City Of London Investment Share Discussion Threads

[tmfmayn] 07/3/2016 08:35

FUM remained at $3.5bn at the end of February according to hxxp://citlon.co.uk/shareholders/announcements.php

[my retirement fund] 04/3/2016 18:28

No prob both offer excellent yield with scope for plenty capital appreciation.Good to see a day of reasonable volume here in CLIG for once.

[robsy2] 04/3/2016 17:03

Thanks for the heads up. I like CNKS, has a good record,HSD and RECI I don't know . I'll have a look.
R2

[my retirement fund] 04/3/2016 12:58

HSD and RECI also worth look

[garycook] 04/3/2016 11:52

Think you will be rewarded for your investment Robsy !!! Good choice.Also have a look at CNKS.

[robsy2] 04/3/2016 08:45

I'm in. I like the look of this. The accounts read well, nice tone. They come across as serious people who know what they are doing.
They perform well and their asset class will not be in the doldrums forever. In fact I see a good turnaround coming. Plenty of cash, excellent cash generation, good cost control and the 8% divi is excellent and almost covered. A generally stronger USD will help the GBP reported results.Any recovery in the AUM through revaluation / new mandates should give us a good boost.
R2

[masurenguy] 16/2/2016 08:13

Latest update on H1 results from Hardman

City of London Investment Group (CLIG.L)- First half results

With most of the main figures having been announced in last month’s trading statement, the first half results from City of London contained no surprises. With weak markets having adversely affected funds under management, revenues fell from £12.2m to £11.8m. Earnings for the period were also reduced by a loss on seed investments of £135,000 and came in at £2.6m. As usual, the cash conversion was excellent at 93% and City of London finished the half with a cash balance of £8.4m. In its outlook the company notes some contrarian behaviour from investors, suggesting the new business prospects remain good.

Market Data

Price (p): 300.0
Mkt Cap (£m): 80.7
Market: Main LSE
Sector: Financial Services

Funds under management: As previously stated, inflows offset some of the market falls with FUM in the first half down 11% compared to 17% for the MSCI Emerging Markets Index. The market turmoil in January has had a further effect, with FUM at $3.5bn as of 31 January.

Dividend: As expected an interim dividend of 8p was announced and we expect the full year to be unchanged. Although the dividend seems likely to be uncovered in 2016, the shortfall can be easily covered from the company’s cash balances.

Valuation: The prospective P/E of 13.5 times is now at a slight premium to the peer group. The yield of 8.4% is very attractive and should at the very least provide support for the shares in the current volatile markets.

Risks: To date, City of London has not experienced the sort of outflows that some other emerging market fund managers have, aided by its good performance and strong client servicing. Further EM volatility may increase the risk of such outflows however.

Investment summary: City of London has continued to show robust performance in challenging market conditions. The valuation remains reasonable. Without a market recovery the dividend may
be uncovered in 2016, but with over £8m of cash the company can easily cover the gap that current market levels imply.

[tmfmayn] 15/2/2016 13:11

I noticed EPS today was given as 10.6p although the number was 10.8p in the January presentation:
hxxp://www.citlon.co.uk/shareholders/share_reports/IP37.pdf

It appears fee income has reduced slightly in the actual half-year figures, which has trimmed EPS.

I also note the FUM/FX table in today's results has reverted back to US operating costs of $7m a year. The January presentation had stated $8m a year.

Not sure what to make of the ESOP comments. The January presentation said the proposal would be brought before shareholders. Today we are told the firm intends to put in place a scheme over "the next few months". Will we get to approve the new scheme at an EGM? The AGM is scheduled for October.

[vfast] 15/2/2016 09:23

In the short term maintaining the dividend is good and EM will bottom out and turn at some stage and CLIG will take full advantage.

[aleman] 15/2/2016 09:20

Not actually looking so bad here. EMs fell at the end of last year but have broadly stabilised since at what appears to be quite good value prices. THey look better value than more evolved markets and I would hope they could now rise this year, given possible signs that the likes of Brasil and China may be showing early signs of turning up again.



Whether they do or not, CLIG's balance sheet still looks strong enough to maintain the dividend for the time being.

[cockerhoop] 15/2/2016 09:17

With 4 & a half months of the year remaining they need a dramatic increase in FUM or a $/£ tailwind to get anywhere near forecasts for 2016.

Further flexibility of the required dividend cover is likely.

[masurenguy] 15/2/2016 08:54

A credible set of interims given the substantial falls in Emerging Markets over the past few months particularly when compared with the benchmark MSCI index

RNS Number : 9927O
15th February 2016

HALF YEAR RESULTS TO 31ST DECEMBER 2015

City of London announces half year results for the six months to 31st December 2015.

-- Funds under Management ("FuM") of US$3.8bn (£2.6bn) at 31st December 2015. This compares with US$4.2bn (£2.7bn) at the beginning of this financial year on 1st July 2015 and US$4.0bn (£2.6bn) at 31st December 2014

-- FuM at 31st January 2016 of US$3.5bn (£2.5bn)

-- Revenues representing the Group's management charges on FuM, were £11.8m (2014: £12.2m)

Profit before tax of £3.6mn (2014: £4.3mn)

-- Maintained interim dividend of 8p per share payable on 11th March 2016 to shareholders on the register on 26th February 2016

-- Cash and cash equivalents at the period end of £8.4mn (2014: £8.1mn)

With markets falling across both the developed and emerging economies we have at least been fortunate to record, if only on a relative basis, a strong performance. As a consequence we have been favoured by contrarian investors awarding us new mandates including asset allocations for our diversification products. At end December 2015 total Funds under Management (FuM) were US$3.8 bn (£2.6bn), down from US$4.2bn (£2.7bn) at the 30th June 2015 year end. The new mandates noted above combined with good relative performance reduced the actual decline in FuM to 11% against a fall in the MSCI Emerging Markets index of 17%.

Results - unaudited
Unaudited profit before taxation for the period was £3.6mn which compares to £4.3mn for the six months to end December 2014. In a falling market these results were exacerbated by losses incurred on our seed investments. No let up could be afforded in our ongoing programme of cost controls. Gross revenue for the period fell back to £11.8mn (2014: £12.2mn), whilst commissions payable to our ex-third party marketing consultant continued to reduce amounting to £0.8mn (2014: £1.2mn). Custody fees relating to the safekeeping and administration of the assets of our commingled funds were unchanged at £0.4m (2014: £0.4m).

Administrative expenses were £6.9mn (2014: £6.4mn). The largest components of which were staff costs (essentially salaries, benefits and related employment taxes) of £3.3mn (2014: £3.0mn) and profit-share, including related employment taxes, of £1.8mn (2014: £1.9mn).

Basic earnings per share, after a 27% tax charge of £1.0mn (2014: £1.2m also representing 27% of profit before tax), were 10.6p (2014: 12.7p). Diluted earnings per share were 10.4p (2014: 12.5p).

Dividends

As I have previously noted, it is recognised by your Board that for many of our shareholders a strong and consistent dividend is particularly important. For this reason we have endeavoured over the recent more difficult years to at least maintain the dividend, whilst always ensuring that our finances have remained sound. In view of your Company's strong balance sheet and cash reserves (cash and cash equivalents at end December 2015 were £8.4m up from £8.1m at end December 2014), your Board has agreed to maintain the 8p interim dividend payable on 11th March 2016 to shareholders on the register on 26th February 2016. Whilst it remains your Board's policy that over a rolling five year period the intention is to achieve an average dividend cover of circa 1.2 times, in the light of current trading some flexibility in this policy may be advisable. No decision on the final dividend will be taken until both the results for the full year are known and the outlook for 2017 is much clearer.

Outlook

Notwithstanding our demonstrated success in attracting new mandates and the early success of our diversification strategies, it remains the case that our fortunes are closely tied to those of the emerging markets. The benchmark index for our core emerging markets product (MSCI Emerging Markets index) has, at the time of writing, given up over 10 years of gains. Whether this is now a buy opportunity is not for me to opine - I leave that up to individual investors - however if markets do turn, and they are often in the habit of overshooting, then I am confident that our well established investment process will ensure that we provide icing on any positive cake.

[masurenguy] 11/2/2016 07:56

Ashmore H1 results show a decline in FUM of 16%, a decline in revenues of 29%, a reduction in operating costs of 16%, a drop in eps of 43% but a maintained dividend for the period of 4.55p. If they maintain their H2 dividend of 12.1p then the annual yield will be 7.9% at yesterdays closing price. Despite this significant fall in financial performance they remain bullish about forward prospects.

Market outlook
In December, the US Federal Reserve raised its target rate for the first time in nine years. Importantly, this occurred nearly three years after it had signalled an end to its quantitative easing (QE) and as a consequence markets had plenty of time to adapt. Emerging Markets pricing had adjusted accordingly to leave substantial value across the asset classes, and particularly when compared with the QE-inflated price levels evident in many Developed Markets. Index yields of approximately 7% are currently available on Emerging Markets government bonds, which are comparable to the yields prevailing at the end of the previous Fed rate cycle in 2006 when the target rate was 5.25%. The potential returns from Emerging Markets fixed income are attractive, both in absolute terms and relative to the alternatives in Developed Markets.

Higher US interest rates will inevitably cause pressure in some areas, particularly where countries or companies have too much debt or inappropriate funding structures. Yet these situations are no longer as common as they once were. The Emerging Markets have faced a number of significant headwinds over the past few years, such as substantial commodity price declines, capital outflows leading to higher funding costs, FX depreciation against the US dollar, and elections in many of the major economies. However, there have been only two sovereign defaults (Argentina and Ukraine) for reasons largely unrelated to those headwinds. In corporate credit, these headwinds have thus far not resulted in a significant increase in defaults; the high-yield corporate default rate of 3.1% at the end of 2015 is below the long-run average of 3.9%, and is also below the equivalent figure for the US high yield market of 3.4%.

The economic fundamentals in Emerging Markets are in robust shape: average GDP growth is expected by the IMF to accelerate in 2016, from 4.0% to 4.3%, twice the rate expected for Developed Markets; inflation is typically at a reasonable level, between 4% and 5% on average; and central banks have built substantial FX reserves, equivalent to an estimated two-thirds of the world total of US$11 trillion, to provide policy flexibility as currencies fluctuate. While commodity price weakness will remain a challenge for some countries and companies, lower prices are a benefit to two-thirds of the major Emerging Market economies. Improving current accounts across the majority of the large Emerging Market countries follow a period of classical and significant macro adjustments.

[aleman] 10/2/2016 18:28

I see Brasil smashed unemployment forecasts again. Both the last two months beat consensus forecasts by 0.5%.



Wages start to rise again.



Consumer credit accelerated in November and December.



Retail sales turn positive again.



Brasilian stockmarket is up about 6% this year.

And just for good measure, a reminder of China vehicle sales:



Funny global slowdown. Yellen seems to be a few months behind events.

[cockerhoop] 04/2/2016 22:36

FUM at the end of Jan a whisker over £3.5bn, perhaps £3.55bn.

[cockerhoop] 13/1/2016 09:22

Good work Maynard regards changes in the table - I'd missed that.

I agree that by the nature of CLIG's business that forward guidance of more than say 3 months is almost worthless as the major drivers: being FUM in emerging markets and £/$ exchange rates are so volatile.

[tmfmayn] 13/1/2016 09:05

Presentation to accompany yesterday's statement:
hxxp://www.citlon.co.uk/shareholders/share_reports/IP37.pdf

Balance sheet now shows cash of £8m.

Also, the FUM/FX table has been (adversely) tweaked, with greater running costs and an extra percentage point tax charge.

So FUM of $4bn at £1:$1.45 now gives earnings of £6.9m. The table supplied at the July year-end results had given a £7.2m figure for the same inputs.

At least the forward guidance for 2016/2017 is showing a '£1.3m transfer to Reserves' -- i.e. the dividend ought to be covered by an extra £1.3m.

Although it is worth recalling from this time last year that CLIG's forward guidance predicted a '£2.9m transfer to Reserves' for 2015/16... only for yesterday's update to revise that down (again) to a '£0.1m transfer FROM reserves'. (i.e the dividend will cost £0.1m more than earnings).

[masurenguy] 13/1/2016 00:36

Hardman are now projecting eps of 22.6p for the current year ending June 2016 and 28.5p for the year ending June 2017. That puts CLIG on a forward PER of 11.6. They also note that with circa £10m in cash they can easily cover the small gap between projected eps and the dividend of 24p out of reserves in the current year, which also provides a yield of 7.2% at todays 332p close.

[topvest] 12/1/2016 19:48

Yes, tough times but at least they seem to be out- performing. The next six months are probably quite tricky for emerging markets. Read an interesting book this week on the 17.6 year stock market cycle which says we are at the back end of a bear market that started in 2000. Makes a lot of sense to me. Think markets will be range bound for another couple of years before we enter a new bull market. City of London are a quality outfit though so happy to hold and await better times.

[cockerhoop] 12/1/2016 19:29

I think they'll make every effort to maintain the dividend but currently it doesn't look covered for this year according to CLIG's new guidance which has been revised down again.

Since the YE the EM MSCI is down almost 10% so FUM likely to be around $3.6bn currently. The exchange rate though has moved 2% in favour of CLIG on conversion to £.

Improved new business for 2016/2017.

[vfast] 12/1/2016 19:16

It looks like a strong performance bearing in mind EM are struggling.

In the short term I still hope they will pay the 24p over the year which will be a 7% yield for me.

In the medium term (2 years)it would be nice to see EM starting to recover.

[masurenguy] 12/1/2016 07:50

FUM holding up fairly well in relation to the 17% fall in the MSCI benchmark index with new investment funds also anticipated over the course of the year. The projection below is based upon a maintained dividend level although this of course will ultimately be subject to a BoD decision later in the year. However, based upon the projections below, the current eps for this year could be in the region of circa 21p/22p, which would still be above the final results for the y/e June 2014 when the current dividend of 24p was maintained via subsidy from cash reserves.

RNS Number : 5184L
12 January 2016

CITY OF LONDON INVESTMENT GROUP PLC - TRADING UPDATE

City of London (LSE: CLIG) announces that total funds under management (FuM) at the Group's half year end on 31 December 2015 were US$3.8 billion (£2.6 billion). This compares with US$4.2 billion (£2.7 billion) at the Company's year-end on 30 June 2015.

The fall in FuM of 11% compares with a fall of 17% in the MSCI Emerging Markets TR Index (NDUEEGF). Despite the fall in the index, the Group is pleased to report continued net inflows and outperformance over the period. With "wins" of just under $200m expected to fund over the next 3-6 months, Barry Olliff, CEO states "we consider that we are in a good place within both our peer group and also from a client stability perspective. Therefore, we are increasing the net new money assumption for our EM CEF strategy to $500m for the next financial year. In addition, recent mandates are spread across GTAA, Frontier also EM and three specialist China mandates. This level of asset allocation diversity is not something that we have experienced in the past."

As of the end of December the monthly "run-rate" for operating profit, before profit-share of c.30%, is approximately £0.9m per month based upon current FuM. The Group estimates the unaudited profit before taxation for the six months ended 31 December 2015 to be approximately £3.6m, which compares to £4.3m for the equivalent period to 31 December 2014, as restated for the effects of IFRS10.

The Company is currently in a close period which will end with the publication of results for the six months ended 31 December 2015 on 15 February 2016.

Template

Please see the attached graph which is based on the following assumptions and includes the estimated quarterly cost of a maintained dividend:



Key Assumptions: (June 2015 comparatives in Italics)
Starting point Current FuM (end December 2015)
- Net new money for the remainder of this financial year (straight-lined to June 2016):

- emerging market CEF strategy $150m (US$250m over full year)

- non-emerging market CEF strategies $500m (US$250m over the full year)

· Net new money in 2016/2017 (straight-lined to June 2017):

- emerging market CEF strategy $500m

- non-emerging market CEF strategies $250m

· Operating margin adjusted monthly for change in product mix and commission run-off

- Market Growth: 0%

· Overheads for 2015/16: +8% compared to 014/15

· Overheads for 2016/17: +10% compared to 2014/15

· Corporation tax based on an estimated average rate of 27% (25%)

· Exchange rate assumed to be £1/$1.47 for entire period (£1/US$1.55)

· Number of CLIG Shares in issue (26.8m) less those held by the ESOP Trust (2.0m) as at 31 December (27.0 m CLIG shares in issue less 2.0m ESOP Trust holding).

For further information, please visit or contact:

Barry Olliff, CEO
City of London Investment Group PLC

[cockerhoop] 06/1/2016 08:56

MSCI Emerging Markets Index down to 761 - (at least) 5 year lows.

£/$ exchange rate providing a EPS tailwind though.

[masurenguy] 31/12/2015 14:32

Not especially unusual - a small buy or sell can have quite a disproportionate impact on the CLIG shareprice. This is due to the fact that it is quite an illiquid stock - the average daily trading volume during December was only circa 15,000.

[asmodeus] 31/12/2015 13:34

Only 616 shares traded - and share price up more than 6% !(@13.35)