City of London Investment Group PLC

19 July 2017

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 2017

City of London (LSE: CLIG), a leading emerging markets asset management group, provides a trading update for it's financial year ended 30 June 2017. The numbers that follow are all unaudited.

Funds under management were US$4.7 billion (£3.6 billion) at 30 June 2017 (2016: US$4.0 billion or £3.0 billion), representing a 17% increase in US$ terms for the year. Over the same period, the MSCI Emerging Markets TR Net Index rose by 24% in US$ terms. Net asset flows for the year in Emerging Markets were negative c US$306 million (as clients rebalanced into the significant EM equity gains) while they were positive (c US$26 million) in the Diversification strategies. Net mandate wins of c US$125 million are confirmed for early in the new financial year.

Investment performance vs benchmarks for all asset classes was positive with the exception of Frontier which was marginally negative.

The Group's overhead for the year to 30 June 2017 is expected to be £11.9 million (2016: £10.7 million) and the current monthly run-rate is c £1.0m. A significant part of this increase is as a result of the fall in GBP vs US$.

For the year to 30 June 2017, the Group expects that pre-tax profits will be approximately £11.6 million (2016: £8.0 million), and that profits after an anticipated tax charge of £2.5 million (22% of pre-tax profits) will be approximately £9.1 million (2016: profits of £5.9 million after a tax charge of £2.1 million, representing 27% of pre-tax profit).  The tax charge includes an estimated refund of £0.4 million relating to prior years' US state taxes, which if excluded would result in a Group tax rate of 25% of pre-tax profits.  Basic and fully diluted earnings per share are expected to be 36.9p and 36.7p respectively (2016: 23.3p and 23.1p).

The Board is recommending an increased final dividend of 17p per share (2016: 16p). This would bring the total for the year to 25p (2016: 24p), for dividend cover of 1.46 times (2016: 0.96 times).

The Board confirms the final dividend timetable for the year to 30 June 2017:

·     ex-dividend date:                     12 October 2017

·     dividend record date:             13 October 2017

·     payable:                                        31 October 2017

City of London expects to announce final results alongside publication of its Accounts for the year to 30 June 2017 on 18 September 2017. The Group's Annual General Meeting will be held on 23 October 2017.   

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/4418L_-2017-7-18.pdf 

Assumptions:

§ Starting point Current FuM (end June 2017)

§ Net increase in FuM in 2017/2018 (straight-lined to June 2018):

·     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 overheads: 3%

§ EIP charge: 2%

§ Corporation tax based on an estimated average rate of 23%

§ Exchange rate assumed to be £1/$1.30 for entire period

§ Number of CLIG Shares in issue (26.9m) less those held by the Employee Benefit Trust (1.5m) as at 30 June 2017

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

CLIG shares

In line with his previously announced intention, during the financial year Barry Olliff sold 500,000 CLIG shares at 400p. Going forward, his revised intention is to reduce his holding progressively at 25p price increments, commencing with up to 250,000 shares at 425p and up to a further 250,000 shares at 450p. His current shareholding is 2,275,186, 8.46% of shares in issue.

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.