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Company City of London Investment Group PLC
TIDM CLIG
Headline

Half Yearly Results

Released 07:00 20-Jan-2014
Number 0012Y07

RNS Number : 0012Y
City of London Investment Group PLC
20 January 2014
 



20th January 2014

 

                                                                 CITY OF LONDON INVESTMENT GROUP PLC

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

                                                              HALF YEAR RESULTS TO 30TH NOVEMBER 2013

                               

City of London (LSE:CLIG) announces half year results for the six months to 30th November 2013.

 

SUMMARY

 

• Funds under Management ("FuM") of US$3.5 billion (£2.1 billion) at 30th November 2013. This compares with

US$3.7 billion (£2.4 billion) at the beginning of this financial year on 1st June 2013 and US$3.9 billion (£2.4 billion)

at 30th November 2012

 

• FuM at 31st December 2013 of US$3.5 billion (£2.1 billion)

 

• Revenues representing the Group's management charges on FuM, were £11.8 million (2012: £15.1 million)

 

• Profit before tax of £3.3 million (2012: £4.7 million)

 

• Maintained interim dividend of 8p per share payable on 28th February 2014 to shareholders on the register on

7th February 2014

 

• Cash and cash equivalents at the period end of £9.9 million (2012: £5.8 million)

 

• Change of financial year end from 31st May to 30th June                                                               

 

 

"It was with considerable pleasure that we witnessed towards the endof the 6 month period both confirmation of 

the turnaround in our investment performance together with renewed interest in taking advantage of

a "cheap" Emerging Markets CEF sector by contrarian and opportunistic investors."

 

David Cardale, Chairman

 

 

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

 

Barry Olliff (CEO)

City of London Investment Group PLC

Tel: +1 610 380 2911

 

Martin Green

Canaccord Genuity Limited

Tel: +44 (0)20 7523 8000

                         

Chairman's statement

 

In writing this, my second interim report as Chairman, I find that I have much in common with George Osborne, 

the UK Chancellor of the Exchequer, in reporting in his Autumn Statement on the state of the economy. We have 

come through some difficult times but there really are now significant green shoots enabling us to take a rather more 

positive view of prospects for 2014.

 

The financial results for the six month period to 30th November 2013 reflect the less favourable investing conditions that we have been experiencing. Not only were there fewer profitable trading opportunities combined with an adverse head wind specific to the CEF sector, but in additionglobal investors continued to benervous of prospects for emerging economies particularly compared to the developed economies. This, together with our below par investment performance, resulted in an environment in which there continued to belittle or no interest from investors in taking up any new strategies or products, including our own.

 

In light of the above it was with considerable pleasure that we witnessed towards the end of the 6 month period both confirmation of the turn around in our investment performance together with renewed interest intaking advantage of a "cheap" Emerging Markets CEF sector by contrarianand opportunistic investors. New 

funds under management("FuM") have subsequently been subscribed both by existing and new clients in our core 

Emerging Markets CEF products.

 

FuM at the Company's half-year end on 30th November 2013 were US$3.5 billion (£2.1 billion), compared to the 

US$3.7 billion (£2.4 billion) at 31st May 2013. The decreaseof 6% in US dollar terms compares with a 2% increase 

in the MSCI Emerging Markets Index (MXEF).

 

Results - unaudited

As a result of the decline in FuM, revenuesfor the half-year were 22% lower at £11.8 million (2012: £15.1 million). As previously, our practiceof keeping our ratio of fixed costs to variable costs to a minimum meant that overall costs declined with revenues, producing a 19% reductionin administrative expenses to

£8.5 million for the period (2012: £10.5 million). Profit before tax was £3.3 million compared to £4.7 million for the six months to 30th November 2012, representing a decline of 29%.

 

Variable costs within administrative expenses represented approximately 42% of the total (2012: 49%). The principal 

components are profit-share of £1.6 million (2012: £2.3 million), and the commission payable to our ex-third party marketing consultant of £1.5 million (2012: £2.2 million).

 

Basic earnings per share, after a 28% tax charge of £0.9 million (2012: £1.4 million representing 29% of profit before tax), were 9.6p (2012 : 13.1p). Diluted earningsper share were 9.6p (2012: 12.9p).

 

Year end

As explained in the CEO's report, your board has decided to bring your company's year end into line with a quarter date 

- 30th June. The logic in making this change as set out in that report is compelling, indeed I wonder why we have taken so long in making the change from a year end date that was originally determined by the date 

of foundingthe original business.

 

 

Dividends

Since becoming a public company in 2006, it has been your board's policy at least to maintain the dividend within the constraints of financial responsibility. In the light of both our substantial uncommitted liquid resources, together with the improved trading outlook, it is our intention, notwithstanding the weaker trading overthe first half year, to pay a maintained dividend of 8p on 28th February 2014 to shareholders on the register on 

7th February 2014.

 

Our dividend payment policy has normally been based on a split of one third/two thirds between the interim and the final, and currentlythere are no plans for this to change however this assumes a continuation of the recovery that we have been benefitingfrom in recent months. In the light of the limited amount of working capital that a business of this nature both needs and, in addition,is required by the regulators to maintain, the board is reviewing the logic of our historic policy of a target cover as high as 1.5 times.

 

Board

As previously announced, with the appointment of Barry Aling in August 2013 as a UK based NED we now have a better balance on the board and we have already benefitedfrom his extensive experience in the London and Far East international equity markets. He has been appointed chairman of the Audit Committee withAllan Bufferd continuing to chair the Remuneration Committee and Rian Dartnell the Nominations Committee.

 

In line with our policy of putting in place long term succession arrangements, further progress has been madein planning for the CIO responsibility for our core Emerging Markets CEF product to be devolved to MarkDwyer who has had approximately 9 years of experienceat City of London and is extremely well versed in our 

investment methodology. This process should be complete in 2015.

 

Outlook

Following on from my comments at the year end, I can confirm the steady if unspectacular improvement in much of our business. Whilst there are external pressureson fees across the industry, we are countering with containment of our own costs and working hard on converting significant new business opportunities. In the light of this I am happy to repeat my earlier statementin the Annual Report that I anticipate a satisfactory outcome for the financialperiod as a whole.

 

David Cardale

Chairman

17th January 2014

 

Chief Executive Officer's review

 

 

Funds under Management('FuM') at the Group's half year end, 30th November 2013 were US$3.5 billion (£2.1 billion). 

This should be compared with US $3.9 billion (£2.4 billion) at 30th November 2012 and US$3.7 billion (£2.4 billion)as at 31st May 2013. As an update, FuM at the end of December were US$3.5 billion (£2.1 billion).

 

MXEF, (which we use as a proxy via which our FuM can be measured and compared), was 1018 at the

end of November 2013, 1007 at the end of November 2012, 928 at the end of November 2011 and 1008 at the end of May 2013. MXEF at the end of December 2013 was 1002. 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$6.2 billion 

at the end of April 2011.

 

For some time we have been considering the possibility of changing our Financial Year from end May to end June. The complexity of making quarterlytrading announcements outside our clients'quarter end has made our announcements significantly more complicated than necessary. Additionally with our competitors using March, June, Septemberand December as quarter ends for both profit and performance calculation purposes, we have had a mismatch of information in terms of research coverage.We have therefore decided to extend this financial year by one month to end June.

 

We are investigating if we can pay the dividend earlier than would otherwise be the case (around the present assumed date in 

October).

 

Over the past few years we have graduallyattempted to become more transparent with our shareholders. The benefits of this are significant as not only are shareholders able to trade in our shares with greater confidence, but in addition to our shareholders, CLIM staff and clients (the three stakeholders in our business), are better able to determine the condition of our business and thus what their version of our share price should be. We started this process a few years ago with a table showing the run-off benefits from our agreement with our original third party marketing agent in terms of the potential amount they were owed 

during the period of the contract's run-off, and we extended this last year via the publication of CLIM monthly FuM on our website: http://www.citlon.co.uk/shareholders/announcements.php

 

As we are all aware, increasingly we are expected to be more transparent regarding just about every aspect of our business. Regulators, clients and consultants (not to mention shareholders) are increasingly expecting that fund managers are both transparent and, more important,that we avoid conflicts of interest. From our point of view we have always attemptedto be at the leading edge in terms of openness and this has enabled us, we hope, to retain the trust of our shareholders through this period of our underperformance. Obviously, during a difficult period in terms of our business and profitability, we believe the benefits of becoming more open outweigh the status quo.

 

As a result of this wish to become more transparent we are now moving in the directionof forward guidance. Most of the leading central banks have attempted over the past few years to become significantly more transparent. If the Federal Reserve can provide forward guidance as a result of its analysis of the US (and World?) economy then I am sure that CLIG can too.

 

Our business is a simple one and thereforelends itself to greater transparency based upon potentially a few key assumptions. Our forward guidance is not a specific forecast, rather it's an attempt to provide an illustrative framework that enables interestedparties to calculatewhat might happen in the future to our post-tax profits based upon these key assumptions. Obviously internally we review this data monthly but we have decided that quarterlydata, projected out six quarters would be a starting point in this regard.

 

In addition we have produced actual equivalent data for F/Y/E 2013.

 

Table with assumptions (below) including the quarterly estimated cost of a maintained dividend:

 

Dividend cover - actual and assumed 2013 -2015




 








 


2012/2013 - £0.2m to Reserves

2013/2014 - £0.8m from Reserves

2014/2015 - £0.5m to Reserves

£'000s

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Post Tax Profit (£)

1,735

1,574

1,675

1,282

1,157

1,263

1,176

1,588

1,423

1,534

1,734

1,869

 

Present Dividend Breakeven (£)

1,515

1,515

1,515

1,515

1,508

1,508

1,508

1,508

1,508

1,508

1,508

1,508














To/(From) Reserves (£)

220

59

160

(233)

(351)

(245)

(332)

80

(85)

26

226

361



























Actual figures (£'000s) in bold










Assumed post tax profit figures (£'000s) in italics

 

 Figures in italics representassumptions as follows:

-  Starting point Current FuM (Dec 2013)

-  Pipeline of potential mandates (additional $500m) straight-lined to Dec 2014 and target new money
for 2015 (additional $500m) straight-lined Jan-Dec 2015

-  Operating margin adjusted monthly for change in client mix and commissionrun-off

-  Market growth: +5% (six months end June 2014) + an additional 10% (twelve months June 2015)

-  Increase in overhead: +1% (2014/15)

-  Assumes total number and mix of staff overheadbetween the four offices remains constant

-  Corporation tax based on an estimated average rate of 28% for Y/E 2014 and 27% for Y/E 2015

-  Exchange rate assumed to be £1/$1.63 for entire period

-  Number of CLIG Shares in issue (27.0m) less those held by the ESOP Trust (1.8m) as at 31st Dec 2013

-  Includes extra month of income in Q4 2014

-  Includes in Q3 2013/14 profit of $250,000 from sale of CLIM International CEF Fund

                      

For more information, please see Half Year Report 2013/14 at

http://www.citlon.com/shareholders/share_reports.php 

 

Given the above assumptions it should be possible for shareholders and other interestedparties to construct models projecting our profitability based upon their own opinions.

 

As we have suggested in previous statements we are gradually gaining traction in a number of areas of our business. The Absolute Return group has won a mandate for $20m and the Frontier, Developedand Natural Resource teams are all expected to win additionalmandates prior to the end of calendar

year end 2014.

 

I am very pleased to report that the expected investmentperformance of the Emerging Markets Closed EndFund team should place us in the top of the second quartile for calendar 2013. This completesthe process of turningaround our business and confirms that with good people, technology and also a conservative country allocation process it's possible to take advantageof pricing anomaliesamongst the closed end funds in which we can invest. I am now hopeful that we can build from this base and continue to provide consistent uninterrupted alpha for our clients. Based upon our in depth research into new areas of our attribution we have learnt a lot over the past year or so, the most importantexample of this being confirmation that wide discounts are not of themselves an opportunity to make money. Having made this pointI would add that the Emerging Markets InvestmentManagement team has remained unchanged throughout this period with one exception,the addition of Mark Dwyer. Mark rejoined CLIM in May 2012and will during 2015 take over my EM CEF CIO responsibilities.

 

The Size WeightedAverage Discount (SWAD) remains very wide and while it remains wide should enable us to continue to provide additionalalpha as a result of the significant and ongoing corporateactions from many of the EM CEF in which we invest. Ifthe SWAD narrows there will potentially be an additional benefit.

 

 

Barry M. Olliff

Chief Executive Officer

17th January 2014

 

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 30th November2013

 

 


 

 

 

Note

Six months ended

30th Nov 2013 (unaudited)

£

Six months
ended

30th Nov 2012 (unaudited)

£

 Year ended

31st May 2013 (audited)

£

Revenue

2

11,785,990

15,135,250

29,363,734

Administrative expenses

Staff costs


 

4,623,433

 

5,696,604

 

11,665,656

Commissions payable


1,552,237

2,227,843

4,194,097

Custody fees payable


458,982

643,855

1,244,318

Other administrative expenses


1,756,378

1,824,386

3,678,097

Depreciation and amortisation


86,072

111,830

222,556



(8,477,102)

(10,504,518)

(21,004,724)

Operating profit


3,308,888

4,630,732

8,359,010

Interest receivable and similar income

3

26,284

34,097

501,107

Profit before tax


3,335,172

4,664,829

8,860,117

Income tax expense


(915,365)

(1,355,279)

(2,593,675)

Profit for the period


2,419,807

3,309,550

6,266,442

Basic earnings per share

4

9.6p

13.1p

24.9p

Diluted earnings per share

4

9.6p

12.9p

24.6p


Consolidated statement of comprehensive income

For the six months ended 30th November2013

 


Six months ended

30th Nov 2013 (unaudited)

£

Six months ended

30th Nov 2012 (unaudited)

£

Year ended

31st May 2013 (audited)

£

Profit for the period

2,419,807

3,309,550

6,266,442

Fair value gains on available-for-sale investments* Release of fair value (gains) on disposal of available-for-sale investments*

114,506

 

(33,161)

379,361

 

-

534,357

 

(165,621)

Other comprehensive income

81,345

379,361

368,736

Total comprehensive income for the period attributable to equity holders of the company

 

2,501,152

 

3,688,911

 

6,635,178

*Net of deferred tax





Consolidated statement of financial position

30th November2013

 


 

 

Note

30th Nov 2013 (unaudited)

£

30th Nov 2012 (unaudited)

£

31st May 2013 (audited)

£

Non-current assets





Property and equipment


438,874

559,272

490,658

Intangible assets


284,128

329,589

306,858

Other financial assets


27,344

31,486

37,897

Deferred tax asset


159,839

337,191

239,980



910,185

1,257,538

1,075,393

Current assets





Trade and other receivables


3,400,539

3,693,521

3,538,726

Available-for-sale financial assets


1,701,342

7,526,393

3,847,526

Cash and cash equivalents


9,896,827

5,791,168

10,061,185



14,998,708

17,011,082

17,447,437

Current liabilities





Trade and other payables


(2,275,620)

(4,092,094)

(3,130,923)

Current tax payable


(477,040)

(441,180)

(671,404)

Creditors, amounts falling due within one year


(2,752,660)

(4,533,274)

(3,802,327)

Net current assets


12,246,048

12,477,808

13,645,110

Total assets less current liabilities


13,156,233

13,735,346

14,720,503

Non-current liabilities





Deferred tax liability


(114,764)

(98,997)

(90,467)

Net assets


13,041,469

13,636,349

14,630,036

 

Capital and reserves





Share capital


269,727

268,327

269,377

Share premium account


2,060,809

2,019,159

2,045,409

Investment in own shares

5

(4,910,800)

(4,984,300)

(4,910,800)

Fair value reserve


384,212

313,492

302,867

Share option reserve


628,227

786,162

716,660

Capital redemption reserve


20,582

20,582

20,582

Retained earnings


14,588,712

15,212,927

16,185,941

Total equity


13,041,469

13,636,349

14,630,036


Consolidated statement of changes in equity

For the six months ended 30th November2013

 

 


 

Share capital

£

Share premium account

£

Investment in own shares

£

Fair value reserve

£

Share option reserve

£

Capital redemption reserve

£

 

Retained earnings

£

 

 

Total

£

At 1st June 2013

269,377

2,045,409

(4,910,800)

302,867

716,660

20,582

16,185,941

14,630,036

Profit for the period

-

-

-

-

-

-

2,419,807

2,419,807

Comprehensive income

-

-

-

81,345

-

-

-

81,345

Total comprehensive income

 

-

 

-

 

-

 

81,345

 

-

 

-

 

2,419,807

 

2,501,152

Transactions with owners

Share option exercise

 

350

 

15,400

 

-

 

-

 

(3,717)

 

-

 

3,717

 

15,750

Share cancellation

-

-

-

-

-

-

-

-

Purchase of own shares

-

-

-

-

-

-

-

-

Share-based payment

-

-

-

-

(34,247)

-

-

(34,247)

Deferred tax

-

-

-

-

(50,469)

-

(29,672)

(80,141)

Current tax on share options

-

-

-

-

-

-

29,627

29,627

Dividends paid

-

-

-

-

-

-

(4,020,708)

(4,020,708)

Total transactions with owners

 

350

 

15,400

 

-

 

-

 

(88,433)

 

-

 

(4,017,036)

 

(4,089,719)

As at

30th November 2013

 

269,727

 

2,060,809

 

(4,910,800)

 

384,212

 

628,227

 

20,582

 

14,588,712

 

13,041,469

 

 


 

Share capital

£

Share premium account

£

Investment in own shares

£

Fair value reserve

£

Share option reserve

£

Capital redemption reserve

£

 

Retained earnings

£

 

 

Total

£

At 1st 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

30th November 2012

 

268,327

 

2,019,159

 

(4,984,300)

 

313,492

 

786,162

 

20,582

 

15,212,927

 

13,636,349


 

 


 

Share capital

£

Share premium account

£

Investment in own shares

£

Fair value reserve

£

Share option reserve

£

Capital redemption reserve

£

 

Retained earnings

£

 

 

Total

£

At 1st 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 year

-

-

-

-

-

-

6,266,442

6,266,442

Comprehensive income

-

-

-

368,736

-

-

-

368,736

Total comprehensive income

 

-

 

-

 

-

 

368,736

 

-

 

-

 

6,266,442

 

6,635,178

Transactions with owners

Share option exercise

 

2,613

 

65,325

 

168,625

 

-

 

(37,159)

 

-

 

37,159

 

236,563

Share cancellation

(2,020)

-

-

-

-

2,020

(516,241)

(516,241)

Purchase of own shares

-

-

(518,822)

-

-

-

-

(518,822)

Share-based payment

-

-

-

-

135,872

-

-

135,872

Deferred tax

-

-

-

-

(649,606)

-

(57,325)

(706,931)

Current tax on share options

-

-

-

-

-

-

122,544

122,544

Dividends paid

-

-

-

-

-

-

(6,046,712)

(6,046,712)

Total transactions with owners

 

593

 

65,325

 

(350,197)

 

-

 

(550,893)

 

2,020

 

(6,460,575)

 

(7,293,727)

As at

31st May 2013

 

269,377

 

2,045,409

 

(4,910,800)

 

302,867

 

716,660

 

20,582

 

16,185,941

 

14,630,036


Consolidated cash flow statement

For the six months ended 30th November2013

 


Six months ended

30th Nov 2013 (unaudited)

£

Six months ended

30th Nov 2012 (unaudited)

£

Year ended

31st May 2013 (audited)

£

Cash flow from operating activities




Operating profit

3,308,888

4,630,732

8,359,010

Adjustments for:

Depreciation charges

 

63,342

 

89,100

 

177,095

Amortisation of intangible assets

22,730

22,730

45,461

Share-based payment charge

(34,247)

86,196

135,872

Translation adjustments

Cash generated from operations before changes

7,130

162,539

(8,539)

in working capital

3,367,843

4,991,297

8,708,899

Decrease in trade and other receivables

138,187

1,651,813

1,806,608

Decrease in trade and other payables

(855,303)

(834,236)

(760,344)

Cash generated from operations

2,650,727

5,808,874

9,755,163

Interest received

53,109

34,097

60,898

Interest paid

(385)

-

-

Taxation paid

(1,080,102)

(1,230,826)

(2,248,450)

Net cash generated from operating activities

1,623,349

4,612,145

7,567,611

Cash flow from investing activities




Purchase of property and equipment

(11,558)

(40,935)

(60,316)

Purchase of non-current financial assets

(1,833)

-

(3,811)

Proceeds from sale of non-current financial assets

Purchase of current financial assets

10,217

-

-

(312,246)

-

(328,991)

Proceeds from sale of current financial assets

2,115,326

-

4,332,466

Net cash generated from/(used in) investing activities

2,112,152

(353,181)

3,939,348

Cash flow from financing activities




Proceeds from issue of ordinary shares

15,750

40,638

67,938

Ordinary dividends paid

(4,020,708)

(4,050,318)

(6,046,712)

Purchase and cancellation of own shares

-

-

(516,241)

Purchase of own shares by employee share option trust

-

-

(518,822)

Proceeds from sale of own shares by employee share option trust

-

95,125

168,625

Net cash used in financing activities

(4,004,958)

(3,914,555)

(6,845,212)

Net (decrease)/increase in cash and cash equivalents

(269,457)

344,409

4,661,747

10,061,185

5,399,869

5,399,869

Effect of exchange rate changes

105,099

46,890

(431)

Cash and cash equivalents at end of period

9,896,827

5,791,168

10,061,185


Notes

 

 

1    Basis of preparation and significant accounting policies

 

The financial information contained herein is unaudited and does not comprise statutoryfinancial information within the meaning of section 434 of the Companies Act 2006. The information for the year ended 31st May 2013 has been extracted from the latest published audited accounts. The report of the independent auditor on those financialstatements contained no qualification or statement under 
s498(2) or (3) of the CompaniesAct 2006.

 

These interim financialstatements have been prepared in accordance with the Disclosureand Transparency Rules of the Financial ConductAuthority and IAS 34 "Interim Financial Reporting" as adopted by the European Union. The accountingpolicies are consistentwith those set out and applied in the statutoryaccounts of the Group for the period ended 31st May 2013, which were prepared in accordance with IFRSs as adopted by the European Union.

 

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

(ex UK)

£

 

Other

£

 

Total

£

Six months to 30th Nov 2013







Revenue

10,800,412

347,397

134,845

503,336

-

11,785,990

Non-current assets:







Property and equipment

292,514

-

137,453

-

8,907

438,874

Intangible assets

284,128

-

-

-

-

284,128

Six months to 30th 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

Year to 31st May 2013







Revenue

25,411,693

699,249

1,551,037

1,701,755

-

29,363,734

Non-current assets:







Property and equipment

319,595

-

158,353

-

12,710

490,658

Intangible assets

306,858

-

-

-

-

306,858

 

The Group has classified revenue based on the domicile of its clients and non-current assets based on where the assets are held. Any individualclient 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

 


 

30th Nov

 

30th Nov

 

31st May

2013

2012

2013

£

£

£

Interest

52,724

34,097

60,898

(Loss)/Gain on sale of investments

(26,440)

-

440,209


26,284

34,097

501,107

 

4    Earnings per share

 

The calculation of earnings per share is based on the profit for the period of £2,419,807 (31st May

2013 - £6,266,442; 30th November 2012 - £3,309,550) divided by the weighted average number of ordinary shares in issue for the six months ended 30th November 2013 of 25,124,451(31st May

2013 - 25,152,921; 30th November 2012 - 25,254,902).

 

As set out in note 5 the Employee Benefit Trust held 1,843,283 ordinary shares in the company as at

30th November 2013. 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 £2,419,807 (31st 
May 2013 - £6,266,442; 30th November 2012 - £3,309,550) divided by the diluted weighted average number of ordinary shares in issue for the six months ended 30th November 2013 of

25,289,846 (31st May 2013 - 25,432,704; 30th November 2012 - 25,697,187).

 

5    Investment in own shares

 

Investment in own shares relates to City of London InvestmentGroup PLC shares held by an

Employee Benefit Trust on behalf of City of London Investment Group PLC.

 

At 30th November 2013 the Trust held 1,843,283 ordinary 1p shares (31st May 2013 - 1,843,283;

30th November2012 - 1,877,783), of which 1,552,490 ordinary 1p shares (31st May 2013 -

1,773,865; 30th November 2012 - 1,585,115) were subject to options in issue.

 

6    Dividends

 

A final dividend of 16p per share in respect of the year ended 31st May 2013 was paid on 25th October

2013.

 

An interim dividend of 8p per share (2013 - 8p) in respect of the year ended 31st May 2014 will be paid on 28th February 2014 to members registered at the close of business on 7th February 2014.


7    Principal risks and uncertainties

 

Changes in market prices, such as foreign exchange rates and equity prices will affect the Group's income and the
value of its investments.

 

Most of the Group's revenues,and a significant part of its expenses,are denominated in currencies other than sterling, principally US and Canadian Dollars. These revenues are derived from fee income which is based upon the net asset value of accounts managed, and have the benefit of a natural hedge by reference to the underlyingcurrencies in which investments are held. Inevitably, debtor and creditor balances arise which in turn give rise to currency exposures.

 

8    General

 

The interim financialstatements for the six months to 30th November 2013 were approved by the Boardon 15th January 2014. These financial statementsare unaudited, but they have been reviewed by the auditors, having regard to the bulletin "Review of Interim FinancialInformation" issued by the 
Auditing PracticesBoard.

 

Copies of this statementare available on our website, www.citlon.co.uk


Statement of directors' responsibilities

 

 

The directors are responsible for preparing the condensed set of financialstatements, in accordancewith applicable law and regulations and confirm that, to the best of their knowledge:

 

 this condensed set of financialstatements has been prepared in accordance with IAS 34 "Interim

Financial Reporting", as adopted by the European Union, and

 

 this condensedset of financial statements includes a fair review of the information required by Sections DTR 4.2.7R and DTR 4.2.8R of the Disclosureand Transparency Rules of the United Kingdom's 
Financial Conduct Authority.

 

By order of the Board

 

 

 

B M Olliff

Chief ExecutiveOfficer


Independent review report to City of London Investment Group PLC

 

 

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half- yearly financial report for the six months ended 30th November 2013 set out on pages 7 to 14. We 
have read the other information contained in the half-yearly financial report and considered whether it 
contains anyapparent misstatements or material inconsistencies with the information in the condensed 
set of financial statements.

 

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing PracticesBoard. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose.To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions 

we have formed.

 

Directors' responsibilities

The half-yearly financialreport is the responsibility of, and has been approved by, the directors.The directors

are responsible for preparing the half-yearly financialreport in accordancewith the Disclosure and Transparency Rules of the United Kingdom's FinancialConduct Authority.

 

As disclosedin Note 1, the annual financial statementsof the group are prepared in accordancewith

IFRSs as adopted by the European Union. The condensed consolidated set of financialstatements

included in this half-yearly financial report has been prepared in accordancewith International Accounting

Standard 34, 'Interim FinancialReporting', as adopted by the European Union.

 

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in 
the half-yearly financialreport based on our review.

 

Scope of review

We conductedour review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditorof the Entity" issued by the Auditing PracticesBoard for use in the United Kingdom.A review of interim financial information consists principally of making enquiries,primarily of persons responsible for accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit performedin accordance with International Standardson Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identifiedin an audit. Accordingly we do not express an audit opinion on the financial information.

 

Conclusion

Based on our review, nothing has come to our attentionthat causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30th November 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's FinancialConduct Authority.

 

Moore Stephens LLP

Registered Auditorsand Chartered Accountants

150 Aldersgate Street, London, EC1A 4AB

 

17th January 2014


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