CIN.L Regulatory News (CIN)

LSE:CIN

24 September 2013

City of London Group plc ("COLG" or "the Company" or "the Group")

Chairman's Statement to AGM

The following is the text of the statement to be read out by Henry Lafferty, Chairman of City of London Group plc, at the Company's Annual General Meeting at 10.00am today.

"I would like to take this opportunity to update shareholders on our current prospects and ambitions following our Interim Management Statement on 16th August 2013 which highlighted the following achievements announced so far in this financial year:

Key events

· Therium entered a joint venture to examine new case potential in the financial services space which could add further pipeline opportunities for cases to fund and continues discussions to establish a material joint venture to fund commercial litigation cases;

· Credit Asset Management Limited (CAML) successfully funding SMEs by deploying the fund founded in conjunction with the Department for Business Innovation & Skills ("BIS");

· Professions Funding Limited (PFL) successfully managing the £10 million institutional fund, which is now well advanced in its deployment alongside its proportion of the BIS fund.

In the IMS we reported strong demand experienced by all of our platforms for funding provision and this strong demand is still evident. We consider the likely returns for shareholders from this market opportunity to be attractive and we are focussed on ensuring that our platforms are appropriately funded to meet this opportunity.

I am pleased to be able to report that the lending levels in our Trade Finance business have increased since the IMS and the trading is again returning to expected levels, particularly as clients' trading levels increase in the lead up to the Christmas period. The business continues to attract an increasing pipeline of potential new clients as the reputation of the business grows.

In Therium, our Litigation Funding business, we continue to try and establish an international joint venture to fund commercial litigation, albeit that talks with the various institutions involved are protracted. On a disappointing note one of Therium's institutional clients has announced the closure of the fund for which Therium provided investment management services, and the fund manager has given notice to limit any new funding to existing cases. This reduces the funds made available to Therium for investment in litigation claims from the previously reported £30 million to approximately £25 million. However, Therium is in discussion with several other parties regarding the possible launch of new funds. Significantly, there have been two successful case settlements in recent weeks and although both of these are fairly small, they add to Therium's successful track record. We are still awaiting judgement or settlement discussions on a number of more significant cases, and return to profitability for the Group for the current year is dependent on the outcome of these cases for which the results remains uncertain.

Meanwhile the lending business, 50% owned by Therium, which makes advances to law firm clients to cover legal bills is progressing well and continues to show good profitability.

Our other lending and leasing platforms, CAML and PFL continue to deploy their existing funds under management ahead of schedule. Most importantly discussions with the government's Business Bank are progressing constructively and we hope to make further announcements in due course as new arrangements are agreed. The existing mandate under the Business Finance Partnership Scheme is proceeding well and deploying funds ahead of target.

We have explored and are continuing to look at adding a banking licence to our capabilities so that retail deposits can be utilised by our lending platforms, all of which have now proven themselves to be scalable. Although this process can be time consuming and expensive, we are in no doubt that a successful outcome would offer substantial benefits to both our customers and shareholders.

In the meantime we retain our existing focus on building third party funds under management to grow our core platforms."

Henry Lafferty

Enquiries:

Note on forward looking statements

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 purposes of complying with English law. Any liability arising out of or in connection with it will be determined in accordance with English law.

Notes to Editors

City of London Group plc is fully listed on the London Stock Exchange plc (LSE symbol CIN).

COLG is a financial services group focused on providing merchant banking services to finance the SME and professional services sectors. It does this by financing trade and securing specialist funding throughout the supply chain to help fuel growth in these sectors, as major national and foreign banks limit new lending to these borrowers. COLG 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.

Since 2009, COLG has focused on Specialist Financing and Alternative Fund Management. As part of its strategy to build a quality Financial Services Group, 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 respectively provide asset backed finance to SMEs and working capital loans to professional practice firms and finally Trade Finance Partners Limited, a trade finance provider to the SME market.