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City of London IT (CTY)

  Print      Mail a friend       Annual reports

Friday 07 September, 2001

City of London IT

Final Results

City of London Investment Trust PLC
7 September 2001


7 September 2001


     THE CITY OF LONDON INVESTMENT TRUST PLC

     Unaudited Preliminary Results for the year ended 30 June 2001

Highlights

  * City of London (net asset value total return +0.9%) outperformed the
    FTSE All-Share (total return -7.8%).
  * Dividends per share +4.5%.
  * New performance-related management fee.
  * Simon de Zoete to succeed Jim Titcomb as Chairman following the Annual
    General Meeting on 1 November 2001.

Performance

During the year under review, the UK equity market was adversely affected by
the poor performance of the Telecommunications, Media and Technology ('TMT')
sectors. Growth from companies in these sectors was significantly below
investors' expectations and the declines in their share prices were
particularly severe as valuations were spectacularly high. Overall, the FTSE
All-Share Index produced a negative total return of 7.8%.

By contrast, City of London benefited from having a low exposure to the TMT
sectors and produced a positive net asset value total return of 0.9%. Over
five years, City of London's net asset value total return is markedly better
than the FTSE All-Share Index total return.

Dividends

A fourth interim dividend of 1.98p was paid on 31 August 2001, making a total
net dividend for the year of 7.50p. This increase of 4.5% over the previous
year continued the Company's unbroken record of annual dividend increases
since 1966.

For the year to 30 June 2002, the Board is forecasting a 5.6% increase in the
Company's total net dividend to 7.92p, payable at the new quarterly rate of
1.98p.

                                   - MORE -



                                    - 2 -

                   THE CITY OF LONDON INVESTMENT TRUST PLC

        Unaudited Preliminary Results for the year ended 30 June 2001

Management Fee

The Board has agreed with Henderson Global Investors to relate part of the
management fee to the investment performance that has been achieved. The
target is to outperform the Company's long-standing benchmark, the FTSE
All-Share Index, in terms of total return.

The new fee arrangements, which were introduced in January 2001, have had the
effect of reducing the base management fee from 0.35% per annum to an
effective rate of 0.28% per annum for the coming year. An additional fee will
be paid at the rate of 0.1% for each 1% of outperformance, on a three year
rolling average basis, against the FTSE All-Share Index up to a maximum
combined base and performance fee of 0.5%. Until 30 June 2003, interim
arrangements have been put in place. Full details are on page 8.

Expenses

For the year to 30 June 2001, excluding interest but including the proportion
of the management fee which is charged to capital, total expenses amounted to
0.48% of assets under management. A performance fee of £337,000 was earned in
respect of the second half of the period.

Prospects

Over the next year the strength of the consumer sector, underpinned by the low
level of interest rates, should mitigate the impact on the United Kingdom of
the slowdown in world trade. Although the current valuation of the UK equity
market has become less demanding, the prospects for corporate earnings growth,
especially for exporters, are uncertain. An improvement in the United States'
and Continental European economies is necessary for overall stockmarket
progress. As confidence returns, there is the potential for reasonable
progress in share prices from current levels.





                                   - MORE -

                                    - 3 -

                   THE CITY OF LONDON INVESTMENT TRUST PLC

        Unaudited Preliminary Results for the year ended 30 June 2001

Statement of Total Return (incorporating the revenue account)

for the year ended 30 June 2001

                               Year ended 30 June 2001 Year ended 30 June 2000
                               Revenue Capital  Total Revenue  Capital    Total
                                 £'000   £'000  £'000   £'000    £'000    £'000

Total capital losses from            - (6,257) (6,257)       - (20,709) (20,709)
investments
Income from fixed asset         19,800       - 19,800  17,892        -   17,892
investments
Other interest receivable and      217       -    217     180        -      180
similar income
                               ------- ------- ------ ------- -------- --------
Gross revenue and capital       20,017 (6,257) 13,760  18,072 (20,709)  (2,637)
(losses)/gains
Management fee                   (730) (1,704) (2,434) (1,499)   (750)  (2,249)
Other administrative expenses    (373)       -   (373)   (385)       -    (385)
                               ------- ------- ------ ------- -------- ---------
Net return/(loss) on ordinary
activities
before interest payable and     18,914 (7,961) 10,953  16,188 (21,459)  (5,271)
taxation
Interest payable               (1,286) (3,000) (4,286) (2,161) (2,161)  (4,322)
                               ------- ------- ------- ------- ------- ---------
Net return/(loss) on ordinary
activities
before taxation                 17,628 (10,961)  6,667  14,027 (23,620)  (9,593)
Taxation on net return/(loss)    (117)     117      -      (67)     67        -
on ordinary
activities
                               ------- ------- ------- ------- ------- ---------
Net return/(loss) on ordinary
activities
after taxation                  17,511 (10,844)  6,667  13,960 (23,553)  (9,593)
Dividends :
Preference and preferred         (190)       -    (190)   (190)      -     (190)
ordinary stocks
                               ------- ------- ------- ------- ------- ---------
Net return/(loss) attributable  17,321 (10,844)  6,477  13,770 (23,553)  (9,783)
to the ordinary shares
                               ------- ------- ------- ------- ------- ---------
Dividends:
Ordinary shares
Three interim payments of      (11,368)      - (11,368)(11,248)      -  (11,248)
1.84p (2000: 1.78p)
Fourth interim payment of       (4,067)      -  (4,067) (3,834)      -   (3,834)
1.98p (2000: 1.84p)
                               ------- ------- ------- ------- ------- ---------
                               (15,435)      - (15,435)(15,082)      -  (15,082)
                               ------- ------- ------- ------- ------- ---------
Transfer to/(from) reserves      1,886 (10,844) (8,958) (1,312)(23,553) (24,865)
                                ======  ====== ======  ======   ======   ======
Return/(loss) per ordinary       8.40p (5.26)p  3.14p   6.54p (11.19)p  (4.65)p
share (note 1)
                                ======  ====== ======  ======   ======   ======

The revenue columns of this statement represent the revenue accounts of the
Company.



                                   - MORE -

                                    - 4 -

                   THE CITY OF LONDON INVESTMENT TRUST PLC

        Unaudited Preliminary Results for the year ended 30 June 2001

Balance Sheet

at 30 June 2001
                                         30 June 2001              30 June 2000
                                                £'000                     £'000

Fixed asset investments
Listed at market value in the United Kingdom              592,747       607,910
Shares in subsidiary undertakings                             347           347
                                                    ------------- -------------
                                                          593,094       608,257
                                                    ------------- -------------

Current Assets
Debtors                                                     2,100         2,050
Cash at bank                                                  544           347
                                                    ------------- -------------
                                                            2,644         2,397

Creditors: amounts falling due within one year            (7,054)       (5,867)
                                                    ------------- -------------
Net current liabilities                                   (4,410)       (3,470)
                                                    ------------- -------------

Total assets less current liabilities                     588,684       604,787

Creditors: amounts falling due after more than one       (46,000)      (46,000)
year
                                                    ------------- -------------
Total net assets                                          542,684       558,787
                                                          =======       =======

Capital and reserves
Called up share capital                                    53,436        54,183
Share premium account                                      28,249        28,249
Other capital reserves                                    448,732       465,974
Revenue reserve                                            12,267        10,381
                                                    ------------- -------------
Shareholders' funds (including non-equity interests       542,684       558,787
of £2,086,000)
                                                          =======       =======
Net asset value per ordinary share                         263.19p      267.14p
                                                           =======      =======




                                   - MORE -

                                    - 5 -

                   THE CITY OF LONDON INVESTMENT TRUST PLC

        Unaudited Preliminary Results for the year ended 30 June 2001

Cash Flow Statement

for the year ended 30 June 2001
                                            2001     2001         2000     2000
                                           £'000    £'000        £'000    £'000

Net cash inflow from operating                     17,532                16,489
activities

Servicing of finance
Debenture interest paid                  (3,583)               (3,412)
Bank interest paid                          (21)                  (57)
Dividends paid on preference and           (190)                 (191)
preferred
ordinary stocks
                                    --------------          --------------
Net cash outflow from servicing of                (3,794)               (3,660)
finance

Taxation
UK income tax paid                         (783)                 (793)
                                      ----------            ----------
Net tax paid                                        (783)                 (793)

Financial investment
Purchases of investments                (80,434)              (83,599)
Sales of investments                      90,023                87,772
Net cash received on futures                   -                   909
contracts
                                      ----------            ----------
Net cash inflow from financial                      9,589                 5,082
investment

Equity dividends paid                            (15,202)              (14,996)
                                                ----------            ----------
Net cash inflow before financing                    7,342                 2,122

Financing
Proceeds from issues of ordinary               -                 1,489
shares
Costs of repurchases of ordinary         (7,145)               (6,265)
shares
                                      ----------            ----------
Net cash outflow from financing                   (7,145)               (4,776)
                                                ----------            ----------
Increase/(decrease) in cash                           197               (2,654)
                                                 ========              ========



                                   - MORE -

                                    - 6 -

                   THE CITY OF LONDON INVESTMENT TRUST PLC

        Unaudited Preliminary Results for the year ended 30 June 2001

Notes:

1.    Return/(loss) per Ordinary Share

      Revenue return per ordinary share is based on earnings attributable to
      the ordinary shares of £17,321,000 (2000: £13,770,000) and on the
      weighted average number of ordinary shares in issue during the year of
      206,295,670 (2000: 210,454,674).

      Capital loss per ordinary share is based on the net capital losses for
      the year of £10,844,000 (2000: loss of £23,553,000) and on the weighted
      average number of ordinary shares in issue during the year of 206,295,670
      (2000: 210,454,674).

2.    Issued Share Capital

      There were 205,401,018 ordinary shares of 25p in issue at 30 June 2001
      (30 June 2000: 208,389,303) for the purpose of calculating the net asset
      value per ordinary share.

3.    Investment Company Status

      Prior to November 2000, the Company's Articles of Association did not
      meet the requirements of an investment company within the meaning of
      section 266 of the Companies Act 1985. In November 2000, the Company
      amended its Articles and reapplied to become an investment company within
      the meaning of section 266 of the Act and it continued to conduct its
      affairs as an investment trust for taxation purposes under section 842 of
      the Income and Corporation Taxes Act 1988. As such, the directors
      consider it necessary to continue to present the accounts in accordance
      with the SORP. Under the SORP, the financial performance of the Company
      is presented in a statement of total return in which the revenue column
      is the profit and loss account of the Company. The revenue column
      excludes net losses on disposals of investments, calculated by reference
      to their previous carrying amount of £3,929,000 (2000: gain of 
      £3,920,000) and management expenses and finance costs charged to capital
      of £1,704,000 and £3,000,000 respectively (2000: £750,000 and £2,161,000)
      less tax relief thereon of £117,000 (2000: £67,000).

      Since the Company's Articles of Association did not meet the requirements
      of an investment company within the meaning of section 266 of the
      Companies Act 1985 until November 2000 the Companies Act and/or FRS 3
      would ordinarily require these items to be included in the profit and
      loss account. However, in the opinion of the directors the inclusion of
      these amounts in the profit and loss account would be misleading because
      it would obscure and distort both the revenue and capital performance of
      the Company, and would not show clearly the revenue profits emerging to
      be distributable by way of dividend. The directors therefore consider
      that these departures from the specific provisions of Schedule 4 of the
      Companies Act, relating to the form and content of accounts for companies
      other than investment companies, and these departures from accounting
      standards are necessary to give a true and fair view. The departures have
      no effect on total return or on the balance sheet.




                                    -MORE -

                                     - 7 -

                    THE CITY OF LONDON INVESTMENT TRUST PLC

         Unaudited Preliminary Results for the year ended 30 June 2001

4.    Share Buy-Backs

      During the year the Company purchased in the market for cancellation
      2,988,285 of its own issued ordinary shares, leaving a balance of
      205,401,018 ordinary shares for the purpose of the calculation of the net
      asset value per ordinary share. Subsequent to the year end, the Company
      purchased in the market for cancellation 150,000 of its own issued
      ordinary shares, leaving a balance of 205,251,018 at the date of this
      announcement.


5.    2001 Accounts

      The preliminary figures for the year ended 30 June 2001 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.


6.    2000 Accounts

      The figures and financial information for the year ended 30 June 2000 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.


7.    Annual Report

      The full annual report and accounts will be posted to shareholders in
      late September 2001 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 Thursday 1 November 2001
      at 3.00pm.




                                   - MORE -

                                    - 8 -

                   THE CITY OF LONDON INVESTMENT TRUST PLC

        Unaudited Preliminary Results for the year ended 30 June 2001


New Management Fee Arrangements

The management agreement between the Company and Henderson Global Investors
provides for the payment of an annual management fee. Until 31 December 2000
this was calculated as a percentage of the average value of the assets under
management on the last day of each of the two calendar years preceding the
calendar year in respect of which the calculation was made. The percentage
applicable until 31 December 2000 was 0.35% per annum. This fee was payable
quarterly in advance.

With effect from 1 January 2001 the management fee arrangements were amended
such that a base fee is calculated at the rate of 0.30% on the first £400
million of assets under management and 0.25% on assets under management in
excess of £400 million. Such fees are payable quarterly in arrears and on the
basis of assets under management at 30 June 2001, this would represent an
effective rate of approximately 0.28% for the year to 30 June 2002.

In addition, with effect from 1 January 2001, a performance fee is payable,
equivalent to 0.1% for every 1% outperformance against the Company's
benchmark, the FTSE All-Share Index, subject to an annual limit (including the
base management fee) of 0.5%. From 30 June 2004 this performance fee will be
calculated on the average outperformance over the three accounting years up to
that date.

In the interim period, the following provisions apply: for the year ended 30
June 2001, on the basis of performance from 1 January 2001 to 30 June 2001,
the performance fee was half of 0.1% for each 1% outperformance over that
period. The total fee for the six-month period was subject to a limit of 0.2%.

For the year to 30 June 2002, the performance fee will be 0.1% for each 1% of
annual outperformance over the period from 1 July 2001 to 30 June 2002 and
applied to assets under management in the 2001/2002 accounting year. Fifty per
cent. of any performance fee earned in this period will be retained by the
Company and will only be paid if a performance fee is earned in the period to
30 June 2003. The total fee is limited to 0.5%.

For the year to 30 June 2003, on the basis of performance from 1 July 2001 to
30 June 2003, the performance fee will be 0.1% for each 1% of average annual
outperformance over the period from 1 July 2001 to 30 June 2003. Again, the
total fee is limited to 0.5%.





                                   - MORE -


                                    - 9 -

                   THE CITY OF LONDON INVESTMENT TRUST PLC

        Unaudited Preliminary Results for the year ended 30 June 2001

The 40 largest equity investments (convertibles and all classes of equity in
any one company being treated as one investment) were as follows :

                           Valuation                                  Valuation
                                  at                                         at
                             30 June                                    30 June
                                2001                                       2001
                               £'000                                      £'000

GlaxoSmithKline               39,656       Unilever                       5,990
BP                            35,070       Cadbury Schweppes              5,754
Shell Transport &             34,869       GKN                            5,456
Trading
HSBC                          29,066       Royal & Sun Alliance           5,350
Vodafone                      25,144       Anglo American                 5,325
Lloyds TSB                    18,499       Six Continents                 5,325
AstraZeneca                   18,221       BAE Systems                    5,243
Royal Bank of Scotland        18,084       Scottish Power                 5,230
CGNU                          17,448       Compass                        5,121
Barclays                      13,625       Scottish & Southern            5,025
                                           Energy
Diageo                        11,700       National Grid                  4,716
Abbey National                 9,960       Reuters                        4,615
Tesco                          9,234       Smith & Nephew                 4,529
BT                             9,119       BG                             4,204
Land Securities                8,740       Cable & Wireless               4,183
British American Tobacco       8,640       Halifax                        4,110
Prudential                     8,610       Reckitt Benckiser              4,038
Legal & General                8,063       Safeway                        4,028
Rio Tinto                      7,572       Allied Domecq                  3,989
Bank of Scotland               6,826       Great Universal Stores         3,955

These investments represent 73.27% of the portfolio.


                                   - ENDS -


For further information please contact :

Job Curtis

Portfolio Manager

The City of London Investment Trust plc

Telephone: 020 7818 4367

Vicki Staveacre

Henderson Global Investors

The Press Office

Telephone: 020 7818 4222



              Issued by The City of London Investment Trust plc