10th October 2016
CITY OF LONDON INVESTMENT GROUP PLC
("City of London", "the Company" or "the Group")
AGM Trading Update - 1st Quarter Funds under Management (FuM)
City of London (LSE: CLIG), a leading emerging markets asset management group, announces that as at 30th September 2016, FuM were US$4.3 billion (£3.4 billion). This compares with US$4.0 billion (£3.0 billion) at the Company's year-end on 30th June 2016. In US dollar terms, this represents an increase of c9% (based on actuals not rounded figures) in-line with the MSCI Emerging Markets Net TR Index (US dollar based), which also rose by c9% over the same period.
Monthly updates of FuM are available on our website www.citlon.co.uk.
It is worth reiterating CLIG's experience with regard to BREXIT:
· Virtually all CLIM income is USD based - our fees are sourced from US Institutions
· No adverse effects on FuM since the referendum result
· Over 90% of CLIM income on a see through basis is effectively derived from the Emerging Markets
· Approximately 40% of Group costs are in GBP
· Only 2.5% of CLIM assets are UCIT'S - very little fall out from BREXIT
The Group's income currently accrues at a weighted average rate of approximately 86 basis points of FuM, net of third party commissions. "Fixed" costs for the quarter were c£0.9 million per month, and accordingly the current run-rate for operating profit, before profit-share of 30%, is approximately £1.4 million per month based upon current FuM and a US$/£ exchange rate of US$1.3 to £1 as at 30th September 2016. With sterling falling significantly against the dollar in recent days, using a rate of 1.24 would result in an operating profit run-rate of c£1.5 million per month.
Although the operating profit run-rate is greatly improved from last year (2015: c£1.0 million per month), the Group is committed to containing costs in order to maximise shareholder returns.
The Group estimates that the post-tax profit for the first three months of the year will be approximately £2.3 million, after an unrealised profit on seed investments of £0.1 million (2015: £1.2 million, after an unrealised loss on seed investments of £0.2 million).
Having provided shareholders with both a template and assumptions via which they can determine their own estimate of CLIG's profitability, shareholders can accordingly adjust their estimates based on subsequent market movements.
The final dividend of 16 pence per share, subject to approval at the AGM on 17th October 2016, will be paid on 31st October 2016, bringing the total dividend for the financial year 2015-16 to 24 pence.
Employee Incentive Plan (EIP)
At the forthcoming AGM shareholders will be asked to approve a new Employee Incentive Plan (EIP), the details of which can be found in the June 2016 financial statements. Both clients and shareholders have always considered it important that staff have a material level of share ownership in the business. With the Group's CEO, Barry Olliff's, retirement at the end of 2019, staff ownership is likely to be substantially reduced. The proposed new scheme is intended to broaden the employee share ownership base and invites all staff to sacrifice a part of their bonus in exchange for shares which the company will match. It is proposed that until Barry Olliff's retirement the limit of the staff profit-share pool be increased from 30% of pre-bonus, pre-tax profits to a potential maximum of 35% to cover the cost of the matching shares, subject to at least maintaining the current dividend. Thereafter, the plan will fall within the 30% limit of the profit-share pool. It should be noted that participation in the EIP is voluntary; as such the increase in the profit-share pool is dependent on the level of employee participation.
The Group firmly believes that its revised remuneration policy strikes the right balance for all stakeholders and ultimately that is in the best interest of shareholders.
For further information please visit www.citlon.co.uk or contact:
Barry Olliff (CEO)
City of London Investment Group PLC
Tel: 001 215 313 3774
Zeus Capital Limited
Financial Adviser & Broker
Tel: +44 (0)20 3829 5000
This information is provided by RNS