City Of London Investment Share Discussion Threads

[drsmessguide] 30/8/2014 08:46

Masurenguy

Great post, forgive me if I continue to believe a takeover likely in the next 2-3 years.
Either way, I too am in for the long haul with 10% yield on my original investment and a 30% capital gain.
As you say c7m pre tax for this year, commission run off of £3m in next 7 years, front loaded, that is about 43% of ptp.
Not sure either statement over eggs the pudding!

[masurenguy] 30/8/2014 08:37

I see that the silly speculation over eps and dividends has sprung up once again liberally seasoned by totally unsubstantiated takeover rumours.

This share has been one of my core holdings over the past few years with a terrific yield that by itself has generated a return of 96p, or circa 35%, on my investment here during this period. I'm also currently sitting on a capital gain of circa 24% as at yesterdays closing price. Long may this continue and I look forward to further increases in the share price and the maintenance of the existing dividend over the next couple of years.

This remains a great investment in my opinion and any new shareholder can still obtain a dividend of around 7% on the shares at the current price with plenty of confidence that this will be maintained for the foreseeable future. There are not many other fully listed shares can provide that prospect.

However people should not be mislead by some of the wild and unfounded speculation posted here by one or two others. Lets consider some actual facts as opposed to their fiction !

1. FUM at the end of July was circa $4bn which means that it has recovered to where it was some 18 months ago but is still around 33% below its post 2007 crash peak of $6bn just over 3 years ago.

2. The annual commission run-off from circa £3m to zero over the next 7 years is worth roughly £500,000 per annum in cost savings or circa 2p a share in value terms. It will add around 7% to the bottom line next year.

3. There is no basis whatsoever to believe that there is any liklehood of a dividend increase over the next couple of years. The current dividend, which has been maintained at 24p over the past 3 years and which will again be paid this year, represents more than 100% of post-tax profits and continues to be subsidised out of reserves by the company by around 14% of the total annual cost. In my view eps would need to increase by at least 50%, to 30p, before any further increase would be considered and while it should continue to improve year-on-year that level of increase is very unlikely to be achieved over the next 2 years.

Here is an extract from the trading update issued about 6 weeks ago relating to projected profits and eps in the year that ended in June 2014 which verifies some of the figures that I have quoted above.

"For the 13 months to 30 June 2014, City of London expects that pre-tax profits will be approximately GBP7.2 million (2013: GBP8.9 million), and that profits after an anticipated tax charge of GBP2.0 million (28% of pre-tax profits) will be approximately GBP5.2 million (2013: profits of GBP6.3 million after a tax charge of GBP2.6 million, representing 29% of pre-tax profit). Basic and fully diluted earnings per share are expected to be 20.7p and 20.6p respectively (2013: 24.9p and 24.6p). With revenues mainly in US$ whilst a substantial proportion of our costs are in GBP, the strengthening of the currency over the period resulted in a headwind of some GBP500,000.

As a result of both falls in Emerging Markets, and client redemptions during the first half of the financial period, earnings cover will be reduced for the 13 months to 30 June 2014 but given the Group's strong cash position and optimism with regard to the future, the Board is recommending a final dividend of 16p per share (2013: 16p). This would bring the total for the 13 months to 30 June 2014 to 24p (2013: 24p), making cover 0.86 times earnings per share (2013: 1.04 times). As previously announced your board is reviewing the historic dividend policy of 1.5 times earnings cover and has in recent years applied it flexibly."

This is a great investment with a terrific yield but please review it on realistic terms without the wild speculation !

[drsmessguide] 29/8/2014 17:51

I do not think that is such an unlikely scenario, on current performance with falling finders commision they are effectivelyearning 30p per share with business improving further. I would be surprised if they are not taken out given Barrys obvious near term retirement plans and large holding

[extrader] 29/8/2014 17:28

Hi monty,

Whatever. You deal with conjecture, I'm happy to settle for the facts.....and of course, if the facts change, I'll change my opinion : what would you do ?

Enjoy your weekend

ATB

[montyhedge] 29/8/2014 17:25

At 500p m/c £134m, I think everyone would be happy, not to rich for the buyer either.

[montyhedge] 29/8/2014 17:21

Don't be draft, if someone made a bid do you think he would say you can have some at 350p, oh have some more at 400p, oh I take 450p for another 500,000.
Another fund company would come in and say ok, 500p for the lot.

[extrader] 29/8/2014 17:16

Hi monty,

Offer would be have to be around 500p to entice Barry to sell.

From the last interims :

In line with his previous commitment Barry Olliff has notified the company that subject to regulatory requirements he would intend to sell 500,000 CLIG shares at 350p followed by 500,000 shares at 400p and then 500,000 at 450p. Following these sales he will continue to be interested in 1,630,000 shares.

Hope this helps.

ATB

[montyhedge] 29/8/2014 17:13

Nice 16p dividend on its way soon.

[masurenguy] 29/8/2014 17:00

A very positive close on very modest trading volume.

[montyhedge] 29/8/2014 17:00

I still say takeover, CLIG are they for the taking. Offer would be have to be around 500p to entice Barry to sell.

[pukeho] 28/8/2014 08:42

Plus you have the recent fall in the pound against the dollar,
which will also have a positive impact on the bottom line. Of
course not withstanding what might happen to the exchange rate for
the rest of the financial year!

[envirovision] 27/8/2014 13:56

Interesting take, thanks, plenty of scope for dividend rises on
top
of the present eye popping divi. If we set aside increasing income
from fum and performance.

The above adds up to near 10 pence per share on its own over
the
period.

[drsmessguide] 26/8/2014 18:42

A reminder of the tailwind CLIG has over the next 6 years from an
earlier post. The following is the estimated 'finders commission'
figure for each year. In the year to 2013 it was over £4m,
2014 was actually just over £3m. As this commission fee
expense falls, £0.5m feeds to the bottom line per annum for
six years, £3m from year end 2013. Thats close to 50% of
current profit. EMs seem to be on the rise after a long slump and
Funds under Management are also starting to rise. Combine that with
an 8% yield and a large chunk of cash and it is a compelling
story.

2014-2015 - £2.5m
2015-2016 - £2.0m
2016-2017 - £1.7m
2017-2018 - £1.4m
2018-2019 - £0.9m
2019-2020 - £0.2m
2020-2021 - £0.0m

[stpalm] 20/8/2014 02:37

Sounds about right silky they're 10 a penny here and no its not a placing.

[tom111] 16/8/2014 12:53

Difficult call to make buywell.In view in whats happening in UKRAINE markets could be a bit shaky Monday,took a profit here and see what happens

[buywell2] 16/8/2014 09:53

A contrary viewpoint based upon the chart

[tom111] 11/8/2014 09:16

Thought the share price would be up today on Asian recovery

[montyhedge] 04/8/2014 20:20

Silky white
Who rattled your cage, lol.

[silkywhite] 03/8/2014 08:24

There is nothing of substance in montyhedge's post, never any financial detail. If you see his posts on other threads they are usually one-liners designed to get a rise out of everyone else. He's just a troll and gets off on it.

[nobbyx] 30/7/2014 18:41

Good for you Monty for not selling even at 500p. Loyalty is such a rare thing these days. I for one, a many years long-term holder, will probably sell at that price.

I was holding in late 2010 when the share price reached about 460p in the wake of the transfer to the main market. Wish I had sold then. (Have averaged down since, present av 265p).

Best of luck with your bold stance.

[pukeho] 30/7/2014 18:01

Masurenguy, thank you for your posts. I must admit that I am new to CLIG. But from I have read, from different sources, it seems to be a well run company, with no debts! Plus a good dividend as well! Consequently I have bought a number of shares in CLIG (partly responsible for the share price increase!).

[masurenguy] 30/7/2014 15:12

Au contraire - I deal in facts while you just spout unadulterated fiction !

[montyhedge] 30/7/2014 15:11

Lol, you should listen to other points of view, we are singing from the same music sheet, but your out of tune.

[masurenguy] 30/7/2014 15:06

montyhedge should be fined for littering since he consistently drops his trash on this board !

[montyhedge] 30/7/2014 15:02

Nobby
So you don't think Barry may have just taken his eye of the ball just a little bit.
I'm glad his CFO and so do other investors, going by the shareprice.