CIN.L Regulatory News (CIN)

City of London Group plc

Second Half Interim Management Statement

Highlights

·; Investment portfolio sees more solid growth buoyed by Natural Resources sector

·; NAV rises by 20% to 96.1p per share (79.7p at 31/1/10)

·; Therium achieves 207% return on capital committed to 4 closed cases to date and has strong pipeline of prospective cases to fund

·; Trade Finance Partners Limited makes a strong start

·; COLG takes control of Legal Receivables Funding Business to accelerate development

·; FTIM establishes three year track record for Munro Fund

·; FX Capital Investment with institutional and personal Foreign Exchange platforms approaches profitability

·; Developing significant new Pools of Capital for asset-backed lending into SME sector

Since our Half Year Results Statement in November 2010 the Group has increased its asset values further as leading International Stock markets continued to recover from the lows experienced following the credit crisis. In particular our portfolio of Mining, Natural Resources and Energy Stocks have again substantially risen in value by 73% since 30 September 2010, reflecting good stock selection and the strength in Commodity prices. This has led to a commendable increase in the NAV to 96.1p per share, a rise of some 20%.

Our investments in quoted yield stocks, shares and bonds have provided good returns and together with loan interest have contributed positively to the Group's administrative and running costs.

In the meantime we have progressed substantially with our strategy to build a quality financial services group centred on specialist financing and Alternative Funds.

Our Investment in Therium, the Litigation Fund Manager, which was launched in December 2009, has achieved early success and to date has achieved a return on funds committed to four closed cases to date of 207%. It has developed a pipeline of cases to fund which now exceed £14million and we are actively raising third party funding to further progress this business. Therium have cancelled their arrangement for fund-raising with Praetorian Capital, a Fund being promoted by St. Vincent Capital. Therium will be making proposals to the Loan Note holders to convert directly to a New Litigation Fund to be established.

We have now established our second major business, Trade Finance Partners, which provides for a pool of Capital to be deployed in the attractive area of bespoke Trade Finance for Small and Medium sized Enterprises (SMEs). The Management Team has exceeded our new business expectations for the start of 2011 and again we are in the process of accessing the next stage of financing.

With our joint project for Legal Receivables funding with St.Helens Finance we have decided to take full control by capitalizing a loan note for £125,000. This should enable us to give this business greater reach in the market place

We are fortunate in seeing a stream of new opportunities and management teams to progress our stated strategy and are confident that the business model we have adopted will show real value over the long term.

Meanwhile our investments elsewhere in early stage developments in the Financial Services sector continue to show promise. Fundamental Tracker Investment Company has started to access new in-flows of funds, including an initial investment from the respected fund managers 7IM, following its three year track record and its highly admired Quantitative Investment methodology. FX Capital has made good progress and is close to trading profitably.

The Board views the future with some optimism whilst remaining cautious about investments in equities and bonds generally. The continued uncertainties and the lack of equity capital for lending to SMEs and the Professional sector within the traditional banking market makes our strategy very appealing. The Board anticipates that the current gaps in the traditional financing arena can continue to be exploited using experienced teams of management.

Preliminary Results for the year to 31 March 2011 are scheduled to be announced in June 2011.

17 February 2011

For Further information:

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 listing since August 1996 (LSE symbol CIN).

The Group's strategy is to build a Quality Financial Services Group centred on specialist financing and Alternative Fund Management. It 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. Its future will create a number of specialist funds to support business models and management skills where financing opportunities exist and yet conventional funding is not available.

Since the final quarter of 2009, significant Seed funds have been pledged to Therium Capital Management Limited a third party Litigation Funder and St. Helens Finance legal Funding providing working capital loans to law firms. Historical Investments have been made in Fundamental Tracker Investment Management Ltd, a privately quoted asset management company based in Glasgow (www.fundamentaltracker.com) and FX Capital Group, a privately quoted foreign exchange dealing company (www.fxcapitalgroup.co.uk). These investments are part of a policy of building a range of interests in the financial services sector.

www.cityoflondongroup.com