City of London Investment Group assets, revenues and profits at highest levels in Group’s history

City of London Investment Group

The Company announces that it has today made available on its website, , the following documents:

– Annual Report and Financial Statements for the year ended 30th June 2021 (the 2021 Annual Report); and
– Notice of 2021 Annual General Meeting (the Notice of AGM).

The above documents have been uploaded to the National Storage Mechanism, in accordance with Listing Rule 9.6.1 R, and will shortly be available for inspection at .

The 2021 Annual Report and the Notice of AGM, which will be held on 18th October 2021, will be posted to shareholders on 17th September 2021.

The Appendix to this announcement contains additional information which has been extracted from the 2021 Annual Report for the purposes of compliance with DTR 6.3.5 only and should be read in conjunction with this announcement. Together, these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This announcement should be read in conjunction with, and is not a substitute for reading, the full 2021 Annual Report.


Funds under Management (FuM) of US$11.4 billion (£8.3 billion) at 30th June 2021. This compares with US$5.5 billion (£4.4 billion) at the beginning of this financial year on 1st July 2020 (pre-merger) 
Net fee income was £52.5 million (2020: £31.7 million) 
Underlying profit before tax* was £26.7 million (2020: £11.5 million). Profit before tax was £22.2 million (2020: £9.4 million)  
Underlying basic earnings per share* were 48.1p (2020: 38.2p). Basic earnings per share were 39.4p (2020: 30.3p) after an effective tax charge of 24% (2020: 22%) of profit before taxation 
Increased final dividend to 22p per share (2020: 20p) payable on 29th October 2021 to shareholders on the register on 8th October 2021, making a total for the year of 33p (2020: 30p) 
*This is an Alternative Performance Measure (APM).  Please refer to the Financial Review for more details on APMs.


Most businesses are well prepared for interruptions to working practices with sophisticated disaster recovery contingencies but few, if any, could have foreseen dislocation on the scale and for as long a period as that witnessed over the last 18 months. I am very pleased to report, therefore, that both operating entities, CLIM and KIM, have sustained full and uninterrupted remote working functionality throughout the COVID-19 pandemic and, as I will detail later, CLIG finished the year in rude health with assets, revenues and profits at the highest levels in the Group’s history.

In addition to maintaining ‘business as usual’, significant progress has been made in the operational integration of the two businesses in order to streamline systems and administrative functions and realise efficiencies. Completion of the integration process is ongoing, as outlined later in this report, but already we can see the benefits of the merger in terms of both results and revenue diversity. While we are geared inevitably to both equity and debt market levels, the KIM merger has served to insulate the Group to a significant degree from past levels of revenue volatility. On behalf of all our shareholders, I would like to thank our CEO, Tom Griffith, and all of his executive colleagues for their resolve and dedication in managing these challenges so successfully.

Assets and performance

Combined Funds under Management (FuM) rose nearly 5% to US$11.4 billion in the six months to 30th June 2021 and by 20% since the merger closing date of 1st October 2020. For the year as a whole, CLIM funds grew by c.37% to US$7.5 billion while KIM’s FuM grew by c.9% to US$3.9 billion from the date of the merger, an impressive rate of growth given that c.60% of KIM’s client assets are invested in fixed income securities.

The Group’s success in growing FuM was due in no small part to excellent investment performance, as detailed later in this report, with ten of the eleven investment strategies across the combined Group achieving first or second quartile relative performance. Equally important is the significant change in the balance of assets over the last five years as a result of the rapid growth in the International equity strategies and the KIM merger. Although Emerging Markets (EM) assets have grown by nearly 50% over the last five years to US$5.4 billion, they now represent less than 50% of total FuM compared with 91% in 2016, giving the Group a far more diversified asset base. Given the capacity constraints existent within the EM closed-end fund (CEF) space, further development of both the diversified strategies and KIM’s wealth management business is a key objective in realising long-term asset growth.


Group statutory pre-tax profits rose by 137% in the year ending 30th June 2021 to £22.2 million (2020: £9.4 million), which include a first-time post-merger contribution from KIM. In order to present a more accurate picture of our financial performance, however, I propose to focus on an Alternative Performance Measure of ‘Underlying’ profits and earnings per share (EPS), which exclude exceptional or non-recurrent items, mainly associated with the KIM merger. On this basis, underlying pre-tax profits were £26.7 million, (2020: £11.5 million), with CLIM contributing £16.6 million, a 44% YOY increase, and KIM contributing £10.1 million in the nine months to 30th June 2021.

Net fee income of £52.5 million, which included £37.0 million attributable to CLIM and £15.5 million to KIM (for nine months), was 66% higher than the previous year despite a slight decline in the average Group revenue margin for the year to 74bp (2020: 75bp). The c.8% gain over the year in the average £/US$ exchange rate served to pare the growth in fee income when expressed in sterling terms as almost all revenues are generated in US dollars. Since an absolute comparison of profits YOY is distorted by the absence of a full-year contribution from KIM, the more appropriate comparative measure of our financial performance is provided by our underlying earnings per share (EPS) which, on a fully diluted basis, rose by 27% to 47.4p (2020: 37.2p) for the year.

I am pleased to report that the Employee Incentive Plan (EIP) continues to attract wide support from employees across the Group, this being the first year in which KIM employees were invited to participate. The most recent elections by employees for the coming financial year resulted in an overall participation rate of 77%, with no less than 92% of our new colleagues at KIM taking their entitlements. This high level of employee support for the EIP is a key factor in increasing employee ownership over time, thereby aligning CLIG’s stakeholder interests.


In line with the Group’s management philosophy over many years, we remain committed to rewarding shareholders within the parameters of cautious balance sheet management. With this in mind and as a result of the continued growth in profits through the second half of the year to June 2021, the Board is able to recommend a final dividend to shareholders of 22p per share. Taken together with the increased interim payment, this brings total dividends for the year to 33p, equivalent to a 10% increase YOY. While these payments will result in dividend cover of 1.2 for the year based on our statutory results, that figure rises to 1.29 on a rolling five-year basis, compared with a target cover of 1.2. Having regard to the buoyancy of markets over the last year, the Board believes that a modest degree of headroom above the target level is prudent. The final dividend of 22p will be paid on 29th October 2021 to those shareholders on the register at 8th October 2021.


As noted in my report to shareholders at the interim stage, there have been a number of changes to the Board this year, which included the appointment of two new Directors in the wake of the KIM merger, George Karpus as a Non-Independent Non-Executive Director (NED) and Dan Lippincott as an Executive Director. In addition, following Susannah Nicklin’s resignation in September 2020, Rian Dartnell was appointed as the replacement Independent NED and in February 2021, Tazim Essani was appointed as a fourth Independent NED.

Arguably for a company of our size, a Board complement of eleven people is excessive and we are conscious also that, at present, the ratio of Independent Directors falls short of the recommendation contained in the UK Corporate Governance Code (the Code) for Boards to have a majority of Independent Directors (or at least parity). More recently, the Financial Conduct Authority (FCA), in its capacity as The Listing Authority, has issued a consultation paper outlining proposals to address gender and ethnic diversity issues for UK-listed companies that will take effect from 2023. The issue of diversity in public companies has become an increasingly important component of UK corporate governance and we fully support the need for raising standards as part of the overall focus on Environmental, Social & Governance (ESG) protocols, a subject to which I will return later. Under the new proposals, Boards will be required to have female representation of at least 40% and one member ‘of colour’, targets which go well beyond those set out in the 2019 industry-led Hampton-Alexander Review on female representation. Taken together these requirements will necessitate significant changes to the CLIG Board, which we acknowledge will not be addressed immediately in what is a post-merger transitional period. Going forward, however, in order to comply with the requirements by the target date of 2023, we intend to set out proposals for a fully compliant composition of the Board to shareholders by the October 2022 Annual General Meeting.


The adoption of best practice in formulating corporate ESG policies is gaining increasing focus by both clients and shareholders and is a trend that we strongly support. The data for CLIG over the last year, which is set out in detail on page 36 of this report, is distorted inevitably by the opposing effects of COVID-19 restrictions, which have reduced carbon emissions and social initiatives, versus the 50% growth in our employee headcount since the KIM merger. CLIG’s environmental impact has been dominated historically by the necessity of air travel, given our international network of offices and the needs of client visits and new business development but for internal purposes, we have relied on video conferencing as a matter of policy for some years. Post-pandemic, our goal is to continue the downward trend in our carbon footprint on a per capita basis.

At the social level, while the Group does not make donations to charities or political parties, we do encourage employees to participate in community support activities across a broad spectrum in each of the locations where we operate. Despite the severe constraints imposed by lockdowns, we have continued to promote community initiatives, examples of which are included in the full report on page 36. Similarly, we have formalised a series of internal policies this year that are designed to codify the fair treatment of employees in order to promote diversity, equity and inclusion with regular training across the Group.

In order to better conform to best practice in corporate governance, a Corporate Governance Working Group (CGWG) was formed in 2020 with a remit to review our policies in relation to the Code and advise the Board of any changes that were needed. Among CGWG’s findings was a recommendation that we appoint Prism Cosec Ltd (PC) as our new Corporate Secretary, which took effect in May 2021. In the course of the last five months, PC has been actively involved at every level of our governance processes and a summary of the progress that has been made is shown in the Governance section of the full report on pages 40 to 86. Although I have already touched on the subject of Board composition as it relates to the Code, the need to review Code compliance across the full gamut of our activities and, where necessary or advisable, make changes to our governance procedures is a core objective of your Board. Cognisant of this, the various reports included in the later pages have been significantly revamped this year to provide more detail on our ESG initiatives and I would encourage shareholders to take the time to read them.


Despite the proliferation of new COVID-19 variants, the global vaccination effort, with more than five billion doses having been administered to date, appears to be successful in curbing hospitalisations and allowing a gradual return to normality. While most central banks have indicated corresponding reductions in fiscal support as the extreme health threat subsides, overall policy, led by the US Federal Reserve, remains accommodative and markets have behaved accordingly. The level of support intervention over the last 18 months has enabled macro economic indicators and asset markets generally to weather the pandemic with comparative ease, despite the disproportionate impact on specific sectors such as tourism and hospitality. In the year to 30th June 2021, the S&P 500 rose 36% while the MXEF EM index rose by 33%, albeit at a slower pace in the most recent six months.

Although this year’s gains take the S&P rating towards the higher end of its historical range with a forward P/E ratio of 21, the comparable MXEF rating of 14 remains undemanding from a longer-term perspective, providing some ‘value comfort’ as markets confront inflationary pressures and possible ‘taper tantrums’ in 2022. Indeed the ‘rating ratio’ between these two indices (S&P P/E vs. MXEF P/E), which stands presently at 1.5, is very much towards the upper range of relative value.

The consensus Bloomberg forecast for GDP growth this year is 5.3% for developed economies and 6.6% for the emerging economies and, while this will slow a little in 2022, the existing consensus is for growth to remain above the long-term averages. While it may be unrealistic to expect markets to continue their sharp climb over the last year, the recovery in economic activity should ensure that any correction will be a ‘soft landing’ rather than a full-blown bear market. Given the more diversified revenue base now enjoyed by the Group, as highlighted earlier, we are therefore cautiously optimistic for the year ahead and believe we are prepared to manage any headwinds that may arise.

Barry Aling


9th September 2021

Good news travels fast (but only if you make that happen). Share on:

Share on twitter
Share on linkedin
Share on facebook
Share on email
Share on reddit

AIM All Share Index