Trading Update

RNS Number : 2492I

City of London Investment Group PLC

13 June 2011

 



13 June 2011

 

 

CITY OF LONDON INVESTMENT GROUP PLC

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

TRADING UPDATE

for the Year to 31 May 2011

City of London (LSE: CLIG), a leading emerging markets asset management group, provides a trading update for its financial year ended 31 May 2011. The numbers that follow are all unaudited.

Funds under management were US$5.82 billion (£3.54 billion) at 31 May 2011 (2010: US$4.38 billion or £3.01 billion), representing a 33% increase in US$ terms and an 18% increase in sterling terms.  Over the same period (31 May 2010 to 31 May 2011) the MSCI Emerging Markets Index (MXEF) increased by 26%.

For the year to 31 May 2011, City of London expects that pre-tax profits will be approximately £13.2 million (2010: £10.4 million), and that profits after an anticipated tax charge of £4.4 million (33% of pre-tax profits) will be approximately £8.8 million (2010: profits of £7.0 million after a tax charge of £3.4 million, representing 33% of pre-tax profit). Basic and fully diluted earnings per share are expected to be 35.1p and 34.0p respectively (2010: 28.5p and 26.9p).

The Group's dividend policy to pay dividends which are covered approximately 1.5 times by earnings per share remains unchanged.  The Board is recommending a final dividend of 16p per share (2010: 15p), which would bring the total for the year to 24p (2010: 22p), covered 1.464 times by earnings per share (2010:1.30 times).  In response to shareholder requests, we intend to pay the final dividend this year on 21^st October, which is around four weeks earlier than last year's final dividend.

From 1 June 2011, the Group has employed two additional marketers, bringing the total team to three people.   In addition, we are seeing significant progress in two of our diversification products.  The first is Natural Resources where the Group has recently won a number of mandates to be funded over the next few months.  The second is developed market closed-end funds where we have recently won a significant mandate which we hope will be the first of many, based upon the consistent outperformance demonstrated by this product. In both cases there is significant consultant interest in the products.

Client rebalancing during the period includes the loss of one client account, where the institution concerned had changed its staff who then implemented new asset allocations.  The reduction in funds from rebalancing activities have been, or are in the process of being, replaced by new monies which for the most part earn significantly higher margins for the Group because they do not attract the marketing commission charged by the Group's former third party marketing agency.  We expect to see further increases in the net margins earned by the Group as the expanded internal marketing team gains traction and we focus increasingly on the diversification products.

Having announced his intention to sell shares at given price levels, Barry Olliff has in the last 18 months sold 500,000 shares at 310p, 500,000 at 350p and 500,000 at 400p. In December 2010 he gifted 500,000 shares to The Newlin Foundation, which subsequently sold 27,793 of those shares. It is now intended that a further 472,207 shares will be made available for sale at 450p, and then 500,000  at 500p, with these sales being satisfied out of the combined holdings of Mr Olliff and the Newlin Foundation.

City of London Investment Group expects to announce final full year results for the year to 31 May 2011 on 5 September 2011.  The Company's Annual General Meeting date and final dividend payment dates are expected to be 3 October 2011 and 21 October 2011 respectively.

Summary and unaudited trading update
	Year to 31 May
	2010	2011
Funds under Management (at period end)	US$4.4bn	US$5.8bn
Turnover (plus investment income)	£30.1m	£36.7m
Administrative expenses, commission payable, and profit-share	£19.7m	£23.5m
Profit before tax	£10.4m	£13.2m
Profit after tax	£7.0m	£8.8m
Profit per share, basic	28.5p	35.1p
Profit per share, diluted	26.9p	34.0p

Financials - consolidated income statement
	Year to 31 May
£'000	2010	2011
Fee income	29,969	36,494
Interest & other	89	201
Finder's commission	(4,769)	(5,785)
Custody & Administration	(1,139)	(1,158)
Total net income	24,150	29,752
Costs:
Human resources	5,010	5,965
Premises	559	600
Communications & IT	1,711	1,699
Business development	691	673
General	940	1,159
Total costs	8,911	10,096
Operating profit	15,239	19,656
Profit-share Listing costs	4,860 -	6,069 438
Pre-tax profit	10,379	13,149
Tax	(3,406)	(4,380)
Post-tax profit	6,973	8,769
Dividends *	(4,183)	(5,787)
Retained	2,790	2,982

* prior year final plus current year interim

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

Doug Allison (Finance Director)	Simon Hudson / Lydia Eades
City of London Investment Group Plc	Tavistock Communications
Tel: [phone]	Tel: [phone]
Jeff Keating	Simon Bridges
Singer Capital Markets Limited	Canaccord Genuity Limited
Financial Adviser & Joint Broker	Joint Broker
Tel: [phone]	Tel: [phone]

This announcement contains forward-looking statements with respect to the financial condition, results and business of City of London Investment Group PLC. By their nature, forward looking statements involve risk and uncertainty and there may be subsequent variations to estimates. City of London Investment Group PLC's actual future results may differ materially from the results expressed or implied in these forward-looking statements. Nothing in this announcement should be construed as or is intended to be a solicitation for or an offer to provide investment advisory services.

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