Interim Results

City of London Investment Trust PLC 14 February 2003 13 February 2003 THE CITY OF LONDON INVESTMENT TRUST PLC UNAUDITED INTERIM RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2002 Summary 6 months 3 Years 5 Years % % % The City of London Investment Trust plc Net Asset Value Total Return * -16.4 -28.1 -7.4 FTSE All-Share Index Total Return # -15.1 -36.9 -10.9 Average UK Growth & Income Investment Trust Net Asset Value Total Return * = -18.4 -22.4 -1.3 * Source: AITC Services Limited # Source: Datastream = Size weighted average - MORE - - 2 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2002 Extracts from the Chairman's Statement:- The UK along with other leading world equity markets produced a very disappointing performance in the second six months of 2002 with a negative total return of 15.1% on the FTSE All-Share Index. Market expectations for corporate profits proved to be too high as overcapacity persisted in many industries. Rising political tension in the Middle East led to a strong oil price with adverse cost implications for both companies and consumers. UK base rates remained at 4% throughout the period. UK economic growth was better than that of the other major economies with consumer spending and house prices outside London remaining robust. Life assurance companies, however, continued to switch out of equities into British government bonds in response to regulatory solvency ratios. Performance City of London's objective is to outperform over the long term the total return of the FTSE All-Share Index. We set out to be a straightforward investment vehicle that gives an above average yield and seeks to be one of the leading candidates for regular savings and investment. For the six month period, City of London's portfolio performed relatively well but gearing, although at modest levels, led to an overall performance which was 1.3 percentage points behind the FTSE All-Share Index. Over three and five years, City of London is ahead by 8.8 and 3.5 percentage points respectively. Dividends The Board declared on 13 February 2003 a third interim dividend of 2.00p per ordinary share, a 1% increase in the dividend rate compared with last year. The dividend will be paid on 31 May and the shares will trade ex-dividend with regard to this payment from Wednesday 5 March 2003. Expenses Total expenses were substantially lower than in the same period of the previous year. The management fees were well down, reflecting the absence of a performance fee for the six months to December 2002 and the lower level of assets under management. Other administrative expenses were higher principally because of the costs of launching the new City of London Alliance Trust Pension Plan. - MORE - - 3 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2002 Henderson Geared Income & Growth Trust plc Henderson Geared Income & Growth Trust plc is a UK investment trust managed by Henderson Global Investors which reaches the end of its fixed life on 7 March 2003. It has a broadly similar investment portfolio to City of London. A maximum of 8 million City of London shares are being offered as one alternative to Henderson Geared Income & Growth shareholders for reinvestment. The new City of London shares will be issued at a 1/2% premium to net asset value. The increased number of shares in issue will reduce the overall running costs per share for City of London shareholders. Outlook After three difficult years for world stock markets, and a fall of 9.1% in January in the FTSE All-Share Index, investor expectations are low. The historic dividend yield for the UK equity market is about 3.8% which, given the long term prospects for growth in company profits and dividends, compares favourably with the current level of base rates 3.75% and the yield on ten year British government bonds of 4.2%. In the short term, the market may continue to be adversely affected by uncertainty ahead of a possible war in Iraq, structural selling by life assurance companies and tough competitive conditions in many industries. We do, however, feel that at the current level UK share prices already reflect many of the problems and offer good long term value. S M de Zoete - MORE - - 4 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2002 STATEMENT OF TOTAL RETURN (incorporating the revenue account) for the half year ended 31 December 2002 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 31 December 2002 31 December 2001 30 June 2002 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 --------- -------- -------- --------- -------- -------- -------- -------- -------- Capital losses from - (80,648) (80,648) - (40,832) (40,832) - (72,856) (72,856) investments Income from fixed asset 7,896 - 7,896 7,451 - 7,451 17,697 - 17,697 investments Other interest receivable and similar income 94 - 94 63 - 63 156 - 156 -------- -------- -------- -------- -------- -------- -------- -------- -------- Gross revenue and capital 7,990 (80,648) (72,658) 7,514 (40,832) (33,318) 17,853 (72,856) (55,003) losses Management fee (note 2) (213) (496) (709) (307) (718) (1,025) (516) (2,535) (3,051) Other administrative (293) - (293) (216) - (216) (400) - (400) expenses -------- -------- -------- -------- -------- -------- -------- -------- -------- Net return/(loss) on ordinary activities before interest payable and taxation 7,484 (81,144) (73,660) 6,991 (41,550) (34,559) 16,937 (75,391) (58,454) Interest payable (675) (1,577) (2,252) (648) (1,510) (2,158) (1,310) (3,056) (4,366) -------- -------- -------- -------- -------- -------- -------- -------- -------- Net return/(loss) on ordinary activities before 6,809 (82,721) (75,912) 6,343 (43,060) (36,717) 15,627 (78,447) (62,820) taxation Taxation on net return on ordinary (61) 50 (11) (40) 40 - (85) 85 - activities -------- -------- -------- --------- --------- --------- -------- -------- -------- Net return/(loss) on ordinary activities after 6,748 (82,671) (75,923) 6,303 (43,020) (36,717) 15,542 (78,362) (62,820) taxation Dividends: Preference and preferred ordinary (95) - (95) (95) - (95) (190) - (190) stocks -------- -------- -------- --------- --------- --------- -------- -------- -------- Net return/(loss) attributable to the 6,653 (82,671) (76,018) 6,208 (43,020) (36,812) 15,352 (78,362) (63,010) ordinary shares -------- -------- -------- --------- --------- --------- -------- -------- -------- Dividends: Ordinary shares First interim 2.00p (2001: (4,118) - (4,118) (4,064) - (4,064) (4,064) - (4,064) 1.98p) Second interim 2.00p (2001: 1.98p) (4,122) - (4,122) (4,064) - (4,064) (4,064) - (4,064) Third interim (2002: 1.98p) - - - - - - (4,064) - (4,064) Fourth interim (2002: - - - - - - (4,105) - (4,105) 2.00p) -------- -------- -------- --------- --------- --------- -------- -------- -------- (8,240) - (8,240) (8,128) - (8,128) (16,297) - (16,297) -------- -------- -------- -------- -------- --------- --------- -------- --------- Transfer from reserves (1,587) (82,671) (84,258) (1,920) (43,020) (44,940) (945) (78,362) (79,307) ===== ===== ===== ===== ===== ===== ===== ===== ===== Return/(loss) per ordinary share 3.24p (40.23p) (36.99p) 3.02p (20.95p) (17.93p) 7.48p (38.18p) (30.70p) (note 3) The revenue columns of this statement represent the revenue accounts of the company. - MORE - - 5 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2002 Balance Sheet As at 31 December 2002 (Unaudited) (Unaudited) (Audited) 31 December 31 December 30 June 2002 2001 2002 £'000 £'000 £'000 ------------- ------------- ------------- Fixed asset investments Listed at market value 438,691 547,007 513,924 Shares in subsidiary undertakings 347 347 347 ---------- ---------- ---------- Fixed asset investments 439,038 547,354 514,271 ---------- ---------- ---------- Current assets Debtors 1,650 1,509 2,332 Bank balances 468 966 52 ---------- ---------- ---------- 2,118 2,475 2,384 Creditors: amounts falling due within one year (15,156) (6,431) (7,623) ---------- ---------- ---------- Net current liabilities (13,038) (3,956) (5,239) Total assets less current liabilities 426,000 543,398 509,032 Creditors: amounts falling due after more than one (46,000) (46,000) (46,000) year ---------- ---------- ---------- Total net assets 380,000 497,398 463,032 ---------- ---------- ---------- Capital and reserves Called-up share capital 53,557 53,398 53,398 Share premium account 29,316 28,249 28,249 Other capital reserves 287,392 405,404 370,063 Revenue reserve 9,735 10,347 11,322 ---------- ---------- ---------- Total shareholders' funds (including non-equity 380,000 497,398 463,032 interests of £2,086,000) ====== ====== ====== Net asset value per ordinary share (note 4) 183.56p 241.32p 224.58p - MORE - - 6 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2002 Cash Flow Statement for the half year ended 31 December 2002 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 31 December 2002 31 December 2001 30 June 2002 £'000 £'000 £'000 ----------- ----------- ----------- Net cash inflow from operating activities 6,777 6,710 15,374 Net cash outflow from servicing of finance (2,331) (2,253) (4,551) Total tax recovered - - 18 Net cash (outflow)/inflow from purchases and sale of investments (5,094) 4,442 5,147 Equity dividends paid (8,223) (8,131) (16,259) ---------- ---------- ---------- Net cash (outflow)/inflow before financing (8,871) 768 (271) Net cash inflow/(outflow) from financing 9,190 (346) (345) ---------- ---------- ---------- Increase/(decrease) in cash 319 422 (616) ====== ====== ====== Reconciliation of operating revenue to net cash inflow from operating activities Net revenue before interest payable and taxation 7,484 6,991 16,937 Decrease/(increase) in prepayments and accrued income 459 591 (21) (Decrease)/increase in other creditors (653) (154) 993 Management fees taken to other capital reserves (496) (718) (2,535) Overseas withholding tax (17) - - ---------- ---------- ---------- Net cash inflow from operating activities 6,777 6,710 15,374 ====== ====== ====== Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash as above 319 422 (616) Exchange movements (91) - 124 Cash inflow from drawdown of loans (7,964) - - Net debt at the beginning of the period (45,948) (45,456) (45,456) ----------- ----------- ---------- Net debt at the end of the period (53,684) (45,034) (45,948) ====== ====== ====== Represented by: Cash at bank less bank overdrafts 340 966 52 Debt falling due within one year (8,024) - - Debt falling due after more than one year (46,000) (46,000) (46,000) ---------- ---------- ---------- (53,684) (45,034) (45,948) ====== ====== ====== - MORE - - 7 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2002 Notes 1. Expenses charged to capital The Company charges to capital 70% of its finance costs and management fees. The performance fee is charged to capital. All other expenses are charged wholly to revenue. Expenses which are incidental to the purchase or sale of a fixed asset investment are included in the cost or deducted from the proceeds of the sale of investment. 2. Management Fee No accrual has been made for a performance fee in respect of the half year ended 31 December 2002, reflecting the movement of the Company's net asset value relative to that of its benchmark, the FTSE All-Share Index, Total Return. The performance fee for the half year ended 31 December 2001 was £171,000 and for the year ended 30 June 2002 was £1,330,000. For the half year ended 31 December 2001 70% of the performance fee was charged to capital. For the year ended 30 June 2002 100% was charged to capital. All amounts quoted are inclusive of irrecoverable VAT. 3. Return/(loss) per ordinary share Revenue return per ordinary share is based on the earnings attributable to the ordinary shares of £6,653,000 (half year ended 31 December 2001: £6,208,000; year ended 30 June 2002: £15,352,000) and 205,529,606 ordinary shares being the weighted average number of ordinary shares in issue for the period (half year ended 31 December 2001: 205,272,758; year ended 30 June 2002: 205,261,977. Capital loss per share is based on net capital losses of £82,671,000 (half year ended 31 December 2001: losses of £43,020,000; year ended 30 June 2002: losses of £78,362,000) and on the weighted average number of ordinary shares in issue as stated above. 4. Net asset value per share The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £377,914,000 (31 December 2001: £495,312,000; 30 June 2002: £460,946,000) and on 205,885,294 ordinary shares (31 December 2001: 205,251,018; 30 June 2002: 205,251,018) being the number of ordinary shares in issue at the end of the period. 5. Allotments During the half year to 31 December 2002, the Company allotted a total of 634,276 shares. Between the half year end and the date of this report a further 738,000 shares were allotted. 6. Buy-Backs During the half year to 31 December 2002, the Company made no purchases for cancellation of its own issued ordinary shares of 25p. 7. Interim Dividends The first interim dividend of 2.00p was paid on 30 November 2002. The second interim dividend of 2.00p will be paid on 28 February 2003 to shareholders on the Register of Members on 17 January 2003. The third interim dividend of 2.00p will be paid on 31 May 2003 to shareholders on the Register of Members on 7 March 2003. 8. Accounts for the year ended 30 June 2002 The figures and financial information for the year ended 30 June 2002 are an extract from the latest published accounts of the Company and do not constitute statutory accounts for that year. These accounts have been delivered to the Registrar of Companies and included in the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or 237(3) of the Companies Act 1985. - MORE - - 8 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2002 9. Interim Report Copies of the Company's interim report for the half year ended 31 December 2002 will be posted to shareholders in February 2003 and will be available thereafter from the Secretary at the Registered Office, 4 Broadgate, London EC2M 2DA. - MORE - - 9 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2002 Largest Investments The 60 largest investments, convertibles and all classes of equity in any one company being treated as one investment, were as follows: Market value Market value 31 December 2002 31 December 2002 £'000 £'000 BP 27,755 Allied Domecq 3,573 GlaxoSmithKline 25,032 Slough Estates 3,390 Shell Transport & Trading 24,540 BSkyB 3,307 HSBC 23,684 Associated British Ports 3,196 Vodafone 19,819 BHP Billiton 3,177 Royal Bank of Scotland 16,368 Wolseley 3,129 AstraZeneca 11,766 BOC 3,108 Barclays 11,550 Cadbury Schweppes 3,096 Diageo 10,125 Gallaher 3,085 British American Tobacco 9,928 BG 3,082 HBOS 9,825 Bovis Homes 2,880 Lloyds TSB 8,920 Hammerson 2,826 National Grid Transco 8,816 Compass 2,805 Aviva 7,088 Sainsbury (J) 2,787 Tesco 6,984 Scottish Power 2,719 Land Securities 6,869 Rank 2,665 Rio Tinto 6,820 Reed Elsevier 2,660 Unilever 6,501 United Utilities 2,652 Legal & General 5,141 Rodamco Europe 2,624 Scottish & Southern Energy 5,100 Next 2,578 Reckitt Benckiser + 4,681 Marks & Spencer 2,550 BT 4,680 GUS 2,308 Anglo American 4,612 Tomkins 2,280 Prudential 4,390 BAA 2,268 Kingfisher 4,045 Liberty International 2,258 Smith & Nephew 3,805 Severn Trent 2,256 Imperial Tobacco 3,693 Alliance & Leicester 2,238 Johnston Press 3,611 Safeway 2,132 Boots 3,604 Smiths 2,086 Six Continents 3,598 Abbey National 2,072 These investments total £375,137,000 or 85.51% of the portfolio. + includes convertibles - MORE - - 10 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2002 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 Vicki Staveacre Henderson Press Office Telephone: 020 7818 4222 - ENDS - This information is provided by RNS The company news service from the London Stock Exchange

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