TIDMCTY
RNS Number : 9837M
City of London Investment Trust PLC
20 September 2023
Legal Entity Identifier: 213800F3NOTF47H6AO55
THE CITY OF LONDON INVESTMENT TRUST PLC
Annual financial results for the year ended 30 June 2023
This announcement contains regulated information
CHAIRMAN'S COMMENT
"City of London's total return of 4.5%, whilst underperforming
the FTSE All-Share Index, should be considered in the light of its
longer-term outperformance and its consistent 57-year record of
annual dividend increases."
INVESTMENT OBJECTIVE
The Company's objective is to provide long-term growth in income
and capital, principally by investment in equities listed on the
London Stock Exchange. The Board fully recognises the importance of
dividend income to shareholders.
PERFORMANCE AT 30 JUNE
2023 2022
--------------------------------------------- ------- -------
Total Return Performance:
Net asset value ("NAV") per ordinary share
(1) 4.5% 7.5%
Share price(2) 4.1% 7.7%
FTSE All-Share Index (Benchmark) 7.9% 1.6%
AIC UK Equity Income sector(3) 8.1% -1.5%
IA UK Equity Income OEIC sector 4.0% -0.5%
2023 2022
--------------------------------------------- ------- -------
NAV per ordinary share 385.2p 390.9p
NAV per ordinary share (debt at fair value) 391.2p 393.5p
Share price 397.0p 400.5p
Premium 3.1% 2.5%
Premium (debt at fair value) 1.5% 1.8%
Gearing at year end 6.2% 7.1%
Revenue earnings per share 20.1p 20.7p
Dividends per share 20.1p 19.6p
Ongoing charge for the year(4) 0.37% 0.37%
Revenue reserve per share 8.9p 9.5p
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 Calculated using the methodology prescribed by the Association
of Investment Companies ("AIC")
Sources: Morningstar Direct, Janus Henderson, Refinitiv
Datastream
CHAIRMAN'S STATEMENT
City of London produced a net asset value ("NAV") total return
of 4.5%, which compares with a total return of 7.9% for the FTSE
All-Share Index. Although this most recent underperformance is
disappointing, City of London's portfolio is managed for the long
term and its NAV total return has exceeded the FTSE All-Share Index
over 3, 5 and 10 years. The dividend was increased for the 57th
year and covered by earnings per share.
The Markets
Financial markets throughout the year have remained challenging
for investors, with the war in Ukraine and tensions in Asia causing
fluctuations in the cost of raw materials and energy. The fight
against inflation took centre stage in developed economies, with
the Federal Reserve, the European Central Bank and the Bank of
England all increasing interest rates (the latter by a factor of 4
times from 1.25% to 5.0% during the 12 months). UK inflation was
more persistent and elevated than inflation in the US and
Continental Europe, but the UK economy narrowly avoided a
recession.
The UK stock market produced a total return of 7.9%, as measured
by the FTSE All-Share Index. Large companies outperformed, with the
FTSE 100 Index (comprising the largest UK listed companies)
returning 9.2% helped by its heavy weighting in oil companies and
banks. Oil company shares outperformed despite the oil price moving
down over the 12 months. Banks benefited from the positive effect
of rising interest rates on their net interest margins while
impairments remained at a low level. The FTSE 250 Index of
medium-sized companies and the FTSE SmallCap Index underperformed,
with respective returns of 1.9% and 1.2%, weighed down by their
greater bias towards UK domestic cyclicals.
Performance
Earnings and Dividends
City of London's revenue earnings per share declined by 2.8% to
20.14p. This compares with an increase in revenue earnings per
share of 21.2% in the previous year, when we benefited from large
dividends from our investments in mining companies. Special
dividends, accounted as income, declined by GBP3.8 million to
GBP2.5 million, reflecting the non-recurrence of these special
dividends from Anglo American, BHP and Rio Tinto. Elsewhere in the
portfolio, there was significant dividend growth from oil companies
and banks, continuing the recovery from the dividend cuts and
suspensions during the pandemic.
Although our dividend increase was considerably lower than
inflation over the 12 months, City of London has increased its
dividend by 40.6% over the last 10 years compared with a cumulative
increase in UK CPI inflation of 33.5%. The Board fully understands
the importance of growing the dividend in real terms through the
economic cycle.
Expenses remained under tight control, with our ongoing charge
of 0.37% being very competitive when compared with other actively
managed funds. Our revenue reserve increased by GBP0.7 million to
GBP44.3 million, but revenue reserves per share declined by 0.6p to
8.9p due to the increase in the number of shares in issue. The
Board considers that maintaining a revenue reserve surplus is
important, particularly given the varied timing of dividend
receipts throughout the year from investee companies and the
experience during the pandemic when, in response to sudden dividend
cuts and suspensions, it was necessary to draw on revenue reserves
to cover dividends paid to shareholders. It should be noted that
the capital reserve arising from capital gains on investments sold,
which could help fund dividend payments, rose by GBP18.0 million to
GBP344.6 million.
NAV Total Return
City of London's NAV total return of 4.5% was 3.4 percentage
points behind the FTSE All-Share Index. Gearing contributed
positively by 1.1 percentage points due to the decline in fair
value of our secured debt. The GBP30 million 2.67% secured notes
maturing in 2046 and the GBP50 million 2.94% secured notes maturing
in 2049 provide low-cost debt financing over the next quarter of a
century for investment in equities.
Stock selection detracted by 4.3 percentage points. The biggest
stock detractor was Direct Line Insurance followed by Persimmon,
the housebuilder. At a sector level, our underweight position in
travel & leisure was the biggest detractor and not holding
Flutter Entertainment, the betting company, the third biggest stock
detractor. The stake in Verizon Communications, the US
telecommunications provider, was also a notable stock detractor. On
a more positive note, 3i, the investor in private companies, was
the biggest stock contributor, followed by Munich Re, the
reinsurer.
City of London's NAV total return was behind the FTSE All-Share
Index over 1 year but, as mentioned in the introduction, ahead over
3, 5 and 10 years. Against the AIC UK Equity Income sector average,
City of London was behind over 1 and 10 years but ahead over 3 and
5 years. Against the IA UK Equity Income OEIC sector average, City
of London was ahead over 1, 3, 5 and 10 years.
Share Issues
City of London's ordinary shares have again been in strong
demand during the year and continued to trade at a premium. 38
million shares were issued at a premium to NAV for proceeds of
GBP153.3 million. Issuing shares at a premium enhances NAV and
spreads costs across a larger asset base. Over the past ten years,
City of London has issued 240 million shares at a premium to NAV,
increasing our share capital by 93%.
Environmental, Social and Governance
The Fund Manager and Deputy Fund Manager give careful
consideration to environmental, social and governance ("ESG")
related risks and opportunities when selecting stocks for the
portfolio. An analysis by MSCI, a company widely used in ESG
analytics, shows that City of London's portfolio continues to rate
slightly better for ESG risks compared with the FTSE All-Share
Index. ESG matters are reported on at each Board meeting, including
how shareholdings have been voted on resolutions at investee
company meetings. Please see the Annual Report for more details of
the analysis by MSCI and a description of how ESG considerations
feature in the investment decision making process.
Annual General Meeting
The 2023 Annual General Meeting ("AGM") will be held at the
offices of Janus Henderson, 201 Bishopsgate, London EC2M 3AE on
Tuesday, 31 October 2023 at 2.30pm. The meeting will include a
presentation by our Fund Manager, Job Curtis, and Deputy Fund
Manager, David Smith. Any shareholder who is unable to travel is
encouraged to join virtually by Zoom, the conference software
provider. There will, as usual, be live voting for those physically
present at the AGM but we cannot offer live voting via Zoom because
of technical restrictions. We therefore request all shareholders,
and particularly those who cannot attend physically, to submit
their votes by proxy to ensure their vote counts at the AGM.
Outlook
Over two-thirds of revenues earned by the companies in City of
London's portfolio comes from overseas. Whilst this diversification
is helpful given the relative economic weakness of the UK,
prospects for the global economy remain very uncertain. The war in
Ukraine has no end in sight, there is continuing tension with
China, the outcome of the increasingly fractious US election
campaign remains in doubt and recent climatic events across the
world have demonstrated the severe risks of climate change.
A further uncertainty arises from the coordinated actions by
central banks to use the levers of monetary policy, and most
directly higher interest rates, to curb inflation. The implications
of this will take some time to show their effect, but it is already
clear that a return to the cheap lending rates that have prevailed
for the last 15 years will not recur. Households will experience a
significant increase in interest costs as their fixed rate
mortgages are rolled over, as will businesses when their existing
debt matures. Over time, although the rate of inflation should
continue to fall as increases in energy prices drop out of the
annual calculation, this will affect the behaviour of consumers,
with consequences for corporate profits and investment.
UK listed shares in general continue to trade at lower
valuations relative to comparable businesses overseas. The reasons
for this include continuing investor scepticism concerning the
benefits of Brexit, the preponderance of "value" stocks (such as
banks and energy companies) relative to "growth" stocks (such as
technology including AI), the lack of domestic support because many
UK investment institutions favour fixed interest in their asset
allocations and the prospect of a more interventionist Labour
government. These lower comparable valuations, however, offer
potential rewards for City of London as both private equity firms
and overseas businesses take advantage of opportunities to use the
UK's open markets to secure attractive acquisitions. It remains the
case that UK equities offer compelling dividend yields relative to
the main alternative equity markets and, on this basis, UK
investors can reasonably take the view that they are being "paid to
hold on" until valuations improve.
City of London has grown its dividend for 57 years during
periods of high and low inflation and, at times, political
instability in the UK and overseas. Our portfolio has, at its core,
good quality and cash generative companies that are well placed to
deliver reliable and competitive returns.
Sir Laurie Magnus CBE
Chairman
19 September 2023
FUND MANAGER'S REPORT
Investment Background
The UK equity market, as measured by the FTSE All-Share Index,
traded in a relatively narrow range during the 12-month period and
produced a total return of 7.9%. Economic growth was better than
some had feared and the economy avoided recession. UK CPI inflation
reached a 40-year high of 11.1% in October 2022. The monetary and
fiscal stimulus and supply chain disruptions during the pandemic
followed by shocks to oil and other commodity prices from the
Russian invasion of Ukraine were the initial causes of inflation.
The tight labour market and accelerating wage increases kept
inflation at elevated levels. The Bank of England increased its
base rate eight times, from 1.25% to 5.0%. In the US, the Federal
Reserve also increased interest rates in response to inflation as
did the European Central Bank.
From June 2022, the oil price declined. Despite the Ukraine war,
Russian supply proved more resilient than expected to countries
such as China and India, who took advantage of discounted Russian
oil. Concerns about shortages gave way to worries over demand
weakening as global economic growth slowed. Europe was able to
substitute Russian natural gas with imports of liquified natural
gas from the US and the Middle East.
Sterling fell to an exchange rate of 1.07 against the US dollar
during the short-lived Premiership of Liz Truss, when unfunded tax
cuts were proposed. By the end of June 2023, sterling had recovered
to 1.27, achieving a 5% gain against the US dollar over the 12
months. Against the euro, sterling made a small gain of 0.9%.
Against a backdrop of inflation and the Bank of England raising
the base rate to 5%, gilt yields also rose. By the end of June, the
10-year gilt yield was 4.4%, around the same as the peak reached
during the Truss Premiership, and above the FTSE All-Share dividend
yield of 3.7%. In recent years, during the period of exceptionally
low interest rates, the Company was able to fix cheap rates of
borrowing for long periods through issuing the following secured
notes: GBP35 million 4.53% 2029, GBP30 million 2.67% 2046 and GBP50
million 2.94% 2049. These borrowings remained fully invested in
equities throughout the year but the HSBC facility, which is priced
off the base rate, was only modestly drawn down. Gearing, which was
7.1% at the start of the 12 months, declined slightly to 6.2% at
the end of June 2023.
Performance Review
Estimated performance attribution (relative to FTSE All-Share
Index total return)
2023 2022
% %
================= ====== ======
Stock selection -4.32 +4.69
Gearing +1.13 +1.53
Expenses -0.37 -0.37
Share issues +0.18 +0.04
----------------- ------ ------
Total -3.38 +5.89
----------------- ------ ------
Source: Janus Henderson
The Company produced a net asset value total return of 4.51%,
which was 3.38 percentage points behind the FTSE All-Share total
return of 7.89%. Gearing contributed to performance by 1.13
percentage points as the fair value of our secured notes declined.
Stock selection detracted by 4.32 percentage points. The biggest
stock detractor was Direct Line Insurance, which suffered from
premium income not keeping pace with the rising cost of claims. In
contrast, Munich Re, the reinsurer, was the second biggest stock
contributor, benefiting from strong rate increases for
reinsurance.
Persimmon, the house builder, was the second biggest stock
detractor, as its share price reacted to the slowdown in the UK
housing market. In the building materials, merchants and equipment
rental sectors, not holding CRH and Ashtead were notable
detractors, partly compensated by our stakes in Holcim and
Ferguson, which were among the best contributors.
Other notable stock detractors were not holding, in the travel
& leisure sector, Flutter Entertainment, the betting company,
and Compass, the contract caterer. In contrast, 3i, the investor in
private companies, was the biggest stock contributor, driven by
outstanding growth from its investment in Action, the European
discount retailer.
The underperformance of 3.38 percentage points in 2023
contrasted with the outperformance of 5.89 percentage points in
2022.
It was a relatively good year for large companies, with the FTSE
100 Index of the largest companies returning 9.2% compared with
1.9% for the FTSE 250 Index of medium-sized companies and 1.2% for
the FTSE SmallCap Index. The FTSE 100 Index was helped by the
outperformance of the banks and oil sectors, where the Company was
underweight.
Lower yielding shares also had a good year, as the chart in the
Annual Report shows. It compares the performance of the FTSE 350
Higher Yield Index (the higher dividend yielding half of the
largest 350 shares listed in the UK) with the FTSE 350 Lower Yield
Index (the lower dividend yielding half of the largest 350 shares
listed in the UK). Telecommunications service providers was a
notably underperforming higher yielding sector. Although the
portfolio avoided the underperformance of BT, Verizon
Communications of the US was a notable stock detractor.
Distribution of the portfolio as at 30 June 2023
% of the portfolio
-------------------------------------------- -------------------
Large UK-listed companies (constituents of
the FTSE 100 Index) 75%
Medium-sized and small UK-listed companies 10%
Overseas-listed companies 15%
Source: Refinitiv Datastream, 30 June 2023
Over the 12 months, the proportion of the portfolio invested in
companies with their prime listing overseas declined from 17% to
15%, with profits taken in Microsoft (of the US) and BHP (of
Australia), after exceptional long-term performance and with the
proceeds reinvested in shares that appeared to offer better value
in the UK equity market. The proportion invested in large,
UK-listed companies (included in the FTSE 100 Index) rose by four
percentage points to 75%. The proportion invested in medium-sized
and small companies fell by two percentage points to 10%, partly
reflecting the takeover of Brewin Dolphin and the promotion to the
FTSE 100 of Beazley and IMI.
Portfolio Changes
Six new holdings were bought over the 12 months. In the mining
sector, Glencore was purchased, financed by the sale of BHP.
Glencore is well placed in metals which are needed for the
transition to cleaner energy, such as copper, which accounts for
37% of profits. It is planning to run down its coal assets for cash
with the aim of the group to be net carbon zero by 2050. It also
has a world leading commodity trading business, accounting for 20%
of profits. On the other hand, 55% of BHP's profits comes from iron
ore. The iron ore price ended the 12-month period at a similar
level to where it had started.
The iron ore price is heavily dependent for demand from Chinese
steelmakers, where the outlook is uncertain. BHP had also rerated
against the UK-listed mining companies after its move from being
50% listed in London to 100% in Australia. In addition to Glencore,
Rio Tinto and Anglo American continue to be held in the
portfolio.
Three new holdings of UK-listed industrial companies were
purchased. Although having cyclical elements to their businesses,
the three companies appeared modestly rated relative to their
prospects and leadership positions. DS Smith is a provider of
corrugated packaging, which is supported by recycling and paper
making operations. Its packaging is largely made from recycled
materials and is used for fast moving consumer goods and industrial
products. It has a strong track record of innovation in packaging.
Its sales are predominantly in Europe (including the UK) where it
is the second largest corrugated packaging producer.
Morgan Advanced Materials, where a new stake was also bought, is
a global leader in making ceramic and other materials that need
precision in highly challenging operating environments, such as
extreme temperatures, for a range of industries. Its business is
backed by strong technology and is well spread geographically with
40% of sales in North America, 30% Asia Pacific and 28% Europe
(including UK). The third industrial stock bought was Vesuvius. Its
business is split into two divisions: firstly, products and systems
which regulate and protect the flow of molten steel during steel
manufacturing; and secondly, consumable products for the foundry
casting process. Vesuvius is the global leader in these businesses
with revenues split 31% Americas, 39% EMEA (Europe, the Middle East
and Africa) and 30% Asia Pacific.
Financial conditions were supportive for the banks over the 12
months with rising interest rates helpful for the net interest
margins they earn, the difference between the rate at which they
pay depositors and charge borrowers. A new holding was bought in
NatWest on a discount to its tangible book value despite its
guidance of 14-16% return on tangible equity for 2023. Overall,
banks delivered strong dividend growth over the year and additions
were made to our stakes in HSBC, where profits predominantly come
from Asia Pacific, and Lloyds Banking. The position in Barclays was
maintained.
A new holding was bought in Round Hill Music Royalties Fund
("RHM"), an investment company, which owns 51 catalogues with some
120,000 songs. 60% of RHM's income comes from publishing rights,
which refers to the actual musical composition i.e. the notes,
melodies and lyrics. 31% of income comes from music rights, which
refers to the sound recording of the written song or piece of
music. RHM is a beneficiary of the growth of streaming through
platforms, such as Spotify. RHM has an "evergreen" portfolio with
71% of its songs pre-2000. RHM was purchased at a deep discount to
its net asset value.
Disposals were made of the holdings in two companies that have
been very successful investments but where share price valuations
seemed expensive relative to prospects and other opportunities.
Microsoft, which entered the portfolio in 2011, has benefited in
recent years from its leading position in cloud computing. During
2023, investors became very excited about its prospects in
artificial intelligence leading to a further rerating of its
shares. At the time of the final sale of the portfolio's holding in
Microsoft, its market capitalisation was almost equal to all of the
stocks in the FTSE 100 Index combined.
Chemical company, Croda, had been held in the portfolio for over
two decades, during which time its share price rating had been
transformed from a high to low dividend yield as it delivered
consistent growth from products made from natural oils. However, it
is not immune from cyclical pressures and had to downgrade profit
expectations in the first half of 2023. The holding was sold given
the high share price valuation. Also in the chemical sector,
Synthomer was sold after a profits warning and the suspension of
its dividend.
Private client wealth manager, Brewin Dolphin, was sold after
its takeover by Royal Bank of Canada. Part of the proceeds were
invested in additions to the stake in Rathbones, another leading
private client wealth manager, who subsequently announced a merger
with Investec Wealth & Investment. The holding in the
non-voting shares of Schroders, the asset manager, was enfranchised
on attractive terms, converting into voting shares.
Portfolio Outlook
Two oil and gas companies are in the top ten investments: Shell,
the largest investment, and BP, ninth largest. In addition,
TotalEnergies and Woodside Energy are also held in the portfolio
for a total oil and gas sector exposure of 8.7% compared with 10.7%
for the FTSE All-Share Index. The companies owned have a relatively
low cost of production, providing some security for their
dividends. Oil and gas currently play a crucial role in the global
economy and although the transition to a clean energy future will
continue, our investee companies are preparing for it with
significant capital investment being spent on the development of
renewable and low carbon energy sources.
Consumer staples companies, which make and sell everyday
products, constitute 19.2% of the portfolio and include in the top
ten investments: Unilever (fourth largest), British American
Tobacco (fifth largest), Diageo (seventh largest) and Imperial
Brands (10th largest). These companies form a sound core to the
portfolio as their dividends are relatively dependable given
consistent profitability and the global spread of their operations.
Unilever has a significant presence in both developed and emerging
markets with its beauty, personal care, food and homecare products.
British American Tobacco ("BAT") and Imperial Brands are strong
cash generators and good dividend payers. Of the two companies, BAT
is more advanced in pivoting its operations towards less harmful
nicotine products than cigarettes. Diageo is the world's largest
spirits company (outside China) and the largest in the US, as well
as owning Guinness beer. Its leading spirits brands include Johnnie
Walker (Scotch whisky), Tanqueray (gin) and Don Julio
(tequila).
HSBC is the third largest investment in the portfolio and the
largest bank shareholding. The next largest bank holding is Lloyds
Banking, which is twentieth. 8.1% of the portfolio is held in the
banks sector, which compares with the FTSE All-Share weighting of
9.4%. Overall, the profitability of banks should continue to
benefit from the higher level of interest rates and its effect on
their net interest margins. Share price valuations for the banks
are attractive compared with consensus expectations of their
profitability. But banks always remain vulnerable to economic
shocks although their capital ratios are much stronger than they
were before the global financial crisis of 2007 to 2009.
AstraZeneca is the eighth largest investment in the portfolio
and the largest pharmaceutical sector holding, but the position is
underweight relative to its FTSE All-Share weighting. AstraZeneca's
share price has been a strong performer in recent years, reflecting
its success in discovering new medicines, especially in the
immunotherapy area of cancer. Unusually for a UK listed company, it
is relatively highly rated compared with overseas listed peers.
8.6% of the portfolio is invested in healthcare, which is a
defensive area of the economy, with spending well protected given
its importance to individuals and usually backed by government
spending or private insurance. The overseas listed pharmaceutical
stocks held in the portfolio (Johnson & Johnson, Merck,
Novartis and Sanofi) have produced better dividend growth than the
UK listed holdings (AstraZeneca and GlaxoSmithKline).
The outlook for the portfolio's second largest holding, BAE
Systems, remains positive. Defence spending has moved on from the
post-Cold War "peace dividend" period to an era when many countries
want to spend more on defence to give protection against external
threats. In addition to its core markets in the US and UK, BAE has
significant opportunities in many other countries and areas, such
as Australia, Japan, Eastern Europe and the Middle East. RELX, the
sixth largest holding in the portfolio, continues to produce
consistent growth from providing essential information and
analytics for businesses, professionals and scientists. In
addition, it is benefiting from the recovery of its business
exhibitions division.
There are significant investments in life assurers Phoenix (14th
largest investment) and Legal & General (18th largest) and fund
manager and life assurer M&G (15th largest). These companies
offer, in our view, highly attractive dividend yields and should
have opportunities for new business growth in bulk annuities given
the levels of interest rates and bond yields. National Grid and
SSE, which are respectively the 16th and 17th largest investments
in the portfolio, will grow their asset bases significantly given
the global economy's need to decarbonise and generate more
electricity from renewable sources going forward. Both companies
own electricity transmission and distribution networks and SSE is
the UK's leading generator of renewable energy, through wind and
hydro.
Revenue exposure
% of the portfolio
---------------------------------- -------------------
United Kingdom 31
North America 24
Europe ex UK 16
Emerging Markets (Other) 12
Emerging Markets (Asia) 11
Developed Markets (Asia/Pacific) 3
Japan 3
Source: Refinitiv Datastream, 30 June 2023
The portfolio remains well diversified with a bias towards
large, international companies and shares with above average
dividend yield. 69% of investee companies' revenues comes from
overseas, which is slightly up from a year ago when it was 67%. The
aim is to be invested in those companies that can support their
dividends through profits and cash generation and invest enough for
growth. The quality of the companies in the portfolio, some leading
global businesses and others with strong market positions in the
UK, gives confidence for the future.
Job Curtis
Fund Manager
David Smith
Deputy Fund Manager
19 September 2023
FORTY LARGEST INVESTMENTS AS AT 30 JUNE 2023
The 40 largest investments, representing 78.22% of the portfolio, are
listed below.
Market
value Portfolio
Position Company Sector GBP'000 %
--------- ------------------ ------------------------------- -------- ----------
1 Shell Oil, Gas and Coal 78,731 3.87
2 BAE Systems Aerospace and Defence 71,843 3.53
3 HSBC Banks 69,941 3.44
Personal Care, Drug
4 Unilever and Grocery Stores 68,019 3.34
British American
5 Tobacco Tobacco 67,795 3.33
6 RELX Media 66,830 3.28
7 Diageo Beverages 66,219 3.26
Pharmaceuticals and
8 AstraZeneca Biotechnology 60,327 2.97
9 BP Oil, Gas and Coal 57,752 2.84
10 Imperial Brands Tobacco 49,967 2.46
--------- ------------------ ------------------------------- -------- ----------
Top 10 657,424 32.32
------------------------------- ------------------------------------------- ----------
Investment Banking and
11 3i Brokerage Services 49,623 2.44
Personal Care, Drug
12 Tesco and Grocery Stores 49,183 2.42
Industrial Metals and
13 Rio Tinto Mining 46,360 2.28
14 Phoenix Life Insurance 46,001 2.26
Investment Banking and
15 M&G Brokerage Services 45,936 2.25
16 National Grid Gas, Water and Multi-utilities 45,552 2.24
17 SSE Electricity 44,552 2.19
18 Legal & General Life Insurance 38,624 1.90
St. James's Investment Banking and
19 Place Brokerage Services 38,062 1.87
20 Lloyds Banking Banks 36,616 1.80
--------- ------------------ ------------------------------- -------- ----------
Top 20 1,097,933 53.97
------------------------------- ------------------------------------------- ----------
Industrial Metals and
21 Glencore Mining 35,560 1.75
Investment Banking and
22 Schroders Brokerage Services 32,353 1.59
Pharmaceuticals and
23 GlaxoSmithKline Biotechnology 31,831 1.56
Personal Care, Drug
24 Reckitt Benckiser and Grocery Stores 29,560 1.45
25 Nestlé Food Producers 28,375 1.39
Investment Banking and
26 IG Brokerage Services 28,007 1.38
27 TotalEnergies Oil, Gas and Coal 27,058 1.33
28 Severn Trent Gas, Water and Multi-utilities 26,943 1.32
Real Estate Investment
29 Land Securities Trusts 26,547 1.30
30 NatWest Banks 25,755 1.27
--------- ------------------ ------------------------------- -------- ----------
Top 30 1,389,922 68.31
------------------------------- ------------------------------------------- ----------
Pharmaceuticals and
31 Merck Biotechnology 24,493 1.20
32 Barclays Banks 24,157 1.19
Industrial Metals and
33 Anglo American Mining 23,112 1.14
34 Munich Re Non-life Insurance 21,230 1.04
Pharmaceuticals and
35 Novartis Biotechnology 20,808 1.02
36 Holcim Construction and Materials 19,312 0.95
37 Swire Pacific General Industrials 18,067 0.89
38 Ferguson Industrial Support Services 17,994 0.88
Investment Banking and
39 Rathbones Brokerage Services 16,740 0.82
Software and Computer
40 Sage Services 15,814 0.78
--------- ------------------ ------------------------------- -------- ----------
Top 40 1,591,649 78.22
------------------------------- ------------------------------------------- ----------
Convertibles and all classes of equity in any one company are treated
as one investment.
PRINCIPAL RISKS
The Board, with the assistance of the Manager, has carried out a
robust assessment of the principal risks and uncertainties facing
the Company, including those that would threaten its business
model, future performance, solvency or liquidity and
reputation.
The Board regularly considers the principal risks facing the
Company and has drawn up a register of these risks. The Board has
also put in place a schedule of investment limits and restrictions,
appropriate to the Company's investment objective and policy. The
principal risks which have been identified and the steps taken by
the Board to mitigate these are set out in the table below. The
principal financial risks are detailed in note 16 to the financial
statements in the Annual Report. Details of how the Board monitors
the services provided by Janus Henderson and its other suppliers,
and the key elements designed to provide effective internal
control, are explained further in the internal controls section of
the Corporate Governance Report in the Annual Report.
Principal risks Trend Mitigating measure
Geopolitical The Fund Managers keep the global
Heightened political tensions political and economic picture under
in and among a number of countries review as part of the investment
around the world have potential process.
impacts, including increasing
market volatility, risks to
cyber security and on the supply
of commodities, including oil
and gas, and manufacturing components.
------ --------------------------------------------
Global pandemics The Fund Managers maintain close
The impact that a global pandemic oversight of the Company's portfolio,
or some future major health and in particular the dividend strategies
crisis could have on the Company's of investee companies. Regular stress
investments and its direct and testing of the revenue account under
indirect effects, including different scenarios for dividends
the effect on the global economy. is carried out.
The Board also maintains close oversight
of the third-party service providers
which assist in the administration
of the Company.
------ --------------------------------------------
Portfolio and market price The Board reviews the portfolio at
Although the Company invests the seven Board meetings held each
almost entirely in securities year and receives regular reports
that are listed on recognised from the Company's brokers. A detailed
markets, share prices may move liquidity report is considered on
rapidly. The companies in which a regular basis.
investments are made may operate
unsuccessfully, or fail entirely. The Fund Managers closely monitor
A fall in the market value of the portfolio between meetings and
the Company's portfolio would mitigate this risk through diversification
have an adverse effect on equity of investments. The Fund Managers
shareholders' funds. periodically present the Company's
investment strategy in respect of
The wider consequences of Brexit current market conditions. Performance
on employment and regulation relative to the FTSE All-Share Index,
together with resultant, adverse other UK equity income trusts and
trade negotiations may impact IA UK Equity Income OEICs is also
the Company's investments. monitored.
The majority of the Company's investments
are multi-national companies with
operations in local markets.
------ --------------------------------------------
Dividend income The Board reviews income forecasts
A reduction in dividend income at each meeting. The Company has
could adversely affect the Company's revenue reserves of GBP44.3 million
dividend record. (before payment of the fourth interim
dividend) and distributable capital
reserves of GBP344.6 million.
------ --------------------------------------------
Investment activity, gearing At each meeting, the Board reviews
and performance investment performance, the level
An inappropriate investment of gearing, the level of premium/discount,
strategy (for example, in terms income forecasts and a schedule of
of asset allocation or the level expenses. It also has an annual meeting
of gearing) may result in underperformance focused on strategy at which these
against the Company's benchmark. matters are considered in more depth.
------ --------------------------------------------
Tax and regulatory The Manager provides its services,
Changes in the tax and regulatory inter alia, through suitably qualified
environment could adversely professionals and the Board receives
affect the Company's financial internal control reports produced
performance, including the return by the Manager on a quarterly basis,
on equity. which confirm legal and regulatory
compliance. The Fund Managers also
A breach of Section 1158/9 of consider tax and regulatory change
the Corporation Tax Act 2010 in their monitoring of the Company's
as amended could lead to a loss underlying investments.
of investment trust status,
resulting in capital gains realised
within the portfolio being subject
to corporation tax. A breach
of the Listing Rules could result
in suspension of the Company's
shares, while a breach of the
Companies Act 2006 could lead
to criminal proceedings, or
financial or reputational damage.
The Company must also ensure
compliance with the Listing
Rules of the New Zealand Stock
Exchange.
------ --------------------------------------------
Operational The Board monitors the services provided
Disruption to, or failure of, by the Manager and its other suppliers
the Manager's or its Administrator's and receives reports on the key elements
(BNP Paribas) accounting, dealing in place to provide effective internal
or payment systems or the Depositary's control.
records could prevent the accurate
reporting and monitoring of Cyber security is closely monitored
the Company's financial position. and the Audit Committee receives
Cyber crime could lead to loss regular presentations from Janus
of confidential data. The Company Henderson's Chief Information Security
is also exposed to the operational Officer.
risk that one or more of its
suppliers may not provide the The Board considers the loss of the
required level of service. Fund Manager as a risk but this is
mitigated by the experience of the
team at Janus Henderson as detailed
in the Annual Report.
------ --------------------------------------------
Emerging risks
In addition to the principal risks facing the Company, the Board
also regularly considers emerging risks, which are defined as
potential trends, sudden events or changing risks which are
characterised by a high degree of uncertainty in terms of the
probability of them happening and the possible effects on the
Company. Should an emerging risk become sufficiently clear, it may
be moved to a significant risk.
BORROWINGS
The Company has a borrowing facility of GBP120.0 million (2022:
GBP120.0 million) with HSBC Bank plc, of which GBP9.0 million was
drawn at the year end (2022: GBP16.3 million).
The Company has GBP114.2 million (2022: GBP114.2 million) (par
value) of secured notes in issue (fair value of the loan notes:
GBP83.3 million (2022: GBP101.1 million)).
The level of gearing at 30 June 2023 was 6.2% of net asset value
with debt at par (2022: 7.1%) and 4.5% with debt at fair value
(2022: 6.4%).
VIABILITY STATEMENT
The AIC Code of Corporate Governance includes a requirement for
the Board to assess the future prospects for the Company, and to
report on the assessment within the Annual Report.
The Board considers that certain characteristics of the
Company's business model and strategy are relevant to this
assessment:
-- The Board seeks to deliver long-term performance by the Company.
-- The Company's investment objective, strategy and policy, which are
subject to regular Board monitoring, mean that the Company is invested
mainly in readily realisable, UK-listed securities and that the level
of borrowings is restricted.
-- The Company is a closed end investment company and therefore does
not suffer from the liquidity issues arising from unexpected redemptions.
-- The Company has an ongoing charge of 0.37%, which is lower than other
comparable investment trusts.
Also relevant were a number of aspects of the Company's
operational agreements:
-- The Company retains title to all assets held by the Custodian under
the terms of formal agreements with the Custodian and Depositary.
-- Long-term borrowing is in place, being 4.53% secured notes 2029,
2.94% secured notes 2049 and 2.67% secured notes 2046 which are subject
to formal agreements, including financial covenants with which the
Company complied in full during the year. The value of long-term
borrowing is relatively small in comparison to the value of net assets,
being 6.0%.
-- Revenue and expenditure forecasts are reviewed by the Directors at
each Board meeting. This includes stress testing of the forecast
under different scenarios.
-- Cash is held with approved banks.
Three model scenarios are considered which evaluate the impact
on revenue reserves. These range from a worst case scenario which
includes low consensus estimates, significant dividend cuts of up
to 50% in specific sectors and specific investee companies, to a
best case scenario with high consensus estimates, no dividend cuts
in any specific sector and limited dividend cuts in specific
investee companies. Increasing dividend payments to shareholders
could continue under all three scenarios whether through revenue,
or supported by distributable capital reserves. None of the results
from the three scenarios would therefore threaten the viability of
the Company.
Covenant limits are tested to ascertain the level that net
assets would need to fall by to breach any covenant conditions. Net
assets would need to fall by amounts in excess of GBP1.5 billion to
breach covenants, with all other factors remaining constant. The
Board considers this to be highly unlikely and therefore does not
threaten the viability of the Company.
In addition, the Directors carried out a robust assessment of
the principal risks and uncertainties which could threaten the
Company's business model, including future performance, liquidity
and solvency and considered emerging risks that could have a future
impact on the Company.
The principal risks identified as relevant to the viability
assessment were those relating to investment portfolio performance
and its effect on the net asset value, share price and dividends,
and threats to security over the Company's assets. The Board took
into account the liquidity of the Company's portfolio, the
existence of the long-term fixed rate borrowings, the effects of
any significant future falls in investment values and income
receipts on the ability to repay and renegotiate borrowings, grow
dividend payments and retain investors and the potential need for
share buybacks to maintain a narrow share price discount.
The Directors assess viability over five-year rolling periods,
taking account of foreseeable severe but plausible scenarios. In
coming to this conclusion, the Directors have considered the
aftermath of the Covid-19 pandemic and heightened macroeconomic
uncertainty following Russia's invasion of Ukraine, in particular
the impact on income and the Company's ability to meet its
investment objective. The Directors do not believe that they will
have a long-term impact on the viability of the Company and its
ability to continue in operation, notwithstanding the short-term
uncertainty these events have caused in the markets and specific
short-term issues such as energy, supply chain disruption,
inflation and labour shortages.
The Directors believe that a rolling five-year period best
balances the Company's long-term objective, its financial
flexibility and scope with the difficulty in forecasting economic
conditions affecting the Company and its shareholders.
Based on their assessment, and in the context of the Company's
business model, strategy and operational arrangements set out
above, the Directors have a reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as
they fall due over the five-year period to June 2028.
RELATED PARTY TRANSACTIONS
The Company's transactions with related parties in the year were
with the Directors and the Manager. There were no material
transactions between the Company and its Directors during the year
and the only amounts paid to them were in respect of expenses and
remuneration for which there were no outstanding amounts payable at
the year end. Directors' shareholdings are disclosed in the Annual
Report.
In relation to the provision of services by the Manager, other
than fees payable by the Company in the ordinary course of business
and the provision of marketing services, there were no material
transactions with the Manager affecting the financial position of
the Company during the year under review. More details on
transactions with the Manager, including amounts outstanding at the
year end, are given in the Annual Report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Each of the Directors, who are listed below, confirms that, to
the best of his or her knowledge:
-- the Company's financial statements, which have been prepared in accordance
with UK Accounting Standards on a going concern basis, give a true
and fair view of the assets, liabilities, financial position and
return of the Company; and
-- the Strategic Report and financial statements include a fair review
of the development and performance of the business and the position
of the Company, together with a description of the principal risks
and uncertainties that it faces.
On behalf of the Board
Sir Laurie Magnus CBE
Chairman
19 September 2023
INCOME STATEMENT
Year ended 30 June 2023 Year ended 30 June 2022
Revenue Capital Total Revenue Capital Total
return return return return return return
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----- ------------------------- -------- -------- --------------- -------- ---------------- ---------------
(Losses)/gains on
investments held
at fair value through
profit or loss - (27,111) (27,111) - 13,394 13,394
Income from investments
held at fair value
through profit or
2 loss 101,747 - 101,747 98,028 - 98,028
Other interest receivable
3 and similar income 224 - 224 190 - 190
-------- -------- --------------- -------- ---------------- ---------------
Gross revenue and
capital (losses)/gains 101,971 (27,111) 74,860 98,218 13,394 111,612
Management fee (1,844) (4,304) (6,148) (1,746) (4,073) (5,819)
Other administrative
expenses (860) - (860) (774) - (774)
-------- -------- --------------- -------- ---------------- ---------------
Net return/(loss)
before finance costs
and taxation 99,267 (31,415) 67,852 95,698 9,321 105,019
Finance costs (1,621) (3,416) (5,037) (1,474) (3,075) (4,549)
-------- -------- --------------- -------- ---------------- ---------------
Net return/(loss)
before taxation 97,646 (34,831) 62,815 94,224 6,246 100,470
Taxation (1,406) - (1,406) (1,236) - (1,236)
-------- -------- --------------- -------- ---------------- ---------------
Net return/(loss)
after taxation 96,240 (34,831) 61,409 92,988 6,246 99,234
-------- -------- --------------- -------- ---------------- ---------------
Return/(loss) per
ordinary share basic
5 and diluted 20.14p (7.29p) 12.85p 20.72p 1.39p 22.11p
-------- -------- --------------- -------- ---------------- ---------------
The total columns of this statement represent the Company's
Income Statement. The revenue return and capital return columns are
supplementary to this and are prepared under guidance published by
the Association of Investment Companies. All revenue and capital
items in the above statement derive from continuing operations. The
Company has no recognised gains or losses other than those
recognised in the Income Statement.
STATEMENT OF CHANGES IN EQUITY
Called Share Capital Other
up share premium redemption capital Revenue
Year ended capital account reserve reserves reserve Total
Notes 30 June 2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
8 shares 9,429 143,918 - - - 153,347
7 Dividends paid - - - - (95,521) (95,521)
---------- ---------- ------------ ---------- --------- ----------
At 30 June
2023 124,339 1,053,061 2,707 691,463 44,322 1,915,892
---------- ---------- ------------ ---------- --------- ----------
Called Share Capital Other
up share premium redemption capital Revenue
Year ended capital account reserve reserves reserve Total
Notes 30 June 2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2021 111,406 855,597 2,707 720,048 37,567 1,727,325
Net return
after taxation - - - 6,246 92,988 99,234
Issue of 14,015,000
new ordinary
8 shares 3,504 53,546 - - - 57,050
7 Dividends paid - - - - (86,952) (86,952)
---------- ---------- ------------ ---------- --------- ----------
At 30 June
2022 114,910 909,143 2,707 726,294 43,603 1,796,657
---------- ---------- ------------ ---------- --------- ----------
STATEMENT OF FINANCIAL POSITION
30 June
2023 30 June 2022
Notes GBP'000 GBP'000
-------- -------------------------------------------------------- ---------- ---------------
Fixed assets
Investments held at fair value through profit or loss
Listed at market value in the United Kingdom 1,734,695 1,642,199
Listed at market value overseas 299,605 281,071
Investment in subsidiary undertakings 347 347
---------- ---------------
2,034,647 1,923,617
---------- ---------------
Current assets
Debtors 10,823 11,451
10,823 11,451
Creditors: amounts falling due within one year (13,956) (22,835)
---------- ---------------
Net current liabilities (3,133) (11,384)
---------- ---------------
Total assets less current liabilities 2,031,514 1,912,233
Creditors: amounts falling due after more than one year (115,622) (115,576)
---------- ---------------
Net assets 1,915,892 1,796,657
---------- ---------------
Capital and reserves
8 Called up share capital 124,339 114,910
Share premium account 1,053,061 909,143
Capital redemption reserve 2,707 2,707
Other capital reserves 691,463 726,294
Revenue reserve 44,322 43,603
---------- ---------------
6 Total shareholders' funds 1,915,892 1,796,657
---------- ---------------
6 Net asset value per ordinary share - basic and diluted 385.22p 390.88p
---------- ---------------
NOTES TO THE FINANCIAL STATEMENTS
Accounting policies
1.
Basis of accounting
The Company is a registered investment company as defined in Section
833 of the Companies Act 2006 and is incorporated in the UK. It operates
in the UK and is registered at the address below.
The financial statements have been prepared in accordance with the
Companies Act 2006, FRS 102, the Financial Reporting Standard applicable
in the UK and Republic of Ireland, and with the Statement of Recommended
Practice: Financial Statements of Investment Trust Companies and Venture
Capital Trusts ("the SORP") issued in July 2022 by the Association
of Investment Companies.
The principal accounting policies applied in the presentation of these
financial statements are set out in the Annual Report. These policies
have been consistently applied to all the years presented.
As an investment fund the Company has the option, which it has taken,
not to present a cash flow statement. A cash flow statement is not
required when an investment fund meets all the following conditions:
substantially all of the entity's investments are highly liquid, substantially
all of the entity's investments are carried at market value, and the
entity provides a Statement of Changes in Equity. The Directors have
assessed that the Company meets all of these conditions.
The financial statements have been prepared under the historical cost
basis except for the measurement at fair value of investments. In
applying FRS 102, financial instruments have been accounted for in
accordance with Sections 11 and 12 of the standard. All of the Company's
operations are of a continuing nature.
The financial statements of the Company's three subsidiaries have
not been consolidated on the basis of immateriality and dormancy.
Consequently, the financial statements present information about the
Company as an individual entity. The Directors consider that the values
of the subsidiary undertakings are not less than the amounts at which
they are included in the financial statements.
The preparation of the Company's financial statements on occasion
requires the Directors to make judgements, estimates and assumptions
that affect the reported amounts in the primary financial statements
and the accompanying disclosures. These assumptions and estimates
could result in outcomes that require a material adjustment to the
carrying amount of assets or liabilities affected in the current and
future periods, depending on circumstance.
The decision to allocate special dividends as income or capital is
a judgement but not deemed to be material. The allocation of expenses
to income or capital is a judgement as well, but also is not deemed
to be material. The Directors do not believe that any accounting judgements
or estimates have been applied to this set of financial statements
that have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next financial
year.
Going concern
The assets of the Company consist of securities that are readily realisable
and, accordingly, the Directors believe that the Company has adequate
resources to continue in operational existence for at least twelve
months from the date of approval of the financial statements. The
Directors have also considered the aftermath of the Covid-19 pandemic
and the risks arising from the wider ramifications of the conflict
between Russia and Ukraine, including cash flow forecasting, a review
of covenant compliance including the headroom above the most restrictive
covenants and an assessment of the liquidity of the portfolio. They
have concluded that the Company is able to meet its financial obligations,
including the repayment of the bank overdraft, as they fall due for
a period of at least twelve months from the date of approval of the
financial statements. Having assessed these factors, the principal
risks and other matters discussed in connection with the viability
statement, the Board has determined that it is appropriate for the
financial statements to be prepared on a going concern basis.
Income from investments held at fair value through profit or loss
2.
2023 2022
GBP'000 GBP'000
--------------------- ------------
UK dividends:
Listed - ordinary dividends 82,884 79,682
Listed - special dividends 1,949 5,702
--------------------- ------------
84,833 85,384
--------------------- ------------
Other dividends:
Dividend income - overseas investments 13,727 10,041
Dividend income - overseas special dividends 568 586
Dividend income - UK REIT 2,619 2,017
16,914 12,644
--------------------- ------------
Total 101,747 98,028
--------------------- ------------
3. Other interest receivable and similar income
2023 2022
GBP'000 GBP'000
--------------------- ------------
Stock lending revenue 224 190
--------------------- ------------
224 190
--------------------- ------------
At 30 June 2023, the total value of securities on loan by the Company
for stock lending purposes was GBP121,213,000 (2022: GBP177,048,000).
The maximum aggregate value of securities on loan at any one time
during the year ended 30 June 2023 was GBP285,320,000 (2022: GBP288,549,000).
The Company's agent holds collateral at 30 June 2023, with a value
of GBP133,180,000 (2022: GBP192,321,000) in respect of securities
on loan, the value of which is reviewed on a daily basis and comprises
CREST Delivery By Value ("DBVs") and Government Bonds with a market
value of 110% (2022: 109%) of the market value of any securities on
loan.
Management fee
4.
2023 2022
Revenue Capital Total Revenue Capital Total
return return return return return return
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ --------- ----------- -------- -------- -----------
Management fee 1,844 4,304 6,148 1,746 4,073 5,819
------------ --------- ----------- -------- -------- -----------
A summary of the terms of the Management Agreement is given in the
Annual Report. Details of apportionment between revenue and capital
can be found in the Annual Report.
Return/(loss) per ordinary share - basic and diluted
5.
The return per ordinary share is based on the net return attributable
to the ordinary shares of GBP61,409,000 (2022: gain of GBP99,234,000)
and on 477,932,402 ordinary shares (2022: 448,747,183), being the
weighted average number of ordinary shares in issue during the year.
The return per ordinary share is analysed between revenue and capital
as below:
2023 2022
GBP'000 GBP'000
-------------------------- -------------------------------
Net revenue return 96,240 92,988
Net capital (loss)/return (34,831) 6,246
-------------------------- -------------------------------
Net total return 61,409 99,234
-------------------------- -------------------------------
Weighted average number of
ordinary shares in issue during
the year 477,932,402 448,747,183
-------------------------- -------------------------------
2023 2022
Pence Pence
-------------------------- -------------------------------
Revenue return per ordinary
share 20.14 20.72
Capital (loss)/return per
ordinary share (7.29) 1.39
-------------------------- -------------------------------
Total return per ordinary
share 12.85 22.11
-------------------------- -------------------------------
The Company does not have any dilutive securities, therefore the basic
and diluted returns per share are the same.
6. Net asset value per ordinary share - basic and diluted
The net asset value per ordinary share is based on the net assets
attributable to the ordinary shares of GBP1,915,892,000 (2022: GBP1,796,657,000)
and on 497,354,868 (2022: 459,639,868) shares in issue on 30 June
2023.
An alternative net asset value per ordinary share can be calculated
by deducting from the total assets less current liabilities of the
Company the preference and preferred ordinary stocks and secured notes
at their market (or fair) values rather than at their par (or book)
values. The net asset value per ordinary share at 30 June 2023 calculated
on this basis was 391.24p (2022: 393.45p). See the Annual Report for
further details of the Alternative Performance Measure and how it
is calculated.
The movements during the year of the assets attributable to the ordinary
shares were as follows:
GBP'000
------------
Total net assets attributable to the ordinary shares at
30 June 2022 1,796,657
Total net return after taxation 61,409
Dividends paid on ordinary shares in the year (95,521)
Issue of shares 153,347
------------
Total net assets attributable to the ordinary shares
at 30 June 2023 1,915,892
------------
The Company does not have any dilutive securities.
7. Dividends paid on ordinary shares
2023 2022
Record date Payment date GBP'000 GBP'000
------------------- --------------- ----------- -----------
Fourth interim dividend (4.80p) for the year 31 August
ended 30 June 2021 6 August 2021 2021 - 21,434
First interim dividend (4.80p) for the year 30 November
ended 30 June 2022 29 October 2021 2021 - 21,434
Second interim dividend (4.80p) for the year 28 February
ended 30 June 2022 28 January 2022 2022 - 21,434
Third interim dividend (5.00p) for the year
ended 30 June 2022 28 April 2022 31 May 2022 - 22,684
Fourth interim dividend (5.00p) for the year 31 August
ended 30 June 2022 4 August 2022 2022 23,139 -
First interim dividend (5.00p) for the year 30 November
ended 30 June 2023 27 October 2022 2022 23,518 -
Second interim dividend (5.00p) for the year 28 February
ended 30 June 2023 26 January 2023 2023 23,910 -
Third interim dividend (5.05p) for the year
ended 30 June 2023 27 April 2023 31 May 2023 24,954 -
Unclaimed dividends over 12 years old - (34)
----------- -----------
95,521 86,952
----------- -----------
In accordance with FRS 102, interim dividends payable to equity shareholders are recognised
in the Statement of Changes in Equity when they have been paid to shareholders.
All dividends have been or will be paid out of revenue reserves or current year revenue profits
and at no point during the year did the revenue reserve move to a negative position.
The total dividends payable in respect of the financial year which form the basis of the test
under Section 1158 of the Corporation Tax Act 2010 are set out below.
2023 2022
GBP'000 GBP'000
--------------- ----------------
Revenue available for distribution by way of dividend for the year 96,240 92,988
First interim dividend of 5.00p (2022: 4.80p) (23,518) (21,434)
Second interim dividend of 5.00p (2022: 4.80p) (23,910) (21,434)
Third interim dividend of 5.05p (2022: 5.00p) (24,954) (22,684)
Fourth interim dividend of 5.05p (2022: 5.00p) paid on 31 August 2023(1) (25,374) (23,139)
--------------- ----------------
Transfer (from)/to revenue reserve (2) (1,516) 4,297
--------------- ----------------
1 Based on 502,464,868 ordinary shares in issue at 27 July 2023 (the ex-dividend date) (2022:
462,789,868)
2 The deficit of GBP1,516,000 (2022: surplus of GBP4,297,000) has been taken from the revenue
reserve
Since the year end, the Board has announced a first interim dividend of 5.05 p per ordinary
share, in respect of the year ending 30 June 2024. This will be paid on 30 November 2023 to
holders registered at the close of business on 27 October 2023. The Company's shares will
go ex-dividend on 26 October 2023.
8. Called up share capital
Nominal value
of total shares
in issue
Shares in issue GBP'000
----------------------- ------------------------
Allotted and issued ordinary shares of 25p each
At 1 July 2022 459,639,868 114,910
Issue of new ordinary shares 37,715,000 9,429
----------------------- ------------------------
At 30 June 2023 497,354,868 124,339
----------------------- ------------------------
Nominal value
of total shares
in issue
Shares in issue GBP'000
----------------------- ------------------------
Allotted and issued ordinary shares of 25p each
At 1 July 2021 445,624,868 111,406
Issue of new ordinary shares 14,015,000 3,504
----------------------- ------------------------
At 30 June 2022 459,639,868 114,910
----------------------- ------------------------
The Company issued 37,715,000 (2022: 14,015,000) ordinary shares with
total proceeds of GBP153,347,000 (2022: GBP57,050,000) after deduction
of issue costs of GBP393,000 (2022: GBP291,000). The average price of
the ordinary shares that were issued was 407.7p (2022: 408.6p). During
the year there were no shares re-purchased by the Company (2022: there
were no shares repurchased).
9. 2023 financial information
The figures and financial information for the year ended 30 June 2023
are extracted from the Company's annual financial statements for that
period and do not constitute statutory accounts. The Company's annual
financial statements for the year to 30 June 2023 have been audited but
have not yet been delivered to the Registrar of Companies. The Independent
Auditors' Report on the 2023 annual financial statements was unqualified,
did not include a reference to any matter to which the auditors drew
attention without qualifying the report, and did not contain any statements
under Sections 498(2) or 498(3) of the Companies Act 2006.
10. 2022 financial information
The figures and financial information for the year ended 30 June 2022
are compiled from an extract of the published financial statements for
that year and do not constitute statutory accounts. Those financial statements
have been delivered to the Registrar of Companies and included the report
of the auditors which was unqualified, did not include a reference to
any matter to which the auditors drew attention without qualifying the
report, and did not contain any statements under Sections 498(2) or 498(3)
of the Companies Act 2006.
11. Annual Report
The Annual Report will be posted to shareholders in late September 2023
and will be available on the Company's website www.cityinvestmenttrust.com
. Copies will be available thereafter in hard copy format from the Company's
registered office, 201 Bishopsgate, London, EC2M 3AE.
12. Annual General Meeting
The Annual General Meeting will be held on Tuesday, 31 October 2023 at
2.30pm at the Company's registered office. The Notice of Meeting will
be sent to shareholders with the Annual Report.
13. General Information
Company Status
The City of London Investment Trust plc is a UK domiciled investment
trust company.
ISIN number / SEDOL: ordinary shares: GB0001990497 / 0199049
London Stock Exchange (TIDM) Code: CTY
New Zealand Stock Exchange Code: TCL
Global Intermediary Identification Number (GIIN): S55HF7.99999.SL.826
Legal Entity Identifier (LEI): 213800F3NOTF47H6AO55
Company Registration Number
UK : 00034871
New Zealand : 1215729
Registered Office
201 Bishopsgate, London EC2M 3AE
Directors and Secretary
The Directors of the Company are Sir Laurie Magnus (Chairman), Samantha
Wren (Audit Committee Chair), Clare Wardle (Senior Independent Director),
Ominder Dhillon and Robert (Ted) Holmes.
The Corporate Secretary is Janus Henderson Secretarial Services UK Limited,
represented by Sally Porter, ACG.
Website
Details of the Company's share price and net asset value, together with
general information about the Company, monthly factsheets and data, copies
of announcements, reports and details of general meetings can be found
at www.cityinvestmenttrust.com.
For further information please contact:
Job Curtis
Fund Manager
The City of London Investment Trust plc
Telephone: 020 7818 4367
Dan Howe
Head of Investment Trusts
Janus Henderson Investors
Telephone: 020 7818 4458
Harriet Hall
Investment Trust PR Manager
Janus Henderson Investors
Telephone: 020 7818 2919
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END
IR UKRKROAUKAAR
(END) Dow Jones Newswires
September 20, 2023 02:00 ET (06:00 GMT)
City Of London Investment (LSE:CTY)
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City Of London Investment (LSE:CTY)
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