Final Results

City of London Investment Trust PLC 04 September 2002 4 September 2002 THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2002 Highlights • City of London (net asset value total return down 11.4%) outperformed the FTSE All-Share Index (total return down 14.8%). • Dividends per share up 5.9%. Extracts from the Chairman's Statement:- This is my first year as your Chairman, following the retirement of Jim Titcomb at the last Annual General Meeting. Jim will be a hard act to follow but I will endeavour to deliver shareholder value through both good and difficult times. David Hubbard, who with great distinction has served shareholders as a director since 1989, is retiring at this year's Annual General Meeting. I would like to thank him for the wise counsel he has given us over many years. We are delighted that Helen Weir joined the Board in March. Helen is Group Finance Director of Kingfisher plc. Performance The year under review was a testing one for investors worldwide. It could perhaps be seen as an antidote to the optimism of the late 1990s which led to excessive capital expenditure in the telecommunications, media and technology sectors and disappointing subsequent returns. In addition, the loose accounting policies and corporate scandals that have been revealed in the United States have been a major blow to investor confidence. Against this sombre background, City of London's performance has been relatively good, reflecting the focus on value. A negative total return was limited to 11.4% whilst the FTSE All-Share Index negative return was 14.8%. This is the fourth year out of the last five that City of London's performance has exceeded the FTSE All-Share Index. Dividends A fourth interim dividend of 2.00p was paid on 31 August 2002, making a total net dividend for the year of 7.94p. This is an increase of 5.9% over the previous year, which is significantly better than the dividend growth for the FTSE All-Share Index of around 1.5% over the same period. It also continues the Company's unbroken record of annual dividend increases since 1966. - MORE - - 2 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2002 In the year to 30 June 2002, the Company's investment income decreased by approximately 11%. This was caused by dividend cuts from a few of the companies in which we are invested, an £0.83m fall in special dividends received and some companies adopting a distribution policy that includes both dividends and share buy-backs. Shareholders should note that the Company had built up revenue reserves of £12.27m and, in the year to 30 June 2002, £0.95m was taken from this reserve to supplement the income received and enable the Company to pay the increased dividend. Going forward, your Board is aware that many shareholders rely upon annual dividend growth and will continue to consider using part of these reserves to supplement dividend flows when income received by the Company is disappointing. In the current year, faced with an uncertain outlook for income into the Company, we are forecasting a minimum increase of 0.8% in the Company's total net dividend to 8.00p, payable at the new quarterly rate of 2.00p. The Board will decide whether a further increase is appropriate at the time of the fourth interim, when the total income received by the Company is known. Management Fee and Expenses Our new management agreement involved a reduction in the base fee, but introduced a performance fee payable in the event of outperformance relative to the total return on the FTSE All-Share Index. This year we have outperformed and therefore a performance fee will become payable to our managers, Henderson Global Investors. This has been charged to the capital account as it has been earned from capital outperformance of the index. For the year to 30 June 2002, excluding interest but including the proportion of the management fees which is charged to capital, total expenses amounted to 0.68% of assets under management. Excluding the performance fee, total expenses amounted to 0.42% of assets under management. Savings City of London sets out to be an attractive and straightforward long-term savings vehicle for private investors. Over recent years we have received excellent support for our Share Savings Plan, PEPs and ISAs. - MORE - - 3 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2002 Outlook The FTSE-All Share Index has fallen by some 39% since its peak at the end of December 1999. Part of this fall has been caused by a downgrading of profit expectations, especially in the telecommunications, media and technology sectors. In addition, there has been a derating of equities. This has taken equity yields, when compared with bond yields, to a level that indicates that equities are relatively cheap based upon differentials over the past decade. The dividend yield for the UK stock market now appears to offer good value relative to cash. The main threat is a further global economic downturn but this should be countered by the easing of monetary and fiscal policy in many of the major economies of the world, including the UK. Overall, prospects for UK corporate profits growth are likely to improve although some sectors will be adversely affected by tough competitive conditions. Annual General Meeting ("AGM") Shareholders are invited to the AGM which will take place on Friday 18 October at 4 Broadgate, London EC2M 2DA. The AGM will start at 12.00 noon and include a presentation from the Portfolio Manager and a buffet lunch. S M de Zoete - MORE - - 4 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2002 Statement of Total Return (incorporating the revenue account) for the year ended 30 June 2002 Year ended 30 June 2002 Year ended 30 June 2001 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Total capital losses from investments - (72,856) (72,856) - (6,257) (6,257) Income from fixed asset investments 17,697 - 17,697 19,800 - 19,800 Other interest receivable and similar 156 - 156 217 - 217 income ---------- ---------- ---------- ---------- ---------- ---------- Gross revenue and capital losses 17,853 (72,856) (55,003) 20,017 (6,257) 13,760 Management fees (516) (2,535) (3,051) (730) (1,704) (2,434) Other administrative expenses (400) - (400) (373) - (373) ---------- ----------- ---------- ---------- ----------- ---------- Net return/(loss) on ordinary activities before interest payable and taxation 16,937 (75,391) (58,454) 18,914 (7,961) 10,953 Interest payable (1,310) (3,056) (4,366) (1,286) (3,000) (4,286) ---------- ----------- ---------- --------- ----------- ---------- Net return/(loss) on ordinary activities before taxation 15,627 (78,447) (62,820) 17,628 (10,961) 6,667 Taxation on net return on ordinary (85) 85 - (117) 117 - activities ----------- ----------- ---------- ----------- ----------- ---------- Net return/(loss) on ordinary activities after taxation 15,542 (78,362) (62,820) 17,511 (10,844) 6,667 Dividends : Preference and preferred ordinary stocks (190) - (190) (190) - (190) ----------- ----------- ---------- ---------- ------------ ---------- Net return/(loss) attributable to the 15,352 (78,362) (63,010) 17,321 (10,844) 6,477 ordinary shares ----------- ----------- ---------- ---------- ------------ ---------- Dividends: Ordinary shares Three interim payments of 1.98p (2001: (12,192) - (12,192) (11,368) - (11,368) 1.84p) Fourth interim payment of 2.00p (2001: (4,105) - (4,105) (4,067) - (4,067) 1.98p) ----------- ----------- ---------- ----------- ----------- ---------- (16,297) - (16,297) (15,435) - (15,435) ----------- ----------- ---------- ----------- ------------ ---------- Transfer (from)/to reserves (945) (78,362) (79,307) 1,886 (10,844) (8,958) ====== ====== ====== ====== ====== ====== Return/(loss) per ordinary share (note 1) 7.48p (38.18)p (30.70)p 8.40p (5.26)p 3.14p ====== ====== ====== ====== ====== ====== The revenue columns of this statement represent the revenue accounts of the Company. - MORE - - 5 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2002 Balance Sheet at 30 June 2002 30 June 30 June 2002 2001 £'000 £'000 Fixed asset investments Listed at market value in the United Kingdom 513,924 592,747 Investment in subsidiary undertakings 347 347 ------------- ------------- 514,271 593,094 ------------- ------------- Current assets Debtors 2,332 2,100 Cash at bank 52 544 ------------- ------------- 2,384 2,644 ------------- ------------- Creditors: amounts falling due within one year (7,623) (7,054) ------------- ------------- Net current liabilities (5,239) (4,410) ------------- ------------- Total assets less current liabilities 509,032 588,684 Creditors: amounts falling due after more than one year (46,000) (46,000) ------------- ------------- Total net assets 463,032 542,684 ======= ======= Capital and reserves Called up share capital 53,398 53,436 Share premium account 28,249 28,249 Other capital reserves 370,063 448,732 Revenue reserve 11,322 12,267 ------------- ------------- Shareholders' funds (including non-equity interests 463,032 542,684 of £2,086,000) ======= ======= Net asset value per ordinary share 224.58p 263.19p ======= ======= - MORE - - 6 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2002 Cash Flow Statement for the year ended 30 June 2002 2002 2002 2001 2001 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 15,374 17,532 Servicing of finance Debenture interest paid (4,265) (3,583) Bank and loan interest paid (96) (21) Dividends paid on preference stock (190) (190) ---------- ---------- Net cash outflow from servicing of finance (4,551) (3,794) Taxation UK income tax recovered/(paid) 18 (783) ---------- ---------- Net tax recovered/(paid) 18 (783) Financial investment Purchases of investments (71,264) (80,434) Sales of investments 76,411 90,023 ---------- ---------- Net cash inflow from financial investment 5,147 9,589 Equity dividends paid (16,259) (15,202) ---------- ---------- Net cash (outflow)/inflow before financing (271) 7,342 Financing Cost of repurchases of ordinary shares (345) (7,145) ---------- ---------- Net cash outflow from financing (345) (7,145) ---------- ---------- (Decrease)/increase in cash (616) 197 ====== ======== - MORE - - 7 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2002 Notes: 1. Return/(loss) per Ordinary Share Revenue return per ordinary share is based on earnings attributable to the ordinary shares of £15,352,000 (2001: £17,321,000) and on the weighted average number of ordinary shares in issue during the year of 205,261,977 (2001: 206,295,670). Capital loss per ordinary share is based on the net capital losses for the year of £78,362,000 (2001: loss of £10,844,000) and on the weighted average number of ordinary shares in issue during the year of 205,261,977 (2001: 206,295,670). 2. Issued Share Capital There were 205,251,018 ordinary shares of 25p in issue at 30 June 2002 (30 June 2001: 205,401,018) for the purpose of calculating the net asset value per ordinary share. 3. Share Buy-Backs During the year the Company purchased in the market for cancellation 150,000 of its own issued ordinary shares at a total cost of £345,000, leaving a balance of 205,251,018 ordinary shares for the purpose of the calculation of the net asset value per ordinary share. 4. 2002 Accounts The preliminary figures for the year ended 30 June 2002 are compiled from an extract of the latest accounts and do not constitute statutory accounts as defined by section 240 of the Companies Act 1985. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. 5. 2001 Accounts The figures and financial information for the year ended 30 June 2001 are compiled from an extract of the latest published accounts and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. 6. Annual Report The full annual report and accounts will be posted to shareholders in September 2002 and copies will be available thereafter from the Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA. The Annual General Meeting will be held on Friday 18 October 2002 at 12.00 noon. - MORE - - 8 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2002 The 40 largest equity investments (convertibles and all classes of equity in any one company being treated as one investment) were as follows : Valuation at Valuation at 30 June 2002 30 June 2002 £'000 £'000 BP 34,437 Anglo American 5,455 GlaxoSmithKline 29,778 BAE Systems 5,363 Shell Transport & Trading 29,700 Cadbury Schweppes 4,915 HSBC 26,030 Scottish & Southern Energy 4,867 Royal Bank of Scotland 21,353 BG 4,854 Barclays 17,664 Six Continents 4,776 Vodafone 14,400 Lattice 4,702 AstraZeneca 14,395 Reckitt Benckiser 4,601 Diageo 12,780 National Grid 4,194 Lloyds TSB 11,754 Boots 4,001 British American Tobacco 11,280 Wolseley 3,990 HBOS 10,650 GUS 3,916 Land Securities 8,630 Allied Domecq 3,872 Tesco 8,586 Imperial Tobacco 3,719 Aviva 8,440 Smith & Nephew 3,640 Rio Tinto 6,616 Johnston Press 3,636 Legal & General 6,537 Slough Estates 3,625 BT 6,048 Associated British Ports 3,600 Prudential 6,000 Compass 3,582 Unilever 5,980 Hammerson 3,321 These investments represent 73.10% of the portfolio. - ENDS - For further information please contact : Job Curtis Portfolio Manager, The City of London Investment Trust plc Telephone: 020 7818 4367 Stephen Westwood Head of Investment Trusts, Henderson Global Investors Telephone: 020 7818 5517 Stephen Phillips Investor Relations Manager, Henderson Global Investors Telephone: 020 7818 6417 or Mark Vickery Henderson Press Office Telephone: 020 7818 4222 Issued by The City of London Investment Trust plc This information is provided by RNS The company news service from the London Stock Exchange

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