18th Sep 2014 07:52
LONDON (Alliance News) - City of London Investment Trust PLC Thursday reported a net asset value total return of 14.7% for its last financial year, but was performance was held back by the strength of sterling against the dollar as a significant minority percentage of the dividends it receives are declared in the latter.
In a statement, the trust said its performance in the year ended June 30 was behind the average for the AIC UK Equity Income sector, but ahead of the FTSE All-Share Index and the average for the UK Equity Income OEIC sector. Gearing, or borrowing to boost returns, contributed 0.66% to the trust's outperformance against the FTSE All-Share.
| 30 June 2014 | 30 June 2013 |
Dividends per ordinary share ('DPS') | +3.2% | +4.1% |
Revenue return per ordinary share ('EPS') | +0.4% | +8.7% |
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Total Returns: |
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Net Asset Value per ordinary share ('NAV') Ordinary Share Price | +14.7% +15.1% | +23.8% +21.5% |
AIC UK Equity Income sector average (benchmark) | +15.7% | +26.0% |
FTSE All-Share Index | +13.1% | +17.9% |
UK Equity Income OEIC sector average | +14.3% | +21.4% |
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Source: City of London Investment Trust Final Results, citing Morningstar for the AIC, Henderson, Datastream.
Chairman Philip Remnant said the 22% of the dividends the trust receives, from holdings in UK companies such as HSBC Holdings PLC and BP PLC, are declared in dollars, meaning that the dividends actually received from such companies did not reflect the underlying underlying growth.
"Despite this, City of London increased its own dividend by 3.2% over the previous year, ahead of the rate of inflation, and after accounting for the final dividend still added GBP729,000 to revenue reserves to underpin future dividends. This is the 48th consecutive year of unbroken dividend growth, a record unrivalled by any other investment trust," Remnant said in a statement.
The chairman said the group's portfolio is predominantly invested in large international companies "well placed" to benefit from global growth.
"Share prices tend to discount the future and an element of derating is occurring during 2014 after the strong rise in share prices during 2013 and 2012, and ahead of a likely rise in interest rates. Given low UK inflation and the weakness in wage increases, any upward move in interest rates is likely to be gradual," Remnant said.
"As a result, equities are set to remain attractive on a dividend yield and growth basis relative to fixed interest and bank deposits. It is an environment which should play well to City of London's strengths," he added.
Remant also noted that the trust has opted to retain the AIC UK Equity Income sector as its official benchmark, but also will present performance statistics against the broader UK Equity Income OEIC sector because of the more level playing field created by new rules governing the investment sector in the UK. The trust also compares performance against the FTSE All-Share Index.
City of London Investment Trust shares were Thursday quoted 0.5% at 377.70 pence.
By Samuel Agini; [email protected]; @samuelagini
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