COLG Interim Report 2009
(Thomson Reuters ONE) - LSE: CIN City of London Group Plc 11 November, 2009 COLG ACHIEVES 24.3P.C. RISE IN NET ASSETS PER SHARE TO 79.4p IN THE FIRST HALF * Strength Provided By Diversification Of Net Assets Geographically And Growth Of Portfolio * Pre-Tax Profit Of £240,000 (£22,000) After Prudent Provisions * Portfolio Profits Of £698,000 Taken * Earnings Per Share From Continuing Operations 3.65p (0.07p) * New Top Management Team AppointedCHAIRMAN'S STATEMENTI have pleasure presenting my first half yearly report sinceappointment as your non-executive chairman. David Walton Mastersstepped down from the Board on 2 September, having served a year asinterim executive chairman; our thanks are due to him for hissterling service.In the ever-changing market conditions, the group has fared well withits mix of overseas investments, convertibles, and cash content, ableto cope with the vicissitudes of the times. I am happy to revealthis resulted in net asset value per share rising sharply to 79.4p a24.3p.c. increase from the 63.9p at the March Year End.Some idea of the strength of the portfolio may be gained from thelist of the Top Thirty shares contained at the end of this report.The annual report was cautious in its outlook, highlighting a numberof pre-conditions to a sustained recovery, including a return tonormal bank lending, stability in the housing and commercial propertymarkets, an increase in corporate capital spending and a pick-up inconsumer confidence and spending. Whilst equity markets have bouncedback over this period, it is difficult to see convincing evidence ofthese conditions being fulfilled. We therefore remain cautious ofthe outlook and our investment decisions reflect this caution.Having said that, major peer economies have now officially moved outof recession and it is likely that the UK economy will follow suit inthe next quarter.Our main concern remains the fall in share price of ConsolidatedAsset Management (Holdings) PLC (formerly ARC Fund Management PLC)which is now delisted. The investment has been written down to itscurrent market value of £24,000, and is no longer regarded as a coreinvestment.Administrative expenses rose to £205,000 (£105,000), excludingexchange gains of £9,000 (£100,000), mainly for technical reasons,including the full consolidation of the expenses of FTIM now that ithas become a subsidiary, and fees that are matched by sundry income.After exceptional costs, earnings per share on continuing operationsamounted to 3.65p (0.07p). The available-for-sale financial assetsrose from £4,218,000 to £6,464,000 during the first half.DIVIDENDAlthough the results for the first half are very encouraging thereremains uncertainty as to the direction of the economy and financialmarkets. Accordingly, the Board considers that it is premature torecommence dividend payments at the interim stage but is mindful thata return to dividend payments should be a high priority.INVESTMENT POLICYA formal investment policy was issued to shareholders on 21September. It is early days to report upon relative performance,but it is interesting to note that over the five year period to 30September, at 32% total returns (dividends plus growth in net assetsper share) have exceeded the benchmark of RPI plus 3% pa, 29%.PORTFOLIO'S ENERGY SPARKLEThe Group's energy-related holdings continued to add sparkle to itsinvestment portfolio showing in the first half, with realised overallprofits of £698,592 boosting the income figures. Acceptance of BGGroup's cash offer for Australian coal seam gas holding Pure Energybrought in £397,552 for a realised gain of £353,826, while a sale ofunder half the Arrow Energy holding gave a £242,731 profit onproceeds of £273,189. Partial sales of Emerald and Tullow also madeuseful contributions.Since end-September, sales proceeds of £524,982 have been receivedfrom the offer for the balance of the Group's Emerald Energy holding,to give a realised gain of £450,344. There has also been good newsfrom unlisted investment Hurricane Energy with the announcement inlate October of the discovery of "potentially significant quantitiesof light oil" during its recent drilling of its 100p.c.-ownedLancaster basement prospect in the West Shetlands area. COLG invested£50,000 at £3 a share in the summer of 2008, and in September 2009the shares changed hands at £10 a share. The company says thatsubsequent to further fund-raising, in which all shareholders will beeligible to participate, it intends to return to the Lancasterdiscovery in 2010 for further testing and appraisal.Among other energy-related holdings, in the coal seam gas sector asubstantial holding is retained in Arrow Energy (see table below ofthe Group's 30 largest holdings), while Whitehaven Coal, a purchasefunded from earlier coal seam gas profits, is already showing itspaces at over three times cost. During the six months toend-September, new investments included Polo Resources and StrikeOil.Disposals, principally from takeover offers, in the first halfbrought in £1.03m, while 20 fresh purchases, across a varied range,from UK financial and industrial shares to mineral stocks, absorbed£1.50m. Several of the newer purchases appear in the table, includinga further £104,000 investment in Tertiary Minerals.TOTAL VOTING RIGHTSThe total number of ordinary shares in issue as at the date of thisannouncement is 10,186,642, with each share carrying the right to onevote. Of these, 375,000 shares are held in Treasury. The totalnumber of voting rights in the Company is therefore 9,811,642.The above figure may be used by shareholders as the denominator forthe calculations by which they will determine if they are required tonotify their interest in, or a change to their interest in, COLGunder the FSA's Disclosure and Transparency Rules.NEW MANAGEMENT TEAMThe Group are delighted to announce the appointment of a newmanagement team with an excellent record in the City. The team'sbrief is to continue development of the Group within the financialservices field. The team is headed by Eric Anstee, who becomes COLG'sChief Executive Officer and John Kent, Executive Director, CorporateDevelopment, who have worked together in three FTSE companies:Eastern Electricity, Energy Group and The Old Mutual Group. Furtherdetails on the team are subject of an announcement released earliertoday.OFFER PERIODOn 16 September 2009, the Company was put in an offer periodfollowing an unsolicited approach that may or may not lead to anoffer being made. Discussions continue and a further announcement onthe outcome of these talks will be made as soon as possible.PROSPECTSYour company is going through a period of change, has a strongbalance sheet and management team, and sees an exciting future aheadas it carefully grasps the many opportunities emerging.Henry LaffertyChairman 11 November, 2009For further information, please contact:Henry Lafferty, Chairman, City of London Group Plc Tel: 0207628 5518Interim Accounts 30/9/2009Unaudited Interim ResultsCONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 6 mths to 6 mths to Year to 30/9/2009 30/09/2008 31/03/2009 £'000 £'000 £'000Continuing OperationsRevenue 72 100 189Administrative expenses Exchange (loss)/profit 9 100 307 Other (205) (105) (326) (196) (5) (19)Share of loss of associatedcompany - (36) -Profit on sale of investments 698 143 888Provision for impairment ofinvestments (199) - (745)Other operating income 19 3 4Restructuring costs (41) (198) (199)Operating profit 353 7 118Financial income - - -Profit before tax on continuingoperations 353 7 118Income tax on continuingoperations - - -Profit after tax on continuingoperations 353 7 118(Loss)/Profit after tax ondiscontinuedoperations (113) 15 36Profit for the period 240 22 154Other comprehensive incomeFair value gains onavailable-for-sale financial assets net of tax : Revaluation 1,843 (1,436) (1,585) Realised ondisposals (569) (66) (356)Adjustment in respect ofassociate becoming a subsidiary - - 16Other comprehensive income net oftax 1,274 (1,502) (1,925)Total comprehensive income forthe period 1,514 (1,480) (1,771)Profit attributable to:Equity holders 245 22 157Minority interest (5) - (3) 240 22 154Earnings per share for profitsattributable to equity holders: Continuing operations 3.65p 0.07p 1.19p Discontinued operations (1.15)p 0.15p 0.36p Total 2.50p 0.22p 1.55pTotal comprehensive income attributable to: Equity holders 1,519 (1,480) (1,768) Minority interest (5) - (3) 1,514 (1,480) (1,771)Unaudited InterimResultsCONDENSED CONSOLIDATED STATEMENT OF CHANGES INEQUITY Asset- Issued Share Retained revaluation Total Capital premium earnings reserve Equity £'000 £'000 £'000 £'000 £'000Balance at 31March 2008 1,019 5,107 673 1,471 8,270Profit for theperiod - - 22 - 22Equitydividends paid - - (122) - (122)Investmentsrevalued in theperiod - - - (1,436) (1,436)Realised ondisposal ofinvestments - - - (66) (66)Balance at 30September 2008 1,019 5,107 573 (31) 6,668Adjustmentassociate becoming Asubsidiary - - 16 - 16 1,019 5,107 589 (31) 6,684Profit forthe period - - 136 - 136Purchase oftreasury shares - - (110) - (110)Investmentsrevalued in theperiod - - - (149) (149)Realised ondisposal ofinvestments - - - (290) (290)Balance at 31March 2009 1,019 5,107 615 (470) 6,271Profit forthe period - - 245 - 245Investmentsrevalued in theperiod - - - 1,843 1,843Realised ondisposal ofinvestments - - - (569) (569)Balance at 30September 2009 1,019 5,107 860 804 7,790Unaudited Interim ResultsCONDENSED CONSOLIDATED BALANCE SHEET As at As at As at 30/9/09 30/9/08 31/3/09 £'000 £'000 £'000ASSETSNon-current assetsAvailable for sale financial assets 6,464 5,330 4,218Investment in associated company - - -Intangible assets 93 49 93Property, plant and equipment 10 2 4 6,567 5,381 4,315Current assetsTrade and other receivables 74 212 282Cash and short-term deposits 1,267 1,179 1,797 1,341 1,391 2,079TOTAL ASSETS 7,908 6,772 6,394Current liabilitiesTrade and other payables 114 94 114Corporation tax - 10 - 114 104 114NET ASSETS 7,794 6,668 6,280EQUITYEquity attributable to equity holders of the parentIssued capital 1,019 1,019 1,019Share premium 5,107 5,107 5,107Retained earnings 860 573 615Asset revaluation reserve 804 (31) (470)Total Equity 7,790 6,668 6,271Minority Interest 4 - 9TOTAL EQUITY 7,794 6,668 6,280Unaudited Interim ResultsCONDENSED CONSOLIDATED CASH FLOW STATEMENT 6 mths to 6 mths to Year to 30/09/09 30/09/08 31/03/09 £'000 £'000 £'000Net cash used in operating activities (129) (170) (211)Net cash flows (used in)/from investing activities (400) 79 848Net cash flows used in financing activities (1) (122) (232)Net (decrease)/increase in cash and cash equivalents (530) (213) 405Cash and cash equivalents at beginning of period 1,797 1,392 1,392Cash and cash equivalents at end of period 1,267 1,179 1,797Notes1. Because the charge for taxation is for a period of less thanone year, the provision is based on the best estimate of theeffective rate for the full year.2. The calculation of earnings per Ordinary Share is based on theprofit attributable to equity shareholders of £245,000 (2008:£22,000, 2008/9 full year £157,000) and on the number of shares inissue being the weighted average number of shares in issue duringthe period (excluding those held in treasury) of 9,811,642 (2008:10,186,635, 2008/9 full year 10,169,793)3. These interim financial results do not comprise statutoryaccounts within the meaning of Section 435 of the Companies Act2006. Statutory accounts for the year ended 31 March 2009 wereapproved by the Board of Directors on 9 July 2009 and delivered tothe Registrar of Companies. The report of the auditors on thoseaccounts was unqualified, did not contain an emphasis of matterparagraph and did not contain any statement under Section 237(2) orSection 237(3) of the Companies Act 1985.4. This condensed consolidated half-yearly financial informationfor the half-year ended 30 September 2009 has been prepared inaccordance with IAS 34 "Interim financial reporting" and should beread in conjunction with the annual financial statements for theyear ended 31 March 2009 which have been prepared in accordance withInternational Financial Reporting Standards as adopted by theEuropean Union. The accounting policies used in preparing thecondensed financial information are consistent with those of theannual financial statements for the year ended 31 March 2009 exceptthat IAS 1 (revised) has been adopted. The adoption of IAS 1 has ledto certain presentational changes, including the adoption of asingle statement of comprehensive income. There have been no changesto the underlying figures as a result of the adoption of thestandard. These condensed financial statements have been reviewed bythe company's auditors. A review does not comprise of a full audit.5. On 15 February 2009, FTIM issued a further 100,000 ordinaryshares to the Group increasing the Group's shareholding to 85% ofthe issued capital and FTIM became a subsidiary of the Group. In theFinancial Statements of the year ended 31 March 2009 the change wasaccounted for in accordance with IFRS 3 "Business Combinations". Inthe comparative figures in this Interim Statement the change asbeen accounted for in the second half of the 2008/9 year.6. The restructuring costs shown on the income statementrepresent compensation of loss of office paid to directors andassociated costs.7. The directors did not declare an interim dividend or recommenda final dividend for the year ended 31 March 2009, and have notdeclared an interim dividend to the year ended 31 March 2010 The interim report, including the financial information containedtherein, is the responsibility of, and were approved by the directorson 11 November 2009. The Listing Rules require that accountingpolicies and presentation applied to the interim figures should beconsistent with those applied in preparing the preceding annualaccounts except where any changes, and the reasons for them, aredisclosed. There have been no changes to the Group's accountingpolicies for the period ended 30 September 2009, except as notedabove. Each of the persons who is a director confirms that as far asthey are aware - the condensed set of financial statements, which has beenprepared in accordance with the applicable set of accounting standards, gives a true and fair view of theassets, liabilities, financial position and profit or loss of the undertakings included in theconsolidation as a whole as required by DTR 4.2.4. - the interim management report includes a fair review of theinformation required to be included, as required by DTR's 4.2.7 and 4.2.8.Discontinued operations 6 mths to 6 mths to Year to 30/9/09 30/9/08 31/03/09 £'000 £'000 £'000Revenue - - 16Administrative expenses (Bad debtprovision) (113) 15 14Profit on sale of trade - - 8Profit before tax (113) 15 38 .Income tax - - (2)Profit for the year (113) 15 36Available for sale financial assets £'000 £'000 £'000Listed securities - Equity Securities - Australia 1,146 1,277 1,019 - Equity Securities - US and Canada 400 341 318 - Equity Securities - UK 3,146 2,308 1,539 - Debentures - UK 15 15 15Cumulative redeemable preference shares -UK 49 - -Non-cumulative non-redeemable preferenceshares - UK 727 845 533Convertible loan - UK 225 104 225Equity fund - UK 382 363 294Unlisted securities - equity securitiestraded on inactive markets 374 77 275 6,464 5,330 4,218Principal Holdings Book Cost Net ofHolding Security provision Value £,000 £,000 70,000 Emerald Energy 1p Ordinary 75 522 Munro UK Fund X Class (Income 500,300 Shares) 500 382 160,000 Arrow Energy Ordinary 34 377 7,000,000 Tertiary Minerals Ordinary 308 315 240,000 Barclays 14% Var. Sub. Pref 234 304 85,808 BAE Systems 2.5p Ordinary 223 299 Abbey National £1 10.375% NC 200,000 Pref 213 225 Vatukoula Gold 8,333,333 Ordinary shares ( 108 ( 118 100,000 Convertible Loan Notes ( 100 ( 100 282,520 FX Capital 210 210 200,000 Standard Chartered 7.375% 200 210 RSA Insurance Group 100,000 Ordinary shares ( 122 ( 133 50,000 7.375 Prefs ( 43 ( 50 25,000 Orient Express Hotels Ordinary 125 180 150,000 Co-Op Bank £1 9.25% NCI Pref 171 174 127,127 Phamaxis Ltd Ordinary 159 168 Consolidated Asset Management Holdings 15,875,000 Ordinary shares ( 24 ( 24 125,000 Convertible £1 Loan Notes ( 125 ( 125 Lloyds TSB 100,000 Ordinary Shares ( 66 ( 103 50,000 9.25% Preference Shares ( 24 ( 39 100,000 Qinetiq 133 140 70,000 Whitehaven Coal 41 140 75,000 Bodycote 107 123 10,000 Glaxo 119 123 2,199,286 SIPA Resources 83 112 City Merchants High Yield 74,401 Trust 93 110 Global Diamonds Convertible Loan 99 99 200,000 Platinum Australia 100 90 750 Apple Inc 67 87 5,000,000 Red Rock Resources 50 85 429,000 Prime People Ord 1p 216 82 40,000 Centennial Coal 43 70 672,600 AFC Energy 105 67 856,550 Shield Mining 43 66 4,363 5,452Directors Remuneration and related party transactions Salary Benefits Fees Compensation Total for loss of officeHalf Year Ended 30September 2009DR Walton Masters 29,167 - - 40,000 69,167H Lafferty - - 11,167 - 11,167JW Greenhalgh - 568 16,167 - 16,735 29,167 568 27,334 40,000 97,069Half Year Ended 30September 2008DR Walton Masters 6,613 - 3,119 - 9,732H Lafferty - - 3,500 - 3,500JW Greenhalgh 24,045 568 - 122,739 147,352PC Doye 13,128 - - 54,687 67,815 43,786 568 6,619 177,426 228,399DR Walton Masters became Executive Chairman on 21st August 2008 andresigned 2nd September 2009.Previous to becoming Executive Chairman he was a Non-ExecutiveDirector.H Lafferty became Non- Executive Chairman on 2nd September 2009 hewas previously a Non-ExecutiveDirector.JW Greenhalgh became a Non-Executive Director on 21st August 2008 ,previously he had been Chairman and Managing Director.PC Doye resigned his directorship on 31st August 2008.There are no key management personnel other than the Board ofDirectors, and no other related party transactions.Independent Review Report to City of London Group PLCIntroductionWe have been engaged by the company to review the condensed set offinancial statements in the half-yearly financial report for the sixmonths ended 30 September 2009 which comprises the condensedconsolidated statement of comprehensive income, the condensedconsolidated statement of changes in equity, the condensedconsolidated balance sheet, the condensed consolidated cash flowstatement and the related notes. We have read the other informationcontained in the half-yearly financial report and considered whetherit contains any apparent misstatements or material inconsistencieswith the information in the condensed set of financial statements.Directors' ResponsibilitiesThe half-yearly financial report is the responsibility of, and hasbeen approved by the directors. The directors are responsible forpreparing the half-yearly financial report in accordance with theDisclosure and Transparency Rules of the United Kingdom's FinancialServices Authority.As disclosed in note 4, the annual financial statements of the groupare prepared in accordance with IFRS as adopted by the EuropeanUnion. The condensed set of financial statements included in thishalf-yearly financial report has been prepared in accordance withInternational Accounting Standard 34, "Interim Financial Reporting,"as adopted by the European Union.Our ResponsibilityOur responsibility is to express to the Company a conclusion on thecondensed set of financial statements in the half-yearly financialreport based on our review.Scope of ReviewWe conducted our review in accordance with International Standard onReview Engagements (UK and Ireland) 2410, "Review of InterimFinancial Information Performed by the Independent Auditor of theEntity" issued by the Auditing Practices Board for use in the UnitedKingdom. A review of interim financial information consists ofmaking enquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an auditconducted in accordance with International Standards on Auditing (UKand Ireland) and consequently does not enable us to obtain assurancethat we would become aware of all significant matters that might beidentified in an audit. Accordingly, we do not express an auditopinion.ConclusionBased on our review, nothing has come to our attention that causes usto believe that the condensed set of financial statements in thehalf-yearly financial report for the six months ended 30 September2009 is not prepared, in all material aspects, in accordance withInternational Accounting Standard 34 as adopted by the European Unionand the Disclosure and Transparency Rules of the United Kingdom'sFinancial Services Authority.Rees PollockChartered Accountants and Registered AuditorsLondon11 November 2009Notes:(a) The maintenance and integrity of the City of London Group PLCwebsite is the responsibility of the directors; the work carried outby the auditors does not involve consideration of these matters and,accordingly, the auditors accept no responsibility for any changesthat may have occurred to the interim report since it was initiallypresented on the website.(b) Legislation in the United Kingdom governing the presentation anddissemination of financial information may differ from legislation inother jurisdictions.---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 11.11.2009 - 14:02 Uhr
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