SCHRODER GLOBAL REAL ESTATE SECURITIES LIMITED - Annual Financial Report

Schroder Global Real Estate Securities Limited

Annual Results Announcement

Schroder Global Real Estate Securities Limited (formerly Investors in Global Real Estate Limited) (“the Company”) hereby submits its Annual Report and Accounts for the year ended 31 December 2015 as required by the UK Listing Authority's Disclosure and Transparency Rule 6.3.5.

The Company's Annual Report and Accounts for the year ended 31 December 2015 are also being published in hard copy format and an electronic copy will shortly be available to download from the Company's website www.schroderglobalrealestatesecurities.com

The Company has submitted its Annual Report and Accounts to the National Storage Mechanism and it will shortly be available for inspection at www.morningstar.co.uk/uk/NSM.

The financial information set out in this announcement does not constitute the Company's statutory accounts for the year ended 31 December 2015. All figures are based on the audited financial statements for the year ended
31 December 2015.

The financial information for the year ended 31 December 2015 is derived from the financial statements delivered to the UK Listing Authority. The Auditors reported on those accounts, their report was unqualified and did not contain a statement under Section 263(2) and 263(3) of the Companies (Guernsey) Law, 2008.

The announcement is prepared on the same basis as will be set out in the Report and Accounts for the year ended
31 December 2015.

Investment Objective, Directors and Alternative Investment Fund Managers (“AIFM”) Directive

Investment Objective

Schroder Global Real Estate Securities Limited’s (the “Company”) investment objective is to provide investors with an attractive total return, through investing in listed global real estate securities with strong fundamentals, offering sustainable income and a progressive dividend potential. For additional information refer to the Strategic Report.

Directors

Crispian Collins (Chairman), aged 68

Mr. Collins was formerly Vice Chairman, UBS Global Asset Management and a member of the Group Managing Board of UBS AG. On leaving Oxford University in 1969, Mr. Collins joined Phillips & Drew, London, which culminated in his appointment as Chief Executive in 1998 and Executive Chairman in 1999. He was a founding sponsor of the Phillips & Drew property team. Mr Collins was appointed to the Board on 25 April 2006.

Christopher Legge, aged 60*

Mr. Legge is Guernsey resident and has over 25 years' experience in the financial services industry. Mr. Legge was appointed as an independent non-executive director of the Company and Chairman of the Audit Committee with effect from 1 January 2015. He qualified as a Chartered Accountant in London in 1980 with Pannell Kerr Forster and subsequently moved to Guernsey in 1983 to work for Ernst & Young, progressing from Audit Manager to Managing Partner in the Channel Islands. Mr. Legge retired from Ernst & Young in 2003 and currently holds a number of directorships in the financial sector. Mr. Legge is a Fellow of the Institute of Chartered Accountants in England and Wales and holds a BA (Hons) in Economics from the University of Manchester. 

Richard Sutton, aged 80

Mr. Sutton is formerly a partner of the Delaware law firm Morris, Nichols, Arsht & Tunnell. He is a member of the bar of the US Supreme Court and of the American Law Institute. He is an independent trustee of the CBRE Clarion Global Real Estate Income Fund and the Unidel Foundation. He is a graduate of the University of Delaware and of Yale Law School. Mr Sutton was appointed to the Board on 25 April 2006.

Robert Houston, aged 65**

Mr. Houston is a chartered surveyor and has been active in the institutional property investment management industry for over 40 years. In 1980, he founded Rowe & Pitman Property Services which four years later, became Baring, Houston & Saunders. The firm became part of the ING Group in 1995. In 2008 he was appointed the Global Chairman and Chief Executive of ING Real Estate Investment Management, one of the world's largest property investment managers with more than $80 billion of assets worldwide and operating in 22 countries. In 2009, he established the St. Bride's Business Alliance, a network of real estate businesses which now has offices in London, Madrid, Sydney and the US. He has written / edited over 250 published research bulletins and articles on the real estate market.

Richard Saunders, aged 61***

Mr. Saunders is a Member of Core Plus Properties LLC, a private real estate investment company which currently owns and manages property in the North East and Mid-Atlantic regions of the United States. Mr. Saunders focuses on the Company’s capital markets activities with responsibility for acquisitions and finance. From 1980 to 1995, Mr. Saunders was with Baring, Houston & Saunders, now ING Real Estate Investment Management. He moved to the United States of America in 1993 and his subsequent roles have included working for ING Realty Partners LLC and as Chief Investment Officer of Healey & Baker Investment Advisors. Mr. Saunders has significant international experience having advised investors and companies across Europe, North America, South America and Asia. Mr Saunders was appointed to the Board on 25 April 2006.

* Mr. Legge was appointed as a Director on 1 January 2015 and is Chairman of the Audit Committee.

** Mr. Houston was appointed as a Director on 1 July 2015.

*** Mr. Saunders retired on 30 September 2015.

Alternative Investment Fund Managers ("AIFM") Directive

Certain pre-sale, regular and periodic disclosures required by the Directive may be found either in this Annual Report and Accounts (the “Financial Statements”) or on the website at www.schroders.co.uk/its.

Financial Highlights

		2015		2014
Total returns (including dividends reinvested) for the year ended 31 December
Net asset value ("NAV") per share total return1		7.3	%	21.8	%
Share price total return 1		11.6	%	14.5	%
						% Change
Shareholders' funds, NAV per share, share price and share price
discount at 31 December
Shareholders' funds (£'000)		65,481		62,143		+5.4
Shares in issue excluding Treasury Shares		48,785,327		48,785,327		+0.0
NAV per share		134.22	p	127.38	p	+5.4
Share price		127.00	p	115.25	p	+10.2
Share price discount to NAV per share		5.4	%	9.5	%
Profit, earnings per share and dividends for the year ended 31 December
Profit after taxation including the movement in realised
and unrealised gains and losses on investments (£'000)		4,070		11,380		(64.2)
Earnings per share		8.35	p	22.62	p	(63.1)
Dividends per share		1.50	p	2.85	p	(47.4)
Net cash 2		(1.7)	%	(0.6)	%
Ongoing Charges 3		1.46	%	2.10	%

¹ Source: Morningstar.

² Borrowings used for investment purposes, less cash, expressed as a percentage of net assets. At the current and comparative year end, cash exceeded borrowings (the Company had no borrowings) and this is shown as a negative “Net Cash” position. If borrowings were to exceed cash, this would be shown as “Gearing”.

³ Ongoing Charges represents the management fee and all other operating expenses excluding finance costs, expressed as a percentage of the average daily net asset values during the year.  Ongoing Charges is calculated in accordance with the recommended methodology issued by the Association of Investment Companies.

Financial Record Since Launch

		At launch
		on 31 May
At 31 December		2006	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015
Shareholders funds (£'000)		97,500	113,208	105,813	71,981	88,315	103,303	97,079	86,504	60,373	62,143	65,481
NAV per share (pence)		97.50	113.21	105.87	72.16	88.54	103.56	101.92	111.40	107.92	127.38	134.22
Share price (pence)		100.00	116.75	83.00	31.75	69.75	85.75	81.50	107.00	104.00	115.25	127.00
Share price premium/(discount) to NAV per share (%)		2.6	3.1	(21.6)	(56.0)	(21.2)	(17.2)	(20.0)	(3.9)	(3.6)	(9.5)	(5.4)
Gearing/(net cash) (%)1		-	20.7	5.6	(14.2)	(0.7)	(0.8)	7.2	1.1	10.2	(0.6)	(1.7)
Earnings, dividends and ongoing charges for the year ended 31 December			20062	2007	2008	2009	2010	2011	2012	2013	2014	2015
Profit/(loss) after taxation including the movement in realised and unrealised gains (£'000)			17,765	(2,680)	(31,454)	17,716	18,217	1,282	10,810	1,199	11,380	4,070
Earnings/(loss) per share (pence)			17.76	(2.68)	(31.48)	17.76	18.26	1.33	12.02	1.84	22.62	8.35
Dividends per share (pence)			2.63	4.50	4.16	3.15	3.33	3.85	4.20	4.20	2.85	1.50
Ongoing Charges (%)3			2.01	1.63	1.77	1.63	1.46	1.58	1.60	1.72	2.10	1.46
		At launch
		on 31 May
Performance4		2006	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015
NAV total return 5		100.0	116.5	109.7	94.9	104.0	125.9	128.5	146.0	146.6	178.5	191.5
Share price total return		100.0	118.3	87.7	35.9	84.0	107.9	107.1	146.9	148.1	169.5	189.2

¹ Borrowings used for investment purposes, less cash, expressed as a percentage of net assets. If the amount so calculated is negative, this is shown as "Net cash".

² Represents the period from 31 May 2006, which is the date the Company began investing, to 31 December 2006.

³ Ongoing Charges represents the management fee and all other operating expenses excluding finance costs, transaction costs and any performance fee payable, expressed as a percentage of the average daily net asset values during the year. The figures for 2011 and prior years represent the expenses calculated as above, expressed as a percentage of the average asset values at the beginning and end the year. The figure for 2006 has been adjusted to an annualised basis.

⁴ Source: Morningstar. Rebased to 100 at 31 May 2006.

⁵ Calculated using capital net asset values plus income reinvested for the period to 31 December 2008 and cum income net asset values plus income reinvested for the period thereafter.

Chairman’s Statement

Future of the Company

During 2015, the Board continued to seek ways of growing the Company. To this end, the Company appointed a new broker and further investigated ways of building the shareholder base. Despite good investment performance and a number of initiatives to identify potential new long-term holders for the Company, our best efforts were not successful and we therefore concluded that a longer-term appraisal of the Company’s future was appropriate.

Thus, at the end of 2015, the Directors reviewed both the strategy and long-term future of the Company. Since the appointment of Schroder Real Estate Investment Management Limited (“SREIM”) as the Company’s Investment Manager and the adoption of a new investment strategy in September 2014, the Company had performed well both in absolute and relative terms and we continued to believe in the investment proposition.  However, we also recognise the difficulties of attracting long term demand for a closed-ended vehicle which is perceived to lack sufficient critical mass, which impacts liquidity in the Company’s shares and the discount at which they trade. Notwithstanding extensive marketing efforts, we concluded that our aspirations to grow the Company significantly were not realisable in prevailing conditions.

Accordingly, a scheme for liquidation was put forward for the approval of shareholders and was approved. The scheme provides an opportunity for shareholders to retain their exposure to the same asset class through one or more open-ended vehicles managed by SREIM, or to receive cash.

A circular was published in the first quarter of 2016 which gave details of the proposed scheme, including the proposed roll-over vehicle or vehicles, and convened a general meeting at which shareholders voted in favour of all the proposals.

Appointment of New Broker

Panmure Gordon was appointed as the Company’s Corporate Broker with effect from 28 May 2015. The appointment was made after an extensive review process and was undertaken to bring a fresh approach and heightened activity levels. 

Edison Research

In an effort to provide improved clarity on the Company and its investment objective, we commissioned Edison Research to prepare a detailed report on the Company, management team, investment strategy and performance. Edison is an investment intelligence firm and is authorised and regulated by the Financial Conduct Authority. The first market research paper was issued on 22 June 2015 and was circulated amongst the investor community in the UK and internationally.

Board Changes

During 2015, Trevor Ash and Richard Saunders retired as directors of the Company. The Board greatly appreciates the experience and support Trevor and Richard have contributed to the development of the Company.

Christopher Legge joined the Board as an independent non-executive director of the Company with effect from 1 January 2015. Christopher also took on the role of Chairman of the Audit Committee. Christopher is Guernsey resident and has over 25 years experience in the financial services industry.

Robert Houston was appointed as an independent non-executive director of the Company with effect from 1 July 2015. Robert also joined the Audit Committee. Robert is a chartered surveyor and has been active in the institutional property investment management industry for over 40 years. He has written/edited over 250 published research bulletins and articles on the real estate market. Robert is resident in the UK.

Performance

The Company delivered a strong performance during the year, providing a net asset value total return of 7.3% (2014: 21.8%) and a share price total return of 11.6% (2014: 14.5%). The Investment Manager’s Review provides a more detailed analysis of performance, market background and investment outlook for the Company.

Dividends

Following the change in strategy in October 2014, following the appointment of Schroder Real Estate Investment Management Limited (“SREIM”), the quarterly dividend level was set at 0.375 pence per share (previously 1.05 pence per share) and this rate has been maintained throughout 2015.  However, the Board announced on 16 February 2016 that in light of the proposed scheme for liquidation announced by the Company in December 2015, the fourth interim dividend of 0.375 pence per share for the year ended 31 December 2015 ordinarily payable in the first quarter of 2016 would not be paid.

Annual General Meeting

As shareholders approved the scheme for liquidation referred to earlier in this Statement, no Annual General Meeting (“AGM”) will be required.

Crispian Collins
Chairman
28 April 2016

Investment Manager’s Review

The Company continued to perform strongly with a NAV total return of 7.3% over the course of the year.

We are wedded to the view that the prototype real estate company must exhibit three characteristics – an ability to grow revenue, a strong balance sheet and a strong management team.

The analogy of a reliable sports car is a good one. We have exposure to real estate markets with exceptionally high barriers where rental growth is evident. This acts as a powerful driver of growth. Ally an ability to grow revenues with low financial leverage, a management team with a quantifiable track record and we see the probability of strong financial returns to shareholders markedly increasing. The reliability of balance sheet and management is paramount. Over-levered balance sheets cause huge instability and can be value destructive. Similarly, management teams that move away from their area of expertise or operate in conflicted structures can also weigh on long-term performance.

A persistently volatile economic backdrop was the overriding theme for 2015. We always communicate to shareholders that the decision making process is not influenced by macro factors. Volatile markets can provide opportunity. When prices of securities become sufficiently disconnected from fundamentals, we find better entry points into companies for Shareholder’s capital.

We remain convinced that focusing on a select group of companies that conform to our view of excellence, provides a far happier hunting ground. Our detailed understanding of a group of companies that we are happy to own means we can then use our valuation overlay to identify which companies are disconnected from their intrinsic value. This method requires a degree of honesty. We are certain to miss share prices that are over-sold but not of sufficient quality. That does not concern us. Over a long-term time horizon, the companies we like consistently provide returns to shareholders over their cost of debt and equity finance (cost of capital). This yardstick is imperative; it shows if a company is making a return over its financing costs.   

Our methodology ties in other facets of investing that have a positive impact on shareholders. In backing these identified companies, the added benefit is the avoidance of high turnover which is a malignant - but under-discussed - drag on shareholders returns.

As we move closer to the date for liquidation of the Company it is important to make one important statement.  The investment philosophy of the two funds, which shareholders can transfer into, is exactly the same as this Company.  Our strategy remains the same today as it was yesterday and we believe that this will benefit investors over the long term.

Conclusion

We retain the view that our expertise is in identifying companies that, on a long-term basis, will provide stable and growing cash flow to shareholders. Market gyrations can cause irrational behavior and slavishly following newsfeeds does not, in our view, result in constructive decisions.

Our intent is to own high quality businesses at the right price. As markets continue to see-saw from China concerns, oil price falls and suspected bank instability, we stick to our process and philosophy.

Schroder Real Estate Investment Management Limited
28 April 2016

Investment Portfolio

			Fair value of holding		% of total equity shareholders' funds
Company	Country	Real estate sub sector	£'000
Simon Property Group	United States	Shopping malls	4,543		6.94
Public Storage	United States	Storage	2,974		4.54
Equity Residential	United States	Apartments	2,952		4.51
Prologis	United States	Warehouse and industrial	2,401		3.67
Welltower	United States	Healthcare	2,243		3.43
Boston Properties	United States	Offices	2,220		3.39
Westfield	Australia	Shopping malls	2,171		3.32
Mitsubishi Estate	Japan	Diversified	2,092		3.20
Land Securities Group	United Kingdom	Diversified	2,077		3.17
Essex Property Trust	United States	Apartments	2,068		3.16
Mitsui Fudosan	Japan	Diversified	2,051		3.13
Link Real Estate Investment Trust	Hong Kong	Shopping malls	2,006		3.06
AvalonBay Communities	United States	Apartments	1,757		2.68
General Growth Properties	United States	Shopping malls	1,756		2.68
Unibail-Rodamco	France	Shopping malls	1,641		2.51
Federal Realty Investment Trust	United States	Shopping malls	1,570		2.40
Sun Hung Kai Properties	Hong Kong	Diversified	1,459		2.23
UNITE Group	United Kingdom	Student accommodation	1,436		2.19
Vornado Realty Trust	United States	Diversified	1,403		2.14
Macerich	United States	Shopping malls	1,310		2.00
Twenty largest investments			42,130		64.35
Mirvac Group	Australia	Diversified	1,255		1.92
Hufvudstaden	Sweden	Offices	1,227		1.87
Deutsche Wohnen	Germany	Residential	1,189		1.82
DDR	United States	Shopping malls	1,164		1.78
Stockland	Australia	Diversified	1,074		1.64
Empire State Realty Trust	United States	Offices	1,061		1.62
RioCan Real Estate Investment Trust	Canada	Shopping malls	1,050		1.60
Douglas Emmett	United States	Offices	1,017		1.55
Pebblebrook Hotel	United States	Hotels	1,008		1.54
Hammerson	United Kingdom	Shopping malls	956		1.46
DCT Industrial Trust	United States	Warehouse and industrial	933		1.43
Hysan Development	Hong Kong	Diversified	910		1.39
Great Portland Estates	United Kingdom	Offices	899		1.37
Hulic Co	Japan	Diversified	888		1.36
Rexford Industrial Realty	United States	Warehouse and industrial	867		1.32
Derwent London	United Kingdom	Offices	859		1.31
LaSalle Hotel Properties	United States	Hotels	854		1.30
Workspace Group	United Kingdom	Offices	809		1.24
Big Yellow Group	United Kingdom	Storage	804		1.23
Kerry Properties	Hong Kong	Diversified	713		1.09
CapitaLand	Singapore	Diversified	700		1.07
CubeSmart	United States	Storage	636		0.97
Equity LifeStyle Properties	United States	Home communities	604		0.92
Swire Properties	Hong Kong	Diversified	585		0.89
Sunstone Hotel Investors	United States	Hotels	579		0.88
Total investments			64,771		98.92
Net current assets			710		1.08
Total equity shareholders' funds			65,481		100.00

At 31 December 2014, the twenty largest investments represented 58.91% of shareholders' funds.

Strategic Report

Company Structure

Schroder Global Real Estate Securities Limited (the "Company") was incorporated on 25 April 2006 and is registered in Guernsey as an Authorised Closed-Ended Investment Company. The Company is listed on the London Stock Exchange. The Company carries on the business of an investment company and invests in global real estate securities.

Key performance indicators

The Board measures the development and success of the Company's business through achievement of the Company's investment objective which is considered to be the most significant key performance indicator of the Company.

The Board continues to review the Company's Ongoing Charges to ensure that the total costs incurred by shareholders in the running of the Company remain competitive.  An analysis of the Company's costs, including the investment management fee, Director's fees and other administrative expenses, is submitted to each Board meeting and the investment management fee is reviewed at least annually. The Board will continue to review the Company’s Ongoing Charges up to the date of the Company’s liquidation.

Role and Composition of the Board

The Board is the Company’s governing body and has overall responsibility for maximising the Company’s success by directing and supervising the affairs of the business and meeting the appropriate interests of shareholders and relevant stakeholders, while enhancing the value of the Company and also ensuring protection of investors. A summary of the Board’s responsibilities is as follows:

• statutory obligations and public disclosure;

• strategic matters and financial reporting;

• risk assessment and management including reporting compliance, governance, monitoring and control; and

• other matters having a material effect on the Company.

The Board’s responsibilities for the Annual Report are set out in the Statement of Directors’ Responsibilities.

As at 31 December 2015, the Board comprised four Directors all of whom the Company considers to be independent.  All Directors are non-executive and all Directors are independent as prescribed by the Listing Rules. Mr Sutton was not considered to be independent prior to 2 July 2014 as he is an independent trustee of the CBRE Clarion Global Real Estate Income Fund, a vehicle managed by CBRE Clarion Securities LLC, the Investment Manager until 2 July 2014. The Board’s approach to diversity is that candidates for Board vacancies are selected based on their skills and experience, which are matched against the balance of skills and experience of the overall Board, taking into account the specific criteria for the role being offered. Candidates are not specifically selected on the grounds of their gender but this is taken into account when the Board examines its overall balance, skill set and experience. The Board is currently considering its composition and refreshment. For additional information refer to the Chairman's Statement.

Mr Ash retired as a Director and Mr Legge was appointed as a Director on 1 January 2015.

Mr Houston was appointed as a Director on 1 July 2015.

Mr Saunders retired as a Director on 30 September 2015.

Management

The Investment Manager is authorised and regulated by the Financial Conduct Authority (“FCA”) and provides portfolio management and risk management services to the Company under the terms of an Alternative Investment Fund Managers agreement. The Investment Manager also provides general marketing support for the Company and manages relationships with key investors, in conjunction with the Chairman, other Board members or the corporate broker as appropriate. Northern Trust International Fund Administration Services (Guernsey) Limited provides company secretarial, administration and accounting services, and Northern Trust (Guernsey) Limited provide depositary services.

The Investment Manager has in place appropriate professional indemnity cover.

The Schroders Group manages £313 billion as at 31 December 2015 (2014: £300 billion) on behalf of institutional and retail investors, financial institutions and high net worth clients from around the world, invested in a broad range of asset classes across equities, fixed income, multi-asset and alternatives.

Investment Objective

The Company's investment objective is to provide investors with an attractive total return, through investing in listed global real estate securities with strong fundamentals, offering sustainable income and a progressive dividend potential.

Investment Strategy

The Board has delegated management of the Company’s portfolio to the Investment Manager. The Investment Manager manages the portfolio with the aim of helping the Company to achieve its investment objective. Details of the Investment Manager’s strategy, and other factors that have affected performance during the year, are set out in the Investment Manager’s Review.

Investment Policy

The Company’s investment policy is flexible enabling it to invest in a wide variety of listed securities including equities, preference shares, debt, convertible securities, warrants, interests in collective investment schemes (including limited partnerships and unit trusts) and other securities issued by companies which derive a significant proportion of their revenues or profits from real estate.

There will be no material change to the investment objective or policy described above unless previously sanctioned by shareholders in a general meeting.

The Investment Manager seeks to reduce portfolio risk by limiting investment concentration in any individual security, having exposure to many different property sectors, and also many different geographic regions. In addition, the Investment Manager undertakes a listed securities portfolio liquidity screen to ensure relatively liquid positions in the Company’s portfolio.

Gearing

The Company has power under its Articles to borrow up to an amount equal to 25% of its net assets at the time of the drawdown. The Board's policy is to limit gearing to 25%. Gearing for this purpose is defined as Borrowings used for investment purposes, less cash, expressed as a percentage of net assets. If the figure so calculated is negative, this is described as "net cash".

At the year end the net cash position was 1.7% (2014: net cash position of 0.6%).

The Company cancelled its credit facility with Northern Trust (Guernsey) Limited on 27 May 2015.

Leverage

The AIFM (“Alternative Investment Fund Managers”) Directive requires the Investment Manager to set maximum leverage ratio limits as defined in the AIFM Directive. Accordingly the limits have been set at 2.25 for both the Gross and Commitment calculation methods. At 31 December 2015, the Company’s gross leverage ratio and its Commitment leverage ratio both stood at 1.0.

Investment Philosophy and Process

The investment philosophy of the Investment Manager stems from an inescapable truth: real estate companies in supply constrained markets with strong management teams and low gearing, outperform. In simple terms, we like to hold companies that own buildings that high quality tenants want to occupy. It is equally important that these companies do not borrow too heavily against the value of these buildings. The result is reliable and growing income from a stable capital base. We remain unimpressed by companies that do the opposite of this. The folly of a ‘quick buck’ strategy has been repeated through multiple economic cycles: too much supply and too much debt results in wholesale value destruction. We do not believe that investing in companies where equity capital is put at risk, offsets the potential returns on offer.

Unsurprisingly, our investment process quantifies the risk and valuation of a company based on this philosophy. This quantification of risk means that we explicitly measure how good a company is. If we ally the risk score to the valuation of that business, we can build a portfolio of companies based on solid foundations. These companies are better able to weather broader economic storms.

This disciplined approach means longer holding periods and better returns for shareholders. Your Investment Manager remains committed to providing that.

Stock Research

Proprietary research is conducted by a team of analysts in Asia, North America and Europe. This ensures breadth and depth of coverage and, importantly, it helps identify unique opportunities.

The research process has four components. These components ensure analytical rigour, open communication and tie the team into constructing a global portfolio of property securities.

• Stock coverage - All analysts are expected to cover stocks in their home markets. In addition, there is a system of secondary coverage in place. The team is encouraged to travel to different regions in order to broaden their knowledge of companies and markets. This increases the knowledge of the global portfolio. It is critical that team members view the portfolio in its global context, understanding the total return that the whole portfolio will generate. This increases the scrutiny of each investment decision;

• Flexible process - The process relies on the local analysts appraising opportunities using local knowledge. This is vital as global property markets are not homogenous, with no single way of valuing companies. The two-step process means that analysts are challenged on their assumptions;

• Team communication - The team formally communicates on a call once a week with a fixed agenda in place. The primary reason for this call is to consider changes to the portfolio. Analysts have the opportunity to present their investment case to the team for questioning.  In addition to the weekly call, team members have regional meetings and communication on secondary stocks on a frequent basis; and

• Company and market knowledge - Meeting management and understanding real estate markets is the backbone to the research process. Analysts are encouraged to spend time with management teams and visiting assets. This aligns with the fundamental approach of the investment process.

Stock Selection/Portfolio Construction

The investment process and subsequent portfolio construction is team-based. Every team member has the ability to shape the portfolio. However, the ultimate stock selection and portfolio construction rests with the co-managers.

Consistent with our investment process the portfolio construction is largely driven by bottom-up stock selection. We do not seek to target specific weightings to sectors, countries or regions.  The risk analysis and investment process ensures that the team is constantly aware of excessive or unintended concentrations.

The decision to invest in a company is primarily driven by an analyst’s conviction that a stock is fundamentally undervalued and there are catalysts that will narrow the gap between the currently traded price and Schroders’ fair value assessment, leading to outperformance.

Investment Restrictions and Spread of Investment Risk

Risk in relation to the Company’s investments is spread as a result of the Investment Manager monitoring the Company’s portfolio with a view to ensuring that the portfolio retains an appropriate balance to meet the Company’s investment objective.

In order to comply with the Listing Rules, the Company will not invest more than 10%, in aggregate, of the value of its total assets (calculated at the time of any relevant investment) in other investment companies or investment trusts which are listed on the Official List (save to the extent that those investment companies or investment trusts have stated investment policies to invest no more than 15% of their gross assets in other investments).

The Company’s investment restrictions are as follows:

(a)   distributable income will be principally derived from investment;

(b)   not more than 20% of total assets to be lent to or invested in the securities of any one company or group at the time when the investment or loan is made; for this purpose any existing holding in the company concerned will be aggregated with the proposed new investment;

(c)   not more than 10% of total assets will be invested in any one security;

(d)   the Company shall at all times have a minimum portfolio exposure to at least four of the following listed real estate markets:

·      The United States of America;

·      Canada;

·      Asia (including Hong Kong, Japan; Singapore;

·      The United Kingdom;

·      Continental Europe;

·      Australia and New Zealand;

·      Other

(e)   not more than 65% of total assets will be invested at the time of investment in any one of the listed real estate markets referred to in (d) above;

(f)    dividends will not be paid unless they are substantially covered by income received from underlying investments;

(g)   the Company will be a passive investor and will not seek to control, or be actively involved in the management of any companies or businesses in which it invests; and

(h)   the Company will not be a dealer in investments.

In the event of any breach of the investment restrictions applicable to the Company, shareholders will be informed of the actions to be taken by the Investment Manager by notice sent to the registered addresses of the shareholders in accordance with the Articles or by an announcement issued through a regulatory information service approved by the FCA.

No breaches of these investment restrictions took place during the year ended 31 December 2015.

The Investment Portfolio and the Investment Manager’s Review demonstrate that, as at 31 December 2015, the portfolio was invested in 10 countries and in 12 different industry sectors within such countries. There were 45 equity holdings in the portfolio at the year end. The Board therefore believes that the objective of spreading investment risk has been achieved in this way.

Performance

An outline of performance, market background, investment activity and portfolio strategy during the year under review, as well as outlook, is provided in the Chairman’s Statement and the Investment Manager’s Review.

Principal Risks and Uncertainties

The Board is responsible for the Company’s system of internal controls and for reviewing its effectiveness. The Board is satisfied that by using the Company’s risk matrix in establishing the Company’s system of internal controls while monitoring the Company’s investment objective and policy that the Board has carried out a robust assessment of the principal risks and uncertainties facing the Company. These fall into the following broad categories:

• Investment Risks: The Company is exposed to the risk that its portfolio fails to perform in line with the Company's objectives if it is inappropriately invested or markets move adversely. The Board reviews reports from the Investment Manager at each quarterly Board meeting, paying particular attention to the diversification of the portfolio and to the performance and volatility of underlying investments. Further details on Investment Risks are discussed in the Investment Manager’s Review;

• Strategic Risk: Over time investment vehicles and asset classes can become out of favour with investors or may fail to meet their investment objectives. This may be reflected in a wide discount of the share price to underlying net asset value. The Directors periodically review whether the Company’s investment remit remains appropriate and continually monitor the success of the Company in meeting its stated objectives;

• Operational Risks: The Company is exposed to the risks arising from any failure of systems and controls in the operations of the Investment Manager or the Administrator. The Board receives reports annually from the Investment Manager and Administrator on their internal controls and reviews pricing reports covering the valuations of underlying investments at each quarterly Board meeting;

• Accounting, Legal and Regulatory Risks: The Company is exposed to risk if it fails to comply with the regulations of the UK Listing Authority or if it fails to maintain accurate accounting records. The Administrator provides the Board with regular reports on changes in regulations and accounting requirements; and

• Financial Risks: The financial risks faced by the Company, include market, credit and liquidity risk. These risks and the controls in place to mitigate them are reviewed at each quarterly Board meeting. Further details on Financial Risks are discussed in Note 20.

Going Concern and Viability Statement

In accordance with provision C.2.2 of the UK Corporate Governance Code, published by the Financial Reporting Council (the "FRC") in September 2014 (the “Code”), the Directors have assessed the prospects of the Company and wish to make the following statement:

A plan to liquidate the Company during Q2 2016 is set out in the Chairman’s Statement. Accordingly, the Financial Statements for the year ended 31 December 2015 are prepared on a basis other than going concern reflecting this intention. The going concern basis of accounting is no longer considered to be appropriate. The Company’s investments are valued at bid market prices as at 31 December 2015, with no adjustments made as a result of the impending liquidation. All other assets are also included in the Financial Statements at the amounts they would expect to realise on liquidation. A provision for all the costs of winding up the Company has been included in the Financial Statements.     

Corporate Social and Environment Policy

As an investment company, the Company has no direct social, environmental or human rights responsibilities; its policy is focused on ensuring that its portfolio is properly managed and invested.

Future Developments

The future of the Company is set out in the Chairman’s Statement.

By Order of the Board

Crispian Collins                                                  Christopher Legge
Chairman                                                               Director

28 April 2016

Report of the Directors

The Directors of the Company present their Annual Report and the audited Accounts of the Company for the year ended 31 December 2015.

Dividend Policy

The Company’s dividend policy is to declare dividends at levels which are expected over the medium term to be sustainable based on the income receivable from investments and which will all for potential growth. Dividends are paid on a quarterly basis in February, May, September and December.

Having already paid interim dividends amounting to 1.125 pence per share, the Board has decided, in light of the scheme for liquidation announced by the Company in December 2015, the fourth interim dividend of 0.375 pence per share for the year ended 31 December 2015 ordinarily payable in the first quarter of 2016 will not be paid.

Directors and their Interests

The Directors of the Company and their biographical details can be found in the Directors section.  Mr Ash retired on 1 January 2015, Mr Legge was appointed on 1 January 2015, Mr Houston was appointed on 1 July 2015 and Mr Saunders retired on 30 September 2015. All the other Directors held office throughout the year under review and up to the date of signing this Annual Report.

As shareholders approved the scheme to put the Company into liquidation as set out in the Chairman’s Statement, no AGM will be required, and hence the Directors will resign upon the placement of the Company into liquidation, with the exception of Christopher Legge who will remain as a Director of the Company.

Each of the Directors has signed a letter of appointment with the Company setting out the terms of their appointment.

None of the Directors had a service contract with the Company during the year and accordingly a Director is not entitled to a minimum period of notice or compensation in the event of their removal as a Director. Details of Directors’ remuneration are disclosed in the Directors’ Remuneration Report.

The Directors’ beneficial interests in the shares of the Company as at 31 December 2015 are set out below:

								% of issued
				Unclassified Shares				share capital
Crispian Collins				200,000				0.41%
Christopher Legge				-				-
Richard Sutton				80,000				0.16%
Robert Houston				-				-

Christopher Legge was appointed as a Director on 1 January 2015 and Robert Houston was appointed as a Director on 1 July 2015. They have no beneficial interests in the Shares of the Company.

Prior to Mr Houston’s appointment to the Board, St. Bride’s Managers were paid a fee by the Company for consultancy services provided by Mr Houston of £17,734 (2014: £23,116).

There have been no changes in the interest of the above Directors in the past year.

Going Concern and Viability Statement

The going concern and viability statement is set out in the Strategic Report.

Share Capital

As at the date of this Annual Report, the Company had 48,785,327 ordinary shares of no par value in issue. A total of 5,123,995 shares were held in Treasury. Accordingly, the total number of voting rights in the Company at the date of this Report is 48,785,327.

During the year no shares were repurchased into Treasury and no shares held in Treasury were cancelled.  Full details of changes in the Company's share capital during the year are given in Note 13 to the accounts.

Discount control policy

The Board has renewed the authority to make share repurchases of up to 14.99% of the Company's issued share capital during the year ended 31 December 2015.  The Board retains the option to buy back shares at their discretion, for cancellation or to hold in Treasury, in an effort to reduce the quantum or volatility of the share price discount to NAV per share.

Shareholders approved a resolution that shares would only be reissued from Treasury at a price which is equal to or exceeds the prevailing NAV per share.

Substantial Share Interests

As at the date of this Report, the Company has received notifications of the following interests in 3% or more of the voting rights attaching to the Company’s issued shares.

							% of issued
					Shares held		share capital
The Bank of New York (Nominees) Limited					15,618,058		32.01%
Ferlim Nominees Limited					6,683,007		13.70%
Hero Nominees Limited					4,725,695		9.69%
Brewin Nominees Limited					3,540,298		7.26%
Nortrust Nominees Limited					2,722,600		5.58%
Smith & Williamson Nominees Limited					1,734,525		3.56%
Rock (Nominees) Limited					1,716,450		3.52%
Luna Nominees Limited					1,537,090		3.15%

Investment Manager

CBRE Clarion Securities LLC was the Investment Manager up to 28 July 2014 and was entitled to an investment management fee of 1% of the Company's NAV per annum payable quarterly in arrears.

In addition CBRE Clarion Securities LLC was entitled to receive a performance fee payable annually based on 10% of the Company's total returns in excess of a hurdle rate of 8% per annum. 

Schroder Property Investment Management Limited was appointed as the new Investment Manager and Alternative Investment Fund Manager on 2 July 2014, following the shareholders' approval for the continuation of the Company in its current form at the EGM held on 3 April 2014. On 24 November 2014, Schroder Property Investment Management Limited changed its name to Schroder Real Estate Investment Management Limited (the "Investment Manager"). The Investment Manager is entitled to receive a management fee of 0.85% of the Company’s NAV per annum payable quarterly in arrears, subject to a minimum investment management fee of £550,000 for the 12 month period from 2 July 2014.  The performance fee arrangement ceased on the appointment of the new Investment Manager.

The Board has reviewed the performance of the Investment Manager during the period since its appointment and considers that it provides the Company with considerable investment management resource and experience, thereby enhancing the ability of the Company to achieve its investment objective. The Board therefore considers that the Investment Manager's continued appointment up to the date of the liquidation under the terms of the Management Agreement, is in the best interests of shareholders.

Administration and Secretary

The Company's Administrator is Northern Trust International Fund Administration Services (Guernsey) Limited (the "Administrator"). 

Custodian

The Company's Custodian is Northern Trust (Guernsey) Limited (the "Custodian"). 

Depositary

The Company entered into an agreement with Northern Trust (Guernsey) Limited (the "Depositary") for the provision of depository services with effect from 2 July 2014. Depositary fees are payable to Northern Trust (Guernsey) Limited monthly in arrears at a rate of 0.03% of the Net Asset Value of the Company below £100 million and 0.015% on Net Assets in excess of £100 million as at the last business day of the month subject to a minimum fee of £30,000 per annum.

Broker

Panmure Gordon & Co was appointed as the Company’s Corporate Broker with effect from 28 May 2015, replacing Numis Securities Limited. The appointment was made after an extensive review process and undertaken to bring a fresh approach and heightened activity levels required to grow the Company. By increasing the investor base, we believe we will be able to improve liquidity which, in turn, will make the Company increasingly attractive to a wider range of investors.

Registrar

The Company has appointed Computershare Investor Services (Guernsey) Limited (the "Registrar") to act as its Registrar. The services provided in their capacity as Registrar include share register maintenance, including the cancellation and allotment of shares as required, handling shareholder queries and correspondence, arranging for the payment of dividends, maintenance and reconciliation of associated bank accounts, meeting management for Company meetings including registering of proxy votes and scrutineer services as and when required, and Corporate Action services.

Greenhouse Gas Emissions

As the Company outsources its operations to third parties, it has no greenhouse gas emissions to report.

Foreign Account Tax Compliance Act

For purposes of the US Foreign Accounts Tax Compliance Act, the Company registered with the US Internal Revenue Service (“IRS”) as a Guernsey reporting Foreign Financial Institution (“FFI”), received a Global Intermediary Identification Number (52F6YC.99999.SL.831), and can be found on the IRS FFI list under the link http://apps.irs.gov/app/fatcaFfiList/flu.jsf. The responsible officer is Christopher Legge.

The Company is subject to Guernsey regulations and guidance based on reciprocal information sharing inter-governmental agreements which Guernsey has entered into with the United Kingdom and the United States of America. The Board will take the necessary actions to ensure that the Company is compliant with Guernsey regulations and guidance in this regard.

Disclosure of Information to the Independent Auditor

Due to pending liquidation of the Company, the auditor will resign with effect from when the Company goes into liquidation and therefore will not be reappointed.

Each of the persons who is a Director at the date of approval of the Financial Statements confirms that:

(1)   so far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and

(2)   each Director has taken all steps he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of The Companies (Guernsey) Law, 2008.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Financial Statements in accordance with applicable law and regulations. The Directors believe that the Financial Statements and all reports therein reflect a fair, balanced and understandable statement of the Company’s affairs.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:

• properly select and apply accounting policies;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

• provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

• make an assessment of the Company's ability to continue as a going concern. As set out in Note 1, basis of preparation, the Board do not believe that it is appropriate to prepare these Financial Statements on a going concern basis.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with The Companies (Guernsey) Law, 2008.

The Directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names are set out on the inside front cover of this report, confirms that to the best of their knowledge that:

• these Financial Statements have been prepared in conformity with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company as required by DTR 4.1.12;  

• the Annual Report, taken as a whole, is fair, balanced and understandable and provide the information necessary for the shareholders to assess the Company’s performance, business model and strategy; and

• the Annual Report includes information detailed in the Chairman's Statement, the Report of the Directors, the Investment Manager's Review and the notes to the accounts, which includes a fair view 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, as required by:

(a) DTR 4.1.8 of the Disclosure and Transparency Rules, being a fair review of the Company business and a description of the principal risks and uncertainties facing the Company; and

(b) DTR 4.1.11 of the Disclosure and Transparency Rules, being an indication of important events that have occurred since the end of the financial year and the likely future development of the Company.

By Order of the Board

Crispian Collins                                                  Christopher Legge
Chairman                                                               Director
28 April 2016

Corporate Governance Report

The Board is committed to high standards of corporate governance and has implemented a framework for corporate governance which it considers to be appropriate for an investment company in order to comply with the principles of the UK Corporate Governance Code (the "UK Code"). The Company is also required to comply with the Code of Corporate Governance (the “GFSC Code”) issued by the Guernsey Financial Services Commission.

The FRC issued a revised Code in September 2012, for reporting periods beginning on or after 1 October 2014. The AIC updated the AIC Code of Corporate Governance (the “AIC Code") (including the Guernsey edition) and its Guide to Corporate Governance (the “AIC Guide") to reflect the relevant changes to the FRC document in February 2015. The Board has adopted the revised code.

Compliance Statement

The UK Listing Authority requires all UK listed premium companies to disclose how they have complied with the provisions of the UK Code. This Corporate Governance Report, together with the Going Concern and Viability Statement and the Statement of Directors’ Responsibilities, indicates how the Company has complied with the principles of good governance of the Code and its requirements on Internal Control.

The Company is a member of the Association of Investment Companies (the "AIC") and by complying with the AIC Code is deemed to comply with both the UK Code and the GFSC Code.

The Board has considered the principles and recommendations of the AIC Code, by reference to the guidance notes provided by the AIC (the “AIC Guide”), and considers that reporting against these will provide better information to shareholders. To ensure ongoing compliance with these principles the Board receives a report from the Company Secretary, at each quarterly meeting, identifying how the Company is in compliance and identifying any changes that might be necessary.           

The AIC Code and the AIC Guide are available on the AIC’s website, www.theaic.co.uk. The UK Code is available in the Financial Reporting Council’s website, www.frc.org.uk.

Throughout the year ended 31 December 2015, the Company has complied with the recommendations of the AIC Code and thus the relevant provisions of the UK Code, except as set out below.

The UK Code includes provisions relating to:

• the role of the Chief Executive;

• the Executive Directors’ remuneration;

• the need for an internal audit function; and

• the whistle blowing policy

For the reasons set out in the AIC Guide, and as explained in the UK Code, the Board considers that these provisions are not relevant to the position of the Company as it is an externally managed investment company. The Company has therefore not reported further in respect of these provisions.

The Directors are non-executive and the Company does not have employees, hence no Chief Executive or whistle-blowing policy is required. The Board is satisfied that any relevant issues can be properly considered by the Board.

There have been no other instances of non-compliance, other than those noted above. However the Directors have satisfied themselves that the Company's service providers have appropriate whistle-blowing policies and procedures and have received confirmation from the service providers that nothing has arisen under those policies and procedures which should be brought to the attention of the Board.  Details of compliance are noted below. The absence of an internal audit function is discussed in the Audit Committee Report.

Operation and Composition of the Board

Composition

The composition of the Board is set out in the Strategic Report.

The Board does not consider it appropriate to appoint a Senior Independent Director because they are all deemed to be independent by the Company. The Board considers it has appropriate balance of diverse skills and experience, independence and knowledge of the Company and the wider sector, to enable it to discharge its duties and responsibilities effectively and that no individual or group of individuals dominates decision making. The Chairman is responsible for leadership of the Board and ensuring its effectiveness.

There are provisions in the Company’s Articles of Incorporation which requires Directors to seek re-election on a periodic basis. There is no limit on length of service, nor is there any upper age restriction on Directors.

The Board considers that there is significant benefit to the Company arising from continuity and experience among directors, and accordingly does not intend to introduce restrictions based on age or tenure. It does, however, believe that shareholders should be given the opportunity to review membership of the Board on a regular basis.

Chairman

The Chairman is Mr Collins. The Chairman of the Board must be independent for the purposes of Chapter 15 of the Listing Rules. Mr Crispian Collins is considered independent because he:

• has no current or historical employment with the Investment Manager; and

• has no current directorships in any other investment funds managed by the Investment Manager.

Role of the Board

The role of the Board is set out in the Strategic Report.

The Board has contractually delegated responsibility for the management of its investment portfolio, the arrangement of custodial and depositary services and the provision of accounting and company secretarial services.

The Board needs to ensure that the Annual Report, taken as a whole, is fair, balanced and understandable and provide the information necessary for Shareholders to assess the Company’s performance, business model and strategy. In seeking to achieve this, the Directors have set out the Company’s investment objective and policy and have explained how the Board and its delegated Committees operate and how the Directors review the risk environment within which the Company operates and set appropriate risk controls. Furthermore, throughout the Annual Report the Board has sought to provide further information to enable Shareholders to have a fair, balanced and understandable view.

Training and Development

On appointment, Directors receive a full, formal and tailored induction. Directors are also provided on a regular basis with key information on the Company’s policies, regulatory and statutory requirements and internal controls. Changes affecting Directors’ responsibilities are advised to the Board as they arise. Directors may also attend training and industry seminars and training and development needs are included as part of the evaluation process and are agreed with the Chairman.

Conflicts of Interest

The Board has approved a policy on Directors’ conflicts of interest. Under this policy, Directors are required to disclose all actual and potential conflicts of interest to the Board as they arise for consideration and approval. The Board may impose restrictions or refuse to authorise such conflicts if deemed appropriate.

Board Evaluation

The AIC Code requires external evaluation of Board performance every three years. The Board undertook an externally facilitated evaluation during 2013 by Trust Associates, having commissioned the report the previous year. The report of the evaluation confirmed that the Company observes a high standard of Corporate Governance and, accordingly, the Board has conducted self-appraisals in 2015.

The Directors consider how the Board functions as a whole taking balance of skills, experience and length of service into consideration and also reviews the individual performance of its members.

This process is conducted by the Chairman reviewing with all the Directors their performance, contribution and commitment to the Company.  The performance of the Chairman is evaluated by the other independent Directors.

During a Board Meeting held on 21 April 2015 the Chairman and Directors reviewed the board performance. The Chairman was satisfied that the Directors complemented each other and worked well as a Board.

Directors' Liability Insurance and Indemnity

Directors' and Officers’ liability insurance cover is maintained by the Company on behalf of the Directors.

Election of Directors

The election of Directors is set out in the Report of the Directors.

Directors' Attendance at Meetings

The Company holds a minimum of four Board meetings per year to discuss general management, structure, finance, corporate governance, marketing, risk management, compliance, asset allocation and gearing, contracts and performance. The quarterly Board meetings are the principal source of regular information for the Board enabling it to determine policy and to monitor performance, compliance and controls but these meetings are supplemented by communication and discussions throughout the year.

A representative of the Investment Manager, Administrator and Depositary attends each Board meeting either in person or by telephone thus enabling the Board to fully discuss and review the Company’s operation and performance. Each Director has direct access to the Investment Manager and Company Secretary and may, at the expense of the Company, seek independent professional advice on any matter.

The table below sets out the number of Board and Audit Committee meetings held during the year ended
31 December 2015 and, where appropriate, the number of such meetings attended by each Director.

				Number of	Crispian	Christopher	Richard	Richard	Robert
				Meetings held	Collins	Legge	Saunders	Sutton	Houston
Board Meetings				5	5	5	3	5	3
Audit Committee Meetings				2	2	2	2	2	1
Adhoc Meetings				2	2	2	1	2	1

Mr Ash retired as a Director and Mr Legge was appointed as a Director on 1 January 2015. Mr Houston was appointed as a Director on 1 July 2015. Mr Saunders retired as a Director on 30 September 2015.

The Chairman’s commitments have not changed during the year. Refer to the Directors section.

Directors’ interests

Directors’ interests are set out in the Report of the Directors section.

Board Committees and their Activities

Terms of Reference

All Terms of Reference of Committees are available from the Company Secretary upon request.

Audit Committee

The Company has established an Audit Committee with formal duties and responsibilities. This Committee meets formally at least twice a year and each meeting is attended by the independent auditor and Administrator. The Company's Audit Committee is comprised of the entire Board. During the year ended 31 December 2015 the Audit Committee was chaired by Mr Legge.

A report of the Audit Committee detailing its responsibilities and its key activities is presented in the Audit Committee Report.

Remuneration, Management Engagement and Nominations Committees

The Board does not have a separate remuneration, management engagement or nomination committees because these functions are carried out as part of the regular Board business. It was not necessary for this Company to appoint a Remuneration Committee as there were no Executive Directors. A Remuneration Report prepared by the Board is presented in the Directors’ Remuneration Report. Directors’ remuneration is considered on an annual basis.

Relations with Shareholders

The Board welcomes shareholders’ views and places great importance on communication with its shareholders. The Board receives regular reports on the views of its shareholders from the Company’s broker, Panmure Gordon & Co. and from the Investment Manager.

The Chairman and other Directors are available to meet shareholders if required.

In addition, the Company maintains a website which contains comprehensive information, including regulatory announcements, share price information, financial reports, investment objectives and strategy, investor contracts and information on the Board.

The Investment Manager provides a monthly newsletter which is available on the Company’s website.

Anti-Bribery Policy

The Company continues to be committed to carrying out its business fairly, honestly and openly and continues to operate an anti-bribery policy.  

Internal Control and Risk Management Systems

The Board is ultimately responsible for establishing and maintaining the Company’s system of internal controls and for maintaining and reviewing its effectiveness. The Company’s risk matrix continues to be the basis of the Company’s risk management process in establishing the Company’s system of internal financial and reporting control. The risk matrix is prepared and maintained by the Board which initially identifies the risks facing the Company and then collectively assesses the likelihood of each risk, the impact of those risks and the strength of the controls operating over each risk. The system of internal controls is designed to manage rather than to eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against misstatement and loss. These controls aim to ensure that assets of the Company are safeguarded, proper accounting records are maintained and the financial information for publication is reliable. The Board uses a formal risk assessment matrix to identify and monitor business risks. These arrangements will continue to the date of the Company’s liquidation.

The Board has delegated the management of the Company’s investment portfolio and the administration, registrar and corporate secretarial functions including the independent calculation of the Company’s NAV and the production of the Annual Report which are independently audited. Whilst the Board delegates responsibility, it retains accountability for the functions it delegates and is responsible for the systems of internal control. Formal contractual agreements have been put in place between the Company and providers of these services. On an ongoing basis board reports are provided at each quarterly board meeting from the Investment Manager, Administrator, Registrar and Company Secretary; and a representative from the Investment Manager is asked to attend these meetings. These arrangements will continue to the date of the Company’s liquidation.

In accordance with Listing Rule 15.6.2 (2) R and having formally appraised the performance and resources of the Investment Manager, in the opinion of the Directors their continuing appointment of the Investment Manager on their terms agreed is in the interests of the Company and the Shareholders.

In common with most investment companies, the Company does not have an internal audit function. All of the Company’s management functions are delegated to the Investment Manager, Administrator, Registrar and Company Secretary which have their own internal audit and risk assessment functions.

In compliance with provision C.2.1 of the UK Corporate Governance Code, the board confirms that it has undertaken a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.  However, in making this statement, the Board also draws attention to the plan for the liquidation of the Company during Q2 2016 referred to in the Chairman’s Statement and  in the Strategic Report.  In addition, the board regularly reviews the effectiveness of the Company's risk management and internal control systems. The board's monitoring covers all material controls, including financial, operational and compliance controls. It is based principally on reviewing reports from management to consider whether significant risks are identified, evaluated, managed and controlled and whether any significant weaknesses are promptly remedied and indicate a need for more extensive monitoring. The board has also performed a specific assessment for the purpose of this annual report. This assessment considers all significant aspects of risk management and internal control arising during the period covered by the report including the work of internal audit.  The audit committee assists the board in discharging its review responsibilities.

During the course of its review of the risk management and internal control systems, the board has not identified nor been advised of any failings or weaknesses which it has determined to be significant. Therefore a confirmation in respect of necessary actions has not been considered appropriate.

Principal risks and uncertainties are set out in the Strategic Report.

By Order of the Board

Crispian Collins                                                  Christopher Legge
Chairman                                                               Director

28 April 2016

Audit Committee Report

Below, we present the Audit Committee Report for 2015, setting out the responsibilities of the Audit Committee and its key activities in 2015. As in previous years, the Audit Committee has reviewed the Company's financial reporting, the independence and effectiveness of the independent auditor and the internal control and risk management systems of service providers. The Audit Committee considered whether the Annual Report is fair, balanced and understandable and whether they provided the necessary information for shareholders to assess the Company’s performance, business model and strategy before recommending them to the Board for approval. In order to assist the Audit Committee in discharging these responsibilities, regular reports are received from the Investment Manager, Administrator and independent auditor. The Auditor will resign upon the Company going into liquidation.

A member of the Audit Committee has been available at each AGM to respond to any shareholder questions on the activities of the Audit Committee. However, as shareholders approved the scheme for liquidation as set out in the Chairman’s Statement, no AGM will be required in 2016.

Responsibilities

The Audit Committee reviews and recommends to the Board, the Financial Statements of the Company and is the forum through which the independent auditor reports to the Board of Directors. The independent auditor and the Audit Committee will meet together without representatives of either the Administrator or Investment Manager being present if either considers this to be necessary.

The role of the Audit Committee includes:

• monitoring the integrity of the Financial Statements of the Company and any formal announcements relating to the Company’s financial performance, and reviewing significant financial reporting judgements;

• reviewing and reporting to the Board on the significant issues and judgements made in the preparation of the Company's published Financial Statements, (having regard to matters communicated by the independent auditor) preliminary announcement, significant financial returns to regulators and other financial information;

• considering the appropriateness of accounting policies and practices including critical judgement areas;

• reviewing and considering the UK Code, AIC Code, FRC Guidance on Audit Committees;

• monitoring and reviewing the quality and effectiveness of the independent auditor and their independence. This includes meeting regularly with the independent auditor to discuss the audit plan, the subsequent audit report and considering the level of fees for both audit and non-audit work, and monitoring and reviewing the auditor independence, objectivity, expertise, resources and qualifications;

• considering and making recommendations to the Board on the appointment, reappointment, replacement and remuneration to the Company's independent auditor;

• reviewing the Company's procedures for prevention, detection and reporting of fraud, bribery and corruption; and

• monitoring and reviewing the internal control and risk management systems of the service providers together with the need for an Internal Audit function.

The Audit Committee's full terms of reference can be obtained by contacting the Company Secretary.

Financial Reporting

The Audit Committee's review of the Half Yearly Financial Report and Audited Annual focused on the valuation and ownership of investments.

Valuation of Investments

The Company’s investments had a fair value of £64,771,000 as at 31 December 2015 (2014: £61,859,000) and represented the majority of the net assets of the Company. The investments are all listed and the valuation of the investments is in accordance with the requirements of IFRS as adopted by the European Union. The Audit Committee considered the fair value of the investments held by the Company as at 31 December 2015 to be reasonable based on information provided by the Investment Manager and Administrator. All prices are confirmed to independent pricing sources as at 31 December 2015 by the Administrator and are subject to review process by the Administrator and oversight by the Investment Manager.

Ownership of Investments

The Company’s investment holdings are reconciled to independent reports from the Custodian by the Administrator with any discrepancies being fully investigated and reconciled by the Administrator. The Audit Committee therefore consider the ownership of the investments held by the Company as at 31 December 2015 to be reasonable based on a  review of information provided by the Investment Manager, Custodian and Administrator.

The Independent Auditor has confirmed to the Audit Committee that no material misstatements were found in the course of its work. Furthermore, the Investment Manager and Administrator confirmed to the Committee that they were not aware of any material misstatements including matters relating to presentation.

The Audit Committee confirms that it is satisfied that the independent auditor has fulfilled its responsibilities with diligence and professional scepticism.

The Audit Committee advised the Board that, to the best of their knowledge, this Financial Statements, taken as a whole, is fair, balanced and understandable.

The Audit Committee has assessed the appropriateness of the accounting policies and practices adopted by the Company together with the clarity of disclosures included in the Financial Statements. Following a review of the presentations and reports from the Administrator and consulting where necessary with the independent auditor, the Audit Committee is satisfied that the Financial Statements appropriately address the critical judgements and key estimates (both in respect to the amounts reported and the disclosures). The Audit Committee is also satisfied that the significant assumptions used for determining the value of assets and liabilities have been appropriately scrutinised, challenged and are sufficiently robust.

Risk Management

The Audit Committee continued to consider the process for managing the risk of the Company and its service providers. Risk management procedures for the Company, as detailed in the Company's risk assessment matrix, were reviewed and approved by the Audit Committee. Regular reports are received from the Investment Manager and Administrator on the Company’s risk evaluation process and reviews.

Fraud, Bribery and Corruption

The Audit Committee continues to monitor the fraud, bribery and corruption policies of the Company. The Board receives a confirmation from all service providers that there have been no instances of fraud, bribery or corruption.

The Independent Auditor

Deloitte LLP has been the Independent Auditor from the date of the initial listing on the London Stock Exchange. The recent revisions to the UK Code introduced a recommendation that the external audit be put out to tender every ten years. However, this will not be applicable due the approved proposal to liquidate the Company.

Independence, Objectivity and Fees

The independence and objectivity of the independent auditor is reviewed by the Audit Committee which also reviews the terms under which the independent auditor is appointed to perform non-audit services.  The Audit Committee has established pre-approval policies and procedures for the engagement of Deloitte LLP to provide audit, assurance and tax services. These are that the independent auditor may not provide a service which:

• places them in a position to audit their own work;

• creates a mutuality of interest;

• results in the independent auditor developing close relationships with service providers of the Company;

• results in the independent auditor functioning as a manager or employee of the Company; or

• puts the independent auditor in the role of advocate of the Company.

As a general rule, the Company does not utilise independent auditors for internal audit purposes, secondments or valuation advice. Services which are in the nature of audit, such as tax compliance, tax structuring, private letter rulings, accounting advice, quarterly reviews and disclosure advice are normally permitted but must be pre-approved where fees are likely to be above £25,000.

The following table summarises the remuneration paid to Deloitte LLP for audit and non-audit services during the years ended 31 December 2015 and 31 December 2014:

								2015	2014
								£000's	£000's
Statutory Audit								28	30
Total audit fees								28	30
Interim review								14	14
Foreign Account Tax Compliance Act								-	3
Total non-audit related fees								14	17
Total fees								42	47

In line with the policies and procedures above, the Audit Committee does not consider that the provision of these non-audit services, which comprised of independent review of the Half Yearly Financial Report, Foreign Account Tax Compliance Act ("FATCA") advice, and withholding tax claims to be a threat to the objectivity and independence of the independent auditor.

Deloitte LLP also have safeguards in place to ensure objectivity and independence. These include:

• Tax work is carried out by teams independent of the audit team and ethical walls ensure that no employee works in both teams; and

• Review and challenge of key decisions by the Engagement Quality Review Partner and engagement quality control review by a member of the Independent Professional Standards Review Team.

When considering the effectiveness and independence of the Independent Auditor, the Audit Committee also takes account of factors such as:

• The audit plan presented to them before each audit;

• The post audit report including variations from the original plan;

• Changes in audit personnel;

• The Independent Auditor's own internal procedures to identify threats to independence; and

• Feedback from both the Investment Manager and Administrator evaluating the performance of the team.

The Audit Committee has examined the scope and results of the audit, its cost effectiveness and the independence and objectivity of the independent auditor, with particular regard to non-audit fees, and is satisfied that an effective audit has been completed, that the scope of the audit was appropriate and significant judgements have been challenged robustly. It also considers Deloitte LLP, as independent auditor, to be independent of the Company.

Reappointment of the Independent Auditor

Due to pending liquidation of the Company, the auditor will resign with effect from when the Company goes into liquidation and therefore will not be reappointed.

Internal Control and Risk Management Systems

The Audit Committee, after consultation with the Investment Manager and independent auditor, considers the key risk of misstatement in its Financial Statements to be the override of controls by its service providers, the Investment Manager or the Administrator.

The Audit Committee reviews and examines externally prepared assessments of the control environment in place at the Investment Manager and the Administrator. No significant failings or weaknesses were identified in these reports.

The Audit Committee has also reviewed the need for an internal audit function. The Audit Committee has decided that the systems and procedures employed by the Investment Manager and the Administrator, including their internal audit functions, provide sufficient assurance that a sound system of internal control, which safeguards the Company’s assets, is maintained. An internal audit function specific to the Company is therefore considered unnecessary.

For any questions on the activities of the Audit Committee not addressed in the foregoing, a member of the Audit Committee remains available to attend each AGM to respond to such questions. However, as shareholders approved the scheme for liquidation as set out in the Chairman’s Statement, no AGM will be required.

Christopher Legge
Chairman, Audit Committee
28 April 2016

Directors’ Remuneration Report

Introduction

As shareholders approved the scheme for liquidation as set out in the Chairman’s Statement, there will be no AGM and therefore no ordinary resolution for the approval of the annual remuneration report will be put to the shareholders.

Policy on Remuneration of Directors

All Directors are non-executive and a Remuneration Committee has not been established. The Board as a whole considers matters relating to the Directors’ remuneration. No advice or services were provided by any external person in respect of its consideration of the Directors’ remuneration.

The Company’s policy is that the fees payable to the Directors should reflect the time spent by the Directors on the Company’s affairs and the responsibilities borne by the Directors and be sufficient to attract, retain and motivate directors of a quality required to run the Company successfully. The Chairman of the Board is paid a higher fee in recognition of his additional responsibilities, as is the Chairman of the Audit Committee. The policy is to review fee rates periodically, although such a review will not necessarily result in any changes to the rates, and account is taken of fees paid to directors of comparable companies.

There are no long term incentive schemes provided by the Company and no performance fees are paid to Directors.

No Director has a service contract with the Company but each Director is appointed by a letter of appointment which sets out the main terms of their appointment. Directors hold office until they retire by rotation or cease to be a director in accordance with the Articles of Incorporation, by operation of law or until they resign.

Component Parts of the Directors’ Remuneration

The Directors of the Company are remunerated for their services at such a rate as the Directors determine provided that the aggregate amount of such fees does not exceed £150,000 (31 December 2014: £150,000) per annum.

Directors are remunerated in the form of fees, payable quarterly in arrears, to the Director personally. No Directors have been paid additional remuneration outside their normal Directors’ fees and expenses. Directors fees have not increased during the year (2014: no increase during the year).

Fees Paid to Directors

For the years ended 31 December 2015 and 31 December 2014 Directors’ fees paid were:

							2015		2014
Crispian Collins							£35,000		£35,000
Chris Legge							£30,000		£0
Richard Sutton							£27,500		£27,500
Richard Saunders							£20,625		£27,500
Robert Houston							£13,750		£0
Trevor Ash							£0		£30,000

Mr Ash retired as a Director on 1 January 2015.

Mr Legge was appointed as a Director on 1 January 2015 and receives £30,000 per annum as a Director and Chairman of the Audit Committee.

Mr Houston was appointed as a Director on 1 July 2015 and receives £27,500 per annum as a Director.

Mr Saunders retired as a Director on 30 September 2015.

By Order of the Board

Crispian Collins                                                  Christopher Legge
Chairman                                                               Director

28 April 2016

Report of the Depositary to the Members of Schroder Global Real Estate Securities Limited

Northern Trust (Guernsey) Limited has been appointed as Depositary to Schroder Global Real Estate Securities Limited (the “Company”) in accordance with the requirements of Article 36 and Articles 21(7), (8) and (9) of the Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the “AIFM Directive”).

We have enquired into the conduct of Schroder Real Estate Investment Management Ltd (the “AIFM”) and the Company for the financial year ending 31 December 2015, in our capacity as Depositary to the Company.

This report including the review provided below has been prepared for and solely for the Shareholders in the Company. We do not, in giving this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown.

Our obligations as Depositary are stipulated in the relevant provisions of the AIFM Directive and the relevant sections of Commission Delegated Regulation (EU) No 231/2013 (collectively the “AIFMD legislation”). 

Amongst these obligations is the requirement to enquire into the conduct of the AIFM and the Company and their delegates in each annual accounting period. We have therefore enquired into the conduct of the AIFM for the period ending 31 December 2015 in our capacity as Depositary to the Company.

Our report shall state whether, in our view, the Company has been managed in that period in accordance with the AIFMD legislation. It is the overall responsibility of the AIFM and the Company to comply with these provisions. If the AIFM, the Company or their delegates have not so complied, we as the Depositary will state why this is the case and outline the steps which we have taken to rectify the situation.

Basis of Depositary Review

The Depositary conducts such reviews as it, in its reasonable discretion, considers necessary in order to comply with its obligations and to ensure that, in all material respects, the Company has been managed (i) in accordance with the limitations imposed on its investment and borrowing powers by the provisions of its constitutional documentation and the appropriate regulations and (ii) otherwise in accordance with the constitutional documentation and the appropriate regulations.  Such reviews vary based on the type of the Company, the assets in which the Company invests and the processes used, or experts required, in order to value such assets.

Review

In our view, the Company has been managed during the period, in all material respects:

(i)            in accordance with the limitations imposed on the investment and borrowing powers of the Company by the constitutional document; and by the AIFMD legislation; and

(ii)           otherwise in accordance with the provisions of the constitutional document; and the AIFMD legislation.

For and on behalf of
Northern Trust (Guernsey) Limited
28 April 2016

Independent Auditor’s Report to the Members of Schroder Global Real Estate Securities Limited

Opinion on Financial Statements of Schroder Global Real Estate Securities Limited (the “Company”)	In our opinion the Financial Statements: ·      give a true and fair view of the state of the Company’s affairs as at 31 December 2015 and of its profit for the year then ended; ·      have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and ·      have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008. The Financial Statements comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Cash Flow Statement, the Statement of Changes in Equity and the related Notes 1 to 22.  The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union.
Emphasis of matter - Financial statements prepared other than on a going concern basis	We have considered the adequacy of the disclosure made in Note 1 to the financial statements, which explains that the financial statements have been prepared on a basis other than that of a going concern. As described in Note 1 to the financial statements, the shareholders have approved the scheme for liquidation. Our opinion is not modified in respect of this matter.
Going concern and the directors’ assessment of the principal risks that would threaten the solvency or liquidity of the Company	We have reviewed the directors’ statement regarding the appropriateness of the going concern basis of accounting contained within Note 1 to the Financial Statements. Aside from the matter disclosed in the emphasis of matter paragraph above, we have nothing material to add or draw attention to in relation to: •           the directors' confirmation in the Strategic Report that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity; •           the disclosures in the Corporate Governance Report that describe those risks and explain how they are being managed or mitigated; •           the directors’ statement in note 1 to the financial statements about whether they considered appropriate to adopt the going concern basis of accounting in preparing them.
Independence	We are required to comply with the Financial Reporting Council’s Ethical Standards for Auditors and we confirm that we are independent of the company and we have fulfilled our other ethical responsibilities in accordance with those standards. We also confirm we have not provided any of the prohibited non-audit services referred to in those standards.
Our assessment of risks of material misstatement	The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team:

   

Risk	How the scope of our audit responded to the risk
Valuation of the Company’s investments Investments of £64.8 million (2014: £61.9 million) are classified as Level 1 investments at year end as disclosed in Note 19. There is a risk that the Company’s pricing methodology does not accurately reflect the potential exit price at the year-end date. This risk is heightened when current market conditions may impair the liquidity of the investment portfolio as an element of judgment may need to be incorporated into the valuation.	We evaluated the design and implementation of controls around the valuation of investments. We tested 100% of the year-end prices to prices obtained independently from reliable third party sources. In addition, the liquidity of the portfolio was considered as at the year-end date to assess whether any adjustment was required to the valuation for illiquid or otherwise suspended from trading equities. Further, we considered whether the impending liquidation of the Company had any material impact on the valuation of the investments as at the statement of financial position date.
Ownership of the Company’s investments There is a risk that the Company has not retained the rights and obligations of its investment portfolio, or that the investment portfolio is not recognised on a trade date basis which may result in gains and losses on investments being recognised in the incorrect period.	We evaluated the design and implementation of controls around the ownership of investments. We tested ownership by confirming all positions with the custodian on both a trade date and settlement date basis, and reconciled the trade date basis to the Company’s records in order to test for the recognition of gains and losses in the correct period.

The description of risks above should be read in conjunction with the significant issues considered by the Audit Committee discussed in the Audit Committee Report.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Our application of materiality	We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work. We determined materiality for the Company to be £0.66 million (2014: £0.62 million), which is approximately 1% (2014: 1%) of equity. As the investment objective of the Company is primarily to invest for capital appreciation, we consider the net asset value of the Company to be a key performance indicator for shareholders. We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £13,100 (2014: £12,400), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.  We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
An overview of the scope of our audit	Our audit was scoped by obtaining an understanding of the Company and its environment, including internal control, and assessing the risks of material misstatement. Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team. The administrator maintains the books and records of the Company including accounting and financial reporting services. Our audit therefore included obtaining an understanding of this service organisation and its relationship with the Company.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records	Under the Companies (Guernsey) Law, 2008 we are required to report to you if, in our opinion: ·      we have not received all the information and explanations we require for our audit; or ·      proper accounting records have not been kept; or ·      the financial statements are not in agreement with the accounting records. We have nothing to report in respect of these matters.
Corporate Governance Statement	Under the Listing Rules we are also required to review the part of the Corporate Governance Statement relating to the Company’s compliance with certain provisions of the UK Corporate Governance Code. We have nothing to report arising from our review.
Our duty to read other information in the Annual Report	Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is: ·      materially inconsistent with the information in the audited financial statements; or ·      apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company acquired in the course of performing our audit; or ·      otherwise misleading. In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors’ statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the audit committee which we consider should have been disclosed. We confirm that we have not identified any such inconsistencies or misleading statements.
Respective responsibilities of directors and auditor	As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.  Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). We also comply with International Standard on Quality Control 1 (UK and Ireland). Our audit methodology and tools aim to ensure that our quality control procedures are effective, understood and applied. Our quality controls and systems include our dedicated professional standards review team and independent partner reviews. This report is made solely to the Company’s members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008.  Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and/or those further matters we have expressly agreed to report to them on in our engagement letter and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Scope of the audit of the financial statements	An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.  This includes an assessment of: whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.  In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit.  If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Nicola Sarah Paul FCA
for and on behalf of Deloitte LLP
Chartered Accountants and Recognised Auditor
Guernsey

28 April, 2016

Statement of Comprehensive Income
For the year ended 31 December 2015

		2015				2014
		Revenue	Capital	Total		Revenue	Capital	Total
	Notes	£'000	£'000	£'000		£'000	£'000	£'000
Gains on investments designated at fair value through profit or loss	2	-	3,978	3,978		-	11,903	11,903
Net foreign currency gains/(losses)		-	3	3		-	(679)	(679)
Income from investments	3	2,110	-	2,110		2,412	-	2,412
Total income		2,110	3,981	6,091		2,412	11,224	13,636
Investment management fee	4	(166)	(387)	(553)		(182)	(426)	(608)
Other administrative expenses	5	(1,032)	-	(1,032)		(1,026)	-	(1,026)
Profit before finance costs
and taxation		912	3,594	4,506		1,204	10,798	12,002
Finance costs	6	-	-	-		(11)	(25)	(36)
Profit before taxation		912	3,594	4,506		1,193	10,773	11,966
Taxation	7	(436)	-	(436)		(586)	-	(586)
Net profit and total comprehensive income		476	3,594	4,070		607	10,773	11,380
Earnings per share	9	0.98p	7.37p	8.35p		1.21p	21.41p	22.62p

The "Total" column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with IFRS as adopted by the European Union. The "Revenue and Capital" columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.

All income is attributable to equity holders of the Company. There are no minority interests.

All revenue and capital items in the above statement derive from discontinuing operations.

The Notes form an integral part of these Financial Statements.

Statement of Changes in Equity
For the year ended 31 December 2015

		Share	Other	Capital	Revenue
		capital	reserve	reserves	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000
At 31 December 2013		-	64,155	(7,043)	3,261	60,373
Repurchase and cancellation of ordinary shares	14	-	(7,819)	-	-	(7,819)
Net (loss)/profit		-	(1,130)	11,903	607	11,380
Dividends paid in the year	8	-	-	-	(1,791)	(1,791)
At 31 December 2014		-	55,206	4,860	2,077	62,143
Net (loss)/profit		-	(384)	3,978	476	4,070
Dividends paid in the year	8	-	-	-	(732)	(732)
At 31 December 2015		-	54,822	8,838	1,821	65,481

Under The Companies (Guernsey) Law, 2008, the Company may pay dividends out of capital and revenue reserves, subject to a solvency test.

The Notes form an integral part of these Financial Statements.

Statement of Financial Position
As at 31 December 2015

			2015		2014
		Notes	£'000		£'000
Non current assets
Investments at fair value through profit or loss		10	-		61,859
Current assets
Investments		10	64,771		-
Receivables		12	285		247
Cash and cash equivalents			1,144		379
			66,200		626
Total assets			66,200		62,485
Current liabilities
Payables		13	(719)		(342)
Total current liabilities			(719)		(342)
Total assets less current liabilities			65,481		62,143
Net assets			65,481		62,143
Equity attributable to equity holders
Share capital		14	-		-
Other reserve		15	54,822		55,206
Capital reserves		15	8,838		4,860
Revenue reserve		15	1,821		2,077
Total equity shareholders' funds			65,481		62,143
Net asset value per share		16	134.22p		127.38p

These Financial Statements were approved and authorised for issue by the Board of Directors on 28 April 2016 and signed on its behalf by:

Crispian Collins                                                                                  Christopher Legge
Chairman                                                                                               Director

The Notes form an integral part of these Financial Statements.

Registered in Guernsey
Company registration number:          44714

Cash Flow Statement
For the year ended 31 December 2015

									2015		2014
									£'000		£'000
Operating activities
Profit before finance costs and taxation									4,506		12,002
Gains on investments at fair value through profit or loss									(3,981)		(11,224)
Net sales of investments at fair value through profit or loss									1,109		15,755
(Increase)/decrease in receivables									(84)		228
Increase in payables									383		3
Overseas taxation paid									(436)		(586)
Net cash inflow from operating activities before interest									1,497		16,178
Interest paid									-		(36)
Net cash inflow from operating activities									1,497		16,142
Financing activities
Repurchase of shares into Treasury									-		(7,819)
Dividends paid									(732)		(1,791)
Net cash outflow from financing activities									(732)		(9,610)
Increase in cash and cash equivalents									765		6,532
Cash and cash equivalents at the start of the year									379		(6,153)
Cash and cash equivalents at the end of the year									1,144		379

The Notes form an integral part of these Financial Statements.

Notes to the Accounts

1. Accounting Policies

(a) Basis of accounting

The Financial Statements have been prepared in accordance with the Companies (Guernsey) Law 2008 and International Financial Reporting Standards (“IFRS”) as adopted by the European Union, which 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 and to the extent that they have been adopted by the European Union.

Where consistent with the requirements of IFRS, the Directors have sought to prepare the Financial Statements on a basis compliant with presentational guidance set out in the Statement of Recommended Practice for investment trust companies (the "SORP") issued by the Association of Investment Companies in November 2014.

A scheme to liquidate the Company is set out in the Chairman’s Statement. Accordingly, the Financial Statements for the year ended 31 December 2015 have been prepared on a basis other than going concern reflecting this intention. The going concern basis of accounting is no longer considered to be appropriate. The Company’s investments are valued at bid market prices at the statement of financial position date, with no adjustments made as a result of the impending liquidation. All other assets are also included in the Financial Statements at the amounts they would expect to realise on liquidation. The Financial Statements include an accrual for the expected costs of liquidation.

The Company’s share capital is denominated in sterling and this is the currency in which its shareholders operate and expenses are generally paid. The Board has therefore determined that sterling is the functional currency and the currency in which the Financial Statements are presented.

The principal accounting policies adopted are set out below.

No critical accounting judgements have been made in the process of applying the Company's accounting policies.

(b) Presentation of the Statement of Comprehensive Income

In order better to reflect the activities of an investment company and in accordance with the recommendations of the SORP, supplementary information has been presented which analyses items in the Statement of Comprehensive Income between those which are income in nature and those which are capital in nature.

(c) Presentation of the Cash Flow Statement

The Cash Flow Statement has been presented in accordance with the “indirect method” detailed in IAS 7: “Statement of cash flows”. Cash payments and receipts from purchases and sales of investments have been reclassified from investment activities to operating activities in the comparative statement. The Directors are of the opinion that this presentation is more relevant and better reflects the activities of an investment trust.

(d) Valuation of Investments

All of the Company’s investments continue to be designated as “Investments at fair value through profit or loss” and are included at bid market prices in active markets at the statement of financial position date. In light of the scheme to liquidate the Company, the Directors are of the opinion that if all the investments were sold, they would realise the amounts shown in the Statement of Financial Position.

(e) Reserves

Gains and losses on sales of investments, including the related foreign exchange gains and losses, are included in the Statement of Comprehensive Income and in capital reserves within “Gains and losses on sales of investments”. Increases and decreases in the valuation of investments held at the year end, including the related foreign exchange gains and losses, are included in the Statement of Comprehensive Income and in capital reserves within “Holding gains and losses on investments”.

Management fee and finance costs allocated to capital and foreign currency gains and losses are included in the Statement of Comprehensive Income and in “Other reserve”.

The consideration payable for the repurchase of shares for cancellation or to hold in Treasury is charged to “Other reserve”.

(f) Income

Dividends receivable from equity shares are included in revenue on an ex-dividend basis except where, in the opinion of the Board, the dividend is capital in nature, in which case it is included in capital.

Deposit interest outstanding at the year end is calculated and accrued on a time apportionment basis using market rates of interest.

(g) Expenses

An accrual for liquidation costs has been included, and allocated wholly to revenue.

All expenses are accounted for on an accruals basis. Expenses are allocated wholly to revenue with the following exceptions:

The management fee is allocated 30% to revenue and 70% to capital in line with the Board's expected long term split of revenue and capital return from the Company's investment portfolio.

(h) Finance costs

Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in profit or loss using the effective interest method.

Finance costs are allocated 30% to revenue and 70% to capital in line with the Board's expected long term split of revenue and capital return from the Company's investment portfolio.

(i) Financial Instruments

Investments are designated as “Investments at fair value through profit or loss” as detailed in part (d) above. Cash and cash equivalents may comprise cash and demand deposits which are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value. Other receivables are non interest bearing, short term in nature and are accordingly stated at nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

(j) Taxation

The taxation charge in the Statement of Comprehensive Income comprises irrecoverable overseas tax deducted from dividends receivable.

(k) Foreign currency

The results and financial position are expressed in sterling which is the Company's functional currency and presentational currency. Transactions in currencies other than sterling are recorded at the rates of exchange prevailing on the dates of the transactions. Monetary assets, liabilities and equity investments held at fair value denominated in foreign currencies are translated at the rates of exchange prevailing at the year end. Foreign exchange differences arising on conversion of the monetary items are recognised in the Statement of Comprehensive Income.

(l) Adoption of new and revised Standards

During the year, the Company has adopted all relevant standards which became effective from both 1 July 2014 and 1 January 2015. These standards have had no material impact on the financial statements. The Directors are aware that there are a number of standards which become effective on or after 1 January 2016, however, given the impending liquidation these will have no impact on the Company and no further disclosures are provided in this respect.

(m) Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment in real estate securities.

2. Gains on investments at fair value through profit or loss

					2015	2014
					£'000	£'000
Realised gains on sales of investments based on historic cost					3,566	12,974
Realised losses on sales of investments based on historic cost					(895)	(3,662)
Movement in unrealised investment holding gains					4,928	8,526
Movement in unrealised investment holding losses					(3,621)	(5,935)
Gains on investments held at fair value through profit or loss					3,978	11,903

3. Income

					2015	2014
					£'000	£'000
Income from investments:
Dividends from investments at fair value through profit or loss					2,110	2,412
Total income					2,110	2,412

4. Investment Management Fee

	2015			2014
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Management fee	166	387	553	182	426	608

The basis for calculating the investment management fee is set out in the Director’s Report.

5. Other administrative expenses

				2015	2015	2014
				£'000	£'000	£'000
Provision for reconstruction and winding-up costs:
Broker fees				160		-
Legal fees				120		-
Liquidator fees				30		-
Manager's notice period of 4 weeks				45		-
Other costs				95		-
					450	-
Directors' fees					127	120
Sundry expenses					108	300
Administration Fees					100	100
Transaction costs on purchase and sale of investments					84	205
Broker Fees					40	35
Professional fees					37	191
Depositary Fees					30	13
Auditor's remuneration for audit services					28	30
Auditor's remuneration for other services1					14	17
Custodian Fees					12	12
Foreign exchange loss on income					2	3
					1,032	1,026

¹ Comprises £14,400 payable to the auditor in respect of the interim review (2014: £14,000 in respect of the interim review and £3,000 in respect of Foreign Account Tax Compliance Act advice).

6. Finance Costs

	2015			2014
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Interest on bank overdraft	-	-	-	11	25	36

7. Taxation

					2015	2014
					£'000	£'000
Irrecoverable withholding tax deducted from dividends receivable					436	586

The Company has been granted an exemption from Guernsey taxation, under the Income Tax (Exempt Bodies) Guernsey Ordinance 1989 for which it was charged an annual exemption fee of £1,200 (2014: £600). 

8. Dividends

The Company paid and declared the following dividends during the year:					2015	2014
					£'000	£'000
2014 Fourth interim dividend of 0.375p (2013: 1.05p)					183	584
2015 First interim dividend of 0.375p (2014: 1.05p)					183	512
2015 Second interim dividend of 0.375p (2014: 1.05p)					183	512
2015 Third interim dividend of 0.375p (2014: 0.375p)					183	183
Total dividends paid in the year					732	1,791

The Board has decided, in light of the proposed scheme for liquidation announced by the Company in December 2015, the fourth interim dividend of 0.375p per share for the year ended 31 December 2015 ordinarily payable in the first quarter of 2016 will not be paid.

9. Earnings per share

					2015	2014
					£'000	£'000
Net revenue profit					476	607
Net capital profit					3,594	10,773
Net total profit					4,070	11,380
Weighted average number of Ordinary shares in issue during the year					48,785,327	50,311,643
Revenue earnings per share					0.98p	1.21p
Capital earnings per share					7.37p	21.41p
Total earnings per share					8.35p	22.62p

10. Investments at fair value through profit or loss

					2015	2014
					£'000	£'000
Opening valuation					61,859	66,274
Opening investment holding gains					(7,769)	(5,178)
Opening book cost					54,090	61,096
Purchases at cost					24,245	61,876
Sales at cost					(22,640)	(68,882)
Closing book cost					55,695	54,090
Closing investment holding gains					9,076	7,769
Total investments at fair value through profit or loss					64,771	61,859

On the Statement of Financial Position, the investments at fair value through profit or loss have been reclassified in 2015 from non-current assets to current assets as a result of the decision to wind up the Company within the next twelve months.

11. Receivables

					2015	2014
					£'000	£'000
Dividends and interest receivable					246	152
Securities sold awaiting settlement					22	68
Other debtors					17	27
					285	247

The Directors consider that the carrying amount of receivables approximated to their fair value.

12. Payables

					2015	2014
					£'000	£'000
Provision for reconstruction and winding-up costs (Note 5)					450	-
Other creditors and accruals					269	342
					719	342

The Directors consider that the carrying amount of payables approximates to their fair value.

13. Share Capital

					2015	2014
Unclassified shares of no par value:
Opening balance excluding shares held in Treasury					48,785,327	55,943,548
Repurchase of shares into Treasury					-	(7,158,221)
Closing balance excluding shares held in Treasury					48,785,327	48,785,327
Shares held in Treasury					5,123,995	5,123,995
Closing balance including shares held in Treasury					53,909,322	53,909,322

Unclassified shares of no par value

The Company has a single class of shares which were issued by means of an initial public offering on 31 May 2006, at 100p per share. The shares carry the right to vote at general meetings of the Company and to receive dividends and, in a winding-up will participate in any surplus assets remaining after settlement of any outstanding liabilities of the Company.

During the year, zero (2014: 7,158,221) shares of no par value were repurchased into Treasury for a total consideration of £Nil (2014: £7,819,000). The reason for the share repurchases was to seek to reduce the volatility of the discount of the share price to net asset value per share.

There were no (2014: 8,245,000) shares held in Treasury cancelled during the year.

Details of the Company's discount control policy are given in the Report of the Directors.

14. Reserves

				Capital reserves
				Gains and	Investment
				losses on	holding
				sales of	gains and	Revenue
			Other reserve	investments	losses	reserve
			£'000	£'000	£'000	£'000
At 31 December 2013			64,155	(12,221)	5,178	3,261
Gains on sales of investments			-	9,312	-	-
Movement in investment holding gains and losses			-	-	2,591	-
Realised exchange losses on cash and cash equivalents			(679)	-	-	-
Repurchase of shares for cancellation			(7,819)	-	-	-
Management fee and finance costs charged to capital			(451)	-	-	-
Dividends paid in the year			-	-	-	(1,791)
Net revenue profit for the year			-	-	-	607
At 31 December 2014			55,206	(2,909)	7,769	2,077
				Capital reserves
				Gains and	Investment
				losses on	holding
				sales of	gains and	Revenue
			Other reserve	investments	losses	reserve
			£'000	£'000	£'000	£'000
At 31 December 2014			55,206	(2,909)	7,769	2,077
Gains on sales of investments			-	2,671	-	-
Movement in investment holding gains and losses			-	-	1,307	-
Realised exchange gains on cash and cash equivalents			3	-	-	-
Management fee and finance costs charged to capital			(387)	-	-	-
Dividends paid in the year			-	-	-	(732)
Net revenue profit for the year			-	-	-	476
At 31 December 2015			54,822	(238)	9,076	1,821

15. Net asset value per share

					2015	2014
Net assets attributable to shareholders (£'000)					65,481	62,143
Shares in issue at the year end excluding shares held in Treasury					48,785,327	48,785,327
Net asset value per share					134.22p	127.38p

16. Transactions with the Investment Manager

During the period to 28 July 2014, investment management services were provided by CBRE Clarion Securities LLC. The Management fee payable in respect of the period 1 January to 28 July 2014 amounted to £332,000. Under the terms of the agreement there was also a performance fee arrangement in place. However, no performance fee was payable for the period 1 January 2014 to 28 July 2014.

On 2 July 2014, the Company appointed Schroder Property Investment Management Limited (the "Investment Manager"), a wholly owned subsidiary of Schroders plc to provide investment management services. On 24 November 2014, the Investment Manager changed its name to Schroder Real Estate Investment Management Limited.  Details of the AIFM Agreement are given in the Report of the Directors. Only with the prior consent of the Board may the Company invest in funds managed or advised by the Investment Manager or any of its associated companies, and the Investment Manager is entitled to receive its fee on these investments. There have been no such investments since the Investment Manager's appointment. The management fee payable in respect of the year amounted to £553,000 (2014: £276,000) of which £152,000 (2014: £157,000) was outstanding at the year end. There is no performance fee arrangement in place.  

17. Related party transactions

Details of remuneration payable to Directors are given in the Remuneration Report and details of Directors' transactions in the Company's shares are given in the Report of the Directors. The Company had no other transactions with Directors.

Prior to Mr Houston’s appointment to the Board, St. Bride’s Managers were paid a fee by the Company for consultancy services provided by Mr Houston of £17,734 (2014: £23,116).

18. Contingent liabilities and capital commitments

There were no contingent liabilities or capital commitments at the statement of financial position date (2014: none).

19. Disclosures regarding financial instruments measured at fair value

The Company’s financial instruments within the scope of IFRS 7 that are held at fair value comprise its investment portfolio. The investments are categorised into a hierarchy consisting of the following three levels:

Level 1 - valued using quoted prices in active markets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted market prices included within Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.

Details of the valuation techniques used by the Company are given in Note 1(d).

At 31 December 2015, the Company's investment portfolio comprised entirely Level 1 investments (2014: same).

There have been no transfers between Levels 1, 2 or 3 during the year (2014: Nil).

20. Financial Instruments’ exposure to risk and risk management policies

The Company's investment objective is to provide investors with an attractive total return, through investing in listed global real estate securities with strong fundamentals, offering sustainable income and a progressive dividend potential. The Company's investment policy will be flexible, enabling it to invest in a wide variety of listed securities including equities, preference shares, debt, convertible securities, warrants, interests in collective investment schemes (including limited partnerships and unit trusts) and other securities, issued by companies which derive a significant proportion of their revenues or profits from real estate. In pursuing this objective, the Company is exposed to a variety of risks which could result in a reduction in the Company's net assets. These risks include market risk (comprising currency risk, interest rate risk and market price risk), liquidity risk and credit risk. The Directors' policy for managing these risks is below. The Board coordinates the Company's risk management policy.

The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set out below, have not changed from those applying in the comparative year.

The Company’s classes of financial instruments may comprise the following:

• investments in a variety of securities issued by companies which derive a significant proportion of their revenues or profits from real estate and which are held in accordance with the Company's investment objective; and

• short term cash, receivables and payables arising directly from its operations.

(a) Market risk

The fair value of future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and market price risk. Information to enable an evaluation of the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, together with sensitivity analyses where appropriate. The Board reviews and agrees policies for managing these risks and these policies have remained unchanged from those applying in the comparative year. The Investment Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

Given the investments comprise solely listed investments which are freely tradeable, the Directors do not consider there to be any impact on the valuation of the investments given the impending liquidation.

(i) Currency risk

Certain of the Company's assets, liabilities and income are denominated in currencies other than sterling, which is the Company's functional currency and the presentational currency of the Financial Statements. As a result, movements in exchange rates will affect the sterling value of those items.

Management of currency risk

The Investment Manager monitors the Company’s exposure to foreign currencies and reports to the Board, which meets on at least four occasions each year. The Investment Manager measures the risk to the Company of the foreign currency exposure by considering the effect on the Company’s net asset value and income of a movement in the rates of exchange to which the Company's assets, liabilities, income and expenses are exposed. The Company may use foreign currency borrowings or forward foreign currency contracts to limit the exposure to anticipated changes in exchange rates which might otherwise adversely affect the value of the portfolio of investments. Income denominated in foreign currencies is converted into sterling on receipt.

Foreign currency exposure

The fair value of the Company’s monetary items that have foreign currency exposure at 31 December are shown below. The Company’s investments (which are not monetary items) have been included separately in the analysis so as to show the overall level of exposure.

	2015
	AUD	CAD	EUR	CHF	HKD	JPY	SEK	SGD	USD	Total
	£’000	£’000	£’000	£'000	£’000	£’000	£’000	£’000	£’000	£’000
Current assets	47	4	-	-	-	6	-	-	222	279
Current liabilities	-	-	-	-	-	-	-	-	-	-
Foreign currency exposure on net monetary items	47	4	-	-	-	6	-	-	222	279
Investments at fair value through profit or loss that are equities	4,500	1,050	2,830	-	5,673	5,031	1,227	700	35,920	56,931
Total foreign currency exposure	4,547	1,054	2,830	-	5,673	5,037	1,227	700	36,142	57,210

   

	2014
	AUD	CAD	EUR	CHF	HKD	JPY	SEK	SGD	USD	Total
	£’000	£’000	£’000	£'000	£’000	£’000	£’000	£’000	£’000	£’000
Current assets	30	3	-	-	-	12	-	-	293	338
Current liabilities	-	-	-	-	-	-	-	-	-	-
Foreign currency exposure on net monetary items	30	3	-	-	-	12	-	-	293	338
Investments at fair value through profit or loss that are equities	4,813	949	3,073	986	4,335	6,518	1,421	2,117	32,583	56,795
Total foreign currency exposure	4,843	952	3,073	986	4,335	6,530	1,421	2,117	32,876	57,133

The above year end amounts are broadly representative of the exposure to foreign currency risk during the current and comparative year.

Foreign currency sensitivity

The following tables illustrate the sensitivity of net profit for the year and net assets with regard to the Company’s monetary financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on the Company’s monetary currency financial instruments held at each balance sheet date and assumes a 10% (2014: 10%) appreciation or depreciation in sterling against the currencies to which the Company is exposed, which is considered to be a reasonable illustration based on the volatility of exchange rates during the year.

If sterling had weakened by 10% this would have had the following effect:

							2015	2014
							£’000	£’000
Statement of Comprehensive Income – net profit
Net revenue profit							167	183
Net capital profit							28	34
Net total profit and net assets							195	217

Conversely if sterling had strengthened by 10% this would have had the following effect:

							2015	2014
							£’000	£’000
Statement of Comprehensive Income – net profit
Net revenue profit							(167)	(183)
Net capital profit							(28)	(34)
Net total profit and net assets							(195)	(217)

In the opinion of the Directors, the above sensitivity analysis with respect to monetary financial assets and liabilities is broadly representative of the whole of the current and comparative year. The sensitivity of the Company's investments to changes in foreign currency exchange rates is subsumed into market price risk sensitivity.

(ii) Interest rate risk

Interest rate movements may affect the level of income receivable on cash balances.

Management of interest rate risk

Liquidity is managed with the aim of increasing returns to shareholders.

Interest rate exposure

The exposure of financial assets to floating interest rates, giving cash flow interest rate risk when rates are re-set, is shown below:

									2015	2014
									£'000	£'000
Exposure to floating interest rates:
Cash and cash equivalents									1,144	379

Interest receivable on cash balances is at a margin below or above LIBOR respectively (2014: same).

Interest rate sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 0.5% (2014: 0.5%) increase or decrease in interest rates.

							2015		2014
							0.5%	0.5%	0.5%	0.5%
							increase	decrease	increase	decrease
							in rate	in rate	in rate	in rate
							£'000	£'000	£'000	£'000
Statement of Comprehensive Income – net profit
Net revenue profit							6	(6)	2	(2)
Net capital profit							-	-	-	-
Net total profit and net assets							6	(6)	2	(2)

In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest rate changes due to fluctuations in the level of cash balances.

(iii) Market price risk

Market price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the value of equity investments.

Management of market price risk

The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated with particular industry sectors. The investment management team has responsibility for monitoring the portfolio, which is selected in accordance with the Company’s investment objective and seeks to ensure that individual stocks meet an acceptable risk/reward profile.

Market price risk exposure

The Company’s total exposure to changes in market prices at 31 December comprised the following:

									2015	2014
									£'000	£'000
Investments at fair value through profit or loss									64,771	61,859

The above data is broadly representative of the exposure to market price risk during the year.

Concentration of exposure to market price risk

An analysis of the Company’s investments is given. This shows that the portfolio comprises listed securities of real estate companies in a spread of countries and property sectors. Thus there is no concentration of exposure to market price risk worthy of note.

Market price risk sensitivity

The following table illustrates the sensitivity of the net profit for the year and net assets to an increase or decrease of 25% (2014: 25%) in the fair values of the Company’s equities. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s equities, adjusting for changes in the management fee, but with all other variables held constant.

								2015		2014
								25%	25%	25%	25%
								increase	decrease	increase	decrease
								in fair	in fair	in fair	in fair
								value	value	value	value
								£'000	£'000	£'000	£'000
Statement of Comprehensive Income – net profit
Net revenue profit								(41)	41	(39)	39
Net capital profit								16,096	(16,096)	15,373	(15,373)
Net total profit for the year and net assets								16,055	(16,055)	15,334	(15,334)

(b) Liquidity risk

This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

Management of the risk

Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meet funding requirements if necessary.

Liquidity risk exposure

Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:

									Three	Three
									months	months
									or less	or less
									2015	2014
									£'000	£'000
Payables
Liquidation costs (Note 5)									450	-
Other creditors and accruals									269	342
									719	342

(c) Credit risk

Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could result in loss to the Company.

Management of credit risk

This risk is managed as follows:

Portfolio dealing

The Company invests in markets that operate a "Delivery Versus Payment" settlement process which mitigates the risk of losing the principal of a trade during settlement. The Investment Manager continuously monitors dealing activity to ensure best execution, which involves measuring various indicators including the quality of trade settlement and incidence of failed trades. Counterparties must be pre-approved by the Investment Manager's credit committee.

Exposure to the Custodian

The Company's Custodian is Northern Trust (Guernsey) Limited, a wholly owned subsidiary of The Northern Trust Corporation which has a credit rating of A+ from Standard & Poors and A2 from Moody's. The Company's investments are held in accounts which are segregated from the Custodian's own trading assets. If the Custodian were to become insolvent, the Company's right of ownership is clear and they are therefore protected. However the Company's cash balances are all deposited with the Custodian as banker and held on the Custodian’s Statement of Financial Position. Accordingly, in accordance with usual banking practice, the Company will rank as a general creditor to the Custodian in respect of cash balances.

Credit risk exposure

The following amounts shown in the Statement of Financial Position represent the maximum exposure to credit risk at the current and comparative year end.

							2015		2014
							Balance	Maximum	Balance	Maximum
							sheet	exposure	sheet	exposure
							£'000	£'000	£'000	£'000
Current assets
Receivables - dividends and interest receivable, securities
sold awaiting settlement and other debtors							285	285	247	247
Cash and cash equivalents							1,144	1,144	379	379
							1,429	1,429	626	626

No items included in “Receivables” are past their due date and none have been provided for.

 (d) Fair values of financial assets and financial liabilities

All financial assets and liabilities are either carried in the Statement of Financial Position at fair value or the carrying amount if that is a reasonable approximation of fair value.

21. Capital management policies and procedures

The Company’s capital structure comprises the following:

									2015	2014
									£'000	£'000
Equity
Share capital and reserves									65,481	62,143
Total debt and equity									65,481	62,143

As detailed in Note 1 (a), the Board has put forward a scheme to liquidate the Company following approval by shareholders.

22. Material events after the Statement of Financial Position date

These Financial Statements were approved for issuance by the Board on 28 April 2016. Subsequent events have been evaluated until this date.

Since the year end, a scheme for liquidation of the Company has been approved by shareholders. Further details are given in the Chairman’s Statement.

A circular was published in the first quarter of 2016 which gave details of the proposed scheme, including the proposed roll-over vehicle or vehicles, and convened a general meeting at which shareholders voted in favour of all the proposals.

The Board announced on 16 February 2016 that in light of the proposed scheme for liquidation announced by the Company in December 2015, the fourth interim dividend of 0.375p per share for the year ended 31 December 2015 ordinarily payable in the first quarter of 2016 will not be paid.

Company Summary and Shareholder Information

The Company

The Company was incorporated on 25 April 2006 and is registered in Guernsey as an Authorised Closed-Ended Investment Company. It is listed on the London Stock Exchange. The Company carries on the business of an investment company and invests in global real estate securities.

On 14 July 2014, the Board announced the closure of the placing programme established in the Company’s prospectus as the resolution proposed to authorise the issue of shares on a non pre-emptive basis was not approved by shareholders at the AGM held on 26 June 2014.

At an EGM held on 14 October 2014, shareholders resolved to amend the Company's investment objective. The Company's new investment objective is to provide investors with an attractive total return, through investing in listed global real estate securities with strong fundamentals, offering sustainable income and a progressive dividend potential.

At an EGM held on 14 October 2014, shareholders resolved to change the Company's name to Schroder Global Real Estate Securities Limited. The "Ticker" code for the Company's shares was also changed to “SGRE”.

At an EGM held on 14 October 2014, shareholders approved the disapplication of pre-emption rights under the Articles in respect of the issue of up to 4,829,747 Ordinary Shares, representing 9.9% of the Company’s issued share capital as at the date of the EGM Circular, together with the grant of the authority to allot the same number of Ordinary Shares. New Ordinary Shares will only be issued on a basis that would not be dilutive to the net asset value per existing Ordinary Share.

On 21 December 2015, the Board announced proposals for the future of the Company. The proposals are referred to in the Chairman’s Statement.

A circular was published in the first quarter of 2016 which gave details of the proposed scheme, including the proposed roll-over vehicle or vehicles, and convened a general meeting at which shareholders voted in favour of all the proposals.

As at 31 December 2015, the Company had 53,909,322 (31 December 2014: 53,909,322) shares in issue, of which 5,123,995 (31 December 2014: 5,123,995) shares were held in Treasury. For additional information refer to Note 13 to the accounts.

On 3 March 2016, the Company issued a circular detailing a scheme to put the Company into liquidation, which can be found at www.londonstockexchange.com.

The Company’s assets are managed by Schroder Real Estate Investment Management Limited and it is administered by Northern Trust International Fund Administration Services (Guernsey) Limited.

Website and Share Price Information

The Company has a dedicated web page, which may be found at www.schroderglobalrealestatesecurities.com which contains comprehensive information, including regulatory announcements, share price information, financial reports, investment objectives and strategy, investor contracts and information on the Board.

The Investment Manager provides a monthly newsletter which is available on the Company’s website.

Registrar Services

Communications with shareholders are mailed to the address held on the register. Any notifications and enquiries relating to shareholdings, including a change of address or other amendment should be directed to Computershare Investor Services (Guernsey) Limited, 3rd Floor, Natwest House, Le Truchot, St Peter Port, Guernsey GY1 1WD.

Dealing Codes

The dealing codes for the Company's shares are as follows:

ISIN: GB00B132SB63
SEDOL: B132SB6

Ticker: SGRE

Alternative Investment Fund Managers Directive – Periodic Disclosure

Preferential Treatment of Investors

The Company’s investors purchase shares on the open market and therefore the Company is not in a position to influence the treatment of investors. No investor receives preferential treatment.

Liquidity Risk Management

The Company’s shares are traded on the London Stock Exchange through market intermediaries. There are no special rights to redemption.

Periodic and Regular Disclosure under the Directive

(a) none of the Company’s assets are subject to special arrangements arising from their illiquid nature;

(b) there are no new arrangements for managing the liquidity of the Company including, but not limited to, any material changes to the liquidity management systems and procedures employed by the Manager in place. Shareholders will be notified immediately where the issue, cancellation, sale and redemption of shares is suspended, when redemptions are suspended or where other similar special arrangements are activated;

(c) the current risk profile of the Company and the risk management systems employed by the Manager to manage those risks can be found in the Strategic Report; and

(d) the total amount of leverage employed by the Company may be found in the Strategic Report.

Any changes to the following information will be provided through a regulatory news service without undue delay and in accordance with the Directive:

(a) any changes to the maximum level of leverage which the Manager may employ on behalf of the Company; and

(b) any changes to the right of re-use of collateral of any changes to any guarantee granted under any leveraging arrangement.

AIFM employee remuneration disclosure

The following disclosures are required under the Alternative Investment Fund Managers Directive (AIFMD).

These disclosures should be read in conjunction with the Schroders Remuneration Report of the 2015 Annual Report & Accounts (available on the Group’s website – www.schroders.com/ir), which provides more information on the activities of our Remuneration Committee and our remuneration principles and policies.

Details of the AIFM Remuneration Code can be found at www.fca.org.uk, in the Senior Management Arrangements, Systems and Controls Sourcebook (SYSC 19B).

The Remuneration Committee of Schroders plc has established an AIFM Remuneration Policy to ensure the requirements of the AIFM Remuneration Code are met proportionately for all AIFM Remuneration Code Staff. You can get details of the latest remuneration policy at www.schroders.com/Remuneration-disclosures.

The total amount of remuneration paid by SREIM to its staff is nil as SREIM has no employees. AIFM Remuneration Code Staff of SREIM are employed and paid by other Schroders group companies. Those who serve as Directors of SREIM receive no additional fees in respect of their role on the Board of SREIM.

SREIM manages a total of £3,670 million assets under management, £520 million of which are in Alternative Investment Funds (AIFs).

SREIM’s Code Staff are individuals in roles which can materially affect the risk of SREIM or any AIF it manages. These individuals are employed by and provide services to other companies in, and clients of, the Schroders Group. As a result, only a portion of remuneration for those individuals is included in the aggregate remuneration figures that follow, based on an objective apportionment to reflect the balance of each. The aggregate total remuneration paid to the 33 AIFM Remuneration Code Staff of SREIM in respect of the financial year ending 31 December 2015, and attributed to SREIM and the AIFs it manages, is £832,524, of which £148,593 is paid to Senior Management and £683,931 is paid to other AIFM Remuneration Code Staff.

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