City Of London Investment Share Discussion Threads

[vfast] 19/7/2016 15:08

Masurenguy, much appreciated.

[chairman20] 19/7/2016 13:19

thanks for the postings guys

[masurenguy] 19/7/2016 11:52

City of London Investment Group (CLIG.L)

Solid full year results in difficult markets
City of London issued a trading statement for the 2016 financial year. The figures were a little better than expected, some of which was due to exchange rate effects. Funds under management finished the year at $4.0bn, which was a 5% decrease in dollar terms from a year ago but an 11% increase in sterling terms to £3.0bn. Pre-tax profits are expected to be £8.0m, with basic eps of 23.6 (0.1p higher than our estimate). As expected a final dividend of 16p was announced, bringing the total for the year to an unchanged 24p.

Market Data

Price (p): 315.0
Mkt Cap (£m): 85.4

Sector: Financial Services

New Business: In dollar terms the MSCI Emerging Markets Index fell 12% over the year, compared to 5% in FUM. We believe that the larger part of this is new business flows, though the EM CEF strategy again outperformed. There is no news on prospective flows.

Operations

There is no new news on operations, though we note that City of London has continued to maintain its excellent cost control. The company notes that with their focus on Emerging Markets and with predominantly US clients the operational impact of Brexit is very slight.

Valuation

The prospective P/E of 13.3 times is in line with the peer group. The yield of 7.6% is very attractive and should at the very least provide support for the shares in the current volatile markets. At current market levels we’d expect dividend cover to be restored in 2017.

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. At current FUM and exchange rates, dividend cover will be restored in FY2017 adding to investors comfort.

Analyst: Dr Brian Moretta
Hardman & Co
11/12 Tokenhouse Yard
London
EC2R 7AS
United Kingdom
Tel: [phone]
Fax: [phone]

www.hardmanandco.com

[my retirement fund] 18/7/2016 11:34

Indeed, conformation of a must have high income share with added growth potential, if ever there was one!

[s0lis] 18/7/2016 11:00

Much more interested in their graph showing a 30% increase in post tax profit for this current year. Given their dividend policy of 1.2 x cover over the 5 year average, we should see a dividend uplift on the horizon.

[montyhedge] 18/7/2016 07:39

16p dividend, that's all I'm interested in.

[masurenguy] 18/7/2016 07:24

Positive impact of fall in sterling exchange rate more than offsets 5% decline in FUM. Investment performance beats benchmark index. Recommendation. Eps down by 11% but strong cash position and forward optimism results in the BoD recommending the final dividend of 16p to be maintained.

RNS Number : 3911E
City of London Investment Group PLC
18 July 2016

This announcement contains inside information

TRADING UPDATE for the year to 30 June 2016

City of London (LSE: CLIG), a leading emerging markets asset management group, provides a trading update for its financial year ended 30 June 2016. The numbers that follow are all unaudited.

Funds under management were US$4.0 billion (£3.0 billion) at 30 June 2016 (2015: US$4.2 billion or £2.7 billion), representing a 5% decrease in US$ terms and an 11% increase in GBP terms as a result of the exchange rate moving from 1.57 to 1.33 over the period. Over the same period, the MSCI Emerging Markets TR Net Index fell by 12% in US$ terms, resulting in a relative change in funds under management of +7% versus the benchmark, a product of both positive investment performance and new and existing client inflows.

Investment performance in the emerging markets closed-end fund (CEF) strategy continues to be strong, with results in the first or second quartile versus manager peers for the year ending 30 June 2016. The current size-weighted average discount (SWAD) across client portfolios is c. 14%-15%, indicating that there is still present significant relative value in the strategy. The investment approach adds value beyond this by exploiting volatility of the underlying discounts in the CEF universe, from which portfolios are constructed with their specific SWAD characteristics plus active country allocation.

The Group's overheads for the year to 30 June 2016 are expected to be £10.7 million (2015: £9.4 million) and the current monthly run-rate is c£0.9m.

For the year to 30 June 2016, City of London expects that pre-tax profits will be approximately £8.0 million (2015: £8.9 million), and that profits after an anticipated tax charge of £2.0 million (25% of pre-tax profits) will be approximately £5.9 million (2015: profits of £6.6 million after a tax charge of £2.3 million, representing 26% of pre-tax profit). Basic and fully diluted earnings per share are expected to be 23.6p and 23.5p respectively (2015: 26.4p and 26.0p).

As a result of the fall in Emerging Markets during the financial year, earnings cover will be reduced this year but given the Group's strong cash position and optimism with regard to the future, the Board is recommending a maintained final dividend of 16p per share (2015: 16p). This would bring the total for the year to 24p (2015: 24p), a dividend cover of 0.98 times earnings per share (2015: 1.1 times).

The Board confirms the final dividend timetable for the year to 30 June 2016:

· ex-dividend date: 13 October 2016

· dividend record date: 14 October 2016

· payable: 31 October 2016

City of London expects to announce final results alongside publication of its Accounts for the year to 30 June 2016 on 12 September 2016. The Group's Annual General Meeting will be held on 17 October 2016.

Business Update

. Virtually all CLIM income is USD based - our fees are sourced from US Institutions

· Zero FUM effect from BREXIT - zero redemptions FYTD

· 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

Template

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



Assumptions:

- Starting point Current FuM (end June 2016)

- Net increase in FuM in 2016/2017 (straight-lined to June 2017):

· emerging market strategies $250m

· diversification strategies $250m

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

- Market growth: 0%

- Increase in overhead: 5%

- Corporation tax based on an estimated average rate of 26%

- Exchange rate assumed to be £1/$1.35 for entire period

- Number of CLIG Shares in issue (26.9m) less those held by the ESOP Trust (1.9m) as at 30 June 2016

[robsy2] 18/7/2016 07:21

I am surprised by the weakness of EM in general.I thought EM was recovering strongly, but year on year it is still down. Their funds are performing relatively well and the USD Xrate has saved he day, divi safe , pretty good really ?
R2

[owenski] 18/7/2016 07:19

FUM lower, costs rising, div covered less than x1 but payout maintained.

[garycook] 18/7/2016 07:13

Final Dividend maintained at 16p,but overhead cost rising.

[my retirement fund] 11/7/2016 23:02

Having seen how the price has held up post brexit I think the shareprice will be moving to fresh highs

[topvest] 11/7/2016 20:13

Don't think they will be increasing the dividend for a while yet, but the dividend cover now looks more comfortable. I would like to buy more as well. Had a look the other day but the price wasn't quite good enough.

[my retirement fund] 11/7/2016 12:50

Ive been a holder for quite some time, but I have also been adding due to the cover given thanks to the weakness of GDP.

There really is now scope here to increase the dividend pushing the yield well in excess of 8%

[robsy2] 11/7/2016 10:55

Bought some mre this morning, the spread made me wince a bit but I am looking for that 8% divi over the next 5 years combined with a gradual rise in the share price to say 400p to reflect the iimproving fortune sof the company, so if I can get 10-15% a year over the next 5 years , the buying costs will be worth it...
That's the theory anyway
Best
R2

[masurenguy] 05/7/2016 13:02

Thanks Mayn. It is also worth restating Barry Olliff's publicly expressed intentions on his planned future share disposals that he reiterated in the 2015 final results that were issued on 14/9/15.

"I would like to restate my intention regarding potential future sales of shares in the Company. I founded CLIG as an asset management business in 1991 and from the outset, I have always sought to align my interests with those of the Group's shareholders, both before and subsequent to the public listing in 2006. The consequence of this is that, as the largest shareholder and the Chief Executive of CLIG, close to all of my investible wealth remains in CLIG shares and I believe it is appropriate and prudent, for both the Company and me personally, that I gradually reduce my holding prior to my retirement in 2020. Accordingly, I propose: -- Selling 500,000 at £4.00 and 500,000 at £4.50. These intentions are the same as were communicated to shareholders, and specifically subsequent to my previous sale of 500,000 shares at £3.50 earlier this year."

His recent opportunistic buy of 145,186 shares @295p last month also suggests that he remains confident of achieving the above announced price thresholds to trigger those sales.

[aleman] 05/7/2016 12:11

You are a bit behind. £ currently $1.315 (and Euro 1.18),

[robsy2] 05/7/2016 12:01

Good thread this. Thanks TMFMayn for the info, much appreciated. We are looking good!
R2

[robsy2] 05/7/2016 12:01

Good thread this. Thanks TMFMayn for the info, much appreciated. We are looking good!
R2

[tmfmayn] 05/7/2016 09:50

June AUM out:
hxxp://citlon.co.uk/shareholders/announcements.php

$4.0bn.

Weak GBP should help earnings from here.

February's interim report...

hxxp://citlon.co.uk/shareholders/share_reports/CoL_Interim11_15.pdf

...said: "A weak pound vs the US$ has a very beneficial effect on profits."

Accompanying FUM/FX table in the chairman's statement indicated that earnings would be £6.9m with $4bn FUM at £1:$1.45

But at same FUM and £1:$1.35, earnings would be £7.5m -- £0.6m higher -- and equivalent to about 29p per share. More than enough to cover the divi.

[speedsgh] 03/7/2016 22:08

Maybe that is why CEO added to his holding recently, even though he is looking to reduce his holding over long term?

[robsy2] 03/7/2016 19:01

vfast makes a good point. Earnings in USD, reported in Sterling, means an earnings tailwine. This, coupled with a recovery in EM's means AUM will increase as well. Now we see that ,we can expect them to capture more assets , so it is looking positive on all fronts. We may start to see some momentum in CLIG share price going forward from here.
R2

[montyhedge] 02/7/2016 18:22

Weak pound surely helping fum.

[chairman20] 28/6/2016 17:27

Aleman The global economic shock
is the one factor that is very hard to
read. Arguably there is no case why
there should be disproportionate effects

- but then with the fragile state of
everything who knows? I had thought
the US election would be the catalyst
for a reversal of Dow etc... but
that could feed in to the current EU
crisis ahead of the event.