CITY OF LONDON GROUP PLC - INTERIM REPORT AND RESULTS
FOR HALF YEAR ENDED 30TH SEPTEMBER,
2007
19 November 2007
CITY OF LONDON GROUP RAISES INTERIM DIVIDEND BY 20P.C.
WHILE PURSUING ITS STRATEGY IN FINANCIAL SERVICES
* Half Year Pre-Tax Profit Up 23p.c. At £268,000
* Earnings 2.57p Per Share: Interim Payout Of 1.2p Declared
* NAV Maintained In Spite Of Market Turbulence
* Final US$500,000 Royalty Payment Received From Iron Mountain
* FSA Authorisation Given To City Of London Financial Services
* 49.9p.c. Stake Taken In New Fund Management Company
_____________________________________________________________________________
CHAIRMAN'S STATEMENT
We continue in very good shape during a transitional phase, taking
our first modest steps into the financial service arena and able to
report an improvement in both portfolio value and earnings per
share. This has allowed us to raise the interim dividend by 20p.c.
to 1.2p per share, which will be paid to shareholders on the register
as at 30 November, 2007 and payable on 21 December, 2007.
Pre-tax profit for the half year to 30th September amounted to
£268,000 (£218,000) helped by capital gains of £175,000 (£229,000)
and a contribution of £98,000 (£57,000) from the PR side. At the
end of September, 2007 we had unrealised gains of £1.53m compared to
£1.60m at the end of March 2007.
Group earnings per share came to 2.57p (2.28p). It is pleasing to
note that, against a background of turbulence in international
markets over the period, NAV per share was 79.5p at the interim stage
(rising to 84.4p at end-October), compared to 78.8p at the prior
year-end.
The fall in 'other operating income' to £87,000 (£101,000) largely
reflected the further move into cash towards the end of 2006-07, with
the dividend element down from £82,000 to £66,000. This was more
than offset, however, by a doubling in interest receipts (shown as
'financial income') to £69,000 (£34,000).
Our pre-tax profit has once again been affected by an exchange loss,
this time £34,000 (£91,000) mainly due to our US$ deposits, but this
loss was mostly offset in balance sheet sterling terms by an exchange
gain on A$ investments taken directly to revaluation reserve. To
illustrate this point, at the half year end £ investments and cash
amounted to £5.3m, US$ investments and cash £1.4m and A$ investments
and cash £1.2m. In the half year US$ had fallen 4.1% and the A$ risen
5.4% against sterling.
Your Board remains busy on many fronts, actively pursuing acquisition
leads, holding discussions and continuing more detailed appraisal of
interesting propositions. The future of the PR division is under
active consideration.
INTERESTS IN FINANCIAL SERVICES
During the period, the Group completed the long and arduous process
for authorisation by the FSA of City of London Financial Services
Limited, wholly owned by COLG, to conduct regulatory business. The
authorisation became effective on October 16 2007.
Since period end, COLG has subscribed £100,000 for an effective
49.9p.c. stake in Glasgow-based Fundamental Tracker Investment
Management Limited and will have a seat on that company's Board.
FTIM has launched its first product, The Munro Fund, based on the
FTSE 350 and which is aimed at cautious investors taking the longer
view. The fund makes low management charges and is weighted to total
forecast dividend payouts. Cash dividend generation is what this fund
is all about.
FINAL IRON MOUNTAIN PAYMENT
In September, as planned, a final advance royalty payment of
US$500,000 was received from Iron Mountain in connection with the
sale of the Archive-it software business.
PORTFOLIO INVESTMENTS
We took slightly lower profits in total on the sale of investments
over the period compared with the corresponding six months of
2006-07. The major contribution of £128,071 to the first half total
of £175,000 came from a further sale of Tullow Oil shares (30,000
shares) at around seven times our cost price. We continue to retain
a balance of 40,000 shares.
A sale of 10,000 shares in BAE Systems chipped in a realised profit
of £20,322, leaving a balance of 85,808 shares. The only other
realised profit of any note was from the disposal of half our Intel
shares.
NET ASSETS
Net assets at end-September amounted to £8.1m (equivalent to 79.5p
per share) boosted by the placing of 627,935 shares at 78p each to an
institutional investor and non-executive Board members David Walton
Masters and Henry Lafferty.
TOTAL VOTING RIGHTS
For the purposes of the transitional provisions of the Financial
Services Authority's Disclosure and Transparency Rules, the total
number of ordinary shares in issue as at the date of this
announcement is 10,186,635, with each share carrying the right to one
vote. There are no shares held in Treasury. The total number of
voting rights in the Company is therefore 10,186,635.
The above figure may be used by shareholders as the denominator for
the calculations by which they will determine if they are required to
notify their interest in, or a change to their interest in, COLG
under the FSA's Disclosure and Transparency Rules.
PROSPECTS
The first bricks have been laid in the foundation work of building
our financial services business but there is much more to do before
we bring together and complete a springboard for a major move
forward. Successful outcomes to one or more of the situations being
examined would speed up the process but will not be entered into by
the Board unless the terms for such investment are right for our
shareholders.
The portfolio should hold up well against the vagaries in the stock
market and, hopefully, at least one of our 'special situations'
should begin to blossom. In the absence of a dramatic change in
market and trading conditions, the Board plans to pursue a
progressive dividend policy.
JOHN GREENHALGH
Chairman
19 November, 2007.
Contact:
John Chairman City of London Group Tel:
Greenhalgh Plc. 020-7628-5518
Peter Doye Deputy City of London Group
Chairman Plc.
Interim Accounts 30/9/2007
Unaudited Interim Results
INCOME STATEMENT
6 mths to 6 mths to Year to
30/09/07 30/09/06 31/03/07
£'000 £'000 £'000
Revenue 206 160 326
Cost of sales (16) (21) (42)
Gross profit 190 139 284
Administrative expenses
Exchange (loss)/profit (34) (91) (141)
Other (219) (194) (403)
(253) (285) (544)
Profit on sale of investments 175 229 673
Provision for impairment of investments - - (121)
Other operating income 87 101 183
Exceptional Item - - (117)
Operating profit 199 184 358
Financial income 69 34 99
Profit before tax 268 218 457
Income tax expense (6) - (15)
Profit for the period 262 218 442
Attributable to:
Equity holders 262 218 442
Earnings per share 2.57p 2.28p 4.52p
Unaudited Interim Results
BALANCE SHEET
As at As at As at
30/9/07 30/9/06 31/3/07
£'000 £'000 £'000
ASSETS
Non-current assets
Available for sale financial assets 5,768 5,027 5,136
Intangible assets 1 2 2
Property, plant and equipment 5 7 6
5,774 5,036 5,144
Current assets
Trade and other receivables 363 359 665
Cash and short-term deposits 2,152 2,033 2,502
2,515 2,392 3,167
TOTAL ASSETS 8,289 7,428 8,311
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent
Issued capital 1,019 956 956
Share premium 5,107 4,689 4,689
Retained earnings 447 159 287
Asset revaluation reserve 1,532 1,491 1,601
Total Equity 8,105 7,295 7,533
Current liabilities
Trade and other payables 184 133 778
184 133 778
TOTAL EQUITY AND LIABILITIES 8,289 7,428 8,311
Unaudited Interim Results
STATEMENT OF CHANGES IN EQUITY
Asset-
Issued Share Retained revaluation Total
capital premium earnings reserve Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2006 956 4,689 (59) 1,910 7,496
Profit for the period - - 218 - 218
Investments revalued in
the period - - - (190) (190)
Realised on disposal of
investments - - - (229) (229)
Balance at 30 September
2006 956 4,689 159 1,491 7,295
Profit for the period - - 224 - 224
Equity dividends paid - - (96) - (96)
Investments revalued in
the period - - - 445 445
Realised on disposal of
investments - - - (335) (335)
Balance at 31 March 2007 956 4,689 287 1,601 7,533
Profit for the period - - 262 - 262
Equity dividends paid - - (102) - (102)
Shares issued 63 418 - - 481
Investments revalued in
the period - - - 45 45
Realised on disposal of
investments - - - (114) (114)
Balance at 30 September
2007 1,019 5,107 447 1,532 8,105
Unaudited Interim Results
CASH FLOW STATEMENT
6 mths to 6 mths to Year to
30/09/07 30/09/06 31/03/07
£'000 £'000 £'000
Net cash from operating
activities (93) (67) (453)
Net cash flows (used in)/from
investing activities (146) 655 1,116
Net cash flows (used in)/from
financing activities (111) - 394
Net (decrease)/increase in cash
and cash equivalents (350) 588 1,057
Cash and cash equivalents at
beginning of period 2,502 1,445 1,445
Cash and cash equivalents at
end of period 2,152 2,033 2,502
Notes
1. Because the charge for taxation is for a period of less than one
year, the provision is based on the best estimate of the effective
rate for the full
year.
2. The calculation of earnings per Ordinary Share is based on the
profit after taxation of £262,000 (2006 £218,000) and on the number
of shares in issue being the weighted average number of shares in
issue during the period of 10,186,635 (2006 9,558,700). The weighted
average number of ordinary shares in issue has been adjusted to
reflect the fact that the funds in respect of the share placement
were received in November 2006.
3. These interim financial results do not comprise statutory accounts
within the meaning of Section 240 of the Companies Act 1985.
Statutory accounts for the year ended 31 March 2007 were approved by
the Board of Directors on 29 June 2007 and delivered to the Registrar
of Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and did
not contain any statement under Section 237(2) or Section 237(3) of
the Companies Act 1985.
4. This condensed consolidated half-yearly financial information for
the half-year ended 30 September 2007 has been prepared in accordance
with the Disclosure and Transparency Rules (DTR) of the Financial
Services Authority and with IAS 34, 'Interim financial reporting' as
adopted by the European Union.
The half-yearly condensed consolidated financial report should be
read in conjunction with the annual financial statements for the
year ended 31 March 2007, which have been prepared in accordance with
IFRS's as adopted by the European Union.
5. The final dividend of 1p per share for the year ended 31 March
2007 was paid on 7 September 2007, the Directors have declared an
interim dividend for the year ended 31 March 2008 of 1.2p per share
payable on 21 December 2007.
The interim report, including the financial information contained
therein, is the responsibility of, and was approved by the directors
on 19 November 2007. The Listing Rules require that accounting
policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual
accounts except where any changes, and the reasons for them, are
disclosed. There have been no changes to the Group's accounting
policies for the period ended 30 September 2007.
Each of the persons who is a director confirms that as far as they
are aware
- the condensed set of financial statements, which has been prepared
in accordance with the applicable set of accounting standards, gives
a true and fair view of the assets, liabilities, financial position
and profit or loss of the undertakings included in the consolidation
as a whole as required by DTR 4.2.4.
- the interim management report includes a fair review of the
information required to be included, as required by DTR's 4.2.7 and
4.2.8.
Available for sale financial assets
As at As at As at
30/9/07 30/9/06 31/3/07
£'000 £'000 £'000
Listed securities
- Equity Securities - Australia 1,018 473 673
- Equity Securities - US and Canada 467 479 533
- Equity Securities - UK 2,374 2,175 1,923
- Debentures - UK 29 59 59
Cumulative redeemable preference shares - UK 99 99 98
Non-cumulative non-redeemable preference
shares - UK 1,074 1,236 1,194
Convertible preference shares - UK - 412 431
Convertible loan - UK 130 - -
Equity fund - UK 500 - -
Unlisted securities - equity securities
traded on
inactive markets 77 94 225
5,768 5,027 5,136
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