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
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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.
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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
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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.
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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
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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)
====== ====== ======
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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.
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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.
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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
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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
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