Final Results

City of London Investment Trust PLC 05 September 2006 5 September 2006 THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 Total Returns % 30 June 2006 30 June 2005 Net asset value per ordinary share ("NAV") +18.5 +21.7 FTSE All-Share Index - 4% Capped +21.9 +18.9 FTSE All-Share Index +19.7 +18.7 Ordinary share price +17.0 +28.0 Dividend 30 June 2006 30 June 2005 Pence per share 9.36 8.62 Increase % 8.6 5.8 Minimum increase of 8.1% forecast for current year 2006/7 Extracts from the Chairman's Statement:- I am pleased to be able to report a second successive year of double digit share price total return and a third successive year of double digit net asset value total return. The income received by the Company has grown and this has not only allowed us to increase the dividend by 8.6% but also to forecast a minimum increase of 8.1% for the year 2006/7. Economic growth was strong globally, led by the US and emerging markets such as China. The UK economy was more subdued but the housing market improved from the end of 2005. Many UK quoted companies benefited from an international orientation with, for example, several of the world's largest mining companies having their primary listing on the London Stock Exchange. Takeovers continued to be a feature given the UK's particularly open system for corporate control. In addition, the valuation of UK equities relative to bond yields was, in general, supportive for private equity bids. Performance Because we recognise the need to achieve a good and rising level of income for our shareholders, there is some bias in the portfolio towards the higher yielding stocks. This can mean that the capital performance of the portfolio can fall behind the market averages at times when the lower yielding stocks outperform. This has been the position in 2005/6. City of London's net asset value total return was 18.5% compared with a 21.9% return on our new benchmark, the FTSE All-Share 4% Capped Index. Over the longer term, however, the Board is confident that this benchmark provides the right incentive to the Manager to achieve the best performance consistent with our objective to provide shareholders with growth in capital and income. Earnings and Dividends Revenue return per share was 10.18p, an increase of 14.6% reflecting another strong year for UK dividend growth. A fourth interim dividend of 2.40p was paid on 31 August 2006, making a total for the year of 9.36p, an increase of 8.6% over the previous year. This is the fortieth consecutive year that City of London has increased its dividends. The minimum quarterly dividend for the year ahead will be 2.53p, an increase of 8.1% on an annual basis. The quarterly rate will next be considered when the third interim dividend is declared in March 2007, by which time the Board will be able to assess better the trend in income performance of the portfolio. - MORE - - 2 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 Expenses The investment management fee and other non interest expenses were around 0.44% of the Company's average assets for the year. This has fallen from 0.74% last year as no performance fee was paid to our Investment Manager, Henderson Global Investors. The fee rate remains very competitive with other equity savings vehicles. Savings City of London sets out to be an attractive and straight forward long-term savings vehicle for private investors. As well as investing directly, shares can be purchased through the itshenderson products (the Share Plan and ISA) or the Alliance Trust Savings (including for pensions). A new internet, telephone or postal dealing service for the itshenderson products, with cheaper dealing costs, has recently started. Outlook Although the significant element of UK stockmarket profits that is accounted for by the banking and resources sectors could be considered to be near a cyclical peak, it is encouraging for investors to benefit from strong dividend growth from companies in these sectors. Overall, UK company profits should continue to experience steady growth from the domestic economy and also should benefit from overseas economic growth, in particular the recovery in Europe. In addition, it seems likely that there will continue to be takeovers of UK companies, given the UK's open system of corporate control and the current levels of bond and equity yields. The main risk is that interest rates could rise more than is currently expected by the market because this would adversely impact the UK consumer as well as hindering takeovers due to the likely rise in bond yields. In addition, further strength in sterling could cause difficulties for those companies with overseas profits, especially those that export from the UK. A further factor is geopolitical risk and its influence on the oil price and consumer confidence. Overall, we feel that the good performance from UK equities can continue given current valuations and the outlook for growth in profits and dividends for UK companies. The combination of dividend yield and growth from UK companies is particularly attractive for investors. The Board We are delighted that Anita Frew will be joining the Board from 1 October 2006. After a career in fund management and marketing services, Anita is now a non executive director of a range of quoted companies. Simon de Zoete 5 September 2006 - MORE - - 3 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 Income Statement for the year ended 30 June 2006 (Audited) (Unaudited) Restated* Year ended 30 June 2006 Year ended 30 June 2005 Revenue Capital Revenue Capital Return Return Total Return Return Total £'000 £'000 £'000 £'000 £'000 £'000 Gains from investments held at fair value through profit or loss - 81,104 81,104 - 83,809 83,809 Income from investments held at fair value through profit or loss 23,503 - 23,503 20,581 - 20,581 Other interest receivable and similar 474 - 474 596 - 596 income --------- --------- --------- --------- --------- --------- Gross revenue and capital gains 23,977 81,104 105,081 21,177 83,809 104,986 Management fee (609) (1,422) (2,031) (528) (1,231) (1,759) Performance fee - - - - (1,372) (1,372) Other administrative expenses (520) - (520) (505) - (505) --------- --------- --------- --------- --------- --------- Net return on ordinary activities before finance charges and taxation 22,848 79,682 102,530 20,144 81,206 101,350 Finance charges (1,459) (2,988) (4,447) (1,464) (2,986) (4,450) --------- --------- --------- --------- --------- --------- Net return on ordinary activities before taxation 21,389 76,694 98,083 18,680 78,220 96,900 Taxation on net return on ordinary (181) (5) (186) (175) (19) (194) activities --------- --------- --------- --------- --------- --------- Net return on ordinary activities after taxation 21,208 76,689 97,897 18,505 78,201 96,706 ===== ===== ===== ===== ===== ===== Return per ordinary share - basic (note 10.18p 36.79p 46.97p 8.88p 37.51p 46.39p 2) ===== ===== ===== ===== ===== ===== Dividends per ordinary share for the year 9.36p - 9.36p 8.62p - 8.62p ===== ===== ===== ===== ===== ===== The total columns of this statement represent the profit and loss account of the Company. All revenue and capital items derive from continuing operations. No operations were acquired or discontinued during the year. The Company has no recognised gains or losses other than those recognised in the Income Statement. *See note 1 (b) - MORE - - 4 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 Reconciliation of Movements in Shareholders' Funds for the years ended 30 June 2006 and 30 June 2005 Year ended 30 June 2006 Share Other premium capital Called up account reserves Revenue share capital £'000 £'000 reserve £'000 Total £'000 £'000 At 30 June 2005 (as restated see note 4a) 52,103 35,309 432,006 16,026 535,444 Net return on ordinary activities after - - 76,689 21,208 97,897 taxation Fourth interim dividend (2.26p) for the year ended 30 June 2005 paid 31 August 2005 - - - (4,710) (4,710) First interim dividend (2.28p) for the year ended 30 June 2006 paid 30 November 2005 - - - (4,752) (4,752) Second interim dividend (2.28p) for the year ended 30 June 2006 paid 28 February 2006 - - - (4,752) (4,752) Third interim dividend (2.40p) for the year ended 30 June 2006 paid 31 May 2006 - - - (5,002) (5,002) Write-back of dividends over twelve years old - - - 14 14 --------- --------- --------- --------- --------- At 30 June 2006 52,103 35,309 508,695 18,032 614,139 ===== ===== ===== ===== ===== Year ended 30 June 2005 Share Other premium capital Called up account reserves Revenue share capital reserve £'000 £'000 Total £'000 £'000 £'000 At 30 June 2004 (as restated see note 4b) 52,453 35,309 356,052 15,125 458,939 Net return on ordinary activities after - - 78,201 18,505 96,706 taxation Fourth interim dividend (2.12p) for the year ended 30 June 2004 paid 31 August 2004 - - - (4,427) (4,427) First interim dividend (2.12p) for the year ended 30 June 2005 paid 30 November 2004 - - - (4,419) (4,419) Second interim dividend (2.12p) for the year ended 30 June 2005 paid 28 February 2005 - - - (4,418) (4,418) Third interim dividend (2.12p) for the year ended 30 June 2005 paid 31 May 2005 - - - (4,418) (4,418) Write-back of dividends over 12 years old - - - 78 78 Share buy backs (350) - (2,247) - (2,597) --------- --------- --------- --------- --------- At 30 June 2005 52,103 35,309 432,006 16,026 535,444 ===== ===== ===== ===== ===== - MORE - - 5 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 Balance Sheet at 30 June 2006 (Audited) (Unaudited) *Restated 2006 2005 £'000 £'000 Investments held at fair value through profit or loss Listed at market value in the United Kingdom 620,848 549,511 AIM quoted investment at market value 1,035 - Listed at market value overseas 30,243 21,394 Investment in subsidiary undertakings 377 347 ---------- ---------- 652,503 571,252 ---------- ---------- Current Assets Debtors 8,443 2,653 Cash at bank and on short term deposit 6,415 13,526 ---------- ---------- 14,858 16,179 Creditors: amounts falling due within one year (5,334) (4,099) ---------- ---------- Net current assets 9,524 12,080 ---------- ---------- Total assets less current liabilities 662,027 583,332 Creditors: amounts falling due after more than one year (47,888) (47,888) ---------- ---------- Total net assets 614,139 535,444 ====== ====== Capital and reserves Called up share capital 52,103 52,103 Share premium account 35,309 35,309 Other capital reserves 508,695 432,006 Revenue reserve 18,032 16,026 ---------- ---------- Shareholders' funds 614,139 535,444 ====== ====== Net asset value per ordinary share (note 3) 294.67p 256.91p ====== ====== * see note 4a - MORE - - 6 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 Cash Flow Statement for the year ended 30 June 2006 (Unaudited) (Audited) Year ended Year ended 30 June 2006 30 June 2005 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 19,622 18,094 Servicing of finance Debenture interest paid (4,265) (4,265) Bank and loan interest paid (4) (1) Dividends paid on preference and preferred ordinary stocks (178) (190) ---------- ---------- Net cash outflow from servicing of finance (4,447) (4,456) Taxation Withholding tax recovered 59 84 ---------- ---------- Net tax recovered 59 84 Financial investment Cash paid under futures contracts - (279) Purchases of investments (112,530) (51,600) Sales of investments 109,464 64,204 ---------- --------- Net cash (outflow)/inflow from financial investment (3,066) 12,325 Equity dividends paid (19,202) (17,604) Management of liquid resources Cash withdrawn from/(placed on) deposit 5,824 (12,125) ---------- ---------- Net cash inflow/(outflow) from liquid resources 5,824 (12,125) ---------- ---------- Net cash outflow before financing (1,210) (3,682) Financing Purchase of preference stock - (199) Purchase of ordinary shares - (2,597) --------- ---------- Net cash outflow from financing - (2,796) --------- ---------- Decrease in cash (1,210) (6,478) ===== ===== - MORE - - 7 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 Notes : 1. Accounting Policies a) Basis of accounting The accounts are prepared on the historical cost basis of accounting, modified to include the revaluation of fixed asset investments, and in accordance with applicable accounting standards and with the Revised Statement of Recommended Practice - "Financial Statements of Investment Trust Companies" dated December 2005 (the "Revised SORP"). All of the Company's operations are of a continuing nature. b) Changes in presentation The Company has adopted the provisions of the Revised SORP which has resulted in some changes to the presentation of the Company's accounts. The Statement of Total Return is now called the Income Statement. Dividends payable to equity shareholders are no longer reflected in the Income Statement, although they continue to be shown in the Reconciliation of Movements in Shareholders' Funds which is now presented as a primary statement. c) Changes in accounting policy The Company has changed its accounting policy for the valuation of listed investments, the classification of preference and preferred ordinary stocks and the recognition of dividends payable to equity shareholders in accordance with the provisions of FRS 26 - Financial instruments: Recognition and Measurement, FRS 25 - Financial Instruments Disclosure and Presentation and FRS 21 - Events after the balance sheet date respectively. These changes in policy and the associated impact on the results of the Company are referred to below. d) Valuation of investments Investments - Prior to 1 July 2005, listed investments were valued at middle market prices. Following the introduction of FRS 26 - Financial instruments: Recognition and Measurement, listed investments are now valued at fair value deemed to be bid market prices or the last traded price depending on the convention of the exchange on which the investment is quoted. The effect of this change is to decrease the value of listed investments at 30 June 2006 and decrease the net return on ordinary activities after taxation and net assets for the year ended 30 June 2006 by £10,000. Comparatives have not been restated but the effect of restatement would have been to reduce the value of investments at 30 June 2005 by £32,000. Unquoted investments are valued by the directors using primary valuation techniques such as earnings multiples, recent transactions and net assets. Where fair value cannot reliably be measured the investment will be carried at the previous reporting date value unless there is evidence that the investment has since been impaired, in which case the value will be reduced. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as "Gains or losses on investments held at fair value through profit or loss". Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Income Statement. All purchases and sales are accounted for on a trade date basis. - MORE - - 8 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 Notes cont'd e) Preference stocks Under FRS 25 - Financial Instruments: Disclosure and Presentation, preference and preferred ordinary stock are now classified as debt (previously included within Capital and Reserves as non equity interests). As a result of this reclassification, the dividends associated with the preference and preferred ordinary stock are charged fully to the Company's revenue return within finance costs. f) Dividends payable to equity shareholders Under FRS 21, dividends should not be accrued in the accounts unless they have been approved by shareholders before the balance sheet date. Interim dividends payable to equity shareholders are recognised in the Reconciliation of Movements in Shareholders' Funds once they have been paid to shareholders. There is no impact from this change on the recognised gains and losses in either 2004 or 2005. However, the net assets at 30 June 2005 and 30 June 2004 have been impacted as disclosed in note 4. The effect of this change is to increase ordinary shareholders' funds at 30 June 2005 by £4,710,000 (or 2.26p per share) (30 June 2004: £4,427,000 or 2.11p per share). 2. Return per ordinary share - basic The return per ordinary share is based on the net return attributable to the ordinary shares of £97,897,000 (year ended 30 June 2005: £96,706,000) and on 208,413,762 ordinary shares (year ended 30 June 2005: 208,482,803) being the weighted average number of ordinary shares in issue during the year. The return per ordinary share can be further analysed between revenue and capital, as below. Year ended Year ended 30 June 2006 30 June 2005 Net revenue return 21,208 18,505 Net capital return 76,689 78,201 --------- --------- Net total return 97,897 96,706 ===== ===== Weighted average number of ordinary shares in issue during the year 208,413,762 208,482,803 Revenue return per ordinary share 10.18p 8.88p Capital return per ordinary share 36.79p 37.51p --------- --------- Total return per ordinary share 46.97p 46.39p ===== ===== The Company does not have any dilutive securities. 3. Net asset value per ordinary share The net asset value per ordinary share is based on net assets attributable to ordinary shares of £614,139,000 (2005: £535,444,000 as restated) and on 208,413,762 (2005: 208,413,762) shares in issue on 30 June 2006. - MORE - - 9 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 Notes cont'd 4. Restatement of balance sheets in respect of dividends payable, preference and preferred ordinary stocks Previously reported Adjustments Restated a) Balance sheet at 30 June 2005 Notes £'000 £'000 £'000 Investments 571,252 - 571,252 Current assets 16,179 - 16,179 Creditors: amounts falling due within one year 1 (8,809) 4,710 (4,099) --------- -------- --------- Total assets less current liabilities 578,622 4,710 583,332 Creditors: amounts falling due after more than 2 (46,000) (1,888) (47,888) one year ---------- ---------- ---------- Net assets 532,622 2,822 535,444 ====== ====== ====== Capital and reserves Called up share capital 2 53,991 (1,888) 52,103 Share premium account 35,309 - 35,309 Other capital reserves 432,006 - 432,006 Revenue reserve 1 11,316 4,710 16,026 ---------- ---------- ---------- 532,622 2,822 535,444 ====== ====== ====== Net asset value per ordinary share 254.65p 2.26p 256.91p Previously reported Adjustments Restated £'000 b) Balance sheet at 30 June 2004 £'000 £'000 Investments 493,889 - 493,889 Current assets 17,848 - 17,848 Creditors: amounts falling due within one year 1 (9,139) 4,427 (4,712) --------- --------- --------- Total assets less current liabilities 502,598 4,427 507,025 Creditors: amounts falling due after more than 2 (46,000) (2,086) (48,086) one year --------- --------- --------- Net assets 456,598 2,341 458,939 ====== ====== ====== Capital and reserves Called up share capital 2 54,539 (2,086) 52,453 Share premium account 35,309 - 35,309 Other capital reserves 356,052 - 356,052 Revenue reserve 1 10,698 4,427 15,125 --------- --------- --------- 456,598 2,341 458,939 ====== ====== ====== Net asset value per ordinary share 216.63p 2.11p 218.74p Notes to the reconciliation 1 No provision has been made for the fourth interim dividend on ordinary shares for the years ended 30 June 2005 and 2004. Under FRS 26, interim dividends are not recognised until paid to shareholders. 2 Under FRS 25, the Company's preference and preferred ordinary stocks are classified as debt. - MORE - - 10 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 5. Issued share capital There were 208,413,762 ordinary shares of 25p in issue at 30 June 2006 (30 June 2005: 208,413,762) for the purpose of calculating the net asset value per ordinary share. There were no share buy backs or allotments during the year. 6. 2006 accounts The preliminary figures for the year ended 30 June 2006 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. 7. 2005 accounts The figures and financial information for the year ended 30 June 2005 are compiled from an extract of the latest published accounts (as restated) 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. 8. Annual Report The full Annual Report and Accounts will be posted to shareholders in September 2006 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 20 October 2006 at 3.00 pm. - MORE - - 11- THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2006 Top 40 Investments as at 30 June 2006 The 40 largest investments representing 74.73% of the portfolio (convertibles and all classes of equity in any one company being treated as one investment) are listed below. In accordance with the revised Listing Rules, the comparative value as at 30 June 2005 is provided for the top ten holdings. Stocks marked * are those new to the top ten this year. For additional clarity, stocks which were in the top ten last year but not this year, are marked #. Market values reflect changes in the value of underlying shares and portfolio changes. Market Value Market Value Market Value 2005 2006 2006 £'000 £'000 £'000 HSBC 33,820 33,303 Cadbury Schweppes 9,387 BP 39,217 30,895 Bovis Homes 8,030 British American Tobacco 20,444 25,878 Scottish Power 7,950 Diageo* 12,756 24,102 Unilever 7,904 GlaxoSmithKline 27,020 22,665 BHP Billiton 7,867 Lloyds TSB 16,555 22,589 Reed Elsevier 7,371 Barclays 18,332 21,507 Wolseley 7,158 BT* 9,890 19,858 Legal & General 7,054 Royal Dutch Shell 25,781 18,910 Rexam 6,864 Land Securities* 12,163 16,595 Scottish & Newcastle 6,813 HBOS # 14,100 Slough Estates 6,115 Tesco 13,360 Tomkins 5,755 National Grid Transco 13,163 BAE Systems 5,546 Aviva 13,014 Rodamco Europe 5,299 Scottish & Southern Energy 12,661 Imperial Tobacco 5,007 Rio Tinto 12,151 Severn Trent 4,973 Royal Bank of Scotland # 12,001 United Utilities 4,811 Vodafone # 11,525 Johnston Press 4,352 ENI 11,145 Prudential 4,277 Anglo American 11,090 Liberty 4,260 - ENDS - For further information please contact: Job Curtis Portfolio Manager, The City of London Investment Trust plc Telephone: 020 7818 4367 James de Sausmarez Head of Investment Trusts, Henderson Global Investors Telephone: 020 7818 3349 Sarah Gibbons-Cook Investor Relations and PR Manager, Henderson Global Investors Telephone: 020 7818 3198 This information is provided by RNS The company news service from the London Stock Exchange

Companies

City of London Inv Trust (CTY)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today