L O N D O N P H I L A D E L P H I A S I N G A P O R E D U B A I L O N D O N P H I L A D E L P H I A S I N G A P O R E D U B A I
city of London
i n v e s t m e n t g r o u p p L c
ANNUAL RE PORT & ACCOUNTS 
2010
London office
77 Gracechurch Street
London
EC3V 0AS
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
Dubai office
Unit 2, 2nd Floor
The Gate Village Building 1
Dubai International Financial Centre
PO Box 506695
Dubai
United Arab Emirates
Telephone: + 971 (0)4 423 1780
Facsimile: + 971 (0)4 437 0510
www.citlon.co.uk
ANNUAL REPORT & ACCOUNTS 2010 CITY OF LONDON INVESTMENT GROUP PLC City of London Investment Group Plc is an
established asset management group which has
built its reputation, with an institutional
client focus, by specialising in emerging market
closed-end fund investment. In recent years the
Group has by way of diversification successfully
added natural resource and developed market
strategies to its product range. City of London
operates its business from offices in London,
the US, Singapore and Dubai.
Highlights 1
City of London coming of age 2
Chairman’s statement 4
Chief Executive Officer’s review 8
Financial review 14
Board of directors 18
Corporate governance report 20
Report of the directors 22
Statement of directors’ 
responsibilities 26
Independent auditors’ report 27
Consolidated income statement 28
Consolidated and Company statement
of comprehensive income 28
Consolidated and Company statement
of financial position 29
Consolidated and Company statement
of changes in equity 30
Consolidated and Company
cash flow statement 31
Notes to the financial statements 32
Notice of Annual General Meeting 51
Notes to the Notice of Annual
General Meeting 53
Professional advisers 56
Contents
Designed and produced by fourthquarter Printed by SV.two •
Funds under management (FuM) at 31st May 2010
increased by 25% in US$ terms to US$4.38 billion
(2009: US$3.50 billion) and by 39% in sterling terms
to £3.01 billion (2009: £2.17 billion). The rise in the
MSCI Emerging Markets Index (MXEF) was 20% 
•
FuM at 31st August 2010 were US$4.86 billion,
a rise of 10% since the financial year end. The rise
in MXEF was 5%
•
Profit before tax was up 93% to £10.4 million
(2009: £5.4 million) with basic earnings per share
up 77% to 28.5p (2009: 16.1p)
•
Recommended final dividend of 15p per share
(2009: 10p), payable on 19th November 2010, subject
to shareholder approval, to shareholders on the register
on 29th October 2010, making a total for the year of
22p (2009: 15p), an increase of 47%
•
Our focus on diversification continues successfully
regarding the direct equity business, global developed
closed-end funds and the frontier emerging
markets strategy
•
Intention to list Ordinary shares on the main market
of the London Stock Exchange following granting of
shareholder approval on 14th July 2010
Highlights
“The Board believes that a transfer to the main market in London will
widen the potential universe of investors in City of London, both
institutional and private individuals. We also believe that a main market
listing could enhance the Group’s reputation and brand with the large
and sophisticated institutional investors that account for the largest
proportion of our current client base.”
Andrew Davison, Chairman
“The past six months, running up to the most recent month end of
31st August, have been the most profitable period that we have experienced.
Operating profit, measured before profit-share, share option charges and
tax, has averaged close to £1.4 million per month.”
Barry Olliff, Chief Executive Officer
City of London Investment Group Plc Annual Report 2010 1
06 07 08 09 10
2,751
3,793 
4,706
3,500
4,379
Funds under management US$m
06 07 08 09 10
Pre-tax profit £m
4.8
7.3
10.7
5.4
10.4 2 City of London Investment Group Plc Annual Report 2010
Coming of age
2010 is our fifth year as a publicly traded company
Our history
1987 Establishment of stockbrokers Olliff & Partners in London by
Barry Olliff after a twenty-plus year career in equity markets,
specialising in investment trusts
1991 Launch of the first City of London Group product, the Emerging
Markets Country T rust
1995 Launch of the first US based mutual fund for institutional
investors, beginning the development of the US business
1997 Opening of the US office in Pennsylvania. Stockbroking activities
terminated and the Group’s sole focus becomes fund management
2000 Singapore office established, linking with London and US hubs
and enabling 24 hour coverage of global investment markets
2006 The Group becomes a publicly traded company via an IPO on
the AIM market in London
2008 Fourth Group office opened in Dubai
2010 Proposed listing on the main market of the London Stock Exchange
Our shares were admitted to the AIM market of the London
Stock Exchange in April 2006 and since then we have grown
the business significantly with funds under management
increased to US$4.4 billion, a new office opened in Dubai and
a market capitalisation that has risen by 50% to £73 million.
As a result of this progress we expect to upgrade to a full
listing on the London Stock Exchange later this year,
enhancing our status with our institutional clients and
widening the Group’s appeal to international investors.
The way in which we run
our business has remained
essentially the same since our
inception and it is worth
restating our key strengths
that we set out in last year’s
annual report.
Expertise
At City of London, we focus not
on gathering assets, but on building
products that reflect our expertise.
Initially, and for many years since
the firm was founded, that
expertise was very specific to closed-
end funds which offered emerging
markets exposure.  This was
subsequently complemented by
research into the underlying
equities, both via natural resources
and via country specific emerging
markets stocks, which in turn
spawned regional and global
emerging market equity funds.
Most recently, we have applied
our unrivalled knowledge of City of London Investment Group Plc  Annual Report 2010 3
1. Investment performance drives our business
2. T echnology leverages our capabilities
3. Focus on profits, margins, costs
4. Aversion to risk in the management of our business
5. 1-4 above create opportunities for further growth
6. CoL differentiation and diversification
City of London’s operating philosophy can
best be represented by the six key drivers:
  
         
Other 
Institutions 9%
Retail 1%
Endowment 22%
Foundation 20%
Pension 48%
Client type 
As a percentage of total assets as at 31st May 2010
closed-end funds around the world
to the development of a global
(ex US) closed-end fund product.
So today, while we remain both
proud and protective of our
“boutique” status, we offer a range
of products which are defined by
the twin pillars of our expertise:
emerging markets and closed
end funds.
Process
We have always striven to develop
and nurture an investment process
which does not rely on ‘star’ fund
managers, but rather upon a series
of analytical procedures that can
produce repeatable and sustainable
first or second quartile performance
versus our peers. Our process
employs an array of proprietary tools
for analysing and identifying value.
These quantitative tools supplement
both macroeconomic analysis and
the trading expertise that has been
developed over a period of nearly
20 years. Whether it is taking
advantage of discount anomalies in
closed-end funds, or company
specific valuations in our equity
business, our aim is to deliver
consistent relative outperformance
combined with low volatility relative
to the applicable emerging markets
benchmarks.
Client service
Our clients are our business.
If performance is our first priority,
then client service is a close second.
We understand that a “one size fits
all” approach is not appropriate.
Our aim is to be open and
accessible to each and every client,
and while we have a designated
client service team we also expect
and encourage our institutional
clients to enjoy direct contact
with fund managers and other
key individuals within the
investment management team.
We acknowledge that our industry
has faced some difficult issues in
recent times, both with respect to
the opaque practices of a few, and
with respect to volatile market
conditions. We are, and always have
been, an open book to our clients.
While we would never seek to
impose, we try to anticipate the
concerns of our clients, and with
that in mind we offer personal visits
by our senior investment officers to
all of our institutional clients and
achieve a significant take up rate.
We believe that our focus on client
service is a key driver of our long
term client retention. Our financial year to 31st May 2010 saw
a marked and sustained recovery in our
principal markets from the lows recorded
in the prior year following the end of the
credit boom and the collapse of financial
markets around the world. Measured by
the MSCI Emerging Markets Index
(MXEF), emerging markets increased by
some 20% during the year under review as
global investors increased their exposure to
countries growing, and forecast to
continue to grow, at rates considerably
ahead of developed economies. City of
London’s funds under management (FuM)
grew over the same period by 25% to a
year-end total of US$4.38 billion,
reflecting performance in line with the
benchmark and the addition of net new
money from clients as they increased their
weighting in emerging markets.
Since the year end, the MXEF has
continued to strengthen and at
31st August the index was 5% higher
than at 31st May. FuM have also
continued to increase, ending August
at US$4.86 billion, a rise of 11% over
the financial year-end figure.
Due to the weakness of sterling against the
US dollar in particular (a topic covered in
more detail in the Financial Review), the
increase in FuM in sterling terms has been
even stronger with a 39% rise to £3.01
billion being recorded in the year to 31st
May 2010. FuM in sterling increased by a
further 5% to £3.16 billion during the
three months to 31st August 2010, less
than the US dollar increase as sterling
weakness continued to unwind.
Results
The substantial improvement in the
Group’s financial results principally reflects
the sustained recovery in emerging markets
during the period and the consequent
increase in FuM, together with new
monies received from existing clients and
the award of new mandates.
Gross fee income for the year to 31st May
2010 (being the revenues derived from the
Group’s management charges on FuM)
increased by 49% to £30.0 million (2009:
£20.2 million). Profit before profit share,
investment losses and tax was up 77%
to £15.2 million (2009: £8.6 million),
demonstrating once again the operational
leverage inherent in the Group’s business.
Chairman’s statement
“The substantial improvement
in the Group’s financial results
principally reflects the sustained
recovery in emerging markets
during the period...”
4 City of London Investment Group Plc Annual Report 2010 City of London Investment Group Plc Annual Report 2010 5
Profit before tax increased by 93% to
£10.4 million (2009: £5.4 million) and
after a tax charge of £3.4 million,
representing 33% of pre-tax profits (2009:
£1.5 million or 28% of pre-tax profits),
profit for the period was up by 82% to
£7.0 million (2009: £3.8 million).
Basic earnings per share were up 77% to
28.5p (2009: 16.1p) and fully diluted
earnings per share, reflecting dilutive
options held by directors and employees,
increased by 79% to 26.9p (2009: 15.0p).
Cash and cash equivalents at the year-end
were £4.8 million (2009: £4.7 million).
Dividends
The Group’s dividend policy is essentially
unchanged. We pay dividends to
shareholders that are covered
approximately 1.5 times by earnings per
share, split one third: two thirds between
the interim and final payments. Following
the exceptional, and volatile market
conditions experienced last year, the level
of cover was temporarily reduced to reflect
the Board’s belief that these conditions
were unlikely to be repeated. It is our
intention to restore dividend cover to the
long term level over the next two years.
The Board is recommending a final
dividend for the year to 31st May 2010 of
15p per share (2009: 10p) to be paid on
19th November 2010 to shareholders on
the register on 29th October 2010. Taken
together with the interim dividend of 7p
paid in March, this makes a total for the
year of 22p (2009: 15p), an increase of
47%. This level of payout is covered
1.30 times by basic earnings per share
compared to 1.07 times last year.
T ransfer from AIM to the main market
I advised shareholders in my statement
accompanying the half year results that
we were revisiting our plans to migrate
our share listing from AIM to the main
market of the London Stock Exchange.
We determined that these plans should be
implemented this year and shareholders
received a notice convening a meeting to
approve the move together with a letter
explaining the benefits to the Company
and its owners. Approval was granted at
the meeting (held in July) and the next
step in the process will be the publication,
and despatch to shareholders, of Listing
Particulars ahead of the grant of listing
and delisting from AIM. We currently
expect this to take place around the end
of October.
The Board believes that a main market
listing in London will widen the potential
universe of investors in City of London,
both institutional and private individuals –
who will be able, for instance, to hold our
shares in an ISA. We also believe that a
main market listing could enhance the
Group’s reputation and brand with the
large and sophisticated institutional
investors that account for the largest
proportion of our current client base.
There are a limited number of current
private shareholders who have expressly
invested in the Company as an AIM
stock in order to take advantage of UK
Inheritance Tax benefits. Hopefully they
will feel that they have received adequate
notice of our intentions.
Operations
We have continued to develop and
progress our strategy to diversify our client
base, the type of funds we run and our
geographical coverage. This strategy is
long term in its execution and reflects the
Group’s core tenet of risk aversion.
During the year under review our focus
has been on the recruitment of
experienced individuals who bring new
skills to the Group and who are able to
help us implement our plans to offer
additional investment products to existing
and potential clients. These new products
include funds investing directly
in equities, in frontier emerging markets
and in global closed-end funds.
The process of internalising the Group’s
marketing functions is now almost
complete. We are extending and
strengthening our contacts and
relationships with the consultant
community worldwide that forms our
principal source of new business. We are
optimistic that the dedicated marketing
resources in place in the US, London and
Singapore will not only generate high
quality new business for us in due course
but also ultimately improve net margins
as payments to present external new
business finders decrease.
A more detailed review of the Group’s
operations and strategy is provided by our
Chief Executive Officer, Barry Olliff,
on page 8.
Board change
In August 2010, we announced the
resignation of Omar Ashur as a non-
executive director to devote more time to
his business interests in Dubai. Omar had
been a director of the Company since
2001 and has been a source of wise and
commercially experienced advice for many
years. On behalf of the Board, I wish him
success and happiness in the future.
Outlook
Developed economies remain difficult to
forecast as government finances continue
to worsen prompting near universal
cutbacks in public spending that may well
reduce or extinguish the recovery in
activity seen in the last 12 months.
The outlook for emerging markets appears
to be more hopeful with relatively high
growth in GDP forecast, at least compared
to the developed economies. If this
translates into increased weightings
towards emerging markets and if we
maintain our investment performance,
then the current financial year should see
further growth in revenues for the Group.
Increased revenues, given our low cost base
and loyal and experienced staff, should
result in increased profitability.
I will update shareholders on progress in
this financial year at the time of the AGM.
Andrew Davison
Chairman
9th September 2010 6 City of London Investment Group Plc Annual Report 2010
Closed-end funds
The original expertise
1868
Launch of what is generally
regarded as the first investment
trust by Foreign & Colonial in the
form of a collective investment
scheme protected by limited
liability for its shareholders. The
Foreign & Colonial Government
T rust set out to raise an initial 
£1million with a stated objective of
providing “the investor of moderate
means the same advantage as the
large capitalist in diminishing risk
in Foreign & Colonial stocks by
spreading the investment over a
number of stocks”.
1873
Launch of the first Scottish
investment trust by Robert Fleming,
The Scottish American Investment
T rust, to invest surplus capital
originally generated in Dundee from
the weaving of imported jute into
tenting and sailcloth and supplied in
vast quantities to forces in the US
Civil War. This was “the first
Association in Scotland for
investments in American railroad
bonds, carefully selected and widely
distributed, and where investments
would not exceed one-tenth of the
capital in any one security”.
In response to the world’s first
telecommunications boom,
The Globe T elegraph and T rust
Company was launched in London
to participate in the business of
laying and operating cable links
between countries. Globe went
on to become the largest UK
investment trust, a position it
held for over 100 years.
1900 – 1930
The 20th century began with
over 80 investment trusts in the
UK, reflecting the success of the
earlier launches and the popularity
of the schemes with the fast
growing number of individual
investors. These investors could
access, via the trusts, opportunities
that until then had been reserved
for only the very richest families –
from railroads and telegraphs
to rubber plantations and
infrastructure in every continent.
In the US as well, investment
trusts slowly gained in popularity
but really took off during the
bull market preceding the Wall
Street Crash of 1929. 
A closed-end fund (or an investment trust or company)
is one with a fixed number of shares outstanding, and
one which does not redeem shares in the way an
open-ended one (such as a mutual fund or unit trust)
does. The price of a share in a publicly traded closed-
end fund is determined entirely by supply and demand,
so shares can either trade below their net asset value
(“at a discount”) or above it (“at a premium”). It is this
characteristic that we seek to exploit, buying those
shares we consider cheap, generally at what we believe
to be an unjustifiable discount, and selling those we
consider expensive, those at an unwarranted small
discount or at a premium. City of London Investment Group Plc Annual Report 2010 7
1932
With the worldwide Great
Depression came a wave of defaults
by companies and over-leveraged
trusts on both sides of the Atlantic.
The conservatively managed
survivors in the UK took the then
radical step of forming an
‘association’ of investment trust
companies (not managers) to
address common issues such as:
taxation and gearing levels,
represent the interests of the trusts
and their shareholders, speak with
one, powerful voice on behalf of its
members and begin the processes
that would lead to greater
transparency in their dealings.
1950 – 1980
The trust sector in the UK enjoyed
a period of significant growth after
the calamity of the Second World
War despite having to deal with
increasing taxation levels, exchange
controls and the emergence of
institutional investors. Increasing
transparency and technology
combined to allow the accurate
analysis of each trust’s underlying
portfolio (by now almost exclusively
in publicly traded equities) by
brokers and therefore whether the
shares were cheap or dear. Sector or
geographic specialisation became
increasingly popular in a return to
the very beginning of the
investment trusts’ history.
1980 to date
The trends begun in the last 50
years continued as institutional
investors came to dominate
ownership of closed-end funds and
ever more sophisticated analysis was
carried out into their underlying
assets. In addition, the rise of
activist investors, and in some cases
successful predators, has sharpened
the focus of all managers around
the world, whether they are in
developed or emerging financial
centres. T oday’s trust sector offers
investors professionally managed,
diversified exposure to almost any
sector and geography they wish –
just as they were designed to do
140 years ago. Chief Executive Officer’s review
Significantly less emotional
behaviour this year
For us this was a boring year.
As shown below our index hardly moved!
Whereas in 2008/9, moves of the order of
magnitude of over 20% in MXEF were
common (there were at least six), in
2009/10 there was one!
Our business was very stable as well.
Clients seem to be happy and the asset
class seems to be well supported at around
current levels. Looking out a few years, at
least at present, the Emerging asset class
seems likely to be one of the few listed
asset classes of choice potentially for many
years to come.
On the right I’ve shown a graph of CDS
Spreads which compares the Developed
with the Emerging countries. This has to
be one of the most remarkable turnarounds
in terms of reversal of roles within our
industry over the past twenty years. The
interesting thing is that where the CDS
relationship went over the past year, P/E’s
could easily follow next. Imagine that –
paying a higher P/E for exposure to a
basket of Emerging countries (say Brazil,
China, Korea and Taiwan) than for a
Developed basket (say US, UK, Germany
and France). We are not only fortunate to
be exposed to this asset class at this point
in its development but it is worth pointing
out that the Developed world is now
suffering from many of the same problems
that the Emerging countries had to deal
with a few years ago. Many of our
shareholders will recall the advice given out
at that time by the US: confront the
problem, reduce deficits, eliminate excess
capacity and pay down or renegotiate
leverage. Now that the boot is on the other
foot it seems likely that, as a result of this
advice being too painful to heed, the
adjustment process will be extended.
Diversification
We have continued to develop our
diversification plans over the past year.
The Business Diversification Product
Map opposite shows the extent of this
diversification.
Current areas of focus include Natural
Resources and the Developed CEF
Products. Both have performed well from
8 City of London Investment Group Plc Annual Report 2010
Source: Bloomberg MSCI Emerging Markets Index 2009/2010
300
400
500
600
700
800
900
1,000
1,100
15/1/09
16/2/09
18/3/09
17/4/09
19/5/09
18/6/09
20/7/09
19/8/09
18/9/09
20/10/09
19/11/09
21/12/09
20/1/10
19/2/10
23/3/10
22/4/10
24/5/10
23/6/10
23/7/10
-9.87%
+35.12%
-7.52%
+13.79%
-13.03%
+17.16%
-18.33%
MXEF
40 Day Moving Average
Source: Bloomberg MSCI Emerging Markets Index 2008/2009
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
15/1/08
15/2/08
19/3/08
21/4/08
22/5/08
24/6/08
25/7/08
27/8/08
29/9/08
30/10/08
2/12/08
2/1/09
4/2/09
9/3/09
9/4/09
12/5/09
12/6/09
15/7/09
-62.65%
+32.75%
-23.02%
-21.78%
+27.13%
+67.46%
MXEF
40 Day Moving Average City of London Investment Group Plc Annual Report 2010 9
an investment perspective and there seems
to be significant appetite for our
Developed CEF expertise which effectively
does what we presently undertake within
the Emerging space. Since winning our
first mandate in September 2009 this
account has outperformed its benchmark
by around 300bps. Obviously shareholders
are not interested in the investment
performance of a specific fund but this
performance has afforded us the
opportunity to significantly short-circuit
the normal time required to create a
relevant record. We will start marketing
this product in November and I’ll provide
more information regarding progress in
the Interim Statement. In addition, in the
above Product Map you can see the
breakdown of the different businesses that
we are attempting to develop. In all cases
these are part of our diversification plans.
Apart from the Developed CEF Fund and
Natural Resources we are expecting these
products to take around two to three years
to build adequate track records. Each of
these areas of business is being developed
on a stand-alone basis with separate
staffing and the creation of a team
environment from their beginning.
North Bridge Capital
As referenced in earlier CEO’s statements,
and apart from one consultant where there
was a one year extension, as of 13th
October 2009 the agreement that we had
with North Bridge Capital with regard to
marketing came to an end. As of 13th
October 2010 we will be responsible for all
of our US Marketing, having internalised
this process. T odd Fawaz, who is in charge
of our US Marketing effort, having now
been with the firm for two years, has
effectively started again regarding our
attempts at diversification. One of the
issues that we have had to confront is that
while we consider that there is a significant
need to diversify our business for reasons
I’ll go into later, North Bridge in retrospect
seem to have been keener to focus on our
old business, that of Emerging Markets
CEF’s. This effectively has meant that
while we had assumed that the relevant
profile building was proceeding, it would
now appear that it was not. The bottom
line is that in our experience third party
marketing works very well when small and
having a single product to sell. It does not
work, or at least is unlikely to work, when
there is an established wish to grow and
market a number of products. Obviously
from our perspective it is not until a
contract of this type comes to an end that
it is possible to take a new direction.
Regarding our need to diversify our
business, in my opinion there are three
main reasons for this:
1) Staff. In my opinion employees thrive
in a growing business. In fact I would
suggest that it’s difficult to keep good
employees if you do not intend to grow a
business. Staff have needs, they are
ambitious and they have a need for
security. If they consider that they are in a
dead end job they will move on to another
business where there are plans for growth.
2) Clients. For similar reasons clients
should expect continuity of staffing.
Changing staff leads to risk. For example
the Investment Process would potentially
alter in the event that investment staff
were to change. In my opinion, while it
used to be argued that diversification was a
risk, I would suggest that recent experience
amongst our peer group would imply that
zero plans for growth leads to staff
departures which leads to insecurity in
terms of investment performance.
3) Competitive Pressure. In my opinion
there is going to be ongoing pressure on
margins, salaries and the costs associated
with the general infrastructure of doing
business. Not surprisingly the regulatory
responsibilities of doing business are
increasing too. In my opinion there is a
need to ensure that these costs are spread
over increased assets, otherwise there is
the potential appearance of reduced
profitability.
Thus while I would not accept that we are
on a treadmill, there is a very real need to
grow our business via diversification and at
the core of delivering in that regard is our
decision to internalise marketing.
0
100
200
300
400
500
600
G7 ex US, Canada EM
bps
??
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Credit Default Swap (CDS) Spreads
Korea Equities Value & Growth
Brazil Equities Value & Growth
Mexico Equities Value & Growth
Chile Equities Value & Growth
GFM-I 
Emerging
Market
Global
Developed
ACWI 
xUS
Tradex
Global
Developed
Emerging
World
Fund
Frontier
Global
Absolute
Return
Fund 
China 
A-Share
Dublin
UCITS
Emerging Market
CEF’s
Frontier
Funds
Total Return
CEF’s
Developed
CEF’s
Equities
US Institutional
Funds
Canadian
Funds
Natural
Resource
Fund
Natural
Resource
Fund
Emerging
Markets Value
& Growth
Emerging
Markets Value
& Growth
Emerging
Market
EM Plus
Fund
Business Diversification Product Map Chief Executive Officer’s review
Continued
10 City of London Investment Group Plc Annual Report 2010
I have produced below the projected run
off payments to North Bridge Capital
over the next ten years, this being the
extent of their participation. These figures
are based upon two key assumptions: first
that the clients remain and second a
constant index level. Obviously there are
additional variables as well including
investment performance and currency
rates, but in terms of the big picture as
these ten year trails run out so we start to
receive those fees that otherwise would be
paid to North Bridge Capital. In all cases
this relates to an increase of 20% in our
fees received.
Migration to main market listing
There are many additional responsibilities
that we assume as a result of moving from
AIM to the main market. These not only
include a number of existing differences
that are well established, but in addition
from 1st June 2011 we will have to meet
the requirements of the new Corporate
Governance Code.
Rather than attempt to achieve all of the
relevant changes this year (within this
Annual Report and Accounts) we will
complete most of the other requirements
next year, leaving a few of our
responsibilities for the year after. The main
difference in this set of accounts is the new
Corporate Governance Report, which
I’m sure will be expanded over time.
Within this context, I would like to draw
particular attention to our Remuneration
Policy, as it is very different in many
respects from recently released guidelines,
and I think it is important for
shareholders to understand why we
believe that our way is better, at any
rate for us. What follows is some
background plus some core values:
From my experience of the City, when I
consider remuneration and remuneration
packages, I’m taken in the direction of
instability, greed and selfishness. I’m also
taken away from the creation and the
maintenance of a brand.
Picking up on these three points:
Instability, because the existing system seems
to be broken. T urnover of staff around the
City implies that employees do not get
job satisfaction and / or that existing
remuneration packages do not create loyalty.
Greed. The City is made up of many
selfish people who are encouraged by
management, and management’s approach
to remuneration, to develop egotistical
tendencies. This culture of greed, in my
opinion, manifests itself often via a lack of
risk awareness, poor team spirit and
significant key man risk.
Selfishness creates an attitude of negotiation
at the point of salary, bonus and option
notification. At City of London we do not
negotiate any aspect of remuneration.
Selfishness can also be observed when
analysing the extent to which colleagues
train the rest of their team. Again our
senior employees are encouraged to take
responsibility for the training of their team.
Effects of £/$ rate on projected commission to be paid to North Bridge Capital
May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18 May-19 May-20
Projected
USD values
($m): $8.1 $8.1 $nil $8.1 $nil $7.7 $0.40 $6.8 $1.30 $5.2 $2.90 $4.3 $3.80 $3.5 $4.60 $1.9 $6.20 $0.6 $7.50 
£/$ rate GBP values (£m)
1.40 £5.79 £5.79 £nil £5.79 £nil £5.50 £0.29 £4.86 £0.93 £3.71 £2.08 £3.07 £2.72 £2.50 £3.29 £1.36 £4.43 £0.43 £5.36 
1.50 £5.40 £5.40 £nil £5.40 £nil £5.13 £0.27 £4.53 £0.87 £3.47 £1.93 £2.87 £2.53 £2.33 £3.07 £1.27 £4.13 £0.40 £5.00 
1.60 £5.06 £5.06 £nil £5.06 £nil £4.81 £0.25 £4.25 £0.81 £3.25 £1.81 £2.69 £2.37 £2.19 £2.87 £1.19 £3.87 £0.38 £4.68 
1.70 £4.76 £4.76 £nil £4.76 £nil £4.53 £0.23 £4.00 £0.76 £3.06 £1.70 £2.53 £2.23 £2.06 £2.70 £1.12 £3.64 £0.35 £4.41 
1.80 £4.50 £4.50 £nil £4.50 £nil £4.28 £0.22 £3.78 £0.72 £2.89 £1.61 £2.39 £2.11 £1.94 £2.56 £1.06 £3.44 £0.33 £4.17 
1.90 £4.26 £4.26 £nil £4.26 £nil £4.05 £0.21 £3.58 £0.68 £2.74 £1.52 £2.26 £2.00 £1.84 £2.42 £1.00 £3.26 £0.32 £3.94 
2.00 £4.05 £4.05 £nil £4.05 £nil £3.85 £0.20 £3.40 £0.65 £2.60 £1.45 £2.15 £1.90 £1.75 £2.30 £0.95 £3.10 £0.30 £3.75  
Blue figures represent the cumulative savings to CoL from North Bridge Capital clients reaching the end of their 10 year commission period
(based on NAV figures from July 2010)
Assumptions:
• No change in client holdings • Indexed investment performance
• Constant market level • No change in management fees
Source: City of London Investment Management 
North Bridge Capital commission run-off
(based upon end July 2010 FuM)
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Financial year £m £m £m £m £m £m £m £m £m £m £m
(@ $1.55/£1) 5.2 5.2 5.2 5.0 4.4 3.3 2.7 2.2 1.2 0.4 – City of London Investment Group Plc Annual Report 2010 11
If we are genuine in wishing to create a
team culture then there is a need to treat
employees as a team. This in effect means
that we do no t pit them one against
another. Rather we attempt to instil in
them that the competition is outside the
firm, which actually is where it is.
The net result of this is that there is little
intrigue at the point of salary and general
compensation disclosures. Staff accept that
the way it is, is the way it is. If they do not
like it they can leave which sometimes
happens within a year of joining.
I would make the point that directors’
remuneration is disclosed via the Report
and Accounts.
In essence, we are not looking for freedom
fighters. Rather we would say it is better
to appoint decent people, who can
genuinely work in a team environment,
than appoint just no1’s.
We often say, better to appoint a good
no2 who is a decent person than a no1
who is greedy, political and does not
consider the maintenance and
development of the brand.
The net result of the above is that the
Group salary, bonus, and option pool to a
great extent reflects seniority and loyalty.
From time to time, usually quarterly, we
review these three but sometimes two
components. Our recommendations are
forwarded to the Remuneration
Committee which requests substantiation
for recommendations that involve salary
levels in excess of £100,000.
Most quarters we will make a change or
two to reflect changes to our perception
of seniority and loyalty, but I would
emphasise that these are gradualist
alterations and are relatively rare.
In conclusion, and as referenced earlier,
I would suggest that remuneration
packages and the system via which they
are arrived at in the City is broken.
Our system however is not broken.
Our approach has been developed by
management using many years of
experience in the UK and the US.
Like our Risk Controls, our Bonus
Formula and our Dividend and Bonus
relationship, I hope that elements of
what we undertake might one day be
considered best practice.
Recent recommendations regarding best
practice as it relates to Remuneration
include deferred bonus. Is this really the
way to go? Why not pay someone on
time for their work. Or, is this meant to
delay their departure, a sort of enforced
loyalty? Or is it that there is insecurity
regarding the profits that the individual
has created? If this is so then surely the
focus should be on the quantum,
measurement and the quality of the
corporation’s earnings. Either way I
would suggest that deferral of
remuneration is irrelevant in our case.
We are running a cash business where
clients pay us for work undertaken
calculated on a monthly basis.
The other structural weakness that I
would suggest needs to be confronted in
the City is the cult of the individual.
This seems to me to embody the very
volatility of earnings and the extreme risk
taking that was displayed by parts of our
industry over the past few years.
Unfortunately the passage of time does
not seem to have altered what seems to
have become considered best practice.
Staffing and outlook
Over the past year we have taken on
around a dozen additional staff. Staff have
been added primarily in the areas of
Compliance, Fund Management, Fund
Accounting and Performance and
Attribution. In most cases this has been
to accommodate further growth.
As a small boutique with a number of
conservative Core Values, as we grow it
would be very easy to not only
compromise but in some cases forget those
Values. We remain committed to our
brand. We are a small specialist fund
manager positioned at the Performance
end of our industry. We are not seeking
to grow fast, we do not want hot money
and we are as a result not only committed
to but are able to maintain our margins.
T o preserve a culture you have to recruit
and keep the right people, and that
applies at every level because if you get
recruitment right at the junior level you
build for the future. We remain
committed to our team approach and
more specifically, not employing greedy,
selfish people. The employees at City of
London have remained very loyal over a
significant period of time and at the end
of another testing year have much to be
proud of. On behalf of the shareholders
I would like to say that we would like
more of the same over the next few years.
Suffice it to say, the new financial year
has started very well and I would hope
that we will have further progress to
report in a few months time.
The past six months, running up to the
most recent month end of 31st August,
have been the most profitable period that
we have experienced. Operating profit,
measured before profit-share, share option
charges and tax, has averaged close to
£1.4 million per month.
I would like to reiterate my intentions
regarding any sale of shares which remain
unchanged, that is to say that I would
intend, subject to close periods and other
regulatory requirements to sell 375,000
shares at 310p, 500,000 at 350p and
500,000 at 400p. Should these intentions
alter, perhaps as a result of a material
change in market conditions, I will
inform the Board and an appropriate
announcement will be released.
B MOlliff
Chief Executive Officer
9th September 2010
The clients (pay the bills)
The shareholders (own the business)
Expect . . .
Fair treatment
Open communication
To share in success
The employees (manage the business)
Expect . . .
Superior 
investment 
performance
Openness & 
accountability
Ethical 
treatment
Expect . . .
Relevant risk 
controls
Quality earnings
Cost controls 12 City of London Investment Group Plc Annual Report 2010
Emerging markets
The first application of our expertise
Emerging Markets as a description of young high growth
economies first appeared in 1981 when only six such markets
(Hong Kong, Malaysia, Mexico, the Philippines, Singapore and
Thailand) could be accessed by foreign investors. Today there
are almost 60, including the ‘frontier’ markets that are at
earlier stages of development, with the largest being the so-
called BRIC’s economies – those of Brazil, Russia, India and
China. City of London realised early on that institutional
investors were struggling to access these markets in a
professionally managed, risk-diversified way and that a
product focused on the closed-end funds run by specialist
managers could hold great appeal.
1980s
Investing in emerging markets
becomes an equity play rather than
debt as stock markets open up and
companies in developing economies,
particularly in Asia, begin to raise
equity capital on their local markets.
International investors, attracted by
high growth and increasing liquidity
build positions. Because successful
emerging market investment
requires specialist skills and
knowledge, collective investment
vehicles, including closed-end
funds start to become popular with
all classes of investor. 
1991
In response to growing demand
from institutional investors for
exposure to high growth emerging
markets and the number of closed-
end funds now available, City of
London Group launches the
Emerging Markets T rust, a UK unit
trust with a global remit. This was
one of the first products to access
emerging markets via closed-end
funds, the historic core expertise of
City of London.
1992 – 1996
Investment in emerging markets
booms as more and more countries
reduce controls on foreign direct
investment and growth in
manufacturing output together with
a surge in natural resource prices
significantly increases GDP for the
emerging markets. The high growth
forecast for many countries
encouraged them to borrow heavily
on international markets. During
this period, City of London launches
additional products and successfully
exports its conservative approach to
US institutional investors. City of London Investment Group Plc Annual Report 2010 13
1997 – 1998
Asian currency devaluations, led by
Thailand, and severe financial and
structural issues in Russia leading to
default, prompt a collapse in
emerging market stock prices as
international investors attempt to
withdraw and liquidity shrinks. The
downturn, following the boom of
the early and mid 1990s, leads
many investors to question again
the potential volatility of emerging
markets and creates an opportunity
for specialist, risk-averse managers
such as City of London to gain
additional mandates.
2000 – 2007
Lessons were learned by both
companies and governments in
emerging markets. In a period of
cheap money, many reduce
borrowing – with some building
large financial surpluses – and the
boom in commodity prices
particularly benefits the exporters.
Stock prices increase substantially
in the period as emerging
economies’ growth rates
outperform those of developed
economies and investors seek to
add to their holdings.
Emerging markets become a core
asset class in the portfolios of
almost all institutional investors.
2008 to date
The worldwide financial crash saw
emerging markets initially falling
further and faster than many
developed markets as liquidity
shrank and panicked international
investors sought an exit. But the
economic fundamentals of
emerging countries and companies
soon reasserted themselves and
performance to date from the lows
post crash is significantly better
than developed markets. Higher
growth rates are forecast to
continue and transparency and
liquidity to improve further.
Emerging market investment has
become mainstream. 85 basis points throughout the year, a
small reduction from the 87 basis points
average for the previous year. This was due
not to any form of fee erosion but rather
to the relative weightings of segregated
accounts versus commingled funds within
the overall portfolio, the former tending to
attract slightly lower fees in recognition of
the size of the investments.
There is very little to say about investment
income this year, with realised losses of
£0.1m from the liquidation of one seed
investment being offset by a recovery of
similar size against the impairment
previously recognised against another one,
leading to a net zero in rounded terms
(2009: £0.4 million loss). Interest income
rounds up to £0.1 million, having last year
rounded down to that figure.
Administrative expenses of £19.7 million
(2009: £14.5 million) includes the
commissions that we pay against our fee
income, as noted above, which this year
totalled £4.8 million (2009: £3.0 million),
and it includes the 30% of operating
profit that forms the profit-share pool, at
£4.9 million including payroll taxes (2009:
£2.8 million). Stripping out these, plus
custody and administration charges of
£1.1 million (2009: £0.9 million), leaves
core overhead of £8.9 million (2009:£7.8
million), representing a cost-income ratio
of 37% (arrived at by comparing core
overhead to net fee income), a marked
improvement against the previous year’s
figure of 48%, which had of course been
inflated by the extreme market conditions
of September 2008 to March 2009.
Human resource costs continued to form
some 56% of overheads, a percentage
unchanged from 2009 despite a marginal
increase in headcount from 58 to 64, the
latter attributable in part to supporting
new products and in part to the
strengthening of the firm’s Singapore
and Dubai offices.
Pre-tax profit of £10.4 million compares
to £5.4 million for the previous year, the
increase of 93% effectively restoring
profitability to the pre September 2008
level. Tax accounts for nearly 33% of
profit, significantly higher than the 29%
level in 2008-9 as a result of an increased
level of investment activity in the United
States, where federal and state taxes
Financial review
14 City of London Investment Group Plc Annual Report 2010
Consolidated income statement
The financial year started with funds
under management (FuM) of US$3.5
billion, and the market recovery which
had started in early 2009 continued pretty
much uninterrupted through to the end of
November, our half year end, at which
point FuM had reached US$4.9 billion
(including of course the effect of net new
money over the period). Thereafter, FuM
moved within the range US$4.4 billion to
US$4.9 billion for the remainder of the
year, finishing in May at the lower end of
that range. Sterling continued to weaken
against the US dollar as the year
progressed, maintaining a trend that had
started back in January 2008. The average
rate for the year was around 1.59,
compared to around 1.63 for 2008-9
(both figures representing a straight
average of twelve month-end rates), with
the effect that, in sterling terms, FuM rose
almost as a straight line from February
2009 to May 2010. With margins
unchanged from the previous year, this
combination delivered gross fee income of
£30.0 million as against last year’s £20.2
million, an increase of 49%.
The weighted average net fee margin (net
of finder’s commission and of custody and
administration fees as applicable) across all
of the client accounts was stable at around
Total income £k
06 07
Fixed costs
Variable costs
Pre-tax profit
Note: excludes AIM listing costs 
and gains/losses on investments.
14,228
18,486
25,316
20,302
30,058
08 09 10 City of London Investment Group Plc Annual Report 2010 15
combined can exceed 40%. Profit after tax
of £7.0 million is up 82% from the
previous year’s £3.8 million.
Consolidated statement of
financial position and statement
of changes in equity
Net assets rose during the year from £8.7
million to £10.6 million, with the main
components offsetting the profit for the
period being the payment of dividends
and the repurchase by the company of a
number of its own shares.
The final dividend for 2008/9 was 10p per
share (2007/8: 13.5p), and the interim for
2009/10 was 7p per share (2008/9: 5p). In
cash terms these dividends amounted to
£2.5 million and £1.7 million respectively
(2008/9: £3.2 million and £1.2 million
respectively), making a total paid in the
year of £4.2 million (2009: £4.4 million).
Opportunities arose during the year to
apply some of the cash which was
considered surplus to the Company’s needs
to the buyback of shares. The following
repurchases were undertaken:
November 2009 143,350 shares at £2.95
November 2009 100,000 shares at £3.0175
April 2010 439,000 shares at £2.65
The first two purchases were undertaken
by the Company’s ESOP , whereas the
shares purchased in April were bought by
the Company itself and were cancelled,
thereby enhancing earnings per share for
the remaining shareholders. In total,
including transaction costs, the cash outlay
on shares was £1.9 million, of which £0.7
million was in the form of an increase in
the loan from the Company to the ESOP .
With respect to share options, the exercise
by directors and employees of 426,200
dilutive options and 271,842 ESOP held
options during the course of the year
generated £0.4 million (2009: £0.3
million), and left at the end of the year
1,446,447 dilutive options and 1,427,533
ESOP options outstanding (2009:
1,872,647 and 1,262,375 respectively).
The increase in net assets was applied, in the
main, to the diversification of the business, by
setting aside a further £2.8 million (net) as
seed funding for new products. Three new
funds were created, two as US Delaware
Statutory T rusts and one as a new sub fund
under the Dublin Open End Investment
Company umbrella structure. As at 31st May
these new funds, plus the pre-existing Natural
Resources sub fund in Dublin, represented a
total investment of £3.6 million (2009: £0.4
million), with the balance of the increase over
the year representing an uplift in market
value of £0.4 million, which is reflected in the
increase in the revaluation reserve.
Cash was virtually unchanged year on year
at £4.8 million (2009: £4.7 million), and
similarly the deferred tax asset of £1.5
million and share option reserve of £1.7
million were only marginally different from
the prior year’s figures of £1.6 million and
£1.8 million respectively, despite the
increase in the Company’s share price from
£2.285 to £2.81 over the year.
Currency exposure
The Company’s approach to currency
exposure is unchanged from previous years
but it is worth revisiting the parameters
each year and so I make no apologies for
doing so again.
At first glance, the starting point would
appear to be that as the Group’s income is
earned almost exclusively in US$, based as
it is upon a percentage of FuM which is
itself US$ denominated (with minor
exceptions), there is a significant exposure
to the value of the US$. In truth though,
it is worth going back one stage, to see
that the level of FuM in US$ terms is itself
a function of the predominantly emerging
market currencies that underlie the
investments of our managed funds and
client accounts. Accordingly, as the US$
strengthens against these currencies the
level of FuM will tend to fall, and of
course conversely as the US$ weakens
FuM in US$ terms will rise.
The significance from an earnings
perspective is that, at a given level of FuM
in US$ terms, the fee income generated in
reported sterling terms will rise and fall as
the US$ strengthens and weakens
respectively. The net effect of this is that
in very general terms a weak US$ will
provide uplift to FuM but the effect on fee
income will be offset or perhaps nullified
by the translation to sterling. T o put this
another way, it is in reality the relationship
of sterling to the underlying investment
currencies that influences the reported
earnings, with the US$ being principally
a conduit for the transaction. As emerging
currencies strengthen relative to sterling,
reported earnings will tend to rise, and of
course the reverse is true.
Despite this, given that FuM is
denominated and presented in US$, it is
still relevant to consider the table below,
which is included in this statement every
year, as a guide to how the fluctuation of
the US$/£ rate potentially impacts
earnings at any given level of FuM:
Post-Tax Profit: illustration of US$/£
rate effect:
FuM – US$bn
4.0 4.5 5.0 5.5
US$/£ Post-tax, £m
1.45 6.2 7.6 9.0 10.4
1.50 6.0 7.3 8.6 9.9
1.55 5.7 7.0 8.3 9.6
1.60 5.5 6.7 7.9 9.2
1.65 5.2 6.4 7.6 8.8
Assumes:
1. Average net fee 85 basis points
2. Annual operating costs £4.5 million plus 
US$8.2 million
3. Profit-share 30%
4. Average tax of 33%
The table shows annualised profit figures
given the assumptions/conditions
described, which approximate very closely
to the Company’s operating environment.
T o take an example, at FuM of US$5.0
billion and an exchange rate of 1.50 the
annualised profit would be expected to be
around £8.6 million, whereas at an
exchange rate of 1.40 the expectation
would increase to around £9.4 million.
As a separate point on currency exposure,
the Company maintains a programme of
forward sales of US$ with a view to
eliminating or minimising the Group’s
balance sheet exposure to exchange rate
risk, and at 31st May these forward sales
amounted to a total of US$6.5 million at
an average rate of 1.5973 (2009: $3.6
million at an average of 1.7694).
Doug Allison
Finance Director
9th September 2010 16 City of London Investment Group Plc Annual Report 2010
Natural resources
A core sector for closed-end funds and
emerging markets
The global natural resources sector has been a key focus for
investing in both closed-end funds and emerging markets
for many years. It is a sector we have always understood and
researched, making it one of the first choices for beginning
to diversify the Group’s product range. Our investment
activity in emerging markets brings us detailed knowledge
of a whole range of resources from oil and gas, metals,
minerals and diamonds to grain, coffee and cocoa, and
forestry. With end-user economies generally ‘resource-poor’
in many commodities, we believe the long term prospects
for investment products in this area to be attractive.
19th century
Investors flocked to the natural
resource booms of the nineteenth
century – the California Gold
Rush, T exas and Arabian oil
discoveries and metals and minerals
throughout Africa and South
America. Many of the earliest
investment trusts were targeted at
these opportunities as well as those
closer to home such as Cornish tin.
Industrialisation had by the end of
the century created vast appetites
for natural resources and motor
transport and electricity would
enlarge these even further. 
1900 – 1973
The insatiable demand for natural
resources continued to mushroom
through economic cycles, two
world wars and the rise in
developed economies of the
consumer society, which increased
still further the demand for energy
and raw materials. By the end of
the period, developed economies
were reliant for some or all of their
requirements on emerging, less
developed economies, having
depleted much of their own
resources. In energy, the step
change came with the oil price
shock of 1973 when the oil
exporting countries seized pricing
power from consuming nations.
1970s
The sharply increased oil prices
resulted in a renewed focus on
‘safe’, that is politically safe, sources
of oil and gas in particular. In the
UK, that meant the North Sea.
After a number of commercial gas
discoveries in the southern North
Sea in the late 1960s, BP discovered
the giant Forties oil field in 1970.
As the decade progressed, many
new oil discoveries were to follow City of London Investment Group Plc Annual Report 2010 17
and a new independent, and often
publicly traded, sector of oil and gas
exploration and production
companies grew up.
1980s
Following the first boom in mineral
exploration in Australia in the
1960s, the late 1980s saw a second
boom of even larger proportions,
beginning a trend of larger and
larger scale projects that continues
today. Coal, iron ore, copper and
uranium were discovered in size and
it was the exports of iron ore that
began to underpin China’s
emergence as a manufacturing
powerhouse. The downside for
Australia’s own manufacturing
industry was the steady rise in the
Australian dollar making
competition in international
markets more and more difficult.
1990s
The decade saw the arrival, largely
through consolidation, of the
mining and oil majors with
operations spanning the globe and
the financial resources to fund,
develop and operate the very largest
projects. Around these projects
grew up a host of locally based
independents and service suppliers
and by the end of the decade the
‘natural resources’ sector was among
the biggest in the world, if not the
biggest, on a number of measures.
T oday
With much of the world’s
remaining natural resources
contained within emerging markets,
the two sectors have become
inextricably entwined. The
industrial growth of China, India,
Brazil and Russia is driving
commodity demand and prices and
growing, in turn, the GDP of
resource exporting countries.
Debates still rage over the effect 
of resource booms on emerging
economies, in terms of focus,
equality and governance but as 
long as demand continues to grow,
natural resources will remain an
attractive sector for investors. Board of directors
18 City of London Investment Group Plc Annual Report 2010
A J Davison
NON EXECUTIVE CHAIRMAN
B MOlliff 
CHIEF EXECUTIVE OFFICER
D F Allison 
FINANCE DIRECTOR
C MYuste
BUSINESS DEVELOPMENT DIRECTOR
T W Griffith
CHIEF OPERATING OFFICER
O I Ashur
NON EXECUTIVE DIRECTOR
D MCardale
NON EXECUTIVE DIRECTOR
G A Robb 
NON EXECUTIVE DIRECTOR
Dr A S Bufferd 
NON EXECUTIVE DIRECTOR 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 MOlliff 
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 graduated in Economics 
& Accountancy at the University of
Southampton, and went on to qualify 
as a Chartered Accountant with Ernst 
& Young in 1980. He moved to the
financial services sector in 1984, and
joined City of London in 1997. Doug is
also an Associate of the Chartered
Institute of Bankers.
City of London Investment Group Plc Annual Report 2010 19
D MCardale
NON EXECUTIVE DIRECTOR
David Cardale has worked extensively in
both Corporate Finance and Private
Equity. He has advised a number of fund
management groups including Gartmore,
Ivory & Sime and MIM, and ran the
European operations of NatWest Equity
Partners. He has been a director of two
London listed Investment T rusts. 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 Integrated Asset Management plc and 
a number of the companies in which
AMIC is invested.
Dr A S Bufferd 
NON EXECUTIVE DIRECTOR
Allan Bufferd is T reasurer Emeritus of
Massachusetts Institute of T echnology
(“MIT”), where he served for over 30 years
prior to his retirement in 2006. At MIT ,
he served as an ex-officio member of the
governing board and its executive
committee, and supervised the formulation
and implementation of investment policy
for US$12 billion of endowment and
retirement fund assets. He is a current or
former member of a large number of
corporate, foundation and investment
advisory boards. 
C MYuste
BUSINESS DEVELOPMENT DIRECTOR
Carlos Yuste holds a Bachelor of Social
Science 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, T oronto, which 
he completed in 2000 before joining City
of London in the same year.
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 (resigned 14.8.10)
NON EXECUTIVE DIRECTOR
Omar Ashur is the chief financial officer 
of Future Management Holdings SA, one
of the founders of the Company and CFO 
of Future Pipe Industries Group Limited, 
a leading fibreglass pipe manufacturer and
has an MBA and PhD from the Wharton
School of the University of Pennsylvania, 
in Philadelphia. Corporate governance report
20 City of London Investment Group Plc Annual Report 2010
The Combined Code
While AIM listed companies are not strictly bound by the provisions of the June 2008 FRC Combined Code (the “Combined
Code”), the Board recognises the importance of good corporate practice and is committed to maintaining high standards of
corporate governance throughout the firm, and accordingly stated at the time of the AIM listing that its intention was to abide by
the principles of the Combined Code and to meet the specific requirements to the extent appropriate for a company of this size,
nature and stage of development. More recently, the Company has announced its intention to move the listing of its shares to the
main market, whereupon the Combined Code (and in due course the Corporate Governance Code June 2010) will formally apply.
The Board of directors
The Board now comprises four executive directors and four non-executive directors, following the resignation of Omar Ashur on
14th August 2010. Certain matters are reserved for the consideration and approval of the Board, principally:
• Group long term objectives and strategy
• Corporate announcements, including annual and interim reports
• Dividend policy
• Share buy-back policy
• Effectiveness of compliance
• Effectiveness of internal controls
• Annual budget
• Acquisitions
• Capital expenditure in excess of £100,000
• Board appointments
The role of the Chairman is to lead the board and ensure its effectiveness, and to oversee shareholder communications. The Chief
Executive Officer’s role is to achieve execution of group strategy through day to day management, and to communicate strategy and
performance to the shareholders.
Committees
The Board has established an Audit Committee, a Remuneration Committee and a Nominations Committee (each comprising of at
least three non-executive directors, who will invite other members of the Board to join meetings as appropriate) with formally
delegated duties and responsibilities.
The Audit Committee meets at least twice each year and is responsible for monitoring the quality of internal control, ensuring that
the financial performance of the Group 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.
The Remuneration Committee 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 executive directors and employees. It also
reviews individual compensation at salary levels in excess of £100,000. The remuneration and terms of appointment of non-
executive directors is set by the Board. The Group 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.
The Nominations Committee 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. City of London Investment Group Plc Annual Report 2010 21
Officers and Board Committees
Audit Remuneration Nominations
Board Committee Committee Committee
D F Allison Executive, and Secretary
A S Bufferd Non-executive
•• •
D MCardale* Non-executive
•
Chairman
••
A J Davison Chairman Non-executive
•• •
Chairman
T W Griffith Executive
BMOlliff Executive
G A Robb Non-executive
••
Chairman
CMYuste Executive
*Senior independent non-executive director. Report of the directors
22 City of London Investment Group Plc Annual Report 2010
The directors present their annual report and the audited financial statements for the year ended 31st May 2010.
Going concern
The directors are satisfied that the Company has adequate resources to continue in operation for the foreseeable future, and the
Financial Statements have therefore been prepared on the going concern basis.
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 32 accounts (2009 – 28 accounts) with a total of £3,012 million (2009 – £2,167 million) under management as at the
end of the year. Accounts may be commingled or segregated.
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 and include relevant
key performance indicators.
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 pages 28 and 30. The
Company has paid dividends of £4,182,692 during the year (2009 – £4,418,079). The final dividend for the year to 31st May 2010
will be paid in November 2010, subject to approval.
Directors’ indemnity arrangements
The Company maintains appropriate directors’ and officers’ insurance. The directors also have the benefit of the indemnity provision in
the Company’s Articles of Association. These provisions which are qualifying third party indemnity provisions as defined by S232 of the
Companies Act 2006, were in force throughout the year and are currently in force.
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
2010 2009
A J Davison (Chairman) (non-executive) 104,500 86,500
B MOlliff 5,168,683 5,243,683
D F Allison 310,625 310,625
T W Griffith 49,925 49,925
C MYuste 314,925 62,925
O I Ashur (non-executive)* 5,000 5,000
A S Bufferd (non-executive) 20,000 10,000
D MCardale (non-executive) 106,250 156,250
G A Robb (non-executive) 45,000 45,000
*Resigned 14th August 2010. City of London Investment Group Plc Annual Report 2010 23
(b) Share options
At 31st May 2010 share options were held by the following directors:
Exercise price Date from which
Number £ exercisable Expiry date
B MOlliff 303,897 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
12,000 2.75 1st October 2011 1st October 2018
8,000 2.30 5th June 2012 5th June 2019
D F Allison 200,000 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
12,000 2.75 1st October 2011 1st October 2018
8,000 2.30 5th June 2012 5th June 2019
12,500 3.14 18th January 2013 18th January 2020
T W Griffith 50,000 0.45 10th January 2004 10th January 2011
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
12,000 2.75 1st October 2011 1st October 2018
8,000 2.30 5th June 2012 5th June 2019
12,500 3.14 18th January 2013 18th January 2020
C MYuste 31,300 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
12,000 2.75 1st October 2011 1st October 2018
8,000 2.30 5th June 2012 5th June 2019
12,500 3.14 18th January 2013 18th January 2020 Report of the directors
Continued
24 City of London Investment Group Plc Annual Report 2010
(c) Remuneration
The remuneration of the directors who held office during the year ended 31st May 2010 is set out below:
Fees/ Health Total Total Pension Pension
salary Profit share insurance 2010 2009 2010 2009
£ ££ £ £ £ £
Non-executive
A J Davison 32,000 –– 32,000 30,916 – –
G A Robb 22,000 –– 22,000 20,917 – –
O I Ashur* 22,000 –– 22,000 20,917 – –
D MCardale 22,000 –– 22,000 20,917 – –
A Bufferd 22,000 –– 22,000 21,750 – –
120,000 –– 120,000 115,417 – –
Executive
B MOlliff 219,346 905,587 – 1,124,933 740,022 27,418 26,624
D F Allison 141,000 397,000 2,255 540,255 356,128 17,625 17,375
T W Griffith 139,912 244,415 – 384,327 254,434 17,489 15,670
C MYuste 139,442 244,415 – 383,857 254,434 17,430 15,670
639,700 1,791,417 2,255 2,433,372 1,605,018 79,962 75,339
*Resigned 14th August 2010.
With effect from 1st October 2010 the fees paid to non-executive directors will be increased as follows:
£
A J Davison 45,000
D MCardale 37,000
G A Robb 30,000
A Bufferd 30,000
Substantial shareholdings
At 31st July 2010, 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
B MOlliff 5,168,683 19.9
BlackRock Investment Management 2,978,994 11.5
F&C Asset Management 2,389,035 9.2
Hargreave Hale 1,838,087 7.1
The City of London Employee Share Option T rust 1,583,890 6.1 City of London Investment Group Plc Annual Report 2010 25
Own shares
The Company is, until the date of the next Annual General Meeting (AGM), generally and unconditionally authorised to buy back
up to 2,603,000 of its own ordinary shares of £0.01. In the year under review the Company purchased and cancelled 439,000
ordinary shares. The shares were purchased at £2.65 representing approximately 1.7% of called up share capital at the time of the
transaction. The Company is seeking a renewal of this authority at the 2010 AGM.
The number of own shares purchased by the Company’s employee benefit trust during the year was 243,350 (2009 – nil) at a cost
of £0.7 million (2009 – nil). The number of own shares held by the trust as at 31st May 2010 was 1,589,158 (2009 – 1,617,650).
The trust has waived its entitlement to receive dividends in respect of the shares held. Further details can be found in note 20 of
the financial statements and in the Financial review.
Creditor payment policy
The Group’s policy is to follow its suppliers’ terms of payment and to make payment in accordance with those terms subject to
receipt of satisfactory invoicing. In practice, payments to creditors are generally made upon receipt of an invoice.
As at 31st May 2010, the creditor days were nil (2009 – nil).
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
9th September 2010 Statement of directors’ responsibilities
26 City of London Investment Group Plc Annual Report 2010
The directors are responsible for preparing the Directors’ report and the financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare Group and Company financial statements for each financial year. Under that law the
directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) as
adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing these
financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the
financial statement;
• 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 adequate accounting records that are sufficient to show and explain the Company’s transactions
and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s
website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from
legislation in other jurisdictions. Independent auditors’ report to the shareholders
of City of London Investment Group Plc
City of London Investment Group Plc Annual Report 2010 27
We have audited the financial statements of City of London Investment Group Plc for the year ended 31st May 2010 which comprises
the Consolidated income statement, the Consolidated and Company statement of comprehensive income, the Consolidated and
Company statement of financial position, the Consolidated and Company statement of changes in equity, the Consolidated and
Company cash flow statements and the related notes. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the
Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 Part 16 of the Companies Act 2006.
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 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.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ responsibilities statement set out on page 26, 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 the
financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
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 Group’s and the Parent 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.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31st May 2010
and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
• the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Senior statutory auditor: Timothy West
10th September 2010
for and on behalf of Moore Stephens LLP , Statutory Auditor
150 Aldersgate Street, London EC1A 4AB 28 City of London Investment Group Plc Annual Report 2010
Consolidated income statement
For the year ended 31st May 2010
Total Total
2010 2009
Note £ £
Revenue 1,2 29,969,539 20,151,149
Administrative expenses
Staff costs 4(b) 9,378,107 6,716,230
Commissions payable 4,768,780 3,036,462
Other administrative expenses 5,184,733 4,426,140
Depreciation and amortisation 348,196 288,918
(19,679,816) (14,467,750)
Operating profit 6 10,289,723 5,683,399
Interest receivable and similar income 7 (70,066) (60,177)
Impairment of seed investments 8 159,418 (238,790)
Profit before taxation 10,379,075 5,384,432
Income tax expense 9 (3,396,293) (1,537,649)
Profit for the period 6,982,782 3,846,783
Basic earnings per share 10 28.5p 16.1p
Diluted earnings per share 10 26.9p 15.0p
Consolidated and Company statement of comprehensive income
For the year ended 31st May 2010
Group Company
2010 2009 2010 2009
£ £ £ £
Fair value gains/(losses) on available-for-sale investments* 266,790 (446,414) 266,862 (446,414)
Release of fair value gains/(losses) on disposal of
available-for-sale investments* – (672) – (672)
Other comprehensive income 266,790 (447,086) 266,862 (447,086)
Profit for the period 6,982,782 3,846,783 5,437,758 2,742,961
Total comprehensive income for the period 
attributable to equity holders of the company 7,249,572 3,399,697 5,704,620 2,295,875
*Net of deferred tax, detailed in note 18. Consolidated and Company statement of financial position
31st May 2010
City of London Investment Group Plc Annual Report 2010 29
Group Company
2010 2009 2010 2009
Note £ £ £ £
Non-current assets
Property and equipment 11 687,657 801,554 359,466 476,454
Intangible assets 12 409,144 – – –
Other financial assets 13 76,679 57,535 829,940 893,380
Deferred tax asset 14 1,503,498 1,605,855 319,513 330,737
2,676,978 2,464,944 1,508,919 1,700,571
Current assets
T rade and other receivables 15 4,365,999 2,868,398 803,547 1,062,701
Current tax receivable – 608,965 950,601 1,323,904
Available-for-sale financial assets 16 3,595,873 431,365 3,595,873 431,365
Cash and cash equivalents 4,774,473 4,718,766 255,677 108,638
12,736,345 8,627,494 5,605,698 2,926,608
Current liabilities
T rade and other payables 17 (3,887,781) (2,349,334) (5,081,468) (2,819,866)
Current tax payable (811,983) – – –
Creditors, amounts falling due within one year (4,699,764) (2,349,334) (5,081,468) (2,819,866)
Net current assets 8,036,581 6,278,160 524,230 106,742
Total assets less current liabilities 10,713,559 8,743,104 2,033,149 1,807,313
Non-current liabilities
Deferred tax liability 18 (105,203) (1,424) (105,203) (1,424)
Net assets 10,608,356 8,741,680 1,927,946 1,805,889
Capital and reserves
Called up share capital 19 259,688 259,816 259,688 259,816
Share premium account 1,640,667 1,518,441 1,640,667 1,518,441
Investment in own shares 20 (3,071,259) (2,633,932) (3,071,259) (2,633,932)
Revaluation reserve 270,451 3,661 270,523 3,661
Share option reserve 1,721,492 1,767,730 651,056 609,542
Capital redemption reserve 18,562 14,172 18,562 14,172
Retained earnings 9,768,755 7,811,792 2,158,709 2,034,189
Total equity 10,608,356 8,741,680 1,927,946 1,805,889
The Board of directors approve and authorise for issue these financial statements on 9th September 2010.
Signed on behalf of the Board of directors of City of London Investment Group Plc, company number 2685257.
B MOlliff D F Allison
Chief Executive Officer Finance Director 30 City of London Investment Group Plc Annual Report 2010
Consolidated and Company statement of changes in equity
31st May 2010
Share Investment Share Capital Total
Share premium in own Revaluation option redemption Retained attributable to
capital account shares reserve reserve reserve earnings shareholders
£ £££ ££££
Group
At 1st June 2008 253,605 1,357,283 (2,811,878) 450,747 3,468,673 14,172 7,038,774 9,771,376
Total comprehensive income –– – (447,086) –– 3,846,783 3,399,697
Share option exercise 6,211 161,158 177,946 –– –– 345,315
Share-based payment –– –– 7,113 – 81,136 88,249
Deferred tax –– –– (1,708,056) – (7,663) (1,715,719)
Current tax on share options –– ––– – 1,270,841 1,270,841
Dividends paid –– ––– – (4,418,079) (4,418,079)
At 1st June 2009 259,816 1,518,441 (2,633,932) 3,661 1,767,730 14,172 7,811,792 8,741,680
Total comprehensive income –– – 266,790 –– 6,982,782 7,249,572
Share option exercise 4,262 122,226 293,512 –– –– 420,000
Share cancellation (4,390) –– –– 4,390 (1,165,678) (1,165,678)
Purchase of own shares –– (730,839) –– –– (730,839)
Share-based payment –– –– 11,943 – 72,962 84,905
Deferred tax –– –– (58,181) – (31,099) (89,280)
Current tax on share options –– ––– – 280,688 280,688
Dividends paid –– ––– – (4,182,692) (4,182,692)
At 31st May 2010 259,688 1,640,667 (3,071,259) 270,451 1,721,492 18,562 9,768,755 10,608,356
Company
At 1st June 2008 253,605 1,357,283 (2,811,878) 450,747 1,105,886 14,172 2,894,595 3,264,410
Total comprehensive income –– – (447,086) –– 2,742,961 2,295,875
Share option exercise 6,211 161,158 177,946 –– –– 345,315
Share-based payment –– –– 43,008 – 31,024 74,032
Deferred tax –– –– (539,352) – (16,262) (555,614)
Current tax on share options –– ––– – 799,950 799,950
Dividends paid –– ––– – (4,418,079) (4,418,079)
At 1st June 2009 259,816 1,518,441 (2,633,932) 3,661 609,542 14,172 2,034,189 1,805,889
Total comprehensive income –– – 266,862 –– 5,437,758 5,704,620
Share option exercise 4,262 122,226 293,512 –– –– 420,000
Share cancellation (4,390) –– –– 4,390 (1,165,678) (1,165,678)
Purchase of own shares –– (730,839) –– –– (730,839)
Share-based payment –– –– 11,943 – 22,516 34,459
Deferred tax –– –– 29,571 – (6,305) 23,266
Current tax on share options –– ––– – 18,921 18,921
Dividends paid –– ––– – (4,182,692) (4,182,692)
At 31st May 2010 259,688 1,640,667 (3,071,259) 270,523 651,056 18,562 2,158,709 1,927,946 Consolidated and Company cash flow statement
For the year ended 31st May 2010
City of London Investment Group Plc Annual Report 2010 31
Group Company
2010 2009 2010 2009
Note £ £ £ £
Cash flow from operating activities
Operating profit 10,289,723 5,683,399 167,856 82,488
Adjustments for:
Depreciation charges 302,735 288,918 143,541 145,279
Amortisation of intangible assets 45,461 – – –
Share based payment charge 84,905 88,249 36,238 33,823
T ranslation adjustments (293,254) (462,181) (18,308) (378,578)
(Profit)/loss on disposal of fixed assets (342) 5,418 – 5,418
Cash generated/(used) in operations before changes
in working capital 10,429,228 5,603,803 329,327 (111,570)
(Increase)/decrease in trade and other receivables (1,497,601) 704,816 259,154 1,017,938
Increase/(decrease) in trade and other payables 1,538,447 (719,487) 2,261,602 (789,738)
Cash generated from operations 10,470,074 5,589,132 2,850,083 116,630
Interest received 66,579 145,604 12,591 7,962
Interest paid – – – –
Taxation (paid)/received (1,681,580) (2,476,595) 351,888 421,621
Net cash generated from operating activities 8,855,073 3,258,141 3,214,562 546,213
Cash flow from investing activities
Dividends received from subsidiaries – – 5,383,363 3,220,000
Purchase of property and equipment (189,408) (799,943) (26,553) (418,765)
Proceeds from sale of property and equipment 911 793 – 793
Purchase of intangible assets (454,605) – – –
Purchase of non-current financial assets (10,318) (663) (3,439) (663)
Proceeds from sale of non-current financial assets – 663 – 663
Purchase of current financial assets (3,146,241) – (3,146,241) –
Proceeds from sale of current financial assets 379,853 744,207 379,853 744,207
Net cash (used)/generated from investing activities (3,419,808) (54,943) 2,586,983 3,546,235
Cash flow from financing activities
Proceeds from issue of ordinary shares 126,488 167,369 126,488 167,369
Ordinary dividends paid 21 (4,182,692) (4,418,079) (4,182,692) (4,418,079)
Purchase and cancellation of own shares (1,165,678) – (1,165,678) –
Purchase of own shares by employee share option trust (730,838) – (730,838) –
Proceeds from sale of own shares by 
employee share option trust 293,511 177,946 293,511 177,946
Net cash used in financing activities (5,659,209) (4,072,764) (5,659,209) (4,072,764)
Net (decrease)/increase in cash and cash equivalents (223,944) (869,566) 142,336 19,684
Cash and cash equivalents at start of period 4,718,766 5,498,910 108,638 83,135
Effect of exchange rate changes 279,651 89,422 4,703 5,819
Cash and cash equivalents at end of period 4,774,473 4,718,766 255,677 108,638  32 City of London Investment Group Plc Annual Report 2010
Notes to the financial statements
For the year ended 31st May 2010
1 Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted
by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
(a) New IFRS Standards and Interpretations
The Group adopted the following during the year:
IAS 1 (revised 2007) “Presentation of financial statements”. The amendments make certain changes to the format and titles of
the primary financial statements and to the presentation of some items within these statements. Some items that were recognised
directly in equity are now recognised in other comprehensive income. IAS 1 affects the presentation of owner changes in equity
and introduces a “Statement of comprehensive income”.
IFRS 7 “Improving Disclosures about Financial Instruments”. The amendments to IFRS 7 expand the disclosures required in
respect of the fair value measurements of financial instruments recognised in the statement of financial position. The Group has
elected not to provide comparative information for these expanded disclosures in the current year in accordance with the
transitional reliefs offered in these amendments.
IFRS 8 “Operating Segments”. The adoption of IFRS 8 requires the disclosure of segment reporting as reviewed by
management. The Group is managed as a single business unit, namely asset management, and therefore only has a single
reportable segment.
There is also a requirement for an entity-wide disclosure of revenues from external customers and certain non-current assets
attributable to the Group’s country of domicile and foreign countries. The Group allocates revenue based on the domicile of its
clients and non-current assets based on where the assets are held. Any individual client generating revenue of 10% or more
would be disclosed separately, as would assets in a foreign country if they are material.
Under IFRS 8 the only change for the Group is a more detailed analysis of the countries to which revenue is attributed.
Previously just three geographical locations were reported; Europe, North America and Other.
Comparative segmental information has been restated accordingly.
At the date of authorisation of these financial statements, the following Standards and Interpretations, which are relevant to the
Group, were in issue but not yet effective:
IAS 1 (revised) Presentation of financial statements – Minor changes to reporting of other comprehensive income effective for
annual periods beginning on or after 1st January 2011. IAS 1 will also be amended by the changes noted
below in IFRS 9.
IFRS 7 Financial instruments: disclosures – Amendments effective for annual periods beginning on or after 1st January
2011 relating to clarification of qualitative and quantitative disclosures and removal of references to materiality
in relation to risk. In addition, IFRS 7 will also be amended by the changes noted below in IFRS 9. In
particular the disclosures by category of financial asset will be altered to reflect the new categorisation.
IFRS 9 Financial instruments – Effective for annual periods beginning on or after 1st January 2013. This is the first part of
a new standard on classification and measurement of financial assets that will replace IAS 39. IFRS 9 replaces the
four categories of financial assets with two; those carried at amortised cost and those at fair value. The Group will
need to consider how it wishes to reclassify its financial assets, in particular those currently classified as available-
for-sale. The Group’s approach will determine the impact of the new standard on the financial statements.
There are a number of other Standards and Interpretations, and revisions to existing Standards and Interpretations, including the
2008 improvements project, in issue but not in force at 31st May 2010. These are not considered likely to have a material
impact on the Group’s financial statements. City of London Investment Group Plc Annual Report 2010 33
1 Basis of accounting continued
(b) Basis of consolidation and preparation
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 2010.
The Company is domiciled in the UK and its shares are issued in sterling. The functional currency of the business is however
US Dollars. Management have decided that the presentational currency of the financial statements should be sterling rather than
the functional currency due to the Company being a UK registered entity.
The consolidated financial statements are prepared on the historical cost basis except for the revaluation of certain financial
instruments as outlined in point (c) (iii) on page 34.
The preparation of these financial statements in conformity with IFRS requires management to make estimates and assumptions
that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Whilst estimates are
based on management’s best knowledge and judgement using information and financial data available to them, the actual
outcome may differ from those estimates.
The most significant areas of the financial statements that are subject to the use of estimates and assumptions are noted below:
Income taxes
The Group is subject to income taxes in different jurisdictions. There are transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from
the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in
which such determination is made.
Share-based payments
In order to calculate the charge for share-based compensation as required by IFRS 2, the Group makes estimates principally
relating to the assumptions used in its option pricing model. Details of these assumptions are outlined in note 24.
Intangible assets
The useful economic life of intangible assets, such as computer software, is determined on acquisition using value in use
calculations based on management’s assumptions and estimates of future cash flows as well as other cost/benefit factors.
The principal accounting polices adopted are set out below and have, unless otherwise stated, been applied consistently to all
periods presented in these accounts. In addition, where presentational changes are made in the current year, the prior year figures
are also updated to present a true comparative.
(c) Significant accounting policies
(i) Property and equipment
For all property and equipment 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
(ii) Intangible assets
Intangible assets acquired separately are capitalised at cost and amortised on a straight line basis. Amortisation charges are
spread over the useful life of the asset as follows:
Long term software licences – ten years
This represents a perpetual licence for the Group’s fund accounting system which is being brought in-house. The directors
consider ten years as a reasonable estimate of useful life given the improved control and flexibility to manage and develop the
software in-house. Notes to the financial statements
Continued
34 City of London Investment Group Plc Annual Report 2010
1 Basis of accounting continued
(iii) Financial instruments
Under IAS 39, “Financial Instruments: Recognition and Measurement”, financial assets must be classified as either:
• Loans and receivables
• Held-to-maturity investments
• Available-for-sale financial assets
• At fair value through profit or loss
Financial liabilities must be classified at fair value through profit or loss or at amortised cost.
The Group’s investments in the funds that it manages are designated as available-for-sale financial assets. Such investments are
initially recognised at fair value, being the consideration given together with any acquisition costs associated with the investment.
They are subsequently carried at fair value, with any gains or losses arising from changes in fair value included as part of other
comprehensive income. Fair value is determined using the price based on the net asset value of the fund. Investments are
derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group
has transferred all risks and rewards of ownership. When derecognition occurs a realised profit or loss is recognised in the income
statement, calculated as the difference between the net sales proceeds and the original cost of the financial asset. Any fair value
gains or losses previously recognised as part of other comprehensive income are recycled into the income statement as part of this
calculation of the profit or loss arising on derecognition.
The Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is
impaired. In the case of an investment classified as available-for-sale, a significant or prolonged decline in the fair value of the
investment below its cost is considered as an indicator that the investment is impaired. If any such evidence exists for available-
for-sale investments, the cumulative loss – measured as the difference between the acquisition cost and the current fair value,
less any impairment loss on that investment previously recognised in the income statement – is removed from other
comprehensive income and recognised in the income statement.
The Group’s investments in derivatives are designated as financial assets or liabilities at fair value through profit or loss. Such
investments are initially recognised at fair value, and are subsequently remeasured at fair value, with any movement recognised in
the income statement. The fair value of the derivatives held by the Group is determined as follows:
• Options – priced using the quoted market bid price
• Forward currency trades – priced using prevailing exchange rates
The only exception is where the Group holds an investment in options on unquoted equity instruments. Such investments are
designated as available-for-sale financial assets and are measured at cost less impairment on the grounds that the fair value can
not be reliably measured and the cost of the investment of $75,000 is not considered to be material.
The Group’s investments have been classified here for recognition and measurement purposes under IAS39 but are not
necessarily reported in the statement of financial position under those headings. A table showing how they are reported is shown
in note 26.
(iv) T rade receivables
T rade receivables are measured at initial recognition at fair value, and are subsequently carried at the lower of original fair value
and their recoverable amount. Appropriate allowances for estimated irrecoverable amounts are recognised in the income
statement when there is objective evidence that the asset is impaired.
(v) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand, deposits with an original maturity of three months or less, and
other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value. City of London Investment Group Plc Annual Report 2010 35
1 Basis of accounting continued
(vi) T rade payables
T rade payables are measured at initial recognition at fair value and subsequently measured at amortised cost.
(vii) Deferred taxation
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the amounts of
assets and liabilities for financial reporting purposes and the amounts used for tax purposes. However, deferred tax is not
accounted for if it arises from goodwill or the initial recognition (other than in a business combination) of other assets or
liabilities in a transaction that affects neither the accounting nor the taxable profit or loss.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised.
The tax rates used are those that have been enacted, or substantially enacted, by the end of the reporting period. Deferred tax is
charged or credited to the income statement, except when it relates to items charged or credited directly as part of other
comprehensive income, in which case the deferred tax is also dealt with as part of other comprehensive income. For share-based
payments, where the estimated future tax deduction exceeds the amount of the related cumulative remuneration expense, the
excess deferred tax is recognised directly in equity.
(viii) Share-based payments
The Company operates an Employee Share Option Plan. 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, based on the Company’s estimate of the number of shares that will
actually vest.
In accordance with the transitional provisions of IFRS2, the above treatment 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 IFRS2, the disclosures in note 24(b)
include grants of share options prior to 7th November 2002.
(ix) Revenue
Revenue comprises investment management fees earned. Fees are based on a percentage of Funds under Management and are
recognised in revenue as the investment management services are provided, in accordance with the underlying agreements.
(x) Foreign currency translation
Foreign currency transactions are translated using the exchange rates prevailing at the transaction date. Foreign exchange gains
and losses resulting from the settlement of such transactions and from the translation of period-end monetary assets and
liabilities are recognised in the income statement.
The functional currency of the Group’s main trading subsidiaries, City of London Investment Management Company Limited
and City of London US Services Limited, is US dollars. The functional currency of City of London Investment Group Plc
(the “Company”) is sterling. The Group uses sterling as the presentation currency. Under IAS 21 this means that exchange
differences caused from translating from the functional currency to presentational currency for the main trading subsidiaries
would be recognised in equity. However, the Group operates a policy whereby the foreign exchange positions of the subsidiaries
are sold to the Company and therefore it is the only entity with any exchange differences. As such any exchange differences
arising in the Company are “real” in that the functional currency matches the presentational currency. This means that all such
exchange differences are included in the income statement and no split is required between other comprehensive income and
the income statement. Notes to the financial statements
Continued
36 City of London Investment Group Plc Annual Report 2010
1 Basis of accounting continued
(xi) Leases
The cost of operating leases is charged to the income statement in equal periodic instalments over the periods of the leases.
(xii) Pensions
The Group operates defined contribution pension schemes covering the majority of its employees. The costs of the pension
schemes are charged to the income statement as they are incurred.
2 Revenue
2010 2009
£ £
Management fees earned by subsidiary companies charged as a
percentage of funds under management 29,969,539 20,151,149
3 Segmental analysis
The directors consider that the Group has only one reportable segment, namely asset management, and hence only analysis by
geographical location is given.
Europe
USA Canada (ex UK) UK Other Total
££££££
Year to 31st May 2010
Revenue 24,185,206 1,702,328 1,909,388 2,026,138 146,479 29,969,539
Non-current assets:
Property and equipment 328,191 –– 239,529 119,937 687,657
Intangible assets 409,144 ––– – 409,144
Year to 31st May 2009
Revenue 16,008,991 1,337,978 1,464,309 900,300 439,571 20,151,149
Non-current assets:
Property and equipment 325,100 –– 302,026 174,428 801,554
Intangible assets ––– –––
The Group has classified revenue based on the domicile of its clients and non-current assets based on where the assets are held.
Any individual client generating revenue of 10% or more would be disclosed separately, as would assets in a foreign country if
they are material. City of London Investment Group Plc Annual Report 2010 37
4 Employees
2010 2009
(a) Average number of persons employed by the Group in the year: Number Number
Investment Management/Research 23 18
Performance and Attribution 4 4
Business Development/Marketing 3 3
Client Services 8 8
Administration, Accounts and Settlements 24 22
62 55
2010 2009
(b) Staff costs incurred during the year in respect of these employees were: £ £
Wages and salaries 3,876,432 3,220,921
Profit sharing payments 4,524,986 2,527,130
Social security costs 448,613 508,416
Defined contribution pension costs 443,171 371,514
Share options charge 84,905 88,249
9,378,107 6,716,230
The Group made contributions of £443,171 (2009 – £371,514) in the period to individual defined contribution pension schemes
established for directors and employees. There were no outstanding or prepaid contributions at 31st May 2010.
5 Directors
2010 2009
Directors’ emoluments comprise: £ £
Emoluments (excluding pension contributions and awards under share option schemes) 2,553,372 1,720,435
Pension contributions 79,962 75,339
Share option charge 14,274 13,072
Gains on exercise of share options 766,645 797,101
2010 2009
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 year 1 4
2010 2009
Highest paid director’s remuneration: £ £
Emoluments (excluding pension contributions and awards under share option
schemes and other long-term incentive schemes) 1,124,933 740,022
Pension contributions 27,418 26,624
Share option charge 2,795 3,870
Gains on exercise of share options – 487,171 Notes to the financial statements
Continued
38 City of London Investment Group Plc Annual Report 2010
6 Operating profit
2010 2009
The operating profit is arrived at after charging/crediting: £ £
Depreciation of owned assets 302,735 288,918
Amortisation of intangible assets 45,461 –
Auditors’ remuneration:
– Statutory audit 44,227 45,271
– Taxation services 19,057 23,629
– Other services 14,097 23,852
Operating lease rentals:
– Land and buildings 373,955 363,746
– Other 12,187 16,914
Operating sublease rentals:
– Land and buildings – 6,091
Foreign exchange (gains)/losses (177,664) 94,256
(Profit)/loss on disposal of fixed assets (342) 5,418
7 Interest receivable and similar income
2010 2009
£ £
Interest on bank deposit 66,579 145,604
(Loss) on sale of investments (136,645) (214,981)
Fair value of investments – 9,200
(70,066) (60,177)
8 Impairment of seed investments
Due to improved market conditions, the Group has written back £159,418 of the £238,790 impairment charge recognised in
2009 against the fair value of its seed investments in new funds in-line with IAS 39.
9 Tax charge on profit on ordinary activities
2010 2009
(a) Analysis of tax charge on ordinary activities: £ £
Tax at 28% (2009 – 28%) based on the profit for the year 2,938,223 1,634,820
Double taxation relief (951,584) (422,174)
Deferred tax 13,077 (113,251)
Adjustments in respect of prior years 12,957 (39,037)
2,012,673 1,060,358
Foreign tax for the current period 1,422,908 610,544
Adjustments in respect of prior years (39,288) (133,253)
1,383,620 477,291
3,396,293 1,537,649 City of London Investment Group Plc Annual Report 2010 39
9 Tax charge on profit on ordinary activities continued
(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 – 28%
(prior year – 28%). The differences are explained below:
2010 2009
£ £
Profit on ordinary activities before tax 10,379,075 5,384,432
Tax at 28% (2008 – 28%) thereon (2,906,141) (1,507,641)
Effects of:
Expenses not deductible for tax purposes (30,979) (35,685)
Capital allowances less than depreciation (63,911) (15,706)
Unrelieved overseas tax (471,324) (188,370)
Impairment in seed investments not tax deductible 44,637 (66,861)
Deferred tax on share based-payments and impairment (13,077) 113,251
Prior period adjustments 26,331 172,290
Other 18,171 (8,927)
(3,396,293) (1,537,649)
10 Earnings per share
The calculation of earnings per share is based on the profit for the period of £6,982,782 (2009 – £3,846,783) divided by the
weighted average number of ordinary shares in issue for the year ended 31st May 2010 of 24,491,592 (2009 – 23,844,801).
As set out in Note 20, the Employee Benefit T rust held 1,589,158 ordinary shares in the Company as at 31st May 2010. The
T rustees of the T rust have waived all rights to dividends associated with these shares. In accordance with IAS 33 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 £6,982,782 (2009 – £3,846,783) divided by
the diluted weighted average of ordinary shares for the year ended 31st May 2010 of 25,953,758 (2009 – 25,587,418).
Reconciliation of the figures used in calculating basic and diluted earnings per share:
2010 2009
Number of shares Number of shares
Weighted average number of shares – basic earnings per share 24,491,592 23,844,801
Effect of dilutive potential shares – share options 1,462,166 1,742,617
Weighted average number of shares – diluted earnings per share 25,953,758 25,587,418 Notes to the financial statements
Continued
40 City of London Investment Group Plc Annual Report 2010
11 Property and equipment
2010 2009
Computer Computer 
Furniture and Short Furniture and Short
and telephone leasehold and telephone leasehold
equipment equipment improvements T otal equipment equipment improvements T otal
£ £££ ££££
Group
Cost
At 1st June 145,413 1,294,307 293,225 1,732,945 111,852 830,381 224,332 1,166,565
Additions 20,952 168,455 – 189,407 65,634 540,128 194,181 799,943
Disposals (334) (22,029) – (22,363) (32,073) (76,202) (125,288) (233,563)
At 31st May 166,031 1,440,733 293,225 1,899,989 145,413 1,294,307 293,225 1,732,945
Accumulated depreciation
At 1st June 88,673 772,699 70,019 931,391 89,619 620,271 159,935 869,825
Charge for the year 26,287 241,193 35,255 302,735 24,916 228,630 35,372 288,918
Disposals (334) (21,460) – (21,794) (25,862) (76,202) (125,288) (227,352)
At 31st May 114,626 992,432 105,274 1,212,332 88,673 772,699 70,019 931,391
Net book value
At 31st May 51,405 448,301 187,951 687,657 56,740 521,608 223,206 801,554
Company
Cost
At 1st June 93,930 493,268 266,481 853,679 60,369 370,119 197,588 628,076
Additions 8,230 18,323 – 26,553 65,634 158,950 194,181 418,765
Disposals –– –– (32,073) (35,801) (125,288) (193,162)
At 31st May 102,160 511,591 266,481 880,232 93,930 493,268 266,481 853,679
Accumulated depreciation
At 1st June 38,852 295,098 43,275 377,225 43,703 241,295 133,899 418,897
Charge for the year 21,678 86,608 35,255 143,541 21,011 89,604 34,664 145,279
Disposals –– –– (25,862) (35,801) (125,288) (186,951)
At 31st May 60,530 381,706 78,530 520,766 38,852 295,098 43,275 377,225
Net book value
At 31st May 41,630 129,885 187,951 359,466 55,078 198,170 223,206 476,454 City of London Investment Group Plc Annual Report 2010 41
12 Intangible Assets
2010 2009
Long term Long term
software software
licences Total licences Total
Group ££££
Cost
At 1st June –– ––
Additions 454,605 – ––
At 31st May 454,605 – ––
Amortisation charge
At 1st June –– ––
Charge for the year (45,461) – ––
At 31st May (45,461) – ––
Net book value
At 31st May 409,144 – ––
The Company did not hold any intangible assets during the current or preceding year.
13 Other financial assets (non-current)
Unlisted Unlisted
investments investments
2010 2009
Group £ £
Cost
At 1st June 57,535 52,048
Additions 10,318 596
Disposals – (1,242)
Fair value gains recognised in other comprehensive income 8,826 6,133
At 31st May 76,679 57,535
2010 2009
Investment in Investment in
Unlisted subsidiary Unlisted subsidiary
investments undertakings Total investments undertakings Total
Company £££ £££
Cost
At 1st June 57,535 835,845 893,380 52,048 795,636 847,684
Additions 3,439 53,392 56,831 596 74,584 75,180
Disposals – (55,171) (55,171) (1,242) (34,375) (35,617)
Impairment – (73,999) (73,999) –––
Fair value gains recognised in
other comprehensive income 8,899 – 8,899 6,133 – 6,133
At 31st May 69,873 760,067 829,940 57,535 835,845 893,380
The additions and disposals in investments in subsidiary undertakings reflect the allocation of share-based payments from the
Company to its subsidiaries under IFRIC 11. Notes to the financial statements
Continued
42 City of London Investment Group Plc Annual Report 2010
13 Other financial assets (non-current) continued
The impairment reflects the reduction in share capital of City of London Unit T rust Managers Limited, a fully owned dormant
subsidiary which will be wound up in due course.
Holding of
Subsidiary undertakings Activity ordinary shares
City of London Investment Management Company Limited Management of funds 100%
City of London Unit T rust Managers Limited Dormant company 100%
City of London US Investments Limited Holding company for US companies 100%
City of London Investment Management Company Limited holds 100% of the ordinary shares in the following:
City of London Latin America Limited Dormant company
City of London Investment Management Singapore PTE Ltd Dormant company
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
All the companies above are incorporated in Great Britain and registered in England and Wales except for City of London
Investment Management Singapore PTE Ltd which is incorporated and registered in Singapore.
All of the above mentioned companies 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, except for City of London Unit T rust Managers Limited
which is carried at cost less impairment.
14 Deferred tax asset
Share-based payments Impairment Total
Group Company Group Company Group Company
At 1st June 2008 3,208,323 811,963 –– 3,208,323 811,963
Credit/(charge) to income 46,390 7,527 66,861 66,861 113,251 74,388
Credit/(charge) to equity (1,715,719) (555,614) –– (1,715,719) (555,614)
At 1st June 2009 1,538,994 263,876 66,861 66,861 1,605,855 330,737
Credit/(charge) to income 31,560 10,147 (44,637) (44,637) (13,077) (34,490)
Credit/(charge) to equity (89,280) 23,266 –– (89,280) 23,266
At 31st May 2010 1,481,274 297,289 22,224 22,224 1,503,498 319,513
15 Trade and other receivables
Group Company
2010 2009 2010 2009
£ £ £ £
T rade receivables 3,871,637 2,508,242 – –
Amounts owed by Group undertakings – – 500,962 817,885
Other debtors 108,874 68,828 89,072 57,988
Prepayments 385,488 291,328 213,513 186,828
4,365,999 2,868,398 803,547 1,062,701 City of London Investment Group Plc Annual Report 2010 43
16 Available-for-sale financial assets
2010 2009
Group and Company £ £
Unlisted investments at market value 3,595,873 431,365
Unlisted investments at cost 3,307,673 670,155
17 Trade and other payables
Group Company
2010 2009 2010 2009
£ £ £ £
T rade creditors 71,894 13,133 – –
Sundry creditors 467,435 209,886 65,775 15,978
Amounts owed to Group undertakings – – 3,800,462 1,980,420
Other taxation and social security 39,712 118,339 39,712 118,339
Accruals and deferred income 3,308,740 2,007,976 1,175,519 705,129
3,887,781 2,349,334 5,081,468 2,819,866
18 Deferred tax liability
Group and Company £
At 1st June 2008 193,177
Released due to decrease in value of available-for-sale investments (191,465)
Released on disposal of available-for-sale investments (288)
At 1st June 2009 1,424
Increased due to gain in fair value of available-for-sale investments 103,779
At 31st May 2010 105,203
19 Share capital
2010 2009
Group and Company £ £
Allotted, called up and fully paid
At start of year 25,981,603 (2009 – 25,360,500) Ordinary shares of 1p each 259,816 253,605
Dilutive share options exercised; 426,200 (2009 – 621,103) 4,262 6,211
Shares repurchased and cancelled; 439,000 (2009 – nil) (4,390) –
At end of year 25,968,803 (2009 – 25, 981,603) Ordinary shares of 1p each 259,688 259,816
Fully paid ordinary shares carry one vote per share and carry a right to dividends. Notes to the financial statements
Continued
44 City of London Investment Group Plc Annual Report 2010
20 Investment in own shares
Investment in own shares relates to City of London Investment Group Plc shares held by an Employee Benefit T rust on behalf
of City of London Investment Group Plc.
At 31st May 2010 the T rust held 1,589,158 ordinary 1p shares (2009 – 1,617,650), of which 1,427,533 ordinary 1p shares
(2009 – 1,262,375) were subject to options in issue.
21 Dividend
2010 2009
£ £
Dividends paid:
Interim dividend of 7p per share (2009 – 5p) 1,727,652 1,197,492
Final dividend in respect of year ended:
31st May 2009 of 10p per share (2008 – 13.5p) 2,455,040 3,220,587
4,182,692 4,418,079
A final dividend of 15p per share has been proposed, payable on 19th November 2010, subject to shareholder approval, to
shareholders who are on the register of members on 29th October 2010.
22 Profit of the Parent Company
As permitted by section 408 of the Companies Act 2006, the income statement of the Parent Company is not presented as part of
these financial statements. The Parent Company’s profit for the financial period, amounted to £5,437,758 (2009 – £2,742,961).
23 Operating lease commitments
At 31st May 2010 the Group had the following commitments for future minimum lease payments under non-cancellable
operating leases:
Group Company
Land and Motor Land and Motor Land and Motor Land and Motor
buildings vehicle buildings vehicle buildings vehicle buildings vehicle
2010 2010 2009 2009 2010 2010 2009 2009
££ ££ ££ ££
Within one year 297,996 – 316,960 8,200 174,384 – 174,384 –
In the second to fifth years inclusive 506,226 – 652,256 – 363,301 – 537,685 –
804,222 – 969,216 8,200 537,685 – 712,069 –
Operating lease payments relating to land and buildings represent rents payable by the Group for its various offices and apartment
rental for staff posted overseas. The Group enters into formal occupational property leases ranging from one to ten years. City of London Investment Group Plc Annual Report 2010 45
24 Share-based payments
(a) The estimated fair values of options which fall under IFRS2, and the inputs used in the Binomial pricing model to calculate
those fair values, are as follows:
Number
Expected Risk-free Share price Exercise Dividend Estimated originally
Date of grant Expiry date life (yrs) rate at grant (£) price (£) Volatility yield fair value (£) granted
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
01/10/2008 01/10/2018 3.00 4.0720% 2.3000 2.7500 32.9241% 7.00% 0.2401 312,000
13/01/2009 13/01/2019 3.00 1.9645% 1.6300 2.7500 41.9187% 11.82% 0.1324 20,000
05/06/2009 05/06/2019 6.50 3.2805% 2.3000 2.3000 32.7809% 8.04% 0.5134 242,000
18/01/2010 18/01/2020 6.50 3.4428% 3.1400 3.1400 30.9664% 4.67% 0.8356 259,000
Historically, the expected life of the options has been assumed to be three years, however this assumption has been revised for
the latest grants to six and a half 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. Historically, 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. Now that
there is sufficient share price data for the Company it has been possible to calculate its expected volatility and this has been used
to calculate the fair value of awards granted on and after 5th June 2009.
(b) The number and weighted average exercise price of share options for each of the following groups is as follows:
2010 2009
Weighted average Weighted average
Number exercise price Number exercise price
Outstanding at the beginning of the year 3,135,022 1.02 3,958,310 0.71
Granted during the year 501,000 2.73 332,000 2.75
Forfeited during the year 64,000 2.63 138,750 1.30
Exercised during the year 698,042 0.6 1,016,538 0.34
Expired during the year –– ––
Outstanding at the end of the year 2,873,980 1.38 3,135,022 1.02
Exercisable at the end of the year 2,149,980 0.87 2,548,022 0.63
The weighted average share price at the date of exercise
for share options exercised during the year was 2.85 2.15 Notes to the financial statements
Continued
46 City of London Investment Group Plc Annual Report 2010
25 Related party transactions
(i) Remuneration of key management personnel
The remuneration of the directors who are the key management personnel of the Group is provided in the directors’ interests
and remuneration report on pages 22 to 24 and in note 5.
In addition, the City of London Employee Share Option T rust purchased ordinary shares from the following directors during the year:
D M Cardale 50,000 shares at £2.95
C M Yuste 33,350 shares at £2.95
(ii) Intra-group transactions
During the period the Company received from its subsidiaries £6,500,876 (2009 – £5,460,306) in respect of management
service charges and dividends of £5,383,363 (2009 – £3,220,000).
Amounts outstanding between the Company and its subsidiaries as at 31st May 2010 are given in notes 15 and 17.
26 Financial instruments
The Group’s financial assets include cash and cash equivalents, investments and other receivables. Its financial liabilities include
accruals and other payables. The fair value of the Group’s financial assets and liabilities is materially the same as the book value.
(i) Financial instruments by category
The tables below show the Group and Company’s financial assets and liabilities as classified under IAS39:
Group Assets at fair 
Loans and value through Available-
31st May 2010 receivables profit or loss for-sale Total
Assets as per statement of financial position ££££
Other financial assets –– 76,679 76,679
T rade and other receivables 4,365,999 –– 4,365,999
Available-for-sale financial assets –– 3,595,873 3,595,873
Cash and cash equivalents 4,774,473 –– 4,774,473
Total 9,140,472 – 3,672,552 12,813,024
Liabilities at Financial
fair value liabilities at
through amortised
profit or loss cost Total
Liabilities as per statement of financial position £££
T rade and other payables 401,660 3,486,121 3,887,781
Total 401,660 3,486,121 3,887,781 City of London Investment Group Plc Annual Report 2010 47
26 Financial instruments continued
Assets at fair 
Loans and value through Available-
31st May 2009 receivables profit or loss for-sale Total
Assets as per statement of financial position ££££
Other financial assets –– 57,535 57,535
T rade and other receivables 2,868,398 –– 2,868,398
Available-for-sale financial assets –– 431,365 431,365
Cash and cash equivalents 4,718,766 –– 4,718,766
Total 7,587,164 – 488,900 8,076,064
Liabilities at Financial
fair value liabilities at
through amortised
profit or loss cost Total
Liabilities as per statement of financial position £££
T rade and other payables 193,908 2,155,426 2,349,334
Total 193,908 2,155,426 2,349,334
Company Assets at fair 
Investment Loans and value through Available-
31st May 2010 in subsidiaries receivables profit or loss for-sale Total
Assets as per statement of financial position £££££
Other financial assets 760,067 –– 69,873 829,940
T rade and other receivables – 803,547 –– 803,547
Available-for-sale financial assets ––– 3,595,873 3,595,873
Cash and cash equivalents – 255,677 –– 255,677
Total 760,067 1,059,224 – 3,665,746 5,485,037
Liabilities at Financial
fair value liabilities at 
through amortised
profit or loss cost Total
Liabilities as per statement of financial position £££
T rade and other payables – 5,081,468 5,081,468
Total – 5,081,468 5,081,468 Notes to the financial statements
Continued
48 City of London Investment Group Plc Annual Report 2010
26 Financial instruments continued
Assets at fair 
Investment Loans and value through Available-
31st May 2009 in subsidiaries receivables profit or loss for-sale Total
Assets as per statement of financial position £££££
Other financial assets 835,845 –– 57,535 893,380
T rade and other receivables – 1,062,701 –– 1,062,701
Available-for-sale financial assets ––– 431,365 431,365
Cash and cash equivalents – 108,638 –– 108,638
Total 835,845 1,171,339 – 488,900 2,496,084
Liabilities at Financial
fair value liabilities at 
through amortised
profit or loss cost Total
Liabilities as per statement of financial position £££
T rade and other payables – 2,819,866 2,819,866
Total – 2,819,866 2,819,866
(ii) Fair value measurements recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value,
grouped into levels 1 to 3 based on the degree to which the fair value is observable.
• Level 1: fair value derived from quoted prices (unadjusted) in active markets for identical assets and liabilities.
• Level 2: fair value derived from inputs other than quoted prices included within level 1 that are observable for the assets or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: fair value derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data.
The fair values of the financial instruments are determined as follows:
• Investments in own funds are determined with reference to the net asset value (NAV) of the fund. Where the NAV is a
quoted price the fair value is shown under level 1, where the NAV is not a quoted price the fair value is shown under level 2.
• Forward currency trades are valued using the prevailing quoted exchange rates and are shown under level 2.
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to
the fair value measurement.
Level 1 Level 2 Level 3 Total
Group ££££
Available-for-sale financial assets
Investment in own funds 1,816,491 1,804,472 – 3,620,963
Total 1,816,491 1,804,472 – 3,620,963
Financial liabilities at fair value through profit or loss
Forward currency trades – 401,660 – 401,660
Total – 401,660 – 401,660 City of London Investment Group Plc Annual Report 2010 49
26 Financial instruments continued
Level 1 Level 2 Level 3 Total
Company £ £££
Available-for-sale financial assets
Investment in own funds 1,816,491 1,797,666 – 3,614,157
Total 1,816,491 1,797,666 – 3,614,157
There were no transfers between any of the levels in the reporting period.
All fair value gains and losses included in other comprehensive income relate to the investment in own funds.
Where there is an impairment in the investment in own funds the loss is reported in the income statement. Due to improved
market conditions, the Group has written back £159,418 of the £238,790 impairment charge recognised in 2009.
The fair value loss on the forward currency trades is offset in the income statement by the foreign exchange gain on other currency
assets and liabilities held during the year and at year end. The net gain reported for the year is £177,664 (2009 – net loss £94,256).
(iii) Foreign currency risk
Most of the Group’s revenues, and a significant part of its expenses, are denominated in currencies other than sterling,
principally US 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 2010, the Group had net asset balances of US$6,854,423 (2009 – US$4,422,628), offset by forward sales
totalling US$6,500,000 (2009 – US$3,600,000), and net asset balances of C$411,851 (2009 – C$371,190).
Had the US Dollar strengthened or weakened against Sterling as at 31st May 2010 by 10%, with all other variables held
constant, there would have been no material impact on the Group’s net assets, because the US Dollar position net of forward
sales is minimal.
Further details on the effects on the Group’s post-tax profits due to movements in the US Dollar/Sterling exchange rate have
been demonstrated in the Financial review on page 15.
(iv) Market risk
Changes in market prices, such as foreign exchange rates and equity prices will affect the Group’s income and the value of its
investments.
The Group is, from time to time, exposed to market risk directly via its investment holdings and indirectly via its assets under
management, from which its fee income is derived. To hedge against any potential loss in fee income due to a fall in the
markets, the Group will look to invest in out of the money put options on the emerging markets index. The purchase and sale
of these options are subject to limits established by the Board and are monitored on a regular basis. The investment management
and settlement functions are totally segregated.
The cost of hedging recognised in the Group income statement for the period is £32,027 (2009 – income £21,194). 50 City of London Investment Group Plc Annual Report 2010
Notes to the financial statements
Continued
26 Financial instruments continued
(v) Credit risk
The majority of debtors relate to management fees due from funds and segregated account holders. As such the Group is able to
assess the credit risk of these debtors as minimal. For other debtors a credit evaluation is undertaken on a case by case basis.
The Group has zero experience of bad or overdue debts.
The majority of cash and cash equivalents held by the Group are with leading UK banks. The credit risk is managed by carrying
out regular reviews of each institution’s credit rating and of their published financial position. Given their high credit ratings,
management does not expect any counterparty to fail to meet its obligations.
(vi) Liquidity risk
The Group’s liquidity risk is minimal due to the liquidity profile of its debtors and creditors being evenly matched and its
strategy to maximise its cash position. In addition, the Group’s current available-for-sale assets represent investments in funds
that it manages and can be liquidated immediately if required.
(vii) Interest rate risk
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 and forward currency contracts. 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 2010
the Group held £4,774,473 (2009 – £4,718,766) in cash balances, of which £4,168,469 (2009 – £4,693,287) was held in bank
accounts which attract variable interest rates. The effect of a 100 basis points increase/decrease in interest rates on the Group’s net
assets would not be material.
(viii) Capital risk management
The Group manages its capital to ensure that all entities within the Group are able to operate as going concerns and exceed any
minimum externally imposed capital requirements. The capital of the Group and Company consists of equity attributable to the
equity holders of the Parent Company, comprising issued share capital, share premium, retained earnings and other reserves as
disclosed in the statement of changes in equity on page 30.
The Group’s principal operating subsidiary company, City of London Investment Management Company Ltd is subject to the
requirements of the Financial Services Authority (“FSA”) in the UK. This subsidiary held surplus capital over its requirements
throughout the year.  City of London Investment Group Plc Annual Report 2010 51
Notice is hereby given that the Annual General Meeting of City of London Investment Group Plc (the “Company”) will be held at
77 Gracechurch Street, London EC3V 0AS on Monday 25th October 2010 at 11.30 am for the following purposes:
Ordinary business
1. To receive and adopt the financial statements for the year ended 31st May 2010 together with the reports of the directors and
auditors thereon.
2. Having last been re-elected at the 2007 Annual General Meeting, to re-elect David Michael Cardale as a director of the
Company in accordance with article 132(a) of the Company’s articles of association.
3. Having last been re-elected at the 2007 Annual General Meeting, to re-elect Carlos Manuel Yuste as a director of the Company
in accordance with article 132(a) of the Company’s articles of association.
4. Having served longer than nine years as a non-executive director, to re-elect Andrew John Davison as a director of the Company
in accordance with section A.7.2 of the Combined Code.
5. Having served longer than nine years as a non-executive director, to re-elect George Alan Robb as a director of the Company in
accordance with section A.7.2 of the Combined Code.
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 resolution 7 as an ordinary resolution and resolutions 8 and 9 as special resolutions:
7. THAT, in accordance with section 551 of the Companies Act 2006, the directors be generally and unconditionally authorised to
exercise all powers conferred pursuant to Article 10 of the Company’s Articles of Association to allot shares in the Company
(which for this purpose includes grants of rights to subscribe for or to convert any security into shares) up to an aggregate nominal
amount of £86,500.00 (representing approximately one third of the Company’s issued ordinary capital at the time of this
resolution), provided that this authority shall, unless renewed, varied or revoked by the Company, expire at the conclusion of the
Company’s Annual General Meeting to be held in 2011, save that the Company may, before such expiry, make an offer of
agreement which would or might require shares to be allotted (or rights to be granted) and the directors may allot shares (or grant
rights) in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired.
This authority is in substitution for all previous authorities conferred on the directors in accordance with section 80 of the
Companies Act 1985 or section 551 of the Companies Act 2006.
8. THAT, subject to the passing of resolution 7 and in accordance with section 570 of the Companies Act 2006, the directors be
generally and unconditionally authorised to exercise all powers conferred pursuant to Article 10 of the Company’s Articles of
Association to allot equity securities (as defined in section 560 of the Companies Act 2006) pursuant to the authority conferred by
resolution 7, as if the pre-emption provisions of section 561(1) of the Companies Act 2006 did not apply to any such allotment,
provided that this power shall be limited to the allotment of equity securities up to an aggregate nominal amount of £13,000.00
(representing approximately 5% of the Company’s issued ordinary capital at the time of this resolution), provided that this
authority shall, unless renewed, varied or revoked by the Company, expire at the conclusion of the Company’s Annual General
Meeting to be held in 2011, save that the Company may, before such expiry, make an offer of agreement which would or might
require shares to be allotted (or rights to be granted) and the directors may allot shares (or grant rights) in pursuance of such offer
or agreement notwithstanding that the authority conferred by this resolution has expired.
Notice of Annual General Meeting 52 City of London Investment Group Plc Annual Report 2010
Notice of Annual General Meeting
Continued
9. THAT the Company be generally and unconditionally authorised to make market purchases (within the meaning of section
693(4) of the Companies Act 2006) of any of its ordinary shares of £0.01 (1p) provided that:
(a) the maximum number of ordinary shares which may be purchased is 2,596,500 (representing approximately 10% 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;
(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 ordinary share is
contracted to be purchased;
(d) unless previously renewed, revoked or varied, this authority shall expire at the conclusion of the Company’s next annual
general meeting, or on 25th April 2012 (whichever is the earlier),
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
9th September 2010
Registered office: 77 Gracecurch Street, London EC3V 0AS
Registered in England and Wales No 2685257 Notes to the Notice of Annual General Meeting
City of London Investment Group Plc Annual Report 2010 53
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, PXS,
34 Beckenham Road, Beckenham, Kent BR3 4TU no later than 11.30 am on 23rd October 2010. 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 6.00 pm on 23rd October 2010.
The rights of members to attend and vote at the meeting will be determined by reference to entries on the register of members
at 6.00 pm on 23rd October 2010. 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 order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at the meeting so that
(i) if a corporate shareholder has appointed the Chairman of the meeting as its corporate representative with instructions to
vote on a poll in accordance with the directions of all of the other corporate representatives for that shareholder at the
meeting, then on a poll those corporate representatives will give voting directions to the Chairman and the Chairman will
vote (or withhold a vote) as corporate representative in accordance with those directions; and
(ii) if more than one corporate representative for the same corporate shareholder attends the meeting but the corporate
shareholder has not appointed the Chairman of the meeting as its corporate representative, a designated corporate
representative will be nominated, from those corporate representatives who attend, who will vote on a poll and the other
corporate representatives will give voting directions to that designated corporate representative. Corporate shareholders are
referred to the guidance issued by the Institute of Chartered Secretaries and Administrators on proxies and corporate
representatives – www.icsa.org.uk – for further details of this procedure. The guidance includes a sample form of
representation letter if the Chairman is being appointed as described in (i) above.
4. The right to appoint a proxy does not apply to persons whose ordinary shares are held on their behalf by another person and
who have been nominated to receive communication from the Company in accordance with section 146 of the Companies Act
2006 (‘nominated persons’). Nominated persons may have a right under an agreement with the registered shareholder who holds
shares on their behalf to be appointed (or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not
have such a right, or do not wish to exercise it, they may have a right under such an agreement to give instructions to the person
holding the ordinary shares as to the exercise of voting rights.
5. 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.
6. 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.
(d) Copies of the Company’s articles of association. Explanation of the business of the Annual General Meeting
54 City of London Investment Group Plc Annual Report 2010
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
2010 together with the directors’ report and the independent auditors’ report thereon.
Re-appointment of directors (Resolutions 2 – 5)
Articles 132 and 137 of the Company’s articles of association require that at each annual general meeting, any director who has been
in office for more than three years shall retire by rotation and that any director who has been appointed by the directors since the
last annual general meeting of the Company will stand for re-appointment. In addition, such further directors (if any) shall retire by
rotation as would bring the number retiring by rotation up to one-third of the number of directors in office as at 9th September 2010
(or if their number is not a multiple of three, the number nearest to but not greater than one third).
Article 138 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 resolution 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.
Section A.7.2 of the Combined Code (which is replaced by Section B.7.1 of the UK Corporate Governance Code for financial years
beginning on or after 29th June 2010) provides that non-executive directors may serve longer than nine years (e.g. three three year
terms), subject to annual re-election.
Brief biographical details of all the directors may be found on page 19 of the annual report.
Re-appointment of auditors (Resolution 6)
The Company is required at each general meeting at which its annual accounts and reports are laid before the shareholders (an
“accounts meeting”) to appoint auditors for the next financial year to hold office from the conclusion of that accounts meeting until
the conclusion of the next accounts 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 for the financial
year ending 31st May 2011, at a fee to be agreed by the board of directors.
Authority to allot shares (Resolution 7) 
Resolution 7 will be proposed as an ordinary resolution, in accordance with section 551 of the Companies Act 2006, to authorise
the directors generally to allot shares and rights over shares up to an aggregate nominal value of £86,500.00 representing
approximately one third of the existing issued ordinary share capital as at the date of this resolution.
Such authority will expire at the conclusion of the Annual General Meeting to be held in 2011, unless renewed, varied or revoked
by the Company prior to or on that date.
Disapplication of pre-emption rights (Resolution 8) 
Resolution 8 will be proposed as a special resolution, in accordance with section 570 of the Companies Act 2006, to authorise the
directors of the Company to allot a limited number of shares for cash other than on a pre-emptive basis, up to an aggregate nominal
value of £13,000.00, representing approximately 5% of the issued ordinary share capital at the time of this resolution. This authority
will expire at the conclusion of the Annual General Meeting to be held in 2011, unless renewed, varied or revoked by the Company
prior to or on that date.
Your Board of Directors is aware of the institutional guidelines which state that no more than 7.5% of a company’s ordinary share
capital should be issued for cash on a non pre- emptive basis in any three year rolling period. Over the last three years, the directors
have not allotted shares for cash on a non pre-emptive basis other than pursuant to employee share schemes. City of London Investment Group Plc Annual Report 2010 55
Purchase by the Company of its own shares (Resolution 9)
Under section 701 of the Companies Act 2006, 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 9, which will be proposed as a special resolution, will give the directors the authority to purchase issued
shares of the Company under section 701 of the Companies Act 2006. The authority contained in this Resolution will be limited to
an aggregate nominal value of £25,965 which represents approximately 10% of the issued ordinary share capital of the Company as
at the current time. 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 2011 or on 25th April 2012 (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. Professional advisers
56 City of London Investment Group Plc Annual Report 2010
Nominated advisers
and joint brokers
Singer Capital Markets
One Hanover Street
London
W1S 1YZ
Joint brokers
Canaccord Genuity Limited
Cardinal Place
7th Floor
80 Victoria Street
London
SW1E 5JL
Auditors
Moore Stephens LLP
Chartered Accountants
150 Aldersgate Street
London
EC1A 4AB
Bankers
The Royal Bank of Scotland plc
London City Office
62-63 Threadneedle Street
London
EC2R 8LA
Financial communications
Tavistock Communications
131 Finsbury Pavement
London
EC2A 1NT
Registrars
Capita Registrars 
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire
HD8 0GA
77 Gracechurch Street
London
EC3V 0AS
Registered office City of London Investment Group Plc is an
established asset management group which has
built its reputation, with an institutional
client focus, by specialising in emerging market
closed-end fund investment. In recent years the
Group has by way of diversification successfully
added natural resource and developed market
strategies to its product range. City of London
operates its business from offices in London,
the US, Singapore and Dubai.
Highlights 1
City of London coming of age 2
Chairman’s statement 4
Chief Executive Officer’s review 8
Financial review 14
Board of directors 18
Corporate governance report 20
Report of the directors 22
Statement of directors’ 
responsibilities 26
Independent auditors’ report 27
Consolidated income statement 28
Consolidated and Company statement
of comprehensive income 28
Consolidated and Company statement
of financial position 29
Consolidated and Company statement
of changes in equity 30
Consolidated and Company
cash flow statement 31
Notes to the financial statements 32
Notice of Annual General Meeting 51
Notes to the Notice of Annual
General Meeting 53
Professional advisers 56
Contents
Designed and produced by fourthquarter Printed by SV.two L O N D O N P H I L A D E L P H I A S I N G A P O R E D U B A I L O N D O N P H I L A D E L P H I A S I N G A P O R E D U B A I
city of London
i n v e s t m e n t g r o u p p L c
ANNUAL RE PORT & ACCOUNTS 
2010
London office
77 Gracechurch Street
London
EC3V 0AS
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
Dubai office
Unit 2, 2nd Floor
The Gate Village Building 1
Dubai International Financial Centre
PO Box 506695
Dubai
United Arab Emirates
Telephone: + 971 (0)4 423 1780
Facsimile: + 971 (0)4 437 0510
www.citlon.co.uk
ANNUAL REPORT & ACCOUNTS 2010 CITY OF LONDON INVESTMENT GROUP PLC