TIDMCLIG
RNS Number : 9260V
City of London Investment Group PLC
21 January 2013
21(st) January 2013
CITY OF LONDON INVESTMENT GROUP PLC
("City of London" or "the Group")
HALF YEAR RESULTS TO 30(th) NOVEMBER 2012
City of London (LSE: CLIG) announces half year results for the
six months to 30(th) November 2012.
SUMMARY
-- Funds under Management ("FuM") of US$3.9 billion (GBP2.4
billion) at 30(th) November 2012. This compares to US$4.5 billion
(GBP2.9 billion) at the beginning of this financial year on 1(st)
June 2012 and US$4.8 billion (GBP3.0 billion) at 30th November
2011.
-- FuM at 31(st) December 2012 of US$4.1 billion (GBP2.5 billion)
-- Revenues, representing the Group's management charges on FuM,
were GBP15.1 million (2011: GBP17.2 million)
-- Profit before tax of GBP4.7 million (2011: GBP5.7 million,
excluding a one-off gain on the sale of an investment)
-- Maintained interim dividend of 8p per share paid on 28(th)
December 2012 to shareholders on the register on 14(th) December
2012
-- Cash and cash equivalents at the period end of GBP5.8 million (2011: GBP5.9 million)
David Cardale, Chairman, said, "We anticipate that global
investors will re-commit to our core emerging and frontier
investment markets - the MXEF has increased by about 7% from 30(th)
November 2012 to date. If we can benefit from a continuation of
this trend, then the operational gearing inherent in City of
London's business model, together with the reduced costs and
commissions, will produce a welcome uplift in revenues,
profitability, dividend cover and ultimately, dividends
themselves."
For further information, please visit www.citlon.co.uk or
contact:
Doug Allison (CEO) Simon Hudson / Kelsey Traynor
City of London Investment Group Tavistock Communications
PLC
Tel: +44 (0) 20 7860 8347 Tel: +44 (0)20 7920 3150
Martin Green
Canaccord Genuity Limited
Financial Adviser & Broker
Tel: +44 (0)20 7050 6500
Chairman's statement
This is my first statement to shareholders since becoming
Chairman on Andrew Davison's retirement at the conclusion of the
Annual General Meeting in October 2012. I have been a non-executive
director of the Company since the IPO in 2006 and was the Senior
Independent Non-executive Director from 2008 until my appointment
as Chairman.
The six month period to 30(th) November 2012 was not an easy one
for City of London. Global investors remained nervous of prospects
for both developed and emerging economies, and this resulted in an
environment in which there was little or no interest from investors
in taking up any new strategies or products, including our own. We
have taken the opportunity to rationalise our portfolio of equity
products and this is discussed in more detail in the Chief
Executive Officer's (CEO) review below.
On top of these challenges, the Group has also had to deal with
the very large redemption from a single client that took the
management of its emerging market exposure in-house, having been a
client of ours for nearly five years. The decision was based on a
change in the client's strategic objectives.
Total funds under management ("FuM") at the Company's half-year
end on 30(th) November 2012 were US$3.9 billion (GBP2.4 billion), a
decline of 13% in US$ terms, compared to the US$4.5 billion (GBP2.9
billion) at 31(st) May 2012. The decrease of US$0.6 billion over
the period reflected almost entirely the client redemption
mentioned above, which totalled US$0.5 billion.
Results - unaudited
As a result of the decline in FuM, revenues for the half-year
were 12% lower at GBP15.1 million (2011: GBP17.2 million). Our
practice of keeping our ratio of fixed costs to variable costs to a
minimum meant that overall costs declined with revenues, producing
a 9% reduction in administrative expenses to GBP10.5 million for
the period (2011: GBP11.6 million). Profit before tax was GBP4.7
million compared to GBP5.7 million for the six months to 30(th)
November 2011 (excluding a gain of GBP0.4 million on the sale of an
investment in options on unquoted equity), representing a decline
of 18%.
Variable costs within administrative expenses represented
approximately 49% of the total (2011: 53%). The principal
components are profit-share of GBP2.3 million (2011: GBP2.8
million), and the commission payable to our ex-third party
marketing consultant of GBP2.2 million (2011: GBP2.7 million).
Basic earnings per share, after a 29% tax charge of GBP1.4
million (2011: GBP2.0 million representing 33% of profit before
tax), were 13.1p (2011: 16.2p). Diluted earnings per share were
12.9p (2011: 15.7p).
Dividends
We stated in an update announced on 15(th) November 2012, that
it was the Board's intention to maintain the interim dividend at
last year's level of 8p per share, albeit with a reduced (and we
hope temporary) level of cover. The Board has subsequently
confirmed the payment of a maintained interim dividend of 8p per
share. The dividend was paid on 28(th) December 2012 to
shareholders on the register on 14(th) December 2012. That we can
do this is a reflection of the Group's conservative financial
management philosophy and careful management of the balance between
fixed and variable costs. Our dividend payment policy has normally
been based on a split of one third/two thirds between the interim
and the final, and currently there are no plans for this to
change.
Board
Andrew Davison stepped down as Chairman and retired from the
Board at the beginning of October 2012. Andrew had been Chairman
since 1999 and for over thirteen years provided wise and valued
counsel to the Board and the Group. On behalf of the Directors,
staff and shareholders, I thank him for his contribution and wish
him a long and happy retirement.
In line with our policy of putting in place long term succession
planning, there have been two other changes to the Board since the
period end. As we advised shareholders over a year ago, City of
London's founder, Barry Olliff, planned to relinquish his role as
Chief Executive in favour of Doug Allison, our Finance Director
since 1998, but would retain his role as Chief Investment Officer.
These changes were duly announced on 31(st) December 2012, along
with the appointment of Valerie Tannahill as Finance Director to
replace Doug. Valerie joined City of London in 1997 as Finance
Manager, and is a director of The World Markets Umbrella Fund plc,
City of London's Dublin listed UCITS product. I congratulate both
Doug and Valerie on their appointments and welcome Valerie to the
Board.
Outlook
The Group's business model is built to withstand shocks and to
cope with volatility, nevertheless we constantly strive both to
improve efficiencies and to cut fixed and variable costs. The Board
and management have recently instituted a review focusing on
product restructuring and process improvement including technology
driven efficiencies in order to enhance the core investment
management function; we are currently in the process of
implementing the improvements identified. We expect this programme
to result in annualised cost savings of at least GBP1 million, to
be reflected fully in our 2013/14 financial year. In addition, next
year will see the first of the significant reductions in run-off
commissions payable to our previous third party marketing
consultants, as further detailed in the CEO review. Both of these
factors can be expected to have a positive impact on Group
profitability.
We anticipate that global investors will re-commit to our core
emerging and frontier investment markets - the MXEF has increased
by about 7% from 30(th) November 2012 to date. If we can benefit
from a continuation of this trend, then the operational gearing
inherent in City of London's business model, together with the
reduced costs and commissions, will produce a welcome uplift in
revenues, profitability, dividend cover and ultimately, dividends
themselves.
David Cardale
Chairman
16(th) January 2013
Chief Executive Officer's review
This will be my last Review for shareholders as Chief Executive
Officer of City of London. As previously advised, I stood down as
CEO at the end of 2012 but will continue in my role as Chief
Investment Officer.
Funds under Management ("FuM") at the Group's half year end,
30(th) November 2012 were US$3.9bn (GBP2.4bn). This should be
compared with US$4.8bn (GBP3.0bn) at 30(th) November 2011 and
US$4.5bn ($2.9bn) as at May 31(st) 2012. As an update, FuM at the
end of December were US$4.1bn (GBP2.5bn).
MXEF, (which we use as a proxy via which our FuM can be measured
and compared), was 1007 at the end of November 2012, 928 at the end
of November 2011 and 906 at the end of May 2012. MXEF at the end of
December 2012 was 1055. These price index levels should be compared
with the all-time high in MXEF of 1340 at the end of October 2007
and our all-time high assets under management of US$6.2bn at the
end of April 2011.
Results - unaudited
Our pretax profits for the half year were GBP4.7 million
compared with GBP5.7 million for the equivalent period to 30(th)
November 2011 (excluding a gain in the prior period of GBP0.4
million on the sale of an investment in options on an unlisted
investment). At the same time an interim dividend of 8p was
announced for Y/E 2013 (2012: 8p).
Investment performance
I thought that it would be helpful for shareholders if I was to
drill down into certain aspects of our investment performance.
The Size Weighted Average Discount (SWAD) of our largest
commingled fund has increased from 7.7% to 13.4% over the past five
years. This significant head wind has adversely, particularly over
the last two years affected the investment performance of our
Emerging Markets closed-end fund business. While significant moves
over long periods can be countered via good country allocation
relative to the funds' benchmark, and opportunities to trade
discount volatility, moves in the SWAD of the order of magnitude,
between October 2010 (8.7%) and end September 2012 (13.4%) are
virtually impossible to counter. As of the end of December the SWAD
was 13.1%.
The SWAD, particularly when it increases or decreases
significantly in a short period of time, is therefore a headwind or
a tailwind in terms of our investment performance. However, by far
and away the greater contribution to investment performance through
extended cycles is trading the various securities that we consider
to be within our investible universe, taking advantage of discount
volatility, country allocation and also corporate actions. These
parts of our process have continued to do very well through this
period of underperformance.
The recent narrowing of the SWAD from 13.4% to 13.1% referenced
earlier has provided us with some modest outperformance, and in
addition is beginning to reflect a significant number of
transactions that had been announced by CEF's over the recent
period. With discounts remaining so wide for so long it would seem
likely that there will continue to be buy- backs, tender offers, in
specie distributions along with the odd liquidation and open
ending. Thus we believe that our investment performance will
continue to improve.
As was referenced in previous CEO Reports (both the Half Year
report for 2012 and the Report and Accounts for 2012), in our
opinion, a wide discount to NAV reflects either over supply or a
poorly performing or constructed product. To the extent that supply
is reduced as has been happening recently, not only will discounts
narrow, but our performance will improve. I would make the point
that we have gone through many such cycles and this one seems to be
no different from those that have gone before.
Diversification
Fortunately we are well advanced in our diversification plans
which have recently started to generate significant interest.
Emerging Asia Small Cap, Global Absolute Return Fund (GARF) and
GARF Plus, Frontier and Global Developed all outperformed their
relevant benchmarks last year and are now being actively marketed.
In many instances we have provided additional infrastructure or
personnel to these areas of our business to ensure that as they
develop they are adequately resourced.
We decided to rationalise our Equity products. Brazil, Chile and
Mexico plus EM Value and Growth have been liquidated. We have
started a new Emerging Markets Equities Small Cap fund based upon
the process developed within our Asia Small Cap Fund.
Cost controls
As referenced in the announcement on 15(th) November we have
continued to focus on cost controls. We consider that we are pretty
lean to start with but we have taken a look at many of our support
functions and where it has been possible we have reduced costs,
significantly in aggregate. In many instances we have taken
advantage of advances in technology that we have recently
introduced. This has enabled us to reduce our headcount. Total
savings as a result of our reductions in expenses on an annual
basis are expected to exceed GBP1 million.
Our Operating Margin has increased from 0.85% in December 2010
to 0.91% as of December 2012, based on monthly data which includes
estimated accruals.
One of the contributing factors leading to this increase in
margin was that after our third party marketing agreement ended,
all new business was written at our full fee (without 20% being
paid out as commission).
The large majority of departing clients therefore had
effectively been paying us 80% of our fee with the other 20% going
to the marketing agent. The effect of this on our present margin,
our ongoing commission liabilities, and the potential for retained
earnings is shown in the table following.
This reduction in commission payments is very noticeable in the
higher margin referenced above. The most recent uptick reflects the
loss of our largest client who was paying us a lower fee as a
result of their size.
All data in the following table, with the exception of the last
column, is from previous Report and Accounts. The table estimates
the commission payable annually through to final run-off, using the
level of FuM and US$/GBP rate at each data point, most recently
31(st) December 2012.
December
As of: July 2010 July 2011 July 2012 2012
MXEF 991 1138 952 1055
GBP/$ 1.55 1.60 1.55 1.60
GBPm.
2012-13 5.2 5.8 4.4 4.1
2013-14 5.0 5.5 4.2 3.7
2014-15 4.4 4.8 3.7 3.2
2015-16 3.3 3.6 2.9 2.4
2016-17 2.7 3.0 2.5 2.0
2017-18 2.2 2.4 2.0 1.7
2018-19 1.2 1.3 1.1 1.0
2019-20 0.4 0.3 0.3 0.3
2020-21 0 0.1 0.1 0.1
Responsibilities
Having worked in the City for 50 years, it's been 25 years since
I started a new business, Olliff and Partners (O&P), back in
1987. City of London Investment Group which was an outgrowth of
O&P has been developed over the past 21 years and I would like
to thank all present and past employees for the assistance that
they have provided in the growth of that business.
As referenced in the announcement on 31(st) December, from 1(st)
January 2013 Doug Allison became CEO. I continue in the role of
Chief Investment Officer. I would like to wish Doug all the best
with his new responsibilities.
Barry Olliff
Chief Investment Officer
16(th) January 2012
For further information please see the most recent presentation
to CLIG shareholders released today. This is on our website
www.citlon.co.uk
Consolidated income statement
For the six months ended 30(th) November 2012
Six months Six months
ended ended Year ended
------------------------------- ----- -------------- -------------- -------------
30(th) Nov 30(th) Nov 31(st) May
2012 2011 2012
------------------------------- ----- -------------- -------------- -------------
(unaudited) (unaudited) (audited)
------------------------------- ----- -------------- -------------- -------------
Note GBP GBP GBP
------------------------------- ----- -------------- -------------- -------------
Revenue 2 15,135,250 17,232,079 34,142,706
------------------------------- ----- -------------- -------------- -------------
Administrative expenses
------------------------------- ----- -------------- -------------- -------------
Staff costs 5,696,604 5,991,205 12,177,561
------------------------------- ----- -------------- -------------- -------------
Commissions payable 2,227,843 2,663,695 5,194,630
------------------------------- ----- -------------- -------------- -------------
Custody fees payable 643,855 706,410 1,433,342
------------------------------- ----- -------------- -------------- -------------
Other administrative expenses 1,824,386 2,087,507 3,955,738
------------------------------- ----- -------------- -------------- -------------
Depreciation and amortisation 111,830 147,754 347,591
------------------------------- ----- -------------- -------------- -------------
(10,504,518) (11,596,571) (23,108,862)
------------------------------- ----- -------------- -------------- -------------
Operating profit 4,630,732 5,635,508 11,033,844
------------------------------- ----- -------------- -------------- -------------
Interest receivable and
similar income 3 34,097 468,786 427,670
------------------------------- ----- -------------- -------------- -------------
Profit before tax 4,664,829 6,104,294 11,461,514
------------------------------- ----- -------------- -------------- -------------
Income tax expense (1,355,279) (2,022,156) (2,963,660)
------------------------------- ----- -------------- -------------- -------------
Profit for the period 3,309,550 4,082,138 8,497,854
------------------------------- ----- -------------- -------------- -------------
Basic earnings per share 4 13.1p 16.2p 33.8p
------------------------------- ----- -------------- -------------- -------------
Diluted earnings per share 4 12.9p 15.7p 32.8p
------------------------------- ----- -------------- -------------- -------------
Consolidated statement of comprehensive income
For the six months ended 30(th) November 2012
Six months Six months
ended ended Year ended
---------------------------------- ----------------- --------------- --------------
30(th) Nov 30(th) Nov 31(st) May
2012 2011 2012
---------------------------------- ----------------- --------------- --------------
(unaudited) (unaudited) (audited)
---------------------------------- ----------------- --------------- --------------
GBP GBP GBP
---------------------------------- ----------------- --------------- --------------
Profit for the period 3,309,550 4,082,138 8,497,854
---------------------------------- ----------------- --------------- --------------
Fair value gains/(losses)
on
available-for-sale investments* 379,361 (704,442) (720,952)
---------------------------------- ----------------- --------------- --------------
Release of fair value (gains)
on
disposal of available-for-sale
investments* - - (14,128)
---------------------------------- ----------------- --------------- --------------
Other comprehensive income 379,361 (704,442) (735,080)
---------------------------------- ----------------- --------------- --------------
Total comprehensive income
for the period
attributable to equity holders
of the company 3,688,911 3,377,696 7,762,774
---------------------------------- ----------------- --------------- --------------
*Net of deferred tax
Consolidated statement of financial position
30(th) November 2012
30(th) Nov 30(th) Nov 31(st) May
2012 2011 2012
------------------------------ ----- -------------- ------------- -------------
(unaudited) (unaudited) (audited)
------------------------------ ----- -------------- ------------- -------------
Note GBP GBP GBP
------------------------------ ----- -------------- ------------- -------------
Non-current assets
------------------------------ ----- -------------- ------------- -------------
Property and equipment 559,272 719,347 607,437
------------------------------ ----- -------------- ------------- -------------
Intangible assets 329,589 375,049 352,319
------------------------------ ----- -------------- ------------- -------------
Other financial assets 31,486 24,676 31,354
------------------------------ ----- -------------- ------------- -------------
Deferred tax asset 337,191 858,716 929,692
------------------------------ ----- -------------- ------------- -------------
1,257,538 1,977,788 1,920,802
------------------------------ ----- -------------- ------------- -------------
Current assets
------------------------------ ----- -------------- ------------- -------------
Trade and other receivables 3,693,521 4,395,060 5,345,334
------------------------------ ----- -------------- ------------- -------------
Available-for-sale financial
assets 7,526,393 5,017,689 6,924,552
------------------------------ ----- -------------- ------------- -------------
Cash and cash equivalents 5,791,168 5,878,235 5,399,869
------------------------------ ----- -------------- ------------- -------------
17,011,082 15,290,984 17,669,755
------------------------------ ----- -------------- ------------- -------------
Current liabilities
------------------------------ ----- -------------- ------------- -------------
Trade and other payables (4,092,094) (3,589,344) (3,891,267)
------------------------------ ----- -------------- ------------- -------------
Current tax payable (441,180) (979,787) (410,705)
------------------------------ ----- -------------- ------------- -------------
Creditors, amounts falling
due within one year (4,533,274) (4,569,131) (4,301,972)
------------------------------ ----- -------------- ------------- -------------
Net current assets 12,477,808 10,721,853 13,367,783
------------------------------ ----- -------------- ------------- -------------
Total assets less current
liabilities 13,735,346 12,699,641 15,288,585
------------------------------ ----- -------------- ------------- -------------
Non-current liabilities
------------------------------ ----- -------------- ------------- -------------
Deferred tax liability (98,997) - -
------------------------------ ----- -------------- ------------- -------------
Net assets 13,636,349 12,699,641 15,288,585
------------------------------ ----- -------------- ------------- -------------
Capital and reserves
------------------------------ ----- -------------- ------------- -------------
Share capital 268,327 268,684 268,784
------------------------------ ----- -------------- ------------- -------------
Share premium account 2,019,159 1,977,584 1,980,084
------------------------------ ----- -------------- ------------- -------------
Investment in own shares 5 (4,984,300) (4,637,273) (4,560,603)
------------------------------ ----- -------------- ------------- -------------
Fair value reserve 313,492 (35,231) (65,869)
------------------------------ ----- -------------- ------------- -------------
Share option reserve 786,162 1,146,553 1,267,553
------------------------------ ----- -------------- ------------- -------------
Capital redemption reserve 20,582 18,562 18,562
------------------------------ ----- -------------- ------------- -------------
Retained earnings 15,212,927 13,960,762 16,380,074
------------------------------ ----- -------------- ------------- -------------
Total equity 13,636,349 12,699,641 15,288,585
------------------------------ ----- -------------- ------------- -------------
Consolidated statement of changes in equity
For the six months ended 30(th) November 2012
Share Investment Share Capital
Fair redemption
Share premium in own value option Retained
capital account shares reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP GBP GBP
---------------- -------- ---------- ------------ --------- ---------- ----------- ------------- -------------
At
1(st) June
2012 268,784 1,980,084 (4,560,603) (65,869) 1,267,553 18,562 16,380,074 15,288,585
Profit
for the
period - - - - - - 3,309,550 3,309,550
Comprehensive
income - - - 379,361 - - - 379,361
---------------- -------- ---------- ------------ --------- ---------- ----------- ------------- -------------
Total
comprehensive
income - - - 379,361 - 3,309,550 3,688,911
Transactions
with owners
Share option
exercise 1,563 39,075 95,125 - (20,443) - 20,443 135,763
Share
cancellation (2,020) - - - - 2,020 (516,241) (516,241)
Purchase
of own
shares - - (518,822) - - - - (518,822)
Share-based
payment - - - - 86,195 - - 86,195
Deferred
tax - - - - (547,143) - (49,970) (597,113)
Current
tax on
share options - - - - - - 119,389 119,389
Dividends
paid - - - - - - (4,050,318) (4,050,318)
---------------- -------- ---------- ------------ --------- ---------- ----------- ------------- -------------
Total
transactions
with owners (457) 39,075 (423,697) - (481,391) 2,020 (4,476,697) (5,341,147))
---------------- -------- ---------- ------------ --------- ---------- ----------- ------------- -------------
As at
30(th)
November
2012 268,327 2,019,159 (4,984,300) 313,492 786,162 20,582 15,212,927 13,636,349
---------------- -------- ---------- ------------ --------- ---------- ----------- ------------- -------------
Share Investment Share Capital
Fair redemption
Share premium in own value option Retained
capital account shares reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP GBP GBP
----------------- -------- ---------- ------------ ---------- ---------- ----------- ------------ ------------
At
1(st) June
2011 268,584 1,975,084 (4,183,659) 669,211 1,621,936 18,562 13,890,478 14,260,196
Profit
for the
period - - - - - - 4,082,138 4,082,138
Comprehensive
income - - - (704,442) - - - (704,442)
----------------- -------- ---------- ------------ ---------- ---------- ----------- ------------ ------------
Total
comprehensive
income - - - (704,442) - - 4,082,138 3,377,696
Transactions
with owners
Share option
exercise 100 2,500 59,962 - (6,052) - 6,052 62,562
Purchase
of own
shares - - (513,576) - - - - (513,576)
Share-based
payment - - - - 96,175 - - 96,175
Deferred
tax - - - - (565,506) - (2,261) (567,767)
Current
tax on
share options - - - - - - 25,817 25,817
Dividends
paid - - - - - - (4,041,462) (4,041,462)
----------------- -------- ---------- ------------ ---------- ---------- ----------- ------------ ------------
Total
transactions
with owners 100 2,500 (453,614) - (475,383) - (4,011,854) (4,938,251)
----------------- -------- ---------- ------------ ---------- ---------- ----------- ------------ ------------
As at
30(th)
November
2011 268,684 1,977,584 (4,637,273) (35,231) 1,146,553 18,562 13,960,762 12,699,641
----------------- -------- ---------- ------------ ---------- ---------- ----------- ------------ ------------
Share Investment Share Capital
Fair redemption
Share premium in own value option Retained
capital account shares reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP GBP GBP
----------------- -------- ---------- ------------ ---------- ---------- ----------- ------------ ------------
At
1(st) June
2011 268,584 1,975,084 (4,183,659) 669,211 1,621,936 18,562 13,890,478 14,260,196
Profit
for the
year - - - - - - 8,497,854 8,497,854
Comprehensive
income - - - (735,080) - - - (735,080)
----------------- -------- ---------- ------------ ---------- ---------- ----------- ------------ ------------
Total
comprehensive
income - - - (735,080) - - 8,497,854 7,762,774
Transactions
with owners
Share option
exercise 200 5,000 136,632 - (18,685) - 18,685 141,832
Purchase
of own
shares - - (513,576) - - - - (513,576)
Share-based
payment - - - - 195,940 - - 195,940
Deferred
tax - - - - (531,638) - (8,267) (539,905)
Current
tax on
share options - - - - - - 33,392 33,392
Dividends
paid - - - - - - (6,052,068) (6,052,068)
----------------- -------- ---------- ------------ ---------- ---------- ----------- ------------ ------------
Total
transactions
with owners 200 5,000 (376,944) - (354,383) - (6,008,258) (6,734,385)
----------------- -------- ---------- ------------ ---------- ---------- ----------- ------------ ------------
As at
31(st)
May
2012 268,784 1,980,084 (4,560,603) (65,869) 1,267,553 18,562 16,380,074 15,288,585
----------------- -------- ---------- ------------ ---------- ---------- ----------- ------------ ------------
Consolidated cash flow statement
For the six months ended 30(th) November 2012
Six months Six months
ended ended Year ended
------------------------------------- ------------------- --------------- --------------
30(th) Nov 30(th) Nov 31(st)
2012 2011 May 2012
------------------------------------- ------------------- --------------- --------------
(unaudited) (unaudited) (audited)
------------------------------------- ------------------- --------------- --------------
GBP GBP GBP
------------------------------------- ------------------- --------------- --------------
Cash flow from operating activities
------------------------------------- ------------------- --------------- --------------
Operating profit 4,630,732 5,635,508 11,033,844
------------------------------------- ------------------- --------------- --------------
Adjustments for:
------------------------------------- ------------------- --------------- --------------
Depreciation charges 89,100 159,119 336,226
------------------------------------- ------------------- --------------- --------------
Amortisation of intangible
assets 22,730 (11,365) 11,365
------------------------------------- ------------------- --------------- --------------
Share based payment charge 86,196 96,175 195,941
------------------------------------- ------------------- --------------- --------------
Translation adjustments 162,539 (23,622) (108,680)
------------------------------------- ------------------- --------------- --------------
Profit on disposal of fixed
assets - (72) (72)
------------------------------------- ------------------- --------------- --------------
Cash generated from operations
before changes in working
capital 4,991,297 5,855,743 11,468,624
------------------------------------- ------------------- --------------- --------------
Decrease in trade and other
receivables 1,651,813 1,342,096 230,677
------------------------------------- ------------------- --------------- --------------
Decrease in trade and other
payables (834,236) (424,075) (122,152)
------------------------------------- ------------------- --------------- --------------
Cash generated from operations 5,808,874 6,773,764 11,577,149
------------------------------------- ------------------- --------------- --------------
Interest received 34,097 33,695 62,875
------------------------------------- ------------------- --------------- --------------
Taxation paid (1,230,826) (2,391,025) (3,928,729)
------------------------------------- ------------------- --------------- --------------
Net cash generated from operating
activities 4,612,145 4,416,434 7,711,295
------------------------------------- ------------------- --------------- --------------
Cash flow from investing activities
------------------------------------- ------------------- --------------- --------------
Purchase of property and equipment (40,935) (334,966) (400,163)
------------------------------------- ------------------- --------------- --------------
Proceeds from sale of property
and equipment - 320 320
------------------------------------- ------------------- --------------- --------------
Purchase of non-current financial
assets - - (6,491)
------------------------------------- ------------------- --------------- --------------
Proceeds from sale of non-current
financial assets - 322,289 483,434
------------------------------------- ------------------- --------------- --------------
Purchase of current financial
assets (312,246) - (2,132,613)
------------------------------------- ------------------- --------------- --------------
Proceeds from sale of current
financial assets - - 178,438
------------------------------------- ------------------- --------------- --------------
Net cash used investing activities (353,181) (12,357) (1,877,075)
------------------------------------- ------------------- --------------- --------------
Cash flow from financing activities
------------------------------------- ------------------- --------------- --------------
Proceeds from issue of ordinary
shares 40,638 2,600 5,200
------------------------------------- ------------------- --------------- --------------
Ordinary dividends paid (4,050,318) (4,041,462) (6,052,068)
------------------------------------- ------------------- --------------- --------------
Purchase of own shares by
employee share option trust - (513,576) (513,576)
------------------------------------- ------------------- --------------- --------------
Proceeds from sale of own
shares by employee share option
trust 95,125 59,962 136,632
------------------------------------- ------------------- --------------- --------------
Net cash used in financing
activities (3,914,555) (4,492,476) (6,423,812)
------------------------------------- ------------------- --------------- --------------
Net increase/(decrease) in
cash and
cash equivalents 344,409 (88,399) (589,592)
------------------------------------- ------------------- --------------- --------------
Cash and cash equivalents
at start of period 5,399,869 6,104,673 6,104,673
------------------------------------- ------------------- --------------- --------------
Effect of exchange rate changes 46,890 (138,039) (115,212)
------------------------------------- ------------------- --------------- --------------
Cash and cash equivalents
at end of period 5,791,168 5,878,235 5,399,869
------------------------------------- ------------------- --------------- --------------
Notes
1. Basis of preparation and significant accounting policies
The financial information contained herein is unaudited and does
not comprise statutory financial information within the meaning of
section 434 of the Companies Act 2006. The information for the year
ended 31st May 2012 has been extracted from the latest published
audited accounts. The report of the independent auditor on those
financial statements contained no qualification or statement under
s498(2) or (3) of the Companies Act 2006.
These interim financial statements have been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Services Authority and IAS 34 "Interim Financial
Reporting" as adopted by the European Union. The accounting
policies are consistent with those set out and applied in the
statutory accounts of the Group for the period ended 31st May
2012.
2. Segmental analysis
The directors consider that the Group has only one reportable
segment, namely asset management, and hence only analysis by
geographical location is given.
USA Canada UK Europe Other Total
GBP GBP GBP ex UK GBP GBP
GBP
------------------- ------------- --------- ---------- ---------- -------- -----------
Six months to
30(th) Nov 2012
------------------- ------------- --------- ---------- ---------- -------- -----------
Revenue 12,721,460 332,248 1,227,868 853,674 - 15,135,250
------------------- ------------- --------- ---------- ---------- -------- -----------
Non-current
assets:
------------------- ------------- --------- ---------- ---------- -------- -----------
Property and
equipment 362,049 - 178,480 - 18,743 559,272
------------------- ------------- --------- ---------- ---------- -------- -----------
Intangible assets 329,589 - - - - 329,589
------------------- ------------- --------- ---------- ---------- -------- -----------
Six months to
30(th) Nov 2011
------------------- ------------- --------- ---------- ---------- -------- -----------
Revenue 14,754,905 324,215 1,279,471 873,488 - 17,232,079
------------------- ------------- --------- ---------- ---------- -------- -----------
Non-current
assets:
------------------- ------------- --------- ---------- ---------- -------- -----------
Property and
equipment 454,453 - 206,827 - 58,067 719,347
------------------- ------------- --------- ---------- ---------- -------- -----------
Intangible assets 375,049 - - - - 375,049
------------------- ------------- --------- ---------- ---------- -------- -----------
Year to 31(st)
May 2012
------------------- ------------- --------- ---------- ---------- -------- -----------
Revenue 29,050,781 654,182 2,680,574 1,757,169 - 34,142,706
------------------- ------------- --------- ---------- ---------- -------- -----------
Non-current
assets:
------------------- ------------- --------- ---------- ---------- -------- -----------
Property and
equipment 389,771 - 191,794 - 25,872 607,437
------------------- ------------- --------- ---------- ---------- -------- -----------
Intangible assets 352,319 - - - - 352,319
------------------- ------------- --------- ---------- ---------- -------- -----------
The Group has classified revenue based on the domicile of its
clients and non-current assets based on where the assets are held.
Any individual client generating revenue of 10% or more would be
disclosed separately, as would assets in a foreign country if they
are material.
3. Interest receivable and similar income
30(th) Nov 30(th) Nov 31(st) May
2012 2011 2012
GBP GBP GBP
----------------------------- ----------- ----------- -----------
Interest 34,097 33,695 62,875
----------------------------- ----------- ----------- -----------
Gain on sale of investments - 435,091 364,795
----------------------------- ----------- ----------- -----------
34,097 468,786 427,670
----------------------------- ----------- ----------- -----------
Last year's interim figure includes a gain of US$675,000
(GBP435,091) on the sale of an investment in options on unquoted
equity.
4. Earnings per share
The calculation of earnings per share is based on the profit for
the period of GBP3,309,550 (31st May 2012- GBP8,497,854; 30th
November 2011 - GBP4,082,138) divided by the weighted average
number of ordinary shares in issue for the six months ended 30th
November 2012 of 25,254,902 (31st May 2012 -25,171,389; 30th
November 2011 - 25,203,351).
As set out in note 5 the Employee Benefit Trust held 1,877,783
ordinary shares in the company as at 30th November 2012. The
Trustees of the Trust have waived all rights to dividends
associated with these shares. In accordance with IAS33 "Earnings
per share", the ordinary shares held by the Employee Benefit Trust
have been excluded from the calculation of the weighted average
number of ordinary shares in issue.
The calculation of diluted earnings per share is based on the
profit for the period of GBP3,309,550 (31st May 2012 -
GBP8,497,854; 30th November 2011 - GBP4,082,138) divided by the
diluted weighted average number of ordinary shares in issue for the
six months ended 30th November 2012 of 25,697,187 (31st May 2012 -
25,917,327; 30th November 2011 - 26,018,983).
5. Investment in own shares
Investment in own shares relates to City of London Investment
Group PLC shares held by an Employee Benefit Trust on behalf of
City of London Investment Group PLC.
At 30th November 2012 the Trust held 1,877,783 ordinary 1p
shares (31st May 2012 - 1,711,867; 30th November 2011 - 1,746,117),
of which 1,585,115 ordinary 1p shares (31st May 2012 - 1,654,242;
30th November 2011 - 1,667,492) were subject to options in
issue.
6. Dividends
A final dividend of 16p per share in respect of the year ended
31st May 2012 was paid on 19th October 2012.
An interim dividend of 8p per share (2012 - 8p) in respect of
the year ended 31st May 2013 was paid on 28th December 2012 to
members registered at the close of business on 14th December 2012.
This interim dividend was paid earlier than usual to accommodate US
resident shareholders.
7. General
The interim financial statements for the six months to 30th
November 2012 were approved by the Board on 16th January 2013.
These financial statements are unaudited, but they have been
reviewed by the auditors, having regard to the bulletin "Review of
Interim Financial Information" issued by the Auditing Practices
Board.
Copies of this statement are available on our website,
www.citlon.co.uk
- ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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