Half-year Report
16/02/2024 08:21
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RNS Number : 4335D City of London Investment Trust PLC 16 February 2024
LEGAL ENTITY IDENTIFIER: 213800F3NOTF47H6AO55
THE CITY OF LONDON INVESTMENT TRUST PLC
Unaudited Results for the Half-Year Ended 31 December 2023
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 As at
31 December 2023
30 June 2023
Net asset value ("NAV") per ordinary share 401.7p 385.2p
Premium 2.0% 3.1%
Net asset value per ordinary share (debt at fair value) 406.0p 391.2p
Premium (debt at fair value) 0.9% 1.5%
Ordinary share price 409.5p 397.0p
Gearing (debt at par value) 5.3% 6.2%
Six months to Six months to
31 December 2023
31 December 2022
Dividends per share 10.1p 10.0p
As at As at
31 December 2023
30 June 2023
Dividend yields
The City of London Investment Trust plc 4.9% 5.1%
FTSE All-Share Index (Benchmark) 3.8% 3.7%
AIC UK Equity Income sector 4.7% 4.3%
IA UK Equity Income OEIC sector 4.5% 4.8%
Sources: Morningstar Direct, LSEG Datastream
Total return performance to 31 December 2023 6 months % 1 year % 3 years 5 years 10 years
%
%
%
NAV(1) 6.5 6.5 34.4 40.3 73.2
Share price(2) 5.8 4.8 28.1 36.3 70.0
FTSE All-Share Index (Benchmark) 5.2 7.9 28.1 37.7 68.2
AIC UK Equity Income sector(3) 5.0 7.8 25.8 39.4 74.7
IA UK Equity Income OEIC sector(4) 6.9 7.1 24.0 32.7 57.8
Sources: Morningstar Direct, Janus Henderson, LSEG 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
Introduction
City of London achieved a 6.5% net asset value total return during the six
months to 31 December 2023 against a backdrop of falling inflation and market
expectations that interest rates have peaked.
The Markets
Although economic growth slowed, the main developed countries appear to have
avoided a significant downturn, with employment remaining at high levels.
Inflation fell by more than expected, especially towards the end of the
period, with investors anticipating cuts to interest rates by central banks
globally during 2024. The 10-year gilt yield, which was 4.4% at the beginning
of July, ended 2023 at 3.5%.
The UK equity market returned 5.2%, as measured by the FTSE All-Share Index,
with medium-sized and small companies slightly outperforming larger peers. The
best performing sector was real estate investment trusts, reflecting the
downward move in gilt yields, followed by technology, in line with trends
overseas. Some more defensive sectors, such as food & beverage and health
care, were notable underperformers.
Net Asset Value Total Return
City of London's net asset value total return was 6.5% - higher than the FTSE
All-Share Index (5.2%) and the AIC UK Equity Income sector average (5.0%), but
behind the IA UK Equity Income OEIC sector average (6.9%). The negative impact
of the fall in gilt yields on the fair value of the Company's fixed interest
debt detracted performance by 34 basis points. It should be noted, however,
that the £30 million 2.67% 2046 and £50 million 2.94% 2049 secured notes,
both issued in recent years, provide borrowings at fixed low interest rates
for investment in equities by City of London over the next quarter of a
century.
Stock and sector selection contributed by 171 bps. The underweight positions
in pharmaceuticals and AstraZeneca were respectively the biggest sector and
stock contributors. The second biggest sector impact arose from being
overweight in real estate investment trusts, with Land Securities a notable
stock contributor. The biggest detracting sector was food producers, with
Nestlé a detractor over the six months. The second biggest detracting sector
was aerospace and defence, where the Company missed out on the rise in Rolls
Royce (which was not held) but benefited from its position in BAE Systems.
Other notable stock contributors were 3i, whose main asset is its shareholding
in Action, a fast-growing discount retailer in Europe, and Round Hill Music
Royalties Fund, which was taken over. The biggest detracting stock was St
James's Place, which announced changes in the structure of its customer fees.
Earnings and Dividends
Earnings per share rose marginally compared with the same six-month period
last year, from 8.79p to 8.80p. Special dividends, received and accounted as
income, were down from £2.4 million to £0.9 million. The trend in ordinary
dividends received was similar to City of London's last financial year, with
cuts from mining companies being offset by increases from banks and oil
companies.
City of London has declared two interim dividends to date of 5.05p each in
respect of this financial year. The Company's diverse portfolio, strong cash
flow and revenue reserve give the Board confidence that, in line with its
objective to provide long-term income and capital growth, it will be able to
increase the total annual dividend for the 58th consecutive year. The
quarterly dividend rate will be reviewed by the Board before the third interim
dividend is declared in April 2024.
Management Fee and Expenses
The investment management fee rate was last reviewed in 2019. Since then, the
Company has grown its net assets under management by 48%, from £1,360 million
to £2,019 million, partly due to the issue of 143 million shares. The Board
has agreed with the Company's investment manager, Janus Henderson, to reduce
the investment management fee rate from 0.325% to 0.300% with effect from 1
January 2024. The consequence of this change is that the ongoing charge, which
represents the investment management fee and other administrative non-interest
related expenses as a percentage of shareholder funds, is expected to be lower
for this financial year than last year, when it was 0.37%. The Board continues
rigorously to review costs to ensure that City of London's ongoing charge
remains low compared with other investment trusts and discretionary
(non-tracker) managed equity investment products. Furthermore, in the event
that net assets under management exceed £3,000 million, the management fee on
any such excess will be reduced to 0.275%.
Material Events and Transactions during the Period
A total of 5.3 million new shares, raising £21 million were issued during the
six months to 31 December 2023. The proceeds were invested across the
portfolio. The Board is continuing its stated policy, subject to prevailing
circumstances, of considering issuance of new shares within a narrow band
relative to net asset value. As at 29 December 2023 (the last dealing day
during the six months), the Company's share price was trading at a premium of
0.9% to NAV (with debt at fair value). As at 13 February 2024 (the last
practicable date before printing this report), the Company's share price was
trading at a discount of 0.6% to NAV (with debt at fair value).
Three new holdings were bought during the six months. Burberry is a luxury
British fashion company with around half of its stores in the Asia Pacific
region. Hilton Foods is a packer and distributor of meat products, with
operations in the UK, Europe and Australasia. The purchase of ENI, the
international oil and gas company, was financed by the sale of Woodside, the
Australian company with a focus on liquified natural gas. Complete sales were
also made in Cisco, the information technology and networking services
company; Ferguson, the US building products distributor; Sanofi, the
pharmaceutical company; and Round Hill Music Royalties Fund, which was taken
over.
Delisting from New Zealand Stock Exchange
The Company's ordinary shares have a primary listing on the London Stock
Exchange and a secondary listing on the New Zealand Stock Exchange (NZX Main
Board). Shareholdings on the New Zealand register now only represent 1.2% of
the Company's total shares in issue and the costs of maintaining the listing
have been steadily increasing. The Board considers that these costs, together
with the administrative and compliance burdens of maintaining the secondary
listing in New Zealand, have become disproportionate to the benefits of
maintaining that listing and relative to the percentage of shares involved.
After careful consideration, the Board has therefore resolved to delist the
shares from the NZX Main Board from 21 March 2024. Shares on the New Zealand
register will be automatically transferred to the UK register, which already
has a number of shareholders with addresses in New Zealand.
The Board
The Board is delighted to announce that Sally Lake will be joining the Board
on 1 August 2024. Sally is currently Group Finance Director of Beazley plc,
the FTSE 100 specialist insurance company, but will be stepping down from that
role later in 2024. She has wide ranging experience of financial markets, risk
management and the operational challenges facing listed companies. She will
succeed Samantha Wren as Audit Committee Chair following the Company's Annual
General Meeting in October, when Samantha will retire after serving nine years
on the Board.
Outlook for the Six Months to 30 June 2024
The tightening of monetary policy in 2022 and 2023 by the world's leading
central banks is expected to lead to a further reduction in the rate of
inflation. A significant slowdown in economic activity, however, appears
unlikely as consumers continue to draw down excess savings from the Covid
lockdowns and employment statistics remain relatively buoyant. Although it is
generally accepted that interest rates have now peaked, market expectations
for cuts may be exaggerated given continuing wage increases and "quantitative
tightening" by central banks. There are also considerable risks resulting from
the current war in the Middle East, with a widening conflict, such as the
recent hostilities in the Red Sea area, raising the prospect of further
political and economic turbulence including the disruption of supply chains
and destabilisation of energy markets, as observed already in the Ukraine
conflict.
UK equities remain attractively valued relative to overseas equivalents. This
has encouraged further takeovers of UK companies by private equity firms and
foreign businesses, including the acquisition of Round Hill Music Royalties
Fund from the Company's portfolio. There has subsequently been a bid in
January 2024 for Wincanton, another of City of London's investee companies,
from a large French private company. More takeovers can be expected while the
discounted value of UK equities relative to global peers persists. Although
the prospect of political change in the UK may weigh on equity valuations
until after the general election, the compelling dividend yields from many
companies effectively "pay investors to hold on" and should help to mitigate
the downside risks of current uncertainties.
Sir Laurie Magnus CBE
Chairman
16 February 2024
FORTY LARGEST INVESTMENTS
Company Market value Company Market value
31 December 31 December
2023 2023
£'000 £'000
Shell 86,360 Glencore 37,768
BAE Systems 84,398 IG 32,917
RELX 79,016 Land Securities 32,597
HSBC 76,883 TotalEnergies 32,026
Unilever 71,241 Schroders 31,813
AstraZeneca 65,178 Nestlé 27,261
3i 61,710 Reckitt Benckiser 27,100
British American Tobacco 60,804 Severn Trent 25,760
BP 58,735 Barclays 25,758
Tesco 57,499 St. James's Place 24,552
Rio Tinto 56,667 Munich Re 23,471
Diageo 55,978 NatWest 23,465
M&G 53,376 Holcim 22,452
Imperial Brands 51,937 Merck 20,952
SSE 48,256 Novartis 20,793
National Grid 46,340 Sage 20,050
Phoenix 46,191 Swire Pacific 19,876
Legal & General 42,687 Persimmon 19,841
Lloyds Banking 40,072 Taylor Wimpey 18,896
GlaxoSmithKline 39,518 Anglo American 18,228
These investments total £1,688,422,000 or 79.4% 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 26.0
Consumer Staples 18.8
Industrials 12.5
Energy 9.0
Health Care 8.1
Consumer Discretionary 7.0
Utilities 6.5
Basic Materials 5.8
Real Estate 3.0
Telecommunications 2.4
Technology 0.9
Total 100.0
Source: Janus Henderson
SECTOR BREAKDOWN OF INVESTMENTS
Valuation Valuation
31 December 31 December
2023 2023
£'000 £'000
ENERGY Industrial Support Services
Oil, Gas and Coal Hays 13,978
Shell 86,360 PayPoint 10,380
BP 58,735 24,358
TotalEnergies(1) 32,026 Total Industrials 266,301
ENI(1) 13,258
190,379 CONSUMER STAPLES
Total Energy 190,379 Beverages
Diageo 55,978
BASIC MATERIALS Britvic 12,607
Chemicals Coca-Cola(1) 10,167
Victrex 5,327 78,752
Johnson Matthey 5,093
10,420 Food Producers
Nestlé(1) 27,261
Industrial Metals and Mining Tate & Lyle 10,167
Rio Tinto 56,667 Hilton 8,000
Glencore 37,768 45,428
Anglo American 18,228
112,663 Personal Goods
Total Basic Materials 123,083 Burberry 6,372
6,372
INDUSTRIALS
Aerospace and Defence Personal Care, Drug and Grocery Stores
BAE Systems 84,398 Unilever 71,241
84,398 Tesco 57,499
Reckitt Benckiser 27,100
Construction and Materials 155,840
Holcim(1) 22,452
Ibstock 12,423 Tobacco
Marshalls 6,985 British American Tobacco 60,804
41,860 Imperial Brands 51,937
112,741
Industrial Engineering Total Consumer Staples 399,133
Vesuvius 12,030
12,030 HEALTH CARE
Medical Equipment and Services
Electronic and Electrical Equipment Smith & Nephew 11,847
IMI 12,209 11,847
Morgan Advanced Materials 11,320
Rotork 5,663 Pharmaceuticals and Biotechnology
XP Power 3,126 AstraZeneca 65,178
32,318 GlaxoSmithKline 39,518
Merck(1) 20,952
General Industrials Novartis(1) 20,793
Swire Pacific(1) 19,876 Johnson & Johnson(1) 12,787
Siemens(1) 14,694 159,228
Smiths Group 10,575 Total Health Care 171,075
DS Smith 9,526
Mondi 8,451
63,122
Industrial Transportation
Wincanton 8,215
8,215
Valuation Valuation
31 December 2023 31 December 2023
£'000 £'000
CONSUMER DISCRETIONARY FINANCIALS
Retailers Banks
Kingfisher 11,070 HSBC 76,883
Halfords 5,979 Lloyds Banking 40,072
DFS 3,045 Barclays 25,758
20,094 NatWest 23,465
Nationwide Building Society 10.25% Var Perp CCDS 8,385
Media
RELX 79,016 174,563
79,016
Investment Banking and Brokerage Services
Household Goods and Home Construction 3i 61,710
Persimmon 19,841 M&G 53,376
Taylor Wimpey 18,896 IG 32,917
38,737 Schroders 31,813
St. James's Place 24,552
Travel and Leisure Rathbones 15,570
La Française des Jeux(1) 8,527 219,938
Young 3,080
11,607 Life Insurance
Total Consumer Discretionary 149,454 Phoenix 46,191
Legal & General 42,687
TELECOMMUNICATIONS Prudential 10,644
Telecommunications Service Providers 99,522
Deutsche Telekom(1) 15,502
Vodafone 13,024 Non-life Insurance
Orange(1) 12,944 Munich Re(1) 23,471
Verizon Communications(1) 10,348 Beazley 11,473
51,818 Hiscox 8,959
Total Telecommunications 51,818 Direct Line Insurance 8,646
Sabre Insurance 7,182
UTILITIES 59,731
Electricity Total Financials 553,754
SSE 48,256
48,256 REAL ESTATE
Real Estate Investment Trusts
Gas, Water and Multi-utilities Land Securities 32,597
National Grid 46,340 Segro 15,955
Severn Trent 25,760 British Land 15,580
United Utilities 12,708 64,132
Pennon 4,133 Total Real Estate 64,132
88,941
Total Utilities 137,197 TECHNOLOGY
Software and Computer Services
Sage 20,050
20,050
Total Technology 20,050
TOTAL INVESTMENTS 2,126,376
( )
(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:
· Geopolitical
· Global pandemics
· Portfolio and market price
· Dividend income
· Investment activity, gearing and performance
· Tax and regulatory
· Operational
Information on these risks and how they are managed is given in the Annual
Report for the year ended 30 June 2023. 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.
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
16 February 2024
INCOME STATEMENT
(Unaudited) (Unaudited) (Audited)
Half-year ended Half-year ended Year ended
31 December 2023 31 December 2022 30 June 2023
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments held at fair value through profit or loss - 92,532 92,532 - 29,737 29,737 - (27,111) (27,111)
Income from investments held at fair value through profit or loss 46,388 - 46,388 43,544 - 43,544 101,747 - 101,747
Other interest receivable and similar income 185 - 185 129 - 129 224 - 224
Gross revenue and capital gains/(losses) 46,573 92,532 139,105 43,673 29,737 73,410 101,971 (27,111) 74,860
Management fee (961) (2,242) (3,203) (886) (2,068) (2,954) (1,844) (4,304) (6,148)
Other administrative expenses (468) - (468) (459) - (459) (860) - (860)
Net return/(loss) before finance costs and taxation 45,144 90,290 135,434 42,328 27,669 69,997 99,267 (31,415) 67,852
Finance costs (737) (1,535) (2,272) (766) (1,604) (2,370) (1,621) (3,416) (5,037)
Net return/(loss) before taxation 44,407 88,755 133,162 41,562 26,065 67,627 97,646 (34,831) 62,815
Taxation on net return/(loss) (201) - (201) (427) - (427) (1,406) - (1,406)
Net return/(loss) after taxation 44,206 88,755 132,961 41,135 26,065 67,200 96,240 (34,831) 61,409
Return/(loss) per ordinary share (note 2) 8.80p 17.67p 26.47p 8.79p 5.57p 14.36p 20.14p (7.29p) 12.85p
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
Called-up share capital Share premium account Capital redemption reserve Other
£'000 £'000 £'000 capital Revenue
Half-year ended 31 December 2023 (unaudited) reserves reserve Total
£'000 £'000 £'000
At 1 July 2023 124,339 1,053,061 2,707 691,463 44,322 1,915,892
Net return on ordinary activities after taxation - - - 88,755 44,206 132,961
Issue of 5,310,000 new ordinary shares 1,328 19,563 - - - 20,891
Dividends paid - - - - (50,759) (50,759)
At 31 December 2023 125,667 1,072,624 2,707 780,218 37,769 2,018,985
Called-up share capital Share premium account Capital redemption reserve Other
£'000 £'000 £'000 capital Revenue
Half-year ended 31 December 2022 (unaudited) reserves reserve Total
£'000 £'000 £'000
At 1 July 2022 114,910 909,143 2,707 726,294 43,603 1,796,657
Net return on ordinary activities after taxation - - - 26,065 41,135 67,200
Issue of 16,560,000 new ordinary shares 4,140 61,342 - - - 65,482
Dividends paid - - - - (46,657) (46,657)
At 31 December 2022 119,050 970,485 2,707 752,359 38,081 1,882,682
Called-up share capital Share premium account Capital redemption reserve Other
£'000 £'000 £'000 capital Revenue
Year ended 30 June 2023 reserves reserve Total
(audited) £'000 £'000 £'000
At 1 July 2022 114,910 909,143 2,707 726,294 43,603 1,796,657
Net (loss)/return after taxation - - - (34,831) 96,240 61,409
Issue of 37,715,000 new ordinary shares 9,429 143,918 - - - 153,347
Dividends paid - - - - (95,521) (95,521)
At 30 June 2023 124,339 1,053,061 2,707 691,463 44,322 1,915,892
( )
The accompanying notes are an integral part of these financial statements.
STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
Investments held at fair value through
profit or loss (note 6)
Listed at market value in the United Kingdom 1,861,318 1,717,798 1,734,695
Listed at market value overseas 265,058 300,628 299,605
Investment in subsidiary undertakings 347 347 347
2,126,723 2,018,773 2,034,647
Current assets
Debtors 9,541 8,664 10,823
Cash at bank 1,753 - -
11,294 8,664 10,823
Creditors: amounts falling due within one year (3,387) (29,172) (13,956)
Net current assets/(liabilities) 7,907 (20,508) (3,133)
Total assets less current liabilities 2,134,630 1,998,265 2,031,514
Creditors: amounts falling due after more than one year (115,645) (115,583) (115,622)
Net assets 2,018,985 1,882,682 1,915,892
Capital and reserves
Called-up share capital (note 3) 125,667 119,050 124,339
Share premium account 1,072,624 970,485 1,053,061
Capital redemption reserve 2,707 2,707 2,707
Other capital reserves (note 4) 780,218 752,359 691,463
Revenue reserve 37,769 38,081 44,322
Equity shareholders' funds 2,018,985 1,882,682 1,915,892
Net asset value per ordinary share - basic and diluted (note 5) 401.66p 395.36p 385.22p
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 July 2022.
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 2023.
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) (Unaudited) (Audited)
Half-year Half-year Year ended
ended ended 30 June
31 December 31 December 2023
2023 2022 £'000
£'000 £'000
The return per ordinary share is based on the following figures:
Revenue return 44,206 41,135 96,240
Capital return/(loss) 88,755 26,065 (34,831)
Total 132,961 67,200 61,409
Weighted average number of ordinary shares in issue for each period 502,285,221 467,917,477 477,932,402
Revenue return per ordinary share 8.80p 8.79p 20.14p
Capital return/(loss) per ordinary share 17.67p 5.57p (7.29p)
Total return per ordinary share 26.47p 14.36p 12.85p
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 2023, 5,310,000 new ordinary shares
were issued for total proceeds of £20,891,000 (half-year ended 31 December
2022: 16,560,000 new ordinary shares issued for total proceeds of
£65,482,000; year ended 30 June 2023: 37,715,000 new ordinary shares issued
for total proceeds of £153,347,000). The number of ordinary shares in issue
at 31 December 2023 was 502,664,868 (31 December 2022: 476,199,868; 30 June
2023: 497,354,868). There were no shares in treasury at 31 December 2023 (31
December 2022 and 30 June 2023: nil).
4. Other Capital Reserves
At 31 December 2023, the other capital reserves are made up of the capital
reserve arising on investments sold which was £362,881,000 (31 December 2022:
£316,480,000; 30 June 2023: £344,587,000) and is distributable and the
capital reserve arising on revaluation of investments held which was
£417,337,000 (31 December 2022: £435,879,000; 30 June 2023: £346,876,000)
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 £2,018,985,000 (31 December 2022: £1,882,682,000;
30 June 2023: £1,915,892,000) and on 502,664,868 ordinary shares (31 December
2022: 476,199,868; 30 June 2023: 497,354,868) 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 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 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 2,126,376 - 347 2,126,723
Total 2,126,376 - 347 2,126,723
Financial assets at fair value through profit or loss at 31 December 2022
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 2,018,426 - 347 2,018,773
Total 2,018,426 - 347 2,018,773
Financial assets at fair value through profit or loss at 30 June 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 2,034,300 - 347 2,034,647
Total 2,034,300 - 347 2,034,647
Financial liabilities
The secured notes, preference stocks and preferred ordinary stock are carried
in the Statement of Financial Position at par.
At 31 December 2023, the aggregate fair value of the preferred and preference
stock was £2,276,000 (31 December 2022: £2,635,000; 30 June 2023:
£2,635,000).
At 31 December 2023, the fair value of the secured notes was estimated to be
£91,658,000 (31 December 2022: £86,591,000; 30 June 2023: £83,313,000).
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 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.
Fair value hierarchy categories
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 in note 1 in the Company's Annual Report for the year ended 30 June
2023.
7. Transaction Costs
Purchase transaction costs for the half-year ended 31 December 2023 were
£390,000 (half-year ended 31 December 2022: £538,000; year ended 30 June
2023: £1,105,000). These comprise mainly stamp duty and commissions. Sale
transaction costs for the half-year ended 31 December 2023 were £23,000
(half-year ended 31 December 2022: £17,000; year ended 30 June 2023:
£34,000).
8. Dividends
A first interim dividend of 5.05p per ordinary share was paid on 30 November
2023. The second interim dividend of 5.05p per ordinary share (declared on 7
December 2023) will be paid on 29 February 2024 to shareholders on the
register on 26 January 2024. The Company's shares went ex-dividend on 25
January 2024.
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 aftermath of the Covid-19 pandemic and
the risks arising from the current geo-political conflicts, 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 2023
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 (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.
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 (http://www.cityinvestmenttrust.com) .
13. Half-Year Report
An abbreviated version of the half-year report, the 'Update', will be posted
to shareholders in late February 2024. The Update will also be available on
the Company's website www.cityinvestmenttrust.com
(http://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
Dan Howe
Head of Investment Trusts
Janus Henderson Investors
Telephone: 020 7818 4458
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) is
incorporated into, or forms part of, this announcement.
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