City Of Lon Grp PLC - Interim Management Statement

City of London Group plc

Interim Management Statement

City of London Group plc ("COLG" or "the Company") today releases its Interim Management Statement covering the period from 1 April 2012 to the date of this announcement.

Highlights

· On 5 April the Company announced that Therium Capital Management Ltd had been awarded its first institutional mandate for £5m with a stated intention to increase the fund to £15m

· On 7 June the Company announced that Trade Finance Partners Ltd had agreed a three year £15m facility with Macquarie Bank with the option to increase to £25m by mutual agreement

· On 6 August the Company announced that Professions Funding Ltd had secured its first institutional mandate for £10m from Crescendo Advisors International Ltd

· On 16 August the Company announced that it had reached agreement to sell its investment in FX Capital Group Ltd for cash at over 2.5 times its original cost. This, when completed, will result in a profit on sale of £733,000 and fully recover book value.

Trade Finance Partners Ltd - trade finance (net investment 30.6.12: £3.1m)

Our trade finance business continues to see strong demand for its services. The transition of its banking lines to Macquarie Bank did cause some disruption in writing new business and additional one off costs were incurred during the first quarter. However, with the new facility in place the business is well positioned to grow its profitability.

Therium Capital Management Ltd - litigation funding (net investment 30.6.12: £1.2m)

Following the first institutional mandate there has been strong interest in this non correlated asset category from a range of potential investors and consequently the outlook for further third party funding looks very promising. The total third party funds raised to date are £14.9m. The pipeline of legal cases coming to Therium for funding remains strong with over 325 cases reviewed to date of which approximately 6% have been funded. There have been no significant developments on legal cases in this period and accordingly there have been no performance fees during this period but the outlook for the portfolio of cases is encouraging.

Credit Asset Management Ltd - lease finance; Professions Funding Ltd - professions funding (net total investment 30.6.12: £2.3m)

Block funding facilities have now been increased and the combined book size has now reached £7.2m with margins holding up above expected levels. The new managed account of £10m from Crescendo (Kuala Lumpur: 6718.KL - news) delivers a step change in the business. As the companies have now been writing successful business for over a year, further block funding lines which have hitherto been constrained by the lack of a one year track record, are now expected to become available.

Other investments

We continue to sell down selective shares in our listed Portfolio by top slicing holdings as appropriate and against our financial budget. Share sales of approximately £0.6m in the period have been achieved and the proceeds used to fund investments in the platforms. The mining, energy and other listed investment portfolio (excluding the Munro Fund and unlisted stocks) is valued at £2.1m as at 14 August 2012.

Novitas Futures Ltd, our business which lends to law firm clients in litigation, has developed a good track record but continues to search for third party funding to enable its growth.

Array Management Ltd continues to investigate suitable properties to support the issue of RPI linked investment products.

The Board is considering its strategic options in relation to its investment in Fundamental Tracker Investment Management Ltd (net investment 30.6.12: £0.1m and £0.4m in the Munro Fund).

Eric Anstee, Chief Executive Officer, commented:

"The activity in this period clearly demonstrates increased momentum on third party funding for our platforms despite the challenging economic conditions. Each of our platforms is moving towards critical mass and this has laid the foundation for future growth.

"The disposal of FX Capital Group, when completed, at over 2.5 times our original cost is the proof that significant value creation can arise from early stage investments in financial services.

"We are continuing to look to reduce our holdings in our other investments to redeploy the capital in line with our strategy."

The Chairman will comment further on our prospects and plans for the future at our AGM on 17 September. The six months' results to 30 September 2012 are expected to be announced on 28 November (Stuttgart: A0Z24E - news) 2012.

This Interim Management Statement may contain certain statements about the future outlook for COLG and its subsidiaries. Although the directors believe their expectations are based on reasonable assumptions, any statements about the future outlook may be influenced by factors that could cause actual outcomes to be materially different. This statement has been drawn up and presented with the purpose of complying with English law. Any liability arising out of or in connection with it will be determined in accordance with English law.

17 August 2012

Enquiries:

Notes to Editors:

City of London Group plc (COLG) is an investment company, with a wide range of national and international investments. A public company since 1986, COLG has had a full London Stock Exchange (LSE: LSE.L - news) listing since August 1996 (LSE symbol CIN).

The Company's strategy is to build a quality Financial Services Group centred on Specialist Financing and Alternative Fund Management. The Company believes there are particular opportunities in the SME and professional services sectors as major national and foreign banks limit new lending to these borrowers. It therefore seeks to identify and exploit product niches and business models in these sectors where they are supported by strong day to day management teams, providing initial equity, working capital and seed funding for those teams.

The Group seeks above-average performance in growth and income via a prudent mix of low, medium and higher-risk investments. It holds a legacy portfolio of income stocks, offering a high degree of security, which are balanced by a higher risk portfolio, which is primarily focused on the minerals and resources sector, where the Board has particular experience.

Since the final quarter of 2009, COLG has developed four specialist financing funds, pledging significant seed funds to Therium Capital Management Limited, a third party Litigation Funder, Credit Asset Management Limited and Professions Funding Limited, which provides asset backed finance and working capital loans to professional practice firms and finally Trade Finance Partners Limited, a trade finance provider to the SME market.