CIN.L Regulatory News (CIN)

LSE:CIN

27 March 2013

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

Business and trading update

Key Events

·; Asset finance platform signs contracts for SME leasing and lending mandate with UK Government's Department for Business Innovation and Skills (BIS)

·; Therium in discussions to establish a material joint venture managing international commercial litigation cases and also in advanced discussions to raise c.£7m in two separate funds

·; Unlikely that Therium will accrue any performance fees this year as a number of case results are still pending

·; Trade finance platform in final negotiations to sign first commodity financing transaction

·; In advanced discussions to sell FTIM subsidiary

On 12 December 2013, COLG announced that its subsidiary Credit Asset Management Limited ("CAML") had been mandated by a new fund to originate and manage lease and loan agreements to SMEs. The £10m fund has been founded in conjunction with BIS who have provided half of the funds which are now actively being deployed. CAML is one of the first firms to deploy funds under the Business Finance Partnership Initiative announced by Her Majesty's Government to increase the flow of credit from "non-traditional" sources. COLG is proud to be a supporter of SMEs at this critical time for the economy and has already started funding SMEs under the mandate.

COLG is pleased to announce that its litigation funding arm, Therium, is in discussions with a partner to establish a new joint venture to manage international litigation. COLG is also pleased to announce that Therium is in the advanced stages of two other funds which together are expected to raise c. £7m.

As announced on 24 January 2013, litigation investment results are taking longer to come through than expected which delays performance fees and returns to COLG where it has invested seed funds directly in cases. This will now adversely impact the results for the year ending 31 March 2013 such that the consolidated loss before tax and minorities is expected to be in the range of £1.2m to £1.4m.

COLG is pleased to announce that Trade Finance Partners Limited is in the final phase of negotiations to sign and finance its first commodity trade.

Finally, COLG is also in advanced discussions to sell its subsidiary Fundamental Tracker Investment Management Limited (FTIM) for a nominal sum, which will return the seed funds (£0.5m) originally committed to that business.

Enquiries:

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.

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.