REG - City of Lon Inv Grp - PRE-CLOSE TRADING UPDATE for year to 30 June 2023

City of London InvestmentAnnouncement

25/07/2023 07:00

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RNS Number : 0093H  City of London Investment Group PLC  25 July 2023

City of London Investment Group PLC

25 July 2023

 

The information contained within this announcement is deemed by the Group to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014. Upon the publication of this announcement via the
Regulatory Information Service, this inside information is now considered to
be in the public domain.



CITY OF LONDON INVESTMENT GROUP PLC

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

 

PRE-CLOSE TRADING UPDATE for the year to 30 June 2023

 

City of London (LSE: CLIG), a leading specialist asset management group
offering a range of institutional and retail products investing primarily in
closed-end funds ("CEFs"), provides a pre-close trading update for its
financial year ended 30 June 2023. The numbers that follow are unaudited.

 

On a consolidated basis, Funds under Management (FuM) were US$9.4 billion
(£7.4 billion) at 30 June 2023.  This compares with US$9.2 billion (£7.6
billion) at the Group's year end on 30 June 2022.  A breakdown by strategy
follows:

 

         FuM ($ million)                             Strategy Index
         Jun-23      Jun-22  %            Net                                      %
         (estimate)          inc/dec      Flows                                    inc/dec
 EM      3,580       3,703   (3%)         (206)      MSCI EM Net TR                1.7%
 KIM     3,520       3,433   3%           (129)      Not applicable
 INTL    1,983       1,812   9%           (51)       MSCI ACWI  ex US              12.7%
 OV      244         193     26%          35         ACWI/Barclays Global Agg      7.5%
 Other*  97          83      17%          (6)
         9,424       9,224                (357)

* includes Frontier, REIT and seed investments

 

Although wider discounts were a headwind for all CEF strategies, investment
performance was ahead of benchmark for the bulk of CLIM's assets due to strong
NAV performance in the Emerging Market strategy.  The International strategy
was slightly behind benchmark over the period while the Opportunistic Value
strategy outperformed. KIM's taxable fixed income, conservative balanced and
SPAC strategies outperformed their market indices over the period, while
equity strategies lagged their benchmarks.

 

Net investment outflows were US$357 million for the Group over the period as
clients reduced exposure to markets due to ongoing volatility, pension fund
de-risking and competition from cash products. Attractive discounts across the
strategies will be the focus of marketing efforts in the second half of 2023.

 

Operations

 

The Group's income currently accrues at a weighted average rate of
approximately 71 basis points of FuM, net of third party commissions.

 

The Group's overheads for the year to 30 June 2023 are expected to be £22.5
million (2022: £19.7 million), primarily as a result of weaker sterling
against USD as well as higher employee retention and retirement costs during
the year. "Fixed" costs are c.£1.9 million per month, and accordingly the
run-rate for operating profit, before profit-share and amortisation of
intangibles is approximately £2.6 million per month based upon current FuM
and a US$/£ exchange rate of US$1.2703 to £1 as at 30 June 2023.

 

For the year to 30 June 2023, the Group estimates that the unaudited profit
before amortisation of intangibles and taxation to be approximately £23.4
million (2022: £27.2 million profit before amortisation of intangibles).

 

Profits after an anticipated tax charge of £3.9 million (representing 21% of
profits before taxation) will be approximately £14.8 million (2022: profits
of £18.1 million after a tax charge of £5.0 million, representing 22% of
profits before taxation). Basic and fully diluted earnings per share are
expected to be 30.4p and 29.8p respectively (2022: 36.9p and 36.4p).

 

Dividend

 

The Board is proposing to recommend a final dividend of 22p per share (2022:
22p), subject to approval by shareholders at the Company's Annual General
Meeting to be held on 23 October 2023. This would bring the total dividend
payment for the year to 33p (2022: 33p, special dividend 13.5p). Rolling
five-year dividend cover based on underlying profits, excluding the special
dividend equates to 1.24 times (2022: 1.34 times).

 

The Board confirms the final dividend timetable for the year to 30 June 2023:

 

 ·     Ex-dividend date:                                         28 September 2023
 ·     Dividend record date:                                     29 September 2023
 ·     DRIP election date/ deadline for currency election:       6 October 2023
 ·     Announcement of USD dividend conversion                   13 October 2023
 rate:
 ·     Dividend payment date:                                    27 October 2023

 

City of London expects to announce its final results alongside publication of
its Accounts for the year to 30 June 2023 on 18 September 2023. The Group's
Annual General Meeting will be held on 23 October 2023.

 

City of London Investment Group is a UK registered company, listed on the
London Stock Exchange and declares its dividends in GBP.  Shareholders based
in the US can now elect to receive dividends in USD, should they wish to do
so. The currency conversion rate from GBP to USD will be fixed two weeks
before the dividend payment date. The currency election form can be found on
our website at
https://www.clig.com/investor-reports/Currency-Election-Form-2022.pdf
(https://www.clig.com/investor-reports/Currency-Election-Form-2022.pdf)

 

Alternatively, overseas shareholders may be able to use the International
Payment Service (IPS) and receive dividend payments direct to their bank
account in local currency. Further information regarding the IPS including
terms and conditions, costs and forms for signing up are available from Link
Group at https://ww2.linkgroup.eu/ips (https://ww2.linkgroup.eu/ips) .

 

Dividend cover template

 

Please see dividend cover template attached
here. http://www.rns-pdf.londonstockexchange.com/rns/0093H_1-2023-7-24.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/0093H_1-2023-7-24.pdf)

 

The dividend cover template shows the quarterly estimated cost of dividend
against actual post-tax profits for last year, the current year and the
assumed post-tax profit for next financial year based upon specified
assumptions.

 

Functional and reporting currency change

 

The functional currency of the Company and the presentational currency of the
Group will change to US dollars with effect from 1 July 2023.

 

The Group's revenue is almost entirely US dollar based and the Board believes
that this change will provide investors and other stakeholders with greater
transparency of the Group's performance and reduced foreign exchange
volatility.

 

There will be no change in the Group's dividend policy, and dividends will
continue to be declared in GBP with an option for shareholders based in the US
to elect to receive dividends in USD.

 

Following the change in the Group's presentational currency with effect from 1
July 2023, the Group's interim results for the six-month period ended 31
December 2023, and all subsequent financial information, will be prepared
using US dollars as the presentational currency. Comparative information will
also be provided in US dollars as required by the relevant Accounting
Standards.

 

For further information, please visit https://www.clig.com/ or contact:

 

Tom Griffith, CEO

City of London Investment Group PLC

Tel: 001-610-380-0435

 

Martin Green, James Hornigold

Zeus Capital Limited

Financial Adviser & Broker

Tel: +44 (0)20-3829-5000

 

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.

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