Final Results

City of London Investment Trust PLC 03 September 2003 2 September 2003 THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2003 Total Returns 30 June 2003 30 June 2002 • Net asset value per ordinary share ("NAV") -11.1% -11.4% • FTSE All-Share Index -9.7% -14.8% • Ordinary share price -9.0% -5.7% Dividend (per share) 8.07p 7.94p Extracts from the Chairman's Statement:- Performance The year under review was a difficult one for the UK stock market. The long build-up to the war in Iraq adversely affected confidence and the rise in the oil price increased costs for consumers and businesses. Corporate profitability continued to be held back by global overcapacity in many industries. Share prices also faced selling pressure from switches out of equities into bonds by some insurance companies and pension funds. Overall, the FTSE All-Share total return for the year to 30 June 2003 was a negative 9.7%, but there was a significant rise from the lowest point which was reached on 12 March 2003. Over the last year City of London's share price total return exceeded that of the FTSE All-Share Index. In addition there was an above average yield of 4.2%. The net asset value total return was a negative 11.1%, which was an underperformance of 1.4% relative to the FTSE All-Share Index, but this has to be seen against the previous year's outperformance of 3.4%. The gearing during the period when the market was falling was the principal reason for City of London's underperformance relative to the FTSE All-Share Index. The Company started the year under review with gearing of 11.5% rising to 17.1% at the market low in March and falling back to 12.3% at the end of June. The modest level of gearing was maintained in the falling market. With the benefit of hindsight, the gearing exposure should have been reduced in anticipation of this fall. The Board believes gearing should enhance shareholder returns over the longer term and therefore going forward it is intended to adopt a more proactive gearing policy whilst still limiting the maximum gearing to approximately 20%. The medium and long-term record remains good with City of London having outperformed the FTSE All-Share Index over three, five and ten years. - MORE - - 2 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2003 Dividends A fourth interim dividend of 2.07p was paid on 29 August 2003, making a total net dividend for the year of 8.07p. This is an increase of 1.6% over the previous year. The Company has increased its dividend every year since 1966 and the Board recognises the continuing importance of annual dividend growth to shareholders. For the year to 30 June 2004, the Board is forecasting a minimum increase of 2.6% in the Company's total net dividend to 8.28p, payable at the new quarterly rate of 2.07p. Over the years substantial revenue reserves have been built up which, together with increased investment income this year, have not only enabled the continuation of the policy to increase dividends to shareholders, but also put the Company in a strong position for the future. Expenses The investment management fee and other non interest expenses were around 0.45% of the Company's average assets for the year. This is a level which is very competitive compared with most investment trusts and with other equity savings vehicles. The fall from the previous year's total expense ratio of 0.68% is due to no investment performance fee being earned by the Investment Manager. Savings City of London sets out to be an attractive and straightforward long-term savings vehicle for private investors. The Company is pleased to welcome the new shareholders who elected to take City of London shares following the reconstruction of Henderson Geared Income & Growth Trust plc in March 2003. Over the past three years the Company's share price has of course been adversely affected by the general fall in the UK stock market, but, taking a ten year view, returns have been very positive. With dividends reinvested, for example through a PEP or ISA, the total return over the ten year period from June 1993 would have been 94.6% (see below), double that obtainable from a typical bank or building society account. The Board is keen to offer shareholders, and potential shareholders, the widest possible opportunities to save over the longer term and this year The City of London Alliance Trust Pension was launched. - MORE - - 3 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2003 Outlook The cuts in interest rates over the last few months in the USA, Europe and the UK to the lowest levels for fifty years should help to counter deflationary forces and to stimulate economic growth over the next year. Against an improved demand background, the progress that many companies have made in cutting costs should lead to the growth in profits that is rewarding for investors. Further encouraging signs are the pick-up in corporate merger and acquisition activity, evidence from surveys of improving business confidence and the abatement of life assurance companies selling equities. Longer term, there are concerns as to the sustainability of the growth in UK consumers' expenditure financed by debt. On balance, however, given the Board's view of the prospects for the year ahead, the valuation of UK equities is attractive and therefore the Company remains moderately geared. S M de Zoete 2 September 2003 Source: - Association of Investment Trust Companies. The bank / building society return is the average return with interest reinvested for deposits of £25,000 and over in a representative sample of 20 UK banks and building societies calculated by Micropal. - MORE - - 4 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2003 Statement of Total Return (incorporating the revenue account) for the year ended 30 June 2003 Unaudited Audited Year ended 30 June 2003 Year ended 30 June 2002 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Total capital losses from investments - (63,399) (63,399) - (72,856) (72,856) Income from fixed asset investments 18,657 - 18,657 17,697 - 17,697 Other interest receivable and similar 170 - 170 156 - 156 income ---------- ---------- ---------- ---------- ---------- ---------- Gross revenue and capital losses 18,827 (63,399) (44,572) 17,853 (72,856) (55,003) Management fees (426) (994) (1,420) (516) (2,535) (3,051) Other administrative expenses (526) - (526) (400) - (400) ---------- ----------- ---------- ---------- ----------- ---------- Net return/(loss) on ordinary activities before interest payable and taxation 17,875 (64,393) (46,518) 16,937 (75,391) (58,454) Interest payable (1,339) (3,125) (4,464) (1,310) (3,056) (4,366) ---------- ----------- ---------- ---------- ----------- ---------- Net return/(loss) on ordinary activities before taxation 16,536 (67,518) (50,982) 15,627 (78,447) (62,820) Taxation on net return on ordinary (81) - (81) (85) 85 - activities ----------- ----------- ---------- ----------- ----------- ---------- Net return/(loss) on ordinary activities after taxation 16,455 (67,518) (51,063) 15,542 (78,362) (62,820) Dividends: Preference and preferred ordinary stocks (190) - (190) (190) - (190) ----------- ----------- ---------- ----------- ----------- ---------- Net return/(loss) attributable to the 16,265 (67,518) (51,253) 15,352 (78,362) (63,010) ordinary shares ----------- ----------- ---------- ----------- ----------- ---------- Dividends: Ordinary shares Three interim payments of 2.00p (2002: (12,373) - (12,373) (12,192) - (12,192) 1.98p) Fourth interim payment of 2.07p (2002: (4,343) - (4,343) (4,105) - (4,105) 2.00p) ----------- ----------- ---------- ----------- ----------- ---------- (16,716) - (16,716) (16,297) - (16,297) ----------- ----------- ---------- ----------- ----------- ---------- Transfer from reserves (451) (67,518) (67,969) (945) (78,362) (79,307) ====== ====== ====== ====== ====== ====== Return/(loss) per ordinary share (note 1) 7.87p (32.66)p (24.79)p 7.48p (38.18)p (30.70)p ====== ====== ====== ====== ====== ====== 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 2003 Balance Sheet at 30 June 2003 Unaudited Audited 30 June 30 June 2003 2002 £'000 £'000 Fixed asset investments Listed at market value in the United Kingdom 440,922 513,924 Listed at market value overseas 9,753 - Investment in subsidiary undertakings 347 347 ------------- ------------- 451,022 514,271 ------------- ------------- Current assets Debtors 2,113 2,332 Cash at bank 2,599 52 ------------- ------------- 4,712 2,384 ------------- ------------- Creditors: amounts falling due within one year (6,470) (7,623) ------------- ------------- Net current liabilities (1,758) (5,239) ------------- ------------- Total assets less current liabilities 449,264 509,032 Creditors: amounts falling due after more than one year (46,000) (46,000) ------------- ------------- Total net assets 403,264 463,032 ======= ======= Capital and reserves Called up share capital 54,539 53,398 Share premium account 35,309 28,249 Other capital reserves 302,545 370,063 Revenue reserve 10,871 11,322 ------------- ------------- Shareholders' funds (including non-equity interests 403,264 463,032 of £2,086,000) ======= ======= Net asset value per ordinary share 191.21p 224.58p ======= ======= - MORE - - 6 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2003 Cash Flow Statement for the year ended 30 June 2003 Unaudited Audited 2003 2003 2002 2002 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 15,386 15,374 Servicing of finance Debenture interest paid (4,265) (4,265) Bank and loan interest paid (193) (96) Dividends paid on preference and preferred ordinary stock (190) (190) ---------- ---------- Net cash outflow from servicing of finance (4,648) (4,551) Taxation Withholding and income tax recovered 7 18 ---------- ---------- Net tax recovered 7 18 Financial investment Purchases of investments (40,065) (71,264) Sales of investments 43,778 76,411 ---------- ---------- Net cash inflow from financial investment 3,713 5,147 Equity dividends paid (16,478) (16,259) ---------- ---------- Net cash outflow before financing (2,020) (271) Financing Net cash outflow from loans (214) - Proceeds from issue of ordinary shares 4,742 - Cost of repurchases of ordinary shares - (345) ---------- ---------- Net cash inflow/(outflow) from financing 4,528 (345) ---------- ---------- Increase/(decrease) in cash 2,508 (616) ====== ====== - MORE - - 7 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2003 Notes: 1. Return/(loss) per Ordinary Share Revenue return per ordinary share is based on earnings attributable to the ordinary shares of £16,265,000 (2002: £15,352,000) and on the weighted average number of ordinary shares in issue during the year of 206,745,219 (2002: 205,261,977). Capital loss per ordinary share is based on net capital losses for the year of £67,518,000 (2002: £78,362,000) and on the weighted average number of ordinary shares in issue during the year of 206,745,219 (2002: 205,261,977). 2. Issued Share Capital There were 209,813,762 ordinary shares of 25p in issue at 30 June 2003 (30 June 2002: 205,251,018) for the purpose of calculating the net asset value per ordinary share. 3. Share Buy-Backs During the year the Company made no purchases in the market for cancellation of its own issued ordinary shares. 4. Share Allotments During the year the Company issued 4,562,744 ordinary shares at prices ranging from 166.22p to 202.00p per share. 5. 2003 Accounts The preliminary figures for the year ended 30 June 2003 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. 6. 2002 Accounts The figures and financial information for the year ended 30 June 2002 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. 7. Annual Report The full annual report and accounts will be posted to shareholders in September 2003 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 17 October 2003 at 3.00 pm. - MORE - - 8 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2003 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 2003 30 June 2003 £'000 £'000 BP 27,947 Scottish & Southern Energy 4,680 HSBC 26,635 Anglo American 4,625 Shell Transport & Trading 24,400 Legal & General 4,498 GlaxoSmithKline 23,849 Johnston Press 4,243 Vodafone 20,145 Wolseley 4,022 Royal Bank of Scotland 19,331 Boots 3,988 Barclays 13,500 Prudential 3,670 HBOS 12,630 Reckitt Benckiser 3,668 AstraZeneca 11,786 Next 3,593 British American Tobacco 11,000 Imperial Tobacco 3,520 Lloyds TSB 10,111 Slough Estates 3,418 Diageo 9,382 Bovis Homes 3,408 Tesco 7,893 Scottish Power 3,276 Land Securities 6,838 Rodamco Europe 3,171 National Grid Transco 6,782 Smith & Nephew 3,134 Aviva 6,206 Reed Elsevier 3,026 Rio Tinto 5,700 BSkyB 3,022 Unilever 5,476 Allied Domecq 3,006 Kingfisher 5,041 Gallaher 2,975 BT 4,890 Tomkins 2,724 These investments represent 73.49% 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 Associate Director, Investment Trusts, Henderson Global Investors Telephone: 020 7818 6417 or Vicki Staveacre Henderson Press Office Telephone: 020 7818 4222 This information is provided by RNS The company news service from the London Stock Exchange

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