?
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
"Itwaswithconsiderablepleasurethatwewitnessedtowardsthe endofthe6monthperiodbothconfirmationof
theturnaround in our investment performance together with renewed interest in taking advantage of
a "cheap" Emerging Markets CEF sector by contrarianandopportunisticinvestors."
DavidCardale,Chairman
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'sstatement
Inwritingthis,mysecondinterimreportasChairman,IfindthatIhavemuchin commonwithGeorgeOsborne,
theUKChancelloroftheExchequer,inreporting inhisAutumnStatementonthestateoftheeconomy.Wehave
comethroughsome difficulttimesbuttherereallyarenowsignificantgreenshootsenablingustotake arathermore
positiveviewofprospectsfor2014.
Thefinancialresultsforthesixmonthperiodto30thNovember2013reflectthelessfavourableinvesting conditionsthatwehavebeenexperiencing.Notonlyweretherefewerprofitabletradingopportunities combinedwithanadverseheadwindspecifictotheCEFsector,butinadditionglobalinvestorscontinuedto benervousofprospectsforemergingeconomiesparticularlycomparedtothedevelopedeconomies.This, togetherwithourbelowparinvestmentperformance,resultedinanenvironmentinwhichtherecontinuedto belittleornointerestfrominvestorsintakingupanynewstrategiesorproducts,includingourown.
Inlightoftheaboveitwaswithconsiderablepleasurethatwewitnessedtowardstheendofthe6month periodbothconfirmationoftheturnaroundinourinvestmentperformancetogetherwithrenewedinterest intakingadvantageofa"cheap"EmergingMarketsCEFsectorbycontrarianandopportunisticinvestors. New
fundsundermanagement("FuM")havesubsequentlybeensubscribedbothbyexistingandnew clientsinourcore
EmergingMarketsCEFproducts.
FuM at the Company's half-year end on 30th November 2013 were US$3.5 billion (£2.1 billion), compared tothe
US$3.7billion(£2.4billion)at31stMay2013.Thedecreaseof6%inUSdollartermscompareswith a2%increase
intheMSCIEmergingMarketsIndex(MXEF).
Results-unaudited
AsaresultofthedeclineinFuM,revenuesforthehalf-yearwere22%lowerat£11.8million(2012:£15.1 million).Aspreviously,ourpracticeofkeepingourratiooffixedcoststovariablecoststoaminimum meantthatoverallcostsdeclinedwithrevenues,producinga19%reductioninadministrativeexpensesto
£8.5millionfortheperiod(2012:£10.5million).Profitbeforetaxwas£3.3millioncomparedto£4.7 millionforthesixmonthsto30thNovember2012,representingadeclineof29%.
Variablecostswithinadministrativeexpensesrepresentedapproximately42%ofthetotal(2012:49%).The principal
componentsareprofit-shareof£1.6million(2012:£2.3million),andthecommissionpayabletoour ex-thirdpartymarketingconsultantof£1.5million(2012:£2.2million).
Basicearningspershare,aftera28%taxchargeof£0.9million(2012:£1.4millionrepresenting29%of profitbeforetax),were9.6p(2012:13.1p).Dilutedearningspersharewere9.6p(2012:12.9p).
Yearend
AsexplainedintheCEO'sreport,yourboardhasdecidedtobringyourcompany'syearendintolinewitha quarterdate
-30thJune.Thelogicinmakingthischangeassetoutinthatreportiscompelling,indeedI wonderwhywehavetakensolonginmakingthechangefromayearenddatethatwasoriginally determinedbythedate
offoundingtheoriginalbusiness.
Dividends
Sincebecomingapubliccompanyin2006,ithasbeenyourboard'spolicyatleasttomaintainthedividend withintheconstraintsoffinancialresponsibility.Inthelightofbothoursubstantialuncommittedliquid resources,togetherwiththeimprovedtradingoutlook,itisourintention,notwithstandingtheweakertrading overthefirsthalfyear,topayamaintaineddividendof8pon28thFebruary2014toshareholdersonthe registeron
7thFebruary2014.
Ourdividendpaymentpolicyhasnormallybeenbasedonasplitofonethird/twothirdsbetweenthe interimandthefinal,andcurrentlytherearenoplansforthistochangehoweverthisassumesa continuationoftherecoverythatwehavebeenbenefitingfrominrecentmonths.Inthelightofthe limitedamountofworkingcapitalthatabusinessofthisnaturebothneedsand,inaddition,isrequiredby theregulatorstomaintain,theboardisreviewingthelogicofourhistoricpolicyofatargetcoverashigh as1.5times.
Board
Aspreviouslyannounced,withtheappointmentofBarryAlinginAugust2013asaUKbasedNEDwenow haveabetterbalanceontheboardandwehavealreadybenefitedfromhisextensiveexperienceinthe LondonandFarEastinternationalequitymarkets.HehasbeenappointedchairmanoftheAuditCommittee withAllanBufferdcontinuingtochairtheRemunerationCommitteeandRianDartnelltheNominations Committee.
Inlinewithourpolicyofputtinginplacelongtermsuccessionarrangements,furtherprogresshasbeen madeinplanningfortheCIOresponsibilityforourcoreEmergingMarketsCEFproducttobedevolvedto MarkDwyerwhohashadapproximately9yearsofexperienceatCityofLondonandisextremelywell versedinour
investmentmethodology.Thisprocessshouldbecompletein2015.
Outlook
Followingonfrommycommentsattheyearend,Icanconfirmthesteadyifunspectacularimprovement inmuchofourbusiness.Whilstthereareexternalpressuresonfeesacrosstheindustry,wearecountering withcontainmentofourowncostsandworkinghardonconvertingsignificantnewbusiness opportunities.InthelightofthisIamhappytorepeatmyearlierstatementintheAnnualReportthatI anticipateasatisfactoryoutcomeforthefinancialperiodasawhole.
DavidCardale
Chairman
17thJanuary2014
ChiefExecutiveOfficer'sreview
FundsunderManagement('FuM')attheGroup'shalfyearend,30thNovember 2013wereUS$3.5billion(£2.1billion).
ThisshouldbecomparedwithUS$3.9 billion(£2.4billion)at30thNovember 2012andUS$3.7billion(£2.4billion)as at31stMay2013.Asanupdate,FuMattheendofDecemberwereUS$3.5billion (£2.1billion).
MXEF,(whichweuseasaproxyviawhichourFuMcanbemeasuredandcompared),was1018atthe
endofNovember2013,1007attheendofNovember2012,928attheendofNovember2011and1008at theendofMay2013.MXEFattheendofDecember2013was1002.Thesepriceindexlevelsshouldbe comparedwiththe
all-timehighinMXEFof1340attheendofOctober2007andourall-timehighassets undermanagementofUS$6.2billion
attheendofApril2011.
ForsometimewehavebeenconsideringthepossibilityofchangingourFinancialYearfromendMayto endJune.Thecomplexityofmakingquarterlytradingannouncementsoutsideourclients'quarterendhas madeourannouncementssignificantlymorecomplicatedthannecessary.Additionallywithour competitorsusingMarch,June,SeptemberandDecemberasquarterendsforbothprofitandperformance calculationpurposes,wehavehadamismatchofinformationintermsofresearchcoverage.Wehave thereforedecidedtoextendthisfinancialyearbyonemonthtoendJune.
Weareinvestigatingifwecanpaythedividendearlierthanwouldotherwisebethecase(aroundthe presentassumeddatein
October).
Overthepastfewyearswehavegraduallyattemptedtobecomemoretransparentwithourshareholders. Thebenefitsofthisaresignificantasnotonlyareshareholdersabletotradeinourshareswithgreater confidence,butinadditiontoourshareholders,CLIMstaffandclients(thethreestakeholdersinour business),arebetterabletodeterminetheconditionofourbusinessandthuswhattheirversionofour sharepriceshouldbe.Westartedthisprocessafewyearsagowithatableshowingtherun-offbenefits fromouragreementwithouroriginalthirdpartymarketingagentintermsofthepotentialamountthey wereowed
duringtheperiodofthecontract'srun-off,andweextendedthislastyearviathepublicationof CLIMmonthlyFuMonourwebsite:http : //www .citlon.co.u k /shar eholde r s/ a nnounce m ents.php
Asweareallaware,increasinglyweareexpectedtobemoretransparentregardingjustaboutevery aspectofourbusiness.Regulators,clientsandconsultants(nottomentionshareholders)areincreasingly expectingthatfundmanagersarebothtransparentand,moreimportant,thatweavoidconflictsofinterest. Fromourpointofviewwehavealwaysattemptedtobeattheleadingedgeintermsofopennessandthis hasenabledus,wehope,toretainthetrustofourshareholdersthroughthisperiodofour underperformance.Obviously,duringadifficultperiodintermsofourbusinessandprofitability,we believethebenefitsofbecomingmoreopenoutweighthestatusquo.
Asaresultofthiswishtobecomemoretransparentwearenowmovinginthedirectionofforward guidance.Mostoftheleadingcentralbankshaveattemptedoverthepastfewyearstobecome significantlymoretransparent.IftheFederalReservecanprovideforwardguidanceasaresultofits analysisoftheUS(andWorld?)economythenIamsurethatCLIGcantoo.
Ourbusinessisasimpleoneandthereforelendsitselftogreatertransparencybaseduponpotentiallya fewkeyassumptions.Ourforwardguidanceisnotaspecificforecast,ratherit'sanattempttoprovidean illustrativeframeworkthatenablesinterestedpartiestocalculatewhatmighthappeninthefuturetoour post-taxprofitsbaseduponthesekeyassumptions.Obviouslyinternallywereviewthisdatamonthlybut wehavedecidedthatquarterlydata,projectedoutsixquarterswouldbeastartingpointinthisregard.
InadditionwehaveproducedactualequivalentdataforF/Y/E2013.
Tablewithassumptions(below)includingthequarterlyestimatedcostofamaintaineddividend:
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 italicsrepresentassumptionsasfollows:
- StartingpointCurrentFuM(Dec2013)
-Pipelineofpotentialmandates(additional$500m)straight-linedtoDec2014andtargetnewmoney
for2015(additional$500m)straight-linedJan-Dec2015
- Operatingmarginadjustedmonthlyforchangeinclientmixandcommissionrun-off
- Marketgrowth:+5%(sixmonthsendJune2014)+anadditional10%(twelvemonthsJune2015)
- Increaseinoverhead:+1%(2014/15)
- Assumestotalnumberandmixofstaffoverheadbetweenthefourofficesremainsconstant
- Corporationtaxbasedonanestimatedaveragerateof28%forY/E2014and27%forY/E2015
- Exchangerateassumedtobe£1/$1.63forentireperiod
- NumberofCLIGSharesinissue(27.0m)lessthoseheldbytheESOPTrust(1.8m)asat31stDec 2013
- IncludesextramonthofincomeinQ42014
- IncludesinQ32013/14profitof$250,000fromsaleofCLIMInternationalCEFFund
For more information, please see Half Year Report 2013/14 at
http://www.citlon.com/shareholders/share_reports.php
Giventheaboveassumptionsitshouldbepossibleforshareholdersandotherinterestedpartiesto constructmodelsprojectingourprofitabilitybasedupontheirownopinions.
As we have suggested in previous statements we are gradually gaining traction in a number of areas of ourbusiness.TheAbsoluteReturngrouphaswonamandatefor$20mandtheFrontier,Developedand NaturalResourceteamsareallexpectedtowinadditionalmandatespriortotheendofcalendar
yearend2014.
IamverypleasedtoreportthattheexpectedinvestmentperformanceoftheEmergingMarketsClosed EndFundteamshouldplaceusinthetop of the secondquartileforcalendar2013.Thiscompletestheprocessof turningaroundourbusinessandconfirmsthatwithgoodpeople,technologyandalsoaconservative countryallocationprocessit'spossibletotakeadvantageofpricinganomaliesamongsttheclosedend fundsinwhichwecaninvest.Iamnowhopefulthatwecanbuildfromthisbaseandcontinuetoprovide consistentuninterruptedalphaforourclients.Baseduponourindepthresearchintonewareasofour attributionwehavelearntalotoverthepastyearorso,themostimportantexampleofthisbeing confirmationthatwidediscountsarenotofthemselvesanopportunitytomakemoney.Havingmadethis pointIwouldaddthattheEmergingMarketsInvestmentManagementteamhasremainedunchanged throughoutthisperiodwithoneexception,theadditionofMarkDwyer.MarkrejoinedCLIMinMay 2012andwillduring2015takeovermyEMCEFCIOresponsibilities.
TheSizeWeightedAverageDiscount(SWAD)remainsverywideandwhileitremainswideshouldenableustocontinuetoprovideadditionalalpha asaresultofthesignificantandongoingcorporateactionsfrommanyoftheEMCEFinwhichweinvest. IftheSWADnarrowstherewill potentiallybeanadditionalbenefit.
BarryM.Olliff
ChiefExecutiveOfficer
17thJanuary2014
ForfurtherinformationpleaseseethemostrecentpresentationtoCLIGshareholdersreleasedtoday. Thisisonourwebsitewww.citlon.co.uk
Consolidated incomestatement
Forthesixmonthsended30thNovember2013
Note | Six months ended 30th Nov 2013 (unaudited) £ |
Six months 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 ofcomprehensiveincome
Forthesixmonthsended30thNovember2013
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 offinancialposition
30thNovember2013
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 ofchangesin equity
Forthesixmonthsended30thNovember2013
Share capital £ | Share premium account £ | Investment in own shares £ | Fair value reserve £ | Share option reserve £ | Capital redemption reserve £ | Retained earnings £ | Total £ | |
At1stJune2013 | 269,377 | 2,045,409 | (4,910,800) | 302,867 | 716,660 | 20,582 | 16,185,941 | 14,630,036 |
Profitfortheperiod | - | - | - | - | - | - | 2,419,807 | 2,419,807 |
Comprehensiveincome | - | - | - | 81,345 | - | - | - | 81,345 |
Totalcomprehensive income | - | - | - | 81,345 | - | - | 2,419,807 | 2,501,152 |
Transactionswith owners Shareoptionexercise | 350 | 15,400 | - | - | (3,717) | - | 3,717 | 15,750 |
Sharecancellation | - | - | - | - | - | - | - | - |
Purchaseofownshares | - | - | - | - | - | - | - | - |
Share-basedpayment | - | - | - | - | (34,247) | - | - | (34,247) |
Deferredtax | - | - | - | - | (50,469) | - | (29,672) | (80,141) |
Currenttaxonshareoptions | - | - | - | - | - | - | 29,627 | 29,627 |
Dividendspaid | - | - | - | - | - | - | (4,020,708) | (4,020,708) |
Totaltransactions withowners | 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 £ | |
At1stJune2012 | 268,784 | 1,980,084 | (4,560,603) | (65,869) | 1,267,553 | 18,562 | 16,380,074 | 15,288,585 |
Profitfortheperiod | - | - | - | - | - | - | 3,309,550 | 3,309,550 |
Comprehensiveincome | - | - | - | 379,361 | - | - | - | 379,361 |
Totalcomprehensive income | - | - | - | 379,361 | - | - | 3,309,550 | 3,688,911 |
Transactionswith owners Shareoptionexercise | 1,563 | 39,075 | 95,125 | - | (20,443) | - | 20,443 | 135,763 |
Sharecancellation | (2,020) | - | - | - | - | 2,020 | (516,241) | (516,241) |
Purchaseofownshares | - | - | (518,822) | - | - | - | - | (518,822) |
Share-basedpayment | - | - | - | - | 86,195 | - | - | 86,195 |
Deferredtax | - | - | - | - | (547,143) | - | (49,970) | (597,113) |
Current tax on share options | - | - | - | - | - | - | 119,389 | 119,389 |
Dividendspaid | - | - | - | - | - | - | (4,050,318) | (4,050,318) |
Totaltransactions withowners | (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 £ | |
At1stJune2012 | 268,784 | 1,980,084 | (4,560,603) | (65,869) | 1,267,553 | 18,562 | 16,380,074 | 15,288,585 |
Profitfortheyear | - | - | - | - | - | - | 6,266,442 | 6,266,442 |
Comprehensiveincome | - | - | - | 368,736 | - | - | - | 368,736 |
Totalcomprehensive income | - | - | - | 368,736 | - | - | 6,266,442 | 6,635,178 |
Transactionswith owners Shareoptionexercise | 2,613 | 65,325 | 168,625 | - | (37,159) | - | 37,159 | 236,563 |
Sharecancellation | (2,020) | - | - | - | - | 2,020 | (516,241) | (516,241) |
Purchaseofownshares | - | - | (518,822) | - | - | - | - | (518,822) |
Share-basedpayment | - | - | - | - | 135,872 | - | - | 135,872 |
Deferredtax | - | - | - | - | (649,606) | - | (57,325) | (706,931) |
Currenttaxonshareoptions | - | - | - | - | - | - | 122,544 | 122,544 |
Dividendspaid | - | - | - | - | - | - | (6,046,712) | (6,046,712) |
Totaltransactions withowners | 593 | 65,325 | (350,197) | - | (550,893) | 2,020 | (6,460,575) | (7,293,727) |
As at 31stMay2013 | 269,377 | 2,045,409 | (4,910,800) | 302,867 | 716,660 | 20,582 | 16,185,941 | 14,630,036 |
Consolidated cash flowstatement
Forthesixmonthsended30thNovember2013
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) |
Proceedsfromsale of ownshares by employeeshare optiontrust | - | 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 |
Cash and cash equivalents at start of period | 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 Basisofpreparationandsignificantaccountingpolicies
Thefinancialinformationcontainedhereinisunauditedanddoesnotcomprisestatutoryfinancial informationwithinthemeaningofsection434oftheCompaniesAct2006.Theinformationforthe yearended31stMay2013hasbeenextractedfromthelatestpublishedauditedaccounts.Thereport oftheindependentauditoronthosefinancialstatementscontainednoqualificationorstatement unders498(2)or(3)oftheCompaniesAct2006.
TheseinterimfinancialstatementshavebeenpreparedinaccordancewiththeDisclosureand TransparencyRulesoftheFinancialConductAuthorityandIAS34"InterimFinancialReporting" asadoptedbytheEuropeanUnion.Theaccountingpoliciesareconsistentwiththosesetoutand appliedinthestatutoryaccountsoftheGroupfortheperiodended31stMay2013,whichwere preparedinaccordancewithIFRSsasadoptedbytheEuropeanUnion.
2 Segmentalanalysis
ThedirectorsconsiderthattheGrouphasonlyonereportablesegment,namelyassetmanagement, andhenceonlyanalysisbygeographicallocationisgiven.
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 |
TheGrouphasclassifiedrevenuebasedonthedomicileofitsclientsandnon-currentassetsbasedon wheretheassetsareheld.Anyindividualclientgeneratingrevenueof10%ormorewouldbe disclosedseparately,aswouldassetsinaforeigncountryiftheyarematerial.
3 Interestreceivableandsimilarincome
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 Earningspershare
Thecalculationofearningspershareisbasedontheprofitfortheperiodof£2,419,807(31stMay
2013-£6,266,442;30thNovember2012-£3,309,550)dividedbytheweightedaveragenumberof ordinarysharesinissueforthesixmonthsended30thNovember2013of25,124,451(31stMay
2013-25,152,921;30thNovember2012-25,254,902).
Assetoutinnote5theEmployeeBenefit Trustheld1,843,283ordinarysharesinthecompanyasat
30thNovember2013. The Trusteesofthe Trusthavewaivedallrightstodividendsassociatedwith theseshares.InaccordancewithIAS33"Earningspershare",theordinarysharesheldbythe EmployeeBenefit Trusthavebeenexcludedfromthecalculationoftheweightedaveragenumberof ordinarysharesinissue.
Thecalculationofdilutedearningspershareisbasedontheprofitfortheperiodof£2,419,807 (31stMay2013-£6,266,442;30thNovember2012-£3,309,550)dividedbythedilutedweighted averagenumberofordinarysharesinissueforthesixmonthsended30thNovember2013of
25,289,846(31stMay2013-25,432,704;30thNovember2012-25,697,187).
5 Investmentinownshares
InvestmentinownsharesrelatestoCityofLondonInvestmentGroupPLCsharesheldbyan
EmployeeBenefitTrustonbehalfofCityofLondonInvestmentGroupPLC.
At30thNovember2013theTrustheld1,843,283ordinary1pshares(31stMay2013-1,843,283;
30thNovember2012-1,877,783),ofwhich1,552,490ordinary1pshares(31stMay2013-
1,773,865;30thNovember2012-1,585,115)weresubjecttooptionsinissue.
6 Dividends
Afinaldividendof16ppershareinrespectoftheyearended31stMay2013waspaidon25thOctober
2013.
Aninterimdividendof8ppershare(2013-8p)inrespectoftheyearended31stMay2014willbe paidon28thFebruary2014tomembersregisteredatthecloseofbusinesson7thFebruary2014.
7 Principalrisksanduncertainties
Changesinmarketprices,suchasforeignexchangeratesandequitypriceswillaffecttheGroup's incomeandthe
valueofitsinvestments.
MostoftheGroup'srevenues,andasignificantpartofitsexpenses,aredenominatedincurrencies otherthansterling,principallyUSandCanadianDollars.Theserevenuesarederivedfromfee incomewhichisbaseduponthenetassetvalueofaccountsmanaged,andhavethebenefitofa naturalhedgebyreferencetotheunderlyingcurrenciesinwhichinvestmentsareheld.Inevitably, debtorandcreditorbalancesarisewhichinturngiverisetocurrencyexposures.
8 General
Theinterimfinancialstatementsforthesixmonthsto30thNovember2013wereapprovedbythe Boardon15thJanuary2014.Thesefinancialstatementsareunaudited,buttheyhavebeenreviewed bytheauditors,havingregardtothebulletin"ReviewofInterimFinancialInformation"issuedby theAuditingPracticesBoard.
Copiesofthisstatementareavailableonourwebsite,ww w .citlon.co.uk
Statement ofdirectors'responsibilities
Thedirectorsareresponsibleforpreparingthecondensedsetoffinancialstatements,inaccordancewith applicablelawandregulationsandconfirmthat,tothebestoftheirknowledge:
? thiscondensedsetoffinancialstatementshasbeenpreparedinaccordancewithIAS34"Interim
FinancialReporting",asadoptedbytheEuropeanUnion,and
? thiscondensedsetoffinancialstatementsincludesafairreviewoftheinformationrequiredbySections DTR4.2.7RandDTR4.2.8RoftheDisclosureandTransparencyRulesoftheUnitedKingdom's
FinancialConductAuthority.
ByorderoftheBoard
BMOlliff
ChiefExecutiveOfficer
Independent reviewreport toCityofLondon Investment Group PLC
Introduction
Wehavebeenengagedbythecompanytoreviewthecondensedsetoffinancialstatementsinthehalf- yearlyfinancialreportforthesixmonthsended30thNovember2013setoutonpages7to14. Wehave readtheotherinformationcontainedinthehalf-yearlyfinancialreportandconsideredwhetheritcontains anyapparentmisstatementsormaterialinconsistencieswiththeinformationinthecondensedsetof financialstatements.
ThisreportismadesolelytothecompanyinaccordancewithInternationalStandardonReview Engagements(UKandIreland)2410'ReviewofInterimFinancialInformationPerformedbythe IndependentAuditoroftheEntity'issuedbytheAuditingPracticesBoard.Ourworkhasbeenundertaken sothatwemightstatetothecompanythosematterswearerequiredtostatetotheminanindependent reviewreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassume responsibilitytoanyoneotherthanthecompany,forourreviewwork,forthisreport,orforthe conclusions
wehaveformed.
Directors'responsibilities
Thehalf-yearlyfinancialreportistheresponsibilityof,andhasbeenapprovedby,thedirectors.The directors
areresponsibleforpreparingthehalf-yearlyfinancialreportinaccordancewiththeDisclosure andTransparencyRulesoftheUnitedKingdom'sFinancialConductAuthority.
AsdisclosedinNote1,theannualfinancialstatementsofthegrouparepreparedinaccordancewith
IFRSsasadoptedbytheEuropeanUnion.Thecondensedconsolidatedsetoffinancialstatements
includedinthishalf-yearlyfinancialreporthasbeenpreparedinaccordancewithInternationalAccounting
Standard34,'InterimFinancialReporting',asadoptedbytheEuropeanUnion.
Ourresponsibility
OurresponsibilityistoexpresstotheCompanyaconclusiononthecondensedsetoffinancialstatements inthehalf-yearlyfinancialreportbasedonourreview.
Scopeofreview
WeconductedourreviewinaccordancewithInternationalStandardonReviewEngagements(UKand Ireland)2410,"ReviewofInterimFinancialInformationPerformedbytheIndependentAuditorofthe Entity"issuedbytheAuditingPracticesBoardforuseintheUnitedKingdom.Areviewofinterim financialinformationconsistsprincipallyofmakingenquiries,primarilyofpersonsresponsiblefor accountingmatters,andapplyinganalyticalandotherreviewprocedures.Areviewissubstantiallylessin scopethananauditperformedinaccordancewithInternationalStandardsonAuditing(UKandIreland) andconsequentlydoesnotenableustoobtainassurancethatwewouldbecomeawareofallsignificant mattersthatmightbeidentifiedinanaudit.Accordinglywedonotexpressanauditopiniononthe financialinformation.
Conclusion
Basedonourreview,nothinghascometoourattentionthatcausesustobelievethatthecondensedsetof financialstatementsinthehalf-yearlyfinancialreportforthesixmonthsended30thNovember2013isnot prepared,inallmaterialrespects,inaccordancewithInternationalAccountingStandard34asadoptedbythe EuropeanUnionandtheDisclosureandTransparencyRulesoftheUnitedKingdom'sFinancialConduct Authority.
MooreStephensLLP
RegisteredAuditorsandCharteredAccountants
150AldersgateStreet,London,EC1A4AB
17thJanuary2014
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