London office
10 Eastcheap
London
EC3M 1LX
United Kingdom
Telephone: + 44 (0) 207 711 0771
Facsimile: + 44 (0) 207 711 0772
US office
The Barn
1125 Airport Road
Coatesville
PA 19320
United States
Telephone: + 1 610 380 2110
Facsimile: + 1 610 380 2116
Singapore office
20 Collyer Quay
10-04 T ung Centre
Singapore 049319
Telephone: + 65 6236 9136
Facsimile: + 65 6532 3997
www.citlon.co.uk
CITY OF LONDON
INVESTMENT GROUP PLC
ANNUAL REPORT & ACCOUNTS 
2007
CITY OF LONDON INVESTMENT GROUP PLC ANNUAL REPORT & ACCOUNTS 2007 Designed and produced by fourthquarter Printed by SV.two
Highlights 1
City of London at a glance 2
Chairman’s statement 4
Chief Executive Officer’s review 8
Financial review 14
Board of directors 18
Officers, Board Committees and
professional advisers 20
Report of the directors 21
Statement of directors’ 
responsibilities 26
Independent auditors’ report 27
Consolidated profit and loss account 28
Consolidated statement of total 
recognised gains and losses 28
Consolidated balance sheet 29
Company balance sheet 30
Cash flow statement 31
Notes to the financial statements 32
Notice of Annual General Meeting 45
Contents
City of London Investment Group PLC is a
leading emerging market and natural resource asset
management group, specialising in the provision
of products and services predominantly to
institutional clients who include some of the
US’s leading institutions and endowment funds.
City of London operates its business from offices
in London, the US and Singapore. City of London Investment Group Plc Annual Report 2007 1
•
First full year as a publicly listed company following
Admission to AIM in April 2006.
•
Funds under management increased by 38% to
US$3.79 billion at the year end and by a further 8%
to US$4.09 billion at the end of the first quarter
at 31st August 2007.
•
Profit before tax up 55% to £7.3 million.
•
Basic earnings per share up 47% to 19.9p, fully
diluted earnings per share up 50% to 17.5p.
•
Recommended final dividend of 7p per share payable
on 15th November 2007 to shareholders on the register
on 2nd November, making a total for the year of 10p.
Highlights
“These record results demonstrate the strength and cash generation
characteristics of the Group. Together with the strong ungeared balance sheet,
they provide us with a secure platform from which to grow our traditional
business lines and to diversify carefully and cautiously into new ones.”
Andrew Davison, Chairman
“Since its inception, we have run our business in a manner that is both
conservative and relatively unfashionable. We don’t manage hedge funds.
We don’t manage any money from an absolute return perspective, preferring
to manage money relative to a benchmark. We manage money using a team
approach. We do not encourage the cult of the individual.
“Due to the outperformance of the emerging market asset class we have
experienced significant rebalancing. These rebalancings totalled approximately
US$269 million. Fortunately, as a result of ongoing good investment
performance, these lost assets were replaced. In my opinion this puts us in 
a good position for a bear market because this will mean that clients are, to
a significant extent, presently adjusting their exposure to emerging markets,
reducing the need for this to occur when markets are falling.”
Barry Olliff, Chief Executive
03 04 05 06 07
340
909
1558
2,751
3,793
Funds under management US$m
03 04 05 06 07
(0.2)
0.4
2.1
4.8
7.3
Pre-tax profit £m 2 City of London Investment Group Plc Annual Report 2007
City of London at a glance
24%
25%
8%
1%
8%
34%
Client type
As a percentage of total assets
Endowment
Corporate pension
Foundation
Other institutions
Public pension
Retail
1. Our investment performance drives
our business
2. We use technology to leverage our
capabilities
3. We maintain focus on profits,
margins and costs
4. We have an aversion to risk in the
management of our business
5. By focussing on the first four drivers,
we create opportunities for 
further growth
6. We maintain our differentiation 
from competitors and continue 
to diversify our business.
City of London has developed its simple operating
philosophy over a number of years. This philosophy 
can best be represented by the six key drivers we 
have identified for our business: City of London Investment Group Plc Annual Report 2007 3
United Kingdom
The London office, our first,
has been based in the City of
London since 1991. In London
we undertake investment
management for our clients and
research into our global markets
from the European time zone.
USA
The Group’s second office was
established near Philadelphia in
the United States in 1994 to
better service the growing client
base in North America and to
provide investment management
from the Americas time zone.
Singapore
The third office, to cover Far 
East emerging markets in real
time, opened in central Singapore 
in 2000, thus positioning the
Group to cover our worldwide
target investment markets 
24 hours a day. 4 City of London Investment Group Plc Annual Report 2007
We expect to continue
to grow City of London
Investment Group for
the benefit of its clients
and shareholders,
managers and staff
around the world. 
I am pleased once again to report a year
of good progress for City of London
Investment Group, the first full year for
which the Group’s shares have been
quoted on the AIM market of the
London Stock Exchange. Since the
financial year end in May, the volatility
in all markets in which we invest for our
clients has increased significantly as a
result of the problems first encountered
in US credit markets. Although this
additional volatility has affected our
investment activities in the first quarter
of the current financial year, Funds under
Management at the end of August
totalled some US$4.093 billion
compared to the 31st May figure of
US$3.793 billion. 
Our markets have always been volatile
and our performance to date in the 
new financial year provides, I believe,
endorsement that our business model is
sufficiently robust to continue to generate
outperformance against benchmarks even
in recent market conditions. In order to
provide some financial protection to the
Group from the worst of the volatility, 
we have this year instituted a limited
hedging programme which is described
more fully, along with our view of the
Group’s target investment markets, in 
the Chief Executive’s Review and the
Accounts that follow my statement.
Results
Funds under management during the
period under review increased by 38%
to US$3.8 billion (2006: US$2.8 billion)
reflecting both our outperformance in
growing emerging markets and additional
funds from existing and new clients.
As a result of the growth in funds under
management, turnover increased by
almost 30% to £18.3 million (2006:
£14.1 million). The higher turnover
figure translated, due to the operational
gearing inherent in our business, into a
55% increase in profit before tax to £7.3
million (2006: £4.7 million after AIM
listing costs of £483,000). Net profit for
the period after a 34% tax charge (2006:
38%) was £4.9 million (2006: £2.9
million), producing basic earnings per
share up 47% to 19.9p (2006: 13.5p)
and fully diluted earnings per share of
17.5p (2006: 11.7p). 
Retained profit for the year, after the paid
and proposed dividend payments set out
below was £4.1 million (2006: £0.7
million). As a result of the substantially
higher level of retained profits for the year,
shareholders’ funds almost doubled to £8.6
million (2006: £4.3 million), including
cash balances at the year end of £6.6
million (2006: £2.7 million). The Group
has no borrowings. A more detailed
explanation of the accounts for the year is
contained in the Financial Review.
Dividends
The Board is recommending a final
dividend in respect of the financial year to
31st May 2007 of 7p per share. Subject to
approval by shareholders at the Annual
General Meeting, the dividend will be paid
on 15th November 2007 to shareholders
on the register on 2nd November 2007.
T ogether with the interim dividend of 3p
per share paid in March, this makes a total
for the year of 10p. No dividend was paid
as a publicly listed company in 2006
reflecting the fact that City of London
listed on AIM less than two months
before the financial year end. 
The Group’s dividend policy is based
on paying dividends to shareholders that
Chairman’s statement
A J Davison
Chairman City of London Investment Group Plc Annual Report 2007 5
are twice covered by earnings and to
pay one third of the annual total as an
interim dividend and two thirds as a
final dividend. This year’s interim
dividend of 3p per share therefore
implied a final dividend of 6p. In the
event, the Board decided to recommend
a final dividend of 7p per share taking
into account the year end cash balances
and the continuing satisfactory financial
performance of the Group. Going
forward, we intend to maintain our
current dividend policy and to declare
or recommend dividends with the
interim and full year results announced
in January and September respectively
followed by payments in February
and November. 
Review
City of London’s investment management
services, provided predominantly to
institutional clients, are focused on
closed-end funds investing in the world’s
emerging markets. In addition, the Group
manages investments in direct equities in
both emerging and natural resource
markets. We provide our services
currently from three offices in the United
States, London and Singapore. 
The emerging market universe in which
we principally invest began the financial
year at relatively depressed levels but
recovered strongly during the first half
and this momentum was maintained
during the second half as investment
fundamentals in many of the territories
remained strong. The positive emerging
market performance ended abruptly after
the year end as international investors
shied away from perceived higher risk
investments and markets, following the
problems disclosed by lenders in the US
mortgage markets. Shareholders should
take comfort from the fact that the
higher volatility of markets now is an
environment we are used to and have
successfully dealt with over our history
as an investment manager specialising in
emerging markets.
Good progress has been made towards
our strategic objective to diversify our
business. A number of new mandates
were won during the period and it is
pleasing to report that such success is
continuing not only in our traditional
core market of North America but also in
Europe where we have invested in
increased marketing of the Group’s
services. At the same time, we have been
planning the addition – when market
conditions are appropriate – of two new
funds for European distribution, a natural
resources fund and an emerging markets
high yield fund. These will provide
further diversification from our original
investment management activities.
The Group’s geographical presence will be
expanded with the planned opening of an
office in the increasingly important
emerging markets of the Middle East.
Subject to the necessary regulatory
approvals, we expect to open an office in
Dubai by the end of the fourth quarter of
calendar 2007. Initially this office will
have a staff of two.
Investor Relations and
Corporate Governance
As a Company we set great store by
being as open as possible with our
shareholders and one of the principal
means of communication is, of course,
the web site (www.citlon.co.uk). This 
has recently been upgraded so that the
Investor Relations section now complies
fully with AIM Rule 26, which came 
into force in August.
Outlook
We expect to continue to grow City of
London Investment Group for the benefit
of its clients and shareholders, managers
and staff around the world. These record
results demonstrate the strength and cash
generation characteristics of the Group.
T ogether with the strong ungeared balance
sheet, they provide us with a secure
platform from which to grow our
traditional business lines and to diversify
carefully and cautiously into new ones.
The current year has started positively with
the Group in good shape to deliver further
progress, subject only, and always, to the
performance of our investment markets.
I am confident that the excellence of our
staff combined with the strength of our
process will enable us to continue to
capitalise to the maximum extent on the
opportunities that lie ahead.
Andrew Davison
Chairman
14th September 2007 6 City of London Investment Group Plc Annual Report 2007
The City of London Dragon
The dragon bearing the shield of St
George, with the sword of St Paul in its
first quarter, stands as protector at each
of the City of London’s seven ancient
gates, and has become a symbol of the
City’s strength and security. City of London Investment Group Plc Annual Report 2007 7
Starting in London in 1991, the Group has
built on its specialist investment expertise in
emerging market closed end funds to deliver
strong performance for over 15 years.
Investment 8 City of London Investment Group Plc Annual Report 2007
Chief Executive Officer’s review
The listing
This is our first full year as a listed
company and it’s been a surprise to me
the extent that, as far as our company is
concerned, it’s been business as usual.
We have not found being listed a
distraction. Possibly this was as a result of
us having most of the required internal
controls in place for many years prior to
listing. Neither have there been changes
in our Governance. The Board appointed
a further Independent Director,
David Cardale at the point of listing,
but apart from this there has been no
noticeable difference in the way we are
running the Group.
One item of City of London Investment
Management Company’s publications
that might be of interest to Group
shareholders is our Statement on
Corporate Governance and Voting Policy
for Closed-End Funds, 2007. This is the
sixth edition of this document that was
first issued in 1999. Where relevant
we follow the principles within this
document in the running of the Group.
The past financial year
The past year has been eventful. Funds
under management (“FUM”) have
increased from $2.750bn to $3.793bn.
Or measured in sterling from £1.471bn
to £1.916bn. Due to the ongoing out
performance of the emerging market
asset class we have experienced significant
rebalancing. These rebalancings totalled
approximately $269mn. Fortunately as
a result of ongoing good investment
performance these lost assets were
replaced. In my opinion this puts us in
a good position for a bear market
because this will mean that clients are, to
a significant extent, presently adjusting
their exposure to emerging markets,
reducing the need for this to occur when
markets are falling. Please refer to the
Financial review on pages 14 to 15 for
more information regarding our
currency hedging strategy, together
with a table on page 15 showing the
sensitivity of our income to moves in
the $/£ exchange rate.
In April we started to hedge (you could
say) our P&L, but in reality we were
hedging our FUM against a fall in
world stock markets. Rather than
believing that our asset class was
expensive we were attempting to take
into account that world stock markets
seemed expensive (the emerging markets
are to some extent priced off world
markets), that the move upwards had
been very sharp and that our profits
were significantly ahead of budget.
Our concern was to get a significant
percentage of these profits into
shareholders hands in the form of
dividends. Whilst believing that we
remain in an emerging markets secular
bull market, we decided to place
$100,000 at the end of April and May
(and we continued with this program
with similar amounts in June and July)
into the purchasing of out of the money
puts. As at the end of August the profit
on this investment was $171,325. We
review this exposure and value it daily,
reflecting its valuation on a monthly basis
through our management accounts.
B M Olliff
Chief Executive Officer
The past year has been
eventful. Funds under
management have increased
from $2.750bn to
$3.793bn. Or measured in
sterling from £1.471bn 
to £1.916bn. City of London Investment Group Plc Annual Report 2007 9
At the point of listing we did not make
a forecast regarding dividends for y/e
2007. At the interim stage we declared a
dividend of 3p and stated that based
upon present conditions we intended to
pay a twice covered dividend. At that
time that could have been projected as a
potential final dividend of 6p. In the
event as a result of increased FUM and
profits, and subject to ratification by
shareholders it is intended to pay a
final dividend of 7p.
Diversification
We have developed our diversification
plans significantly over the past year and
would expect them to continue to develop
and bear fruit during the next year. The
basis of our diversification plans relate 
to risk. At the beginning of the decade
(31st December 1999), 89% of our 
assets were US based. If we were to go
back even two years, close to 81% of our
business was US based and nearly all of
the growth was coming from the US too.
A further risk was that we had all of our
eggs, you might say, in the Emerging
Markets basket.
However, I would point out that when we
say we are going to diversify we are not
setting targets, we are not going to spend
a lot of shareholders’ money attempting to
achieve an objective in a given time frame,
or in a difficult (stock) marketplace.
Rather we are going to be opportunistic
and, most important, we are not going to
Diversification: 10 City of London Investment Group Plc Annual Report 2007
Chief Executive Officer’s review
Continued
market products that are not either first or
second quartile, for to do so would mean
that we would be undermining the
reputation of the company we work for.
As a result of the above our present
diversification, which we plan to be
organic, falls into three categories:
1) To diversify our core emerging
markets business geographically.
Since January 2006, the percentage of
assets that are sourced outside of the
US has increased from 17% to 23%.
2) To use our investment trust discipline
in other areas separate from the
emerging markets.
We have recently (in our new
financial year) been awarded our first
ACWI (ex US) mandate.
3) To develop our emerging markets
equities (as compared with closed
end funds) business.
A possible new office
In my previous review I mentioned that
we were considering the opening of an
office in Dubai. This was principally to
add value to our investment process 
but, I stated, we would hope that over 
a period of time it could assist in the
selling of City of London products.
These plans have developed over the past
year to the extent that this office will,
other things being equal, open during
October this year. It will be staffed
initially by two existing City of London
employees. This office will round out for
the foreseeable future our coverage
geographically, effectively allowing us to
trade in all of the various emerging
markets efficiently.
Business continuity plans
Another year of testing was successfully
completed at our off-site disaster recovery
centre in London. We extensively tested
recovery of mission critical servers from
backup tape onto different hardware
platforms following our previously tried
and tested procedures. We are also in the
process of signing up with a leading
disaster recovery centre based in
Philadelphia, which would provide us
with instant desk space for our US office
in the event of a disaster type scenario,
replicating the London arrangements.
Cost income ratio
As our FUM grows, so we expect our cost
income ratio to fall, and so it has this year,
from 56% in fiscal 2006 to 52% in the
current year (treating third party marketing
commission and custody as a deduction
from fees rather than as an expense). We
take some pride in the fact that this level is
significantly lower than the average for our
sector, and it is a fundamental element of
our strategy to maintain the focus on costs
that enables us to consistently differentiate
City of London in this respect. I make no
apology for repetition on this point; our
ethos would simply not allow us to relax
our stance on cost control.
Operational leverage
As I reported last year we are focused on
developing our business in such a way that
enables a significant percentage of any
increase in income to flow through to
shareholders. We do not spend large
amounts of shareholders’ money on fancy
offices, or on travel, or accommodation
when on the road. As I mentioned earlier,
neither do we intend to throw shareholders’
money at diversification. Over many years
I’ve watched financial service companies do
this often with very little added value being
achieved in terms of measurable success.
As I reported last year we
are focused on developing
our business in such a way
that enables a significant
percentage of any increase
in income to flow through
to shareholders.  City of London Investment Group Plc Annual Report 2007 11
The other point about operational
leverage that I would like to make is that
if you don’t spend frivolously you don’t
have to change habits in the event of a
bear market. In other words, keeping
expenses low results in higher dividends
for shareholders.
Authorisation and regulation
It seems to me that we, by which I mean
our wholly owned subsidiary City of
London Investment Management
Company Limited (“CoLIM”), are one of
the most regulated firms of our size.
CoLIM is authorised and regulated by
the Financial Services Authority in the
UK, is registered as an adviser with the
US Securities and Exchange Commission,
and is also registered as required by the
regulatory authorities in Singapore and
Canada. Additionally, CoLIM is currently
seeking authorisation from the Dubai
Financial Services Authority against the
background of the Dubai office
intentions as outlined above.
End of first quarter FUM
At the end of August total FUM were
$4.093bn. This compares with $2.815bn
at the same point last year. Both FUM
and pre-tax profit for the quarter are
significantly ahead of our budget.
CoL core values
By now you will be aware of the fact that
since our company’s inception, we have
run our business in a manner that is both
conservative and might seem relatively
unfashionable. We don’t manage Hedge
Funds. We don’t manage any money
from an Absolute return perspective
(neither do we participate in out
performance), preferring to manage
money Relative to a benchmark. We
manage money using a team approach.
We do not encourage the cult of the
individual. The reason that we maintain
these core values is that we believe that
by doing so we provide better returns for
our clients which leads to employment
continuity for employees and better
returns for our shareholders.
Thanks to CoL employees.
Finally I would like to thank all of my
colleagues for their hard work over the
past year in what remains a challenging
environment.
B M Olliff
Chief Executive Officer
14th September 2007 Risk
A central plank of City of London’s
approach to business is a proven 
risk averse culture and a prudent
investment process in markets with 
a history of volatility.
The Liberty Bell, Philadelphia, PA.
The Liberty Bell was founded in 1751 
to commemorate the 50th anniversary 
of William Penn’s Charter of Privileges,
which enunciated the rights and freedoms
of the people of Pennsylvania, and the bell
became symbolic of the abolition of slavery
movement. It is believed that the crack
appeared when the bell was first tested for
tone, and that the bell last rang on George
Washington’s birthday in 1846.
12 City of London Investment Group Plc Annual Report 2007 City of London Investment Group Plc Annual Report 2007 13 14 City of London Investment Group Plc Annual Report 2007
Financial review
The major change
compared to last year
is the higher level of
retained profit, and
consequently cash,
arising from the Group’s
increased profitability
during the year. 
Profit and loss account
Group turnover, management fees
charged as a percentage of funds under
management (FUM), increased by almost
30%, reflecting the 38% uplift in FUM to
a period end figure of US$3.793 billion.
As last year, by far the largest proportion
of turnover – £16.8 million (2006: £13.2
million) representing 92% (2006: 93%)
of the total – was generated in North
America. However, progress was made in
growing the level of business derived from
Europe and turnover generated here
doubled to £1.1 million, representing 6%
(2006: 4%) of the total for the year.
Administrative Expenses increased by
18% to £11.2 million (2006: £9.5
million). The increase is principally
accounted for by higher wage costs
resulting from six additional members
of staff and the higher levels of bonuses
paid during the year, reflecting the
Group’s increased profitability. Over 50%
of Administrative Expenses for the period
(2006: 46%) are represented by costs
that vary with turnover levels, principally
commissions payable to marketing agents
at £2.72 million (2006: £2.18 million)
and staff profit sharing at £3.15 million
(2006: £2.20 million), representing 53%
(2006: 47%) of total staff costs.
The dividend for 2007 is the £735,864
cost of the interim dividend of 3p per
share paid in March 2007, while the
2006 figure comprises the final dividend
for 2005 and the interim and final
dividends for 2006, paid before the
Company was listed on AIM, which
together total £2,282,675.
The Group’s tax charge is normally
higher than the 30% prevailing rate of
UK corporation tax because net income
attributable to the US operations attracts
the higher US corporate tax rate of
marginally in excess of 40%. The overall
charge rate this year was 34% (2006:
38% restated), reflecting that most of our
managed funds and segregated accounts
had a higher weighting towards non-US
investments during the period.
Recognised gains and losses
The revaluation reserve increased by
£511,323 to a year end balance sheet
figure of £645,829 (2006: £134,506),
reflecting the increase in the value of
investments made by the Group in order
to seed new funds, plus the investment
in the options hedging programme
referred to in the Chairman’s Statement
and the Chief Executive’s Review. These
investments had a market value of £2.30
million (2006: £1.36 million) at the year
end, with the increase of £940,000 being
attributable approximately 50:50 to net
new investments and to the increase in
market value.
Balance sheet
The major change in the consolidated
balance sheet compared to last year is
the higher level of retained profit, and
consequently cash, arising from the
Group’s increased profitability during
the year. As is historically the case for
the Group, net current assets of £8.3
million (2006: £4.0 million) represent,
at 97% (2006: 93%), by far the largest
proportion of total net assets of
£8.6 million (2006: £4.3 million).
04 05 06
Fixed costs
Variable costs
Pre-tax profit
Note: excludes AIM listing costs
3,881
7,762
14,228
18,547
07
D F Allison
Finance Director
Total income £k City of London Investment Group Plc Annual Report 2007 15
Debtors and creditors both increased
roughly in proportion with the growth
in turnover. Cash at bank and in hand
at £6.6 million (2006: £2.7 million)
represented 77% (2006: 63%) of total
net assets.
Investment in own shares increased by
£0.55 million to a year end figure of
£1.57 million (2006: £1.03 million),
representing loans made by the
Company to the employee benefit trust
to acquire shares for the share option
schemes. These loans are repaid on the
exercise of options issued by the trust.
Currency exposure
In line with previous years, some 90%
of the Group’s income is sourced in US$,
but its expenses are roughly evenly
divided between sterling and US dollars
(with a small Singapore dollar element).
As a result, reported sterling net income
is significantly exposed to movements in
the sterling/US dollar exchange rate,
which during the year moved within an
approximate range of US$1.80 – 2.00 to
£1 (2006: US$1.70 – 1.90 to £1).
The following table illustrates the
approximate effect across a range of
funds under management assumptions,
given the current geographical
distribution of the expense base:
Average FUM – US$bn
3.0 3.5 4.0 4.5
US$/£ Pre-tax, £m
1.90 6.4 8.0 9.7 11.3
1.95 6.2 7.8 9.4 11.0
2.00 6.0 7.5 9.1 10.7
2.05 5.8 7.3 8.8 10.4
2.10 5.6 7.1 8.6 10.1
Assumes:
1 Average net fee 0.90%.
2 Annual operating costs of £2.5 million plus
US$4.2 million plus Singapore $1.2 million.
3 Profit share equivalent to 30% of
operating profits.
For example, if funds under management
were constant at US$4.0 billion
throughout the year, then the impact on
sterling pre-tax profit of a move in the
exchange rate from US$2.00 to US$2.05
to £1 would be approximately £0.3
million on an annualised basis, if one
assumes that none of the exposure is
hedged. That said, it is worth repeating
that there is a significant degree of natural
hedge inherent in our investment process,
given that a weaker US dollar gives uplift
to our funds under management.
As in previous years, we continue to 
hedge our balance sheet currency
exposure by forward sales, with a total 
of US$4.5million sold forward at the
balance sheet date.
Share options
The Group regards share options as a vital
tool in recruiting, motivating and retaining
staff and management. At the period end
there were 4,797,675 options on ordinary
shares outstanding (2006: 4,747,050),
representing 17.9% of the current issued
share capital. 2,297,675 of the outstanding
options (48% of the total) are over shares
held by the Employee Share Option T rust
and their eventual exercise will therefore
result in no dilution to existing
shareholders’ interests.
Change in accounting policy
The Group has adopted accounting
standard FRS 20, Share-based Payments.
The effect of this was to increase
Administrative Expenses in the year to
31st May 2007 by £124,520 and by
£64,026 for 2006, which has meant
that the 2006 comparative figures have
been restated to reflect the adoption.
Corresponding amounts have been
credited to a Share Option Reserve on
the Consolidated Balance Sheet. The
charges arise because under FRS 20, 
the fair value of the employee services
received in exchange for share options is
recognised as an expense. More detail on
the adoption of FRS 20 is contained in
Note 1 to the Accounts.
International Financial
Reporting Standards
City of London Investment Group is
required to adopt International Financial
Reporting Standards (IFRS) for the year
ended 31st May 2008. These accounts
have been produced in line with UK
GAAP . The interim results for the six
months to 30th November 2007 will be
the first results prepared under IFRS.
D F Allison
Finance Director
14th September 2007 T echnology 
We have consistently used technology to leverage
our capabilities across our three offices, to reduce
risk and to improve investment performance.  
The Merlion of Singapore
The Merlion was designed by Fraser Brunner
for the Singapore Tourism Board in 1964 and
was used as its logo up to 1997 but is still the
accepted trademark symbol of Singapore. The
lion’s head upon a fish’s body relates to the
story of Sang Nila Utama, the legendary
prince and founder of Singapore, who upon
finding the mouth of the Singapore River in
11AD and beginning to hunt, saw a strange
beast which he took to be a lion, giving the
name Singapore, “Singa” lion and “Pura” city.
The fish’s tail symbolises the city’s humble
beginnings as a fishing village.
16 City of London Investment Group Plc Annual Report 2007 City of London Investment Group Plc Annual Report 2007 17 18 City of London Investment Group Plc Annual Report 2007
Board of directors
A J Davison
NON EXECUTIVE CHAIRMAN
Andrew Davison, a Chartered Accountant, joined
County Bank Limited in 1972 and by 1984 had
become Managing Director of NatWest Ventures.
In 1987 he became Chairman and CEO of
Business Mortgages Bank which was sold in 1991.
He subsequently joined the Boards of a number of
listed and unlisted companies.
B M Olliff 
CHIEF EXECUTIVE OFFICER
Barry Olliff’s career has spanned over 40 years 
within the investment trust (closed-end fund) sector.
He began his career in 1964 with Denny Brothers,
ultimately Pinchin Denny, as a market maker in the
sector. In 1979 he moved to Laing & Cruickshank 
as a member of their investment trust department,
and became a director in 1984. In 1987 he
established Olliff & Partners, the stockbroker
business from which City of London was founded 
in the early 1990’s.
D F Allison 
FINANCE DIRECTOR
Doug Allison qualified as a Chartered Accountant
with Ernst & Young in 1980, and has worked in
the financial services sector since 1984, joining
City of London in 1997. He is also an Associate
of the Chartered Institute of Bankers.
C M Yuste
BUSINESS DEVELOPMENT DIRECTOR
Carlos Yuste holds a BS in International Relations
from the University of Ottawa, and an MA in
International Political Economy from Carleton
University, also in Ottawa. He worked at the
International Development Research Centre in
Ottawa from 1994 to 1998, leaving to undertake
an International MBA at York University, Toronto,
which he completed in 2000 before joining City 
of London in the same year. City of London Investment Group Plc Annual Report 2007 19
T W Griffith
CHIEF OPERATING OFFICER
Prior to joining City of London Group in 2000,
Thomas Griffith held various positions in the
institutional client division of The Vanguard
Group including roles as both a Client
Relationship Manager and a Marketing Executive.
In 1986 he obtained a bachelor’s degree in
Corporate Finance and Investment Management
from the University of Alabama.
O I Ashur
NON EXECUTIVE DIRECTOR
Omar Ashur is the chief financial officer of FMH,
one of the Company’s major shareholders and has
an MBA and PhD from the Wharton School of the
University of Pennsylvania, in Philadelphia.
D M Cardale
NON EXECUTIVE DIRECTOR
David Cardale is the co-founder and Chairman
of Global Investor Relations. He has worked
extensively in both Corporate Finance and 
Private Equity. He has advised a number of fund
management groups including Gartmore, Ivory &
Sime and NIM, and ran the European operations
of NatWest Equity Partners. He has been a director
of two London listed Investment Trusts. David
Cardale holds an MBA from INSEAD.
G A Robb 
NON EXECUTIVE DIRECTOR
George Robb qualified as a solicitor before becoming
fully involved with the asset management sector 
in 1971. In 1994 he established Asset Management
Investment Company PLC as a specialist vehicle
investing in the asset management sector and 
was appointed managing director on its flotation. 
He is a non-executive director of several companies
in which AMIC is invested. Officers and Board Committees
Professional advisers
20 City of London Investment Group Plc Annual Report 2007
Audit Remuneration
Board Committee Committee Other
D F Allison Executive Secretary
O I Ashur Non-executive
••
D M Cardale Non-executive
••
A J Davison Chairman Non-executive
•
Chairman
•
T W Griffith Executive
B M Olliff Executive
G A Robb Non-executive
••
Chairman
C M Yuste Executive
Nominated advisers
and brokers
Landsbanki
Beaufort House
15 St Botolph Street
London
EC3A 7QR
Bankers
The Royal Bank of Scotland plc
London City Office
62-63 Threadneedle Street
London
EC2R 8LA
Auditors
Moore Stephens LLP
Chartered Accountants
St. Paul’s House
Warwick Lane
London
EC4M 7BP
Registrars
Capita Registrars 
The Registry 
34 Beckenham Road 
Beckenham 
Kent 
BR3 4TU
Financial communications
Tavistock Communications
13 Finsbury Pavement
London
EC2A 1NT
10 Eastcheap
London
EC3M 1LX
Registered Office Report of the directors
City of London Investment Group Plc Annual Report 2007 21
The directors present their annual report and the audited financial statements for the year ended 31st May 2007.
Principal activity and review of business
City of London Investment Group Plc is the holding company for a number of investment management subsidiaries. The principal
operating subsidiary is City of London Investment Management Company Limited, which acts as an investment adviser and which
advises on 27 accounts (2006 – 22 accounts) with a total of £1,916m (2006 – £1,471m) under management as at the end of the year.
The Report of the directors should be read in conjunction with the Chairman’s statement, the Chief Executive Officer’s review, and
the Financial review on pages 4 to 15, which together provide a commentary on the operations of the Group.
Future prospects
The Board is optimistic as to the future and is committed to increasing the Group’s funds under management.
Results and dividend
The results of the Group for the year, together with details of amounts transferred to reserves, are set out on page 28. The Company
has paid dividends of £735,864 during the year (2006 – £2,282,675). The final dividend for the year to 31st May 2007 will be paid
in November 2007, subject to approval.
Corporate governance
(a) The Board of directors
The Board recognises the importance of good corporate practice and is committed to maintaining high standards of corporate
governance throughout the Group. The Board comprises four executive directors and four non-executive directors. The directors intend
to comply with the Combined Code in such respects as are appropriate for a company of this size, nature and stage of development.
The Board meets regularly and has overall responsibility for ensuring that the Group is properly led and controlled, and is
accountable to shareholders for financial and operational performance. These responsibilities include the overall strategy of the
Group, approval of significant items of expenditure and consideration of significant financing matters pertaining to the Group.
The Board has established an Audit Committee, a Remuneration Committee and a Nominations Committee (each comprising the four
non-executive directors, who will invite other members of the Board to join meetings) with formally delegated duties and responsibilities.
(b) The Remuneration Committee
The Remuneration Committee is chaired by George Robb. It reviews the performance of executive directors and sets the scale and
structure of their remuneration and reviews the basis of their service agreements with due regard to the interests of the shareholders.
The Remuneration Committee also makes recommendations to the Board concerning the allocation of share options to directors
and employees. The remuneration and terms of appointment of non-executive directors will be set by the Board.
The Company has a remuneration policy, the aim of which is to provide, in the context of the Group’s business strategy,
remuneration that will attract and retain high calibre executives and staff. In order to achieve this, total rewards are set at levels that
are competitive within the relevant market. Rewards are earned through the achievement of objectives based on measures consistent
with shareholder interests.
(c) The Audit Committee
The Audit Committee is chaired by Andrew Davison. It meets at least twice each year and is responsible for monitoring the quality
of internal control, ensuring that the financial performance of the Company is properly measured and reported on, meeting with the
auditors and reviewing reports from the auditors relating to accounting and internal controls.
The finance director is invited to attend meetings but the committee meets with the auditors at least once a year without the finance
director being present. Report of the directors
Continued
22 City of London Investment Group Plc Annual Report 2007
(d) The Nominations Committee
The Nominations Committee is chaired by Andrew Davison. It is responsible for reviewing and proposing appointments to the
Board and the various Board committees. In addition, the committee has responsibility for reviewing the composition of the Board
and for selecting candidates for appointment, to meet the desired composition.
(e) Corporate Governance in Investee Closed-End Funds
Since 1999, City of London has produced a detailed statement outlining the corporate governance procedures and policies it expects
to be employed by closed-end funds in which we invest. The sixth edition of our “Statement of Corporate Governance and Voting
Policy for Closed-End Funds” was circulated in June 2007. In publishing this statement we attempt to capture the current best
practices in the corporate governance of closed-end funds.
Corporate governance is an integral part of our investment process because it is our firm belief that a closed-end fund with poor
corporate governance will generally trade at a wide discount over time. Poor corporate governance in a closed-end fund results in
fund price under-performance via the widening of the discount to the Net Asset Value at which the fund trades.
Our statement is addressed to Boards, Managers, Shareholders, and the Professional community. It attempts to define the
responsibilities of all the parties involved within a closed-end fund, with the ultimate aim of promoting shareholder value and the
long-term interests of the closed-end fund sector.
A copy of our statement is distributed to the members of the Boards of the closed-end funds in which we invest and is available on
our website.
Directors interests and remuneration
(a) Shareholdings
The directors who served throughout the year and their interests in the Company were as follows:
Ordinary Shares of
1p each 1p each
2007 2006
A J Davison (Chairman) (non-executive) 49,000 49,000
B M Olliff 3,763,250 3,763,250
D F Allison 175,625 165,625
T W Griffith 16,575 14,075
C M Yuste 16,575 16,575
G A Robb (non-executive) – –
O I Ashur (non-executive) 5,000 –
D M Cardale (non-executive) – – City of London Investment Group Plc Annual Report 2007 23
(b) Share options
At 31st May 2007 share options were held by the following directors:
Exercise price Date from which
Number £ exercisable Expiry date
B M Olliff 62,500 0.45 10th January 2004 10th January 2008
62,500 0.45 13th September 2004 13th September 2008
189,000 0.29 14th May 2007 14th May 2009
311,000 0.26 14th May 2007 14th May 2014
25,000 1.40 31st March 2009 31st March 2016
5,000 2.61 30th January 2010 30th January 2017
5,000 2.73 30th March 2010 30th March 2017
D F Allison 52,500 0.45 10th January 2004 10th January 2008
62,500 0.45 13th September 2004 13th September 2008
250,000 0.26 14th May 2007 14th May 2014
18,750 1.40 31st March 2009 31st March 2016
5,000 2.61 30th January 2010 30th January 2017
5,000 2.73 30th March 2010 30th March 2017
T W Griffith 50,000 0.45 10th January 2004 10th January 2011
33,350 0.45 13th September 2004 13th September 2008
16,650 0.45 13th September 2004 13th September 2011
250,000 0.26 14th May 2007 14th May 2014
12,500 1.40 31st March 2009 31st March 2016
5,000 2.61 30th January 2010 30th January 2017
5,000 2.73 30th March 2010 30th March 2017
C M Yuste 50,000 0.45 10th January 2004 10th January 2011
33,350 0.45 13th September 2004 13th September 2008
16,650 0.45 13th September 2004 13th September 2011
250,000 0.26 14th May 2007 14th May 2014
12,500 1.40 31st March 2009 31st March 2016
5,000 2.61 30th January 2010 30th January 2017
5,000 2.73 30th March 2010 30th March 2017 Report of the directors
Continued
24 City of London Investment Group Plc Annual Report 2007
(c) Remuneration
The remuneration of the directors who held office during the year ended 31st May 2007 is set out below:
Health Total Total Pension Pension
Salary Profit share insurance 2007 2006 2007 2006
£££ £ £ £ £
Non-executive
A J Davison 30,000 – – 30,000 25,764 – –
G A Robb 20,000 – – 20,000 15,764 – –
O I Ashur 20,000 – – 20,000 15,764 – –
D M Cardale 20,000 – – 20,000 4,483 – –
90,000 – – 90,000 61,775 – –
Executive
B M Olliff 182,200 676,741 – 858,941 727,182 22,775 24,632
D F Allison 135,000 305,250 1,059 441,309 340,981 16,875 15,626
T W Griffith 104,114 165,411 – 269,525 212,535 13,014 10,732
C M Yuste 104,114 165,411 – 269,525 212,535 13,014 10,732
525,428 1,312,813 1,059 1,839,300 1,493,233 65,678 61,722
Substantial shareholdings
At 25th August 2007, the Company had been notified of the following interests of 3% or more in the Company’s ordinary shares:
Number of Percentage of
Interested party shares issued shares
FMH Investments NV 7,929,425 29.61
B M Olliff 3,763,250 14.05
F&C Asset Management 2,521,447 9.42
The City of London Employee Share Option Trust 2,303,125 8.60
BlackRock Investment Management 2,120,500 7.92
Asset Management Investment Company PLC 1,781,275 6.65
JP Morgan Asset Management 954,932 3.57
Axa Framlington Investment Managers 880,000 3.29
Creditor payment policy
The Company’s current policy concerning the payment of its trade creditors is to:
(a) settle the terms of payment with suppliers when agreeing the terms of each transaction;
(b) ensure that suppliers are made aware of the terms of payment; and
(c) abide by the terms of payment.
The payment policy applies to all payments to suppliers for revenue and capital supplies of goods and services without exception.
As at 31st May 2007, the creditor days were Nil (2006 – Nil). Donations
During the year the Group made charitable donations of £5,000.
Auditors
A resolution to re-appoint Moore Stephens LLP as the Company’s auditor will be put to the forthcoming Annual General Meeting.
Each of the persons who are directors at the time when this report is approved has confirmed that:
(a) so far as each director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and
(b) each director has taken all the steps that ought to have been taken as a director, including making appropriate enquiries of fellow
directors and the Company’s auditors for that purpose, in order to be aware of any information needed by the Company’s
auditors in connection with preparing their report and to establish that the Company’s auditors are aware of that information.
Approved by the Board of directors and signed on behalf of the Board
D F Allison
Company Secretary
14th September 2007
City of London Investment Group Plc Annual Report 2007 25 Statement of directors’ responsibilities
26 City of London Investment Group Plc Annual Report 2007
United Kingdom company law requires the directors to prepare financial statements for each financial year which give a true and fair
view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit or loss of the Group
for that year. In preparing those financial statements, the directors are required to:
– select suitable accounting policies and then apply them consistently;
– make judgements and estimates that are reasonable and prudent;
– state whether applicable accounting standards have been followed, subject to any material departures disclosed
and explained in the financial statements;
– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the financial statements comply with the Companies Act 1985. They are
also responsible for the system of internal control, for safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities. Independent auditors’ report to the shareholders
of City of London Investment Group plc
City of London Investment Group Plc Annual Report 2007 27
We have audited the Group and Parent Company financial statements (the “financial statements”) of City of London Investment
Group plc for the year ended 31st May 2007 which are set out on pages 28 to 44. These financial statements have been prepared
under the accounting policies set out therein.
This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. 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
auditors’ report and for no other purpose. T o 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.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and
United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of
directors’ responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in
accordance with the Companies Act 1985. We also report to you if, in our opinion, the Company has not kept proper accounting
records, if we have not received all the information and explanations we require for our audit, or if information specified by law
regarding directors’ remuneration and other transactions is not disclosed.
We report to you whether in our opinion the information given in the directors’ report is consistent with the financial statements.
In addition, we read other information contained in the Annual Report. This other information comprises the Introduction and
highlights, the Chairman’s statement, the Chief Executive Officer’s review and the Financial review. We consider the implications for
our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our
responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also
includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and
of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to
provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements.
Opinion
In our opinion:
• the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of
the state of the Group’s and the Parent Company’s affairs as at 31st May 2007 and of the Group’s profit for the year then ended;
• the financial statements have been properly prepared in accordance with the Companies Act 1985; and
• the information given in the directors’ report is consistent with the financial statements.
Moore Stephens LLP
14th September 2007
Registered Auditors and Chartered Accountants
St Paul’s House, Warwick Lane, London EC4M 7BP Consolidated profit and loss account
For the year ended 31st May 2007
28 City of London Investment Group Plc Annual Report 2007
Total
Total 2006
2007 (as restated)
Note £ £
Turnover 1,2 18,304,881 14,118,639
Administrative expenses
Staff costs 4(b) 5,954,730 4,568,763
Other administrative expenses 5,139,946 4,350,907
AIM listing costs – 482,708
Depreciation 120,494 108,112
(11,215,170) (9,510,490)
Other operating income – 9,520
Operating profit 6 7,089,711 4,617,669
Interest receivable and similar income 7 242,103 109,562
Profit on ordinary activities before taxation 7,331,814 4,727,231
Tax charge on profit on ordinary activities 8 (2,457,856) (1,784,138)
Profit on ordinary activities after taxation 4,873,958 2,943,093
Dividends 9 (735,864) (2,282,675)
Retained profit for the financial year 17 4,138,094 660,418
Basic profit per share 10 19.9p 13.5p
Diluted profit per share 10 17.5p 11.7p
Consolidated statement of total recognised gains and losses
For the year ended 31st May 2007
2006
2007 (as restated)
Note £ £
Retained profit for the period 4,138,094 660,418
Increase in revaluation reserve 511,323 134,506
Total recognised gains and losses for the period 4,649,417 794,924
Prior year adjustment 17 (106,325)
Total gains and losses recognised since the last annual report 4,543,092 Consolidated balance sheet
31st May 2007
2006
2007 (as restated)
Note £ £
Fixed assets
Tangible assets 11 193,362 225,939
Investments 12 46,859 61,253
240,221 287,192
Current assets
Debtors 13 2,613,212 2,136,312
Investments 14 2,299,325 1,359,563
Cash at bank and in hand 6,616,824 2,708,915
11,529,361 6,204,790
Creditors, amounts falling due within one year 15 (3,210,074) (2,160,169)
Net current assets 8,319,287 4,044,621
Total assets less current liabilities 8,559,508 4,331,813
Capital and reserves
Called up share capital 16 267,777 267,777
Share premium account 17 1,357,283 1,357,283
Investment in own shares 17 (1,573,525) (1,027,283)
Revaluation reserve 17 645,829 134,506
Share option reserve 17 230,845 106,325
Profit and loss account 17 7,631,299 3,493,205
Shareholders’ funds 17 8,559,508 4,331,813
The Board of directors approved these financial statements on 14th September 2007.
Signed on behalf of the Board of directors
B M Olliff D F Allison
Chief Executive Officer Finance Director
City of London Investment Group Plc Annual Report 2007 29 Company balance sheet
31st May 2007
30 City of London Investment Group Plc Annual Report 2007
2006
2007 (as restated)
Note £ £
Fixed assets
Tangible assets 11 74,748 63,252
Investments 12 621,789 636,187
696,537 699,439
Current assets
Debtors 13 3,407,872 632,617
Investments 14 2,299,325 1,359,563
Cash at bank and in hand 427,988 35,261
6,135,185 2,027,441
Creditors, amounts falling due within one year 15 (3,318,544) (1,093,182)
Net current assets 2,816,641 934,259
Total assets less current liabilities 3,513,178 1,633,698
Capital and reserves
Called up share capital 16 267,777 267,777
Share premium account 17 1,357,283 1,357,283
Investment in own shares 17 (1,573,525) (1,027,283)
Revaluation reserve 17 645,829 134,506
Share option reserve 17 230,845 106,325
Profit and loss account 17 2,584,969 795,090
Shareholders’ funds 17 3,513,178 1,633,698
The Board of directors approved these financial statements on 14th September 2007.
Signed on behalf of the Board of directors
B M Olliff D F Allison
Chief Executive Officer Finance Director Cash flow statement
For the year ended 31st May 2007
City of London Investment Group Plc Annual Report 2007 31
2007 2006
Note £ £
Consolidated cash flow statement
Net cash inflow from operating activities 20 7,708,693 4,145,424
Returns on investments and servicing of finance 21 196,487 109,562
Taxation 21 (2,190,642) (1,643,687)
Capital expenditure and financial investment 21 (58,545) (164,267)
Equity dividends paid (735,864) (2,282,675)
Financing 21 (546,242) 907,685
Management of liquid resources 21 (465,978) (761,167)
Increase in cash 23 3,907,909 310,875 Notes to the financial statements
For the year ended 31st May 2007
32 City of London Investment Group Plc Annual Report 2007
1 Accounting policies
The financial statements are prepared in accordance with applicable United Kingdom law and accounting standards.
The principal accounting policies adopted by the directors are set out below.
(a) Consolidation
These financial statements consolidate the financial statements of the Company and all of its subsidiary undertakings.
The Company’s principal subsidiaries are City of London Investment Management Company Limited and City of London
US Services Limited, all other subsidiaries being dormant at 31st May 2007.
Goodwill of £25,023 arising on the acquisition of the subsidiary undertakings, being the excess of cost over the fair value of the
net tangible assets acquired, was written off directly to reserves in the year of acquisition for those acquisitions prior to 23rd
December 1998. Any goodwill arising on subsequent acquisitions will be capitalised and amortised over its useful economic life.
(b) T urnover
Turnover arises in North America, Europe and Australia and comprises investment management fees earned. Fees are recognised
in turnover as the investment management services are provided, in accordance with the underlying agreements.
(c) Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the
balance sheet date and any exchange differences arising are dealt with through the profit and loss account.
(d) Tangible fixed assets and depreciation
For all tangible fixed assets depreciation is calculated to write off their cost to their estimated residual values by equal annual
instalments over the period of their estimated useful lives, which are considered to be:
Short leasehold property improvements – over the remaining life of the lease
Furniture and equipment – four years
Computer and telephone equipment – four years
(e) Investments
Fixed asset investments are stated at cost less provision for any impairment in value.
Current asset investments are those investments which are considered to be liquid assets. They are stated at market value, and
unrealised gains and losses are reflected in the revaluation reserve in accordance with the alternative accounting rules of the
Companies Act 1985.
(f) Leases
The cost of operating leases is charged to the profit and loss account in equal periodic instalments over the periods of the leases.
(g) Pensions
The Group operates defined contribution pension schemes covering the majority of its employees. The costs of the pension
schemes are charged to the profit and loss account as they accrue.
(h) Deferred taxation
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or
a right to pay less tax, at a future date, at rates that are expected to apply when they crystallise based on current tax rates and
law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods
different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that
it is regarded more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted. City of London Investment Group Plc Annual Report 2007 33
1 Accounting policies continued
(i) Comparatives
Comparatives have been restated in respect of “Share-based payments” in accordance with FRS 20.
(j) Change in accounting policy
In preparing the financial statements for the current period, the Group has adopted FRS 20 “share-based payments”. The effect
of this change in policy on the financial statements is to increase the administrative costs as detailed below. A corresponding
amount is credited to a share option reserve in accordance with FRS 20.
Share-based Total share
End of accounting period payment option reserve
31st May 2005 42,299 42,299
30th November 2005 27,301 69,600
31st May 2006 36,725 106,325
30th November 2006 56,657 162,982
31st May 2007 67,863 230,845
Share-based payments
The Company operates an Employee Share Option Plan. In accordance with FRS 20, the fair value of the employee services
received in exchange for share options is recognised as an expense. The fair value has been calculated using the Binomial pricing
model, and has then been expensed on a straight line basis over the vesting period of three years, based on the Company’s
estimate of the number of shares that will actually vest.
The estimated fair values of options which fall under FRS 20, and the inputs used in the Binomial pricing model to calculate
those fair values, are as follows:
Expected Risk-free Share price Exercise Dividend Estimated Number
Date of grant Expiry date life (yrs) rate at grant (£) price (£) Volatility yield fair value (£) outstanding
14/05/2004 14/05/2014 3.00 5.0411% 0.2600 0.2600 33.5589% 4.50% 0.0668 2,000,000
17/12/2004 17/12/2014 3.00 4.5420% 0.4500 0.4500 30.9463% 4.50% 0.1061 536,250
31/03/2006 31/03/2016 3.00 4.5300% 1.4000 1.4000 25.4798% 4.50% 0.2450 818,750
10/10/2006 10/10/2016 3.00 4.9865% 1.8000 1.8000 29.3594% 4.50% 0.3196 50,000
30/01/2007 30/01/2017 3.00 5.4828% 2.6100 2.6100 29.8223% 4.50% 0.4834 140,500
30/03/2007 31/03/2017 3.00 5.4338% 2.7300 2.7300 29.3557% 4.50% 0.4948 143,500
The expected life of the options has been assumed to be three years based upon the empirical evidence available. The risk-free rate has
been assumed to be represented by the yield to maturity at the date of grant of a UK Gilt strip with term to maturity equal to the
expected life of the option. The volatility of the Company’s share price at each date of grant has been calculated as the average of the
standard deviations of daily continuously compounded returns on the stock of a group of comparable companies.
In accordance with the transitional provisions, FRS 20 has been applied only to grants of share options after 7th November 2002
that had not vested as at 1st June 2006, although, as required by FRS20, the disclosures below include grants of share options prior 
to 7th November 2002. Notes to the financial statements
Continued
34 City of London Investment Group Plc Annual Report 2007
1 Accounting policies continued
The number and weighted average exercise price of share options for each of the following groups is as follows:
2007 2006
Weighted average Weighted average
Number exercise price Number exercise price
Outstanding at the beginning of the year 4,747,050 0.54 4,435,350 0.36
Granted during the year 334,000 2.54 825,000 1.40
Forfeited during the year 6,250 1.40 ––
Exercised during the year 277,125 0.45 513,300 0.45
Expired during the year –– ––
Outstanding at the end of the year 4,797,675 0.68 4,747,050 0.54
Exercisable at the end of the year 3,108,675 0.33 1,385,800 0.45
The weighted average share price at the date of exercise 
for share options exercised during the year was 214.45 –
(2006: No share prices available prior to AIM listing)
2 Turnover
2007 2006
£ £
Management fees earned by subsidiary companies charged
as a percentage of funds under management 18,304,881 14,118,639
3 Analysis of turnover, operating profit and net assets
The directors consider that the Group only undertakes one class of business, and hence only analysis by geographical location is given.
Turnover Operating profit Net assets
2006 2006
2007 2006 2007 (as restated) 2007 (as restated)
£ £ £ £ £ £
Europe 1,130,223 585,206 601,146 855,197 6,606,459 2,367,636
North America 16,780,057 13,185,903 6,301,978 3,538,613 1,923,885 1,921,165
South America – 298,173 – 205,660 1,643 2,973
Other 394,601 49,357 186,587 18,199 27,520 40,039
18,304,881 14,118,639 7,089,711 4,617,669 8,559,508 4,331,813
4 Employees
(a) Average number of persons employed by the Group in the year:
2007 2006
Number Number
Investment management staff 9 9
Sales and dealing staff 2 2
Research staff 10 7
Administration accounts and settlement staff 23 20
44 38 City of London Investment Group Plc Annual Report 2007 35
4 Employees continued
(b) Staff costs incurred during the year in respect of these employees were:
2006
2007 (as restated)
£ £
Wages and salaries 2,256,950 1,960,784
Profit sharing payments 2,923,952 2,024,485
Social security costs 395,124 299,276
Defined contribution pension costs 254,184 220,192
Share options charge 124,520 64,026
5,954,730 4,568,763
The Group made contributions of £254,184 (2006 – £220,192) in the period to individual defined contribution pension
schemes established for directors and employees. There were no outstanding or prepaid contributions at the balance sheet date.
5 Directors
2007 2006
Directors’ emoluments comprise: £ £
Emoluments (excluding pension contributions and awards under share option schemes) 1,929,300 1,555,008
Pension contributions 65,678 61,722
2007 2006
Number Number
Number of directors on whose behalf pension contributions were paid during the year 4 4
Number of directors who exercised share options during the period 1 2
2007 2006
Highest paid director’s remuneration: £ £
Emoluments (excluding pension contributions and awards under share option
schemes and other long-term incentive schemes) 858,941 727,181
Pension contributions 22,775 24,632
6 Operating profit
2006
2007 (as restated)
The operating profit is arrived at after charging: £ £
Depreciation of owned assets 120,494 108,112
Auditors’ remuneration:
– Statutory audit 31,510 30,000
– Taxation services 12,337 22,810
– Corporate finance services – 97,539
– Other services 5,575 34,243
Operating lease rentals:
– Land and buildings 135,418 136,494
– Other 6,543 7,022 Notes to the financial statements
Continued
36 City of London Investment Group Plc Annual Report 2007
7 Interest receivable and similar income
2007 2006
£ £
Interest on bank deposit 196,487 109,562
Profit on sale of investments 45,616 –
242,103 109,562
8 Tax charge on profit on ordinary activities
(a) Analysis of tax charge on ordinary activities:
2007 2006
£ £
Tax at 30% (2006 – 30%) based on the profit for the year 2,260,228 1,538,223
Double taxation relief (542,228) (415,360)
Adjustments in respect of prior years (11,518) (3,148)
1,706,482 1,119,715
Foreign tax for the current period 778,144 652,983
Adjustments in respect of prior years (26,770) 11,440
751,374 664,423
2,457,856 1,784,138
(b) Factors affecting tax charge for the current period:
The tax assessed for the period is different to that resulting from applying the standard rate of corporation tax in the UK: 30%
(prior year: 30%). The differences are explained below:
2006
2007 (as restated)
£ £
Profit on ordinary activities before tax 7,331,814 4,727,231
Tax at 30% thereon (2,199,544) (1,418,169)
Effects of:
Expenses not deductible for tax purposes (41,353) (119,208)
Capital allowances less than depreciation (16,733) –
Unrelieved overseas tax (235,916) (237,623)
Prior period adjustments 38,288 (8,292)
Other (2,598) (846)
(2,457,856) (1,784,138)
The Company has revalued its current asset investments to market value. Deferred tax has not been recognised on this
revaluation, but the estimated tax payable if the investments were sold at the values shown is £193,749 (2006 – £40,352).  City of London Investment Group Plc Annual Report 2007 37
9 Dividend
2007 2006
£ £
Dividends paid:
Interim dividend of £0.03 per share (2006 – £0.09) 735,864 1,982,662
Final dividend in respect of year ended:
31st May 2005 of £0.36 per share – 300,013
735,864 2,282,675
10 Earnings per share
The calculation of earnings per share is based on the profit for the period of £4,873,958 (2006 restated – £2,943,093) divided by
the weighted average number of ordinary shares in issue for the year ended 31st May 2007 of 24,432,528 (2006 – 21,855,212).
As set out in Note 17 the Employee Benefit T rust held 2,303,125 ordinary shares in the Company as at 31st May 2007. The T rustees
of the T rust have waived all rights to dividends associated with these shares. In accordance with FRS 22 the ordinary shares held by the
Employee Benefit T rust have been excluded from the calculation of the weighted average of ordinary shares in issue.
The calculation of diluted earnings per share is based on the profit for the year of £4,873,958 (2006 restated – £2,943,093) divided
by the diluted weighted average of ordinary shares for the year ended 31st May 2007 of 27,823,144 (2006 – 25,272,459).
Reconciliation of the figures used in calculating basic and diluted earnings per share:
2007 2006
Number of shares Number of shares
Weighted average number of shares – basic earnings per share 24,432,528 21,855,212
Effect of dilutive potential shares – share options 3,390,616 3,417,247
Weighted average number of shares – diluted earnings per share 27,823,144 25,272,459
11 Tangible fixed assets
Furniture Computer and Short
and telephone leasehold
equipment equipment improvements Total
Group ££££
Cost
At 1st June 2006 94,697 587,580 159,163 841,440
Additions 7,531 80,386 – 87,917
Disposals (10,801) – – (10,801)
At 31st May 2007 91,427 667,966 159,163 918,556
Accumulated depreciation
At 1st June 2006 81,893 386,394 147,214 615,501
Charge for the year 6,710 106,781 7,003 120,494
Disposals (10,801) – – (10,801)
At 31st May 2007 77,802 493,175 154,217 725,194
Net book value
At 31st May 2007 13,625 174,791 4,946 193,362
At 31st May 2006 12,804 201,186 11,949 225,939 Notes to the financial statements
Continued
38 City of London Investment Group Plc Annual Report 2007
11 Tangible fixed assets continued
Computer
Furniture and Short
and telephone leasehold
equipment equipment improvements Total
Company ££££
Cost
At 1st June 2006 46,678 207,978 132,419 387,075
Additions 2,751 52,131 – 54,882
Disposals (8,551) – – (8,551)
At 31st May 2007 40,878 260,109 132,419 433,406
Accumulated depreciation
At 1st June 2006 43,459 155,787 124,577 323,823
Charge for the year 1,961 36,121 5,304 43,386
Disposals (8,551) – – (8,551)
At 31st May 2007 36,869 191,908 129,881 358,658
Net book value
At 31st May 2007 4,009 68,201 2,538 74,748
At 31st May 2006 3,219 52,191 7,842 63,252
12 Investments held as fixed assets
Unlisted
investments
Group £
Cost
At 1st June 2006 61,253
Additions 255
Disposals (14,649)
At 31st May 2007 46,859
Shares in
Unlisted subsidiary
investments undertakings Total
Company £££
Cost
At 1st June 2006 60,183 576,004 636,187
Additions 255 – 255
Disposals (14,649) (4) (14,653)
At 31st May 2007 45,789 576,000 621,789 City of London Investment Group Plc Annual Report 2007 39
12 Investments held as fixed assets continued
Holding of
ordinary
Subsidiary undertakings Activity shares
City of London Investment Management Company Limited Management of funds 100%
City of London Unit Trust Managers Limited Dormant company 100%
City of London US Investments Limited Holding company for US companies 100%
City of London US Investments Limited holds 100%
of the ordinary shares in the following:
City of London US Services Limited Service company
City of London Quantitative Management Limited Dormant company
City of London Latin America Limited Dormant company
The above companies are incorporated in Great Britain and registered in England and Wales. They are included in the consolidated
financial statements of the Group. In the opinion of the directors, the value of the subsidiaries is at least equal to their cost.
13 Debtors
Group Company
2007 2006 2007 2006
£ £ £ £
Trade debtors 2,352,826 1,762,550 – –
Amounts owed by Group undertakings – – 2,456,417 35,110
Other debtors 111,631 180,282 53,292 98,779
Prepayments and accrued income 148,755 193,480 107,152 157,725
Corporation tax recoverable – – 791,011 341,003
2,613,212 2,136,312 3,407,872 632,617
14 Current asset investments
Group and Company
31st May 31st May
2007 2006
£ £
Unlisted investments at market value 2,231,989 1,359,563
Listed investments at market value 67,336 –
Total at market value 2,299,325 1,359,563
Unlisted investments at cost 1,578,458 1,225,057
Listed investments at cost 75,038 –
Total at cost 1,653,496 1,225,057 Notes to the financial statements
Continued
40 City of London Investment Group Plc Annual Report 2007
15 Creditors: amounts falling due within one year
Group Company
2007 2006 2007 2006
£ £ £ £
Trade creditors 369,140 252,893 – –
Sundry creditors 37,604 57,279 37,604 85,357
Amounts owed to Group undertakings – – 2,445,607 541,520
Other creditors including taxation and social security 1,047,906 780,692 – –
Accruals and deferred income 1,755,424 1,069,305 835,333 466,305
3,210,074 2,160,169 3,318,544 1,093,182
16 Share capital
31st May 31st May
2007 2006
Number of Number of
Group and Company shares shares
Authorised
Ordinary shares of 1p each (2006 – 1p each) 90,000,000 90,000,000
£ £
Ordinary shares of 1p each (2006 – 1p each) 900,000 900,000
31st May 31st May
2007 2006
Number of Number of
Group and Company shares shares
Allotted, called up and fully paid
Ordinary shares of 1p each (2006 – 1p each) 26,777,800 26,777,800
£ £
Ordinary shares of 1p each (2006 – 1p each) 267,777 267,777 City of London Investment Group Plc Annual Report 2007 41
17 Combined statement of movement in reserves and reconciliation of shareholders’ funds
Year ended
31st May
Share Investment Share Profit 2006
Share premium in own Revaluation option and loss (as restated)
capital account shares reserve reserve account Total Total
Group ££££££££
At 1st June 2006 –
as previously stated 267,777 1,357,283 (1,027,283) 134,506 – 3,599,530 4,331,813 2,565,178
Prior year adjustment FRS 20 –––– 106,325 (106,325) – –
At 1st June 2006 –
as restated 267,777 1,357,283 (1,027,283) 134,506 106,325 3,493,205 4,331,813 2,565,178
Purchase of own shares – – (670,948) – – – (670,948) –
Share allotment – – 124,706––– 124,706 907,685
Revaluation reserve – – – 511,323 – – 511,323 134,506
Share option reserve –––– 124,520 – 124,520 64,026
Profit retained for the period ––––– 4,138,094 4,138,094 660,418
At 31st May 2007 267,777 1,357,283 (1,573,525) 645,829 230,845 7,631,299 8,559,508 4,331,813
Year ended
31st May
Share Investment Share Profit 2006
Share premium in own Revaluation option and loss (as restated)
capital account shares reserve reserve account Total Total
Company ££££££££
At 1st June 2006 –
as previously restated 267,777 1,357,283 (1,027,283) 134,506 – 901,415 1,633,698 845,521
Prior year adjustment FRS 20 –––– 106,325 (106,325) – –
At 1st June 2006 –
as restated 267,777 1,357,283 (1,027,283) 134,506 106,325 795,090 1,633,698 845,521
Purchase of own shares – – (670,948) – – – (670,948) –
Share allotment – – 124,706––– 124,706 907,685
Revaluation reserve – – – 511,323 – – 511,323 134,506
Share option reserve –––– 124,520 – 124,520 64,026
Profit/(loss) retained
for the period ––––– 1,789,879 1,789,879 (318,040)
At 31st May 2007 267,777 1,357,283 (1,573,525) 645,829 230,845 2,584,969 3,513,178 1,633,698
Investment in own shares relates to City of London Investment Group Plc shares held by an Employee Benefit Trust on behalf
of City of London Investment Group Plc.
At 31st May 2007 the Trust held 2,303,125 ordinary 1p shares (2006 – 2,262,750), of which 2,297,675 ordinary 1p shares
(2006 – 2,247,050) were subject to options in issue.
In total, the Company has granted options over 4,797,675 ordinary shares at exercise prices from £0.26 to £2.73. These options
have a range of exercise dates from September 2000 to March 2017. Notes to the financial statements
Continued
42 City of London Investment Group Plc Annual Report 2007
18 Profit of the Parent Company
As permitted by section 230 of the Companies Act 1985, the profit and loss account of the Parent Company is not presented as
part of these financial statements. The Parent Company’s profit for the financial period before dividends paid, amounted to
£2,525,743 (2006 restated – £1,964,635).
19 Operating lease commitments
At 31st May 2007 the Group was committed to making the following payments during the next year in respect of operating leases:
Motor Land and Motor Land and
vehicle buildings vehicle buildings
2007 2007 2006 2006
££ ££
Leases which expire:
Within one year 3,886 – – 34,755
In the second to fifth years inclusive – 131,150 6,826 99,496
3,886 131,150 6,826 134,251
The Group is also committed to paying a minimum of £165,169 per annum in respect of a service agreement which 
expires in 2009.
20 Reconciliation of operating profit to net cash inflow from operating activities
2006
2007 (as restated)
£ £
Operating profit 7,089,711 4,617,669
Profit on sale of fixed assets – (9,519)
Depreciation charges 120,494 108,112
Increase in debtors (476,900) (1,043,783)
Increase in creditors 782,691 408,417
Translation adjustments on investments 68,177 502
Share-based payment charge 124,520 64,026
Net cash inflow from operating activities 7,708,693 4,145,424 City of London Investment Group Plc Annual Report 2007 43
21 Gross cash flows
2007 2006
£ £
Returns on investments and servicing of finance
Interest received 196,487 109,562
Taxation
Corporation tax paid (2,190,642) (1,643,687)
Capital expenditure and financial investment
Payments to acquire investments (255) (41,727)
Receipts from sale of investments 29,627 –
Payments to acquire tangible fixed assets (87,917) (133,268)
Receipts from sale of tangible fixed assets – 10,728
(58,545) (164,267)
Financing
(Increase)/repayment of ESOP loan (546,242) 230,985
Issue of ordinary share capital – 676,700
(546,242) 907,685
Management of liquid resources
Payment to acquire current asset investments (580,139) (761,167)
Receipts from sale of current asset investments 114,161 –
(465,978) (761,167)
22 Reconciliation of net cash flow to movement in net funds
2007 2006
£ £
Increase in cash in the year 3,907,909 310,875
Increase in liquid assets 465,978 761,167
Other non cash changes 30,816 –
Changes in market value and exchange rate movements 442,968 134,506
Change in net funds 4,847,671 1,206,548
Net funds at 1st June 4,068,478 2,861,930
Net funds at 31st May 8,916,149 4,068,478 Notes to the financial statements
Continued
44 City of London Investment Group Plc Annual Report 2007
23 Analysis of changes in net funds
Changes 
At in market Other At
1st June Cash value and non-cash 31st May
2006 flows exchange rates changes 2007
££££ £
Cash at bank and in hand 2,708,915 3,907,909 – – 6,616,824
Current asset investments 1,359,563 465,978 442,968 30,816 2,299,325
4,068,478 4,373,887 442,968 30,816 8,916,149
24 Related party transactions
Advantage has been taken of the exemption under Financial Reporting Standard No. 8 not to disclose transactions between
entities, 90% or more of whose voting rights are controlled within the Group.
25 Financial instruments
Most of the Group’s revenues, and a significant part of its expenses, are denominated in currencies other than sterling, principally
United States’ and Canadian Dollars. These revenues are derived from fee income which is based upon the net asset value of
accounts managed, and have the benefit of a natural hedge by reference to the underlying currencies in which investments are
held. Inevitably, debtor and creditor balances arise which in turn give rise to currency exposure. Each of the Group’s subsidiaries
eliminates its currency exposure by transfer to the holding company. All hedging activity is therefore assessed at the group level.
Forward foreign exchange transactions are executed so as to substantially reduce the Group’s exposure to currency market
movements. The level of forward currency hedging is such as is judged by the directors to be consistent with market conditions.
As at 31st May 2007, the Group had net asset balances of US $8,242,038 (2006 – US $7,507,086), offset by forward sales
totalling US $4,500,000 (2006 – US $3,600,000), and net asset balances of C $574,804 (2006 – C $501,335).
The Group has no borrowings, and therefore has no exposure to interest rate risk other than that which attaches to its
interest earning cash balances. The Group’s strategy is to maximise the amount of cash which is maintained in interest bearing
accounts, and to ensure that those accounts attract a competitive interest rate. At 31st May 2007 the Group held £6,616,824
(2006 – £2,708,915) in cash balances, of which £6,581,480 (2006 – £2,552,656) was held in bank accounts which attract
variable interest rates.
The fair value of the Group’s financial assets and liabilities is materially the same as the book value. Notice of Annual General Meeting
City of London Investment Group Plc Annual Report 2007 45
Notice is hereby given that the Annual General Meeting of City of London Investment Group Plc will be held at 10 Eastcheap,
London EC3M 1LX on Monday 29th October 2007 at 11.30 am for the following purposes:
Ordinary business
1. To receive and adopt the financial statements for the year ended 31st May 2007 together with the reports of the directors and
auditors thereon.
2. Having retired by rotation, to re-elect David Michael Cardale as a director of the Company in accordance with article 132 of the
Company’s articles of association.
3. Having retired by rotation, to re-elect George Alan Robb as a director of the Company in accordance with article 132 of the
Company’s articles of association.
4. Having retired by rotation, to re-elect Carlos Manuel Yuste as a director of the Company in accordance with article 132 of the
Company’s articles of association.
5. Having been appointed by the board over three years ago, to re-elect Thomas Wayne Griffith as a director of the Company in
accordance with article 136 of the Company’s articles of association.
6. To re-appoint Moore Stephens LLP as auditors of the Company to hold office from the conclusion of the meeting until the
conclusion of the next general meeting of the Company at which accounts are laid before the Company and authorise the
directors to determine the auditors’ remuneration.
Special business
To consider and, if thought fit, pass the following resolution as a special resolution:
7. THAT the Company be generally and unconditionally authorised to make market purchases (within the meaning of section
163(3) of the Companies Act 1985) of any of its ordinary shares of £0.01 (1p) provided that:
(a) the maximum number of ordinary shares which may be purchased is 4,000,000 (representing 14.94% of the Company’s
issued ordinary share capital at the time of this resolution);
(b) the minimum price which may be paid for each ordinary share is £0.01 (1p) which amount shall be exclusive of expenses, if any; Notice of meeting
Continued
46 City of London Investment Group Plc Annual Report 2007
(c) the maximum price, exclusive of any expenses, which may be paid for any ordinary share is an amount equal to 105% of the
average of the middle market quotations for the ordinary shares of the Company as derived from the Daily Official List of
the London Stock Exchange plc for the five business days immediately preceding the date on which such share is contracted
to be purchased; 
(d) unless previously renewed, revoked or varied, this authority shall expire at the conclusion of the annual general meeting in
2008 or 15 months after the passing of this resolution (whichever is the earlier); and
under this authority the Company may make a contract to purchase ordinary shares which would or might be executed
wholly or partly after the expiry of this authority and may make purchases of ordinary shares pursuant to it as if this
authority had not expired.
By order of the Board
D F Allison
Company Secretary
14th September 2007
Registered office
10 Eastcheap
London EC3M 1LX
Registered in England and Wales No 2685257 Notes to the Notice of Annual General Meeting
City of London Investment Group Plc Annual Report 2007 47
1. A member entitled to receive notice, attend and vote at the annual general meeting (“AGM”) is entitled to appoint a proxy or
proxies to attend and, on a poll, vote instead of him. Such proxy need not be a member of the Company. Completion of a form
of proxy does not preclude the member attending the meeting and voting in person if they so wish. To be valid, the instrument
appointing a proxy, together, if appropriate, with a power of attorney or other authority (if any) under which it is signed, or a
notarially certified copy of such authority, must be deposited at the offices of the Company’s registrars, Capita Registrars, The
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU no later than 11.30 am on 27th October 2007. A form of proxy
accompanies this notice.
2. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the time by which a person must be entered on the
register of members of the Company in order to have the right to attend and vote at the annual general meeting (and for the
purposes of the determination by the Company of the numbers of votes they may cast) is 11.30 am on 27th October 2007. 
The rights of members to attend and vote at the meeting will be determined by reference to entries on the register of members
at 11.30 am on 27th October 2007. Changes to entries on the register of members of the Company after that time will be
disregarded in determining the rights of any person to attend or vote at the meeting.
3. In the case of joint holders, the signature of only one of the joint holders is required on the form of proxy, but the vote of the
first named on the register of members will be accepted to the exclusion of the other joint holders.
4. The following documents are available for inspection between 10.00 am and 12.00 noon at the registered office of the Company
on any weekday and will also be available for inspection at the place of the AGM from the commencement of the meeting until
the conclusion thereof:
a) The register of interests of the directors (and their families) in the share capital of the Company.
b) Copies of the directors’ contracts of service and letters of appointment of the non-executive directors.
c) Terms of reference of the Audit, Remuneration and Nominations Committees. Explanation of the business of the Annual General Meeting
48 City of London Investment Group Plc Annual Report 2007
Report and accounts (Resolution 1)
The first item on the agenda requires that the directors must present the accounts of the Company for the year ended 31st May 2007
together with the directors’ report and the independent auditors’ report thereon.
Re-appointment of directors (Resolutions 2-5)
The Company’s articles of association require that at every annual general meeting, one-third of the directors or, if their number is
not three or a multiple of three, the number nearest to one-third shall retire from office. In addition, the articles of association
require that all directors who have been in office for more than three years or have been appointed by the directors since the last
annual general meeting of the Company will stand for re-appointment.
Article 137 of the Company’s articles of association requires that a resolution for the appointment or re-appointment of two or more
persons as directors by a single motion may not be moved unless a resolution that it shall be so moved has first been agreed to by the
meeting without any vote being given against it. Consequently separate resolutions will be put to the meeting.
Re-appointment of Auditors (Resolution 6)
The Company is required at each general meeting at which accounts are laid before the shareholders to appoint auditors to hold
office from the conclusion of the annual general meeting until the conclusion of the next annual general meeting. Moore Stephens
LLP are the current auditors and have indicated their willingness to continue in office. If Resolution 6 is passed, Moore Stephens
LLP will be re-appointed as auditors to the Company, at a fee to be agreed by the board of directors.
Purchase by the Company of its own shares (Resolution 7)
Under section 166 of the Companies Act 1985, the directors of a company may make market purchases of that company’s shares if
authorised to do so. The Company’s articles of association give a general authority to the directors to purchase shares on the market
but that authority is subject to the approval of shareholders. Your directors believe that granting such approval would be in the best
interests of shareholders in allowing directors the flexibility to react promptly to circumstances requiring market purchases.
Accordingly, Resolution 7, which will be proposed as a special resolution, will give the directors the authority to purchase issued shares
of the Company under section 166 of the Companies Act 1985. The authority contained in this Resolution will be limited to an
aggregate nominal value of £40,000 which represents 14.94% of the issued ordinary share capital of the Company as at 14th September
2007. The price which may be paid for those shares is also restricted as set out in the Resolution. This authority will expire at the
conclusion of the Company’s annual general meeting in 2008 or 15 months after the passing of this resolution (whichever is the earlier).
The board has no present intention of exercising this authority. However, this will be kept under review, and the board will use this
power only if and when, taking account of market conditions prevailing at the time, other investment opportunities, appropriate
gearing levels and the overall financial position of the Group, they believe that the effect of such purchases will be in the best
interests of shareholders generally and that they will result in an increase in earnings per share.
Shares purchased under this authority may be held as treasury shares. The Company may purchase and hold shares as treasury shares
up to a maximum amount equal to 10% of the nominal value of the issued ordinary share capital at that time, rather than cancelling
them. Shares held in treasury do not carry voting rights and no dividends will be paid on any such shares. Shares held in treasury in
this way can be sold for cash or cancelled. This would allow the Company to manage its capital base more effectively and to
replenish its distributable reserves.
If and when the board resolves to exercise its authority to make market purchases, it will at that time decide whether shares
purchased are to be cancelled or held in treasury. Designed and produced by fourthquarter Printed by SV.two
Highlights 1
City of London at a glance 2
Chairman’s statement 4
Chief Executive Officer’s review 8
Financial review 14
Board of directors 18
Officers, Board Committees and
professional advisers 20
Report of the directors 21
Statement of directors’ 
responsibilities 26
Independent auditors’ report 27
Consolidated profit and loss account 28
Consolidated statement of total 
recognised gains and losses 28
Consolidated balance sheet 29
Company balance sheet 30
Cash flow statement 31
Notes to the financial statements 32
Notice of Annual General Meeting 45
Contents
City of London Investment Group PLC is a
leading emerging market and natural resource asset
management group, specialising in the provision
of products and services predominantly to
institutional clients who include some of the
US’s leading institutions and endowment funds.
City of London operates its business from offices
in London, the US and Singapore. London office
10 Eastcheap
London
EC3M 1LX
United Kingdom
Telephone: + 44 (0) 207 711 0771
Facsimile: + 44 (0) 207 711 0772
US office
The Barn
1125 Airport Road
Coatesville
PA 19320
United States
Telephone: + 1 610 380 2110
Facsimile: + 1 610 380 2116
Singapore office
20 Collyer Quay
10-04 T ung Centre
Singapore 049319
Telephone: + 65 6236 9136
Facsimile: + 65 6532 3997
www.citlon.co.uk
CITY OF LONDON
INVESTMENT GROUP PLC
ANNUAL REPORT & ACCOUNTS 
2007
CITY OF LONDON INVESTMENT GROUP PLC ANNUAL REPORT & ACCOUNTS 2007