City of London Investment Group PLC Trading Update (8098U)

TIDMCLIG

RNS Number : 8098U

City of London Investment Group PLC

17 July 2018

City of London Investment Group PLC

17 July 2018

The information contained within this announcement is deemed by the Group to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

CITY OF LONDON INVESTMENT GROUP PLC

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

PRE-CLOSE TRADING UPDATE for the year to 30 June 2018

City of London (LSE: CLIG), a leading specialist asset management group focused on emerging markets and closed-end funds, provides a pre-close trading update for its financial year ended 30 June 2018. The numbers that follow are all unaudited.

Funds under management were US$5.1 billion (GBP3.9 billion) at 30 June 2018 (2017: US$4.7 billion or GBP3.6 billion), representing a 10% increase in US$ terms for the year. A breakdown by strategy follows:

 
                            FuM ($mn)                                 Strategy Index 
 
                    Jun-18          Jun-17         %      Net                                % 
                (estimate)                   inc/dec    Flows                          inc/dec 
 EM                 4,207            4,202        0%    (215)   MSCI EM                     8% 
 DEV                   481             179      169%      279   MSCI ACWI                  11% 
                                                                ACWI/Barclays Global 
 OV*                   174             110       58%       54    Agg                        6% 
 Frontier              245             172       42%       67   MSCI Frontier               2% 
                    5,107         4,663                   185 
----------  --------------  --------------  --------  -------  ---------------------  -------- 
 

*Opportunistic Value formerly Global Tactical Asset Allocation, GTAA

The core EM strategy underperformed (by approximately 330bps, net of fees) for the full year as discounts widened (cost approximately 200bps) and an underweight to China, specifically the IT sector detracted from performance. The Developed, Opportunistic Value (formerly GTAA) and Frontier strategies all recorded positive relative performance due to a combination of positive discount and allocation effects.

The Group's overhead for the year to 30 June 2018 is expected to be GBP12.5 million (2017: GBP11.9 million) and the current monthly run-rate is c GBP1.1m.

For the year to 30 June 2018, the Group expects that pre-tax profits will be approximately GBP12.8 million (2017: GBP11.6 million), and that profits after an anticipated tax charge of GBP2.7 million (21% of pre-tax profits) will be approximately GBP10.1 million (2017: profits of GBP9.1 million after a tax charge of GBP2.5 million, representing 22% of pre-tax profit). Basic and fully diluted earnings per share are expected to be 39.5p and 39.3p respectively (2017: 36.9p and 36.7p).

The Board is recommending an increased final dividend of 18p per share (2017: 17p). This would bring the total for the year to 27p (2017: 25p), for dividend cover of 1.47 times (2017: 1.46 times).

The Board confirms the final dividend timetable for the year to 30 June 2018:

   --     ex-dividend date:                     11 October 2018 
   --     dividend record date:             12 October 2018 
   --     payable:                                     30 October 2018 

City of London expects to announce final results alongside publication of its Accounts for the year to 30 June 2018 on 17 September 2018. The Group's Annual General Meeting will be held on 22 October 2018.

Template

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

http://www.rns-pdf.londonstockexchange.com/rns/8098U_1-2018-7-16.pdf

Assumptions:

-- Starting point Current FuM (end June 2018)

-- Net increase in FuM in 2018/2019 (straight-lined to June 2019):

   --     emerging market strategies zero 
   --     diversification strategies $250m 

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

-- Market growth: 0%

-- Increase in overheads: 3%

-- EIP charge: 4%

-- Corporation tax based on an estimated average rate of 20%

-- Exchange rate assumed to be GBP1/$1.32 for entire period

-- Number of CLIG Shares in issue (26.9m) less those held by the Employee Benefit Trust (1.5m) as at 30 June 2018

This can also be found on our website at:

https://www.citlon.com/investor-relations/dividend-cover.php

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

Barry Olliff, CEO

City of London Investment Group PLC

Tel: [phone]

Martin R Green

Zeus Capital Limited

Financial Adviser & Broker

Tel: [phone]

This release includes forward-looking statements, which may differ from actual results. Any forward-looking statements are based on certain factors and assumptions, which may prove incorrect, and are subject to risks, uncertainties and assumptions relating to future events, the Group's operations, results of operations, growth strategy and liquidity.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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July 17, 2018 02:00 ET (06:00 GMT)