COLG Interim Report 2009
2009-11-11 14:07:15 -
London, November , 11, 2009
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 Appointed
CHAIRMAN'S STATEMENT
I have pleasure presenting my first half yearly report since
appointment as your non-executive chairman. David Walton Masters
stepped down from the Board on 2 September, having served a year as
interim executive chairman; our thanks are due to him for his
sterling service.
In the ever-changing market conditions, the group has fared well with
its mix of overseas investments, convertibles, and cash content, able
to cope with the vicissitudes of the times. I am happy to reveal
this resulted in net asset value per share rising sharply to 79.4p a
24.3p.c. increase from the 63.9p at the March Year End.
Some idea of the strength of the portfolio may be gained from the
list of the Top Thirty shares contained at the end of this report.
The annual report was cautious in its outlook, highlighting a number
of pre-conditions to a sustained recovery, including a return to
normal bank lending, stability in the housing and commercial property
markets, an increase in corporate capital spending and a pick-up in
consumer confidence and spending. Whilst equity markets have bounced
back over this period, it is difficult to see convincing evidence of
these conditions being fulfilled. We therefore remain cautious of
the outlook and our investment decisions reflect this caution.
Having said that, major peer economies have now officially moved out
of recession and it is likely that the UK economy will follow suit in
the next quarter.
Our main concern remains the fall in share price of Consolidated
Asset Management (Holdings) PLC (formerly ARC Fund Management PLC)
which is now delisted. The investment has been written down to its
current market value of £24,000, and is no longer regarded as a core
investment.
Administrative expenses rose to £205,000 (£105,000), excluding
exchange gains of £9,000 (£100,000), mainly for technical reasons,
including the full consolidation of the expenses of FTIM now that it
has become a subsidiary, and fees that are matched by sundry income.
After exceptional costs, earnings per share on continuing operations
amounted to 3.65p (0.07p). The available-for-sale financial assets
rose from £4,218,000 to £6,464,000 during the first half.
DIVIDEND
Although the results for the first half are very encouraging there
remains uncertainty as to the direction of the economy and financial
markets. Accordingly, the Board considers that it is premature to
recommence dividend payments at the interim stage but is mindful that
a return to dividend payments should be a high priority.
INVESTMENT POLICY
A formal investment policy was issued to shareholders on 21
September. It is early days to report upon relative performance,
but it is interesting to note that over the five year period to 30
September, at 32% total returns (dividends plus growth in net assets
per share) have exceeded the benchmark of RPI plus 3% pa, 29%.
PORTFOLIO'S ENERGY SPARKLE
The Group's energy-related holdings continued to add sparkle to its
investment portfolio showing in the first half, with realised overall
profits of £698,592 boosting the income figures. Acceptance of BG
Group's cash offer for Australian coal seam gas holding Pure Energy
brought in £397,552 for a realised gain of £353,826, while a sale of
under half the Arrow Energy holding gave a £242,731 profit on
proceeds of £273,189. Partial sales of Emerald and Tullow also made
useful contributions.
Since end-September, sales proceeds of £524,982 have been received
from 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 news
from unlisted investment Hurricane Energy with the announcement in
late October of the discovery of "potentially significant quantities
of light oil" during its recent drilling of its 100p.c.-owned
Lancaster basement prospect in the West Shetlands area. COLG invested
£50,000 at £3 a share in the summer of 2008, and in September 2009
the shares changed hands at £10 a share. The company says that
subsequent to further fund-raising, in which all shareholders will be
eligible to participate, it intends to return to the Lancaster
discovery in 2010 for further testing and appraisal.
Among other energy-related holdings, in the coal seam gas sector a
substantial holding is retained in Arrow Energy (see table below of
the Group's 30 largest holdings), while Whitehaven Coal, a purchase
funded from earlier coal seam gas profits, is already showing its
paces at over three times cost. During the six months to
end-September, new investments included Polo Resources and Strike
Oil.
Disposals, principally from takeover offers, in the first half
brought 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, including
a further £104,000 investment in Tertiary Minerals.
TOTAL VOTING RIGHTS
The total number of ordinary shares in issue as at the date of this
announcement is 10,186,642, with each share carrying the right to one
vote. Of these, 375,000 shares are held in Treasury. The total
number of voting rights in the Company is therefore 9,811,642.
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.
NEW MANAGEMENT TEAM
The Group are delighted to announce the appointment of a new
management team with an excellent record in the City. The team's
brief is to continue development of the Group within the financial
services field. The team is headed by Eric Anstee, who becomes COLG's
Chief Executive Officer and John Kent, Executive Director, Corporate
Development, who have worked together in three FTSE companies:
Eastern Electricity, Energy Group and The Old Mutual Group. Further
details on the team are subject of an announcement released earlier
today.
OFFER PERIOD
On 16 September 2009, the Company was put in an offer period
following an unsolicited approach that may or may not lead to an
offer being made. Discussions continue and a further announcement on
the outcome of these talks will be made as soon as possible.
PROSPECTS
Your company is going through a period of change, has a strong
balance sheet and management team, and sees an exciting future ahead
as it carefully grasps the many opportunities emerging.
Henry Lafferty
Chairman 11 November, 2009
For further information, please contact:
Henry Lafferty, Chairman, City of London Group Plc Tel: 0207
628 5518
Interim Accounts 30/9/2009
Unaudited Interim Results
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 mths to 6 mths to Year to
30/9/2009 30/09/2008 31/03/2009
£'000 £'000 £'000
Continuing Operations
Revenue 72 100 189
Administrative expenses
Exchange (loss)/profit 9 100 307
Other (205) (105) (326)
(196) (5) (19)
Share of loss of associated
company - (36) -
Profit on sale of investments 698 143 888
Provision for impairment of
investments (199) - (745)
Other operating income 19 3 4
Restructuring costs (41) (198) (199)
Operating profit 353 7 118
Financial income - - -
Profit before tax on continuing
operations 353 7 118
Income tax on continuing
operations - - -
Profit after tax on continuing
operations 353 7 118
(Loss)/Profit after tax on
discontinued
operations (113) 15 36
Profit for the period 240 22 154
Other comprehensive income
Fair value gains on
available-for-sale financial
assets net of tax :
Revaluation 1,843 (1,436) (1,585)
Realised on
disposals (569) (66) (356)
Adjustment in respect of
associate becoming
a subsidiary - - 16
Other comprehensive income net of
tax 1,274 (1,502) (1,925)
Total comprehensive income for
the period 1,514 (1,480) (1,771)
Profit attributable to:
Equity holders 245 22 157
Minority interest (5) - (3)
240 22 154
Earnings per share for profits
attributable
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 1.55p
Total comprehensive income
attributable to:
Equity holders 1,519 (1,480) (1,768)
Minority interest (5) - (3)
1,514 (1,480) (1,771)
Unaudited Interim
Results
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Asset-
Issued Share Retained revaluation Total
Capital premium earnings reserve Equity
£'000 £'000 £'000 £'000 £'000
Balance at 31
March 2008 1,019 5,107 673 1,471 8,270
Profit for the
period - - 22 - 22
Equity
dividends paid - - (122) - (122)
Investments
revalued in the
period - - - (1,436) (1,436)
Realised on
disposal of
investments - - - (66) (66)
Balance at 30
September 2008 1,019 5,107 573 (31) 6,668
Adjustment
associate becoming
A
subsidiary - - 16 - 16
1,019 5,107 589 (31) 6,684
Profit for
the period - - 136 - 136
Purchase of
treasury shares - - (110) - (110)
Investments
revalued in the
period - - - (149) (149)
Realised on
disposal of
investments - - - (290) (290)
Balance at 31
March 2009 1,019 5,107 615 (470) 6,271
Profit for
the period - - 245 - 245
Investments
revalued in the
period - - - 1,843 1,843
Realised on
disposal of
investments - - - (569) (569)
Balance at 30
September 2009 1,019 5,107 860 804 7,790
Unaudited Interim Results
CONDENSED CONSOLIDATED BALANCE SHEET
As at As at As at
30/9/09 30/9/08 31/3/09
£'000 £'000 £'000
ASSETS
Non-current assets
Available for sale financial assets 6,464 5,330 4,218
Investment in associated company - - -
Intangible assets 93 49 93
Property, plant and equipment 10 2 4
6,567 5,381 4,315
Current assets
Trade and other receivables 74 212 282
Cash and short-term deposits 1,267 1,179 1,797
1,341 1,391 2,079
TOTAL ASSETS 7,908 6,772 6,394
Current liabilities
Trade and other payables 114 94 114
Corporation tax - 10 -
114 104 114
NET ASSETS 7,794 6,668 6,280
EQUITY
Equity attributable to equity holders
of the parent
Issued capital 1,019 1,019 1,019
Share premium 5,107 5,107 5,107
Retained earnings 860 573 615
Asset revaluation reserve 804 (31) (470)
Total Equity 7,790 6,668 6,271
Minority Interest 4 - 9
TOTAL EQUITY 7,794 6,668 6,280
Unaudited Interim Results
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
6 mths to 6 mths to Year to
30/09/09 30/09/08 31/03/09
£'000 £'000 £'000
Net cash used in operating
activities (129) (170) (211)
Net cash flows (used in)/from
investing activities (400) 79 848
Net cash flows used in
financing activities (1) (122) (232)
Net (decrease)/increase in cash
and cash equivalents (530) (213) 405
Cash and cash equivalents at
beginning of period 1,797 1,392 1,392
Cash and cash equivalents at
end of period 1,267 1,179 1,797
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 attributable to equity shareholders of £245,000 (2008:
£22,000, 2008/9 full year £157,000) and on the number of shares in
issue being the weighted average number of shares in issue during
the 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 statutory
accounts within the meaning of Section 435 of the Companies Act
2006. Statutory accounts for the year ended 31 March 2009 were
approved by the Board of Directors on 9 July 2009 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 2009 has been prepared in
accordance with IAS 34 "Interim financial reporting" and should be
read in conjunction with the annual financial statements for the
year ended 31 March 2009 which have been prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union. The accounting policies used in preparing the
condensed financial information are consistent with those of the
annual financial statements for the year ended 31 March 2009 except
that IAS 1 (revised) has been adopted. The adoption of IAS 1 has led
to certain presentational changes, including the adoption of a
single statement of comprehensive income. There have been no changes
to the underlying figures as a result of the adoption of the
standard. These condensed financial statements have been reviewed by
the company's auditors. A review does not comprise of a full audit.
5. On 15 February 2009, FTIM issued a further 100,000 ordinary
shares to the Group increasing the Group's shareholding to 85% of
the issued capital and FTIM became a subsidiary of the Group. In the
Financial Statements of the year ended 31 March 2009 the change was
accounted for in accordance with IFRS 3 "Business Combinations". In
the comparative figures in this Interim Statement the change as
been accounted for in the second half of the 2008/9 year.
6. The restructuring costs shown on the income statement
represent compensation of loss of office paid to directors and
associated costs.
7. The directors did not declare an interim dividend or recommend
a final dividend for the year ended 31 March 2009, and have not
declared an interim dividend to the year ended 31 March 2010
The interim report, including the financial information contained
therein, is the responsibility of, and were approved by the directors
on 11 November 2009. 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 2009, except as noted
above. 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.
Discontinued operations
6 mths to 6 mths to Year to
30/9/09 30/9/08 31/03/09
£'000 £'000 £'000
Revenue - - 16
Administrative expenses (Bad debt
provision) (113) 15 14
Profit on sale of trade - - 8
Profit before tax (113) 15 38
.
Income tax - - (2)
Profit for the year (113) 15 36
Available for sale financial assets
£'000 £'000 £'000
Listed 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 15
Cumulative redeemable preference shares -
UK 49 - -
Non-cumulative non-redeemable preference
shares - UK 727 845 533
Convertible loan - UK 225 104 225
Equity fund - UK 382 363 294
Unlisted securities - equity securities
traded on inactive markets 374 77 275
6,464 5,330 4,218
Principal Holdings
Book Cost
Net of
Holding 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 5,452
Directors Remuneration and related party transactions
Salary Benefits Fees Compensation Total
for loss of
office
Half Year Ended 30
September 2009
DR Walton Masters 29,167 - - 40,000 69,167
H Lafferty - - 11,167 - 11,167
JW Greenhalgh - 568 16,167 - 16,735
29,167 568 27,334 40,000 97,069
Half Year Ended 30
September 2008
DR Walton Masters 6,613 - 3,119 - 9,732
H Lafferty - - 3,500 - 3,500
JW Greenhalgh 24,045 568 - 122,739 147,352
PC Doye 13,128 - - 54,687 67,815
43,786 568 6,619 177,426 228,399
DR Walton Masters became Executive Chairman on 21st August 2008 and
resigned 2nd September 2009.
Previous to becoming Executive Chairman he was a Non-Executive
Director.
H Lafferty became Non- Executive Chairman on 2nd September 2009 he
was previously a Non-Executive
Director.
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 of
Directors, and no other related party transactions.
Independent Review Report to City of London Group PLC
Introduction
We have been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report for the six
months ended 30 September 2009 which comprises the condensed
consolidated statement of comprehensive income, the condensed
consolidated statement of changes in equity, the condensed
consolidated balance sheet, the condensed consolidated cash flow
statement and the related notes. We have read the other information
contained in the half-yearly financial report and considered whether
it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has
been approved by the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial
Services Authority.
As disclosed in note 4, the annual financial statements of the group
are prepared in accordance with IFRS as adopted by the European
Union. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
International Accounting Standard 34, "Interim Financial Reporting,"
as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the
condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK
and Ireland) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us
to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 September
2009 is not prepared, in all material aspects, in accordance with
International Accounting Standard 34 as adopted by the European Union
and the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
Rees Pollock
Chartered Accountants and Registered Auditors
London
11 November 2009
Notes:
(a) The maintenance and integrity of the City of London Group PLC
website is the responsibility of the directors; the work carried out
by the auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the interim report since it was initially
presented on the website.
(b) Legislation in the United Kingdom governing the presentation and
dissemination of financial information may differ from legislation in
other jurisdictions.
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