City of London Investment Group PLC Trading Update (6507Z)

TIDMCLIG

RNS Number : 6507Z

City of London Investment Group PLC

14 January 2020

City of London Investment Group PLC

14 January 2020

CITY OF LONDON INVESTMENT GROUP PLC

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

FUNDS UNDER MANAGEMENT AS AT 31 December 2019,

TRADING UPDATE

City of London (LSE: CLIG), a leading specialist asset management group offering a range of institutional products investing in closed-end funds, announces that as at 31 December 2019, FuM were US$6 billion (GBP4.5 billion). This compares with US$5.4 billion (GBP4.3 billion) at the Company's year-end on 30 June 2019. A breakdown by strategy follows:

 
                          FuM ($mn)                    Strategy Index 
 
                  Dec-19   Jun-19         %     Net                            % 
                  (estimate)        inc/dec   Flows                      inc/dec 
 EM                4,429    4,221        5%   (118)   MSCI EM                 7% 
 DEV               1,109      729       52%     272   MSCI ACWI               7% 
 Opportunistic                                        ACWI/Barclays 
  Value              270      233       16%      20    Global Agg             5% 
 Frontier            206      206        0%       8   S&P Frontier 150        0% 
                                             ------ 
                   6,014    5,389               182 
---------------  -------  -------  --------  ------  -----------------  --------

Excludes seed investments

The EM and International Developed strategies outperformed, driven by narrower discounts, positive country allocation and good NAV performance. The Opportunistic Value Strategy outperformed led by good NAV performance and significant discount narrowing. The Frontier strategy underperformed due primarily to negative country allocation and discount widening.

During the period under review, the Developed strategies recorded net inflows of $272 million. The EM strategies saw net outflows of $118 million. We have to date received notification of circa $200 million of net inflows in aggregate across all strategies, which we expect to fund over the next quarter.

With regard to business development, the Group continues to maintain an active pipeline across all of its major CEF offerings with an increased interest in the diversification CEF strategies.

Operations

The Group's income currently accrues at a weighted average rate of approximately 75 basis points of FuM, net of third party commissions. "Fixed" costs are cGBP1.1 million per month, and accordingly the current run-rate for operating profit, before profit-share of 30% and an EIP charge of 5%, is approximately GBP1.8 million per month based upon current FuM and a US$/GBP exchange rate of US$1.3257 to GBP1 as at 31 December 2019.

The Group estimates the unaudited profit before taxation for the six months ended 31 December 2019 to be approximately GBP6.3 million, which compares with GBP5.2 million for the equivalent period to 31 December 2018.

The Company is currently in a close period which will end with the publication of results for the six months ended 31 December 2019 on 17 February 2020.

Dividend

In recognition of the improved results and having regard to the current dividend cover policy the Board has decided to increase the interim dividend by 1p to 10p per share, which will be paid on 20 March 2020 to shareholders registered at the close of business on 6 March 2020 (2019: 9 pence).

Template

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

http://www.rns-pdf.londonstockexchange.com/rns/6507Z_1-2020-1-13.pdf

Key assumptions:

(June 2019 comparatives in Italics)

 
 -   Starting point Current FuM (end December 2019) 
 -   Net increase for the remainder of this financial year (straight-lined 
      to June 2020): 
      - emerging market CEF strategy zero (zero) 
      - non-emerging market CEF strategies US$250 (US$250m over 
      the full year) 
 -   Net increase in 2020/2021 (straight-lined to June 2021): 
      - emerging market CEF strategy zero 
      - non-emerging market CEF strategies US$250m 
 -   Operating margin adjusted monthly for change in product 
      mix and commission run-off 
 -   Market growth: 0% 
 -   Overheads for 2019/20: no increase on 2018/2019 (0%) 
 -   Overheads for 2020/21: +3% compared with 2018/2019 
 -   EIP cost for 2019/20: 5% of operating profit (5%) 
 -   EIP cost for 2020/21: n/a now falls within 30% profit-share 
 -   Corporation tax based on an estimated average rate of 21% 
      (21%) 
 -   Exchange rate assumed to be GBP1/$1.31 for entire period 
      (GBP1/US$1.27) 
 -   Number of CLIG Shares in issue (26.6m) less those held by 
      the ESOP Trust (1.7m) as at 31 December 2019 (26.6 m CLIG 
      shares in issue less 1.5m ESOP Trust holding)

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

Tom Griffith, CEO

City of London Investment Group PLC

Tel: 001-610-380-0435

Martin Green

Zeus Capital Limited

Financial Adviser & Broker

Tel: +44 (0)20 3829 5000

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 rns@lseg.com or visit www.rns.com.

END

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