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TIDMCLIG
RNS Number : 5197F
City of London Investment Group PLC
18 June 2012
18 June 2012
CITY OF LONDON INVESTMENT GROUP PLC
("City of London" or "the Group")
TRADING UPDATE
for the Year to 31 May 2012
City of London (LSE: CLIG), a leading emerging markets asset management group, provides a trading update for its financial year ended 31 May 2012. The numbers that follow are all unaudited.
Funds under management were US$4.48 billion (GBP2.91 billion) at 31 May 2012 (2011: US$5.82 billion or GBP3.54 billion), representing a 23% decrease in US$ terms and an 18% decrease in sterling terms. Over the same period (31 May 2011 to 31 May 2012) the MSCI Emerging Markets Index (MXEF) decreased by 20% in US$ terms. The majority of this decline occurred in the last quarter of the financial year (29 February to 31 May 2012), during which period MXEF decreased by 15%.
For the year to 31 May 2012, City of London expects that pre-tax profits will be approximately GBP11.5 million (2011: GBP13.1 million), and that profits after an anticipated tax charge of GBP3.0 million (26% of pre-tax profits) will be approximately GBP8.5 million (2011: profits of GBP8.8 million after a tax charge of GBP4.3 million, representing 33% of pre-tax profit). Basic and fully diluted earnings per share are expected to be 33.8p and 32.8p respectively (2011: 35.1p and 34.0p).
The Group's dividend policy - to pay dividends which are covered approximately 1.5 times by earnings per share - remains unchanged. The Board is recommending a final dividend of 16p per share (2011: 16p), which would bring the total for the year to 24p (2011: 24p), covered 1.41 times by earnings per share (2011: 1.46 times).
From a low of 831 in October, MXEF recovered to a ten month high of 1,079 on 2 March 2012, and in general Emerging Markets during that period performed well and exhibited relatively low volatility. Since then volatility has increased and markets have fallen back, such that MXEF is now at or around the calendar year end level of 917. This volatility has put risk aversion back into the spotlight, but our clients have continued to take a long term view, and net withdrawals over the financial year have totalled less than $200 million.
Investment performance has benefitted from an increased focus on corporate governance issues, which has led to a significant number of tenders, buy-backs, and other discount reducing transactions in some of the closed end funds in which we are invested. The momentum of corporate activity in this respect offers encouraging signs that discounts will continue to contract from the very wide levels which have been a feature in recent months.
Diversification efforts continue to prioritise the Developed closed end fund strategy, with the third anniversary of the launch of this product in September 2012 representing a significant milestone with respect to marketing opportunities, particularly within the context of the consultant universe. The product continues to exhibit consistent outperformance. The Frontier Emerging Markets Fund has also consistently outperformed its benchmark since its inception in 2005, and is now beginning to attract the attention of investment consultants and institutional prospects.
City of London Investment Management Company Limited (CLIM) was recently notified by the China Securities Regulatory Commission of approval in principle for a Qualified Foreign Institutional Investor account allocation of $100 million. CLIM's China A Share Fund has been invested in Chinese A Shares since 2003 and has generated first quartile performance over all annualised periods since inception, and we believe this Fund's track record will allow for new marketing opportunities.
Having announced his intention to sell shares at given price levels, Barry Olliff has since the start of 2010 sold 500,000 shares at 310p, 500,000 at 350p and 500,000 at 400p. In December 2010 he gifted 500,000 shares to The Newlin Foundation, which subsequently sold 27,793 of those shares. It is now intended that a further 472,207 shares will be made available for sale at 450p, and then 500,000 at 500p, with these sales being satisfied out of the combined holdings of Mr Olliff and the Newlin Foundation.
City of London Investment Group expects to announce final full year results for the year to 31 May 2012 on 3 September 2012. The Company's Annual General Meeting date and final dividend payment dates are expected to be 1 October 2012 and 19 October 2012 respectively.
Summary and unaudited trading update
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Year to 31 May
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2012 2011
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Funds under Management (at period end) US$4.5bn US$5.8bn
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Turnover (plus investment income) GBP34.6m GBP36.7m
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Administrative expenses, commission payable, GBP23.1m GBP23.2m
and profit-share
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Listing costs - GBP0.4m
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Profit before tax GBP11.5m GBP13.1m
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Profit after tax GBP8.5m GBP8.8m
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Profit per share, basic 33.8p 35.1p
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Profit per share, diluted 32.8p 34.0p
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Financials - consolidated income statement
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Year to 31 May
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GBP'000 2012 2011
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Fee income 34,142 36,494
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Interest & other 428 201
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Finder's commission (5,195) (5,785)
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Custody & Administration (1,433) (1,158)
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Total net income 27,942 29,752
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Costs:
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Human resources 6,763 5,965
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Premises 628 600
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Communications & IT 1,619 1,699
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Business development 909 673
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General 1,135 1,159
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Total costs 11,054 10,096
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Operating profit 16,888 19,656
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Profit-share 5,424 6,069
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Listing costs - 438
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Pre-tax profit 11,464 13,149
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Tax (2,964) (4,380)
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Post-tax profit 8,500 8,769
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Dividends (prior year final plus current
year interim) (6,052) (5,787)
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Retained 2,448 2,982
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For further information, please visit www.citlon.co.uk or contact:
Doug Allison (Finance Director) Simon Hudson / Kelsey Traynor
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City of London Investment Group Tavistock Communications
PLC
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Tel: +44 (0)20 7860 8347 Tel: +44 (0)20 7920 3150
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Claes Spang Martin Green
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Singer Capital Markets Limited Canaccord Genuity Limited
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Financial Adviser & Joint Broker Joint Broker
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Tel: +44 (0)20 3205 7500 Tel: +44 (0)20 7523 8000
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This announcement contains forward-looking statements with respect to the financial condition, results and business of City of London Investment Group PLC. By their nature, forward looking statements involve risk and uncertainty and there may be subsequent variations to estimates. City of London Investment Group PLC's actual future results may differ materially from the results expressed or implied in these forward-looking statements. Nothing in this announcement should be construed as or is intended to be a solicitation for or an offer to provide investment advisory services.
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This information is provided by RNS
The company news service from the London Stock Exchange
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