City of Lon Inv Grp - Half Year Results and Dividend Declaration
18/02/2019 07:00
RNS Number : 2881Q
City of London Investment Group PLC
18 February 2019
18th February 2019
CITY OF LONDON INVESTMENT GROUP PLC
("City of London", "the Group" or "the Company")
HALF YEAR RESULTS TO 31ST DECEMBER 2018
City of London (LSE:CLIG) announces half year results for the six months to 31st December 2018.
HALF YEAR SUMMARY
• Funds under Management ("FuM") of US$4.6 billion (£3.6 billion) at 31st December 2018. This compares with US$5.1 billion (£3.9 billion) at the beginning of this financial year on 1st July 2018 and US$5.3 billion (£3.9 billion) at 31st December 2017
• FuM at 31st January 2019 of US$5.1 billion (£3.9 billion)
• Revenues representing the Group's management fees on FuM were £15.6 million (31st December 2017: £17.1 million)
• Profit before tax of £5.2 million (31st December 2017: £6.6 million)
• Maintained interim dividend of 9p per share (31st December 2017: 9p) payable on 22nd March 2019 to shareholders on the register on 8th March 2019
• Special dividend of 13.5p per share payable on 22nd March 2019 to shareholders on the register on 8th March 2019
CHAIRMAN's QUOTE
"Your Board is pleased to announce a special dividend of 13.5p per share, equivalent to one half of the current annual distributions, to coincide with this year's interim payment. It is your Board's view that this additional payment represents a fair balance between the need to reward shareholders while maintaining sufficient reserves to capitalise on any opportunities that may arise."
For access to the full interim report, please follow the link below:
http://www.rns-pdf.londonstockexchange.com/rns/2881Q_1-2019-2-17.pdf
This release includes forward-looking statements, which may differ from actual results. Any forward-looking statements are based on certain factors and assumptions, which may prove incorrect, and are subject to risks, uncertainties and assumptions relating to future events, the Group's operations, results of operations, growth strategy and liquidity.
For further information, please visit www.citlon.co.uk or contact:
Barry Olliff (CEO)
City of London Investment Group PLC
Tel: +1 215 313 3774
Martin Green
Zeus Capital Limited
Financial Adviser & Broker
Tel: +44 (0)20 3829 5000
CHAIRMAN'S STATEMENT
Having been appointed your Chairman on 22nd October 2018, I feel it is my first duty to extend sincere thanks to my predecessor, David Cardale, for his tireless efforts both as Chairman for the past six years and as a Director for six years before that. David's considerable experience in the financial industry, which extended over several decades, was evident with sound guidance and advice throughout his tenure as a Director and his contribution to the Board will be sorely missed. On behalf of both colleagues and shareholders, we wish him well in his retirement.
Like David, I have long since been aware of the risks inherent in trying to forecast markets and this was never more the case than in 2018, when both emerging and frontier markets suffered falls of 15% and 16% respectively. The fall in the MXEF (EM) index of close to 7% in the first half of the calendar year owed much to weaker commodity prices and downward pressure on those economies with significant net US$ liabilities, such as Turkey, while the combination of rising US interest rates and intensification of the US/China trade dispute served to exacerbate this weakness with an 8% fall in the second half of the year, led by a 17% fall in the Chinese market. Frontier markets suffered equally punishing falls with the impact of US$ debt-related concerns being most obviously felt in Argentina, which fell 52% in 2018 and resulted in that market's weighting in the index falling from 23% to 16% in a single year.
While trade-related worries have been a concern for Chinese equities throughout much of 2018, the increasing signs of debt-related stress in the economy, specifically related to the real estate sector, may prompt the Bank of China to revert to a more accommodative liquidity policy in 2019 in order to avoid the risk of a crash landing. Similarly, recent comments emerging from the US Federal Reserve suggest a parallel awareness of the need for caution in realising the longer-term goal of draining liquidity from asset markets (through higher interest rates) on the other side of the Pacific.
Performance
Against the headwinds of volatile markets, the Group's core emerging market strategy finished 2018 with a marginal net outperformance of 0.2% against the MXEF benchmark. Having lagged MXEF in the early part of the year when tech-heavy Chinese companies performed strongly, relative performance ground was gradually restored during the second half as discounts narrowed and country allocation proved helpful. In contrast to the EM strategy, the diversified products, having fared relatively well in the first half of 2018, suffered a degree of relative underperformance in the second half, particularly in December when volatility rose sharply. As I write this statement, it is perhaps too early to comment on 2019 but suffice it to say that some significant ground has been made up in the first six weeks of the year in each of the diversification strategies as CLIG's value-driven style regains favour.
Notwithstanding the recent headwinds faced by our active investment approach we note that each of our key strategies continue to rank in the 1st quartile within their respective peer groups over the past five year period and in the 1st or 2nd quartile over the past three year period ending December 2018.
Funds under Management
Over the six-month period, total funds under management fell by 9% to US$4.6 billion, due mainly to weakness across the emerging and frontier market sectors, together with a degree of ongoing asset re-balancing by some clients. However, this reduced figure masks continued gains made in attracting new funds to our developed and opportunistic value products, which now represent 15% of the total asset base.
Following the recruitment of a specialist Real Estate Investment Trust (REIT) team last summer, we established two new products towards the year-end, the Emerging REIT and International REIT funds. While the international REIT universe is mature and substantial, with a market capitalisation in excess of US$1 trillion, the emerging REIT universe is a comparatively new investment sector, having grown in value from just US$28 billion in 2008 to US$170 billion today. With several emerging markets looking to add REIT securities as a means of attracting new investment, we believe that these products offer CLIG the potential to add significant assets over time within sub-sets of the CEF markets and which, importantly, are not capacity constrained. Thus while global economic uncertainties appear likely to continue in 2019, we are hopeful that the diversification of CLIG's product offerings to include sectors with considerable depth in capacity will help the Group mitigate the effects of ongoing volatility in our traditional emerging market products.
Results
Unaudited pre-tax profit for the period was £5.2 million, compared with £6.6 million in the equivalent period of 2017. The reduction in profits was due mainly to the aforementioned fall in assets under management in our core product allied with a 7% contraction in average revenue margins to 0.77%, arising from the higher ratio of "developed" assets under management. In response to these market challenges, some limited cost reductions were implemented towards the year-end, the benefits of which will only come through in the second half of the fiscal year to June 2019.
Gross revenues fell by 9% to £15.6 million while administrative expenses were maintained at £9.5 million. Included in this figure is the cost of the Employee Incentive Plan (EIP) £0.4 million, a slight increase on the equivalent period of the previous year. We have been encouraged by the healthy level of EIP take-up from the vast majority of employees, which, by raising the level of employee ownership, helps align their interests ever more closely with those of our external shareholders. Basic earnings per share were 16.3p after a 20% tax charge, compared with 20.2p in the previous year. Diluted earnings per share were 15.9p, compared with 20p in 2017.
Dividends
Notwithstanding the reduction in earnings per share in the first half, the Board has elected to maintain the interim dividend at 9p per share. In part, this reflects confidence in a marginal recovery in financial performance in the remaining months of this fiscal year but it also reflects the very prudential capital structure of the Group's balance sheet, which at the end of 2018 included cash of £18.7 million. While the Board remains alert to any opportunities that may arise to deploy these cash reserves to grow the business, it is equally mindful of the maxim to "use it or lose it", namely that cash should not be accumulated ad infinitum. Accordingly, your Board is pleased to announce a special dividend of 13.5p per share, equivalent to one half of the current annual distributions, to coincide with this year's interim payment. It is your Board's view that this additional payment, which will reduce net cash reserves by c£3.4 million, represents a fair balance between the need to reward shareholders while maintaining sufficient reserves to capitalise on any opportunities that may arise.
Your Board
In anticipation of David Cardale's retirement from the CLIG Board in October 2018, Jane Stabile was elected as a Non-Executive Director in July and has been elected as Chair of the Remuneration Committee. Jane is based in Boston and is the president and founder of IMP Partners LLC, a FinTech consulting business that provides strategic advice on the use of technology to many of the largest global asset managers. With over 30 years' experience in the financial services industry, Jane adds very considerable breadth to the skill-sets available within the CLIG Board.
During the course of the last six months, considerable progress has been made in preparation for the retirement of Barry Olliff at the end of 2019. The issue of management succession in people businesses is of crucial importance, particularly when addressing the retirement of the founder and key driver of a business over almost 30 years. Barry is widely recognised throughout the global asset management industry as an expert in the closed-end fund sector and has been the face of CLIG throughout its history and this legacy, therefore, creates its own challenges in terms of a succession strategy. However, we are fortunate that, alongside Barry, we have a number of highly experienced executives who have been immersed in the CLIG culture for many years, including Tom Griffith, who was appointed as Deputy CEO last year. He will be appointed to replace Barry as CEO with effect from 1st March 2019. In tandem with Tom's appointment, Mark Dwyer, currently CIO-EM strategies, will be promoted to Group CIO. Both will continue to serve on the Board as Executive Directors. Barry will continue to play an active executive role on the Board alongside his colleagues throughout 2019 and will remain available as a consultant to CLIG for a further two-year period in order to provide a degree of continuity to both clients and shareholders thereafter. In summary, the overriding objective through the coming transitional year is "Business as Usual".
Outlook
As I have made clear in this statement and as our latest results testify, 2018 proved to be a year of major challenge across the emerging markets, particularly in the half year just ended. Nevertheless, CLIG has faced many similar if not greater challenges over the years since first becoming a listed company in 2006. Throughout that period, we have adhered strictly to a value-driven process in the management of our clients' assets and a prudent policy with regard to cost and operational management of the business. Taken together, we believe that these twin tenets will continue to serve the interests of both clients and shareholders in the form of enhanced returns and I would like to thank our loyal and hard-working employees for their efforts in sustaining this ethos during this challenging period.
Barry Aling
Chairman
15th February 2019
CHIEF EXECUTIVE OFFICER'S REVIEW
FuM Flows
As shareholders will have seen from the monthly release of data on our web site, www.citlon.co.uk, FuM have reduced predominantly as a result of market falls and to a lesser extent marginal net outflows.
The table on page 5 of the interim accounts shows flows into and out of our various business areas over the past four years and year to date.
EM SWAD
With markets becoming increasingly volatile, it's not surprising that the Emerging Markets have become volatile too. Having said that, discounts are wide across the board, not just amongst Emerging Market Closed-End Funds but also throughout our diversification products. This should provide comfort to clients and shareholders alike. To a great extent, our recent performance has reflected a widening in the SWAD.
CLIG KPI
As a result of changes in the peer group, also our own mix of business, we have decided to change our primary Key Performance Indicator (KPI).
As you are aware, we are encouraged to have a KPI via which you as shareholders can measure us as management - this is also a benchmark that we can attempt to beat.
For many years now, and as illustrated in the past four years accounts, our prime KPI has been to outperform the Total Return (T/R) of our peers' share prices.
To take account of the above-mentioned changes in our peer group, and also the mix of our business, we have decided to use the following as our KPI's. We will attempt to:
•Double the T/R of M1EF. M1EF is the most relevant Emerging Markets Index.
•Compound the T/R of a CLIG share by 7.5% to 12.5%, through a cycle, on an annualised basis. We will define a cycle as a rolling 5 years.
We don't like the idea of changing our prime KPI, but it seems that our KPI should be relevant, accessible and accountable.
We believe that what we are proposing is fair, is not risky but will stretch management in terms of their own performance. We will start reporting on the new prime KPI's in the 2019 annual accounts.
Template
Please see page 7 of our interim accounts for our Template projecting CLIG profitability, using a number of key assumptions. This is not a profit forecast, rather it should be used in conjunction with data that can be reviewed, and is updated monthly, on the CLIG website.
CLIM Expenses
With reduced FuM, we have made some reductions in expenses which will benefit the P&L to a greater extent in FYE 2020 rather than 2019.
Savings have been made in many areas of the firm including US Client Servicing, Performance and Attribution and Operations. Our target is to get our costs back down to c£1.0 million per month from around £1.1 million. We will be continuing to reduce our costs and will take more aggressive action in the event that FuM falls to US$4.5 billion.
Dividends
For some time, the CLIG Board has been reviewing its cash position and overall distribution policy. We believe that conformity to our policy of a rolling 5-year dividend cover ratio of 1.2/1 remains appropriate and adherence to this policy has allowed us to maintain this year's interim payment of 9p per share.
Equally, however, and allowing for the many opportunities for ongoing diversification, including US$5 million (current market value US$5.5 million) recently invested to seed two REIT funds, together with our regulatory and statutory capital requirements, the Group has sufficient excess capital to reward shareholders with a special one-off distribution of 13.5p per share, the cost of which will be £3.4 million.
Additional distributions of this nature are made possible by a consistent and prudent policy of capital management over many years and we are pleased to be able to reward shareholders through careful adherence to this policy.
China Fund
As an update to my reference in our 2018 Annual Accounts regarding our involvement with the China Fund, our engagement has resulted in some significant changes.
The Manager has been changed, the Expense Ratio has been significantly reduced and, via resignations and retirements, the Board is being reduced from seven to three.
Apart from our response to being sued, which was to defend ourselves, our final action that potentially worked as the catalyst for change was our public statement that we would not vote for any of the Directors who had sued us.
Our belief is that the China Fund is now likely to demonstrate good corporate governance and will be very competitive in the marketplace.
REIT Team
As shareholders will be aware, last year we identified a REIT team. They, having joined, will be managing what would seem to be the last of our Closed-End Fund (CEF) diversification products.
We now have two REIT Funds (International and Emerging Markets) that have been created for US tax exempt institutions. Apart from some seed money invested by CLIG, we will be attempting to raise some money from a few of our clients.
We hope that, as with a number of products that we have developed over the past few years, we will gain traction as REITs become more mainstream and specifically the EM REIT asset class develops.
As implied above, we would rather have a range of CEF products to market, thus diversifying our revenue sources, than be tied to just Emerging Market CEFs. To this end, as of 31st December 2018 we have around 19% of our FuM in what we collectively refer to as our Diversification products. These Diversification products now represent around 14% of our income.
Client and Employee longevity
While it's not fashionable to detail client and employee longevity, and while the bar charts on pages 8 and 9 of the interim accounts look similar to last year, I would suggest that core values play a very important role in these outcomes.
Despite challenging relative performance conditions in 2018, our clients have been very loyal. I believe that this is because we send a clear message, provide good quality attribution and are always available for telephone calls and visits, and, to the extent reasonably possible, we respond to emails the same day.
From an employee perspective, over the 28 years since this business was started, we have re-employed six members of staff. I guess that the grass is not always greener? The most recent person to rejoin us was Carlos Yuste, who had been on the CLIG Board from 1st June 2005 to 31st December 2015, and is now serving as Head of Business Development.
I continue to believe that having respect for, and trying to treat fairly, the three stakeholders in our business is at the centre of our core values.
My intended CLIG share sales
As previously reported, my plan is to only sell CLIG shares at specific price levels. This in my opinion is an accountable way to proceed. My intention remains to sell up to 500,000 shares at each of 450p, 475p and 500p subject to close periods etc.
CLIG and CLIM Transition[s]
The transition of responsibilities within CLIG and CLIM is nearly complete. On 1st March, Tom Griffith will become Group CEO with Mark Dwyer becoming Group CIO.
I will retain my position on the CLIG Board up until my intended retirement on 31st December 2019.
I would like to wish my colleagues all the best in their new positions.
Barry Olliff
Chief Executive Officer
15th February 2019
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 31ST DECEMBER 2018
| Six months ended | Six months ended | Year ended | ||
| 31st Dec 2018 | 31st Dec 2017 | 30th June 2018 | ||
| (unaudited) | (unaudited) | (audited) | ||
| Note | £ | £ | £ | |
| Revenue Gross fee income | 3 | 15,562,330 | 17,076,005 | 33,930,846 |
| Commissions payable | (429,655) | (605,753) | (1,159,580) | |
| Custody fees payable | (611,701) | (486,163) | (1,164,477) | |
| Net fee income | 14,520,974 | 15,984,089 | 31,606,789 | |
| Administrative expenses Staff costs | 7,131,264 | 7,080,437 | 14,066,857 | |
| Other administrative expenses | 2,179,737 | 2,275,926 | 4,717,139 | |
| Depreciation and amortisation | 143,950 | 140,622 | 294,799 | |
| (9,454,951) | (9,496,985) | (19,078,795) | ||
| Operating profit | 5,066,023 | 6,487,104 | 12,527,994 | |
| Interest receivable and similar gains* | 4 | 96,379 | 81,804 | 264,501 |
| Profit before tax | 5,162,402 | 6,568,908 | 12,792,495 | |
| Income tax expense | (1,057,440) | (1,439,640) | (2,732,152) | |
| Profit for the period | 4,104,962 | 5,129,268 | 10,060,343 | |
| Profit attributable to: | ||||
| Equity shareholders of the parent | 4,104,962 | 5,129,268 | 10,060,343 | |
| Basic earnings per share | 5 | 16.3p | 20.2p | 39.5p |
| Diluted earnings per share | 5 | 15.9p | 20.0p | 39.3p |
| Six months ended | Six months ended | Year ended | |
| 31st Dec 2018 | 31st Dec 2017 | 30th June 2018 | |
| (unaudited) | (unaudited) | (audited) | |
| £ | £ | £ | |
| Profit for the period | 4,104,962 | 5,129,268 | 10,060,343 |
| Fair value gains on available-for-sale investments*/** | - | 47,809 | 1,694 |
| Reclassification of fair value gains on disposal of | |||
| available-for-sale investments* | - | (70,702) | (154,384) |
| Foreign exchange gains/(losses) on non-monetary assets | 14,786 | (31,060) | (20,884) |
| Other comprehensive income | 14,786 | (53,953) | (173,574) |
| Total comprehensive income for the period attributable to the equity shareholders of the parent | 4,119,748 | 5,075,315 | 9,886,769 |
| 31st Dec 2018 (unaudited) | 31st Dec 2017 (unaudited) | 30th June 2018 (audited) | ||
| Note | £ | £ | £ | |
| Non‐current assets Property and equipment | 755,598 | 500,766 | 450,241 | |
| Intangible assets | 246,731 | 300,873 | 292,037 | |
| Other financial assets | 37,308 | 38,461 | 38,170 | |
| Deferred tax asset | 275,663 | 195,430 | 119,078 | |
| 1,315,300 | 1,035,530 | 899,526 | ||
| Current assets Trade and other receivables | 5,338,388 | 6,111,180 | 5,833,160 | |
| Available-for-sale financial assets | - | 536,095 | - | |
| Other financial assets | 187,000 | 216,081 | 195,112 | |
| Cash and cash equivalents | 6 | 18,699,003 | 15,620,633 | 19,704,111 |
| 24,224,391 | 22,483,989 | 25,732,383 | ||
| Current liabilities Trade and other payables | (4,653,996) | (3,544,063) | (4,801,433) | |
| Current tax payable | (262,375) | (507,791) | (361,021) | |
| Creditors, amounts falling due within one year | (4,916,371) | (4,051,854) | (5,162,454) | |
| Net current assets | 19,308,020 | 18,432,135 | 20,569,929 | |
| Total assets less current liabilities | 20,623,320 | 19,467,665 | 21,469,455 | |
| Non‐current liabilities Deferred tax liability | (3,221) | (73,019) | (3,221) | |
| Net assets | 20,620,099 | 19,394,646 | 21,466,234 | |
| Capital and reserves Share capital | 266,867 | 268,617 | 268,617 | |
| Share premium account | 2,256,104 | 2,256,104 | 2,256,104 | |
| Investment in own shares | 7 | (4,569,614) | (4,066,413) | (4,699,115) |
| Fair value reserve* | - | 143,528 | 13,731 | |
| Share option reserve | 344,511 | 410,328 | 372,762 | |
| EIP share reserve | 752,466 | 352,801 | 605,707 | |
| Foreign exchange reserve | 103,041 | 78,079 | 88,255 | |
| Capital redemption reserve | 24,847 | 23,097 | 23,097 | |
| Retained earnings* | 21,441,877 | 19,928,505 | 22,537,076 | |
| Total equity attributable to the equity shareholders of the parent | 20,620,099 | 19,394,646 | 21,466,234 |
| Share capital £ | Share premium account £ | Investment in own shares £ | Fair value reserve £ | Share option reserve £ | EIP share reserve £ | Foreign exchange reserve £ | Capital redemption reserve £ | Retained earnings £ | Total attributable to share- holders £ | |
| At 30th June 2018 | 268,617 | 2,256,104 | (4,699,115) | 13,731 | 372,762 | 605,707 | 88,255 | 23,097 | 22,537,076 | 21,466,234 |
| Adjustment on initial application of IFRS 9* | - | - | - | (13,731) | - | - | - | - | 13,731 | - |
| Adjusted balance at 1st July 2018 | 268,617 | 2,256,104 | (4,699,115) | - | 372,762 | 605,707 | 88,255 | 23,097 | 22,550,807 | 21,466,234 |
| Profit for the period | - | - | - | - | - | - | - | - | 4,104,962 | 4,104,962 |
| Other comprehensive income | - | - | - | - | - | - | 14,786 | - | - | 14,786 |
| Total comprehensive income | - | - | - | - | - | - | 14,786 | - | 4,104,962 | 4,119,748 |
| Transactions with owners | ||||||||||
| Share option exercise | - | - | 204,080 | - | (26,780) | - | - | - | 26,780 | 204,080 |
| Purchase of own shares | - | - | (465,416) | - | - | - | - | - | - | (465,416) |
| Share cancellation | (1,750) | - | - | - | - | - | - | 1,750 | (649,120) | (649,120) |
| Share-based payment | - | - | - | - | (1,471) | - | - | - | - | (1,471) |
| EIP provision | - | - | - | - | - | 344,388 | - | - | - | 344,388 |
| EIP vesting/forfeiture | - | - | 390,837 | - | - | (197,629) | - | - | - | 193,208 |
| Deferred tax share opts | - | - | - | - | - | - | - | - | (49,683) | (49,683) |
| Current tax share opts | - | - | - | - | - | - | - | - | 1,784 | 1,784 |
| Dividends paid | - | - | - | - | - | - | - | - | (4,543,653) | (4,543,653) |
| Total transactions with owners | (1,750) | - | 129,501 | - | (28,251) | 146,759 | - | 1,750 | (5,213,892) | (4,965,883) |
| As at 31st December 2018 | 266,867 | 2,256,104 | (4,569,614) | - | 344,511 | 752,466 | 103,041 | 24,847 | 21,441,877 | 20,620,099 |
| Share capital £ | Share premium account £ | Investment in own shares £ | Fair value reserve £ | Share option reserve £ | EIP share reserve £ | Foreign exchange reserve £ | Capital redemption reserve £ | Retained earnings £ | Total attributable to share- holders £ | |
| At 1st July 2017 | 268,617 | 2,256,104 | (4,355,887) | 166,421 | 442,379 | 101,497 | 109,139 | 23,097 | 19,069,725 | 18,081,092 |
| Profit for the period | - | - | - | - | - | - | - | - | 5,129,268 | 5,129,268 |
| Other comprehensive income | - | - | - | (22,893) | - | - | (31,060) | - | - | (53,953) |
| Total comprehensive income | - | - | - | (22,893) | - | - | (31,060) | - | 5,129,268 | 5,075,315 |
| Transactions with owners | ||||||||||
| Share option exercise | - | - | 401,630 | - | (52,503) | - | - | - | 52,503 | 401,630 |
| Purchase of own shares | - | - | (112,156) | - | - | - | - | - | - | (112,156) |
| Share-based payment | - | - | - | - | 20,452 | - | - | - | - | 20,452 |
| EIP provision | - | - | - | - | - | 251,304 | - | - | - | 251,304 |
| Deferred tax share opts | - | - | - | - | - | - | - | - | (27,262) | (27,262) |
| Current tax share opts | - | - | - | - | - | - | - | - | 34,897 | 34,897 |
| Dividends paid | - | - | - | - | - | - | - | - | (4,330,626) | (4,330,626) |
| Total transactions with owners | - | - | 289,474 | - | (32,051) | 251,304 | - | - | (4,270,488) | (3,761,761) |
| As at 31st December 2017 | 268,617 | 2,256,104 | (4,066,413) | 143,528 | 410,328 | 352,801 | 78,079 | 23,097 | 19,928,505 | 19,394,646 |
| Share capital £ | Share premium account £ | Investment in own shares £ | Fair value reserve £ | Share option reserve £ | EIP share reserve £ | Foreign exchange reserve £ | Capital redemption reserve £ | Retained earnings £ | Total attributable to share- holders £ | |
| At 1st July 2017 | 268,617 | 2,256,104 | (4,355,887) | 166,421 | 442,379 | 101,497 | 109,139 | 23,097 | 19,069,725 | 18,081,092 |
| Profit for the period | - | - | - | - | - | - | - | - | 10,060,343 | 10,060,343 |
| Other comprehensive income | - | - | - | (152,690) | - | - | (20,884) | - | - | (173,574) |
| Total comprehensive income | - | - | - | (152,690) | - | - | (20,884) | - | 10,060,343 | 9,886,769 |
| Transactions with owners | ||||||||||
| Share option exercise | - | - | 637,799 | - | (83,312) | - | - | - | 83,312 | 637,799 |
| Purchase of own shares | - | - | (981,027) | - | - | - | - | - | - | (981,027) |
| Share-based payment | - | - | - | - | 13,695 | - | - | - | - | 13,695 |
| EIP provision | - | - | - | - | - | 504,210 | - | - | - | 504,210 |
| Deferred tax share opts | - | - | - | - | - | - | - | - | (100,430) | (100,430) |
| Current tax share opts options | - | - | - | - | - | - | - | - | 50,204 | 50,204 |
| Dividends paid | - | - | - | - | - | - | - | (6,626,078) | (6,626,078) | |
| Total transactions with owners | - | - | (343,228) | - | (69,617) | 504,210 | - | - | (6,592,992) | (6,501,627) |
| As at 30th June 2018 | 268,617 | 2,256,104 | (4,699,115) | 13,731 | 372,762 | 605,707 | 88,255 | 23,097 | 22,537,076 | 21,466,234 |
| Six months ended | Six months ended | Year ended | |
| 31st Dec 2018 | 31st Dec 2017 | 30th June 2018 | |
| (unaudited) | (unaudited) | (audited) | |
| £ | £ | £ | |
| Cash flow from operating activities Operating profit | 5,066,023 | 6,487,104 | 12,527,994 |
| Adjustments for: | |||
| Depreciation charges | 93,028 | 93,930 | 200,332 |
| Amortisation of intangible assets | 50,922 | 46,692 | 94,467 |
| Share-based payment charge | (1,471) | 20,452 | 13,695 |
| EIP charge | 342,565 | 251,304 | 504,210 |
| Translation adjustments | (58,341) | 147,040 | 100,657 |
| (Profit)/loss on disposal of fixed assets | (240) | - | 202 |
| Cash generated from operations before changes in working capital | 5,492,486 | 7,046,522 | 13,441,355 |
| Decrease/(increase) in trade and other receivables | 494,772 | (253,285) | 24,735 |
| Increase in trade and other payables | 47,594 | 141,382 | 1,398,752 |
| Cash generated from operations | 6,034,852 | 6,934,619 | 14,864,842 |
| Interest received | 45,667 | 21,785 | 47,105 |
| Interest receivable | 14,316 | - | 8,615 |
| Taxation paid | (1,360,570) | (1,358,849) | (2,818,992) |
| Net cash generated from operating activities | 4,734,265 | 5,597,555 | 12,101,570 |
| Cash flow from investing activities Purchase of property and equipment | (388,975) | (52,263) | (136,903) |
| Proceeds from sale of property and equipment | - | - | - |
| Purchase of non-current financial assets | - | (1,480) | (2,272) |
| Proceeds from sale of non-current financial assets | - | 71 | 1,654 |
| Purchase of current financial assets | - | (148,037) | (151,467) |
| Proceeds from sale of current financial assets | 57,064 | 443,623 | 978,356 |
| Net cash (used in)/generated from investing activities | (331,911) | 241,914 | 689,368 |
| Cash flow from financing activities Ordinary dividends paid | (4,543,653) | (4,330,626) | (6,626,078) |
| Purchase and cancellation of own shares | (649,120) | - | - |
| Purchase of own shares by employee benefit trust | (465,416) | (112,156) | (981,027) |
| Proceeds from sale of own shares by employee | |||
| benefit trust | 204,080 | 401,630 | 637,799 |
| Net cash used in financing activities | (5,454,109) | (4,041,152) | (6,969,306) |
| Net (decrease)/increase in cash and cash equivalents | (1,051,755) | 1,798,317 | 5,821,632 |
| Cash and cash equivalents at start of period | 19,704,111 | 13,936,558 | 13,936,558 |
| Effect of exchange rate changes | 46,647 | (114,242) | (54,079) |
| Cash and cash equivalents at end of period | 18,699,003 | 15,620,633 | 19,704,111 |
| Note | Group £ | |
| Closing retained earnings - IAS 39 as at 30th June 2018 Adjustment to retained earnings from adoption of IFRS 9 and reclassification of investments from AFS FVOCI to FVTPL | a | 22,537,076 13,731 |
| Opening retained earnings - IFRS 9 as at 1st July 2018 | 22,550,807 |
| Financial assets | Note | Loans and receivables £ | Amortised cost £ | FVTPL £ | Available for sale FVOCI £ | Total financial assets £ |
| Closing balance - IAS 39 | ||||||
| as at 30th June 2018 | 24,836,049 | - | 195,112 | 38,170 | 25,069,331 | |
| Reclassify loans and receivables to amortised cost | (24,836,049) | 24,836,049 | - | - | - | |
| Reclassify investments from AFS FVOCI to FVTPL | a | - | - | 38,170 | (38,170) | - |
| Opening balance - IFRS 9 as at 1st July 2018 | - | 24,836,049 | 233,282 | - | 25,069,331 | |
| The impact of changes to the Group's equity is as follows: | Effect on fair value reserve | Effect on retained earnings | |
| Note | £ | £ | |
| Closing balance - IAS 39 as at 30th June 2018 | 13,731 | 22,537,076 | |
| Reclassify investments from AFS FVOCI to FVTPL | a | (13,731) | 13,731 |
| Opening balance - IFRS 9 as at 1st July 2018 | - | 22,550,807 |
| Original - IAS 39 | New - IFRS 9 | £ | £ | |
| Non‐current financial assets Investment in own funds | FVOCI | FVTPL | 38,170 | 38,170 |
| Current financial assets Trade and other receivables | Loans and | Amortised | ||
| receivables | cost | 5,131,938 | 5,131,938 | |
| Listed investments | FVTPL | FVTPL | 195,112 | 195,112 |
| Cash and cash equivalents | Loans and | Amortised | ||
| receivables | cost | 19,704,111 | 19,704,111 | |
| Current financial liabilities Trade and other payables | FVTPL | FVTPL | 264,790 | 264,790 |
| Financial liabilities | Loans and | Amortised | ||
| receivables | cost | 4,413,011 | 4,413,011 |
| USA £ | Canada £ | UK £ | (ex UK) £ | Other £ | Total £ | |
| Six months to 31st Dec 2018 Revenue | 14,404,701 | 475,393 | 184,057 | 498,179 | - | 15,562,330 |
| Non-current assets: | ||||||
| Property and equipment | 294,249 | - | 423,482 | - | 37,867 | 755,598 |
| Intangible assets | 206,543 | - | 40,188 | - | - | 246,731 |
| Six months to 31st Dec 2017 Revenue | 15,757,242 | 502,842 | 235,029 | 580,892 | - | 17,076,005 |
| Non-current assets: | ||||||
| Property and equipment | 361,800 | - | 93,275 | - | 45,691 | 500,766 |
| Intangible assets | 283,382 | - | 17,491 | - | - | 300,873 |
| Year to 30th June 2018 Gross fee income | 31,334,283 | 968,724 | 453,443 | 1,174,396 | - | 33,930,846 |
| Non-current assets: | ||||||
| Property and equipment | 324,324 | - | 85,907 | - | 40,010 | 450,241 |
| Intangible assets | 244,704 | - | 47,333 | - | - | 292,037 |
| Six months ended | Six months ended | Year ended | |
| 31st Dec 2018 | 31st Dec 2017 | 30th June 2018 | |
| (unaudited) | (unaudited) | (audited) | |
| £ | £ | £ | |
| Interest on bank deposit | 45,667 | 21,785 | 47,105 |
| Gain on sale of investments | 38,608 | 60,019 | 298,534 |
| Unrealised loss on investments | (2,212) | - | (89,753) |
| Interest receivable on restated US state tax returns | 14,316 | - | 8,615 |
| 96,379 | 81,804 | 264,501 |
| Six months ended | Six months ended | Year ended | ||
| 31st Dec 2018 | 31st Dec 2017 | 30th June 2018 | ||
| (unaudited) | (unaudited) | (audited) | ||
| Note | £ | £ | £ | |
| Cash at bank and in hand | 14,778,664 | 15,620,633 | 19,704,111 | |
| Committed cash | 11 | 3,920,339 | - | - |
| Total cash and cash equivalents | 18,699,003 | 15,620,633 | 19,704,111 | |
| 31st December 2018 | Level 1 £ | Level 2 £ | Level 3 £ | Total £ |
| Financial assets at fair value through profit or loss Investment in own funds* | - | 37,308 | - | 37,308 |
| Investment in other financial assets | 187,000 | - | - | 187,000 |
| Total | 187,000 | 37,308 | - | 224,308 |
| Financial liabilities at fair value through profit or loss Forward currency trades | - | 113,713 | - | 113,713 |
| Total | - | 113,713 | - | 113,713 |
| 31st December 2017 | Level 1 £ | Level 2 £ | Level 3 £ | Total £ |
| Available‐for‐sale financial assets Investment in own funds | - | 574,556 | - | 574,556 |
| Total | - | 574,556 | - | 574,556 |
| Financial assets at fair value through profit or loss Investment in other financial assets | 216,081 | - | - | 216,081 |
| Forward currency trades | - | 121,323 | - | 121,323 |
| Total | 216,081 | 121,323 | - | 337,404 |
| 30th June 2018 | Level 1 £ | Level 2 £ | Level 3 £ | Total £ |
| Available‐for‐sale financial assets Investment in own funds | - | 38,170 | - | 38,170 |
| Total | - | 38,170 | - | 38,170 |
| Financial assets at fair value through profit or loss Investment in other financial assets | 195,112 | - | - | 195,112 |
| Forward currency trades | - | - | - | - |
| Total | 195,112 | - | - | 195,112 |
| Financial liabilities at fair value through profit or loss Forward currency trades | - | 264,790 | - | 264,790 |
| Total | - | 264,790 | - | 264,790 |