The City of London Investment Trust plc Registered as an investment company in England and Wales Registration Number: 34871 Registered Office: 201 Bishopsgate, London EC2M 3AE THE CITY OF 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 LONDON Telephone: 0800 832 832 Email: [email protected] www.cityinvestmenttrust.com INVESTMENT TRUST PLC The City of London Investment Trust plc – Annual Report for the year ended 30 June Annual Report 2019 2 0 1 9 Shareholder Communication Awards 2018 WINNER This report is printed on revive 50:50 Silk, a recycled paper containing 50% recycled waste and 50% virgin fibre and manufactured at a mill certified with ISO 14001 environmental management standard. The pulp used in this product is bleached using an Elemental Chlorine Free process. (ECF). This product is made of material from well-managed FSC®–certified forests, recycled materials, JHI9224/2019 and other controlled sources. Typeset by 2112 Communications, London. Printed by DG3 Leycol, London. JHI9224/2019 The City of London Investment Trust plc Annual Report 2019 The City of London Investment Trust plc Annual Report 2019 Contents A Brief History Strategic Report Financial Statements The Company was formed as City of London Brewery Company The name of the Company was changed to The City of London Limited in 1860 to acquire Calverts, a family brewing business at Investment Trust plc in October 1997. Performance Highlights 2-3 Independent Auditors’ Report 36-41 Upper Thames Street in the City of London. The brewery had Historical Performance 4 Income Statement 42 extensive interests in the licensed premises trade. Henderson Global Investors (Holdings) plc was acquired by AMP in the spring of 1998. In December 2003 Henderson Group plc, Chairman’s Statement 5-6 Statement of Changes in Equity 43 In 1932 the name was changed to The City of London Brewery and the holding company of Henderson Global Investors (Holdings) plc, Portfolio Information: Statement of Financial Position 44 Investment Trust Limited, parts of the business having been sold and was demerged from AMP which was quoted on the London and Top 40 investments and classification 7-8 the proceeds invested in securities according to investment trust Australian Stock Exchanges. Notes to the Financial Statements 45-60 principles. In 1968 the remaining part of the brewery business was Fund Manager’s Report 9-12 sold and the Company concentrated exclusively on investments In May 2017, Henderson Group plc merged with Janus Capital Group Portfolio Information: Sector breakdown 13-14 Other information (unaudited) in securities. Inc. to become Janus Henderson Group plc which is quoted on the New York and Australian Stock Exchanges. Directors and Fund Manager 15 Securities Financing Transactions 61-63 In 1970 the Company appointed Touche, Remnant & Co. as Service Providers 16 Investment Manager and in 1982 the name was changed to Alternative Performance Measures 64-65 TR City of London Trust PLC. In 1992 Touche, Remnant & Co. Business Model 17-21 General Shareholder Information 66 was acquired by Henderson Administration Group plc. Glossary 22 A brief history of the Company 67 Dates of dividend and interest payments 67 Corporate Report Dates of Dividend and Interest Payments Directors’ Report 24-25 Statement of Directors’ Responsibilities 26 Dividends1 Debenture Interest Directors’ Remuneration Ordinary shares: 10¼% debenture stock 2020: Remuneration Policy 27 • first interim payable on 30 November • payable on 30 April and 31 October Annual Report on Remuneration 27-28 • second interim payable on 28 February Redeemable at par on 30 April 2020 Corporate Governance Statement 29-33 • third interim payable on 31 May 8½% debenture stock 2021: Audit Committee Report 34-35 • fourth interim payable on 31 August • payable on 31 January and 31 July Redeemable at par on 31 January 2021 Preference and preferred ordinary stocks: • payable on 28 February and 31 August Secured Notes 1 Payments are made on the nearest working day prior to the dates indicated above. 4.53% secured notes 2029: • payable on 22 January and 22 July Redeemable at par on 22 January 2029 2.94% secured notes 2049: • payable on 17 May and 17 November Redeemable at par on 17 November 2049 Warning to Shareholders Many companies are aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas based ‘brokers’ who target UK shareholders offering to sell them what often turn out to be worthless or high risk shares in US or UK investments. They can be very persistent and extremely persuasive. Shareholders are therefore advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. Please note that it is very unlikely that either the Company or the Company’s Registrar, Computershare Investor Services PLC, would make unsolicited telephone calls to shareholders and that any such calls would relate only to official documentation already circulated to shareholders and never in respect of investment ‘advice’. If you are in any doubt about the veracity of an unsolicited phone call, please contact the Company Secretary on the telephone number detailed on page 16. The image on the front cover is based on the Royal Exchange, London 67 The City of London Investment Trust plc Annual Report 2019 Strategic Report “In a flat year for equity returns NAV total return was 2.7%, ahead of our sector and market benchmarks. Our dividend was increased for the 53rd consecutive year, by 5.1% and well ahead of inflation.” Philip Remnant CBE, Chairman The City of London Investment Trust plc Annual Report 2019 Strategic Report: Performance Highlights Total Return Performance for year to 30 June 2019 % 10 9.0 8 6.3 6.2 6.3 6.2 6 4 3.0 2.7 2 0.6 0 -0.8 -2 -2.6 -4 NAV1 Share Price2 AIC UK Equity FTSE All-Share IndexIA UK Equity Income Income sector (Benchmark)3 OEIC sector 2019 2018 Dividend growth compared with the Retail Price Index (RPI) and Consumer Price Index (CPI) for the ten years to 30 June 2019 (rebased to 100) £ 160 Dividend Growth UK Retail Price Index UK Consumer Price Index 150 140 130 120 110 100 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2 The City of London Investment Trust plc Annual Report 2019 Strategic Report: Performance Highlights (continued) NAV per ordinary share Premium 2019 421.2p 2018 429.2p 2019 1.0% 2018 0.7% With debt at market value With debt at market value 2019 416.3p 2018 424.3p 2019 2.2% 2018 1.8% Share price Dividends per share 2019 425.5p 2018 432.0p 2019 18.6p 2018 17.7p Revenue earnings per share Gearing 2019 19.8p 2018 18.7p 2019 7.9% 2018 7.7% Revenue reserve per share Ongoing charge4 2019 15.4p 2018 15.0p 2019 0.39% 2018 0.41% Dividend Yields % 5.0 4.6 4.4 4.1 4.1 4.1 3.9 4.0 3.7 3.6 3.0 2.0 1.0 0.0 City of London AIC UK Equity Income sector FTSE All-Share Index IA UK Equity (Benchmark) Income OEIC sector 2019 2018 1 Net asset value per ordinary share total return with debt at market 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 for the AIC, Janus Henderson, Datastream A glossary of terms is on page 22 and Alternative Performance Measures on pages 64 and 65 3 The City of London Investment Trust plc Annual Report 2019 Strategic Report: Historical Performance Total Return Performance to 30 June 2019 1 year 3 years 5 years 10 years % % % % Net asset value per ordinary share1 2.7 25.0 37.5 226.1 AIC UK Equity Income sector average – net asset value2 -0.8 24.6 33.9 213.3 FTSE All-Share Index 0.6 29.5 35.8 167.1 IA UK Equity Income OEIC sector average -2.6 23.5 29.9 157.9 Share Price Performance Total Return to 30 June 2019 1 year 3 years 5 years 10 years Value of £1,000 with net income reinvested £ £ £ £ The City of London Investment Trust plc3 1,030.1 1,276.3 1,373.2 3,300.9 AIC UK Equity Income sector average4 1,000.5 1,260.2 1,288.3 3,064.7 FTSE All-Share Index 1,005.7 1,295.1 1,358.1 2,671.1 IA UK Equity Income OEIC sector average 974.5 1,234.8 1,298.6 2,579.1 Ten Year Net Asset Value and Dividend Record Net Asset Value per Net Asset Value per Net Dividends per Net Dividends per Ordinary Share Ordinary Share Ordinary Share Ordinary Share Year ended (p)5 (rebased)6 (p) (rebased)6 30 June 2009 205.7 100.0 12.32 100.0 30 June 2010 245.0 119.1 12.66 102.8 30 June 2011 300.0 145.8 13.20 107.1 30 June 2012 292.9 142.4 13.74 111.5 30 June 2013 343.6 167.0 14.30 116.1 30 June 2014 377.5 183.5 14.76 119.8 30 June 2015 386.3 187.8 15.30 124.2 30 June 2016 382.2 185.8 15.90 129.1 30 June 2017 421.3 204.8 16.70 135.6 30 June 2018 429.2 208.7 17.70 143.7 30 June 2019 421.2 204.8 18.60 151.0 Historical Dividend Historical NAV pence per share pence per share 20 500 18 18.60 450 17.70 16 16.70 400 421.3 429.2 421.2 15.90 15.30 377.5 386.3 382.2 14 14.30 14.76 350 13.20 13.74 343.6 12 12.32 12.66 300 300.0 292.9 10 250 245.0 8 200 205.7 6 150 4 100 2 50 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1 Net asset value per ordinary share with income reinvested 2 AIC UK Equity Income sector size weighted average NAV total return (shareholders’ funds) 3 Share price total return using mid-market closing price 4 AIC UK Equity Income sector size weighted average share price total return 5 Net asset value per ordinary share is calculated after deducting all prior charges, including the preference and preferred ordinary stocks, at par 6 Rebased to 100 at 30 June 2009 Sources: Morningstar for the AIC, Janus Henderson, Datastream A glossary of Alternative Performance Measures is on pages 64 and 65 4 The City of London Investment Trust plc Annual Report 2019 Strategic Report: Chairman’s Statement ahead of the FTSE All-Share Index.