CIN.L Regulatory News (CIN)

LSE:CIN

16 August 2013

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

Interim Management Statement

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 successfully funding SMEs by deploying the fund founded in conjunction with the Department for Business Innovation & Skills ("BIS")

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

Eric Anstee, Chief Executive, commented:

"The activity in this period again demonstrates the attractiveness of our various platforms and the market opportunities open to them. Raising additional third party funds to deploy continues to be a priority for our lending platforms but we are encouraged by a number of on-going discussions. I remain frustrated by continual court delays in the final determination of litigation funding cases.

Our strategy to expand the Group into merchant banking activities is now well advanced and we continue to look at new complementary platforms.

The Chairman will comment further on our prospects and plans for the future at our AGM on 24 September.

Finally it was with great sadness that we reported the death of the founder of the Company and a non-executive director, John Greenhalgh on 22 July 2013. John will be sorely missed in the Boardroom and around our office."

Trade Finance Partners Limited ("TFPL") - trade finance

TFPL continues to see strong demand for its services and an increasing number of new clients being awarded facilities. However, the rate of drawdown has been slower than anticipated and therefore the overall quantity of capital deployed in the lending book has not reached the level expected. The rate of drawdown is expected to accelerate in the second half of the year, as clients' seasonal stocking takes effect along with an increase in transactions as new clients utilise their facilities.

Therium Capital Management Limited ("Therium") - litigation funding

Therium continues to attract strong interest from investors in this asset class which is non-correlated to conventional markets.

Therium has entered a joint venture arrangement to examine new case potential in the financial services space which could add further pipeline opportunities for cases to fund. Therium is also continuing discussions in order to establish a material joint venture to fund commercial litigation cases. There continue to be no significant developments in cases in this period but the outlook on the portfolio of cases remains encouraging.

During the period we have been able to allocate sufficient new cases from our pipeline to give our new funds a strong start.

Novitas Asset Management Limited which is 50% owned by Therium continues to expand and has been successful in attracting new forms of finance. The loan book continues to grow significantly.

Credit Asset Management Limited ("CAML") - lease finance; Professions Funding Limited ("PFL") - professions funding

CAML is successfully deploying the £10 million SME fund that was founded in conjunction with the Department for Business Innovation & Skills ("BIS"), who provided half of the funds. Full deployment is anticipated to be achieved ahead of target later this year.

The £10 million institutional fund managed by PFL is also well advanced in its deployment.

Both funds are performing well to date.

Discussions continue with a number of institutional funds to establish new lines of funding for later this year and next.

Other Investments

The Group continued to dispose of its listed share portfolio aggressively in the period by selling shares which reached their optimum price. Share sales in the period to the date of this announcement have totalled £0.5 million and the proceeds have been used to fund increased investment in the platforms and general working capital.

The listed investment portfolio (excluding the Munro Fund and unlisted stocks) is valued at £0.8 million as at 12 August (14 August 2012:£2.1 million) which reflects the realisations achieved.

We were disappointed that our major unlisted investment, Hurricane Energy plc (c£380,000) announced on 1 July 2013 that delays in drilling one of its major oil discoveries had caused it to defer its impending listing of the shares on the AIM market probably until 2014. Following the Group's sale of its shares in Fundamental Tracker Investment Management Limited in April, it continues to be repaid its original seed capital.

The results for the six months to 30 September 2013 are expected to be announced on 25 November 2013.

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.