Trading Update

RNS Number : 2177W

City of London Investment Group PLC

09 June 2008

 



9 June 2007

CITY OF LONDON INVESTMENT GROUP PLC

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

TRADING UPDATE FOR THE YEAR TO 31 MAY 2008

City of London Investment Group PLC (AIM: CLIG), a leading emerging market and closed end fund asset management group, today provides a trading update for the financial year ended 31 May 2008.

Funds under management (FUM) increased by 24% during the year to US$4.706 billion at 31 May 2008 (US$3.792 billion at the end of May 2007). For the year to 31 May 2008, City of London expects that pre-tax profits will be approximately 46% higher at £10.7 million (2007: £7.3 million) and that profits after a tax charge of £3.6 million will be approximately £7.1 million (2007: £4.9 million after a tax charge of £2.4 million).

The Group's dividend policy is based on paying dividends that are covered approximately one and a half times by full year profit per share with an annual distribution pattern of roughly one third as an interim dividend and two thirds as a final dividend. The Board has already declared an interim dividend of 6p per share, which was paid in March 2008, implying a final dividend of 12p per share. In the event, it is the Board's current intention to recommend a final dividend for the year of 13.5p per share payable in November 2008. This will make a total for the year of 19.5p per share and represents a 95% increase over the 10p paid in respect of the year to end May 2007.

The Group made good progress during the year just ended in growing and diversifying the business organically. A new office has been opened in Dubai to extend our geographical reach and in the US, attention has been focused on growing the direct equity business and marketing the Group's Natural Resources fund to broaden the range of investment products offered to clients. Particularly good progress has been made in Europe where significant new funds have been added and in the current year the Group will be marketing the remaining capacity in the established Emerging Markets closed end fund spoke of the World Markets Umbrella Fund, as well as the Natural Resources and the new Yield sub-funds.

The rebalancing of clients' portfolios continued for most of the past year as overweighting to emerging markets was reduced, with US$625 million of rebalancing requests against US$580 million in new monies. However, following the market correction in the first quarter of this calendar year, this rebalancing has slowed significantly and, as of today, there is in excess of net US$200 million in the pipeline which should be reflected in increased FUM, subject as ever to market conditions over the next two months. 

The Group's focus on tight control of overheads has been maintained. As a result, the cost-income ratio, excluding profit-share, and netting variable commissions against income, reduced from 31% to 28%, and the proportion of gross income which is carried to the bottom line (pre-tax) increased from 40% to 42%.

The Board has recently reviewed the listing of City of London's shares on the AIM market of the London Stock Exchange. The conclusion of this review was that, subject to regulatory and shareholder approvals, the Group will seek a primary listing of its ordinary shares on the Official List of the UK Listing Authority and a move to trading on the London Stock Exchange's Main Market for listed securities. The Board considers this to be a logical response to City of London's growing size, profile and shareholder base and believes that a move to the Main Market will broaden the universe of potential new investors and, in time, increase liquidity in the Group's ordinary shares. City of London intends to seek the requisite shareholder approval at its next Annual General Meeting and to apply for a move to the Main Market within the next 12 months.  

City of London Investment Group expects to announce final full year results for the year to 31 May 2008 on 15 September 2008.

Summary and Trading Update
	31.05.07	31.05.08
Funds under Management (at period end)	US$3.8bn	US$4.7bn
Turnover (plus investment income)	£18.4m	£25.7m
Administrative expenses	£11.1m	£15.0m
Profit before tax	£7.3m	£10.7m
Profit after tax	£4.9m	£7.1m
Profit per share, basic	19.9p	29.3p
Profit per share, diluted	17.5p	26.1p

Financials - P&L Account
	Year to 31 May
£'000	2007	2008
Fee income	18,317	24,784
Interest & other	230	963
Finder's commission	(2,723)	(3,558)
Custody & Administration	(613)	(775)
Total net income	15,211	21,414
Costs:
Human resources	2,998	3,632
Premises	217	291
Communications & IT	645	838
Business development	283	442
General	583	826
Total costs	4,726	6,029
Operating profit	10,485	15,385
Profit-share	3,153	4,682
Pre-tax profit	7,332	10,703
Tax	(2,458)	(3,562)
Post-tax profit	4,874	7,141
Dividends	(736)*	(3,237)*
Retained	4,138	3,904

* prior year final plus current year interim

-ends-

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

Doug Allison (Finance Director)	Simon Hudson / Andrew Dunn
City of London Investment Group PLC	Tavistock Communications
Tel: [phone]	Tel: [phone]
Jeff Keating / Fred Walsh
Landsbanki Securities (UK)
Nominated Adviser & Broker
Tel: [phone]

NOTES TO EDITORS

City of London is an asset management group whose principal activity is providing emerging market asset management products and services predominantly to institutional investors via its principal operating company City of London Investment Management Company Limited. The Group is based in the UK and also has offices in the US, Singapore and Dubai. Clients include some of the world's leading institutions and endowment funds.

With total funds under management of approximately US$4.7 billion, the Group manages several Open Ended Funds as well as a number of segregated accounts. The Group's fund mandates are mainly in emerging markets, although the Group has more recently diversified its asset management product portfolio by the launch of a natural resources fund and has also seeded three new funds: a global fund, a frontier fund and an emerging markets yield fund. The Group seeks to provide capital growth for clients through active country allocation and stock selection.

 

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