors affecting current tax charge for the period
The tax assessed for the period is the standard rate of corporation tax in the UK for a large company 28% (2009: 28%).
	2010	2009
	£'000	£'000
Profit before tax	107,494	115,134
Corporation tax at 28% (2009: 28%)	30,098	32,237
Effects of:
Capital gains not subject to tax	(27,216)	(28,972)
Revaluation of Equities Index Stock 2013	8	8
Non-taxable UK dividends	(195)	(458)
Non-taxable overseas dividends	(4,591)	(321)
Overseas tax suffered	1,415	-
Non allowable expenses charged to capital	-	1
Overseas dividends taxable on receipt	-	247
Movement in unutilised management expenses	1,896	-
Prior year adjustment	-	(370)
Current tax charge for the period	1,415	2,372

6. Earnings per Ordinary Share

	2010	2010	2010	2009	2009	2009
	Revenue	Capital	Total	Revenue	Capital	Total
Basic	7.94p	58.33p	66.27p	7.98p	62.62p	70.60p

The total basic earnings per Ordinary Share is based on Group net profit for the financial year of £106,087,000 (2009: profit £113,017,000) and on 160,080,089 (2009: 160,080,089) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

The total basic earnings per Ordinary Share figures detailed above can be further analysed between revenue and capital, as below.

The basic revenue earnings per Ordinary Share is based on Group revenue after taxation for the financial year of £12,712,000 (2009: £12,774,000) and on 160,080,089 (2009: 160,080,089) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

The basic capital earnings per Ordinary Share is based on Group net profit for the financial year of £93,375,000 (2009: profit £100,243,000) and on 160,080,089 (2009: 160,080,089) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

7. 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 Company		Net asset value per Share attributable Group
	2010	2009	2010	2009
	p	p	p	p
Ordinary Shares (basic)	518.28	459.26	518.28	459.26
	Net asset value attributable Company		Net asset value attributable Group
	2010	2009	2010	2009
	£'000	£'000	£'000	£'000
Ordinary Shares (basic)	829,670	735,188	829,670	735,188
The movement during the year of the Group assets attributable to the Ordinary Shares were as follows:
			2010	2009
			Ordinary	Ordinary
			Shares	Shares
			(basic)	(basic)
			£'000	£'000
Total net assets attributable at beginning of year			735,188	633,856
Total comprehensive income for the year			106,087	113,017
Dividends appropriated in the year			(11,605)	(11,685)
Net assets attributable at end of year			829,670	735,188

Basic net asset value per Ordinary Share is based on net assets and on 160,080,089 (2009: 160,080,089) Ordinary Shares being the number of Ordinary Shares in issue at the year end.

At the year end the net asset value per Share adjusted to include the Debenture Stocks at market value rather than par was 514.56p (2009: 455.16p).

8. Financial instruments and capital disclosures

Risk management policies and procedures

The investment objective of the Group 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 Group's financial instruments comprise equity and fixed interest investments, cash balances and borrowings. The Group 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.

The Group may also enter into derivative transactions which comprise forward foreign exchange contracts (the purpose of which is to manage currency risk arising from the Group's investing activities) and quoted options on indices appropriate to sections of the portfolio (the purpose of which is to provide protection against falls in the capital values of the holdings). The Group has used derivatives during the current financial year as part of its investment strategy.

The value of the Group's assets and the total return earned by the Company's shareholders can be significantly affected by foreign exchange rate movements as some of the Group's assets are denominated in currencies other than sterling, the currency in which the Company's accounts are prepared. It is not the Group's usual policy to hedge this risk. Income denominated in foreign currencies is converted to sterling upon receipt.

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 in the event that the debt is repaid before maturity.

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 two series of debentures issued by the Company both carry fixed rates of interest and were issued as a planned level of gearing. These debenture stocks are carried in the Company's balance sheet at amortised cost rather than at fair value. Hence movement in interest rates will not affect equity but may have an impact on the Company's share price and discount/premium which is not likely to be material.

The interest liability of the Index Stock moves in accordance with movements in the income returns of the FTSE All-Share Index. This exposure may be reduced by investing in non-current assets expected to perform in line with the FTSE All-Share Index.

Market price risk

The management of market price risk is part of the fund management process and is typical of equity investment. 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.

Liquidity risk

The Company's assets mainly comprise readily realisable securities which can be easily sold to meet funding commitments if necessary. Unlisted investments 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.

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 broker. The total credit exposure of the Group at the year end as shown on the Balance Sheet was £8,707,000 (2009: £12,400,000).

Fair values of financial assets and financial liabilities

Except for the Group's Debenture Stocks measured at amortised cost as shown below, the financial assets and financial liabilities of the Group, are either carried in the balance sheet at their fair value (investments and Equities Index Unsecured Loan Stock 2013), or the balance sheet amount is a reasonable approximation of fair value (due from brokers, dividends receivable, accrued income, cash at bank and due to brokers).

	2010		2009
	Book value	Fair value	Book value	Fair value
	£'000	£'000	£'000	£'000
103/8 per cent Debenture Stock 2011	(8,484)	(9,044)	(8,484)	(9,734)
81/8 per cent Debenture Stock 2023	(14,907)	(20,310)	(14,900)	(20,218)

Market values have been used to determine the fair value of the Group's Debenture Stocks.

The fair value of the Group's unquoted investments is measured by the Directors using valuation methodologies in accordance with International Private Equity and Venture Capital Valuation Guidelines.

Capital management policies and procedures

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 Group's capital on an ongoing basis. These reviews include:

• the level of gearing, which takes account of the Group'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 Group's objectives, policies and processes for managing capital are unchanged from last year.

The Group is subject to externally imposed capital requirements:

• as a public company, the Company has a minimum share capital of £50,000; and

• in order to be able to pay dividends out of profits available for distribution, the Company has to be able to meet one of the two capital restriction tests imposed on investment companies by company law.

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

9. Contingencies, guarantees and financial commitments

In June 2007 the European Court of Justice ruled that investment management fees should be exempt from VAT, and in early November 2007 HM Revenue & Customs decided not to contest that ruling. The Board is taking steps to reclaim such back VAT on investment management fees as it can and has recovered £3,423,600 up to the date of this report. For the current period to 30 September 2010 £396,498 has been recovered and shown within these financial statements. This has been allocated £231,405 as revenue and £165,093 as capital within the Consolidated Statement of Comprehensive Income in line with VAT previously written-off on investment management and performance fees previously charged.

While most of the Back VAT has now been recovered, the Company will continue to examine methods to recover further Back VAT, and interest, but does not anticipate any further significant recovery in the near term.

At 30 September 2010 the Group had no financial commitments (2009: £12,361,000).

At 30 September 2010 the Group had no contingent liability in respect of any investments carrying an obligation for future subscription or underwriting commitments (2009: £nil).

10. Related party disclosure

The related party transaction with Asset Value Investors Limited is set out in the Directors Report of the Company's Annual Report & Accounts for the year ended 30 September 2010. Management fees for the year amounted to £4,374,000 (2009: £3,804,000) and the performance fee for the year was £170,000 of which £26,000 relates to the prior year which has been paid (2009: £2,313,000).

As at the year end, the following amounts were outstanding in respect of management fees: £365,000 (2009: £317,000) and performance fees: £144,000 (2009: £2,313,000).

At 30 September 2010 the Group had a contingent liability pursuant to an Indemnity given to Caledonia Investments Limited (Caledonia) in respect of sums received from Caledonia by way of repayment of VAT (the VAT Refund) paid by the Company between 1991 and 1995 on investment management fees to Caledonia, against any amounts of VAT (including any interest or penalties) for which Caledonia is liable to repay to HM Revenue & Customs in respect of the VAT Refund together with all reasonable costs, charges and expenses incurred by Caledonia in enforcing its rights under the Indemnity. The Company's liability under the Indemnity shall not exceed the amount of the VAT Refund received from Caledonia which amounted to £619,178 (including simple interest of £263,337).

11. Investment objective and policy 

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

Investments are principally in companies listed on recognised stock exchanges in the UK and/or overseas, which may include investment holding companies, investment trusts and other companies, the share price of which is assessed to be below their estimated net asset value or intrinsic worth. Although listed assets make up the bulk of the portfolio the Company may also invest in unlisted assets with the prior approval of the Board.

The Company generally invests on a long-only basis but may hedge exposures through the use of derivative instruments and may also hedge its foreign currency exposures.

There are no geographic limits on exposure as the Company invests wherever it considers there are opportunities for capital growth. Risk is spread by investing in a number of holdings, many of which themselves are diversified companies.

The Company will not invest in any holding that would represent more than 15% of the value of its total investments at the time of investment.

Potential investments falling within the scope of the Company's investment objective will differ over the course of market cycles. The number of holdings in the portfolio will vary depending upon circumstances and opportunities within equity markets at any particular time.

The Company may gear its assets through borrowings which may vary substantially over time according to market conditions but which will not exceed twice the nominal capital and reserves of the Company.

12. Comparative Information

The financial information contained in this announcement does not constitute statutory accounts for the year ended 30 September 2010 nor 30 September 2009 as defined by the Companies Act 2006 but is derived from those accounts. The statutory accounts for the year ended 30 September 2009 have been delivered to the Registrar of Companies and those for the year ended 30 September 2010 will be delivered following the Company's Annual General Meeting. The Independent Auditor's report on those accounts was unqualified and did not contain any statements under section 498 (2) or (3) of the Companies Act 2006.

13. Availability of Report & Accounts

A copy of the Company's Annual Report & Accounts for the year ended 30 September 2010 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 Report & Accounts will be sent to shareholders shortly.  Additional copies may be obtained from the Company Secretary - Phoenix Administration services Limited, Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW. 

The Annual General Meeting of the Company will be held on Thursday 16 December 2010 at 12 noon.

The Directors have proposed the payment of a final dividend of 5.7p (4.2p in 2009) per Ordinary share which, if approved by shareholders at the forthcoming Annual General Meeting, will be payable on 7 January 2011 to shareholders whose names appear on the register at the close of business on 10 December 2010 (ex-dividend 8   December 2010).

14. Declaration

The Directors of the Company, comprising Mr Strone Macpherson (Chairman), Mr Steven Bates, Mrs Rosamund Blomfield-Smith, Mr John May and Mr Andrew Robson, being the persons responsible, confirm to the best of their knowledge that:

·      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 Group; and

·      the Management Report (which comprises the Chairman's Statement and the Investment Manager's Review) includes a fair review of the development and performance of the business and the position of the Group together with a description of the principal risks and uncertainties that the Group faces.

Phoenix Administration Services Limited

15 November 2010

 

END

 

 

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