City of London Investment Group PLC

18 July 2016

This announcement contains inside information



CITY OF LONDON INVESTMENT GROUP PLC

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

TRADING UPDATE

for the year to 30 June 2016

City of London (LSE: CLIG), a leading emerging markets asset management group, provides a trading update for its financial year ended 30 June 2016. The numbers that follow are all unaudited.

Funds under management were US$4.0 billion (£3.0 billion) at 30 June 2016 (2015: US$4.2 billion or £2.7 billion), representing a 5% decrease in US$ terms and an 11% increase in GBP terms as a result of the exchange rate moving from 1.57 to 1.33 over the period. Over the same period, the MSCI Emerging Markets TR Net Index fell by 12% in US$ terms, resulting in a relative change in funds under management of +7% versus the benchmark, a product of both positive investment performance and new and existing client inflows.

Investment performance in the emerging markets closed-end fund (CEF) strategy continues to be strong, with results in the first or second quartile versus manager peers for the year ending 30 June 2016. The current size-weighted average discount (SWAD) across client portfolios is c. 14%-15%, indicating that there is still present significant relative value in the strategy. The investment approach adds value beyond this by exploiting volatility of the underlying discounts in the CEF universe, from which portfolios are constructed with their specific SWAD characteristics plus active country allocation.   

The Group's overheads for the year to 30 June 2016 are expected to be £10.7 million (2015: £9.4 million) and the current monthly run-rate is c£0.9m.

For the year to 30 June 2016, City of London expects that pre-tax profits will be approximately £8.0 million (2015: £8.9 million), and that profits after an anticipated tax charge of £2.0 million (25% of pre-tax profits) will be approximately £5.9 million (2015: profits of £6.6 million after a tax charge of £2.3 million, representing 26% of pre-tax profit).  Basic and fully diluted earnings per share are expected to be 23.6p and 23.5p respectively (2015: 26.4p and 26.0p).

As a result of the fall in Emerging Markets during the financial year, earnings cover will be reduced this year but given the Group's strong cash position and optimism with regard to the future, the Board is recommending a maintained final dividend of 16p per share (2015: 16p). This would bring the total for the year to 24p (2015: 24p), a dividend cover of 0.98 times earnings per share (2015: 1.1 times).

The Board confirms the final dividend timetable for the year to 30 June 2016:

·     ex-dividend date:                     13 October 2016

·     dividend record date:             14 October 2016

·     payable:                                        31 October 2016

City of London expects to announce final results alongside publication of its Accounts for the year to 30 June 2016 on 12 September 2016. The Group's Annual General Meeting will be held on 17 October 2016.     

Business Update

·     Virtually all CLIM income is USD based - our fees are sourced from US Institutions

·     Zero FUM effect from BREXIT - zero redemptions FYTD

·     Over 90% of CLIM income on a see through basis is effectively derived from the Emerging Markets

·     Approximately 40% of Group costs are in GBP

·     Only 2.5% of CLIM assets are UCIT'S - very little fall out from BREXIT

Template

Please see the attached graph which is based on the following assumptions and includes the estimated cost of a maintained dividend:

http://www.rns-pdf.londonstockexchange.com/rns/3911E_1-2016-7-17.pdf

Assumptions:

- Starting point Current FuM (end June 2016)

- Net increase in FuM in 2016/2017 (straight-lined to June 2017):

·     emerging market strategies $250m

·     diversification strategies $250m

- Operating margin adjusted monthly for change in product mix and commission run-off

- Market growth: 0%

- Increase in overhead: 5%

- Corporation tax based on an estimated average rate of 26%

- Exchange rate assumed to be £1/$1.35 for entire period

- Number of CLIG Shares in issue (26.9m) less those held by the ESOP Trust (1.9m) as at 30 June 2016

This can also be found on our website at: http://www.citlon.co.uk/shareholders/announcements.php

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

Barry Olliff, CEO

City of London Investment Group PLC

Tel: 001 215 313 3774

Martin R Green

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.