Annual Financial Report

EP GLOBAL OPPORTUNITIES TRUST PLC ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2010 The full Annual Report and Financial Statements can be accessed via the Company's website at www.epgot.com or by contacting the Company Secretary on telephone 0131 270 3800. HIGHLIGHTS * At 31 December 2010 our net asset value per share was 188.2p, giving a total return for the twelve months of 8.3 per cent. * The share price closed the year at 186.8p, an increase of 8.6 per cent over the share price at the end of 2009. At the year-end this represented a discount of 0.7 per cent to the net asset value per share. * Our revenue per share increased by 18.5 per cent to 3.2p. The Board, in February 2011, declared an interim dividend (instead of a final dividend) of 2.8p per share, a 16.7 per cent increase over the dividend declared for 2009. * We continued our policy of buying in shares with a view to maintaining the share price at close to the net asset value per share. During 2010, we bought back 1,393,700 shares into treasury. * Following the end of the year we announced an agreement to borrow £5 million from Scotiabank Europe PLC in the form of a secured multicurrency revolving loan. To date the equivalent of £4.5 million in Japanese yen and US dollars has been drawn down and is being invested. * The proposed merger with Anglo & Overseas Plc announced in February 2011 has received the approval of Shareholders of both companies. A total of 31,855,462 new shares in EP Global Opportunities Trust have been issued to Anglo & Overseas Plc Shareholders who elected to roll over their investment into the Company, increasing the net assets of the Company by £59 million to £110 million. FINANCIAL SUMMARY Results for year 31 December 31 December Change 2010 2009 Shareholders' funds £51,620,000 £50,712,000 1.8% Net asset value per ordinary share 188.2p 175.9p 7.0% ("NAV") Share price 186.8p 172.0p 8.6% Share price discount to NAV 0.7% 2.2% Revenue return per ordinary share* 3.2p 2.7p 18.5% Dividend per ordinary share** 2.8p 2.4p 16.7% * Based on the weighted average number of shares in issue during the year excluding own shares held in treasury. ** Declared dividend for the year. Ordinary share Ordinary share Year's high/low Share price - high 186.8p 173.0p - low 159.5p 113.0p NAV - high 193.1p 177.3p - low 162.0p 116.8p Share price premium /(discount) to NAV - high 0.5% 0.4% - low (6.6)% (13.5)% Cost of running the Company Total expense ratio* 1.3% 1.0%** * Based on total expenses for the year and average monthly net asset value. ** Total expense ratio 1.3% in 2009 excluding VAT refund. Performance record Share price Revenue Net asset Share discount return Dividend value per price per to net per per Shareholders' ordinary ordinary asset ordinary ordinary funds share share value share share Year ended 31 December 2004* £26.1m 116.4p 110.5p 5.1% 0.6p 0.4p 2005 £52.2m 156.2p 154.5p 1.1% 1.1p 0.8p 2006 £58.8m 172.8p 170.0p 1.6% 2.1p 1.8p 2007 £57.7m 177.2p 160.0p 9.7% 2.7p 2.3p 2008 £46.4m 150.4p 132.5p 11.9% 3.9p 3.1p 2009 £50.7m 175.9p 172.0p 2.2% 2.7p 2.4p 2010 £51.6m 188.2p 186.8p 0.7% 3.2p 2.8p** * Period 13 November 2003 to 31 December 2004. The Company commenced operations on the admission of its shares to listing on the London Stock Exchange on 15 December 2003. ** Declared dividend for the year. CHAIRMAN'S STATEMENT Results At 31 December 2010 our net asset value per share was 188.2p, giving a total return for the twelve months of 8.3 per cent. This follows the total return of 19.4 per cent in 2009, as share prices continued to recover from the 2008 bear market. We do not have a benchmark against which we monitor the performance of the net asset value. However, your Board does take note of the investment performance of your Company compared to the major stock market indices. Relative to the FTSE All-World Index, our performance is ahead of the Index since the launch of the Company in late 2003. However, in 2010 we gave back some of that outperformance, with the FTSE All-World Index achieving a total return of 16.7 per cent. The total return for the FTSE All-Share Index was 14.5 per cent. The share price closed the year at 186.8p, an increase of 8.6 per cent over the share price at the end of 2009. At the year end, this represented a discount of 0.7 per cent to the net asset value per share. We continued our policy of buying in shares with a view to maintaining the share price at close to the net asset value per share. During 2010, we bought back 1,393,700 shares into treasury. A further 244,000 shares have been bought back into treasury since the year end and this has been more than offset by the sale from treasury of 450,000 shares. Stock market and investment performance World stock markets started 2010 on a firm note. A brief setback in January was quickly reversed and most markets enjoyed a positive first quarter. The second quarter was a very different story. Share prices fell back sharply, with declines in the second quarter of typically 10 to 15 per cent in the main regional indices causing all the first quarter gains to be surrendered. Concerns about the financial stability of some individual countries within the euro-zone and worries that the US recovery was beginning to falter led some commentators to predict that the recovery from recession would be short-lived. In particular, concerns about the budget deficits and the ability of governments in some southern European countries to finance their debts unnerved financial markets. While Greece was the first country to suffer a sharp rise in interest rates, contagion soon spread to Ireland and threatened both Portugal and Spain. In June, the European finance ministers finalised the creation of the European Financial Stability Facility, a fund to make loans to countries within the euro-zone which are in financial distress. Share prices bottomed out in early July as markets began to anticipate that the Federal Reserve, the US central bank, would commence another round of "quantitative easing", i.e. buying US government debt and printing the money to do so. Share prices recovered strongly as worries of an economic double dip evaporated. The main trends in equity markets that had developed in 2009 continued through 2010, with investors focusing on the growth potential of Asia and the increasing demand for commodities. The best performing region was the Far East, where the FTSE All-World Asia ex-Japan Index achieved a total return of 23.9 per cent in sterling terms. Once again, currency fluctuations played a significant part in the relative performance of markets. The Japanese yen was particularly strong. As a result, while the Japanese Topix Index ended the year fractionally below its level at the start of the year, there was a total return of 19.5 per cent when adjusted into sterling. The euro was the weakest of the major currencies and the FTSE All-World European Index was the poorest performer in sterling terms of the major regional indices with a gain of only 6.6 per cent. The S&P composite index in the US was up 18.7 per cent in sterling terms. Our own performance was held back by having our largest geographical weighting in Europe (excluding the UK) for most of the year and by holding relatively little in the regional markets in Asia. We continue to find poor value in the emerging Asian markets. On the other hand, the one country where share prices appear to offer significant value is Japan. We added steadily to our investments in Japan throughout 2010 and, by the year end, 24.9 per cent of our assets were invested in Japanese equities, making it our largest geographical area of investment. Holding in Edinburgh Partners Funds managed by our Investment Manager, Edinburgh Partners, have continued to grow, helped by the rise in equity markets. We have increased the valuation of our equity stake in Edinburgh Partners by £300,000 to £1.5 million. Gearing Since the end of the year, in January 2011, we announced an agreement to borrow £5 million from Scotiabank Europe PLC in the form of a secured multicurrency revolving loan. The interest rate payable on the loan is 1.2 per cent over LIBOR, the London interbank lending rate. One of the long- term advantages of the investment trust structure is the ability to borrow money and hence to introduce an element of gearing to the performance of the net assets. At the time of the agreement, the £5 million amounted to gearing of approximately 10 per cent of our net assets. To date, the equivalent of £4.5 million in Japanese yen and US dollars has been drawn down and is being invested. Anglo & Overseas In February 2011, we announced that we had reached agreement in principle with the board of Anglo & Overseas Plc in respect of a merger with your Company through a scheme of reconstruction and voluntary winding up of Anglo & Overseas. Details of the proposals were posted to Shareholders in February, with Shareholder meetings taking place in March. Your Board recommended the proposals as we believed an increase in the size of your Company should improve the marketability of the shares and reduce the annual running costs as a percentage of the total assets. The proposals have now received the approval of the Shareholders of both companies. One member of the Anglo & Overseas Board, Giles Weaver, joined our Board on 10 March 2011 and a total of 31,855,462 new shares in EP Global Opportunities Trust have been issued to Anglo & Overseas Shareholders who elected to roll over their investment, increasing the net assets of the Company by £59 million to £110 million. Anglo & Overseas was also managed by Edinburgh Partners and had the same value-based investment philosophy as your Company. The prime difference between the two trusts is that Anglo & Overseas operated a progressive dividend policy, whereas our dividend is dependent on where our Investment Manager perceives the best value to be. We would rather reduce our dividend than compromise this investment philosophy. We believe that our approach will produce superior returns over the longer term. This will continue to be our policy. Revenue account and dividend Our revenue per share increased by 18.5 per cent to 3.2p. In 2009 we reduced the dividend as revenue declined due to changes in the shares held in the portfolio. In 2010, the reverse was the case and the Board has been able to declare an interim dividend of 2.8p per share, a 16.7 per cent increase over the dividend declared for 2009. As in the past, only one dividend will be paid for the year. The dividend was announced in February 2011, prior to the issue of new shares in the Company to Anglo & Overseas Shareholders, and is payable on 18 March 2011. Outlook As 2010 closed, rising commodity prices were causing an increase in inflationary pressures. This was particularly true in developing countries where food is a relatively high percentage of consumption. China had already raised interest rates a number of times and no doubt will continue to do so until the pricing pressure has been reduced. This is likely to moderate the rate of economic growth and it would not be surprising to see it dampen the enthusiasm for Asian equities, at least for a while. More recently, unrest in a number of Middle Eastern countries and the effect on the price of oil has increased the level of concern. While China is becoming an increasingly important engine of growth for the world economy, the USA remains by far the largest economy. The US is still focusing on stimulative policies, both fiscal and monetary, to maintain the momentum of the economic recovery. The US monetary policy of "quantitative easing", continues to be a positive for the economy and hence for share prices. Europe, by contrast, is pursuing a policy of monetary easing, while tightening fiscally, raising taxes and cutting spending. The variety of policy strategies being applied around the world will no doubt cause moments of doubts about the pace of economic growth in 2011, just as there were such moments in 2010. At the year end, we remained fully invested, as our Investment Manager was still able to find shares that represent good value even as some shares in more fashionable areas were looking increasingly fully valued. It is not possible to gauge the short-term effect on financial markets of the nuclear risk in Japan following the tragic earthquake but we are hopeful that the negative effect will indeed be only short-term. Teddy Tulloch Chairman 18 March 2011 MANAGER'S REPORT AND PORTFOLIO ANALYSIS In 2010 the Company's net asset value total return per share was 8.3 per cent. In real terms this was a positive, but set against the backdrop of returns from global equities it was less than inspiring. Although we do not invest by reference to the composition of indices, we nevertheless are cognisant of the returns earned by indices. During the calendar year the FTSE All-World Index total return was 16.7 per cent. This begs the question of whether there were opportunities we missed. As our Shareholders know, we seek to identify companies where the long-term profit potential is not being valued correctly by the market. The key lies in the analysis of this profit potential and to this end we have an extremely experienced team which operates within a robust and tested analytical process. This approach has been sound over the long term and we believe will continue to be so. However, that does not mean that there will not be periods where we misjudge future events meaning that we do not participate in some share price advances. Equally, there will be periods when stocks that are expensive go up and during that period our performance will lag. The critical question for 2010 was whether it was the former or the latter. Putting this another way, Benjamin Graham, the famous investor and author whose teachings are often quoted by Warren Buffet, described the market as a voting machine in the short-run and a weighing machine in the long-run. In our view, many of the stocks which performed best in 2010 were the product of `votes' or sentiment rather than of underlying value. Two principal categories of stocks performed particularly well during 2010. The first were those who were deemed to be beneficiaries of consumption growth, in particular in Asia, with Chinese stocks the most prominent. We subscribe to the widely held view that there are better economic growth conditions in emerging markets. Our difficulty is that for many of our holdings in this area we found that even with a generous allowance for this higher growth many of the stocks were becoming expensive. As a consequence, for 2010 our direct exposure to these types of stocks was relatively low. During the period, the stock market `voting' was directly opposed to this, to the detriment of our performance. We have spent considerable time reviewing our forecasts and have seen little that would change our view. We remain positive on economic prospects in the emerging markets and will invest in companies domiciled there when valuations come back into range. The second category of stocks which performed well in 2010 were companies that might loosely be termed as beneficiaries of global monetary easing. Asian asset plays and commodities were the two most obvious groupings. Again, we have not seen anything which alters our views on their valuations. On a more positive note, there are many companies within the portfolio which did not perform well during 2010, but where we are convinced there is outstanding value. In the technology area, Cisco Systems, Intel and Applied Materials delivered very solid financial results but to a greater or lesser extent were penalised for cautious outlook statements. In our view these statements were appropriate and did not detract from the longer term prospects. We expect to see strong returns from these holdings. Other stocks where we see sentiment having unduly impacted share prices are a number of our bank holdings, including Bank of America, Mizuho and Intesa Sanpaolo. It is not that we see a recovery in these companies fuelled by future growth. Neither do we see them as being free from a range of risk factors. Rather it is simply that we believe many of the risks to be discounted and that a level of exposure to the potential returns is appropriate for the portfolio. The major change in the structure of the portfolio has been the continued increase in the number of Japanese holdings. The simple reason for this is that as the year progressed more companies fell into our valuation range. Additions to the portfolio included Bridgestone, the tyre company, which has been able to raise prices consistently, Omron, the control equipment and automation supplier, and Panasonic, the consumer electronics company formerly known as Matsushita Electric Industries. Although these holdings did not provide much by way of return during the year, their valuation suggests that we can expect strong returns at some point in the future. Japan has been a stock market where investors have been disappointed for some considerable time. However, earnings growth has been strong for the past ten years and the market valuation has now deflated to such a level that (on Thomson Reuters Datastream numbers) it has a lower PE and higher yield than that of the US. International investors can continue to ignore the potential value in Japan for a while, but eventually the `weighing machine' will kick in. The realisation of value in Japan may well be postponed by the recent earthquake and subsequent tsunami. It is very early days but it appears that the damage to the fabric of the economy was at the margin and there does not yet appear any reason to significantly alter our long-term profits growth expectations. The main concerns seem to revolve around nuclear power generation and the potential for energy shortages and price rises in combination with the Middle East tension. We will monitor these aspects very closely. Major sales from the portfolio during 2010 were Swedbank and Franklin Resources. Their share prices had appreciated strongly since purchase and we considered both stocks to be fully valued. We continue to believe that future returns will be lower than historic norms but substantially ahead of what can be earned from bonds and cash. Again, it is entirely likely that we will also see periodic setbacks which will create opportunities for Shareholders. Finally, we have now in place a small amount of gearing which we believe will enhance returns in the long-run. Dr Sandy Nairn Edinburgh Partners Limited 18 March 2011 PORTFOLIO OF INVESTMENTS as at 31 December 2010 Company Sector Country Valuation % of £'000 Net Assets Equity investments 20 largest equity investments Vodafone Telecommunications United 1,907 3.7 Kingdom Gazprom Oil & Gas Russia 1,820 3.5 Samsung Electronics Technology South Korea 1,694 3.3 Yamaha Motor Company Consumer Goods Japan 1,673 3.2 Cisco Systems Technology United States 1,559 3.0 Applied Materials Technology United States 1,543 3.0 Sony Consumer Goods Japan 1,512 2.9 Edinburgh Partners Financials (unlisted) United 1,500 2.9 Limited Kingdom Fujitsu Technology Japan 1,499 2.9 Royal Dutch Shell Oil & Gas United 1,472 2.9 Kingdom Mitsubishi Industrials Japan 1,471 2.9 Nokia Technology Finland 1,458 2.8 Time Warner Cable Media United States 1,434 2.8 Taisei Industrials Japan 1,408 2.7 Mizuho Financials Japan 1,388 2.7 D.R. Horton Consumer Goods United States 1,379 2.7 Singapore Telecommunications Singapore 1,359 2.6 Telecommunications Omron Industrials Japan 1,351 2.6 Deutsche Post Industrials Germany 1,345 2.6 Bridgestone Consumer Goods Japan 1,313 2.5 Total - 20 largest equity 30,085 58.2 investments Other equity investments Tesco Consumer Services United 1,312 2.5 Kingdom ENI Oil & Gas Italy 1,297 2.5 Petrobras Oil & Gas Brazil 1,286 2.5 Novartis Health Care Switzerland 1,284 2.5 GlaxoSmithKline Health Care United 1,278 2.5 Kingdom Sanofi-aventis Health Care France 1,275 2.5 Panasonic Consumer Goods Japan 1,275 2.5 Aviva Financials United 1,250 2.4 Kingdom HSBC Financials United 1,224 2.4 Kingdom Bank of America Financials United States 1,201 2.3 Yara International Basic Materials Norway 1,150 2.2 SK Telecom Telecommunications South Korea 1,129 2.2 China Mobile Telecommunications China 1,127 2.2 Telecom Italia Telecommunications Italy 1,126 2.2 UBS Financials Switzerland 1,098 2.1 Intesa Sanpaolo Financials Italy 975 1.9 Symantec Technology United States 973 1.9 Intel Technology United States 967 1.9 Total - 38 equity 51,312 99.4 investments Cash and other net assets 308 0.6 Net assets 51,620 100.0 The geographic distribution is based on each investment's principal stock exchange listing, except in instances where this would not give a proper indication of where its activities predominate. Of the ten largest portfolio investments as at 31 December 2010, the valuations at the previous year end, 31 December 2009, were Vodafone £1,653,000; Gazprom £1,784,000; Samsung Electronics £1,347,000; Yamaha Motor Company £1,246,000; Cisco Systems £2,046,000; Applied Materials £1,166,000; Sony £1,618,000; Edinburgh Partners Limited £1,200,000 and Fujitsu £1,334,000. Royal Dutch Shell was a new purchase during the year ended 31 December 2010. DISTRIBUTION OF INVESTMENTS as at 31 December 2010 (% of net assets) Sector distribution % of net assets Technology 18.8 Financials 13.8 Consumer Goods 13.8 Telecommunications 12.9 Oil & Gas 11.4 Industrials 10.8 Health Care 7.5 Financials (unlisted) 2.9 Media 2.8 Consumer Services 2.5 Basic Materials 2.2 Cash and other net assets* 0.6 100.0 Geographical distribution % of net assets Japan 24.9 Europe 24.8 United Kingdom 19.3 United States 17.6 Asia Pacific 10.3 Latin America 2.5 Cash and other net assets* 0.6 100.0 *Cash and other net assets includes foreign currency balances of £17,000 (0.03%). The figures detailed in the geographical distribution above represent the Company's equity exposure to these countries or regional areas. The geographic distribution is based on each investment's principal stock exchange listing, except in instances where this would not give a proper indication of where its activities predominate. BUSINESS REVIEW Status of Company The Company is registered as a public limited company and is an investment company within the terms of section 833 of the Companies Act 2006. Its shares are listed on the premium segment of the Official List of the UK Listing Authority and traded on the main market of the London Stock Exchange. The Company has received approval from HM Revenue & Customs as an authorised investment trust under section 842 of the Income and Corporation Taxes Act 1988 for the period from inception to 31 December 2009. This approval is subject to there being no subsequent enquiry under corporation tax self-assessment. In the opinion of the Directors, the Company has subsequently directed its affairs so as to enable it to continue to qualify for such approval and the Company will continue to seek approval each year. With effect from the year ended 31 December 2010, approval will be sought under sections 1158 and 1159 of the Corporation Tax Act 2010. Activities The principal activity of the Company is to carry on business as an investment trust. A review of the Company's activities during the year is given in the Chairman's Statement and in the Manager's Report and Portfolio Analysis. Net asset valuation The net asset value per ordinary share ("NAV") at 31 December 2010 was 188.2p (2009: 175.9p). Results The results for the year are set out in the Income Statement and the Reconciliation of Movements in Shareholders' Funds below. Dividends The Directors have declared the payment of an interim dividend of 2.8p per ordinary share (2009: interim dividend of 2.4p). This dividend is payable on 18 March 2011 to Shareholders on the register at the close of business on 4 March 2011. The ex-dividend date was 2 March 2011. No final dividend has been recommended. Objective The investment objective of the Company is to provide Shareholders with an attractive real long-term total return by investing globally in undervalued securities. The portfolio is managed without reference to the composition of any stock market index. Investment policy The Company invests in a focused portfolio of approximately 30 to 40 securities of issuers throughout the world, predominantly in quoted equities. The Company may also invest in unquoted securities, which are not anticipated to exceed 10 per cent of the Company's total assets at the time of investment (excluding shares held in Edinburgh Partners). No investment in the Company's portfolio may exceed 15 per cent of the Company's total assets at the time of investment (being the maximum amount permitted for an investment trust company in terms of Chapter 4 of Part 24 of the Corporation Tax Act 2010). The Company has no present intention to invest in other investment companies or funds but retains the ability to invest no more than 15 per cent of its gross assets in other listed investment companies (including investment trusts). The Company may also invest a substantial portion of its assets in debt instruments, cash or cash equivalents when the Investment Manager believes market or economic conditions make equity investment unattractive or while seeking appropriate investment opportunities for the portfolio or to maintain liquidity. In addition, the Company may purchase derivatives for the purposes of efficient portfolio management. It is intended that, from time to time, when deemed appropriate, the Company will borrow for investment purposes up to the equivalent of 25 per cent of its total assets. By contrast, the Company's portfolio may from time to time have substantial holdings of debt instruments, cash or short-term deposits. The investment objective and policy are intended to distinguish the Company from other investment vehicles which have relatively narrow investment objectives and which are thus constrained in their decision making and asset allocation. The objective and policy allow the Company to be constrained in its investment selection only by valuation and to be pragmatic in portfolio construction by only investing in securities which the Investment Manager considers to be undervalued on an absolute basis. Investment strategy The Company's portfolio is managed without reference to any stock market index. Investments are selected for the portfolio only after extensive research by the Investment Manager. The process through which an equity must pass in order to be included in the portfolio is rigorous. Only a security where the Investment Manager believes that the price will be significantly higher in the future will pass the selection process. The key to successful stock selection is to identify the long-term value of a company's shares and to have the patience to hold the shares until that value is appreciated by other investors. Identifying long-term value involves detailed analysis of a company's earning prospects over a five year time horizon. Further details of the investment strategy can be found in the Chairman's Statement and the Manager's Report and Portfolio Analysis. The Company's Investment Manager is Edinburgh Partners which is an independent specialist investment manager focusing exclusively on achieving returns for investors based on global investment analysis of the highest quality. The Edinburgh Partners investment team includes experienced investment professionals with strong investment performance records who believe rigorous fundamental research allied to patience is the basis of long-term investment success. Each of the investment professionals has specific responsibilities for sector and regional research in addition to their fund management role. Principal risks The Board considers that the following are the principal risks associated with investing in the Company: investment and strategy, discount volatility, market risk, liquidity risk, credit risk, interest rate risk, foreign currency risk, gearing, regulatory risk, operational risk and financial risk. An explanation of these risks and how they are managed and the policy and practice with regards to financial instruments are contained in note 18. Key Performance Indicators At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objective. The Key Performance Indicators used to measure progress and performance of the Company over time are established industry measures and are as follows: - Net asset value per ordinary share - Share price - Share price discount/premium to net asset value per ordinary share - Revenue return per ordinary share - Total expense ratio The Financial Summary above provides information for the years ended 31 December 2010 and 31 December 2009 on the Key Performance Indicators noted above. Current and future developments A review of the main features of the year ended 31 December 2010 and the outlook for the coming year can be found in the Chairman's Statement and the Manager's Report and Portfolio Analysis. The Board's main focus is on the investment return and approach. Attention is paid to the integrity and success of the investment approach and on factors which may have an impact on this approach. Due regard is paid to the promotion of the Company including communication with Shareholders and other external parties. The Board is regularly updated on wider investment trust industry issues. Detailed papers are presented to the Board which lead to extensive discussion on development and strategy. On 10 March 2011 a merger of the assets of the Company and Anglo & Overseas was implemented following Shareholder approval. Further information regarding the merger can be found in the Chairman's Statement and in note 21: Post balance sheet events. Gearing The Company did not have any gearing as at 31 December 2010. The Company entered into a £5,000,000 secured multicurrency revolving credit facility on 14 January 2011, as detailed in note 21. The use of gearing can cause both gains and losses in the net asset value of the Company to be magnified, as explained more fully in note 18. Social, environmental and ethical policy EP Global Opportunities Trust plc seeks to invest in companies that are well managed, with high standards of corporate governance. The Directors believe this creates the proper conditions to enhance long-term value for Shareholders. In aiming to achieve a high level of corporate performance the Company adopts a positive approach to corporate governance and engagement with companies. In pursuit of the above objective, the Directors believe that proxy voting is an important part of the corporate governance process and considers seriously its obligation to manage the voting rights of companies in which is invested, for which it has delegated responsibility to its Investment Manager. It is the policy of the Company to vote, as far as it is practicable, at all shareholder meetings of investee companies. The Company follows the relevant applicable regulatory and legislative requirements in the UK, with the guiding principles being to make proxy voting decisions which favour proposals that will lead to maximising Shareholder value while avoiding any conflicts of interest. Voting decisions are taken on a case by case basis, with the key issues on which the Investment Manager focuses being corporate governance, including disclosure and transparency, board composition and independence, control structures, remuneration and social and environmental issues. The Company itself has no employees and all the Directors are non-executive. The day-to-day management of the Company's business has been delegated to the Company's Investment Manager, Edinburgh Partners, which has an Environmental, SRI and Corporate Governance ("ESG") policy in place, which can be found on their website at www.edinburghpartners.com. Share capital At the year end the Company's issued share capital comprised 32,654,180 ordinary shares of which 5,223,700 ordinary shares were held in treasury. At general meetings of the Company, one vote is attached to each ordinary share in issue. Own shares held in treasury do not carry voting rights. The total voting rights of the Company at 31 December 2010 were 27,430,480 ordinary shares. There are no restrictions on the transfer of the Company's ordinary shares or special rights attached to these shares regarding control. During the year ended 31 December 2010 the Company purchased in the market 1,393,700 ordinary shares (with a nominal value of £13,937) for treasury, at a total cost of £2,419,000. This represented 4.27 per cent of the issued share capital at 31 December 2009. The total number of own shares held in treasury as at 31 December 2010, including those shares bought back in prior accounting periods, totalled 5,223,700 ordinary shares. The Board has not set a limit on the number of shares that can be held in treasury at any one time. The maximum number of own shares held in treasury during the year was 5,223,700 ordinary shares (with a nominal value of £52,237) representing 16.00 per cent of the issued share capital at the time they were held in treasury. Subsequent to the year end and up to the date of this report, a further 244,000 ordinary shares (with a nominal value of £2,440) have been purchased for treasury representing 0.75 per cent of the issued share capital at 31 December 2010, at a total cost of £445,000. On 17 March 2011 the Company sold 450,000 ordinary shares (with a nominal value of £4,500) from treasury, representing 1.38 per cent of the issued share capital at 31 December 2010, for a total consideration of £805,500. The shares were sold at a premium to the prevailing net asset value. On 11 October 2005 the Company applied for a block listing of 1,300,000 ordinary shares. As at 31 December 2010 and at the date of this report a balance of 745,830 shares may be issued under this block listing. The Company made no share issues during the year ended 31 December 2010. After the year end, on 10 March 2011, 31,855,462 new ordinary shares were allotted (with a nominal value of £318,555) to Shareholders in Anglo & Overseas who elected or were deemed to elect to roll over their shareholdings in Anglo & Overseas into shares in the Company under the scheme of reconstruction and voluntary winding up of Anglo & Overseas. The price at which these new ordinary shares are treated as being issued is 186.29p per share. The Company received assets comprising of investments in shares of publicly quoted companies worldwide and cash as consideration for the issue of the new ordinary shares. Sale of shares from treasury The Company will only sell shares from treasury at a price at or above the prevailing net asset value per share. Holding shares in treasury enables a company to issue shares cost effectively that might otherwise have been cancelled. The Company made no sales from treasury during the year ended 31 December 2010. Subsequent to the year end the Company sold 450,000 ordinary shares from treasury, as detailed above. Cancellation of share premium As part of the resolutions required to approve the merger with Anglo & Overseas, Shareholders approved the cancellation of the Company's share premium account. This requires the approval of the Court in order to take effect and once obtained will increase the Company's special reserve which can be used to fund purchases of the Company's own shares for treasury or for cancellation. The full Annual Report contains the following statements regarding responsibility for the financial statements and management report/ business review included therein (references in the following statements are to pages in the Annual Report). MANAGEMENT REPORT AND STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RELATION TO THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS Management report Listed companies are required by the FSA's Disclosure and Transparency Rules (the "Rules") to include a management report within their annual report and financial statements. The information required to be included in the management report for the purpose of these Rules is included in the Chairman's Statement, the Manager's Report and Portfolio Analysis and the Business Review contained in the Directors' Report. Therefore no separate management report has been included. Statement of Directors' responsibilities in relation to the Annual Report and Financial Statements The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial period. Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; and - state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; The Directors, to the best of their knowledge, state that; - the financial statements, prepared in accordance with UK Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and - the Chairman's Statement, Manager's Report and Portfolio Analysis and the Directors' Report 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 it faces. The Directors confirm that, so far as they are each aware, there is no relevant audit information of which the Company's Auditors are unaware; and each Director has taken all the steps that ought to have been taken as a Director to make himself aware of any relevant audit information and to establish that the Company's Auditors are aware of that information. 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 its financial statements comply with the Companies Act 2006 and include the information required by the Listing Rules of the FSA. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. On behalf of the Board Teddy Tulloch Chairman 18 March 2011 NON-STATUTORY ACCOUNTS The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 December 2010 and 2009 but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies, and those for 2010 will be delivered 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 (ii) 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 at www.epgot.com. INCOME STATEMENT for the year ended 31 December 2010 2010 2009 Revenue Capital Total Revenue Capital Total Note £'000 £'000 £'000 £'000 £'000 £'000 Gains on 8 - 3,149 3,149 - 7,616 7,616 investments at fair value Foreign exchange - (35) (35) - (226) (226) losses on capital items Income 2 1,635 - 1,635 1,382 - 1,382 Investment 3 (365) - (365) (323) - (323) management fee Refund of VAT - - - 126 - 126 paid on investment management and administration fees Other expenses 4 (276) - (276) (248) - (248) Net return before 994 3,114 4,108 937 7,390 8,327 finance costs and taxation Finance costs Interest payable - - - (1) - (1) and similar charges Net return before 994 3,114 4,108 936 7,390 8,326 taxation Taxation 5 (100) - (100) (131) - (131) Net return after 894 3,114 4,008 805 7,390 8,195 taxation pence pence pence pence pence pence Return per 7 3.2 11.0 14.2 2.7 24.7 27.4 ordinary share All revenue and capital items in the above statement derive from continuing operations. The total column of this statement is the profit and loss account of the Company. The revenue and capital return columns are prepared under guidance published by the Association of Investment Companies ("AIC"). A separate Statement of Total Recognised Gains and Losses has not been prepared as all such gains and losses are included in the Income Statement. Dividend Information An interim dividend, instead of a final dividend, for the year of 2.8p per ordinary share (2009: 2.4p) has been declared. This dividend is payable on 18 March 2011 to Shareholders on the register at the close of business on 4 March 2011. The ex-dividend date was 2 March 2011. Based on 27,186,480 ordinary shares, being the number of ordinary shares in issue (excluding shares held in treasury) on 2 March 2011, the total dividend payment will amount to £761,000. In accordance with FRS 21, dividends are accounted for in the period in which they are paid. Further information on dividend distributions can be found in note 6. The notes form part of these financial statements. BALANCE SHEET as at 31 December 2010 2010 2009 Note £'000 £'000 Fixed asset investments: Investments at fair value through 8 51,312 49,254 profit or loss Current assets: Debtors 10 193 1,340 Cash at bank and short-term deposits 350 1,186 543 2,526 Creditors: amounts falling due within 11 235 1,068 one year Net current assets 308 1,458 Net assets 51,620 50,712 Capital and reserves: Called-up share capital 12 327 327 Capital redemption reserve 14 14 Share premium account 17,991 17,991 Special reserve 10,486 12,905 Capital reserve 21,205 18,091 Revenue reserve 1,597 1,384 Total Shareholders' funds 51,620 50,712 pence pence Net asset value per ordinary share 14 188.2 175.9 These financial statements were approved and authorised for issue by the Board of Directors on 18 March 2011 and were signed on its behalf by: Teddy Tulloch Chairman Registered in Scotland No. 259207 The notes form part of these financial statements. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the year ended 31 December 2010 Share Capital Share Special Capital Revenue Total capital redemption premium reserve reserve reserve reserve account £'000 £'000 £'000 £'000 £'000 £'000 £'000 Year ended 31 December 2010 At 31 December 327 14 17,991 12,905 18,091 1,384 50,712 2009 Net return after - - - - 3,114 894 4,008 taxation for the year Dividends paid - - - - - (681) (681) Share purchases - - - (2,419) - - (2,419) for treasury At 31 December 327 14 17,991 10,486 21,205 1,597 51,620 2010 Year ended 31 December 2009 At 31 December 340 1 17,991 15,795 10,701 1,525 46,353 2008 Net return after - - - - 7,390 805 8,195 taxation for the year Dividends paid - - - - - (946) (946) Share purchases (13) 13 - (1,667) - - (1,667) for cancellation Share purchases - - - (1,223) - - (1,223) for treasury At 31 December 327 14 17,991 12,905 18,091 1,384 50,712 2009 The notes form part of these financial statements CASH FLOW STATEMENT for the year ended 31 December 2010 2010 2009 Note £'000 £'000 Operating activities: Investment income received 1,601 1,388 Bank deposit interest received - 1 Refund of VAT, including interest, on 138 - investment management and administration fees Investment management fees paid (361) (307) Secretarial fees paid (71) (70) Other cash payments (125) (199) Net cash inflow from operating activities 15 1,182 813 Servicing of finance - (1) Taxation (70) (188) Capital expenditure and financial investment: Purchases of investments (12,957) (18,371) Sales of investments 14,126 20,349 Exchange losses on settlement (40) (100) Net cash inflow from investing activities 1,129 1,878 Net cash inflow before equity dividend 2,241 2,502 and financing Equity dividend paid 6 (681) (946) Financing: Ordinary shares purchased and held in (2,419) (1,223) treasury Ordinary shares purchased and cancelled - (1,667) Net cash outflow from financing (2,419) (2,890) Decrease in cash 16 (859) (1,334) The notes form part of these financial statements. NOTES TO THE FINANCIAL STATEMENTS at 31 December 2010 1. Accounting policies Accounting convention The financial statements are prepared on a going concern basis, under the historical cost convention (modified to include fixed asset investments at fair value), in accordance with the Companies Act 2006, UK Generally Accepted Accounting Practice ("UK GAAP") and with the AIC Statement of Recommended Practice issued in January 2009 relating to the Financial Statements of Investment Trust Companies and Venture Capital Trusts. All of the Company's activities are continuing. Income recognition Dividend and other investment income is included as revenue on the ex-dividend date. Deposit interest and underwriting commission receivable is included on an accruals basis. Dividends are accounted for in accordance with Financial Reporting Standard No. 16: Current Taxation on the basis of income actually receivable, without adjustment for the tax credit attaching to the dividends. Dividends from overseas companies are shown gross of withholding tax. Management expenses and finance costs All expenses are accounted for on an accruals basis. All operating expenses are charged through the revenue account in the Income Statement except costs that are incidental to the acquisition or disposal of investments, which are charged to the capital account in the Income Statement. Transaction costs are included within the gains and losses on investment sales, as disclosed in the Income Statement. Investments All investments held by the Company are classified as `fair value through profit or loss'. Investments are initially recognised at cost, being the fair value of the consideration given. After initial recognition, investments are measured at fair value, with changes in the fair value of investments and impairment of investments recognised in the Income Statement and allocated to capital. Realised gains and losses on investments sold are calculated as the difference between sales proceeds and cost. For investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange quoted market bid prices at the close of business on the Balance Sheet date, without adjustment for transaction costs necessary to realise the asset. Unlisted investments will be valued by the Directors at fair value, using the guidelines on valuation published by the International Private Equity and Venture Capital Association. This represents the Directors' view of the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. This does not assume that the underlying business is saleable at the reporting date or that its current shareholders have any intention to sell their holding in the near future. Foreign currency The functional and reporting currency of the Company is sterling because that is the currency of the primary economic environment in which the Company operates. Transactions denominated in foreign currencies are converted to sterling at the actual exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the year end are reported at the rate of exchange at 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 of a capital or revenue nature. Taxation The charge for taxation is based on the net revenue for the year and takes into account taxation deferred or accelerated because of timing differences between the treatment of certain items for accounting and taxation purposes. Full provision for deferred taxation is made under the liability method, without discounting, on all timing differences that have arisen but not been reversed by the Balance Sheet date, unless such provision is not permitted by Financial Reporting Standard No. 19: "Deferred Tax". This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods. Dividends payable to Shareholders Under Financial Reporting Standard No. 21: "Events after the Balance Sheet Date", final dividends are recognised as a liability in the period in which they have been approved by shareholders in a general meeting. Interim dividends are recognised as a liability in the period in which they have been declared and paid. 2. Income 2010 2009 £'000 £'000 Income frominvestments: UK net dividend income 486 322 Overseas dividends 1,147 1,041 Interest on liquidity funds 2 7 1,635 1,370 Other income: Interest on VAT refund on investment - 12 management and administration fees 1,635 1,382 Total income comprises: Dividends 1,635 1,370 Interest - 12 1,635 1,382 3. Investment management fee 2010 2009 £'000 £'000 Investment management fee 365 323 The investment management fee is paid quarterly in arrears, at the rate of 0.75 per cent per annum of the market capitalisation of the issued ordinary shares (excluding treasury shares) of the Company. At 31 December 2010 there was £ 93,000 outstanding (2009: £89,000). In addition, the Investment Manager received an administration fee of £72,000 as detailed in note 4 (2009: £70,000). At 31 December 2010 there was £18,000 outstanding (2009: £17,000). 4. Other expenses 2010 2009 £'000 £'000 Administration and secretarial fees 72 70 Auditors' remuneration for: Audit 18 18 Directors' remuneration 56 56 Other 130 104 276 248 5. Taxation a) Analysis of charge 2010 2009 in year Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Current tax: UK Corporation Tax - - - 108 - 108 Overseas tax suffered 100 - 100 118 - 118 Double taxation relief - - - (95) - (95) 100 - 100 131 - 131 b) The current taxation charge for the year ended 31 December 2010 is lower than the standard rate of Corporation Tax in the UK of 28 per cent (2009: 28 per cent). The differences are explained below: 2010 2009 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Net return before 994 3,114 4,108 936 7,390 8,326 taxation Theoretical tax at UK 278 872 1,150 262 2,069 2,331 Corporation Tax rate of 28% (2009: 28%) Effects of: - UK dividends that are (136) - (136) (90) - (90) not taxable - Foreign dividends (257) - (257) (70) - (70) that are not taxable - Accrued income - - - 11 - 11 taxable on receipt - Accrued income exempt (7) - (7) - - - on receipt - Non-taxable - (872) (872) - (2,069) (2,069) investment gains - Unrelieved excess 122 - 122 - - - expenses - Marginal relief - - - (3) - (3) adjustment - Overseas tax suffered 100 - 100 118 - 118 - Overcharge relating - - - (2) - (2) to prior period - Double taxation - - - (95) - (95) relief 100 - 100 131 - 131 At 31 December 2010 the Company had unrelieved management expenses of £435,000 (31 December 2009: £nil). It is unlikely, that the Company will generate sufficient taxable income in the future to use these expenses to reduce future tax charges and therefore no deferred tax asset has been recognised. In addition due to the Company's status as an investment trust and the intention to continue meeting the conditions required to obtain approval as an investment trust in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. 6. Dividends 2010 2009 Declared and paid £'000 £'000 2009 interim dividend of 2.4p per ordinary share paid in March 2010 (2008: final dividend of 3.1p paid in May 2009) 681 946 681 946 Net revenue return after taxation 894 805 Declared 2010 interim dividend of 2.8p (2009: interim dividend 761 681 of 2.4p) per ordinary share 761 681 An interim dividend, instead of a final dividend, for the year of 2.8p per ordinary share (2009: interim dividend of 2.4p) has been declared. This dividend is payable on 18 March 2011 to Shareholders on the register at the close of business on 4 March 2011. The ex-dividend date was 2 March 2011. Based on 27,186,480 ordinary shares, being the number of ordinary shares in issue (excluding shares held in treasury) at 2 March 2011, the total dividend payment will amount to £761,000. 7. Return per ordinary share 2010 2009 Net Ordinary Per Net Ordinary Per return shares* share return shares* share £'000 pence £'000 pence Revenue return after 894 28,149,994 3.2 805 29,872,821 2.7 taxation Capital return after 3,114 28,149,994 11.0 7,390 29,872,821 24.7 taxation Total return 4,008 28,149,994 14.2 8,195 29,872,821 27.4 * Weighted average number of ordinary shares, excluding shares held in treasury, in issue during the year. 8. Investments 2010 2009 £'000 £'000 Listed investments 49,812 48,054 Unlisted investments 1,500 1,200 51,312 49,254 2010 2009 Unlisted Listed Total Total £'000 £'000 £'000 £'000 Analysis of investment portfolio movements Opening book cost 214 46,035 46,249 50,777 Opening investment holding gains/ 986 2,019 3,005 (6,842) (losses) Opening valuation 1,200 48,054 49,254 43,935 Movements in the year: Purchases at cost - 12,056 12,056 19,045 Sales - proceeds - (13,147) (13,147) (21,342) - realised gains/(losses) on sales - 2,805 2,805 (2,231) Increase in investment holding gains 300 44 344 9,847 Closing valuation 1,500 49,812 51,312 49,254 Closing book cost 214 47,749 47,963 46,249 Closing investment holding gains 1,286 2,063 3,349 3,005 Closing valuation 1,500 49,812 51,312 49,254 2010 2009 Unlisted Listed Total Total £'000 £'000 £'000 £'000 Analysis of capital gains and losses Realised gains/(losses) on sales - 2,805 2,805 (2,231) Increase in investment holding gains 300 44 344 9,847 Gains on investments 300 2,849 3,149 7,616 The unlisted investment is the 71,294 shares in Edinburgh Partners as disclosed in the Chairman's Statement. Fair value hierarchy In accordance with Financial Reporting Standard No. 29: "Financial Instruments: Disclosures", the Company must disclose the fair value hierarchy of financial instruments. All of the Company's financial instruments fall into level 1, being valued at quoted prices in active markets, except its investment in Edinburgh Partners which falls into level 3 and is valued using an unquoted price that is derived from inputs that are not based on observable market data. A reconciliation of the fair value movements of level 3 investments is shown in the unlisted column of the table above. Transaction costs During the year the Company incurred transaction costs of £28,000 (2009: £35,000) and £16,000 (2009: £36,000) on purchases and sales of investments respectively. These amounts are included in gains on investments at fair value, as disclosed in the Income Statement. 9. Significant holdings The Company had no holdings of 3 per cent or more of the share capital of any portfolio companies. 10. Debtors 2010 2009 £'000 £'000 Due from brokers - 997 Dividends receivable 104 71 Prepayments and accrued income 10 21 Taxation recoverable 79 125 VAT refund on investment management and - 126 administration fees 193 1,340 11. Creditors: amounts falling due within one year 2010 2009 £'000 £'000 Due to brokers - 901 Other creditors and accruals 235 152 Corporation Tax - 15 235 1,068 12. Share capital 2010 2009 £'000 £'000 Allotted, called up and fully paid: 32,654,180 (2009: 32,654,180) ordinary shares of 1p each (includes 5,223,700 (2009: 3,830,000) shares held in 327 327 treasury. See notes 13 and 14) Duration of the Company The Company does not have a termination date or the requirement for any periodic continuation votes. 13. Own shares held in treasury As set out in the Business Review, from time to time the Company buys back shares and holds them in treasury for re-issue at a later date. In accordance with Financial Reporting Standard No. 25, the consideration paid for these shares held in treasury is presented as a deduction in Shareholders' funds and, in accordance with the AIC Statement of Recommended Practice issued in January 2009, has been allocated to the special reserve. Details of own shares held in treasury and the total cost deducted from Shareholders' funds are shown below: Number of 2010 Number of 2009 shares £'000 shares £'000 At 1 January 3,830,000 5,934 3,174,000 4,711 Shares purchased for treasury 1,393,700 2,419 782,000 1,223 Shares cancelled from treasury - - (126,000) - At 31 December 5,223,700 8,353 3,830,000 5,934 Nominal value of own shares held in 52 38 treasury 14. Net asset value per share The net asset value per share, calculated in accordance with the Articles of Association, is as follows: 2010 2009 pence pence Ordinary share 188.2 175.9 The net asset value per ordinary share is based on net assets of £51,620,000 (2009: £50,712,000) and on 27,430,480 (2009: 28,824,180) ordinary shares, being the number of ordinary shares, excluding shares held in treasury, in issue at the year end. 15. Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities 2010 2009 £'000 £'000 Net return before finance costs and taxation 4,108 8,327 Net gains on capital items (3,114) (7,390) Increase/(decrease) in creditors 83 (2) Decrease/(increase) in debtors and accrued income 105 (122) Net cash inflow from operating activities 1,182 813 16. Reconciliation of net cash flow to movement in net funds 2010 2009 £'000 £'000 Decrease in cash for the year (859) (1,334) Realised exchange gains/(losses) 23 (130) (836) (1,464) Net funds at 1 January 1,186 2,650 Net funds at 31 December 350 1,186 At At 1 January Cash Exchange 31 December 2010 Flows Gains 2010 £'000 £'000 £'000 £'000 Cash at bank 1,186 (859) 23 350 1,186 (859) 23 350 At At 1 January Cash Exchange 31 December 2009 Flows Losses 2009 £'000 £'000 £'000 £'000 Cash at bank 2,734 (1,418) (130) 1,186 Bank overdraft (84) 84 - - 2,650 (1,334) (130) 1,186 17. Analysis of financial assets and liabilities Interest rate and currency profile The interest rate and currency profile of the Company's financial assets and liabilities were: 2010 2009 Cash Cash No flow No flow interest interest interest interest rate rate risk rate rate risk Total exposure exposure Total exposure exposure £'000 £'000 £'000 £'000 £'000 £'000 Equity shares US dollar 13,291 13,291 - 16,015 16,015 - Japanese yen 12,890 12,890 - 6,441 6,441 - Sterling 11,240 11,240 - 6,963 6,963 - Euro 6,179 6,179 - 10,880 10,880 - Swiss franc 2,382 2,382 - 2,423 2,423 - South Korean won 1,694 1,694 - 1,347 1,347 - Singapore dollar 1,359 1,359 - - - - Norwegian krone 1,150 1,150 - 1,499 1,499 - Hong Kong dollar 1,127 1,127 - 1,035 1,035 - Swedish krona - - - 1,532 1,532 - Danish krone - - - 1,119 1,119 - Cash at bank and short-term deposits Sterling 333 - 333 792 - 792 US dollar 17 - 17 76 - 76 Japanese yen - - - 318 - 318 Debtors Sterling 69 69 - 203 203 - Euro 46 46 - 38 38 - Singapore dollar 30 30 - - - - Swiss franc 29 29 - 40 40 - Japanese yen 8 8 - - - - US dollar 7 7 - 57 57 - Norwegian krone 4 4 - - - - Hong Kong dollar - - - 997 997 - Danish krone - - - 5 5 - Short-term creditors Sterling (235) (235) - (167) (167) - Japanese yen - - - (901) (901) - 51,620 51,270 350 50,712 49,526 1,186 At 31 December 2010 the Company had no financial liabilities other than short-term creditors (2009: £nil). All financial assets and liabilities of the Company are held at fair value. 18. Risk analysis Risks The principal risks the Company faces are: - Investment and strategy - Discount volatility - Market price risk - Liquidity risk - Credit risk - Interest rate risk - Foreign currency risk - Gearing - Regulatory risk - Operational risk - Financial risk The Investment Manager monitors the financial risks affecting the Company on an ongoing basis within the policies and guidelines determined by the Board. The Directors receive financial information, which is used to identify and monitor risk, quarterly. The Company may enter into derivative contracts to manage risk but has not done so to date. A description of the principal risks the Company faces is detailed below. Investment and strategy There can be no guarantee that the objective of the Company will be achieved. The Investment Manager meets regularly with the Board to discuss the portfolio performance and strategy. The Board receives quarterly reports from the Investment Manager detailing all portfolio transactions and any other significant changes in the market or stock outlooks. Discount volatility The Board recognises that it is in the long-term interests of Shareholders to reduce discount volatility and believes that the prime driver of discounts over the longer term is investment performance. The Company is permitted to employ gearing, a process whereby funds are borrowed principally for the purpose of purchasing securities should the Board feel that it is appropriate to do so. The use of gearing can magnify discount volatility. The Board actively monitors the discount at which the Company's shares trade, and is committed to using its powers to allot or repurchase the Company's ordinary shares with a view to maintaining the middle market price at which the shares trade at close to the net asset value most recently published by the Company (taking into account the effect on the net asset value per share of any rights to which the shares are trading ex-dividend). The Board's commitment to allot or repurchase ordinary shares is subject to it being satisfied that any offer to allot or purchase shares is in the best interests of Shareholders of the Company as a whole, the Board having the requisite authority pursuant to the Articles of Association and relevant legislation to allot or purchase shares, and all other applicable legislative and regulatory provisions. During the year ended 31 December 2010 the Company bought back 1,393,700 (2009: 782,000) ordinary shares into treasury, and nil (2009: 1,218,000) ordinary shares were bought back for cancellation. In addition nil (2009: 126,000) ordinary shares previously held in treasury were cancelled. During the year ended 31 December 2010 the Company issued nil (2009: nil) ordinary shares and sold nil (2009: nil) ordinary shares from treasury. Market risk The Company is exposed to market risk due to fluctuations in the market prices of its investments. Market price 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 in the face of price movements. The Investment Manager monitors the prices of financial instruments held by the Company on an ongoing basis. The Investment Manager actively monitors market and economic data and reports to the Board, which considers investment policy on a regular basis. The net asset value per share of the Company is issued daily to the London Stock Exchange and is also available on the Company's website www.epgot.com. Details of the Company's investment portfolio as at 31 December 2010 are disclosed above. If the investment portfolio valuation fell by 1 per cent from the amount detailed in the financial statements as at 31 December 2010 it would have the effect, with all other variables held constant, of reducing the net capital return before taxation by £513,000 (2009: £493,000). An increase of 1 per cent in the investment portfolio valuation would have an equal and opposite effect on the net capital return before taxation. Liquidity risk The Company's policy with regard to liquidity is to ensure continuity of funding. Short-term flexibility is achieved through cash management. The Company's assets comprise mainly of readily realisable securities which can be sold freely to meet funding requirements if necessary. Securities listed on a recognised stock exchange have been valued at bid prices and exchange rates ruling at the close of business on 31 December 2010. In certain circumstances, the market prices at which investments are valued may not represent the realisable value of those investments, taking into account both the size of the Company's holding and the frequency with which such investments are traded. Credit risk Credit risk is the risk of financial loss to the Company if the contractual party to a financial instrument fails to meet its contractual obligations. The carrying amounts of financial assets best represent the maximum credit risk exposure at the Balance Sheet date. The Company's listed investments are held on its behalf by The Bank of New York Mellon acting as the Company's custodian. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to securities held by the custodian to be delayed. The Board monitors the Company's risk by reviewing the custodian's internal controls reports. Investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Investment Manager. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company's custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed. Cash is only held at banks and in money market funds that have been identified by the Board as reputable and of high credit quality. The maximum exposure to credit risk as at 31 December 2010 was £51,855,000 (2009: £51,780,000). The calculation is based on the Company's credit risk exposure as at 31 December 2010 and this may not be representative of the year as a whole. None of the Company's assets are past due or impaired. Interest rate risk The Company's assets and liabilities, excluding short-term debtors and creditors, may comprise financial instruments which include investments in fixed interest securities. Details of the Company's interest rate exposure as at 31 December 2010 are disclosed in note 17 of these financial statements. The majority of the Company's assets were non-interest bearing as at 31 December 2010. There was limited exposure to interest bearing liabilities during the year ended 31 December 2010. Surplus cash is invested in liquidity funds. If interest rates had reduced by 0.25 per cent (2009: 0.25 per cent) from those obtained as at 31 December 2010 it would have the effect, with all other variables held constant, of reducing the net revenue return before taxation on an annualised basis by £1,000 (2009: £3,000). If there had been an increase in interest rates of 0.25 per cent (2009: 0.25 per cent) there would have been an equal and opposite effect in the net revenue return before taxation. The calculations are based on cash at bank and short-term deposits as at 31 December 2010 and these may not be representative of the year as a whole. Foreign currency risk The base currency of the Company is sterling. The international nature of the Company's investment activities gives rise to a currency risk which is inherent in the performance of its overseas investments. The Company's overseas income is also subject to currency fluctuations. It is not the Company's policy to hedge this risk on a continuous basis. Details of the Company's foreign currency risk exposure as at 31 December 2010 are disclosed in note 17 above of these financial statements. If sterling had strengthened by 1 per cent against all other currencies on 31 December 2010, with all other variables held constant, it would have the effect of reducing the net capital return before taxation by £402,000 (2009: £ 438,000). If sterling had weakened by 1 per cent against all other currencies there would have been an equal and opposite effect on the net capital return before taxation. Gearing Gearing is used to enhance long-term returns to Shareholders. The Company is permitted to employ gearing should the Board feel it appropriate to do so up to a maximum of 25 per cent of total assets. The Company did not have any gearing as at 31 December 2010. On 14 January 2011 the Company entered into a £5,000,000 secured multicurrency revolving credit facility as detailed in note 21. The Company will pay interest on any amounts drawn down under this facility and as such is exposed to interest rate risk due to fluctuations in the prevailing market rates. The principal financial covenants of the facility are that the adjusted asset coverage shall not be less than 4:1 and net assets shall not fall below £25 million. The use of gearing is likely to lead to volatility in the net asset value per share, meaning that a relatively small movement either down or up in the value of the Company's total investments may result in a magnified movement in the same direction of the net asset value per share. The greater the level of gearing, the greater the level of risk and likely fluctuation in the share price. Regulatory risk Failure to qualify under the terms of Sections 1158 and 1159 of the Corporation Tax Act 2010 (formerly Section 842 of the Income and Corporation Taxes Act 1988) may lead to EP Global Opportunities Trust plc being subject to capital gains tax. A breach of the rules of the London Stock Exchange may result in censure by the Financial Services Authority ("FSA") and/or the Company's suspension from listing. The Board has agreed service levels with the Secretary and Investment Manager which include active and regular review of compliance with these requirements. These checks are reviewed at each Board Meeting. Operational risk There are a number of operational risks associated with the fact that third parties undertake the Company's administration and custody. The main risk is that third parties may fail to ensure that statutory requirements such as Companies Act and London Stock Exchange requirements are met. The Board regularly receives and reviews management information on third parties which the Secretary compiles. In addition, each of the third parties provides a copy of its report on internal controls (SAS 70 or equivalent) to the Board each year. Financial risk Inappropriate accounting policies or failure to comply with current or new accounting standards may lead to a breach of regulations. The Investment Manager employs independent administrators to prepare all financial statements and meets with the independent auditors at least once a year to discuss all financial matters including appropriate accounting polices. The Company is a member of the AIC, a trade body intended to promote investment trusts which also develops best practice for all of its members. The Board undertakes an annual assessment and review of all the risks stated above together with a review of any new risks which may have arisen during the year. This risk is formalised within the Company's risk assessment matrix. 19. Capital management policies The Company's objective is to provide Shareholders with an attractive real long-term total return by investing globally in undervalued securities. The portfolio is managed without reference to the comparison of any stock market index. In pursuing this objective, the Board has a responsibility for ensuring the Company's ability to continue as a going concern. This involves the ability to: issue and buyback share capital within limits set by the Shareholders in general meeting; borrow monies in the short and long-term; and pay dividends to Shareholders out of current year revenue earnings as well as out of brought forward revenue reserves. The Company's capital comprises: 2010 2009 £'000 £'000 Called-up share capital 327 327 Capital redemption reserve 14 14 Share premium account 17,991 17,991 Special reserve 10,486 12,905 Capital reserve 21,205 18,091 Revenue reserve 1,597 1,384 Total Shareholders' funds 51,620 50,712 The Company's objectives for managing capital are the same as the previous year and have been complied with throughout the year. 20. Transactions with the Investment Manager Information with respect to transactions with the Investment Manager is provided in note 3 of these financial statements and in the Directors' Report in the Annual Report and Financial Statements. 21 Post balance sheet events On 14 January 2011 the Company entered into a £5,000,000 secured multicurrency revolving credit facility with Scotiabank Europe PLC. The facility is available for one year and interest will be payable on amounts drawn down at the rate of 1.20 per cent above the British Bankers' Association Interest Settlement Rate at the time of draw down (LIBOR). At the date of this report the equivalent of £4,500,000 in Japanese yen and US dollars has been drawn down under this facility. On 4 February 2011 the Company announced that the Board had reached agreement with Anglo & Overseas in respect of a merger between the two companies. Details of the proposed merger were posted to Shareholders in February, with Shareholder meetings taking place in March and approval was recommended by the Board. The merger has now received the approval of the Shareholders of both companies. One member of the Anglo & Overseas Board, Mr Weaver, was appointed to the Board on 10 March 2011 and a total of 31,855,462 new shares in EP Global Opportunities Trust have been issued to Anglo & Overseas Shareholders who elected to roll over their investment into the Company, increasing the net assets of the Company by £59 million to £110 million. Edinburgh Partners has agreed that, following the merger with Anglo & Overseas, the investment management fee will be amended with effect from 1 April 2011 by a one-off reduction of £236,000 paid by Anglo & Overseas and with effect from 10 March 2011 will be reduced from 0.75 per cent to 0.65 per cent per annum on fees chargeable where the average market capitalisation exceeds £100 million. Further details are contained in the Directors' Report in the Annual Report and Financial Statements. ANNUAL GENERAL MEETING The Company's Annual General Meeting will be held at The Bonham Hotel, 35 Drumsheugh Gardens, Edinburgh EH3 7RN on 28 April 2011, at 12.00 noon. DIRECTORS Teddy Tulloch (Chairman) Richard Burns David Hough Ian McBean Giles Weaver INVESTMENT MANAGER Edinburgh Partners Limited 12 Charlotte Square Edinburgh EH2 4DJ NATIONAL STORAGE MECHANISM A copy of the Annual Report and Financial Statements will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.hemscott.com/nsm.do. ENQUIRIES: Sandy Nairn / Kenneth Greig - Edinburgh Partners Limited, telephone: 0131 270 3800 ENDS Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

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