City of London Investment Group PLC AGM Trading Update - 1st Qtr Funds under Mgmt (0832M)

TIDMCLIG

RNS Number : 0832M

City of London Investment Group PLC

10 October 2016

10th October 2016

CITY OF LONDON INVESTMENT GROUP PLC

("City of London", "the Company" or "the Group")

AGM Trading Update - 1st Quarter Funds under Management (FuM)

City of London (LSE: CLIG), a leading emerging markets asset management group, announces that as at 30th September 2016, FuM were US$4.3 billion (GBP3.4 billion). This compares with US$4.0 billion (GBP3.0 billion) at the Company's year-end on 30th June 2016. In US dollar terms, this represents an increase of c9% (based on actuals not rounded figures) in-line with the MSCI Emerging Markets Net TR Index (US dollar based), which also rose by c9% over the same period.

Monthly updates of FuM are available on our website www.citlon.co.uk.

BREXIT

It is worth reiterating CLIG's experience with regard to BREXIT:

   --     Virtually all CLIM income is USD based - our fees are sourced from US Institutions 
   --     No adverse effects on FuM since the referendum result 

-- Over 90% of CLIM income on a see through basis is effectively derived from the Emerging Markets

   --     Approximately 40% of Group costs are in GBP 
   --     Only 2.5% of CLIM assets are UCIT'S - very little fall out from BREXIT 

Operations

The Group's income currently accrues at a weighted average rate of approximately 86 basis points of FuM, net of third party commissions. "Fixed" costs for the quarter were cGBP0.9 million per month, and accordingly the current run-rate for operating profit, before profit-share of 30%, is approximately GBP1.4 million per month based upon current FuM and a US$/GBP exchange rate of US$1.3 to GBP1 as at 30th September 2016. With sterling falling significantly against the dollar in recent days, using a rate of 1.24 would result in an operating profit run-rate of cGBP1.5 million per month.

Although the operating profit run-rate is greatly improved from last year (2015: cGBP1.0 million per month), the Group is committed to containing costs in order to maximise shareholder returns.

The Group estimates that the post-tax profit for the first three months of the year will be approximately GBP2.3 million, after an unrealised profit on seed investments of GBP0.1 million (2015: GBP1.2 million, after an unrealised loss on seed investments of GBP0.2 million).

Having provided shareholders with both a template and assumptions via which they can determine their own estimate of CLIG's profitability, shareholders can accordingly adjust their estimates based on subsequent market movements.

Dividends

The final dividend of 16 pence per share, subject to approval at the AGM on 17th October 2016, will be paid on 31st October 2016, bringing the total dividend for the financial year 2015-16 to 24 pence.

Employee Incentive Plan (EIP)

At the forthcoming AGM shareholders will be asked to approve a new Employee Incentive Plan (EIP), the details of which can be found in the June 2016 financial statements. Both clients and shareholders have always considered it important that staff have a material level of share ownership in the business. With the Group's CEO, Barry Olliff's, retirement at the end of 2019, staff ownership is likely to be substantially reduced. The proposed new scheme is intended to broaden the employee share ownership base and invites all staff to sacrifice a part of their bonus in exchange for shares which the company will match. It is proposed that until Barry Olliff's retirement the limit of the staff profit-share pool be increased from 30% of pre-bonus, pre-tax profits to a potential maximum of 35% to cover the cost of the matching shares, subject to at least maintaining the current dividend. Thereafter, the plan will fall within the 30% limit of the profit-share pool. It should be noted that participation in the EIP is voluntary; as such the increase in the profit-share pool is dependent on the level of employee participation.

The Group firmly believes that its revised remuneration policy strikes the right balance for all stakeholders and ultimately that is in the best interest of shareholders.

For further information please visit www.citlon.co.uk or contact:

Barry Olliff (CEO)

City of London Investment Group PLC

Tel: [phone]

Martin Green

Zeus Capital Limited

Financial Adviser & Broker

Tel: [phone]

This information is provided by RNS

The company news service from the London Stock Exchange

END

TSTLIFSRISLILIR

(END) Dow Jones Newswires

October 10, 2016 02:46 ET (06:46 GMT)