City of London Investment Group plc (LSE: CLIG), a leading specialist asset management group offering a range of institutional and retail products investing primarily in closed-end funds (“CEF”), provides a pre-close trading update for its financial year ended 30 June 2021. The numbers that follow are unaudited.
On a consolidated basis, Funds under Management (FuM) were US$11.4 billion (£8.3 billion) at 30 June 2021. This compares with US$5.5 billion (£4.4 billion) at the Group’s year end on 30 June 2020, which was before the merger with Karpus Management Inc. (“KIM”) on 1 October 2020. A breakdown by strategy follows:
| FuM ($ million) | Strategy Index | ||||||||
| Jun-21 | Jun-20 | % | Net | % | |||||
| (estimate) | inc/dec | Flows | inc/dec | ||||||
| EM | 5,393 | 3,828 | 41% | (275) | MSCI EM Net TR | 40.9% | |||
| KIM | 3,919 | 3,578ᶺ | 10% | (213) | Not applicable | ||||
| INTL | 1,938 | 1,244 | 56% | (14) | MSCI ACWI ex US | 35.7% | |||
| OV | 173 | 256 | (32%) | (103) | ACWI/Barclays Global Agg | 19.8% | |||
| Other* | 26 | 175 | (85%) | (169) | |||||
| 11,449 | 9,081 | (774) | |||||||
* includes Frontier, REIT and seed investments
ᶺ KIM FuM as at 1 October 2020 (date of merger)
Strong investment performance across CLIG’s investment strategies resulted from strong NAV performance at the underlying closed end funds and positive discount effects.
At year end, both CLIG operating subsidiaries hit all-time FuM highs following the significant equity market gains of recent months and strong relative performance. This was tempered by the high levels of client rebalancing and liquidations, leading to net outflows of circa US$774 million across the Group’s strategies.
With regard to business development, the Group continues to develop an active pipeline across all of its major CEF offerings.
Operations
The Group’s income currently accrues at a weighted average rate of approximately 74 basis points of FuM, net of third party commissions.
The Group’s overheads for the year to 30 June 2021 are expected to be £16.8 million (2020: £13.0 million). “Fixed” costs are c.£1.6 million per month, and accordingly the run-rate for operating profit, before profit-share and amortisation of intangibles is approximately £3.3 million per month based upon current FuM and a US$/£ exchange rate of US$1.3831 to £1 as at 30 June 2021.
For the year to 30 June 2021, the Group estimates that the unaudited profit before amortisation of intangibles, exceptional merger costs and taxation to be approximately £27.2 million, including non-controlling interest (“NCI”) profit of nil (2020: £10.7 million, NCI loss of £0.2 million).
Profits after an anticipated tax charge of £5.3 million (representing 22% of profits before exceptional merger costs and taxation) will be approximately £17.0m (2020: profits of £7.6million after a tax charge of £2.0 million, representing 19% of profits before exceptional merger costs and taxation). Basic and fully diluted earnings per share are expected to be 39.4p and 38.8p respectively (2020: 30.3p and 29.5p).
Dividend
The Board is proposing to recommend a final dividend of 22p per share (2020: 20p), subject to approval by shareholders at the Company’s Annual General Meeting to be held on 18 October 2021. This would bring the total dividend payment for the year to 33p (2020: 30p). Rolling five-year dividend cover equates to 1.29 times (2020: 1.24 times).
The Board confirms the final dividend timetable for the year to 30 June 2021:
| ex-dividend date: 7 October 2021 dividend record date: 8 October 2021 payable: 29 October 2021 |
City of London Investment Group expects to announce its final results alongside publication of its Accounts for the year to 30 June 2021 on 13 September 2021. The Group’s Annual General Meeting will be held on 18 October 2021.
