CIN.L Regulatory News (CIN)

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

Interim Management Statement

The Company is pleased to release its Interim Management Statement covering the period from 1 October 2011 to the date of this announcement.

Highlights

Momentum gathers in each of the four main businesses

Trade finance business expected to deliver a good profit in the second half

Advanced discussions for first institutional mandate for Therium Capital Management Ltd

Investment portfolio has seen some recovery in January to a total value of £4.7m

Trade Finance Partners Ltd ("TFP") - trade finance (net investment 30.9.11: £3.0m)

Our trade finance business, TFP, continues to expand resulting in the business becoming increasingly profitable month on month and is expected to deliver a good profit in the second half based on the current order pipeline. The business is proposing to step up its drawing of existing facilities to fund this growth. Demand for TFP's services has continued to grow strongly. In particular TFP has signed up a number of clients who have orders to provide various merchandise and consumables connected with the 2012 London Olympics.

Therium Capital Management Ltd ("Therium") - litigation funding (net investment 30.9.11: £0.8m)

Our litigation funding business, Therium, continues to trade actively with strong deal flow and demand in the last quarter, as it cements its reputation as a leading litigation funder in the UK marketplace. A further distribution to investors from a past settled case is expected in the final quarter of the current financial year which will further improve investment performance for its funds and also benefit COLG. A response from the Court of Appeal is still awaited in respect of a case where we made provision at the half year stage for an adverse finding. Arrangements for Therium's first institutional mandate for a managed account are at an advanced stage. As set out in the announcement made by the Company on 2 February 2012, amendments are proposed regarding the dilution clause in the shareholders' agreement between the Company, Therium and its shareholders. If completed, these will confirm the quantum of the Company's holding in Therium.

Credit Asset Management Ltd ("CAM") - lease finance (net investment 30.9.11: £1.0m)

Our lease finance business, CAM, has recently secured further funding lines and now has a range of lending facilities from four financial institutions totaling £2.5m. This has enabled CAM to increase the size of the lease book to £1.3m (from £0.3m at 30 September 2011). New business volumes are accelerating and the outlook for demand from SME's for lease finance remains positive.

Professions Funding Ltd ("PFL") - professions funding (net investment 30.9.11: £0.9m)

Our professions funding business, PFL, has also secured additional funding from a second financial institution taking funding capacity to £2.5m. This has enabled the business to increase its loan book to £1.7m (from £1.1m at 30 September 2011). New business volumes for this business are proving resilient despite a small dip in December.

Other investments

The valuation we placed on our unlisted investment in FX Capital Group Limited ("FXCG") has been validated by a recent further fund-raising achieved by FXCG in this period.

Since 30 September 2011, our associated company, Novitas Futures Limited, which funds the cost of litigation, has grown a secured loan book of over £1m. This business is being funded by a new £1m bank facility and by third party investment into a specific loan portfolio.

The NAV per share at 31 December 2011 was 60.0p (30 September 2011, 62.9p before the interim dividend of 0.5p). The market value of the Company's portfolio of stocks improved in January 2012 by approximately £0.5m in aggregate (equivalent to c2.8p per share), resulting in a valuation of £4.7m as at 31 January 2012.

The full year results to 31 March 2012 are expected to be announced on or around 25 June 2012.

Eric Anstee , Chief Executive Officer, commented:

"Two years ago we identified that the deleveraging at the banks would cause a steep demand for our funding businesses which provide alternative credit lines. This is now being seen in the momentum of each of our business units where funding requests continue to increase, matched with a growing awareness from institutions that this is an excellent area in which to gain good returns. "

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.

7 February 2012

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