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City of London still attractive

City of London Investment Group is attracting fresh funds and has maintained its generous dividend
September 15, 2014

Investing funds owned by institutional investors into emerging markets and charging a fee is how City of London Investment Group (CLIG) makes its money. So it's hardly surprising that net fee income was down 15 per cent at £20.3m, as assets under management swung between $3.2bn (£2bn) and $3.9bn in volatile markets during the year.

IC TIP: Buy at 321p

More encouragingly, subscriptions and redemptions for the 13-month period (the year end has moved from 31 May to 30 June), were virtually the same, with net outflows in the first half offset by a net inflow in the second half. Fresh funds are being attracted by new closed-end vehicles such as a special situations fund strategy. The company is pacing itself by restricting flows into its emerging markets closed-end funds to $100m per month, but still has a target to raise $750m by December 2015.

Custody payments, which are paid to third parties who introduce new business to City of London, continue to run down, falling from £4.2m to £3.1m. These payments are expected to cease altogether by 2020.

Prior to these figures, analysts at Hardman were forecasting pre-tax profits for the current year of £9.17m and EPS of 26.6p.

CITY OF LONDON INVESTMENT GROUP (CLIG)
ORD PRICE:321pMARKET VALUE:£86m
TOUCH:320-328p12-MONTH HIGH:344pLOW: 225p
DIVIDEND YIELD:7.5%PE RATIO:16
NET ASSET VALUE:52pNET CASH:£10.2m

Year to 31 MayTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201030.010.428.522
201136.513.135.124
201234.111.533.824
201329.48.924.924
30 Jun (£m) (£m) (p) (p)
2014*24.27.220.724
% change†-24-25-23-8

Ex-div: 9 Oct

Payment: 31 Oct

*13 months

†Annualised