Annual Financial Report
Summary by AI BETAClose X
Legal Entity Identifier: 213800F3NOTF47H6AO55
THE CITY OF LONDON INVESTMENT TRUST PLC
("the Company" or "City of London")
Annual financial results for the year ended 30 June 2025
This announcement contains regulated information
CHAIRMAN'S COMMENT
"City of London's net asset value total return of 16.8% outperformed the FTSE All-Share Index return of 11.2%. The dividend was increased for the 59th consecutive year and fully covered by earnings per share."
INVESTMENT OBJECTIVE
The Company's objective is to provide long-term growth in income and capital, principally by investment in equities listed on the London Stock Exchange. The Board fully recognises the importance of dividend income to shareholders.
PERFORMANCE AT 30 JUNE
|
|
2025 |
2024 |
|
Total Return Performance: |
|
|
|
Net asset value ("NAV") per ordinary share1, 5 |
16.8% |
15.6% |
|
Share price2, 5 |
21.8% |
11.3% |
|
FTSE All-Share Index (Benchmark) |
11.2% |
13.0% |
|
AIC UK Equity Income sector3 |
12.6% |
12.6% |
|
IA UK Equity Income OEIC sector |
10.5% |
14.6% |
|
|
|
|
|
|
2025 |
2024 |
|
NAV per ordinary share5 |
472.5p |
424.3p |
|
NAV per ordinary share (debt at fair value)5 |
478.1p |
429.6p |
|
Share price |
487.5p |
420.0p |
|
Premium/(discount)5 |
3.2% |
(1.0)% |
|
Premium/(discount) (debt at fair value)5 |
2.0% |
(2.2)% |
|
Gearing at year end5 |
5.3% |
7.1% |
|
Revenue earnings per share |
21.6p |
20.9p |
|
Dividends per share |
21.3p |
20.6p |
|
Ongoing charge for the year4, 5 |
0.36% |
0.37% |
|
Revenue reserve per share,5 |
9.9p |
9.4p |
1 NAV per ordinary share total return with debt at fair value (including dividends reinvested)
2 Share price total return using mid-market closing price
3 Association of Investment Companies ("AIC") UK Equity Income sector size-weighted average NAV total return (shareholders' funds)
4 Calculated using the methodology prescribed by the AIC
5 See alternative performance measures in the Annual Report
A glossary of terms and explanations of alternative performance measures are included in the Annual Report.
Sources: Morningstar Direct, Janus Henderson, LSEG Datastream
DIVIDEND YIELDS AT 30 JUNE
|
|
2025 |
2024 |
|
City of London |
4.4 |
4.9 |
|
FTSE All-Share Index (Benchmark) |
3.5 |
3.7 |
|
AIC UK Equity Income sector |
4.1 |
4.2 |
|
IA UK Equity Income OEIC sector |
4.1 |
4.3 |
CHAIRMAN'S STATEMENT
City of London produced a net asset value ("NAV") total return of 16.8%, outperforming the FTSE All-Share Index total return of 11.2%. City of London's NAV total return has exceeded the FTSE All-Share Index over 1, 3, 5 and 10 years. The dividend was increased for the 59th consecutive year and fully covered by earnings per share.
The Markets
The inauguration of Donald Trump as President of the USA for a second term in January 2025 has had a significant impact on markets. One of his key election campaign pledges was to increase tariffs substantially in order to return manufacturing industry to the US and to raise revenue for the government. During the following months, world equity markets reacted to a series of announcements imposing tariffs at varying levels on particular countries depending on the state of negotiation of specific trade agreements. This made economic data, including forecasts, difficult to interpret, with evidence of some stockpiling of goods ahead of tariffs taking effect. The US dollar was notably weak, reflecting the consequent policy uncertainty. Despite these upheavals, the strongest area of US growth continued to be in artificial intelligence and data centres, with a positive effect on the value of a small number of very large US technology companies.
Another of Mr Trump's policies was to encourage allies to pay more for their defence. There was a step change in Europe, with the UK, Germany and some other European countries announcing plans to increase significantly their defence spending.
Concerns over increasing government borrowing caused markets to take a cautious view of the prospects for interest rates, particularly in the USA and the UK where 10-year government bond yields gave up earlier declines. The European Central Bank was more aggressive than the US Federal Reserve and the Bank of England in cutting lending rates.
In the UK, the new Labour government's first Budget, which significantly increased public spending, had a negative effect on sentiment in the private sector. The rise in the Employer's National Insurance tax rate hit hard those companies with large labour costs, such as in the hospitality sector. The combination of increasing energy and food prices, together with wage cost pressure, led to UK CPI inflation rising above 3% again in April 2025. Over the 12 months to 30 June 2025, the Bank of England responded to the weakness in economic growth by cutting its base rate to 4.25% through four cuts of 25 basis points.
The UK stock market benefited from a return to confidence in the UK banks, which delivered good profit and dividend growth. Life insurance had a good year, as did the tobacco industry where profits were more resilient than in most other consumer staples sectors. Takeovers of UK companies by overseas companies and private equity firms continued at a pace, demonstrating the value in the UK equity market.
Performance
Earnings and Dividends
City of London's earnings per share increased by 3.4% to 21.6p. The growth in dividends from the banks sector was the most important positive contributor for the second year in a row. Special dividends accounted as revenue amounted to £0.6 million, down from £1.0 million the previous year and reflecting the corporate trend for effecting shareholder distributions through share buybacks rather than dividend payments.
City of London's annual dividend grew by 3.4% to 21.3p, marginally behind UK CPI inflation of 3.6%. Over ten years, City of London's dividend has grown by 39.2%, slightly ahead of UK CPI inflation of 38.6%. This has been achieved during a difficult period for real dividend growth, which has included both the widespread cuts during the Covid pandemic and a period when, mainly because of rising energy costs, the annual rate of inflation exceeded 10%. Over 20 years, City of London's dividend has risen by 147.1%, compared to UK CPI inflation of 77.7%. The Board understands the importance of growing the dividend in real terms through the economic cycle and over the long term.
Expenses remained under tight control, with City of London's ongoing charge ratio, which declined from 0.37% to 0.36%, remaining very competitive compared with other actively managed funds. The reduction in the management fee rate from 0.325% to 0.300%, which the Board agreed with the Company's Manager, Janus Henderson, took effect from 1 January 2024 and had a positive effect on the ongoing charge ratio over the 12 months to 30 June 2025.
The revenue reserve increased by £2.1 million to £48.7 million with revenue reserves per share rising by 5.3% to 9.9p. The Board is firmly of the view that dividend payments should, other than in very exceptional circumstances, be covered by revenue alone and not be supplemented by distribution from realised capital profits. Whilst the Company's capital reserves arising from gains on investments sold (which rose by £52.1 million and £398.4 million) could help fund dividend payments, the Board considers that a healthy revenue reserve surplus provides an important underpinning for dividend payments drawn from earnings alone. Revenue reserves can be particularly useful given the varied timing of dividend receipts throughout the year from investee companies. They also provide a facility to cover dividend payments to shareholders at a time of sudden dividend cuts and surprises, such as occurred during the Covid pandemic.
NAV Total Return
City of London's NAV total return of 16.8% was 5.6% ahead of the FTSE All-Share Index. Gearing, which contributed positively by 0.4%, was financed mainly by secured debt. The £30 million 2.67% secured notes (maturing in 2046) and the £50 million 2.94% secured notes (maturing in 2049) will provide low-cost debt financing over the next quarter of a century for investment in equities.
Stock selection contributed by 5.5%. The biggest stock contributor relative to the FTSE All-Share Index was AstraZeneca, the pharmaceutical company, despite the portfolio being underweight compared with the index. The second biggest contributor was NatWest, the banking group, followed by Imperial Brands, the tobacco company. The biggest detractor to relative performance was not owning Rolls Royce, the aero engine manufacturer. The second biggest detractor was Merck, the US-listed pharmaceutical company, followed by not owning Standard Chartered, the bank. Overall, we benefited from overweight positions in the banks, financial services and life insurance sectors. More detail on our investment performance can be found in our Fund Managers' Report.
As mentioned in the introduction, City of London's NAV total return was ahead of the FTSE All-Share Index over 1, 3, 5 and 10 years. City of London was also ahead of the AIC UK Equity Income and IA UK Equity Income OEIC sector averages over 1, 3, 5 and 10 years.
Share Issues and Buybacks
During the first half of the year, City of London's share price traded close to its net asset value, except briefly in July 2024 when 28,278 shares were bought back into treasury at a small discount, costing £119,000. From the start of 2025 until 11 April, 2.5 million shares, costing £11.0 million, were bought back at a small discount, to be held in treasury. Since 11 April 2025 to 30 June 2025, 1.7 million shares, raising proceeds of £7.9 million, have been sold from treasury at a small premium. Since 1 July 2025 to 12 September 2025, with the share price continuing to trade at a premium to NAV, a further 1,950,000 shares have been sold from treasury for total proceeds of £9.8 million.
The Board's policy, subject to prevailing market conditions, is for the Company's share price to reflect closely its underlying NAV while smoothing volatility and encouraging a liquid market in the shares. The ability to do this is underpinned by the liquidity of the Company's portfolio, all of which is listed and readily marketable, in contrast to the position of some other investment trusts. The Board's adherence to a policy of issuing shares at a premium and buying back at a discount over the last 15 years has enhanced NAV and, of particular note, kept the prevailing premium and discount to NAV within narrow bands rarely exceeding 3%.
Environmental, Social and Governance
The Fund Manager and Deputy Fund Manager, supported by specialists at Janus Henderson, give careful consideration to environmental, social and governance ("ESG") related risks and opportunities when selecting stocks for the portfolio. The Board recognises that these risks are highly relevant to the long-term performance of City of London and of increasing interest to shareholders and commentators. An analysis by MSCI, a company widely used in the review of ESG factors, shows that City of London's portfolio as at 30 June 2025 had a lower weighted score for ESG risks than the FTSE All-Share Index. ESG related issues receive careful consideration at each Board meeting, including how shareholdings have been voted at investee company meetings. Further details on how the Fund Managers take ESG consideration into account in their investment decision-making process are provided in the Annual Report.
Annual General Meeting
The 2025 Annual General Meeting ("AGM") will be held at the offices of Janus Henderson, 201 Bishopsgate, London EC2M 3AE on Thursday, 30 October at 1.00pm. The meeting will include a presentation by our Fund Manager, Job Curtis, and Deputy Fund Manager, David Smith. Any shareholder who is unable to travel is encouraged to join virtually by Zoom, the conference software provider. We therefore request all shareholders and particularly those who cannot attend physically, to submit their votes by proxy to ensure their vote counts at the AGM.
Outlook
The tariffs imposed by the Trump administration mark a seismic break from the post Second World War international trading system. They are likely to raise the costs of imported goods for US consumers and reduce demand for exporters to the USA. The UK, whose economy is predominantly services based, is less exposed to these tariffs than most other countries, particularly after reaching a trade agreement for a relatively low, general tariff of 10% with the US government.
The economic outlook for the UK has become more uncertain, with business confidence dented by the government's imposition of higher payroll taxes, more restrictive labour regulations and the continuing threat of further tax rises in the Autumn Budget targeted at investors and entrepreneurs. The deterioration in the overall UK government fiscal position remains a concern, particularly the implications for interest rates as the associated government debt issues are absorbed by international bond markets. With inflation having increased above 3%, significantly in excess of its 2% target, the Bank of England faces a difficult choice on further cutting interest rates following the 25-basis point cut in August 2025 to 4%. There is a high risk that inflation becomes persistent as expectations for pay increases, particularly in the public sector, remain elevated.
City of London is significantly shielded from the fortunes of the UK domestic economy given that the revenues of many UK-listed investee companies in its portfolio are predominantly from overseas. It can reasonably be claimed that UK-listed shares "offer global growth at a discount", given their attractive share price valuations compared with similar overseas companies. It can also be expected that the flow of takeovers for UK companies will continue, given this relative valuation discount and the open system for corporate control on the London stock market.
Many UK-listed companies are buying back their own shares, enhancing earnings per share for remaining shareholders. Some companies in which City of London has a large shareholding, such as Shell and Imperial Brands, have bought back shares and, given the resulting lower number of shares in issue, grown their dividends at a reduced total cost. The Board remains confident that the companies in City of London's portfolio can help to achieve its objective of long-term growth in capital and income.
Sir Laurie Magnus CBE
Chairman
16 September 2025
FUND MANAGERS' REPORT
Investment Background
The UK equity market, as measured by the FTSE All-Share Index, produced a total return of 11.2% over the 12 months. In July 2024, Labour returned to government after 14 years in opposition. The Budget in October raised public spending and increased the Employer's National Insurance tax rate. In the US, Donald Trump won the presidential election, returning to the White House, in January 2025, after a gap of four years. In early April, the new US administration announced tariffs against its trading partners, which triggered a brief correction in equity markets across the world. Stocks quickly rebounded as Washington announced a partial suspension of some of these levies. In May, the US and UK agreed a trade deal, with a 10% tariff for most British products.
During the 12 months, the Bank of England made four 25 basis point cuts in the base rate, taking it from 5.25% to 4.25%. CPI inflation rose above 3% in the first half of 2025, in response to wage cost pressure and rising utility and food prices. UK economic growth was weak, except for an uptick in the first quarter of 2025, when there was increased factory production ahead of the tariff announcements. The 10-year gilt yield rose from 4.2% to 4.5% over the 12 months reflecting the move in inflation to above 3% and concerns about the sustainability of the UK's budget deficit. The dividend yield of the FTSE All-Share Index was 3.5% at the end of June 2025, below the 10-year gilt yield and base rate, but with equities offering the prospect of dividend growth.
In 2017 and 2021, low interest rates were exceptionally low, the Company was able to fix cheap rates of borrowing for long periods using the following secured notes: £30 million 2.67% and £50 million 2.94% 2049. In addition, there is also one secured note with four years until maturity: £35 million 4.53% 2029. These borrowings remained invested in equities throughout the year. The HSBC borrowing facility, which is priced off the base rate, was used opportunistically. £41 million was drawn down at the start of the 12-month period, falling to £3 million at 31 October 2024, rising to £76 million at 28 February 2025, and falling to £17 million at 30 June 2025.
The key feature in the foreign exchange market was the weakening of the US dollar, which reflected investors' concerns about the size of the US federal budget deficit and the effect of tariffs on US inflation and growth. Against sterling, the US dollar fell from an exchange rate of 1.26 to 1.37. Against the Euro, sterling was more stable, with the exchange rate moving from 1.18 to 1.17.
The oil price weakened over the 12 months, falling from $86/bbl to $68/bbl, despite continuing conflicts in Ukraine and the Middle East. Russian oil continued to be bought, mainly by China and India. The Twelve-Day War between Israel and Iran had little impact on the oil price, with Iran not attempting to interrupt the flow of oil shipments through the Strait of Hormuz. Overall, the growth in the non-OPEC supply of oil, including from the US, along with slower growth in demand from China, put downward pressure on the oil price.
Iron ore, a key ingredient in steel production, had a subdued year, with prices falling by around 10%. This reflected the pattern of demand from China, the world's dominant consumer of iron ore. In general, base commodities had a weak year.
Performance Review
Estimated performance attribution (relative to FTSE All-Share Index total return)
|
|
2025 |
2024 |
|
|
% |
% |
|
Stock selection |
+5.54 |
+2.64 |
|
Gearing |
+0.39 |
+0.25 |
|
Expenses |
-0.36 |
-0.37 |
|
Share issues/buybacks |
+0.02 |
+0.07 |
|
Total |
+5.59 |
+2.59 |
Source: Janus Henderson
The Company produced a net asset value total return of 16.75%, which was 5.59 percentage points ("pp") better than the FTSE All-Share Index total return of 11.16%. Gearing contributed to performance by 0.39pp and stock selection by 5.54pp.
The biggest stock contributor to performance relative to the FTSE All-Share Index was AstraZeneca, the pharmaceutical company, which is held in the portfolio but at a much smaller position size than the index weight. AstraZeneca and other pharmaceutical stocks suffered from uncertainty relating to the Trump administration's policies on the pricing of medicines in the US.
The second biggest contributor was NatWest, which benefited from the higher interest rate environment. Hedges of cash balances, which had been taken out over five years ago at low interest rates, were rolled over at much higher interest rates with a favourable effect on NatWest's profitability. The third biggest contributor was Imperial Brands, the tobacco company, where the large share buyback proved accretive for the remaining shareholders. The fourth biggest contributor was BAE Systems, which continued to experience strong demand from many countries for defence equipment given the external threats. The fifth biggest contributor was M&G, the fund manager and life assurer, which announced a long-term strategic partnership with Japanese insurer Dai-Ichi Life, which is expected to deliver new business flows for M&G while Dai-Ichi will also acquire a 15% stake in the company.
In contrast, the biggest stock detractor to performance relative to the FTSE All-Share Index was not holding Rolls Royce, the aero engine manufacturer, which started paying a dividend again but at a low level relative to its share price. The second biggest detractor was Merck, the US-listed pharmaceutical company, which suffered from the same adverse sector influences that affected AstraZeneca. The third and fourth biggest detractors were not holding Standard Chartered and being underweight HSBC compared with the index. Both these banks' operations are predominantly in Asia Pacific. The fifth biggest detractor was TotalEnergies, which was adversely affected by the weakness in the oil price.
Large companies, as represented by the FTSE 100 Index, produced a total return of 11.3%, which was slightly ahead of the 10.2% return for medium-sized companies, as represented by the FTSE 250 Index. The FTSE Small Cap return was 11.1%, in line with the FTSE 100 return. The FTSE 100 benefited from its large weighting in banks, which was the best performing sector. On the other hand, healthcare, which is also well represented in the FTSE 100, was a drag on performance.
Higher and lower-yielding shares produced similar returns. The FTSE 350 High Yield Index (the higher dividend-yielding half of the largest 350 companies listed in the UK) returned 11.4%. The FTSE 350 Lower Yield Index (the lower-yielding half of the largest 350 companies listed in the UK) returned 11.0%.
Portfolio Changes
In our view, UK shares continued to provide better value than overseas equivalents, possibly due to lack of demand from domestic institutional and retail investors. UK companies received a steady flow of takeover bids from overseas companies and private equity firms, indicating the value on offer. The proportion of the portfolio invested in overseas- listed companies was reduced from 10% to 8% over the 12 months and compares with 15% at 30 June 2023. The portfolio remained predominantly invested in large companies with the amount invested in FTSE 100 companies increasing slightly from 78% to 81%, with a decline from 12% to 11% in medium-sized and small companies.
Distribution of the portfolio as at 30 June 2025
|
|
% of the portfolio |
|
Large UK-listed companies (constituents of the FTSE 100 Index) |
81 |
|
Medium-sized and small UK-listed companies |
11 |
|
Overseas-listed companies |
8 |
Source: LSEG Datastream, as at 30 June 2025
There were three new holdings bought during the 12 months. Admiral's main business is UK motor insurance with 5.7 million customers. It also has much smaller businesses in UK household insurance and motor insurance in France, Italy and Spain. It has a good underwriting record and has consistently outperformed peers on profit margins. It uses reinsurance to operate a capital-efficient business model. The purchase of Admiral was funded by the sale of Direct Line, which was in the process of being taken over by Aviva, which was already held in the portfolio.
A new holding was bought in TP ICAP, which is the world's largest inter-dealer broker between investment banks in interest rates, foreign exchange, money market and credit products. It also has smaller operations in executing trades in equities, energy and commodities broking and OTC data analytics. The group converts a high percentage of its profits into cash and is expected to be a good dividend payer.
A small, new holding was bought in Harbour Energy, the oil and gas exploration and production company. Harbour's production is split 61% gas and 39% oil. Geographically, production is split 35% Norway, 32% UK and 33% rest of the world (including Latin America, North Africa and Germany). It has proven oil and gas reserves worth nine years of production. Harbour's UK North Sea production is expected to decline, with little incentive to invest due to high taxation. This will be offset by growth in other countries where they operate, which are more welcoming to oil and gas investment. Also in the oil sector, significant additions were made to the holding in Shell, which was valued at a large discount to its US peers, Exxon and Chevron. Shell is engaged in a very substantial share buyback programme, worth $14 billion over 12 months, some 6% of its market capitalisation. It has a strong balance sheet, with a low level of debt, and has set out impressive targets for free cash flow over the next five years. The increased investment in Shell was partly funded by the sale of ENI, the international oil company with its head office in Italy.
Significant additions were made to the holdings in diversified Real Estate Investment Trusts ("REITs"), Land Securities and British Land, against a backdrop of evidence of a bottoming of value for high-quality office and retail property, and growth in rental income. The two REITs have a similar split between retail (British Land 36%, Land Securities 32%) and London offices (British Land 53%, Land Securities 52%). Within retail, there is a difference, with British Land being mainly invested in retail warehouses and Land Securities large shopping centres. Within London offices, British Land's biggest asset is its 50% stake in Broadgate, while Land Securities' main focus is Victoria. Additions were made to both REITs on discounts to their net asset values of over 30% and dividend yields of over 6%.
Two other stocks left the portfolio through takeovers. Britvic, the Pepsi bottler and soft drinks company, was bought by Carlsberg. Britvic had been in the portfolio since its IPO in 2005, during which time it achieved an annual share price total return of 13.2%. DS Smith, a paper and packaging company, was taken over by International Paper of the US. Some of the proceeds from DS Smith were reinvested in the paper and packaging sector by adding to the holding in Mondi.
In utilities, the holding in Pennon, the water company covering Southwest England, was sold with the proceeds reinvested in additions to the holding in Severn Trent, the water company covering the West Midlands, which has a superior record. The water sector benefited from the conclusion of the five-yearly regulatory review, ending the uncertainty over regulated returns, even though press coverage was still negative. In electricity, SSE was reduced given the lower yield after its dividend cut and with some uncertainty regarding the funding of its ambitious investment plans.
Significant profits were also taken in the successful holding in 3i, the investor in private companies. 3i's portfolio is dominated by its holding in Action, the fast-growing European discount retailer. 3i's investments performed well but its share price was standing at a large premium to its NAV and therefore it seemed prudent to reduce the size of the holding.
Some large profits were also taken in BAE Systems, the leading defence company, whose shares have performed very well since the start of the war in Ukraine. Less successful were two small holdings in the consumer discretionary area, DFS Furniture and Burberry. Against a tough backdrop for consumer spending for large ticket items, both companies omitted their dividends and were sold.
Portfolio Outlook
Revenue exposure
|
|
% of the portfolio |
|
United Kingdom |
40 |
|
North America |
22 |
|
Europe ex UK |
13 |
|
Asia Pacific (inc Japan) |
15 |
|
Emerging Markets |
10 |
Source: Factset, as at 30 June 2025
The portfolio remains well diversified, with 60% of investee companies' revenues coming from overseas. The detailed split of revenue is UK 40%, North America 22%, Asia Pacific 15%, Europe 13% and Emerging Markets 10%.
Largest sector weightings
|
|
Portfolio % |
FTSE All-Share Index % |
Relative to the FTSE All-Share Index % |
|
Banks |
14.0 |
13.0 |
+1.0 |
|
Investment Banking and Brokerage Services |
9.0 |
3.5 |
+5.5 |
|
Personal Care, Drug and Grocery Stores |
7.8 |
7.5 |
+0.3 |
|
Oil and Gas |
7.6 |
8.7 |
-1.1 |
|
Tobacco |
7.1 |
3.6 |
+3.5 |
|
Life Insurance |
7.0 |
2.5 |
+4.5 |
The largest sector exposure is banks at 14.0% of the portfolio, one percentage point higher than the FTSE All-Share Index weight, with four large bank holdings: HSBC (4.8% of the portfolio), NatWest (3.7%), Lloyds (2.9%) and Barclays (2.2%). City of London moved overweight in the banks sector at the start of 2024 for the first time since before the Global Financial Crisis ("GFC") of 2007 to 2009. During the years following the GFC, banks were required by regulators to increase capital, leading to limited or, in some cases, no dividend payments. In addition, low interest rates and bond yields had an adverse impact on bank profitability because it was harder to earn the net interest margin (the difference between what banks pay on deposits and earn on loans). In addition, balances that were hedged out ("structural hedges") earned a lower interest rate than had historically been the case.
By the start of 2024, it was clear that the banks had sufficient capital and the mood from politicians was shifting towards wanting banks to lend more to stimulate economic growth. In addition, the rise in interest rates eased pressure on net interest margins and the rise in gilt yields meant that the structural hedges, typically lasting five to seven years, would sharply improve in profitability as old hedges rolled from lower to higher yields. A further favourable factor was the consolidation that took place with Barclays buying Tesco's retail banking operations and NatWest buying Sainsburys'. We believe it is right to remain overweight in the sector given the continuing beneficial effect of the structural hedge, our view that dividend payout ratios can increase and the undervaluation compared with previous periods of elevated banking profitability.
The second largest sector weighting is investment banking and brokerage services (9.0% of the portfolio), which would better be described as financial services. This is a strong part of the UK economy and there are holdings in seven companies in the portfolio. The three largest holdings are: M&G, the fund manager and life assurer; IG, the online financial trading company; and 3i, the investor in private companies. In our view, M&G (2.7% of the portfolio) offers a compelling dividend yield backed by the cash flow from its life assurance business and growth potential from its leading position in private credit. IG (1.7% of the portfolio) has been reinvigorated by its new management, with potential to grow its share of the large and growing markets for investing and trading of financial instruments. As discussed earlier, some profits have been taken in 3i (reducing the position over the 12 months from 3.3% to 1.1% of the portfolio) on valuation grounds, but its holding in Action, the European discount retailer which forms some 70% of its portfolio, is producing exceptional growth.
A third financial sector, life insurance (7.0% of the portfolio), is among the largest six sectors in the portfolio. Attractive dividend yields are offered by Phoenix, Aviva and Legal & General, which are respectively 2.3%, 2.3% and 2.0% of the portfolio. Phoenix benefits from the cash generation of its life insurance operations that are closed to new business and growth from its workplace pensions and retirement income units. Aviva is expected to continue to produce competitive earnings growth and shareholder returns from its general insurance businesses in the UK and Canada and its life insurance and pensions operations in the UK. Legal & General has the leading UK business in bulk pension annuities, which helps companies de-risk defined benefit pensions and is a growing market. It is also a leading asset manager and has a strong record of shareholder returns.
The third and fifth largest sector weightings are both in the consumer staples area. Personal care, drug and grocery stores is 7.8% of the portfolio and includes Unilever and Tesco, respectively 3.4% and 3.2% of the portfolio. Unilever, the consumer products and food group, has been focusing its portfolio of businesses in recent years and is set to spin out its ice cream division. Unilever has over half of its sales in emerging markets, with long-term growth opportunities for the type of product it sells. Tesco, the UK's largest food retailer, remains price competitive and a substantial cash generator. The other consumer staples sector among the six largest sectors is tobacco, which is 7.1% of the portfolio. British American Tobacco and Imperial Brands, which are respectively 3.7% and 3.4% of the portfolio, offer attractive dividend yields supported by strong cash generation.
Oil and gas is the fourth largest sector, but the portfolio's weighting of 7.6% is less than the FTSE All-Share Index's 8.7% weighting. The oil price outlook seems subdued. Russian oil continues to be bought on world markets, while Saudi Arabia restricts some of its production and non-OPEC supply, especially from the US, continues to rise. Chinese demand for oil is being adversely affected by the rise in sales of electric vehicles. Shell (4.5% of the portfolio) should be defensive if the oil price weakens, given its strong balance sheet and large share buyback programme.
The high dividend yields from companies in sectors, such as life insurance and tobacco, enables some low-yielding stocks with exceptional growth potential to be held. BAE Systems (4.3% of the portfolio) is benefiting from the major uplift in defence spending, in response both to rising external threats and pressure from the US on its allies to do more. BAE's biggest market is the US followed by the UK and Saudi Arabia. It also has smaller but fast-growing sales with countries, such as Japan and Australia and in Eastern Europe. As mentioned earlier in this report, some profits have been taken in BAE after its very strong share price performance, but we have retained a large position given the robust outlook for the company. RELX (4.1% of the portfolio) enjoys structural growth characteristics as the provider of information and analytics for businesses, professionals and scientists, with an increasing artificial intelligence capability incorporated in many of its products.
Overall, the portfolio is designed to continue growing City of London's dividend and provide a competitive total return, including capital appreciation. It has a tilt towards stocks with above average-dividend yield, but some lower-yielding stocks are included within the mix for their growth potential. The portfolio is diversified both by geography and by sector. We believe the companies in the portfolio offer good value relative to our view of the prospects for earnings and dividend growth and compared with equivalents overseas.
Job Curtis David Smith
Fund Manager Deputy Fund Manager
16 September 2025
|
FORTY LARGEST INVESTMENTS AS AT 30 JUNE 2025
The 40 largest investments, representing 82.66% of the portfolio, are listed below.
|
||||||||
|
|
|
|
|
|
|
Market value |
|
Portfolio |
|
Position |
|
Company |
|
Sector |
|
£'000 |
|
% |
|
1 |
|
HSBC |
|
Banks |
|
118,148 |
|
4.81 |
|
2 |
|
Shell |
|
Oil and Gas |
|
109,801 |
|
4.47 |
|
3 |
|
BAE Systems |
|
Aerospace and Defence |
|
105,145 |
|
4.28 |
|
4 |
|
RELX |
|
Software and Computer Services |
|
100,305 |
|
4.08 |
|
5 |
|
British American Tobacco |
|
Tobacco |
|
91,716 |
|
3.74 |
|
6 |
|
NatWest |
|
Banks |
|
90,773 |
|
3.70 |
|
7 |
|
Unilever |
|
Personal Care, Drug and Grocery Stores |
|
82,950 |
|
3.38 |
|
8 |
|
Imperial Brands |
|
Tobacco |
|
82,685 |
|
3.37 |
|
9 |
|
Tesco |
|
Personal Care, Drug and Grocery Stores |
|
79,438 |
|
3.23 |
|
10 |
|
Lloyds Banking |
|
Banks |
|
72,079 |
|
2.94 |
|
Top 10 |
|
933,040 |
|
38.00 |
||||
|
|
|
|
|
|
|
|
|
|
|
11 |
|
M&G |
|
Investment Banking and Brokerage Services |
|
66,820 |
|
2.72 |
|
12 |
|
AstraZeneca |
|
Pharmaceuticals and Biotechnology |
|
62,238 |
|
2.53 |
|
13 |
|
Phoenix |
|
Life Insurance |
|
56,874 |
|
2.32 |
|
14 |
|
Aviva |
|
Life Insurance |
|
55,710 |
|
2.27 |
|
15 |
|
Barclays |
|
Banks |
|
54,466 |
|
2.22 |
|
16 |
|
National Grid |
|
Gas, Water and Multi-utilities |
|
53,075 |
|
2.16 |
|
17 |
|
Land Securities |
|
Real Estate Investment Trusts |
|
49,494 |
|
2.01 |
|
18 |
|
Legal & General |
|
Life Insurance |
|
48,355 |
|
1.97 |
|
19 |
|
Rio Tinto |
|
Industrial Metals and Mining |
|
46,271 |
|
1.88 |
|
20 |
|
BP |
|
Oil and Gas |
|
46,078 |
|
1.88 |
|
Top 20 |
|
1,472,421 |
|
59.96 |
||||
|
|
|
|
|
|
|
|
|
|
|
21 |
|
IG |
|
Investment Banking and Brokerage Services |
|
42,520 |
|
1.73 |
|
22 |
|
GSK |
|
Pharmaceuticals and Biotechnology |
|
41,685 |
|
1.70 |
|
23 |
|
British Land |
|
Real Estate Investment Trusts |
|
40,651 |
|
1.65 |
|
24 |
|
Diageo |
|
Beverages |
|
35,819 |
|
1.46 |
|
25 |
|
Munich Re |
|
Non-life Insurance |
|
34,033 |
|
1.39 |
|
26 |
|
Severn Trent |
|
Gas, Water and Multi-utilities |
|
32,796 |
|
1.33 |
|
27 |
|
Reckitt Benckiser |
|
Personal Care, Drug and Grocery Stores |
|
29,730 |
|
1.21 |
|
28 |
|
SSE |
|
Electricity |
|
27,457 |
|
1.12 |
|
29 |
|
3i |
|
Investment Banking and Brokerage Services |
|
27,398 |
|
1.12 |
|
30 |
|
TotalEnergies |
|
Oil and Gas |
|
26,777 |
|
1.09 |
|
Top 30 |
|
1,811,287 |
|
73.76 |
||||
|
|
|
|
|
|
|
|
|
|
|
31 |
|
Schroders |
|
Investment Banking and Brokerage Services |
|
26,744 |
|
1.09 |
|
32 |
|
St. James's Place |
|
Investment Banking and Brokerage Services |
|
26,629 |
|
1.08 |
|
33 |
|
Beazley |
|
Non-life Insurance |
|
23,375 |
|
0.95 |
|
34 |
|
Deutsche Telekom |
|
Telecommunications Service Providers |
|
21,929 |
|
0.89 |
|
35 |
|
Sage |
|
Software and Computer Services |
|
21,384 |
|
0.87 |
|
36 |
|
Novartis |
|
Pharmaceuticals and Biotechnology |
|
21,153 |
|
0.86 |
|
37 |
|
BT |
|
Telecommunications Service Providers |
|
19,859 |
|
0.81 |
|
38 |
|
Nestlé |
|
Food Producers |
|
19,510 |
|
0.80 |
|
39 |
|
Swire Pacific |
|
General Industrials |
|
19,366 |
|
0.79 |
|
40 |
|
Persimmon |
|
Household Goods and Home Construction |
|
18,533 |
|
0.76 |
|
Top 40 |
|
2,029,769 |
|
82.66 |
||||
|
All classes of equity in any one company are treated as one investment. |
||||||||
PRINCIPAL RISKS
The Board, with the assistance of the Manager, has carried out a robust assessment of the principal and emerging risks and uncertainties facing the Company, including those that would threaten its business model, future performance, solvency or liquidity and reputation.
The Board regularly considers the principal and emerging risks facing the Company and has drawn up a register of these risks. The Board has also put in place a schedule of investment limits and restrictions, appropriate to the Company's investment objective and policy. Emerging risks are defined as potential trends, sudden events or changing risks which are characterised by a high degree of uncertainty in terms of the probability of them happening and the possible effects on the Company. Should an emerging risk become sufficiently clear, it may be moved to a significant risk. During the year under review, the Board did not identify any emerging risks which are not already encompassed within the existing principal risks.
The principal risks which have been identified and the steps taken by the Board to mitigate these are set out in the table below. The principal financial risks are detailed in note 16 to the financial statements in the Annual Report. Details of how the Board monitors the services provided by Janus Henderson and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal controls section of the Corporate Governance Report in the Annual Report.
|
Principal risks |
Trend |
Mitigating measure |
|
Portfolio and market price Although the Company invests almost entirely in securities that are listed 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 equity shareholders' funds. |
↔ |
The Board reviews the portfolio at the seven Board meetings held each year and receives regular reports from the Company's brokers. A detailed liquidity report is considered on a regular basis.
The Fund Managers closely monitor the portfolio between meetings and mitigate this risk through diversification of investments. The Fund Managers periodically present the Company's investment strategy in respect of current market conditions to the Board. Performance relative to the FTSE All-Share Index, other UK equity income trusts and IA UK Equity Income OEICs is also monitored.
The majority of the Company's investments are multi-national companies with operations in local markets and are therefore not dependent on the UK economy.
|
|
Dividend income A reduction in dividend income from investee companies could adversely affect the Company's ability to maintain its record of paying a growing dividend to shareholders each year.
|
↔ |
The Board reviews income forecasts at each meeting. The Company has revenue reserves of £48.7 million (before payment of the fourth interim dividend) and distributable capital reserves of £398.4 million. |
|
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.
Investment performance could be affected over the longer term by the impact of sudden potentially catastrophic events, whether man-made (for example extreme political tensions, conflict, poor trade relations, wide-scale financial market disruption), or natural disasters, whether arising from climate change, adverse weather events or disease.
|
↔ |
At each meeting, the Board reviews investment performance, the level of gearing, the level of premium/discount, income forecasts and a schedule of expenses. It also has an annual meeting focused on strategy at which these matters are considered in more depth. |
|
Tax and regulatory Changes in the tax and regulatory environment, including the Company failing to identify and implement any necessary regulatory change, could adversely affect the Company's financial performance, including the return on equity. These may also include government measures which damage the market appeal of investment trusts for investors.
A breach of Section 1158/9 could 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 UK 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 Manager provides its services, inter alia, through suitably qualified professionals and the Board receives internal control reports produced by the Manager on a quarterly basis, which confirm legal and regulatory compliance. The Fund Managers also consider tax and regulatory change in their monitoring of the Company's underlying investments. |
|
Operational The disruption or failure of technology systems used by the Manager or its Administrator (BNP Paribas), whether through inter alia, cyber attacks, failed software updates or data breaches, could profoundly impact 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 and receives reports on the key elements in place to provide effective internal control.
Cyber security is closely monitored and the Audit and Risk Committee receives regular updates from Janus Henderson's Chief Information Security Officer.
The Board considers the loss of the Fund Manager as a risk but this is mitigated by the experience of the team at Janus Henderson as detailed in the Annual Report.
|
BORROWINGS
The Company has a borrowing facility of £120.0 million (2024: £120.0 million) with HSBC Bank plc, of which £17.0 million was drawn at the year end (2024: £41.0 million).
The Company has £114.3 million (2024: £114.3 million) of secured notes in issue (fair value of the loan notes: £85.5 million (2024: £83.3 million)).
The level of borrowing at 30 June 2025 was 5.8% of NAV with debt at par (2024: 7.5%) and 4.5% with debt at fair value (2024: 6.2%).
VIABILITY STATEMENT
The AIC Code of Corporate Governance includes a requirement for the Board to assess the future prospects for the Company, and to report on the assessment within the Annual Report. The Directors have completed their assessment for the year under review and report as set out below.
The Board considers that certain characteristics of the Company's business model and strategy are relevant to this assessment:
|
• |
The Board seeks to deliver long-term performance by the Company. |
|
• |
The Company's investment objective, strategy and policy, which are subject to regular Board monitoring, mean that the Company is invested mainly in readily realisable, UK-listed securities and that the level of borrowings is restricted. |
|
• |
The Company is a closed end investment company and therefore does not suffer from the liquidity issues arising from unexpected redemptions. |
|
• |
The Company has an ongoing charge of 0.36%, which is lower than other comparable investment trusts. |
Also relevant are a number of aspects of the Company's operational agreements:
|
• |
The Company retains title to all assets held by the Custodian under the terms of formal agreements with the Custodian and Depositary. |
|
• |
Long-term borrowing is in place, being 4.53% secured notes 2029, 2.94% secured notes 2049 and 2.67% secured notes 2046 which are subject to financial covenants with which the Company complied in full during the year. The value of long-term borrowing is relatively small in comparison to the value of net assets, being 4.9%. |
|
• |
Revenue and expenditure forecasts are reviewed by the Directors at each Board meeting. This includes stress testing of the forecast under different scenarios. |
|
• |
Cash is held with approved banks. |
Three model scenarios are considered which evaluate the impact on revenue reserves. These range from a worst-case scenario which includes low consensus dividend estimates and significant dividend cuts of up to 50% from specific sectors and investee companies, to a best-case scenario with high consensus dividend estimates, no dividend cuts in any specific sector and limited dividend cuts in specific investee companies. Increasing dividend payments to shareholders could continue under all three scenarios whether through revenue, or supported by distributable capital reserves. None of the results from the three scenarios would therefore threaten the viability of the Company.
Covenant limits are tested to ascertain the level that net assets would need to fall by to breach any covenant conditions. Net assets would need to fall by amounts in excess of £1.9 billion to breach covenants, with all other factors remaining constant. The Board considers this to be highly unlikely and therefore does not threaten the viability of the Company.
In addition, the Directors carried out a robust assessment of the principal risks and uncertainties which could threaten the Company's business model, including future performance, liquidity and solvency and considered emerging risks that could have a future impact on the Company.
The principal risks identified as relevant to the viability assessment were those relating to investment portfolio performance, including climate change, and its effect on the NAV, share price and dividends, and threats to security over the Company's assets. The Board took into account: the liquidity of the Company's portfolio; the existence of the long-term fixed rate borrowings; the effects of any significant future falls in investment values and income receipts on the ability to repay and renegotiate borrowings, grow dividend payments and retain investors; and the potential need for share buybacks to maintain a narrow share price discount.
The Directors assess viability over five-year rolling periods, taking account of foreseeable severe but plausible scenarios. The Directors believe that a rolling five-year period best balances the Company's long-term objective, its financial flexibility and scope with the difficulty in forecasting economic conditions affecting the Company and its shareholders. The Directors have considered the current geopolitical and macroeconomic uncertainties and the potential for sudden catastrophic events such as pandemics, conflict and climate events, in particular the impact on income and the Company's ability to meet its investment objective. The Directors do not believe that they will have a terminal impact on the viability of the Company and its ability to continue in operation, notwithstanding the short-term uncertainty these events could cause in the markets and specific short-term issues such as energy, supply chain disruption, inflation and labour shortages.
Based on their assessment, and in the context of the Company's business model, strategy and operational arrangements set out above, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five-year period.
RELATED PARTY TRANSACTIONS
The Company's transactions with related parties in the year were with the Directors and the Manager. There were no material transactions between the Company and its Directors during the year and the only amounts paid to them were in respect of expenses and remuneration for which there were no outstanding amounts payable at the year end. Directors' shareholdings are disclosed in the Annual Report.
In relation to the provision of services by the Manager, other than fees payable by the Company in the ordinary course of business and the provision of marketing services, there were no material transactions with the Manager affecting the financial position of the Company during the year under review. More details on transactions with the Manager, including amounts outstanding at the year end, are given in the Annual Report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Each of the Directors, who are listed below, confirms that, to the best of his or her knowledge:
|
• |
the Company's financial statements, which have been prepared in accordance with UK Accounting Standards on a going concern basis, give a true and fair view of the assets, liabilities, financial position and return of the Company; and
|
|
• |
the Strategic Report and financial statements include 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. |
On behalf of the Board
Sir Laurie Magnus CBE
Chairman
16 September 2025
INCOME STATEMENT
|
|
|
Year ended 30 June 2025 |
Year ended 30 June 2024 |
||||
|
Notes |
|
Revenue return |
Capital |
Total |
Revenue return |
Capital |
Total |
|
|
Gains on investments held at fair value through profit or loss |
- |
244,522 |
244,522 |
- |
200,864 |
200,864 |
|
2 |
Income from investments held at fair value through profit or loss |
112,223 |
- |
112,223 |
109,335 |
- |
109,335 |
|
3 |
Other interest receivable and similar income |
242 |
- |
242 |
371 |
- |
371 |
|
|
|
|
|
|
|
|
|
|
|
Gross revenue and capital gains |
112,465 |
244,522 |
356,987 |
109,706 |
200,864 |
310,570 |
|
|
|
|
|
|
|
|
|
|
4 |
Management fee |
(2,006) |
(4,680) |
(6,686) |
(1,927) |
(4,497) |
(6,424) |
|
|
Other administrative expenses |
(1,228) |
- |
(1,228) |
(1,009) |
- |
(1,009) |
|
|
|
|
|
|
|
|
|
|
|
Net return before finance costs and taxation |
109,231 |
239,842 |
349,073 |
106,770 |
196,367 |
303,137 |
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
(1,954) |
(4,191) |
(6,145) |
(1,666) |
(3,520) |
(5,186) |
|
|
|
|
|
|
|
|
|
|
|
Net return before taxation |
107,277 |
235,651 |
342,928 |
105,104 |
192,847 |
297,951 |
|
|
|
|
|
|
|
|
|
|
|
Taxation |
(812) |
- |
(812) |
(533) |
- |
(533) |
|
|
|
|
|
|
|
|
|
|
|
Net return after taxation |
106,465 |
235,651 |
342,116 |
104,571 |
192,847 |
297,418 |
|
|
|
|
|
|
|
|
|
|
5 |
Return per ordinary share - basic and diluted |
21.57p |
47.74p |
69.31p |
20.87p |
38.48p |
59.35p |
|
|
|
|
|
|
|
|
|
The total columns of this statement represent the Company's Income Statement. 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. The Company has no recognised gains or losses other than those recognised in the Income Statement.
STATEMENT OF CHANGES IN EQUITY
|
Notes |
Year ended 30 June 2025 |
Called up share capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
|
At 1 July 2024 |
125,666 |
1,072,624 |
2,707 |
849,910 |
46,621 |
2,097,528 |
|
|
Net return after taxation |
- |
- |
- |
235,651 |
106,465 |
342,116 |
|
8 |
Buyback of 2,530,895 ordinary shares for treasury |
- |
- |
- |
(11,154) |
- |
(11,154) |
|
8 |
Sale of 1,685,000 ordinary shares from treasury |
- |
855 |
- |
7,086 |
- |
7,941 |
|
7 |
Dividends paid |
- |
- |
- |
- |
(104,392) |
(104,392) |
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2025 |
125,666 |
1,073,479 |
2,707 |
1,081,493 |
48,694 |
2,332,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
Year ended 30 June 2024 |
Called up share capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
|
At 1 July 2023 |
124,339 |
1,053,061 |
2,707 |
691,463 |
44,322 |
1,915,892 |
|
|
Net return after taxation |
- |
- |
- |
192,847 |
104,571 |
297,418 |
|
8 |
Buyback of 8,301,867 ordinary shares for treasury |
- |
- |
- |
(34,400) |
- |
(34,400) |
|
8 |
Issue of 5,310,000 new ordinary shares |
1,327 |
19,563 |
- |
- |
- |
20,890 |
|
7 |
Dividends paid |
- |
- |
- |
- |
(102,272) |
(102,272) |
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2024 |
125,666 |
1,072,624 |
2,707 |
849,910 |
46,621 |
2,097,528 |
STATEMENT OF FINANCIAL POSITION
|
Notes |
|
30 June 2025 £'000 |
30 June 2024 £'000 |
|
|
Fixed assets |
|
|
|
|
Investments held at fair value through profit or loss |
|
|
|
|
Listed at market value in the United Kingdom |
2,163,235 |
1,657,638 |
|
|
Listed at market value overseas |
190,162 |
216,147 |
|
|
Investments on loan |
102,131 |
372,460 |
|
|
Investment in subsidiary undertakings |
347 |
347 |
|
|
|
|
|
|
|
|
2,455,875 |
2,246,592 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
Debtors |
14,443 |
12,911 |
|
|
|
|
|
|
|
|
14,443 |
12,911 |
|
|
|
|
|
|
|
Creditors: amounts falling due within one year |
(22,552) |
(46,307) |
|
|
|
|
|
|
|
Net current liabilities |
(8,109) |
(33,396) |
|
|
|
|
|
|
|
Total assets less current liabilities |
2,447,766 |
2,213,196 |
|
|
|
|
|
|
|
Creditors: amounts falling due after more than one year |
(115,727) |
(115,668) |
|
|
|
|
|
|
|
Net assets |
2,332,039 |
2,097,528 |
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
8 |
Called up share capital |
125,666 |
125,666 |
|
|
Share premium account |
1,073,479 |
1,072,624 |
|
|
Capital redemption reserve |
2,707 |
2,707 |
|
|
Other capital reserves |
1,081,493 |
849,910 |
|
|
Revenue reserve |
48,694 |
46,621 |
|
|
|
|
|
|
6 |
Total shareholders' funds |
2,332,039 |
2,097,528 |
|
|
|
|
|
|
6 |
Net asset value per ordinary share - basic and diluted |
472.53p |
424.29p |
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
|
1. |
Accounting policies |
|
|
Basis of accounting The Company is a registered investment company as defined in Section 833 of the Companies Act 2006 and is incorporated in the UK. It operates in the UK and is registered at the address below.
The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland, and with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts ("the SORP") issued in July 2022 by the Association of Investment Companies.
The principal accounting policies applied in the presentation of these financial statements are set out below. These policies have been consistently applied to all the years presented.
As an investment fund the Company has the option, which it has taken, not to present a cash flow statement. A cash flow statement is not required when an investment fund meets all the following conditions: substantially all of the entity's investments are highly liquid, substantially all of the entity's investments are carried at market value, and the entity provides a Statement of Changes in Equity. The Directors have assessed that the Company meets all of these conditions.
The financial statements have been prepared under the historical cost basis except for the measurement at fair value of investments. In applying FRS 102, financial instruments have been accounted for in accordance with Section 11 and 12 of the standard. All of the Company's operations are of a continuing nature.
The financial statements of the Company's three subsidiaries have not been consolidated on the basis of immateriality. Consequently, the financial statements present information about the Company as an individual entity. The Directors consider that the values of the subsidiary undertakings are not less than the amounts at which they are included in the financial statements.
The preparation of the Company's financial statements on occasion requires the Directors to make judgements, estimates and assumptions that affect the reported amounts in the primary financial statements and the accompanying disclosures. These assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the current and future periods, depending on circumstance.
The decision to allocate special dividends as income or capital and the allocation of expenses to income or capital are judgements taken by the Directors. Neither of these have any impact on net assets but do impact the net revenue return that is available to pay dividends from current year revenue in any specific year. The Directors believe that any accounting judgements or estimates applied to this set of financial statements do not create significant risk of material adjustments in the future to the carrying amount of assets and liabilities.
|
|
|
Going concern The assets of the Company consist of securities that are readily realisable. As set out in the Viability Statement, the Directors consider three model scenarios that stress test the revenue reserves. None of the results from these scenarios would threaten the viability of the Company and its ability to continue as a going concern. The Directors have also considered the current geopolitical and macroeconomic uncertainties and the potential for sudden catastrophic events such as pandemics, conflict and climate events, including cash flow forecasting, a review of covenant compliance including the headroom above the most restrictive covenants and an assessment of the liquidity of the portfolio. They have concluded that the Company is able to meet its financial obligations, including the repayment of the bank overdraft, as they fall due for a period to 16 September 2026, which is at least 12 months from the date of approval of the financial statements. Having assessed these factors, the principal risks and other matters discussed in connection with the viability statement, the Board has determined that it is appropriate for the financial statements to be prepared on a going concern basis.
|
|
2. |
Income from investments held at fair value through profit or loss |
||||||||
|
|
|
2025 |
2024 |
||||||
|
|
|
£'000 |
£'000 |
||||||
|
|
UK dividends: |
|
|
||||||
|
|
Listed - ordinary dividends |
97,526 |
94,307 |
||||||
|
|
Listed - special dividends |
616 |
985 |
||||||
|
|
|
|
|
||||||
|
|
|
98,142 |
95,292 |
||||||
|
|
|
|
|
||||||
|
|
Other dividends: |
|
|
||||||
|
|
Dividend income - overseas investments |
8,665 |
10,678 |
||||||
|
|
Dividend income - overseas special dividends |
- |
59 |
||||||
|
|
Dividend income - UK REIT |
5,416 |
3,306 |
||||||
|
|
|
|
|
||||||
|
|
|
14,081 |
14,043 |
||||||
|
|
|
|
|
||||||
|
|
|
112,223 |
109,335 |
||||||
|
|
|
|
|
||||||
|
3. |
Other interest receivable and similar income |
||||||||
|
|
2025 |
2024 |
|||||||
|
|
|
£'000 |
£'000 |
||||||
|
|
Bank interest |
1 |
84 |
||||||
|
|
Underwriting commission (allocated to revenue)1 |
5 |
45 |
||||||
|
|
Stock lending revenue |
236 |
242 |
||||||
|
|
|
|
|
||||||
|
|
|
242 |
371 |
||||||
|
|
|
|
|
||||||
|
|
1 During the year the Company was not required to take up shares in respect of its underwriting (2024: none)
Stock lending revenue has been shown net of brokerage fees of £59,000 (2024: £61,000). |
||||||||
|
|
|
||||||||
|
4. |
Management fee |
||||||||
|
|
|
||||||||
|
|
|
2025 |
2024 |
||||||
|
|
|
Revenue return |
Capital return |
Total return |
Revenue return |
Capital return |
Total return |
||
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
|
Management fee |
2,006 |
4,680 |
6,686 |
1,927 |
4,497 |
6,424 |
||
|
|
|
||||||||
|
|
A summary of the terms of the Management Agreement is given in the Annual Report. Details of apportionment between revenue and capital can be found in the Annual Report. |
||||||||
|
|
|
||||||||
|
5. |
Return per ordinary share - basic and diluted |
|
||
|
|
The return per ordinary share is based on the net return attributable to the ordinary shares of £342,116,000 (2024: £297,418,000) and on 493,599,088 ordinary shares (2024: 501,134,608), being the weighted average number of ordinary shares in issue during the year, excluding treasury shares. |
|
||
|
|
|
|
||
|
|
The return per ordinary share is analysed between revenue and capital as below: |
|
||
|
|
|
|
||
|
|
|
2025 |
2024 |
|
|
|
|
£'000 |
£'000 |
|
|
|
Net revenue return |
106,465 |
104,571 |
|
|
|
Net capital return |
235,651 |
192,847 |
|
|
|
|
|
|
|
|
|
Net total return |
342,116 |
297,418 |
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares in issue during the year |
493,599,088 |
501,134,608 |
|
|
|
|
|
|
|
|
|
|
2025 |
2024 |
|
|
|
|
Pence |
Pence |
|
|
|
Revenue return per ordinary share |
21.57 |
20.87 |
|
|
|
Capital return per ordinary share |
47.74 |
38.48 |
|
|
|
|
|
|
|
|
|
Total return per ordinary share |
69.31 |
59.35 |
|
|
|
|
|
|
|
|
|
The Company does not have any dilutive securities, therefore the basic and diluted returns per share are the same.
|
|
||
|
6. |
Net asset value per ordinary share - basic and diluted |
|
||
|
|
The net asset value per ordinary share of 472.53p (2024: 424.29p) is based on the net assets attributable to the ordinary shares of £2,332,039,000 (2024: £2,097,528,000) and on 493,517,106 (2024: 494,363,001) shares in issue on 30 June 2025, excluding treasury shares. |
|
||
|
|
An alternative net asset value per ordinary share can be calculated by deducting from the total assets less current liabilities of the Company the preference and preferred ordinary stocks and secured notes at their market (or fair) values rather than at their par (or book) values. The net asset value per ordinary share at 30 June 2025 calculated on this basis was 478.14p (2024: 429.57p). See the Annual Report for further details of the Alternative Performance Measure and how it is calculated.
|
|
||
|
|
The movements during the year of the assets attributable to the ordinary shares were as follows: |
|
||
|
|
|
|
||
|
|
|
£'000 |
|
|
|
|
Total net assets attributable to the ordinary shares at 30 June 2024 |
2,097,528 |
|
|
|
|
Total net return after taxation |
342,116 |
|
|
|
|
Dividends paid on ordinary shares in the year |
(104,392) |
|
|
|
|
Buyback of shares |
(11,154) |
|
|
|
|
Sale of shares from treasury |
7,941 |
|
|
|
|
|
|
|
|
|
|
Total net assets attributable to the ordinary shares at 30 June 2025 |
2,332,039 |
|
|
|
|
|
|
||
|
|
The Company does not have any dilutive securities. |
|
||
|
7. |
Dividends paid on ordinary shares |
||||||
|
|
|
Record date |
Payment date |
2025 £'000 |
2024 £'000 |
||
|
|
Fourth interim dividend (5.05p) for the year ended 30 June 2023 |
27 July 2023 |
31 August 2023 |
- |
25,374 |
||
|
|
First interim dividend (5.05p) for the year ended 30 June 2024 |
26 October 2023 |
30 November 2023 |
- |
25,385 |
||
|
|
Second interim dividend (5.05p) for the year ended 30 June 2024 |
25 January 2024 |
29 February 2024 |
- |
25,385 |
||
|
|
Third interim dividend (5.25p) for the year ended 30 June 2024 |
25 April 2024 |
31 May 2024 |
- |
26,200 |
||
|
|
Fourth interim dividend (5.25p) for the year ended 30 June 2024 |
26 July 2024 |
30 August 2024 |
25,953 |
- |
||
|
|
First interim dividend (5.25p) for the year ended 30 June 2025 |
25 October 2024 |
29 November 2024 |
25,953 |
- |
||
|
|
Second interim dividend (5.25p) for the year ended 30 June 2025 |
24 January 2025 |
28 February 2025 |
25,953 |
- |
||
|
|
Third interim dividend (5.40p) for the year ended 30 June 2025 |
25 April 2025 |
30 May 2025 |
26,580 |
- |
||
|
|
Unclaimed dividends over 12 years old |
|
|
(47) |
(72) |
||
|
|
|
|
|
|
|
||
|
|
|
|
|
104,392 |
102,272 |
||
|
|
|
|
|
|
|
||
|
|
In accordance with FRS 102, interim dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they have been paid to shareholders.
All dividends have been paid or will be paid out of revenue reserves or current year revenue profits and at no point during the year did the revenue reserve move to a negative position.
The total dividends payable in respect of the financial year which form the basis of the test under Section 1158 of the Corporation Tax Act 2010 are set out below. |
||||||
|
|
|
||||||
|
|
|
2025 |
2024 |
||||
|
|
|
£'000 |
£'000 |
||||
|
|
Revenue available for distribution by way of dividend for the year |
106,465 |
104,571 |
||||
|
|
First interim dividend of 5.25p (2024: 5.05p) |
(25,953) |
(25,385) |
||||
|
|
Second interim dividend of 5.25p (2024: 5.05p) |
(25,953) |
(25,385) |
||||
|
|
Third interim dividend of 5.40p (2024: 5.25p) |
(26,580) |
(26,200) |
||||
|
|
Fourth interim dividend of 5.40p (2024: 5.25p) paid on 29 August 2025¹ |
(26,650) |
(25,953) |
||||
|
|
|
|
|
||||
|
|
Transfer to revenue reserve² |
1,329 |
1,648 |
||||
|
|
|
|
|
||||
|
|
1 Based on 493,517,106 ordinary shares in issue at 24 July 2025 (the ex-dividend date) (2024: 494,334,723) 2 The surplus of £1,329,000 (2024: deficit of £1,648,000) has been taken to the revenue reserve |
||||||
|
|
|
|
|
||||
|
|
Since the year end, the Board has announced a first interim dividend of 5.40p per ordinary share, in respect of the year ending 30 June 2026. This will be paid on 28 November 2025 to holders registered at the close of business on 24 October 2025. The Company's shares will be quoted ex-dividend on 23 October 2025.
|
||||||
|
8. |
Called up share capital |
|
|
|
|
|
|
|
Number of shares held in treasury |
Number of shares entitled to dividend |
Total number of shares in issue |
Nominal value of total shares in issue |
|
|
Allotted and issued ordinary shares of 25p each |
|
|
|
|
|
|
At 1 July 2024 |
8,301,867 |
494,363,001 |
502,664,868 |
125,666 |
|
|
Buyback of shares for treasury |
2,530,895 |
(2,530,895) |
- |
- |
|
|
Sale of shares from treasury |
(1,685,000) |
1,685,000 |
- |
- |
|
|
|
|
|
|
|
|
|
At 30 June 2025 |
9,147,762 |
493,517,106 |
502,664,868 |
125,666 |
|
|
|
|
|
|
|
|
|
|
Number of shares held in treasury |
Number of shares entitled to dividend |
Total number of shares in issue |
Nominal value of total shares in issue |
|
|
Allotted and issued ordinary shares of 25p each |
|
|
|
|
|
|
At 1 July 2023 |
- |
497,354,868 |
497,354,868 |
124,339 |
|
|
Buyback of shares for treasury |
8,301,867 |
(8,301,867) |
- |
- |
|
|
Issue of new ordinary shares |
- |
5,310,000 |
5,310,000 |
1,327 |
|
|
|
|
|
|
|
|
|
At 30 June 2024 |
8,301,867 |
494,363,001 |
502,664,868 |
125,666 |
|
|
|||||
|
The Company sold 1,685,000 (2024: 5,310,000) ordinary shares from treasury with total proceeds of £7,941,000 (2024: £20,890,000) after deduction of issue costs of £12,000 (2024: £31,000). The average price of the ordinary shares that were issued was 468.5p (2024: 396.5p). During the year 2,530,895 shares were bought back into treasury (2024: 8,301,867) for a net payment of £11,154,000 (2024: £34,400,000). |
|||||
|
9. 2025 financial information The figures and financial information for the year ended 30 June 2025 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 2025 have been audited but have not yet been delivered to the Registrar of Companies. The Independent Auditor's Report on the 2025 annual financial statements was unqualified, did not include a reference to any matter to which the Auditor drew attention without qualifying the report, and did not contain any statements under Sections 498(2) or 498(3) of the Companies Act 2006. |
|||||
|
10. 2024 financial information The figures and financial information for the year ended 30 June 2024 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. The Independent Auditor's Report on the 2024 annual financial statements was unqualified, did not include a reference to any matter to which the Auditor drew attention without qualifying the report, and did not contain any statements under Sections 498(2) or 498(3) of the Companies Act 2006. |
|||||
|
11. Annual Report The Annual Report will be posted to shareholders in late September 2025 and will be available on the Company's website www.cityinvestmenttrust.com. Hard copies of the Annual Report will thereafter be available at the Company's registered office, 201 Bishopsgate, London, EC2M 3AE.
|
|||||
|
12. Annual General Meeting The Annual General Meeting will be held at 1.00pm on Thursday, 30 October 2025 at the Company's registered office. Instructions on attending the meeting in person or virtually, and details of resolutions to be put to the AGM, are included in the Notice of AGM in the Annual Report and will be available at www.cityinvestmenttrust.com. If shareholders would like to submit any questions in advance of the AGM, they are welcome to send these to the corporate secretary at itsecretariat@janushenderson.com. |
|||||
|
|
|||||
|
13. General Information |
|
Company Status The City of London Investment Trust plc is a UK domiciled investment trust company.
|
|
ISIN number / SEDOL: ordinary shares: GB0001990497 / 0199049 London Stock Exchange (TIDM) Code: CTY |
|
Global Intermediary Identification Number (GIIN): S55HF7.99999.SL.826 |
|
Legal Entity Identifier (LEI): 213800F3NOTF47H6AO55
|
|
Company Registration Number |
|
00034871
|
|
Registered Office |
|
201 Bishopsgate, London EC2M 3AE
|
|
Directors and Secretary |
|
The Directors of the Company are Sir Laurie Magnus CBE (Chairman), Sally Lake (Audit and Risk Committee Chair), Clare Wardle (Senior Independent Director), Ominder Dhillon and Robert (Ted) Holmes.
|
|
The Corporate Secretary is Janus Henderson Secretarial Services UK Limited, represented by Sally Porter, ACG.
|
|
Website Details of the Company's share price and net asset value, together with general information about the Company, monthly factsheets and data, copies of announcements, reports and details of general meetings can be found at www.cityinvestmenttrust.com. |
|
|
|
|
|
For further information please contact:
Job Curtis Fund Manager The City of London Investment Trust plc Telephone: 020 7818 4367
Dan Howe Head of Investment Trusts Janus Henderson Investors Telephone: 020 7818 1818
Harriet Hall PR Director, Investment Trusts Janus Henderson Investors Telephone: 020 7818 2919 |
|
|
|
|
|
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) are incorporated into, or form part of, this announcement.
|
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