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City of London IT (CTY)

  Print          Annual reports

Friday 18 February, 2022

City of London IT

Half-year Report

RNS Number : 0520C
City of London Investment Trust PLC
18 February 2022
 

 

LEGAL ENTITY IDENTIFIER: 213800F3NOTF47H6AO55

 

 

THE CITY OF LONDON INVESTMENT TRUST PLC

Unaudited Results for the Half-Year Ended 31 December 2021

 

 

This announcement contains regulated information

 

 

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

 

 

 

As at
31 December 2021

As at
30 June 2021

Net asset value ("NAV") per ordinary share

404.4p

387.6p

(Discount)/premium

(2.6%)

0.6%

Net asset value per ordinary share (debt at fair value)

400.8p

384.1p

(Discount)/premium (debt at fair value)

(1.7%)

1.5%

Ordinary share price

394.0p

390.0p

Gearing (debt at par value)

8.3%

6.9%

 

 

 

Dividend yields

As at
31 December 2021

As at
30 June 2021

The City of London Investment Trust plc

4.9%

4.9%

FTSE All-Share Index (Benchmark)

3.6%

3.1%

AIC UK Equity Income sector

4.3%

3.8%

IA UK Equity Income OEIC sector

3.7%

3.2%

 

Sources: Morningstar Direct, Bloomberg

 

Total return performance to 31 December 2021

(including dividends reinvested)

6 months %

1 year %

3 years
%

5 years
%

10 years
%

Net asset value per ordinary share 1

6.9

20.1

25.4

27.2

126.8

Ordinary share price2

3.5

11.8

18.9

22.5

114.6

FTSE All-Share Index (Benchmark)

6.5

18.3

27.2

30.2

110.7

AIC UK Equity Income sector 3

6.0

19.2

31.3

34.7

140.6

IA UK Equity Income OEIC sector4

5.6

18.4

26.7

26.3

115.4

 

Sources: Morningstar Direct, Janus Henderson, Refinitiv Datastream

 

1 Net asset value per ordinary share total return with debt at fair value (including dividends reinvested)

2 Share price total return using mid-market closing price

3 AIC UK Equity Income sector size weighted average NAV total return (shareholders' funds)

4 The Investment Association ("IA") peer group average is based on mid-day NAV whereas the returns of the investment trust are calculated using close of business NAV

 

 

 

INTERIM MANAGEMENT REPORT

 

CHAIRMAN'S STATEMENT

 

Net Asset Value Total Return

The UK economy, benefiting from very accommodative monetary and fiscal policies, continued to recover from the damage caused mainly by the first lockdown of the pandemic. A similar picture was seen in overseas economies. Increasing global demand for energy, particularly for supply constrained oil, contributed to a rise in inflation, with additional pressure on prices coming from a tight labour market and shortages of materials. In December, the Bank of England, having earlier in the year considered the inflationary trends to be "transitory", raised the Bank Rate from 0.1% to 0.25%, the first increase in interest rates for over three years.

 

UK equities continued to benefit from the recovery in corporate profits and dividends and produced a total return of 6.5%, as measured by the FTSE All-Share Index. City of London's net asset value total return was 6.9%, slightly ahead of the index benchmark and the averages for the UK equity income investment trust and OEIC sectors.

 

Both stock selection and gearing contributed positively to this result, with a key factor being our position in the food retail sector through stakes in Tesco and Wm Morrison. While it was disappointing to see a good company like Wm Morrison leave the stock market, its takeover came after a bidding war between two private equity groups and at an exit price well ahead of what had prevailed before the first bid was announced. Other important stock contributors were our shareholdings in RELX (business and professional information provider), Microsoft (software and computer services) and St. James's Place (wealth management advice and services). M&G (life assurer and wealth manager) and La Française des Jeux (French national lottery operator), which had been among the best contributors in our last financial year, were the two biggest stock detractors over the six-month period.

 

Earnings and Dividends

It is pleasing to report revenue earnings per share of 8.94p, 23% ahead of last year and 4% better than the same period in 2019 (just before the start of the pandemic). A highlight has been the dividend increases from our holdings in mining companies, with Anglo American and Rio Tinto also paying special dividends. There has been a significant recovery in dividends from our holdings in banks (HSBC, Barclays and Lloyds), which were stopped from paying dividends by their regulator in the first stage of the pandemic, and also from oil companies (BP and Royal Dutch Shell), which have partially restored the disappointingly large cuts made in 2020. A total of £2.8 million of special dividends was received and accounted as income (representing 6.7% of gross revenue). A further £3.5 million special dividend (from Pennon, the water utility) was accounted as capital.

 

City of London has declared two interim dividends of 4.80p each so far during this financial year. The Company's diverse portfolio, strong cash flow and revenue reserve give the Board confidence that it will be able to increase the dividend for the fifty-sixth consecutive year. The quarterly dividend rate will be reviewed by the Board before the third interim dividend is declared in April 2022.

 

Expenses

The ongoing charge, which represents the investment management fee and other administrative non-interest-bearing expenses as a percentage of shareholders' funds, remains low compared with most other equity investment products. The ongoing charge for the six months indicates a full year rate remaining around 0.38% of net assets.

 

Material Events and Transactions during the Period

A total of 925,000 new shares, raising net proceeds of £3.6 million, were issued during the six months to 31 December 2021 at a premium to net asset value. The proceeds were invested across the portfolio. The Board is continuing its stated policy, subject to prevailing circumstances, of considering issuance of new shares and buybacks within a narrow band relative to net asset value. As at 31 December 2021, the Company's shares were trading at a discount of 1.7% to NAV (with debt at fair value). As at 16 February 2022 (the last practicable date before printing this report), the Company's share price was trading at a premium of 1.8% to NAV (with debt at fair value).

 

Two new holdings were acquired during the period. 3i is an investment company with stakes in private companies. Its largest investment is in Action, a discount retailer in Europe. 3i has a successful track record and provides City of London with exposure to a range of fast-growing private companies. The other new holding is in Holcim, the Swiss-headquartered, international building materials group. It should benefit from infrastructure spending in both developed and emerging markets.

 

Two companies left the portfolio as a result of takeover bids: Wm Morrison (food retailer) and Daily Mail & General (newspaper publisher and business information provider). Two other holdings, Go Ahead (transport operator) and Hammerson (shopping centre owner), were sold because of their respective poor performances in favour of better opportunities.

 

Outlook for the Six Months to 30 June 2022

The Omicron variant of Covid-19 appears to cause less severe illness than earlier variants, especially for those who are fully vaccinated. It is now increasingly unlikely that there will be a return to an economically damaging lockdown and the UK and other developed economies are expected fully to reopen during the next six months.

 

The monetary response to the pandemic currently remains largely in place, but is likely to be progressively withdrawn with rises in interest rates (albeit remaining low by historic standards) expected because inflation is proving to be more severe and persistent than had been hoped. Governments are moving to phase out the fiscal reliefs introduced in response to the pandemic and, as already proposed in the UK, to increase tax rates in order to restrain their borrowing requirements. The resulting reduction in liquidity may test equity valuations, especially at the more speculative end of the markets. International tensions are a further reason for caution, with the crisis in Eastern Europe causing particular concern.

 

At present, no more than a slowdown in economic growth is expected and therefore corporate profits and dividends during the rest of the current financial year should continue to increase. Households in aggregate still have a high level of enforced savings from the lockdowns to support consumption, although their discretionary real spending power may be reduced by inflation, tax increases and rising interest rates in the next financial year and beyond. The dividend yield from many high-quality UK equities remains attractive, with the continuing trend of takeovers demonstrating potential additional overall upside.

 

 

Sir Laurie Magnus CBE

Chairman

17 February 2022

FORTY LARGEST INVESTMENTS

 

Company 

 Market value

31 December

2021

£'000

 

 Company

Market value

31 December

2021

£'000

Diageo

79,906

 

Anglo American

32,724

British American Tobacco

71,006

 

Persimmon

31,987

RELX

61,060

 

Direct Line Insurance

31,806

Royal Dutch Shell

54,519

 

Reckitt Benckiser

31,700

Tesco

50,153

 

Lloyds Banking

31,070

Unilever

48,721

 

Nestlé

30,980

Phoenix

46,794

 

Severn Trent

30,207

GlaxoSmithKline

46,029

 

IG

30,081

National Grid

45,147

 

Schroders

29,070

AstraZeneca

45,105

 

Ferguson

28,820

BAE Systems

44,809

 

Barclays

28,050

Rio Tinto

44,517

 

Verizon Communications

26,854

HSBC

44,411

 

Segro

25,839

M&G

44,189

 

3i Group

25,357

St. James's Place

43,350

 

Vodafone

24,680

Imperial Brands

42,837

 

Land Securities

23,274

BP

41,147

 

Taylor Wimpey

23,166

Legal & General

37,757

 

Munich Re

21,867

SSE

36,668

 

Microsoft

21,596

BHP

35,734

 

TotalEnergies

18,736

 

 

These investments total £1,511,723,000 or 77.3% of the portfolio.

 

 

Convertibles and all classes of equity in any one company are treated as one investment.

 

 

SECTOR EXPOSURE

 

As a percentage of the investment portfolio excluding cash

 

 

%

Financials

24.7

Consumer Staples 

19.9

Industrials

9.4

Consumer Discretionary

8.7

Basic Materials

7.7

Health Care

7.5

Utilities  

6.8

Energy

5.8

Telecommunications

4.4

Real Estate

3.3

Technology 

1.8

Total

100.0

 

 

 

SECTOR BREAKDOWN OF INVESTMENTS

 

 

Valuation

31 December

2021

£'000

 

 

Valuation

31 December

2021

£'000

ENERGY

 

 

Industrial Support Services

 

Oil, Gas and Coal

 

 

Ferguson

28,820

Royal Dutch Shell

54,519

 

PayPoint

10,640

BP

41,147

 

 

39,460

TotalEnergies1

18,736

 

 

 

 

114,402

 

Total Industrials

184,128

 

 

 

 

 

Total Energy

114,402

 

CONSUMER STAPLES

 

 

 

 

Beverages

 

BASIC MATERIALS

 

 

Diageo

79,906

Chemicals

 

 

Britvic

11,270

Synthomer

13,979

 

Coca-Cola1

9,617

Croda International

11,598

 

 

100,793

Victrex

7,814

 

 

 

Johnson Matthey

4,604

 

Food Producers

 

 

37,995

 

Nestlé1

30,980

 

 

 

Tate & Lyle

11,905

Industrial Metals and Mining

 

 

42,885

Rio Tinto

44,517

 

 

 

BHP

35,734

 

Personal Care, Drug and

 

Anglo American

32,724

 

Grocery Stores

 

 

112,975

 

Tesco

50,153

 

 

 

Unilever

48,721

Total Basic Materials

150,970

 

Reckitt Benckiser

31,700

 

 

 

 

130,574

INDUSTRIALS

 

 

 

 

Aerospace & Defence

 

 

Tobacco

 

BAE Systems

44,809

 

British American Tobacco

71,006

 

44,809

 

Imperial Brands

42,837

 

 

 

 

113,843

Construction and Materials

 

 

 

Ibstock

14,732

Total Consumer Staples

388,095

Holcim1

12,246

 

 

 

Marshalls 

6,440

 

HEALTH CARE

 

 

33,418

 

Medical Equipment and Services 

 

 

 

Smith & Nephew

9,575

Electronic and Electrical Equipment

 

 

9,575

IMI

16,214

 

 

XP Power

10,200

 

Pharmaceuticals and Biotechnology

Rotork

6,251

 

GlaxoSmithKline

46,029

 

32,665

 

AstraZeneca

45,105

 

 

 

Novartis1

17,109

General Industrials

 

 

Merck1

15,843

Siemens1

12,135

 

Johnson & Johnson1

13,132

Mondi

11,869

 

 

137,218

Smiths

5,528

 

 

 

Swire Pacific1

4,244

 

Total Health Care

146,793

 

33,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation

31 December 2021

£'000

 

 

Valuation

31 December 2021

£'000

CONSUMER DISCRETIONARY

 

FINANCIALS

 

Retailers

 

 

Banks

 

Kingfisher

14,538

 

HSBC

44,411

Halfords

7,276

 

Lloyds Banking

31,070

DFS

5,483

 

Barclays

28,050

 

27,297

 

Nationwide Building Society 10.25% Var Perp CCDS

12,418

 

 

Media

 

 

 

115,949

RELX

61,060

 

 

 

 

61,060

 

Investment Banking and Brokerage Services

 

 

 

M&G

44,189

Household Goods and Home Construction

 

St. James's Place

43,350

Persimmon

31,987

 

IG

30,081

Taylor Wimpey

23,166

 

Schroders

29,070

Berkeley

10,363

3i Group

25,357

 

65,516

 

Brewin Dolphin

16,928

 

 

 

188,975

Travel and Leisure

 

 

 

La Française des Jeux1

12,728

 

Life Insurance

 

Young

2,995

 

Phoenix

46,794

 

15,723

 

Legal & General

37,757

 

 

 

Prudential

16,568

Total Consumer Discretionary

169,596

 

 

101,119

 

 

 

Non-life Insurance

 

TELECOMMUNICATIONS

 

 

Direct Line Insurance

31,806

Telecommunications Service Providers

 

Munich Re1

21,867

Verizon Communications1

26,854

 

Sabre Insurance

8,190

Vodafone

24,680

 

Beazley

7,924

Deutsche Telekom1

11,957

 

Hiscox

6,886

Orange1

10,667

 

 

76,673

 

74,158

 

 

 

 

 

 

Total Financials

482,716

Telecommunications Equipment

 

 

 

Cisco Systems1

11,695

 

 

 

 

11,695

 

REAL ESTATE

 

 

 

 

Real Estate Investment Trusts

Total Telecommunications

85,853

 

Segro 

25,839

 

 

 

Land Securities

23,274

UTILITIES

 

 

British Land

14,602

Electricity

 

 

 

63,715

SSE

36,668

 

 

 

 

36,668

 

Total Real Estate

63,715

 

 

 

 

 

Gas, Water and Multi-utilities

 

 

TECHNOLOGY

 

National Grid

45,147

 

Software and Computer Services

Severn Trent

30,207

 

Microsoft1

21,596

United Utilities

13,591

 

Sage 

13,352

Pennon

7,715

 

 

34,948

 

96,660

 

 

 

 

 

 

Total Technology

34,948

Total Utilities

133,328

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS

1,954,544

 

 

 

 

 

      

 

1 Overseas listed

All classes of equity in any one company are treated as one investment.

 

 

 

 

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties associated with the Company's business can be divided into the following main areas:

 

· Global pandemic

· Portfolio and market price

· Dividend income

· Investment activity, gearing and performance

· Tax and regulatory

· Operational

 

Information on these risks and how they are managed are given in the Annual Report for the year ended 30 June 2021. In the view of the Board, these principal risks and uncertainties at the year end remain and are as applicable to the remaining six months of the financial year as they were to the six months under review.

 

In addition, in the last Annual Report, the Board had identified as an emerging risk heightened political tensions in and among a number of countries around the world which had the potential to increase the risk of market volatility (geopolitical risk). On further review of current international tensions, the Board has upgraded geopolitical risk, including an increased risk to cyber security, from an emerging risk to a principal risk.

 

 

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that, to the best of their knowledge:

 

the condensed set of financial statements has been prepared in accordance with FRS 104 "Interim Financial Reporting";

 

the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during the first six months and description of the principal risks and uncertainties for the remaining six months of the year); and

 

the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

 

 

On behalf of the Board

 

Sir Laurie Magnus CBE

Chairman

17 February 2022

 

 

 

 

 

INCOME STATEMENT

 

 

(Unaudited)

Half-year ended

31 December 2021

(Unaudited)

Half-year ended

31 December 2020

(Audited)

Year ended

30 June 2021

 

Revenue

return

£'000

Capital

return

£'000

 

Total

£'000

Revenue

return

£'000

Capital

return

£'000

 

Total

£'000

Revenue

return

£'000

Capital

return

£'000

 

Total

£'000

 

 

 

 

 

 

 

 

 

 

Gains on investments held at fair value through profit or loss

-

81,154 

81,154 

68,598 

68,598 

200,267 

200,267 

 

 

 

 

 

 

 

 

 

 

Income from investments held at fair value through profit or loss

42,134 

42,134 

32,496 

32,496 

77,626 

77,626 

 

 

 

 

 

 

 

 

 

 

Other interest receivable and similar income

75 

75 

154 

263 

263 

 

 

 

 

 

 

 

 

 

 

Gross revenue and capital gains

42,209 

81,154 

123,363 

32,650 

68,598 

101,248 

77,889 

200,267 

278,156 

 

 

 

 

 

 

 

 

 

 

Management fee

(854)

(1,993)

(2,847)

(685)

(1,599)

(2,284)

(1,493)

(3,484)

(4,977)

Other administrative expenses

(413)

(413)

(389)

(389)

(726)

(7)

(733)

 

 

 

 

 

 

 

 

 

 

Net return before finance costs and taxation

40,942 

79,161 

120,103 

31,576 

66,999 

98,575 

75,670 

196,776 

272,446 

 

 

 

 

 

 

 

 

 

 

Finance costs

(706)

(1,464)

(2,170)

(984)

(2,112)

(1,696)

(3,589)

(5,285)

 

 

 

 

 

 

 

 

 

 

Net return before taxation

40,236 

77,697 

117,933 

30,592 

64,887 

95,479 

73,974 

193,187 

267,161 

 

 

 

 

 

 

 

 

 

 

Taxation on net return

(333)

(333)

(341)

(1,165)

-

(1,165)

 

 

 

 

 

 

 

 

 

 

Net return after taxation

39,903 

77,697 

117,600 

30,251 

64,887 

95,138 

72,809 

193,187 

265,996 

 

 

 

 

 

 

 

 

 

 

Return per ordinary share (note 2)

8.94p

17.40p

26.34p

7.25p

15.56p

22.81p

17.09p

45.36p

62.45p

 

The total columns of this statement represent the Company's Income Statement, prepared in accordance with FRS 104. The revenue and capital columns are supplementary to this and are published under guidance from the Association of Investment Companies.

 

The Company has no recognised gains or losses other than those disclosed in the Income Statement and Statement of Changes in Equity. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

 

The accompanying notes are an integral part of these financial statements.
 

 

STATEMENT OF CHANGES IN EQUITY

 

 

 

Half-year ended 31 December 2021 (unaudited)

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 2021

111,406

855,597

2,707

720,048

37,567 

1,727,325 

Net return on ordinary activities after taxation

-

-

-

77,697

39,903 

117,600 

Issue of 925,000 new ordinary shares

231

3,394

-

-

3,625 

Dividends paid

-

-

-

-

(42,868)

(42,868)

 

 

 

 

 

 

 

At 31 December 2021

111,637

858,991

2,707

797,745

34,602 

1,805,682 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Half-year ended 31 December 2020 (unaudited)

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 2020

104,101

752,967

2,707

526,861 

45,623 

1,432,259 

Net return on ordinary activities after taxation

-

-

-

64,887 

30,251 

95,138 

Buyback of 1,175,000 ordinary shares for treasury

-

-

-

(3,736)

(3,736)

Issue of 1,175,000 ordinary shares from treasury

-

124

-

3,736 

3,860 

Issue of 5,445,000 new ordinary shares

1,361

18,261

-

19,622 

Dividends paid

-

-

-

(39,503)

(39,503)

 

 

 

 

 

 

 

At 31 December 2020

105,462

771,352

2,707

591,748 

36,371 

1,507,640 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 30 June 2021

(audited)

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 2020

104,101

752,967

2,707

526,861 

45,623 

1,432,259 

Net return on ordinary activities after taxation

-

-

-

193,187 

72,809 

265,996 

Buyback of 1,175,000 ordinary shares for treasury

-

-

-

(3,736)

(3,736)

Issue of 1,175,000 ordinary shares from treasury

-

124

-

3,736 

3,860 

Issue of 29,220,000 new ordinary shares

7,305

102,506

-

109,811 

Dividends paid

-

-

-

(80,865)

(80,865)

Unclaimed dividends over 12 years old

-

-

-

60 

60 

 

 

 

 

 

 

 

At 30 June 2021

111,406

855,597

2,707

720,048 

37,567 

1,727,325 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

STATEMENT OF FINANCIAL POSITION

 

 

(Unaudited) 

31 December 

2021 

£'000 

(Unaudited) 

31 December 

2020 

£'000 

(Audited) 

30 June 

2021 

£'000 

 

 

 

 

Investments held at fair value through

profit or loss (note 6)

 

 

 

Listed at market value in the United Kingdom

1,703,138 

1,414,556 

1,618,973 

Listed at market value overseas

251,406 

223,058 

227,701 

Investment in subsidiary undertakings

347 

347 

347 

 

 

 

 

 

1,954,891 

1,637,961 

1,847,021 

 

 

 

 

Current assets

 

 

 

Debtors

8,290 

8,253 

10,157 

 

 

 

 

 

8,290 

8,253 

10,157 

 

 

 

 

Creditors: amounts falling due within one year

(41,946)

(52,809)

(14,323)

 

 

 

 

Net current liabilities

(33,656)

(44,556)

(4,166)

 

 

 

 

Total assets less current liabilities

1,921,235 

1,593,405 

1,842,855 

 

 

 

 

Creditors: amounts falling due after more than one year

(115,553)

(85,765)

(115,530)

 

 

 

 

Net assets

1,805,682 

1,507,640 

1,727,325 

 

 

 

 

Capital and reserves

 

 

 

Called-up share capital (note 3)

111,637 

105,462 

111,406 

Share premium account

858,991 

771,352 

855,597 

Capital redemption reserve

2,707 

2,707 

2,707 

Other capital reserves (note 4)

797,745 

591,748 

720,048 

Revenue reserve

34,602 

36,371 

37,567 

 

 

 

 

Equity shareholders' funds

1,805,682 

1,507,640 

1,727,325 

 

 

 

 

 

 

 

 

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

404.36p

357.38p

387.62p

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

NOTES

 

1.

Accounting Policy - Basis of Preparation

 

The condensed set of financial statements has been prepared in accordance with FRS 104, Interim Financial Reporting, FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland and the Statement of Recommended Practice for "Financial Statements of Investment Trust Companies and Venture Capital Trusts", issued in April 2021.

 

For the period under review, the Company's accounting policies have not varied from those described in the Annual Report for the year ended 30 June 2021. These financial statements have been neither audited nor reviewed by the Company's auditors.

 

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 and are carried at market value; and where a statement of changes in equity is provided.

 

2.

Return per Ordinary Share

 

 

 

 

 

 

 

(Unaudited)

Half-year

ended

31 December

2021

£'000

 

(Unaudited)

Half-year

ended

31 December

2020

£'000

 

(Audited) 

Year ended 

30 June 

2021 

 '000 

 

The return per ordinary share is based on the following figures:

 

 

 

 

 

 

Revenue return

39,903 

 

30,251 

 

72,809 

 

Capital return

77,697 

 

64,887 

 

193,187 

 

 

 

 

 

 

 

 

Total

117,600 

 

95,138 

 

265,996 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares in issue for each period

446,480,031 

 

417,014,243 

 

425,921,991 

 

 

 

 

 

 

 

 

Revenue return per ordinary share

8.94p

 

7.25p

 

17.09p

 

Capital return per ordinary share

17.40p

 

15.56p

 

45.36p

 

 

 

 

 

 

 

 

Total return per ordinary share

26.34p

 

22.81p

 

62.45p

 

 

 

 

 

 

 

 

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

 

3.

Share Capital

 

During the half-year ended 31 December 2021, 925,000 new ordinary shares were issued for total proceeds of £3,625,000 (half-year ended 31 December 2020: 1,175,000 ordinary shares bought back into treasury for a total cost of £3,736,000, these shares were then re-issued for total proceeds of £3,860,000 and a further 5,445,000 new ordinary shares were issued for total proceeds of £19,622,000; year ended 30 June 2021: 1,175,000 ordinary shares bought back into treasury for a total cost of £3,736,000, these shares were then re-issued for total proceeds of £3,860,000 and a further 29,220,000 new ordinary shares issued for total proceeds of £109,811,000). The number of ordinary shares in issue at 31 December 2021 was 446,549,868 (31 December 2020: 421,849,868; 30 June 2021: 445,624,868). There were no shares in treasury at 31 December 2021 (31 December 2020 and 30 June 2021: nil).

 

4.

Other Capital Reserves

 

At 31 December 2021, the other capital reserves are made up of the capital reserve arising on investments sold which was £307,144,000 (31 December 2020: £300,424,000; 30 June 2021: £296,561,000) and is distributable and the capital reserve arising on revaluation of investments held which was £490,601,000 (31 December 2020: £291,324,000; 30 June 2021: £423,487,000) which is not distributable.

 

5.

Net Asset Value per Ordinary Share

 

The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £1,805,682,000 (31 December 2020: £1,507,640,000; 30 June 2021: £1,727,325,000) and on 446,549,868 ordinary shares (31 December 2020: 421,849,868; 30 June 2021: 445,624,868) being the number of ordinary shares at the period end.

 

6.

Financial Instruments

 

The financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value or the Statement of Financial Position amount is a reasonable approximation of fair value (debtors and creditors falling due within one year). The debenture stock, secured notes, preference stocks and preferred ordinary stock are carried in the Statement of Financial Position at par.

 

At 31 December 2021, the fair value of the debenture stock was £nil (31 December 2020: £30,150,000; 30 June 2021: £nil) and the aggregate fair value of the preferred and preference stocks was £2,635,000 (31 December 2020: £2,635,000; 30 June 2021: £2,635,000).

 

As at 31 December 2021, the fair value of the secured notes was estimated to be £128,941,000 (31 December 2020: £109,196,000; 30 June 2021: £128,494,000).

 

The fair value of the secured notes is calculated using a discount rate which reflects the yield on a UK gilt of similar maturity plus a suitable credit spread.

 

The debenture stock, preference stocks and preferred ordinary stock are categorised as Level 1 in the fair value hierarchy. The secured notes are categorised as Level 3 in the fair value hierarchy. 

 

The table below sets out fair value measurements of the investments using the FRS 102 fair value hierarchy.

 

 

 

Financial assets at fair value through profit or loss at 31 December 2021

 

 

 

 

Level 1

Level 2

Level 3

Total

 

 

£'000

£'000

£'000

£'000

 

Equity investments

1,954,544

  - 

347

1,954,891

 

Total

1,954,544

  - 

347

1,954,891

 

 

 

 

 

 

 

Financial assets at fair value through profit or loss at 31 December 2020

 

 

Level 1

Level 2

Level 3

Total

 

 

£'000

£'000

£'000

£'000

 

Equity investments

1,637,614

  - 

347

1,637,961

 

Total

1,637,614

  - 

347

1,637,961

 

 

 

 

 

 

 

Financial assets at fair value through profit or loss at 30 June 2021

 

 

Level 1

Level 2

Level 3

Total

 

 

£'000

£'000

£'000

£'000

 

Equity investments

1,846,674

  - 

347

1,847,021

 

Total

1,846,674

  - 

347

1,847,021

 

 

 

 

 

 

 

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows: 

 

Level 1: The unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date;

 

Level 2: Inputs other than quoted prices included within Level 1 that are observable (i.e., developed using market data) for the asset or liability, either directly or indirectly; and

 

Level 3: Inputs are unobservable (i.e., for which market data is unavailable) for the asset or liability.

 

 

The valuation techniques used by the Company are explained in the accounting policies note 1 in the Company's Annual Report for the year ended 30 June 2021.

 

 

7.

Transaction Costs

 

Purchase transaction costs for the half-year ended 31 December 2021 were £473,000 (half-year ended 31 December 2020: £359,000; year ended 30 June 2021: £1,046,000). These comprise mainly stamp duty and commissions. Sale transaction costs for the half-year ended 31 December 2021 were £26,000 (half-year ended 31 December 2020: £34,000; year ended 30 June 2021: £51,000).

 

8.

Dividends

 

A first interim dividend of 4.80p per ordinary share was paid on 30 November 2021. The second interim dividend of 4.80p per ordinary share (declared on 9 December 2021) will be paid on 28 February 2022 to shareholders on the register on 28 January 2022. The Company's shares went ex-dividend on 27 January 2022.

 

9.

Related Party Transactions

 

Other than the relationship between the Company and its Directors, the provision of services by Janus Henderson is the only related party arrangement currently in place. Other than fees payable by the Company in the ordinary course of business and the provision of marketing services, there have been no material transactions with this related party affecting the financial position of the Company during the period under review.

 

10.

Going Concern

 

The assets of the Company consist of securities that are readily realisable. The Directors have also considered the impact of Covid-19, 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 has adequate resources to meet its financial obligations, including the repayment of the bank overdraft, as they fall due for a period of at least twelve months from the date of approval of the financial statements. Having assessed these factors and the principal risks, the Board has determined that it is appropriate for the financial statements to be prepared on a going concern basis.

 

11.

Comparative Information

 

The financial information contained in this half-year report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The figures and financial information for the year ended 30 June 2021 are extracted from the latest published accounts and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the Report of the Independent Auditors, which was unqualified and did not include a statement under either section 498(2) or 498(3) of the Companies Act 2006.

 

12.

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

 

New Zealand Stock Exchange Code: TCL

 

 

Global Intermediary Identification Number (GIIN): S55HF7.99999.SL.826

 

 

Legal Entity Identifier number (LEI): 213800F3NOTF47H6AO55

 

 

Company Registration Number

 

UK: 34871  

New Zealand: 1215729

 

 

Registered Office

 

201 Bishopsgate, London EC2M 3AE

 

 

Directors and Secretary

 

The Directors of the Company are Sir Laurie Magnus CBE (Chairman), Samantha Wren (Audit Committee Chair), Clare Wardle (Senior Independent Director), Robert Edward (Ted) Holmes and Ominder Dhillon (appointed on 1 September 2021).

 

 

The Corporate Secretary is Henderson Secretarial Services 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

 

13.

Half-Year Report

An abbreviated version of the half-year report, the 'Update', will be posted to shareholders in early March 2022. The Update will also be available on the Company's website www.cityinvestmenttrust.comor in hard copy from the Company's registered office.

           

 

 

 

For further information please contact:

 

Job Curtis

Fund Manager

The City of London Investment Trust plc

Telephone: 020 7818 4367

 

James de Sausmarez

Director and Head of Investment Trusts

Janus Henderson Investors

Telephone: 020 7818 3349

 

Harriet Hall

PR Manager (Investment Trusts)

Janus Henderson Investors

Tel: 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) is incorporated into, or forms part of, this announcement.

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