Final Results

City of London Investment Trust PLC 30 August 2007 30 August 2007 THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2007 Total Returns % 30 June 2007 30 June 2006 Net asset value per ordinary share ("NAV") +21.0 +18.5 FTSE All-Share Index - 4% Capped (benchmark) +20.3 +21.9 FTSE All-Share Index +18.4 +19.7 Ordinary share price +17.2 +17.0 Dividend 30 June 2007 30 June 2006 Pence per share 10.30 9.36 Increase % 10.0 8.6 Minimum increase of 10.3% forecast for the current year to 30 June 2008 Extracts from the Chairman's Statement:- I am pleased to report that our net asset value total return for the year to 30 June 2007 was 21.0%, an outperformance of our benchmark, which itself was materially ahead of the FTSE All-Share Index. We have increased our dividend by 10.0% and have forecast a further increase of 10.3% for the current year. The companies in which we are invested have delivered, on average, earnings and dividends that have come in above market expectations. Performance Over the course of the twelve months, City of London outperformed its benchmark by 0.7%, which in turn outperformed the FTSE All-Share Index by 1.9%. Both gearing and stock selection were positive contributors. The overweight position relative to the benchmark in real estate stocks, which was a significant contributor to outperformance in the first half of the period under review, was a negative in the second half. Despite exposure being reduced to real estate stocks with some large profits realised, the above average position relative to the benchmark was the most important cause of the second half giving back some of the gains relative to the benchmark. City of London's share price discount to net asset value (with debt at market value) increased from 6.9% to 10.9% over the year, which was similar to the trend experienced by many other investment trusts. At the time of writing, the discount has narrowed to 6.6%. Earnings and Dividends Revenue return per share was 11.59p, an increase of 13.9% reflecting another strong year for UK dividend growth. A fourth interim dividend of 2.62p will be paid on 31 August 2007, making a total for the year of 10.30p, an increase of 10.0% over the previous year. This is the forty-first consecutive year that City of London has increased its dividend, the longest record of any investment trust. - MORE - - 2 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2007 Extracts from the Chairman's Statement (continued) The minimum quarterly dividend for the year ahead will be 2.84p, a further minimum increase of 10.3% on an annual basis. The quarterly rate will next be considered when the third interim dividend is declared in March 2008, by which time the Board will be able to assess better the trend in income performance of the portfolio. Expenses The investment management fee and other non interest expenses were around 0.42% of the Company's average assets for the year which is a slight decline from 0.44% last year. No performance fee was paid to our Investment Manager, Henderson Global Investors, because the period's outperformance did not exceed the previous year's underperformance. Savings City of London sets out to be an attractive and straightforward 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). Outlook Since the year end, markets have become more volatile and have fallen back. This change of sentiment stems from concerns about the mortgage market in the United States, the level of risk adopted by the banks by lending on historically tight terms and the opaque nature of hedge funds. Credit may be scarcer in the future and a reduced appetite for risk could result. There is much talk of the contagion effect of this global credit crunch and it will probably take time for the wider ramifications and effect on the consumer to become clear. Having said all of this, I am confident that City of London's relatively defensive portfolio is well positioned and, with a low level of gearing, we are well placed to take advantage of the opportunities that often arise from volatility in markets and sectors. We are focused on companies that have good cash flow from high quality businesses that can deliver the dividend growth that is so important to our shareholders. Although there may be volatility, this brings with it opportunities for our investment management team to perform. Now that the market has pulled back, the downside risk has been reduced. The Board After serving ten years as a director, Mark Nicholls has decided not to stand for re-election at the next Annual General Meeting. I would like to thank Mark for his wise counsel and most valuable contribution to the Company. Simon de Zoete 30 August 2007 - MORE - - 3 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2007 Income Statement for the year ended 30 June 2007 (Unaudited) (Audited) Year ended 30 June 2007 Year ended 30 June 2006 Revenue Capital Revenue Capital Return Return Total Return Return Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Gains on investments held at fair value through profit or loss - 107,437 107,437 - 81,104 81,104 Income from investments held at fair value through profit or loss (note 2) 26,734 - 26,734 23,503 - 23,503 Other interest receivable and similar income (note 3) 249 - 249 474 - 474 --------- --------- --------- --------- --------- --------- Gross revenue and capital gains 26,983 107,437 134,420 23,977 81,104 105,081 Management fee (684) (1,596) (2,280) (609) (1,422) (2,031) Performance fee - - - - - - Other administrative expenses (497) - (497) (520) - (520) --------- --------- --------- --------- --------- --------- Net return on ordinary activities before finance charges and taxation 25,802 105,841 131,643 22,848 79,682 102,530 Finance charges (1,465) (3,002) (4,467) (1,459) (2,988) (4,447) --------- --------- --------- --------- --------- --------- Net return on ordinary activities before taxation 24,337 102,839 127,176 21,389 76,694 98,083 Taxation on net return on ordinary activities (190) - (190) (181) (5) (186) --------- --------- --------- --------- --------- --------- Net return on ordinary activities after taxation 24,147 102,839 126,986 21,208 76,689 97,897 ========= ========= ========= ========= ========= ========= Return per ordinary share - basic (note 4) 11.59p 49.34p 60.93p 10.18p 36.79p 46.97p ========= ========= ========= ========= ========= ========= The total columns of this statement represent the income statement 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. - MORE - - 4 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2007 Reconciliation of Movements in Shareholders' Funds for the years ended 30 June 2007 and 30 June 2006 Share Other Called up premium capital Revenue share capital account reserves reserve Total Year ended 30 June 2007 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 At 30 June 2006 52,103 35,309 508,695 18,032 614,139 Net return on ordinary activities after taxation - - 102,839 24,147 126,986 Buy-back of 483,722 ordinary shares (120) - (1,343) - (1,463) Fourth interim dividend (2.40p) for the year ended 30 June 2006 paid 31 August 2006 - - - (5,002) (5,002) First interim dividend (2.53p) for the year ended 30 June 2007 paid 30 November 2006 - - - (5,273) (5,273) Second interim dividend (2.53p) for the year ended 30 June 2007 paid 28 February 2007 - - - (5,274) (5,274) Third interim dividend (2.62p) for the year ended 30 June 2007 paid 31 May 2007 - - - (5,459) (5,459) Write-back of dividends over 12 years old - - - 3 3 --------- --------- --------- --------- --------- At 30 June 2007 51,983 35,309 610,191 21,174 718,657 ========= ========= ========= ========= ========= Share Other Called up premium capital Revenue share capital account reserves reserve Total Year ended 30 June 2006 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 At 30 June 2005 52,103 35,309 432,006 16,026 535,444 Net return on ordinary activities after taxation - - 76,689 21,208 97,897 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 12 years old - - - 14 14 -------- -------- ---------- -------- ---------- At 30 June 2006 52,103 35,309 508,695 18,032 614,139 ======== ======== ========== ======== ========== - MORE - - 5 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2007 Balance Sheet at 30 June 2007 (Unaudited) (Audited) 2007 2006 Â£'000 Â£'000 Investments held at fair value through profit or loss Listed at market value in the United Kingdom 734,390 620,848 AIM quoted investment at market value - 1,035 Listed at market value overseas 23,899 30,243 Investment in subsidiary undertakings 378 377 ---------- ---------- 758,667 652,503 ---------- ---------- Current assets Debtors 3,542 8,443 Cash at bank and on short term deposit 8,268 6,415 ---------- ---------- 11,810 14,858 ---------- ---------- Creditors: amounts falling due within one year (3,932) (5,334) ---------- ---------- Net current assets 7,878 9,524 ---------- ---------- Total assets less current liabilities 766,545 662,027 Creditors: amounts falling due after more than one year (47,888) (47,888) ---------- ---------- Total net assets 718,657 614,139 ========== ========== Capital and reserves Called up share capital 51,983 52,103 Share premium account 35,309 35,309 Other capital reserves 610,191 508,695 Revenue reserve 21,174 18,032 ---------- ---------- Shareholders' funds 718,657 614,139 ========== ========== Net asset value per ordinary share (note 5) 345.62p 294.67p ========== ========== - MORE - - 6 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2007 Cash Flow Statement for the year ended 30 June 2007 (Unaudited) (Audited) Year ended Year ended 30 June 2007 30 June 2006 Â£'000 Â£'000 Â£'000 Â£'000 Net cash inflow from operating activities 23,421 19,622 Servicing of finance Debenture interest paid (4,265) (4,265) Bank and loan interest paid (24) (4) Dividends paid on preference and preferred ordinary stocks (178) (178) ---------- ---------- Net cash outflow from servicing of finance (4,467) (4,447) Taxation Withholding tax recovered 39 59 ---------- ---------- Net tax recovered 39 59 Financial investment Purchases of investments (103,157) (112,530) Sales of investments 108,472 109,464 ---------- --------- Net cash inflow/(outflow) from financial investment 5,315 (3,066) Equity dividends paid (21,005) (19,202) Management of liquid resources Cash (placed on)/withdrawn from deposit (1,900) 5,824 ---------- ---------- Net cash (outflow)/inflow from liquid resources (1,900) 5,824 ---------- ---------- Net cash inflow/(outflow) before financing 1,403 (1,210) Financing Purchases of ordinary shares (1,460) - --------- ---------- Net cash outflow from financing (1,460) - --------- ---------- Decrease in cash (57) (1,210) ========= ========== - MORE - - 7 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2007 Notes : 1. Accounting Policies a) Basis of accounting The accounts have been prepared on the basis of the accounting policies used for the Company's accounts for the year ended 30 June 2006. The accounts are prepared in accordance with United Kingdom Generally Accepted Accounting Principles 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. 2. Income from investments held at fair value through profit or loss 2007 2006 Â£'000 Â£'000 Franked: Listed 24,983 21,769 Listed - special dividends 350 305 --------- --------- 25,333 22,074 --------- --------- Unfranked - listed investments: Interest from UK convertibles 37 103 Dividend income 1,278 1,194 Special dividends 86 132 --------- --------- 1,401 1,429 --------- --------- 26,734 23,503 ====== ====== 3. Other interest receivable and similar income 2007 2006 Â£'000 Â£'000 Bank interest 148 378 Underwriting commission 65 66 Stock lending 36 30 --------- --------- 249 474 ========= ========= 4. Return per ordinary share - basic The return per ordinary share is based on the net return attributable to the ordinary shares of Â£126,986,000 (year ended 30 June 2006: Â£97,897,000) and on 208,399,576 ordinary shares (year ended 30 June 2006: 208,413,762) being the weighted average number of ordinary shares in issue during the year. - MORE - - 8 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2007 The return per ordinary share can be further analysed between revenue and capital, as below. Year ended Year ended 30 June 2007 30 June 2006 Â£'000 Â£'000 Net revenue return 24,147 21,208 Net capital return 102,839 76,689 --------- --------- Net total return 126,986 97,897 ========= ========= Weighted average number of ordinary shares in issue during the year 208,399,576 208,413,762 Revenue return per ordinary share 11.59p 10.18p Capital return per ordinary share 49.34p 36.79p --------- --------- Total return per ordinary share 60.93p 46.97p ========= ========= The Company does not have any dilutive securities. 5. Net asset value per ordinary share The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of Â£718,657,000 (2006: Â£614,139,000) and on 207,930,040 (2006: 208,413,762) shares in issue on 30 June 2007. 6. Issued share capital There were 207,930,040 ordinary shares of 25p in issue at 30 June 2007 (30 June 2006: 208,413,762) for the purpose of calculating the net asset value per ordinary share. During the year the Company repurchased for cancellation 483,722 ordinary shares at a total cost of Â£1,463,000. 7. 2007 accounts The preliminary figures for the year ended 30 June 2007 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. 8. 2006 accounts The figures and financial information for the year ended 30 June 2006 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. 9. Annual Report The full Annual Report and Accounts will be posted to shareholders in September 2007 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 Wednesday 10 October 2007 at 3.00 pm. - MORE - - 9 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Preliminary Results for the year ended 30 June 2007 Top 40 Investments as at 30 June 2007 The 40 largest investments, representing 79.81% 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 UKLA Listing Rules, the comparative value as at 30 June 2006 is provided for the top ten holdings. The stock marked * was not in the top ten last year. For additional clarity, the stock which was in the top ten last year but not this year is marked #. Market values reflect changes in the value of underlying shares and portfolio changes. Market Market Market Value Value Value 2007 2006 2007 Â£'000 Â£'000 Â£'000 BP 35,577 30,895 ENI 13,576 Vodafone * 33,560 11,525 BHP Billiton 11,815 British American Tobacco 32,262 25,878 Unilever 11,305 HSBC 32,025 33,303 Scottish & Newcastle 9,928 Royal Dutch Shell 29,162 18,910 Reed Elsevier 9,698 BT 27,597 19,858 Bovis Homes 8,930 Diageo 27,481 24,102 Legal & General 8,256 Barclays 24,360 21,507 Britvic 8,132 Lloyds TSB 23,630 22,589 BAE Systems 8,100 GlaxoSmithKline 22,838 22,665 Rexam 7,980 Royal Bank of Scotland 21,459 Wolseley 7,212 National Grid Transco 19,188 Pearson 6,323 Tesco 16,740 United Utilities 6,031 Land Securities # 16,558 Reckitt Benckiser 5,470 Rio Tinto 16,265 Imperial Tobacco 5,306 Scottish & Southern Energy 15,939 IMI 5,062 Aviva 14,870 Premier Foods 5,014 HBOS 14,783 Greene King 4,867 Anglo American 14,725 Croda 4,777 Cadbury Schweppes 13,600 Kingfisher 4,756 - 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

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