City of London Investment Group reports drop in profit as investments struggle

The City of London Investment Group (CLIG) announced its 2023 half-year results as for the first time, the group reported in US dollars.

For the second half of 2023, its funds under management went up by $152m (£120m) to $9.6bn (£7.6bn) compared to $9.4bn (£7.4bn) in the first half of 2023. Net fee income, which represents the group’s management fees on FuM was $32.6m (£25.7m), up from $31.9m (£25.2) reported for the same period of 2022.

However, underlying profit before tax dropped to $13.3m (£10.5m), down from the $13.6m (£10.7m) reported for the second half of 2022. Its profit before tax was also slightly down to $11.1m (£8.2m)

Last year, the board decided to change the group’s financial reporting currency to US dollars. This went into effect on 1st July 2023. The board said the change allowed them to present a more transparent statement of comparative financial performance that neutralises currency fluctuations.

Despite that, around 33 per cent of the group’s overheads are booked in sterling, making them subject to USD/GBP currency rate fluctuations.

Opposite to last year’s six-month interim report, on average, the dollar weakened against the pound by around 7 per cent, impacting earnings.

The board of City of London declared an unchanged interim dividend of 11p per share as it took into account profits for the period. The interim dividend will be paid on 28th March 2024 to those shareholders registered at the close of business on 1st March 2024.

The group also announced that Sarah Ing will be joining the board as a non-executive director on 1st March 2024. This comes after Jane Stabile, a non-executive director and chair of the nomination committee, requested to resign due to increasing commitments in her own business.

Rian Dartnell has taken over the role of chair of the nomination committee. On the board changes, he said “On behalf of the board I would like to welcome Sarah Ing. Sarah’s extensive experience in asset management and her record of delivering significant results across a range of businesses will add an important dimension to the board. We look forward to her contribution.”

“We would also like to thank Jane Stabile for her important contributions to CLIG over the last five and a half years. We wish her well in her endeavours,” he added.

Commenting on the City of London’s outlook, CEO Tom Griffith said: “In my CLIG outlook from the FY2023 annual reports and accounts, I used the phrase ‘with a following wind’ to reference that the foundations for growth have been laid, and the group was poised for growth pending an improvement in the overall market sentiment.”

The wind has not yet shifted, as closed-end funds discounts remain wide across multiple strategies. Despite a headwind versus a tailwind, the group is positioned to go further together, with thanks and appreciation to our colleagues for navigating the rough seas,” he added.