Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

City of London IT (CTY)

  Print      Mail a friend       Annual reports

Wednesday 14 September, 2011

City of London IT

Final Results

RNS Number : 2301O
City of London Investment Trust PLC
14 September 2011
 



 

14 September 2011     

 

This announcement contains regulated information

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 


30 June 2011

30 June 2010

Dividends per ordinary share ('DPS')

+4.3%

+2.8%

Revenue return per ordinary share ('EPS')

+10.4%

-9.3%




Total Returns:



Net asset value per ordinary share ('NAV') #

+29.2%

+26.5%

AIC UK Growth & Income sector NAV (size weighted average) (benchmark) #

+29.7%

+25.8%

FTSE All-Share 4% Capped Index †

+25.9%

+23.3%

FTSE All-Share Index †

+25.6%

+21.1%

Ordinary share price #

+31.1%

+27.6%

 

Sources:  # Morningstar for the AIC, using cum income fair value NAV; † Datastream

 

 

CHAIRMAN'S STATEMENT

The year ended 30 June 2011 was another successful year for City of London. The net asset value total return was 29.2%, exceeding the 26.5% return in 2010 and importantly the dividend was increased for the forty-fifth consecutive year. Our total expense ratio remained amongst the lowest in the sector.

 

Performance for Year to 30 June 2011

Earnings and Dividends

Earnings per share rose by 10.4%, a figure that benefited mainly from a very satisfactory increase in the dividends received from companies held in the portfolio.  Investment income rose by 16.9% and we made some use of our borrowing facility to buy dividend paying equities. 

 

A fourth interim dividend of 3.35p was paid on 31 August 2011 making a total for the year of 13.20p, an increase of 4.3% over the previous year.  EPS of 13.17p almost covered the DPS of 13.20p and there were revenue reserves per share of 11.98p at 30 June 2011.

 

The dividend declarations from companies in our portfolio have been encouraging during our current financial year.  The quarterly rate will next be considered when the third interim is declared in March 2012, by which time the Board will be able to assess better the trend in income of the portfolio.

 

Net Asset Value Total Return

It was a good year with a net asset value total return of 29.2%.  The majority of the return was achieved in the first half of the period with the euro sovereign debt crisis and concerns about UK economic growth overshadowing the equity market in the second half.  Gearing and stock selection both contributed positively to our performance over the year.

 

On stock selection, for a second year running the best performers in our portfolio were industrial stocks, such as Weir Group and Croda, which have benefited from global economic growth and have strong market positions in their niche industries.  In addition, Land Securities was a notable outperformer, based on the rise in value of its London office and retail property.

 

City of London marginally underperformed the average of the AIC UK Growth & Income sector by 0.5% over the year.

 

The share price did better than its net asset value moving from a discount (with debt at par value) of 1.7% at the previous year end to a premium of 0.5% at 30 June 2011.

 

- 2 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

Chairman's Statement (continued)

 

Performance for Five Years to 30 June 2011

Earnings and Dividends

The Company's annual dividend has grown by 41% over the last five years from 9.36p to 13.20p and revenue reserves have increased from 8.65p to 11.98p.

 

Net Asset Value Total Return

Shareholders' net asset value total return has been 26.9% over the last five years, which compares with 21.6% for the average of the AIC UK Growth & Income sector. 

 

Expenses

There is no performance fee payable for the year.

 

The total expense ratio ('TER'), which is the investment management fee and other non-interest expenses as a percentage of shareholder funds, was 0.44%, which is very competitive compared with the OEIC market, with most other investment trusts and with other actively managed equity funds.

 

This is important because expenses are a tax on shareholder returns and we have to compete for investment and savings in a market that will be changing as a result of the Retail Distribution Review.

 

Share Issues and Buy-Backs

The Board's aim is for our share price to reflect closely its underlying net asset value; and also to reduce volatility and have a liquid market in our shares.  Our ability to influence this is, of course, limited.  We do believe that flexibility is important and that it is not in shareholders' interests to have a specific issuance and buy-back policy.  The Board intends, however, subject always to the overall impact on our portfolio, the pricing of other trusts and overall market conditions, to consider issuance and buy-backs within a narrow band relative to net asset value.

 

City of London's shares have been in strong demand. During the year under review 16.24m new shares were issued for proceeds of £45.57m at a premium to net asset value.  This allowed the Portfolio Manager to invest in good dividend yielding shares at attractive valuations.

 

Outlook

Since our financial year end of 30 June 2011, there have been significant falls across world equity markets.   Growth expectations in the developed Western economies have been declining.  The process of deleveraging for consumers and national governments is proving to be protracted and painful.  In contrast, companies have, in general, relatively strong balance sheets.  In addition, many UK listed companies are well-placed to benefit from the structural growth taking place in emerging markets.  Equities seem to be attractive, on a price earnings basis, based on the consensus of analysts' expectations for profits.  The dividend yield of equities is substantially above gilts and dividends have prospects for growth over the coming year.

 

Board

After ten years serving as Chairman I am standing down from the Board after the Annual General Meeting on 24 October 2011.  I am absolutely delighted that Philip Remnant will be succeeding me.

 

Annual General Meeting

Shareholders are invited to the Annual General Meeting on Monday 24 October 2011 at 201 Bishopsgate, London EC2M 3AE.  The meeting will start at 3pm and will include a presentation from the Portfolio Manager.

 

Simon de Zoete

14 September 2011

 

 

- 3 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

PORTFOLIO MANAGER'S REPORT

 

Investment Background

During the 12 month period under review, the UK equity market, as measured by the FTSE All-Share 4% Capped Index, produced a total return of 25.9%.  These gains were skewed towards the second half of 2010 where the return was 22.1% as equities responded well to strong global economic growth led by emerging markets, such as China. Growth in developed economies, including the UK, was relatively pedestrian.   Commodities reacted to the overall strength of demand with, for example, the Brent Crude oil price rising by 24% over the six months.

 

In the first half of 2011, the UK equity market produced a more modest return of 3.0%.  The rise in petrol, food and utility prices and the increase in VAT from 17.5% to 20.0%, led to a rise in inflation as well as a further squeeze on the spending power of heavily indebted UK consumers.  Given a slowdown in growth for the economy and low level of wage increases, the Bank of England's Monetary Policy Committee decided to ignore the rise in inflation and kept the base rate at the historic low of 0.5%.  Overseas, worries about the solvency of some of the countries in the Eurozone grew.

 

During the 12 months, sterling rose against the US dollar from 1.50 to 1.61.  Some 33% of the Company's dividend income from Royal Dutch Shell, HSBC and BHP Billiton, which all declare dividends in US dollars, had been hedged in the previous year at 1.44.

 

A welcome feature of the year has been the return to dividend growth from companies as profits have recovered.  The average increase in the dividend rate of companies in which City of London has shares was 5.0% compared with last year.  If BP and special dividends are excluded, the increase would have been 8.4%.

 

Given the dividend growth being delivered from companies in the portfolio, equities appeared to offer good value relative to the yields available in fixed interest during the 12 month period.  As a result, gearing was maintained in a range of between 8% and 12%.  The facility with HSBC was drawn down to take advantage of opportunities to a maximum of £27.2m in February and then reduced to £9.0m by the end of June 2011.  Gearing contributed positively by 2.72 percentage points to performance relative to the FTSE All-Share 4% Capped Index.  In addition, stock selection also contributed positively by 0.83 percentage points.

 

Performance of Higher Yielding Shares compared with Lower Yielding Shares

Over the 12 month period, the FTSE 350 Lower Yield Index returned 26.1% which was a slight outperformance of the FTSE 350 Higher Yield Index which returned 25.4%.  Although the low yielding mining sector outperformed, this was offset by the underperformance of the banking sector.

 

 

 

- 4 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

PORTFOLIO MANAGER'S REPORT (continued)

 

Portfolio Review

The overall supply/demand balance for oil remained tight and the oil price strengthened over the year.  Oil companies are a natural beneficiary of the rise in the oil price although they face a constant battle to replace and grow their oil reserves.  The largest holding in the portfolio, Royal Dutch Shell ("RDS"), had a very good year, producing a share price total return of 49%.  RDS's technical expertise was demonstrated by the start of production in the first half of 2011 of a large oil sands project in Canada and two complex gas projects in Qatar.  These and other major oil and gas projects under development should underpin RDS's long-term growth in profits and cash flow. Elsewhere in the oil sector, a new holding was purchased in Statoil, which is the dominant player in the Norwegian oil and gas fields.  The holding in Diamond Offshore Drilling was sold with the company's profits being adversely affected by reduced drilling activity in the Gulf of Mexico.

 

For the second year running, industrial companies performed strongly.  Spectacular returns were achieved from the portfolio's holdings in Weir (108%), Croda (91%), IMI (58%) and Renishaw (147%).  These companies mainly operate in niche areas with strong barriers to entry and relatively strong pricing power.  They are international leaders and have benefited from strong growth in global demand for their products.  To the extent to which they export from the UK, the sterling exchange rate has been competitive for them.  In the general industrials sector, Tomkins was sold after a bid approach from a Canadian private equity firm.

 

A significantly below average exposure to the banking sector was maintained throughout the year.  Banks underperformed against a background of regulatory uncertainty and a need to rebuild their capital bases.  The holding in Lloyds Banking Group, which had higher than expected losses in Ireland, was sold.  Some additions were made to HSBC which is conservatively managed with deposits in excess of loans and has significant exposure to the Pacific and emerging markets.

 

In the insurance sector, two new holdings were purchased.  Prudential appeared undervalued given the combination of its UK, US and Pacific life assurance businesses and its UK fund management operations.  Zurich Financial Services was bought on a very attractive dividend yield of 6.8% and appeared to be good value relative to comparable large European and US insurance companies.

 

In property, Land Securities had a good year, benefiting from a strong rise in value of its London office and retail portfolio.  This reflected both overseas and UK investors favouring London property as an asset class.

 

An above average exposure to the utility sector was maintained given attractive dividend yields and for some companies a degree of inflation protection in their regulatory controlled pricing.  A new holding was purchased in International Power which merged with GDF Suez of France to form the world's largest independent power producer.  The company has a strong balance sheet and is expected to produce double-digit percentage profits growth between 2011 and 2014 from new power stations being built.  In contrast, RWE, which has a high level of indebtedness and lacklustre outlook for profits growth from its coal and nuclear power plants, was sold.

 

- 5 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

PORTFOLIO MANAGER'S REPORT (continued)

 

The portfolio's biggest holding in the telecommunications sector, Vodafone, produced a total return of 25% over the 12 months.  Vodafone owns 45% of Verizon Wireless, the leading mobile operator in the USA, which is performing well and is to start paying dividends, which will give a significant boost to its cash flow.  Elsewhere, new holdings were purchased on attractive dividend yields in SK Telecom of South Korea and the French media/telecoms conglomerate Vivendi.

 

Certain stocks that were considered to be vulnerable to the weak UK domestic economy were sold.  These included: pub group Marston's, transportation company Stobart and leisure group Holidaybreak (which subsequently received a takeover bid).  On the other hand, a new holding was purchased in Sainsbury, in view of the relatively defensive nature of its food retailing business and the value of the stores that it owns.

 

In technology, a new holding was purchased in Microsoft, which has a dominating market position in providing operating systems for personal computers ('PCs') and net cash equivalent to around 20% of its market capitalisation.  Although smartphones/tablets are eroding some PC sales, there is significant scope for companies to upgrade their software and this is the most important part of Microsoft's business.  The purchase of Microsoft was financed by the sale of Playtech, the betting software company.

 

Other new purchases included:  Compass, the leading international caterer with good growth prospects given the continuing trend for the contracting-out of catering; Paypoint, the national network for collecting payments "over the counter", which was bought on a very attractive valuation; and John Laing Infrastructure Fund, an investment company which owns private finance initiative ('PFI') assets, which offered a secure and growing income stream.

 

Distribution of the Portfolio

The distribution at 30 June 2011 was: large companies 78% (2010: 76%), medium-sized companies 16% (2010: 20%) and overseas listed companies 6% (2010: 4%).  During the year under review there has been a reduction in the proportion of the portfolio invested in medium-sized companies and increases in the proportions invested in both FTSE 100 and overseas listed companies.

 

There is scope to have 20% of the portfolio in overseas listed stocks, but we will only invest overseas when there is, in our view, a significant advantage over UK listed companies.

 

Outlook

A continuation of existing trends seems likely in the year ahead.  Most developed economies, including the UK, are struggling with too much debt both among consumers and governments.  As a result, economic growth in these economies will be slow and interest rates are likely to remain at low levels.   In contrast, emerging economies should enjoy relatively rapid growth with portions of the vast population of countries, such as China and India, in the process of moving out of poverty and into a modest degree of affluence. 

 

The largest nine holdings in the portfolio are all multinationals.  British American Tobacco (second largest holding), Diageo (fourth) and Unilever (eighth) are consumer products companies with strong brands and substantial operations in fast growing emerging markets.  Vodafone (fifth) and HSBC (sixth) also have global footprints for their operations.

 

- 6 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

 

PORTFOLIO MANAGER'S REPORT (continued)

 

Although 9.8% of the portfolio is invested in the oil sector and 4.7% in mining, this is significantly less than the average exposure for the UK equity market.  Many companies in these sectors have low dividend yields and valuations built on the current high level of commodity prices which are volatile.  However, Royal Dutch Shell (largest holding) and BHP Billiton (ninth) have excellent prospects and good dividend records.

 

8.5% of the portfolio is invested in the pharmaceutical sector with GlaxoSmithKline (third largest) and AstraZeneca (seventh).  These companies are trading at historically low levels of valuation.  They also offer strong cash flows and research and development pipelines of new medicines that are, in our view, now underappreciated.

 

Turning to UK domestic stocks, the biggest exposure is to utilities which make up 9.5% of the portfolio.  Their revenues and profits are relatively secure but can be affected by regulatory decisions. Some domestic cyclicals with strong balance sheets and good market positions are held but overall the portfolio has below average exposure to this area.  The process of deleveraging in the UK is likely to be a long one given the high level of consumer debt.

 

Corporate indebtedness is at a relatively low level and the recent trend in dividend payouts is encouraging.  Shares that produce a decent dividend yield and growth are particularly attractive in the current investment climate with very low yields available in bank deposits and fixed interest.

 

Job Curtis



 

- 7 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

Top 40 Investments

as at 30 June 2011

 

The 40 largest investments, representing 78.43% of the portfolio (convertibles, all classes of equity and all written call option positions in any one company being treated as one investment), are listed below.  The stocks marked * were not in the top ten last year. The stocks which were in the top ten last year but not this year are Scottish & Southern Energy and Tesco.

 

 


Market Value

2011



Market Value

2011


£'000



£'000






Royal Dutch Shell

46,704


IMI

10,003

British American Tobacco

45,471


Reed Elsevier

9,056

GlaxoSmithKline

35,351


BAE Systems

8,440

Diageo

33,735


Imperial Tobacco

8,284

Vodafone

33,060


Reckitt Benckiser

7,912

HSBC

27,828


Britvic

7,890

AstraZeneca

21,756


Amlin

7,716

Unilever *

21,665


France Telecom

5,960

BHP Billiton *

20,635


Pennon

5,933

National Grid

19,906


Severn Trent

5,888

Scottish & Southern Energy

19,154


Hiscox

5,865

BP

16,053


Prudential

5,760

Tesco

14,874


United Utilities

5,691

Land Securities

13,640


Spirax-Sarco Engineering

5,503

Rio Tinto

13,399


RSA Insurance

5,396

Croda

12,737


Legal & General

5,319

Pearson

12,642


Greene King

4,874

Weir

11,167


Deutsche Telekom

4,870

Aviva

10,975


Vivendi

4,676

Centrica

10,507


Novartis

4,567

 

 

 

 



 

 

- 8 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

 

PRINCIPAL RISKS AND UNCERTAINTIES

 

The Board has drawn up a matrix of risks facing the Company and has put in place a schedule of investment limits and restrictions, appropriate to the Company's investment objective and policy, in order to mitigate these risks as far as practicable.  The principal risks which have been identified and the steps taken by the Board to mitigate these are as follows:

 

●       Portfolio and market price

         Although the Company invests almost entirely in securities that are quoted on recognised markets, share prices may move rapidly.  The companies in which investments are made may operate unsuccessfully, or fail entirely.  A fall in the market value of the Company's portfolio would have an adverse effect on shareholders' funds.  The Board reviews the portfolio each month and mitigates this risk through diversification of investments in the portfolio.

 

●       Investment activity, gearing and performance

         An inappropriate investment strategy (for example, in terms of asset allocation or the level of gearing) may result in underperformance against the Company's benchmark.  The Board monitors investment performance at each Board meeting and regularly reviews the level of its gearing.  

 

●       Tax and regulatory

A breach of section 1158 of the Corporation Tax Act 2010 would lead to a loss of investment trust status, resulting in capital gains realised within the portfolio being subject to corporation tax.  A breach of the UKLA Listing Rules could result in suspension of the Company's shares, while a breach of the Companies Act 2006 could lead to criminal proceedings, or financial or reputational damage.  The Company must also ensure compliance with the listing rules of the New Zealand Stock Exchange. 

 

The Manager has contracted to provide investment, company secretarial, administration and accounting services through qualified professionals.  The Board receives internal control reports produced by the Manager on a quarterly basis, which confirm regulatory compliance. 

 

          ●       Operational

         Disruption to, or failure of, the Manager's accounting, dealing or payment systems or custody records could prevent the accurate reporting and monitoring of the Company's financial position. The Company is also exposed to the operational risk that one or more of its suppliers may not provide the required level of service. The Board monitors the services provided by the Manager and its other suppliers.

 

Further details of the Company's exposure to market risk (including market price risk, currency risk and interest rate risk), liquidity risk, and credit and counterparty risk and how they are managed are contained in the notes to the financial statements in the annual report.

 

 

 

 

- 9 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

 

RELATED PARTY TRANSACTIONS

 

The provision of investment management, accounting, company secretarial and administration services has been outsourced to Henderson Global Investors Limited (the 'Manager').  This is the only related party arrangement currently in place.  Other than fees payable by the Company in the ordinary course of business, there have been no material transactions with the related party affecting the financial position or performance of the Company during the year under review. 

 

 

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

In accordance with Disclosure and Transparency Rule 4.1.12, each of the directors confirms that, to the best of their knowledge:

 

●          the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

 

●          the Report of the Directors in the Annual Report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that it faces.

 

Signed for and on behalf of the Board of directors

 

 

Simon de Zoete

Chairman

14 September 2011

 


- 10 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

 

Audited Income Statement

for the year ended 30 June 2011

 


Year ended 30 June 2011

Year ended 30 June 2010


Revenue return £'000

Capital return £'000

 

Total

£'000

Revenue

return

£'000

Capital return £'000

 

Total

£'000

Gains on investments held at fair value through profit or loss

-

122,350

122,350

-

87,484

87,484

Income from investments held at fair value through profit or loss (note 2)

30,179

-

30,179

25,809

-

25,809

Other interest receivable and similar income (note 3)

1,383

-

1,383

1,833

-

1,833


---------

----------

-----------

---------

---------

----------

Gross revenue and capital gains

31,562

122,350

153,912

27,642

87,484

115,126








Management and performance fees

(658)

(1,537)

(2,195)

(561)

(1,385)

(1,946)

Other administrative expenses

(591)

-

(591)

(612)

-

(612)


---------

----------

----------

---------

---------

----------

Net return on ordinary activities before finance charges and taxation

30,313

120,813

151,126

26,469

86,099

112,568








Finance charges

(1,521)

(3,181)

(4,702)

(1,440)

(2,993)

(4,433)


---------

---------

----------

---------

---------

----------

Net return on ordinary activities before taxation

28,792

117,632

146,424

25,029

83,106

108,135








Taxation on net return on ordinary activities

(204)

-

(204)

(148)

-

(148)


---------

---------

----------

---------

----------

----------

Net return on ordinary activities after taxation

28,588

117,632

146,220

24,881

83,106

107,987


=====

======

======

=====

======

======

 

 







Return per ordinary share - basic and diluted (note 4)

13.17p

54.21p

67.38p

11.93p

39.83p

51.76p


=====

=====

=====

=====

=====

=====

 

 

The total columns of this statement represent the Income Statement of the Company.  The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.  All revenue and capital items in the above statement 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.

 

 

 

 

 


 

- 11 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

Audited Reconciliation of Movements in Shareholders' Funds

for the years ended 30 June 2011 and 30 June 2010

 

 

 

Year ended 30 June 2011

Called up share capital £'000

Share premium account £'000

Capital redemption reserve £'000

Other capital reserves £'000

Revenue reserve £'000

Total

£'000

At 30 June 2010

52,155

37,079

2,707

392,406

26,679

511,026

Net return on ordinary activities after taxation

-

-

-

117,632

28,588

146,220

Issue of 16,240,000 new ordinary shares

4,060

41,511

-

-

-

45,571

Dividends paid (note 6)

-

-

-

-

(28,340)

(28,340)


--------

---------

---------

---------

---------

----------

At 30 June 2011

56,215

78,590

2,707

510,038

26,927

674,477


=====

=====

=====

======

=====

======






















Year ended 30 June 2010

Called up share capital

£'000

Share premium account £'000

Capital redemption reserve £'000

Other capital reserves £'000

Revenue reserve £'000

Total

£'000

At 30 June 2009

52,130

36,893

2,707

309,300

27,852

428,882

Net return on ordinary activities after taxation

-

-

-

83,106

24,881

107,987

Issue of 100,000 new ordinary shares

25

186

-

-

-

211

Dividends paid (note 6)

-

-

-

-

(26,054)

(26,054)


--------

---------

--------

----------

---------

----------

At 30 June 2010

52,155

37,079

2,707

392,406

26,679

511,026


=====

=====

=====

======

=====

======

 

 

 

- 12 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

Audited Balance Sheet

at 30 June 2011





2011

2010


£'000

£'000

Investments held at fair value through profit or loss



Listed at market value in the United Kingdom

681,202

535,443

Listed at market value overseas

46,709

23,024

Investment in subsidiary undertakings

347

347


----------

----------


728,258

558,814


----------

----------

Current assets



Debtors

6,276

4,577

Cash at bank

480

1,475


----------

----------


6,756

6,052


----------

----------

Creditors: amounts falling due within one year

(13,138)

(6,441)


----------

----------

Net current liabilities

(6,382)

(389)


----------

----------




Total assets less current liabilities

721,876

558,425




Creditors: amounts falling due after more than one year

(47,399)

(47,399)


----------

----------

Net assets

674,477

511,026


======

======




Capital and reserves



Called up share capital

56,215

52,155

Share premium account

78,590

37,079

Capital redemption reserve

2,707

2,707

Other capital reserves

510,038

392,406

Revenue reserve

26,927

26,679


----------

----------

Shareholders' funds

674,477

511,026


======

======




Net asset value per ordinary share - basic and diluted (note 5)

299.95p

244.96p


======

======

 

 

 

 



- 13 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

Audited Cash Flow Statement

for the year ended 30 June 2011

 


        Year ended

          30 June 2011

        Year ended

         30 June 2010


£'000

£'000

£'000

£'000

Net cash inflow from operating activities


28,281


25,465






Servicing of finance





Debenture interest paid

(4,265)


(4,265)


Bank and loan interest paid

(262)


(11)


Dividends paid on preference and preferred ordinary stocks

(157)


(157)



----------


----------


Net cash outflow from servicing of finance


(4,684)


(4,433)






Taxation





Withholding tax recovered

138


331



----------


----------


Net tax recovered


138


331






Financial investment





Purchases of investments

(95,452)


(82,535)


Sales of investments

48,828


86,667



----------


----------


Net cash (outflow)/inflow from financial investment


(46,624)


4,132






Equity dividends paid


(28,340)


(26,054)



----------


----------

Net cash outflow before financing


(51,229)


(559)






Financing





Proceeds from issue of ordinary shares

44,392


211


Repayment of loans

-


(2,000)



---------


---------


Net cash inflow/(outflow) from financing


44,392


(1,789)



---------


---------






Decrease in cash


(6,837)


(2,348)



=====


=====

 

 


- 14 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

Notes to the financial statements

 

1.

Accounting policies

 


Basis of accounting


The financial statements have been prepared on a going concern basis and under the historical cost basis of accounting as modified to include the revaluation of investments at fair value.  The financial statements are prepared in accordance with United Kingdom Generally Accepted Accounting Practice and with the Statement of Recommended Practice ("the SORP") for investment trusts issued by the Association of Investment Companies in January 2009.  All of the Company's operations are of a continuing nature. The Company's accounting policies are consistent with the prior year.



2.

Income from investments held at fair value through profit or loss



2011

2010



£'000

£'000


Franked UK dividends:




  Listed

26,408

23,409


  Listed - special dividends

226

95


  Income from subsidiary

-

31



---------

---------



26,634

23,535



---------

---------


Unfranked - listed investments:




  Dividend income - overseas investments

3,035

1,590


  Dividend income - UK REIT

486

527


  Special dividends

24

157



---------

---------



3,545

2,274



---------

---------



30,179

25,809



=====

=====





3.

Other interest receivable and similar income


2011

2010



£'000

£'000


Bank interest

11

3


Underwriting commission (allocated to revenue)*

56

526


Option premium income †

1,316

1,304



-------

------


1,383

1,833



====

====


* During the year the Company was not required to take up shares in respect of its underwriting commitments (2010: £17,000).

 


†  Options were mainly written against low or zero dividend yielding holdings, which would not normally form part of the portfolio.  These transactions had no material impact on the capital account of the Company.

 



- 15 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

Notes to the financial statements (continued)

 

 

3.

Other interest receivable and similar income (continued)

During the year, the Company sold (or wrote) call options for the purpose of generating revenue income.  In accordance with the SORP, the premiums received are recognised in the revenue return shown in the Income Statement evenly over the life of the option with an appropriate amount taken to the capital account such that the total return reflects the change in fair value of the options.  The Company received total premiums of £911,000 (2010: £1,728,000) from this activity during the year of which £892,000 (2010: £1,304,000) was recognised as revenue in the year ended 30 June 2011. The balance of £424,000 not due to be recognised as revenue in 2010 was recognised in 2011 giving total income of £1,316,000 (2010: £1,304,000).

 

 

 


Call options outstanding at 30 June 2011 are recognised at their fair value and at 30 June 2011 the fair value of the written call options was a liability of £73,000 (2010: £248,000) representing the notional cost of repurchasing the call options at 30 June 2011 market prices.  The premiums recognised in respect of these outstanding options amounted to £112,000 (2010: £713,000) meaning that the total change in fair value recognised during the year ended 30 June 2011 in respect of these outstanding options amounts to a gain of £39,000 (2010: £465,000).

 



4.

Return per ordinary share - basic


The return per ordinary share is based on the net return attributable to the ordinary shares of £146,220,000 (2010: £107,987,000) and on 217,008,223 ordinary shares (2010: 208,613,841), being the weighted average number of ordinary shares in issue during the year.




The return per ordinary share is analysed between revenue and capital below:







2011

2010



£'000

£'000


Net revenue return

28,588

24,881


Net capital return

117,632

83,106



----------

----------


Net total return

146,220

107,987



======

======


Weighted average number of ordinary shares in issue during the year

217,008,223

208,613,841






Revenue return per ordinary share

13.17p

11.93p


Capital return per ordinary share

54.21p

39.83p



---------

---------


Total return per ordinary share

67.38p

51.76p



=====

=====


The Company does not have any dilutive securities. Therefore the basic and diluted returns per share are the same.



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 £674,477,000 (2010: £511,026,000) and on 224,859,868 (2010: 208,619,868) shares in issue on 30 June 2011.



- 16 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

Notes to the financial statements (continued) 

 

6.

Dividends paid on the ordinary shares

Record date

Payment date

2011

£'000

2010

£'000


Fourth interim dividend (3.08p) for the year ended 30 June 2009

24 Jul 2009

28 Aug 2009

-

6,422


First interim dividend (3.08p) for the year

ended 30 June 2010

23 Oct 2009

30 Nov 2009

-

6,426


Second interim dividend (3.08p) for the year ended 30 June 2010

22 Jan 2010

26 Feb 2010

-

6,426


Third interim dividend (3.25p) for the year ended 30 June 2010

30 Apr 2010

28 May 2010

-

6,780


Fourth interim dividend (3.25p) for the year ended 30 June 2010

30 Jul 2010

31 Aug 2010

6,831

-


First interim dividend (3.25p) for the year

ended 30 June 2011

22 Oct 2010

30 Nov 2010

6,974

-


Second interim dividend (3.25p) for the year ended 30 June 2011

21 Jan 2011

28 Feb 2011

7,090

-


Third interim dividend (3.35p) for the year ended 30 June 2011

6 May 2011

31 May 2011

7,445

-





--------

--------





28,340

26,054





=====

=====

 

7.   Issued share capital

During the year the Company issued 16,240,000 (2010: 100,000) ordinary shares for total proceeds of £45,571,000 (2010: £211,000).  The average price of the shares that were issued was 281p (2010: 211p). At 30 June 2011 there were 224,859,868 ordinary shares in issue (2010: 208,619,868).

 

8.   Dividends paid

A fourth interim dividend of 3.35p per ordinary share (2010: 3.25p) in respect of the year ended 30 June 2011 was paid on 31 August 2011 to shareholders on the register on 29 July 2011 for a total consideration of £7,533,000.

 

9.   Going concern statement

The directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements as the assets of the Company consist mainly of securities which are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future.  In reviewing the position as at the date of this announcement, the Board has considered the "Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009" published by the Financial Reporting Council in October 2009.

 

10.   2011 Financial information

The figures and financial information for the year ended 30 June 2011 are extracted from the Company's annual financial statements for that period and do not constitute statutory accounts.  The Company's annual financial statements for the year to 30 June 2011 have been audited but have not yet been delivered to the Registrar of Companies. The auditors' report on the 2011 annual financial statements was unqualified, did not include a reference to any matter to which the auditors drew attention without qualifying the report, and did not contain any statements under sections 498(2) or 498(3) of the Companies Act 2006.

 

 

 

 

 

 

- 17 -

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 June 2011

 

Notes to the financial statements (continued)

 

 

11.   2010 Financial information

The figures and financial information for the year ended 30 June 2010 are compiled from an extract of the published financial statements for that year and do not constitute statutory accounts.  Those financial statements have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified, did not include a reference to any matter to which the auditors drew attention without qualifying the report, and did not contain any statements under sections 498(2) or 498(3) of the Companies Act 2006.

 

12.   Annual report and financial statements and annual general meeting

The annual report and financial statements will be posted to shareholders on 21 September 2011 and will be available on the Company's website (www.cityinvestmenttrust.com) or in hard copy format from the Company's registered office, 201 Bishopsgate, London, EC2M 3AE thereafter.

 

The Annual General Meeting will be held at the registered office on Monday 24 October 2011 at 3.00pm. The notice of the meeting will be sent to shareholders with the annual report.

 

- ENDS -

For further information please contact:

 

Job Curtis

Portfolio Manager, The City of London Investment Trust plc

Telephone: 020 7818 4367

 

James de Sausmarez

Director, 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

 

 

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR LIMBTMBMBBRB