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 2026
This announcement contains regulated information
CHAIRMAN'S COMMENT
"The dividend was increased, for the 60th consecutive year, by 4.0% and was fully covered by earnings per share. This continues City of London's unique leadership in delivering the longest record of consecutive annual dividend increases in the investment trust sector. The Board is determined to maintain this leadership position over the years ahead."
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
|
|
2026 % |
2025 % |
|
Total Return Performance for year to 30 June: |
|
|
|
Net asset value ("NAV") per ordinary share1, 5 |
21.9 |
16.8 |
|
Share price2, 5 |
21.0 |
21.8 |
|
FTSE All-Share Index (Benchmark) |
21.9 |
11.2 |
|
AIC UK Equity Income sector3 |
13.7 |
12.6 |
|
IA UK Equity Income OEIC sector |
15.1 |
10.5 |
|
|
|
|
|
|
2026 |
2025 |
|
NAV per ordinary share5 |
553.4p |
472.5p |
|
NAV per ordinary share (debt at fair value)5 |
558.9p |
478.1p |
|
Share price |
566.0p |
487.5p |
|
Premium5 |
2.3% |
3.2% |
|
Premium (debt at fair value)5 |
1.3% |
2.0% |
|
Gearing at year end5 |
4.7% |
5.3% |
|
Revenue earnings per share |
22.5p |
21.6p |
|
Dividends per share |
22.15p |
21.30p |
|
Ongoing charge for the year4, 5 |
0.36% |
0.36% |
|
Revenue reserve per share5 |
10.2p |
9.9p |
1 Net asset value ("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 Alternative Performance Measure
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
|
|
2026 |
2025 |
|
City of London |
3.9 |
4.4 |
|
FTSE All-Share Index (Benchmark) |
3.1 |
3.5 |
|
AIC UK Equity Income sector |
3.9 |
4.1 |
|
IA UK Equity Income OEIC sector |
3.9 |
4.1 |
CHAIRMAN'S STATEMENT
City of London produced a net asset value ("NAV") total return of 21.9% over the year to 30 June 2026, which was the same as the FTSE All-Share Index total return. The Company also exceeded the FTSE All-Share Index total return over 3, 5 and 10 years.
The dividend was increased, for the 60th consecutive year, by 4.0% and was fully covered by earnings per share. This continues City of London's unique leadership in delivering the longest record of consecutive annual dividend increases in the investment trust sector. The Board is determined to maintain this leadership position over the years ahead.
The Markets
Despite volatile global politics, stock markets produced good returns during the twelve months. Excitement about the potential for artificial intelligence ("AI") shifted from the large technology companies that will provide AI to those benefiting from the huge capital expenditure in building out the infrastructure, such as semi-conductor manufacturers. Companies whose business models appeared to be threatened by AI were notable underperformers, even if the threat had not yet impacted their results.
Equity markets were also helped by a loosening of monetary policy in the second half of 2025. The US Federal Reserve reduced interest rates to 3.75% after announcing three 25 basis points ("bps") cuts and the Bank of England also reduced its rate to 3.75% after two 25 bps cuts. Following the outbreak of armed conflict between the US and Iran at the end of February 2026, which led to the closure of the Strait of Hormuz and an upward spike in the oil price, interest rates stayed on hold in the US and UK. The European Central Bank lifted its key deposit rate, in June, by 25 bps to 2.25% as pricing pressures increased. Equity markets initially fell on the escalation of the conflict in the Middle East but recovered in anticipation of a ceasefire and with the Memorandum of Understanding signed by the US and Iran in June.
UK GDP growth was tepid during the second half of 2025, partly because of damaging speculation, for the second consecutive year, about tax changes in the Budget. 10-year Gilt yields rose during the 12 months from 4.5% to a peak of 5.2% in May, before falling to 4.8% at the end of June, with continuing doubts in the markets about the sustainability of the UK government's fiscal policy. Economic growth improved marginally during the first half of 2026, but the arrival of Andy Burnham as Prime Minister has revived uncertainty concerning the government's attitude towards business and its fiscal credibility.
There was a significant number of takeover bids for UK listed companies by overseas companies and private equity firms, as has been the case for several years. City of London's portfolio benefited with the proposed acquisitions of Beazley by Zurich Insurance, Schroders by Nuveen of the US, Tate & Lyle by Ingredion of the US and Segro by Prologis of the US.
Performance
Earnings and Dividends
City of London's earnings per share increased by 4.4%. The growth in dividends from the banks sector was the most important positive contributor for the third year in a row. Special dividends accounted for as revenue amounted to £0.3 million, down from £0.6 million for the previous year and reflecting the corporate trend for effecting shareholder distributions through share buybacks rather than dividend payments.
Expenses remained under tight control, with City of London's ongoing charge ratio of 0.36% remaining very competitive compared to most other actively managed funds. The management fee with Janus Henderson is 0.3% for net assets up to £3.0 billion, dropping to 0.275% on any excess above £3.0 billion. Net assets amounted to £2.85 billion as at 30 June 2026.
City of London's annual dividend grew by 4.0%, ahead of UK CPI inflation of 2.6%. Over ten years, City of London's dividend has grown by 39.3%, slightly behind UK CPI inflation of 41.7%. The last decade has been a difficult period for real dividend growth, adversely affected both by 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 136.6%, compared to UK CPI inflation of 78.0%.
City of London's record of 60 consecutive annual dividend increases is the longest of any investment trust. It has been achieved by investing predominantly in the UK stock market and by harnessing the benefits of the investment trust structure, including the facility to use revenue reserves and to raise low-cost long-term debt. It has also been achieved through the exemplary custodianship of the fund management team, led by Job Curtis, who has consistently steered the portfolio through numerous unpredictable market challenges over a tenure of 35 years with skill, humility and dedicated commitment.
The revenue reserve increased by £3.6 million to £52.3 million, with the revenue reserve per share rising by 3.0% to 10.2p. 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 £61.0 million to £459.4 million) could help to fund dividend payments, the Board considers that a healthy revenue reserve provides an important backstop for dividend payments made from revenue alone, especially during periods of dividend cuts across the stock market, as occurred during the Covid pandemic.
NAV Total Return
City of London's NAV total return of 21.9% for the 12 months was the same as for the FTSE All-Share Index. Gearing, which contributed positively by 0.8%, 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 continue to provide low-cost debt financing over the next 20 years for investment in equities.
Stock selection detracted relative to the FTSE All-Share Index by 0.5%. The biggest stock detractor relative to the FTSE All-Share Index was Rolls Royce, the aero engine manufacturer, which pays a low level of dividend and was not held. The next largest detractors were being underweight in HSBC, the bank, and AstraZeneca, the pharmaceutical company. The biggest contributor to relative performance was not holding London Stock Exchange followed by IG, the online trading company, and not holding Experian, the credit rating company.
As mentioned in the introduction, City of London's NAV total return was ahead of the FTSE All-Share Index over 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
The Board takes very seriously its stated policy to issue and buy back shares within a narrow band relative to NAV. 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. Over the last 15 years, the Company's prevailing share price premium and discount to NAV has stayed within narrow bands rarely exceeding 3%. City of London's shareholders have therefore benefited from a relatively low volatility of share price relative to NAV. In addition, share issues at a premium and buybacks at a discount have enhanced NAV. During the 12 months to 30 June 2026, the Company sold 9.1 million shares from treasury (which had been bought back in earlier periods) and issued 12.4 million new shares - all at a premium to NAV for total proceeds of £114.8 million.
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 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 2026, had a lower weighted score to 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 meetings. Further details on how the Fund Managers take ESG considerations into account in their investment decision making process are provided in the Annual Report.
Annual General Meeting
The 2026 Annual General Meeting ("AGM") will be held in the offices of Janus Henderson, 201 Bishopsgate, London EC2M 3AE on Thursday, 29 October 2026 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 webinar by registering at www.janushenderson.com/cty-agm. The Board has decided to adopt the practice of conducting the voting for each resolution on a poll, as an alternative to shareholders voting on a show of hands at the meeting. This will mean that all votes submitted by proxy will be taken into account, as well as the votes of those shareholders physically present. All shareholders, and particularly those who cannot attend in person, are therefore requested to submit their votes by proxy by the deadline set out in the Notice of Meeting to ensure their vote counts.
Outlook
The huge amount being spent on rolling out the infrastructure for AI suggests it will be a groundbreaking new technology. While there will be significant medium-term productivity benefits for the world economy, there will also be disruption for some industries and related labour markets. The returns on the vast sums being invested could also be disappointing, with adverse consequences for the highly valued stocks that have capitalised on the speculation associated with the AI "revolution". In addition, this capital expenditure is having a short-term upward impact on inflation, with price rises in commodities and components, such as copper and semiconductors, even if the adoption of AI will ultimately be deflationary.
Movements in oil and natural gas prices continue to have an important influence on global inflation. The wars in Ukraine and Iran have constrained the availability of these energy resources and reduced refining capacity with adverse consequences for critical products, such as jet fuel and diesel. The outcome of these conflicts, which is still uncertain, will have a significant effect on the global economy. Overall, while inflation remains above target in the US and UK and rising in Europe, further interest rate cuts by central banks are unlikely.
The UK equity market offers a diverse range of sectors and is not dominated by technology companies, as is the case with the US stock market. The Board is confident that companies in industries with large weightings in the UK stock market, such as financials, resources and consumer staples, will grow in the years ahead. The share prices of UK companies remain at a considerable valuation discount to comparable companies overseas and therefore likely to continue to attract takeover bids. The Board believes City of London's portfolio is well placed to build on its record-breaking 60 years of consecutive dividend growth and to provide shareholders with a competitive total return.
Sir Laurie Magnus CBE
Chairman
15 September 2026
FUND MANAGERS' REPORT
Investment Background
The UK equity market, as measured by the FTSE All-Share Index, produced a total return of 21.9% over the year under review. UK GDP growth slowed in the second half of 2025, adversely affected by speculation over the Budget, but recovered in the first half of 2026, leading to growth of 1.1% over the 12 months. After poor results in the May local elections, Sir Keir Starmer resigned as Prime Minister and was replaced by Andy Burnham in July 2026.
Globally, the dominant investment theme was excitement over the new technology of artificial intelligence ("AI"). The vast sums being spent on building out the infrastructure for AI led to very substantial opportunities for suppliers, such as manufacturers of semi-conductor chips, copper miners and builders of data centres. But concern grew towards the end of the period about whether the returns would justify the scale of investment.
The outbreak of hostilities between the US and Iran, which led to the Strait of Hormuz being closed, caused a rise in the oil price and fall in global equity prices. These moves reversed in the second quarter of 2026 as the conflict appeared to de-escalate.
During the 12 months, the Bank of England made two 25 basis points cuts in the base rate, in August and December 2025, taking it from 4.25% to 3.75%. CPI inflation started the period under review at 3.6% and was on a declining trend until the conflict between the US and Iran led to a rise in the oil price and inflation. The 10-year gilt yield, which was 4.5% on 30 June 2025, rose to a peak of 5.2% on 19 May 2026 and ended the 12 months at 4.8% on 30 June 2026. The dividend yield of the FTSE All-Share Index was 3.1% at 30 June 2026, below the 10-year gilt yield and the base rate, but with equities offering the prospect of dividend growth.
In 2017 and 2021, when interest rates were exceptionally low, the Company was able to fix cheap rates of borrowing for long periods through the following secured notes: £30 million 2.67% 2046 and £50 million 2.94% 2049. In addition, there is also one secured note with two-and-a-half years until maturity: £35 million 4.53% 2029. These borrowings remained invested in equities throughout the year. The HSBC facility, which is priced off the base rate, was used opportunistically: £17 million was drawn down at the start of the 12-month period, falling to £4 million at 30 September 2025, rising to £73 million at 31 May 2026 and falling to £32 million at 30 June 2026.
In the foreign exchange market, the US dollar strengthened against sterling, which reflected the better growth of the US economy, partly due to capital expenditure on AI infrastructure. The exchange rate between the US dollar and sterling fell from 1.37 to 1.33. Against the euro, sterling was more stable, with the exchange rate moving from 1.17 to 1.16.
The oil price softened during the first eight months of the period under review, reflecting an excess supply of oil in world markets. There was a dramatic change with the outbreak of the conflict between the US and Iran leading to the closure of the Strait of Hormuz, a significant artery in the export of oil and liquified natural gas ("LNG") from the Middle East. In some respects, it was surprising that the oil price did not rise higher than $118/bbl. Consumers globally reduced demand for oil and China was able to draw on its large oil reserves. The oil price fell in June 2026, as the Memorandum of Understanding between the US and Iran was agreed, and ended the 12 months at $73/bbl.
Performance Review
Estimated performance attribution (relative to FTSE All-Share Index total return)
|
|
2026 |
2025 |
|
|
% |
% |
|
Stock selection |
-0.51 |
+5.54 |
|
Gearing |
+0.76 |
+0.39 |
|
Expenses |
-0.36 |
-0.36 |
|
Share issues/buybacks |
+0.11 |
+0.02 |
|
Total |
0.00 |
+5.59 |
Source: Janus Henderson
The Company produced a net asset value total return of 21.9%, which was the same as the FTSE All-Share Index. Gearing contributed to performance by 0.76 percentage points ("pp") and stock selection detracted by 0.51pp.
The biggest stock detractor to relative performance was not owning Rolls Royce, the aero engine manufacturer. Benefiting from the upswing in the civil aerospace cycle, Rolls Royce's shares performed strongly but the company continued to pay a low level of dividend. The second and third biggest detractors were HSBC, the bank, and AstraZeneca, the pharmaceutical company. Both were large holdings in the portfolio but underweight relative to the benchmark index. The fourth biggest detractor was RELX, the provider of information and analytics to businesses, lawyers and scientists. RELX's shares underperformed on general fears of the medium-term impact of AI on its business, despite it delivering short-term profits growth in line with expectations. The fifth biggest detractor was Anglo American, the mining company, which was sold from the portfolio but subsequently announced a combination with Teck of Canada, which was well received.
The biggest and third biggest contributors to relative performance were respectively London Stock Exchange and Experian, the credit rating company, which were not held in the portfolio. Both companies derated on fears about the impact of AI on their businesses. The second biggest contributor was IG, the online trading company, which benefited from supportive market conditions and an improved product offering leading to strong customer growth. The fourth biggest contributor was 3i, the investor in private companies, where the holding was reduced and the portfolio was underweight. The fifth largest contributor was Schroders, the fund management company, which agreed to be taken over by Nuveen of the US.
Large companies, as represented by the FTSE 100 Index, produced a total return of 23.6%, outperforming the 10.2% return for medium-sized companies, as represented by the FTSE 250 Index, and the 14.3% return for smaller companies, as represented by the FTSE SmallCap Index. The FTSE 100 was helped by its large weighting in mining, banks and health care which were strongly performing sectors.
Higher yielding shares outperformed, with the FTSE 350 Higher Yield Index (the higher dividend-yielding half of the largest 350 companies listed in the UK) producing a return of 28.2% compared to a total return of 15.6% by the FTSE 350 Lower Yield Index (the lower yielding half of the largest 350 companies listed in the UK). The perceived AI loser companies, such as RELX, London Stock Exchange and Experian mentioned above, tended to be lower yielding.
Portfolio Changes
Distribution of the portfolio as at 30 June 2026
|
|
% of the portfolio |
|
Large UK-listed companies (constituents of the FTSE 100 Index) |
85 |
|
Medium-sized and small UK-listed companies |
8 |
|
Overseas-listed companies |
7 |
Source: Janus Henderson, as at 30 June 2026.
The proportion of the portfolio in large UK-listed companies (constituents of the FTSE 100 Index) rose during the 12 months from 81% to 85%. This reflects the strong performance and continuing good prospects, in our view, for capital and income growth from sectors and companies typically found in the FTSE 100 Index, such as banks and life insurers. The proportion in overseas-listed companies reduced slightly from 8% to 7%, given our preference for UK companies which stood at a valuation discount to overseas equivalents. There is scope for up to 20% of the portfolio to be in overseas-listed equities and it did reach 17% as at 30 June 2022. In the future, a greater allocation will be given to overseas-listed equities when we perceive the relative valuation to have improved.
There were four new holdings bought during the 12 months. Big Yellow is the UK's largest self-storage operator with a footprint of some six million square feet. Its estate is primarily freehold and concentrated in London, the South-East and large urban conurbations. Although demand can be affected by the volume of housing transactions, evidence suggests there is considerable scope for secular growth of self-storage in the UK to reach the penetration found in some other countries, such as the US.
ICG is an alternative asset management firm, in areas such as structured capital, private debt, private equity secondaries, credit and real assets. The private markets in which ICG operates have been growing faster than public markets with less pressure on management fees.
ITV's revenues are split between media and entertainment, where it is the leader in UK TV advertising, and the studios, where it is one of the world's largest makers of television programmes. ITV has reached agreement to sell its media and entertainment division to Sky (owned by Comcast of the US), subject to regulatory approval. The remaining studios division should be able to achieve a higher valuation given its growth rate.
Rightmove is the UK's leading property portal, with some 90% of estate agents paying a monthly subscription to advertise an unlimited number of properties on its website. Rightmove's shares have derated because of fears about AI disrupting its business model. Rightmove is investing in AI to enhance its platform and has proprietorial data and analytics to build on.
There were seven complete sales made during the 12 months. Two companies were sold ahead of the completion of takeovers: Beazley, the specialist insurer, which is being bought by Zurich Insurance; and Dowlais, the motor components company, which was taken over by American Axle.
Anglo American, the mining company, was sold after it cut its dividend severely and concern about the difficulty of selling its coal assets in Australia and its controlling interest in De Beers, the diamond company. XP Power, a power supply manufacturer, passed its dividend, and Hays, the employment agency, and Mondi, paper and packaging company, both cut their dividends. These three companies, which were small holdings in the portfolio, were sold given uncertainty about their recovery prospects.
In the oil and gas sector, the holding in Harbour Energy was sold, given the cut in its dividend and its high leverage. In contrast, a significant addition was made to BP, which stopped its share buyback but continued to increase its dividend. The elevated oil price has enabled BP to reduce its debt levels more quickly than previously anticipated. In addition, the company made several discoveries of new oil and gas fields over the last year, including Bumerangue, a large prospect off the coast of Brazil.
In consumer staples, additions were made to two long-standing holdings, Diageo and Unilever. Diageo is one of the world's largest alcoholic drinks companies, with brands such as Johnnie Walker (Scotch whisky), Guinness (beer), Smirnoff (vodka) and Don Julio (tequila). Diageo has performed poorly in recent years, with falling profits leading to a cut in its dividend. Although weight-loss drugs may have had an impact, there is also an element of cyclicality in demand for premium alcoholic beverages, which should recover. The new Chief Executive, Sir Dave Lewis, who had an excellent record turning around Tesco, should be able to improve Diageo's trading performance and operational efficiency over the medium term.
Unilever is in the process of significantly simplifying its business. It spun out its ice cream business, Magnum, which was sold from the portfolio. It also announced the merger of its food division with McCormick of the US. This will take place in 2027 and lead to a better-balanced food business. McCormick also has a good record of dividend growth. The remaining Unilever business (personal care, beauty & well-being and homecare) should have a higher growth rate, especially given their large presence in emerging markets.
GSK, the pharmaceutical company, was added to given its more consistent profits delivery and promising pipeline of new drugs in research and development. The holding in RELX, the provider of information and analytics to businesses, lawyers and scientists, was increased. In our view, RELX has high barriers to entry around its businesses and is likely to be a beneficiary of AI.
The share prices of the Real Estate Investment Trust shares held in the portfolio traded on substantial discounts to their net asset values despite high occupancies of their properties and improving rental growth. Additions were made to Land Securities (London offices and shopping centres), British Land (London offices and retail warehouses) and Segro (industrial warehouses and data centres). In June 2026, there was a takeover approach for Segro from Prologis of the US, subsequently recommended by Segro's board in August 2026.
Reductions were made in the utilities SSE and National Grid on substantial premiums to their regulatory asset values. While both businesses have strong growth prospects as renewable energy infrastructure is built out, they will need to execute well on their large investment programmes.
Over 80% of the holding in 3i, the investor in private companies, which entered the portfolio in 2021, was sold at a large profit compared with our book cost. 3i's shares were standing on a large premium to its NAV, reflecting the success of its investment in Action, a European discount retailer. Subsequently, Action's sales fell short of expectations, leading to share price underperformance.
Portfolio Outlook
Revenue exposure
|
|
% of the portfolio |
|
United Kingdom |
42 |
|
North America |
21 |
|
Asia Pacific (inc Japan) |
15 |
|
Europe ex UK |
12 |
|
Emerging Markets |
10 |
Source: Factset, as at 30 June 2026
The portfolio remains well diversified, with 58% of investee companies' revenues coming from overseas. As shown in the chart above, the detailed split is 42% UK, 21% North America, 15% Asia Pacific, 12% Europe ex UK and 10% Emerging Markets.
Largest sector weightings
|
|
Portfolio % |
FTSE All-Share Index % |
Relative to the FTSE All-Share Index % |
|
Banks |
16.8 |
17.0 |
-0.2 |
|
Investment Banking and Brokerage Services |
9.7 |
2.9 |
+6.8 |
|
Oil and Gas |
7.7 |
8.6 |
-0.9 |
|
Pharmaceuticals and Biotechnology |
7.7 |
11.5 |
-3.8 |
|
Personal Care, Drug and Grocery Stores |
7.3 |
6.1 |
+1.2 |
|
Life Insurance |
7.2 |
2.4 |
+4.8 |
|
Tobacco |
6.9 |
4.1 |
+2.8 |
The largest sector exposure is banks at 16.8% of the portfolio, which had risen from 14.0% a year ago due to strong share price performances rather than any additions to the holdings. The largest position in the banks sector (and in the whole portfolio) is in HSBC (6.4% of the portfolio) followed by NatWest (4.0%), Lloyds (3.5%) and Barclays (2.6%). The sector should continue to benefit as balances that were hedged out when bond yields were low before 2023 (often referred to as the "structural hedge") are rolled over to the higher yields that are now available. The regulatory climate continues to improve with the overall capital position of the leading banks seen to be sufficient with the trend towards a relaxation of capital requirements to boost lending and economic growth. As the profitability of the banks sector builds, further dividend growth can be expected, with pay-out ratios at a conservative level.
The second largest sector weighting is in investment banking and brokerage services (9.7% of the portfolio). This sector includes fund managers, wealth managers and financial advisers. The three largest holdings are: M&G (2.9%), the fund manager and life insurer; IG (2.4%), the online trading company; and Schroders (1.5%), the asset management group. M&G offers a compelling dividend yield backed by the cash flow from its life insurance business. Its fund management operation should benefit from the strategic partnership with Dai-ichi Life of Japan, which has bought a 15% stake in M&G. IG is well placed in the large and growing markets for the investment in and trading of financial instruments, while the recently announced acquisition of Underdog increases the company's exposure to the US and adds new products in sports and prediction markets. Schroders has agreed to be taken over by Nuveen of the US and will probably exit the portfolio in the second half of 2026.
The oil and gas sector is the third largest in the portfolio, with the two largest holdings being Shell (4.2%) and BP (2.5%), but slightly underweight compared with the benchmark index. The price of oil and natural gas are the key determinants for the profitability of the oil companies, which can make them volatile despite their large size. Shell has a strong balance sheet, with a low level of debt, and a large share buyback programme, which should lead to its share price being defensive relative to others in the sector. As discussed in the Portfolio Changes section above, BP, in our view, has considerable recovery potential.
The fourth largest sector is pharmaceuticals and biotechnology, where the two largest holdings are AstraZeneca (3.1%) and GSK (2.5%). AstraZeneca has a strong record for the discovery and development of new drugs and a promising pipeline. Its share price stands at a valuation premium compared with most others in the global sector, with a relatively low dividend yield. The portfolio is underweight relative to the FTSE All-Share Index. GSK is more modestly rated and, as discussed in the Portfolio Changes section, additions have been made to the holding given improved prospects.
The fifth largest sector is personal care, drug and grocery stores, where the two largest holdings are Unilever (3.2%) and Tesco (3.0%). As discussed above, Unilever will be demerging its food business, which should release the growth potential of its remaining operations. Tesco is the UK's leading food retailer with a market share of around 29%. Tesco trades in a variety of different sized stores as well as online. It is competitive with its prices and offers a full range of goods in its large stores. It also has a more sophisticated loyalty card programme than competitors.
The sixth largest sector is life insurance, where the largest holdings are Aviva (2.4%), Standard Life (2.4%) and Legal & General (1.9%). These companies benefit from the cash flow from existing books of business as well as the growth potential as leaders in the market for UK savings and retirement products.
The seventh largest sector is tobacco, where the holdings are British American Tobacco (4.2%) and Imperial Brands (2.7%). Both companies are strongly cash generative with scope to enhance returns through share buybacks as well as dividends. British American Tobacco is also well placed in what are widely considered to be less harmful nicotine products, such as pouches and vapes, whose growth is offsetting some of the decline in volumes from combustible products.
The largest seven sectors, which make up 63.3% of the total portfolio, illustrate the range of the UK equity market as they include companies from financial industries (banks, investment banking and brokerage services and life insurers), energy (oil and gas), health care (pharmaceuticals) and consumer staples (personal care, drug and grocery stores and tobacco). In addition, there are large holdings in other sectors with significant growth potential, such as BAE Systems (3.4%, in aerospace and defence), Rio Tinto (2.8%, in mining) and RELX (2.1%, in software).
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 in the mix. The portfolio is diversified by geography and sector, in contrast to many global portfolios which are dominated by technology shares. We believe the companies in the portfolio continue to 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 |
|
15 September 2026 |
|
|
FORTY LARGEST INVESTMENTS AS AT 30 JUNE 2026
The 40 largest investments, representing 84.35% of the portfolio, are listed below.
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Market value |
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Portfolio |
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Position |
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Company |
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Sector |
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£'000 |
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% |
|
|
1 |
|
HSBC |
|
Banks |
|
191,727 |
|
6.42 |
|
|
2 |
|
Shell |
|
Oil and Gas |
|
126,076 |
|
4.22 |
|
|
3 |
|
British American Tobacco |
|
Tobacco |
|
123,940 |
|
4.15 |
|
|
4 |
|
NatWest |
|
Banks |
|
118,357 |
|
3.96 |
|
|
5 |
|
Lloyds Banking |
|
Banks |
|
104,434 |
|
3.50 |
|
|
6 |
|
BAE Systems |
|
Aerospace and Defence |
|
101,365 |
|
3.40 |
|
|
7 |
|
Unilever |
|
Personal Care, Drug and Grocery Stores |
|
94,564 |
|
3.17 |
|
|
8 |
|
AstraZeneca |
|
Pharmaceuticals and Biotechnology |
|
93,060 |
|
3.12 |
|
|
9 |
|
Tesco |
|
Personal Care, Drug and Grocery Stores |
|
89,656 |
|
3.00 |
|
|
10 |
|
M&G |
|
Investment Banking and Brokerage Services |
|
87,386 |
|
2.93 |
|
|
Top 10 |
|
|
|
1,130,565 |
|
37.87 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
11 |
|
Rio Tinto |
|
Industrial Metals and Mining |
|
84,752 |
|
2.84 |
|
|
12 |
|
Imperial Brands |
|
Tobacco |
|
80,184 |
|
2.69 |
|
|
13 |
|
Barclays |
|
Banks |
|
78,270 |
|
2.62 |
|
|
14 |
|
BP |
|
Oil and Gas |
|
73,327 |
|
2.46 |
|
|
15 |
|
GSK |
|
Pharmaceuticals and Biotechnology |
|
73,278 |
|
2.45 |
|
|
16 |
|
IG |
|
Investment Banking and Brokerage Services |
|
72,720 |
|
2.44 |
|
|
17 |
|
Aviva |
|
Life Insurance |
|
72,367 |
|
2.42 |
|
|
18 |
|
Standard Life (formerly Phoenix) |
|
Life Insurance |
|
71,968 |
|
2.41 |
|
|
19 |
|
RELX |
|
Software and Computer Services |
|
64,052 |
|
2.14 |
|
|
20 |
|
National Grid |
|
Gas, Water and Multi-utilities |
|
60,029 |
|
2.01 |
|
|
Top 20 |
|
|
|
1,861,512 |
|
62.35 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
21 |
|
Legal & General |
|
Life Insurance |
|
57,915 |
|
1.94 |
|
|
22 |
|
British Land |
|
Real Estate Investment Trusts |
|
57,739 |
|
1.93 |
|
|
23 |
|
Land Securities |
|
Real Estate Investment Trusts |
|
57,569 |
|
1.93 |
|
|
24 |
|
Schroders |
|
Investment Banking and Brokerage Services |
|
43,438 |
|
1.45 |
|
|
25 |
|
Severn Trent |
|
Gas, Water and Multi-utilities |
|
35,472 |
|
1.19 |
|
|
26 |
|
Diageo |
|
Beverages |
|
35,017 |
|
1.17 |
|
|
27 |
|
Reckitt Benckiser |
|
Personal Care, Drug and Grocery Stores |
|
34,370 |
|
1.15 |
|
|
28 |
|
Glencore |
|
Industrial Metals and Mining |
|
33,397 |
|
1.12 |
|
|
29 |
|
TotalEnergies |
|
Oil and Gas |
|
30,464 |
|
1.02 |
|
|
30 |
|
Munich Re |
|
Non-life Insurance |
|
27,329 |
|
0.92 |
|
|
Top 30 |
|
|
|
2,274,222 |
|
76.17 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
31 |
|
St. James's Place |
|
Investment Banking and Brokerage Services |
|
27,259 |
|
0.91 |
|
|
32 |
|
Segro |
|
Real Estate Investment Trusts |
|
26,694 |
|
0.89 |
|
|
33 |
|
Swire Pacific |
|
General Industrials |
|
26,672 |
|
0.89 |
|
|
34 |
|
SSE |
|
Electricity |
|
26,176 |
|
0.88 |
|
|
35 |
|
Novartis |
|
Pharmaceuticals and Biotechnology |
|
26,011 |
|
0.87 |
|
|
36 |
|
BT |
|
Telecommunications Service Providers |
|
25,942 |
|
0.87 |
|
|
37 |
|
TP ICAP |
|
Investment Banking and Brokerage Services |
|
21,996 |
|
0.74 |
|
|
38 |
|
IMI |
|
Electronic and Electrical Equipment |
|
21,474 |
|
0.72 |
|
|
39 |
|
ITV |
|
Media |
|
21,359 |
|
0.72 |
|
|
40 |
|
Smiths |
|
General Industrials |
|
20,480 |
|
0.69 |
|
|
Top 40 |
|
2,518,285 |
|
84.35 |
|||||
|
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 Audit and Risk Committee maintains a detailed risk matrix which sets out the risks facing the Company and the steps taken to mitigate these. This is reviewed at each Committee meeting, and the full Board also regularly considers the principal and emerging risks facing the Company. The mitigating measures include a schedule of investment limits and restrictions, appropriate to the Company's investment objective and policy, within which the fund management team must operate. In addition, one of the meetings of the Audit and Risk Committee held each year is dedicated to a review of risk management and internal controls.
During the year, the Audit and Risk Committee began formalising the mapping of existing key controls to the material controls reporting requirement under Provision 34 of the AIC Code. The enhanced reporting requirements under Provision 34 will apply to the Company for the financial year ending 30 June 2027.
As well as the principal risks, the Directors regularly consider emerging risks, 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 reclassified as a principal 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 each Board meeting 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 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 Fund Managers consider the sustainability of the dividend for each stock held and provide scenario analyses for each Board meeting.
The Board monitors the level of the Company's reserves as well as income received in the period. The Company has revenue reserves of £52.3 million (before payment of the fourth interim dividend) and distributable capital reserves of £459.4 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 and/or its peer group.
Investment performance could be disrupted over the longer term by the impact of 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, both absolute and relative to the benchmark and the Company's peer group, 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, or demand for the Company's shares. 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) (for example, 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 the Audit and Risk Committee 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 depth of experience of the team at Janus Henderson and the appointment of the Deputy Fund Manager.
|
BORROWINGS
The Company has a borrowing facility of £120.0 million (2025: £120.0 million) with HSBC Bank plc, of which £31.6 million was drawn at the year end (2025: £17.0 million).
The Company has £114.4 million (2025: £114.3 million) of secured notes in issue (fair value of the secured notes: £84.9 million (2025: £85.5 million)).
The level of borrowing at 30 June 2026 was 5.2% of NAV with debt at par (2025: 5.8%) and 4.1% with debt at fair value (2025: 4.5%).
VIABILITY STATEMENT
The AIC Corporate Governance Code 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 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 a formal agreement with the Depositary. |
|
• |
Longer-term fixed rate borrowing is in place, being 4.53% secured notes 2029 (which are due to be repaid during the five-year assessment period), 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 4.0%. |
|
• |
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 over a five year period. 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 £2.5 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 longer-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 and/or 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.
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 their 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
15 September 2026
INCOME STATEMENT
|
|
|
Year ended 30 June 2026 |
Year ended 30 June 2025 |
||||
|
Notes |
|
Revenue return |
Capital |
Total |
Revenue return |
Capital |
Total |
|
|
Gains on investments held at fair value through profit or loss |
- |
409,587 |
409,587 |
- |
244,522 |
244,522 |
|
2 |
Income from investments held at fair value through profit or loss |
119,588 |
- |
119,588 |
112,223 |
- |
112,223 |
|
3 |
Other interest receivable and similar income |
290 |
- |
290 |
242 |
- |
242 |
|
|
|
|
|
|
|
|
|
|
|
Gross revenue and capital gains |
119,878 |
409,587 |
529,465 |
112,465 |
244,522 |
356,987 |
|
|
|
|
|
|
|
|
|
|
4 |
Management fee |
(2,417) |
(5,639) |
(8,056) |
(2,006) |
(4,680) |
(6,686) |
|
|
Other administrative expenses |
(1,453) |
- |
(1,453) |
(1,228) |
- |
(1,228) |
|
|
|
|
|
|
|
|
|
|
|
Net return before finance costs and taxation |
116,008 |
403,948 |
519,956 |
109,231 |
239,842 |
349,073 |
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
(1,852) |
(3,954) |
(5,806) |
(1,954) |
(4,191) |
(6,145) |
|
|
|
|
|
|
|
|
|
|
|
Net return before taxation |
114,156 |
399,994 |
514,150 |
107,277 |
235,651 |
342,928 |
|
|
|
|
|
|
|
|
|
|
|
Taxation |
(733) |
- |
(733) |
(812) |
- |
(812) |
|
|
|
|
|
|
|
|
|
|
|
Net return after taxation |
113,423 |
399,994 |
513,417 |
106,465 |
235,651 |
342,116 |
|
|
|
|
|
|
|
|
|
|
5 |
Return per ordinary share - basic and diluted |
22.52p |
79.43p |
101.95p |
21.57p |
47.74p |
69.31p |
|
|
|
|
|
|
|
|
|
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 2026 |
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 2025 |
125,666 |
1,073,479 |
2,707 |
1,081,493 |
48,694 |
2,332,039 |
|
|
Net return after taxation |
- |
- |
- |
399,994 |
113,423 |
513,417 |
|
8 |
Sale of 9,147,762 ordinary shares from treasury |
- |
8,079 |
- |
38,277 |
- |
46,356 |
|
8 |
Issue of 12,407,238 new ordinary shares |
3,102 |
65,378 |
- |
- |
- |
68,480 |
|
7 |
Dividends paid |
- |
- |
- |
- |
(109,799) |
(109,799) |
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2026 |
128,768 |
1,146,936 |
2,707 |
1,519,764 |
52,318 |
2,850,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
STATEMENT OF FINANCIAL POSITION
|
Notes |
|
30 June 2026 £'000 |
30 June 2025 £'000 |
|
|
Fixed assets |
|
|
|
|
Investments held at fair value through profit or loss |
|
|
|
|
Listed at market value in the United Kingdom |
2,667,474 |
2,163,235 |
|
|
Listed at market value overseas |
210,207 |
190,162 |
|
|
Investments on loan |
107,991 |
102,131 |
|
|
Investment in subsidiary undertakings |
347 |
347 |
|
|
|
|
|
|
|
|
2,986,019 |
2,455,875 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
Debtors |
16,428 |
14,443 |
|
|
|
|
|
|
|
|
16,428 |
14,443 |
|
|
|
|
|
|
|
Creditors: amounts falling due within one year |
(36,172) |
(22,552) |
|
|
|
|
|
|
|
Net current liabilities |
(19,744) |
(8,109) |
|
|
|
|
|
|
|
Total assets less current liabilities |
2,966,275 |
2,447,766 |
|
|
|
|
|
|
|
Creditors: amounts falling due after more than one year |
(115,782) |
(115,727) |
|
|
|
|
|
|
|
Net assets |
2,850,493 |
2,332,039 |
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
8 |
Called up share capital |
128,768 |
125,666 |
|
|
Share premium account |
1,146,936 |
1,073,479 |
|
|
Capital redemption reserve |
2,707 |
2,707 |
|
|
Other capital reserves |
1,519,764 |
1,081,493 |
|
|
Revenue reserve |
52,318 |
48,694 |
|
|
|
|
|
|
6 |
Total shareholders' funds |
2,850,493 |
2,332,039 |
|
|
|
|
|
|
6 |
Net asset value per ordinary share - basic and diluted |
553.42p |
472.53p |
|
|
|
|
|
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 impact of potentially catastrophic events, whether man-made or natural disasters, 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 15 September 2027, 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 |
|
||||||||||||||
|
|
|
2026 |
2025 |
|
||||||||||||
|
|
|
£'000 |
£'000 |
|
||||||||||||
|
|
UK dividends: |
|
|
|
||||||||||||
|
|
Listed - ordinary dividends |
103,858 |
97,526 |
|
||||||||||||
|
|
Listed - special dividends |
252 |
616 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
104,110 |
98,142 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
Other dividends: |
|
|
|
||||||||||||
|
|
Dividend income - overseas investments |
8,399 |
8,665 |
|
||||||||||||
|
|
Dividend income - UK REIT |
7,079 |
5,416 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
15,478 |
14,081 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
119,588 |
112,223 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
3. |
Other interest receivable and similar income |
|
||||||||||||||
|
|
2026 |
2025 |
|
|||||||||||||
|
|
|
£'000 |
£'000 |
|
||||||||||||
|
|
Bank interest |
65 |
1 |
|
||||||||||||
|
|
Underwriting commission (allocated to revenue)1 |
7 |
5 |
|
||||||||||||
|
|
Stock lending revenue |
218 |
236 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
290 |
242 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
1 During the year the Company was not required to take up shares in respect of its underwriting (2025: none)
Stock lending revenue has been shown net of brokerage fees of £55,000 (2025: £59,000). |
|
||||||||||||||
|
|
|
|
||||||||||||||
|
4. |
Management fee |
|
||||||||||||||
|
|
|
|
||||||||||||||
|
|
|
2026 |
2025 |
|
||||||||||||
|
|
|
Revenue return |
Capital return |
Total return |
Revenue return |
Capital return |
Total return |
|
||||||||
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
||||||||
|
|
Management fee |
2,417 |
5,639 |
8,056 |
2,006 |
4,680 |
6,686 |
|
||||||||
|
|
|
|
||||||||||||||
|
|
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 £513,417,000 (2025: £342,116,000) and on 503,585,202 ordinary shares (2025: 493,599,088), 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: |
|
||||||||||||||
|
|
|
|
||||||||||||||
|
|
|
2026 |
2025 |
|
||||||||||||
|
|
|
£'000 |
£'000 |
|
||||||||||||
|
|
Net revenue return |
113,423 |
106,465 |
|
||||||||||||
|
|
Net capital return |
399,994 |
235,651 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
Net total return |
513,417 |
342,116 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
Weighted average number of ordinary shares in issue during the year |
503,585,202 |
493,599,088 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
2026 |
2025 |
|
||||||||||||
|
|
|
Pence |
Pence |
|
||||||||||||
|
|
Revenue return per ordinary share |
22.52 |
21.57 |
|
||||||||||||
|
|
Capital return per ordinary share |
79.43 |
47.74 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
Total return per ordinary share |
101.95 |
69.31 |
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
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 553.42p (2025: 472.53p) is based on the net assets attributable to the ordinary shares of £2,850,493,000 (2025: £2,332,039,000) and on 515,072,106 (2025: 493,517,106) shares in issue on 30 June 2026, 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 2026 calculated on this basis was 558.89p (2025: 478.14p). 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 2025 |
2,332,039 |
|
|||||||||||||
|
|
Total net return after taxation |
513,417 |
|
|||||||||||||
|
|
Dividends paid on ordinary shares in the year |
(109,799) |
|
|||||||||||||
|
|
Sale of shares from treasury |
46,356 |
|
|||||||||||||
|
|
Issue of new shares |
68,480 |
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
Total net assets attributable to the ordinary shares at 30 June 2026 |
2,850,493 |
|
|||||||||||||
|
|
|
|
||||||||||||||
|
|
The Company does not have any dilutive securities.
|
|
||||||||||||||
|
7. |
Dividends paid on ordinary shares |
|||||||||||||||
|
|
|
Record date |
Payment date |
2026 £'000 |
2025 £'000 |
|||||||||||
|
|
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 |
|||||||||||
|
|
Fourth interim dividend (5.40p) for the year ended 30 June 2025 |
25 July 2025 |
29 August 2025 |
26,650 |
- |
|||||||||||
|
|
First interim dividend (5.40p) for the year ended 30 June 2026 |
24 October 2025 |
28 November 2025 |
27,018 |
- |
|||||||||||
|
|
Second interim dividend (5.40p) for the year ended 30 June 2026 |
23 January 2026 |
27 February 2026 |
27,344 |
- |
|||||||||||
|
|
Third interim dividend (5.65p) for the year ended 30 June 2026 |
24 April 2026 |
29 May 2026 |
28,815 |
- |
|||||||||||
|
|
Unclaimed dividends over 12 years old |
|
|
(28) |
(47) |
|||||||||||
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
109,799 |
104,392 |
|||||||||||
|
|
|
|
|
|
|
|||||||||||
|
|
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. |
|||||||||||||||
|
|
|
2026 |
2025 |
|||||||||||||
|
|
|
£'000 |
£'000 |
|||||||||||||
|
|
Revenue available for distribution by way of dividend for the year |
113,423 |
106,465 |
|||||||||||||
|
|
First interim dividend of 5.40p (2025: 5.25p) |
(27,018) |
(25,953) |
|||||||||||||
|
|
Second interim dividend of 5.40p (2025: 5.25p) |
(27,344) |
(25,953) |
|||||||||||||
|
|
Third interim dividend of 5.65p (2025: 5.40p) |
(28,815) |
(26,580) |
|||||||||||||
|
|
Fourth interim dividend of 5.70p (2025: 5.40p) paid on 28 August 2026¹ |
(29,385) |
(26,650) |
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
Transfer to revenue reserve² |
861 |
1,329 |
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
1 Based on 515,522,106 ordinary shares in issue at 23 July 2026 (the ex-dividend date) (2025: 493,517,106) 2 The surplus of £861,000 (2025: surplus of £1,329,000) has been taken to the revenue reserve |
|||||||||||||||
|
|
|
|
|
|||||||||||||
|
|
Since the year end, the Board has announced a first interim dividend of 5.70p per ordinary share in respect of the year ending 30 June 2027. This will be paid on 30 November 2026 to holders registered at the close of business on 23 October 2026. The Company's shares will go ex-dividend on 22 October 2026.
|
|||||||||||||||
|
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 2025 |
9,147,762 |
493,517,106 |
502,664,868 |
125,666 |
|||||||||||
|
|
Sale of shares from treasury |
(9,147,762) |
9,147,762 |
- |
- |
|||||||||||
|
|
Issue of new shares |
- |
12,407,238 |
12,407,238 |
3,102 |
|||||||||||
|
|
|
|
|
|
|
|||||||||||
|
|
At 30 June 2026 |
- |
515,072,106 |
515,072,106 |
128,768 |
|||||||||||
|
|
|
|
|
|
|
|||||||||||
|
|
|
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 |
|||||||||||
|
|
||||||||||||||||
|
During the year the Company sold 9,147,762 ordinary shares from treasury with total proceeds of £46,356,000, and 12,407,238 new ordinary shares were issued for total proceeds of £68,480,000 (2025: the Company sold 1,685,000 ordinary shares from treasury with total proceeds of £7,941,000 and bought back into treasury 2,530,895 shares for a net payment of £11,154,000) after deduction of issue costs of £452,000 (2025: £12,000). The average price of the ordinary shares that were issued was 536.6p (2025: 468.5p).
|
||||||||||||||||
|
9. 2026 financial information The figures and financial information for the year ended 30 June 2026 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 2026 have been audited but have not yet been delivered to the Registrar of Companies. The Independent Auditor's Report on the 2026 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. 2025 financial information The figures and financial information for the year ended 30 June 2025 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 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.
|
||||||||||||||||
|
11. Annual Report The Annual Report will shortly be available on the Company's website at www.cityinvestementtrust.com. Copies will be posted to shareholders in late September 2026 and printed copies of the Annual Report will thereafter be available from the Corporate Secretary at the Company's registered office, 201 Bishopsgate, London, EC2M 3AE.
The Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
|
||||||||||||||||
|
12. Annual General Meeting The Annual General Meeting will be held at 1.00pm on Thursday, 29 October 2026 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 Annual General Meeting 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.
A resolution for the adoption of new Articles of Association is being proposed at the AGM. A copy of the proposed amended Articles of Association, marked to show the proposed changes, will be submitted to the National Storage Mechanism and will shortly be available to view at: |
||||||||||||||||
|
|
||||||||||||||||
|
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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