City of London Investment Group made a profit of GBP11.5m in the year ended 31 May 2012, down from GBP13.1m in 2011.

Revenues, representing the group’s management charges on FuM, were GBP34.1m (2011: GBP36.5m).

The group achieved this despite seeing funds under management fall by 23 per cent during the year to USD4.5bn, (2011: USD5.8bn). In sterling terms, FuM fell by 18 per cent to GBP2.9bn (2011: GBP3.5bn).  The MSCI Emerging Markets Index (MXEF) registered a 20 per cent decline over the whole of the financial year with the major part of the fall occurring in the final quarter.
 
FuM at the end of August 2012 were USD4.4bn, a fall of 1.7 per cent since the financial year end. This compares to a rise of 5.7 per cent in MXEF over the same period. The shortfall reflects net client withdrawals, largely prompted by rebalancing of risk assets by asset allocators, together with marginal underperformance deriving in the main from underlying net asset value weakness and supplemented by some further discount widening.
 
Basic earnings per share were 33.8p (2011: 35.1p) after a reduced tax charge of 26 per cent (2011: 33 per cent of pre-tax profits), reflecting the positive impact of prior year adjustments to the group’s US and Singapore tax charges.
 
Andrew Davison, chairman, says: “These results provide a demonstration of the group’s ability to generate profits and dividends for our shareholders even in the difficult market conditions that we have had to deal with over the last 12 months. This is a reflection of our core belief in keeping fixed costs to a minimum, and our continual striving to achieve superior investment performance so as to reward, and therefore to retain and grow our client base.”