Last checked at 
18 Feb 2022 07:00
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 at31 December 2021 | As at30 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 at31 December 2021 | As at30 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 share1 | 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 sector3 | 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.
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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 |
|
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| |
|
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| |
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| |
| 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 | |
|
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|
|
| |
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 |
|
|
|
|
|
|
|
|
|
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Gains on investments held at fair value through profit or loss | - | 81,154 | 81,154 | - | 68,598 | 68,598 | - | 200,267 | 200,267 |
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Income from investments held at fair value through profit or loss | 42,134 | - | 42,134 | 32,496 | - | 32,496 | 77,626 | - | 77,626 |
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|
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Other interest receivable and similar income | 75 | - | 75 | 154 | - | 154 | 263 | - | 263 |
|
|
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|
|
|
|
|
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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) |
|
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|
|
|
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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 |
|
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|
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|
|
|
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Finance costs | (706) | (1,464) | (2,170) | (984) | (2,112) | (3,096) | (1,696) | (3,589) | (5,285) |
|
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|
|
|
|
|
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Net return before taxation | 40,236 | 77,697 | 117,933 | 30,592 | 64,887 | 95,479 | 73,974 | 193,187 | 267,161 |
|
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Taxation on net return | (333) | - | (333) | (341) | - | (341) | (1,165) | - | (1,165) |
|
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|
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|
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Net return after taxation | 39,903 | 77,697 | 117,600 | 30,251 | 64,887 | 95,138 | 72,809 | 193,187 | 265,996 |
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|
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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) |
|
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At 31 December 2021 | 111,637 | 858,991 | 2,707 | 797,745 | 34,602 | 1,805,682 |
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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) |
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|
|
|
|
|
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At 31 December 2020 | 105,462 | 771,352 | 2,707 | 591,748 | 36,371 | 1,507,640 |
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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 |
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At 30 June 2021 | 111,406 | 855,597 | 2,707 | 720,048 | 37,567 | 1,727,325 |
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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 |
|
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|
|
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 |
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| 1,954,891 | 1,637,961 | 1,847,021 |
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Current assets |
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Debtors | 8,290 | 8,253 | 10,157 |
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|
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| 8,290 | 8,253 | 10,157 |
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Creditors: amounts falling due within one year | (41,946) | (52,809) | (14,323) |
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Net current liabilities | (33,656) | (44,556) | (4,166) |
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Total assets less current liabilities | 1,921,235 | 1,593,405 | 1,842,855 |
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Creditors: amounts falling due after more than one year | (115,553) | (85,765) | (115,530) |
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Net assets | 1,805,682 | 1,507,640 | 1,727,325 |
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Capital and reserves |
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|
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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 |
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Equity shareholders' funds | 1,805,682 | 1,507,640 | 1,727,325 |
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Net asset value per ordinary share - basic and diluted (note 5) | 404.36p | 357.38p | 387.62p |
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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.
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2. | Return per Ordinary Share |
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| ||||
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| (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: |
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| ||||
| Revenue return | 39,903 |
| 30,251 |
| 72,809 | ||||
| Capital return | 77,697 |
| 64,887 |
| 193,187 | ||||
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| ||||
| Total | 117,600 |
| 95,138 |
| 265,996 | ||||
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| Weighted average number of ordinary shares in issue for each period | 446,480,031 |
| 417,014,243 |
| 425,921,991 | ||||
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| Revenue return per ordinary share | 8.94p |
| 7.25p |
| 17.09p | ||||
| Capital return per ordinary share | 17.40p |
| 15.56p |
| 45.36p | ||||
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| Total return per ordinary share | 26.34p |
| 22.81p |
| 62.45p | ||||
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| The Company does not have any dilutive securities, therefore, the basic and diluted returns per share are the same.
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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).
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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.
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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.
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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.
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| Financial assets at fair value through profit or loss at 31 December 2021 |
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| Level 1 | Level 2 | Level 3 | Total | |||||
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| £'000 | £'000 | £'000 | £'000 | |||||
| Equity investments | 1,954,544 | - | 347 | 1,954,891 | |||||
| Total | 1,954,544 | - | 347 | 1,954,891 | |||||
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| 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 | |||||
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| |||||
| 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 | |||||
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| 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. | |||||||||
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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).
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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.
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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.
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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.
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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.
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12. | General Information Company Status | |||||||||
| The City of London Investment Trust plc is a UK domiciled investment trust company.
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| ISIN number / SEDOL: ordinary shares: GB0001990497 / 0199049
London Stock Exchange (TIDM) Code: CTY
New Zealand Stock Exchange Code: TCL
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| Global Intermediary Identification Number (GIIN): S55HF7.99999.SL.826
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| Legal Entity Identifier number (LEI): 213800F3NOTF47H6AO55
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| Company Registration Number | |||||||||
| UK: 34871 New Zealand: 1215729
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| Registered Office | |||||||||
| 201 Bishopsgate, London EC2M 3AE
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| 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).
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| The Corporate Secretary is Henderson Secretarial Services Limited, represented by Sally Porter, ACG.
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| 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
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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.com or 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
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James de Sausmarez Director and Head of Investment Trusts Janus Henderson Investors Telephone: 020 7818 3349
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Harriet Hall PR Manager (Investment Trusts) Janus Henderson Investors Tel: 020 7818 2919
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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.