Interim Results

City of London Investment Trust PLC 12 February 2004 11 February 2004 THE CITY OF LONDON INVESTMENT TRUST PLC UNAUDITED INTERIM RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2003 Total Returns* Six Months to 31 December 2003 Net asset value per ordinary share +13.23% Ordinary share price +4.63% FTSE All-Share Index +13.67% NAV underperformance -0.44% *Source: AITC Services Limited Extracts from the Chairman's Statement:- Confidence in UK equities continued to improve in the six months to 31 December 2003 and the FTSE All-Share Index produced a total return of 13.67%. Given the lack of inflationary pressure, the Bank of England cut interest rates in July from 3.75% to 3.5%, the lowest level since the 1940s. UK consumer demand remained robust with a low level of unemployment, house prices firm and credit growth strong. The rebound in the US economy and buoyant demand from China helped UK companies with interests in those areas although some of the benefit was lost due to the fall in the dollar. Interest rates were moved back to 3.75% in November as evidence of the strength of the UK economy mounted. Performance City of London produced a net asset value total return for the six months of 13.23%. It is disappointing to have been marginally behind our benchmark, the FTSE All-Share Index, by 0.44%. This is understandable however as the strongest element in the upward movement of the market can be attributed to the recovery of small companies and those that had done particularly badly in the preceding three years of falling markets. A number of these companies have low dividend cover or do not pay a dividend and therefore are not particularly suitable for the portfolio. Gearing made a positive contribution over the six months. Longer term performance has remained satisfactory with City of London ahead of the FTSE All-Share over three and five years by 4.9 and 5.4 percentage points respectively. - MORE - - 2 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2003 Expenses Expenses remained under tight control. For the six months to 31 December 2003, excluding interest but including the portion of the management fee which is charged to capital, they amounted to 0.21% of assets under management. Dividends In line with our objective of providing long term dividend growth, the Board declared on 11 December 2003 a second interim dividend of 2.07p per ordinary share. This is a 3.5% increase in the dividend rate compared with last year and is above the rate of inflation. The dividend will be paid on 27 February 2004 and the shares traded ex-dividend with regard to this payment from 4 February. Savings City of London sets out to be a straightforward investment vehicle and seeks to be one of the leading candidates for regular savings and investment. Currently the dividend yield is above the average of the UK equity market. Outlook The UK economy seems set for a period of growth with historically low inflation. The main risks are the large and growing fiscal and trade deficits and the level of consumer debt. Growth in the economy should to some extent alleviate these problems, but interest rate rises or tax increases may also be necessary. Against this UK economic background and improving growth overseas, the outlook for corporate profits should improve although further weakness in the US dollar would be a problem for some companies. The valuation of the UK equity market has risen with the dividend yield of the FTSE All-Share falling to 3.1%. We believe that the valuation of many smaller companies is well up with events with the yield of the FTSE Small Cap only 2.2%. Large companies offer better value and we remain committed to this area of the equity market. S M de Zoete - MORE - - 3 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2003 STATEMENT OF TOTAL RETURN (incorporating the revenue account) for the half year ended 31 December 2003 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 31 December 2003 31 December 2002 30 June 2003 Revenue Capital Total Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 --------- -------- -------- --------- -------- -------- -------- -------- -------- Total capital gains/ - 46,459 46,459 - (80,648) (80,648) - (63,399) (63,399) (losses) from Investments Income from fixed asset 8,890 - 8,890 7,896 - 7,896 18,657 - 18,657 Investments Other interest receivable 110 - 110 94 - 94 170 - 170 and similar income -------- -------- -------- -------- -------- -------- -------- -------- -------- Gross revenue and capital 9,000 46,459 55,459 7,990 (80,648) (72,658) 18,827 (63,399) (44,572) gains/(losses) Management fee (234) (545) (779) (213) (496) (709) (426) (994) (1,420) Other administrative (261) - (261) (293) - (293) (526) - (526) expenses -------- -------- -------- -------- -------- -------- -------- -------- -------- Net return/(loss) on ordinary activities before interest payable and 8,505 45,914 54,419 7,484 (81,144) (73,660) 17,875 (64,393) (46,518) taxation Interest payable (641) (1,495) (2,136) (675) (1,577) (2,252) (1,339) (3,125) (4,464) -------- -------- -------- -------- -------- -------- -------- -------- -------- Net return/(loss) on 7,864 44,419 52,283 6,809 (82,721) (75,912) 16,536 (67,518) (50,982) ordinary activities before taxation Taxation on net return on (11) - (11) (61) 50 (11) (81) - (81) ordinary activities -------- -------- -------- -------- -------- -------- -------- -------- -------- Net return/(loss) on 7,853 44,419 52,272 6,748 (82,671) (75,923) 16,455 (67,518) (51,063) ordinary activities after taxation Dividends: Preference and preferred (95) - (95) (95) - (95) (190) - (190) ordinary stocks -------- -------- -------- -------- -------- -------- -------- -------- -------- Net return/(loss) 7,758 44,419 52,177 6,653 (82,671) (76,018) 16,265 (67,518) (51,253) attributable to the ordinary shares -------- -------- -------- -------- -------- -------- -------- -------- -------- Dividends: Ordinary shares First interim 2.07p (4,343) - (4,343) (4,118) - (4,118) (4,118) - (4,118) (2002/2003: 2.00p) Second interim 2.07p (4,343) - (4,343) (4,122) - (4,122) (4,122) - (4,122) (2002/2003: 2.00p) Third interim - - - - - - (4,133) - (4,133) (2002/2003: 2.00p) Fourth interim - - - - - - (4,343) - (4,343) (2002/2003: 2.07p) -------- -------- -------- -------- -------- -------- -------- -------- -------- (8,686) - (8,686) (8,240) - (8,240) (16,716) - (16,716) -------- -------- -------- -------- -------- -------- --------- -------- --------- Transfer (from)/to reserves (928) 44,419 43,491 (1,587) (82,671) (84,258) (451) (67,518) (67,969) ===== ===== ===== ===== ===== ===== ===== ===== ===== Return/(loss) per ordinary 3.70p 21.17p 24.87p 3.24p (40.23p) (36.99p) 7.87p (32.66p) (24.79p) share (note 2) The revenue columns of this statement represent the revenue accounts of the company. - MORE - - 4 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2003 Balance Sheet As at 31 December 2003 (Unaudited) (Unaudited) (Audited) 31 December 31 December 30 June 2003 2002 2003 Â£'000 Â£'000 Â£'000 ------------- ------------- ------------- Fixed asset investments Listed at market value in the United Kingdom 483,775 436,067 440,922 Listed at market value overseas 10,788 2,624 9,753 Shares in subsidiary undertaking 347 347 347 ---------- ---------- ---------- Fixed asset investments 494,910 439,038 451,022 ---------- ---------- ---------- Current assets Debtors 2,025 1,650 2,113 Bank balances and short term deposits 2,528 468 2,599 ---------- ---------- ---------- 4,553 2,118 4,712 Creditors: amounts falling due within one year (6,708) (15,156) (6,470) ---------- ---------- ---------- Net current liabilities (2,155) (13,038) (1,758) ---------- ---------- ---------- Total assets less current liabilities 492,755 426,000 449,264 Creditors: amounts falling due after more than one (46,000) (46,000) (46,000) year ---------- ---------- ---------- Total net assets 446,755 380,000 403,264 ---------- ---------- ---------- Capital and reserves Called-up share capital 54,539 53,557 54,539 Share premium account 35,309 29,316 35,309 Other capital reserves 346,964 287,392 302,545 Revenue reserve 9,943 9,735 10,871 ---------- ---------- ---------- Total shareholders' funds (including non-equity 446,755 380,000 403,264 interests of Â£2,086,000) ====== ====== ====== Net asset value per ordinary share (note 3) 211.94p 183.56p 191.21p - MORE - - 5 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2003 Cash Flow Statement for the half year ended 31 December 2003 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 31 December 2003 31 December 2002 30 June 2003 Â£'000 Â£'000 Â£'000 ----------- ----------- ----------- Net cash inflow from operating activities 8,291 6,777 15,386 Net cash outflow from servicing of finance (2,231) (2,331) (4,648) Total tax recovered - - 7 Net cash inflow/(outflow) from purchases and sales of 2,557 (5,094) 3,713 investments Equity dividends paid (8,686) (8,223) (16,478) ---------- ---------- ---------- Net cash outflow before financing (69) (8,871) (2,020) Net cash inflow from financing - 9,190 4,528 ---------- ---------- ---------- (Decrease)/increase in cash (69) 319 2,508 ====== ====== ====== Reconciliation of operating revenue to net cash inflow from operating activities Net revenue before interest payable and taxation 8,505 7,484 17,875 Decrease in accrued income 322 459 45 Increase/(decrease) in other creditors 28 (653) (1,397) Management charge taken to other capital reserves (545) (496) (994) Overseas withholding tax suffered (19) (17) (143) ---------- ---------- ---------- Net cash inflow from operating activities 8,291 6,777 15,386 ====== ====== ====== Reconciliation of net cash (outflow)/inflow to movement in net debt (Decrease)/increase in cash as above (69) 319 2,508 Exchange movements (2) (91) (175) Cash (inflow)/outflow from drawdown of loans - (7,964) 214 Net debt at the beginning of the period (43,401) (45,948) (45,948) ----------- ----------- ---------- Net debt at the end of the period (43,472) (53,684) (43,401) ====== ====== ====== Represented by: Cash at bank and short term deposits 2,528 340 2,599 Debt falling due within one year - (8,024) - Debt falling due after more than one year (46,000) (46,000) (46,000) ---------- ---------- ---------- (43,472) (53,684) (43,401) ====== ====== ====== - MORE - - 6 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2003 Notes 1. Expenses charged to capital The Company charges to capital 70% of its finance costs and management fees. 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. Return/(loss) per ordinary share Revenue return per ordinary share is based on the earnings attributable to the ordinary shares of Â£7,758,000 (half year ended 31 December 2002: Â£6,653,000; year ended 30 June 2003: Â£16,265,000) and 209,813,762 ordinary shares being the weighted average number of ordinary shares in issue for the period (half year ended 31 December 2002: 205,529,606; year ended 30 June 2003: 206,745,219). Capital return per share is based on net capital gains of Â£44,419,000 (half year ended 31 December 2002: losses of Â£82,671,000; year ended 30 June 2003: losses of Â£67,518,000) and on the weighted average number of ordinary shares stated above. 3. 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£444,669,000 (31 December 2002: Â£377,914,000; 30 June 2003: Â£401,178,000) and on 209,813,762 ordinary shares (31 December 2002: 205,885,294; 30 June 2003: 209,813,762) being the number of ordinary shares in issue at the end of the period. 4. Interim Dividends The first interim dividend of 2.07p was paid on 28 November 2003. The second interim dividend of 2.07p will be paid on 27 February 2004 to shareholders on the register on 6 February 2004. 5. Accounts for the year ended 30 June 2003 The figures and financial information for the year ended 30 June 2003 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. 6. Interim Report Copies of the Company's interim report for the half year ended 31 December 2003 will be posted to shareholders in March 2004 and will be available thereafter from the Secretary at the Registered Office, 4 Broadgate, London EC2M 2DA. - MORE - - 7 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2003 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 2003 31 December 2003 Â£'000 Â£'000 HSBC 33,364 Allied Domecq 3,879 BP 30,125 Next 3,650 Shell Transport & Trading 25,761 Imperial Tobacco 3,575 GlaxoSmithKline 24,064 Reckitt & Colman+ 3,354 Vodafone 23,545 Scottish Power 3,350 Royal Bank of Scotland 17,283 RMC 3,313 Barclays 14,948 Rodamco Europe 3,253 AstraZeneca 13,400 Tomkins 3,210 HBOS 13,023 Sainsbury (J) 3,128 British American Tobacco 12,320 Compass 3,040 Lloyds TSB 11,200 Reed Elsevier 3,037 Diageo 10,658 Gallaher 3,000 Tesco 9,279 BOC 2,987 Land Securities 8,680 BHP Billiton 2,928 Aviva 6,864 Cadbury Schweppes 2,872 Rio Tinto 6,172 BSkyB 2,812 Anglo American 6,035 Rank 2,793 Unilever 5,911 BPB 2,776 National Grid Transco 5,664 Liberty International 2,730 Legal & General 5,368 GUS 2,707 Scottish & Southern Energy 5,048 IMI 2,529 BT 4,895 BAA 2,481 Wolseley 4,740 Granada 2,440 Johnston Press 4,564 Severn Trent 2,434 Kingfisher 4,431 GKN 2,403 Slough Estates 4,393 Marks & Spencer 2,340 Prudential 4,250 Smiths 2,314 Boots 4,250 Provident Financial 2,277 Bovis Homes 4,055 Hammerson 2,266 Smith & Nephew 3,989 Associated British Ports 2,245 These investments total Â£414,402,000 or 83.79% of the portfolio. + includes convertibles - MORE - - 8 - THE CITY OF LONDON INVESTMENT TRUST PLC Unaudited Interim Results for the half year ended 31 December 2003 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 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 END IR QKDKNABKDBBD

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