City Of Lon Grp PLC CIN Interim Results

  City Of Lon Grp PLC (CIN) - Interim Results

RNS Number : 3942R
City Of London Group PLC
19 November 2012




                            Half-year results 2012

                                      

                                   LSE: CIN

                                                              19 November 2012

                                      

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

                                      

Results for the six month period ended 30 September 2012



The Company is a financial services group focused on providing finance to the
SME and professional sectors, is pleased to announce its unaudited interim
results for the six month period ended 30 September 2012.



Highlights

Financial



· Revenue increased by 169% to £15.2 million

· Gross profit increased by 25% to £1.3 million

· Operating losses reduced to £143,000 after £733,000 profit on sale of  FX 
Capital

· Third party funds under management up  by 125% to £51.4 million, with  a 
further £20 million committed in principle

· Sales of 'available-for-sale' investments of £1.8 million with  realised 
profits of £950,000 (includes FX Capital)

· Successful placing of 10% of issued share capital, raising £1.3  million 
to fund further growth of business platforms

· Interim dividend 0.33p (2011:0.5p) - rebalanced

· NAV per share attributable to owners of the Company 59.1p (31 March 2012
68.8p)

· Unaudited  proforma  NAV  per  share of  COLG  and  including  directors' 
valuation of subsidiaries 111.5p (31 March 2012 114.8p)



Platforms



Trade Finance Partners (trade finance)

· rapidly becoming  one of  the leading providers  of transactional  trade 
finance to the SME sector in the UK

· business now trading at a  level which is expected to generate  revenues 
of around £24 million per year





Therium Capital Management (litigation funding)

· signed  first managed  account  with an  institutional investor  for  £5 
million, with a view to increasing the fund to £15 million

· launching its fourth fund



Professions Funding (lending to professional firms)



· in August won a mandate to manage £10 million

· now manages more  than 150 loan  agreements, with a  book value of  £3.2 
million



Credit Asset Management (SME equipment leasing)



· now manages a book of £2.6 million, spread across 215 loans



Eric Anstee, Chief Executive, commented:



"Our strategy of providing specialist financing to high quality SMEs and the
professional services market is proving to be a sound one as traditional bank
finance and other funding sources remain challenging. The Group now has the
business platforms required to facilitate its ongoing development into a
traditional merchant bank model."



For further information:



City of London Group plc


Eric Anstee              0207 628 5518
John Kent



N+1 Singer
                     

Jonny Franklin-Adams 0203 205 7500

Matt Thomas
FTI Consulting
                     

Ed Gascoigne-Pees    0207 269 7132



Notes to Editors:

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



The Company's strategy is to build a quality financial services group centred
on specialist financing and alternative fund management. The Company believes
there are particular opportunities in the SME and professional services
sectors as major national and foreign banks limit new lending to these
borrowers. It therefore 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 developed four specialist financing funds, pledging
significant seed capital to Trade Finance Partners Limited, a trade finance
provider to the SME market; Therium Capital Management Limited, a third party
litigation funder; and Credit Asset Management Limited and Professions Funding
Limited, which respectively provide asset backed finance to SME's and working
capital loans to professional practice firms.



www.cityoflondongroup.com



Chairman and Chief Executive's review



Operational review



Our strategy of providing specialist financing to high quality SMEs and the
professional services market is proving to be a sound one as traditional bank
finance and other funding sources remain challenging.



Following further major disposals from our share portfolio during the period,
the transition from an investment company with holdings in listed and unlisted
natural resources companies to a backer of a series of focused investment
platforms providing a range of specialist financing to the SME and
professional services markets, is virtually complete. The Group now has the
business platforms required to facilitate its ongoing development into a
traditional merchant bank model.



In September, the Company successfully completed a placing of 10% of its share
capital, which raised £1.3m before expenses. These new funds, together with
the sale proceeds from the disposal of our early stage investment in FX
Capital, have provided liquidity to continue this progress.



Since the start of the financial year third party funds available to the
Group's platforms have increased from £22.8m to £51.4m with a further £20m
agreed in principle. Management continues to seek additional third party
funding to take its investment platforms to optimum scale and to exploit new
opportunities.



Each of our investment platforms is capable of developing into a major
business in its own right and substantial progress has been made in this
period in growing both the scale of operations and the funds to be deployed
within them. A review of the progress of each of the platforms is set out
below:



Trade Finance Partners Limited (TFP)



TFP provides medium to large scale trade finance facilities to SME's. It has
continued its robust development during the period and is rapidly becoming one
of the leading providers of transactional trade finance to the SME sector in
the UK. The withdrawal of funding from the sector by the major banks
continues to create strong demand for TFP's products and services. More
recently, it has started to receive an increasing number of enquiries
regarding commodity trade finance.



Following completion of TFP's three year revolving, multi-option facility with
Macquarie Bank in June, the business has the necessary capacity to expand its
activities further over the coming year. The facility has a non-utilisation
fee which has had an adverse impact on the second quarter trading performance.
However, since the facility has 'bedded down', TFP has performed strongly.
Compared with the year to 31 March 2012, gross revenues have almost doubled,
with annual turnover expected to reach around £24 million if current levels of
trading are maintained. Although the loss before tax for the period was £68k,
the profit before shareholders' loan interest for the period was £103k.



Therium Capital Management Limited (Therium)



Therium is one of the leading third party litigation funding businesses in the
UK market. The business is progressing well and signed its first managed
account with an institutional investor in the period. This mandate is for an
initial £5 million, with the party's stated intention, in due course, to
increase the size of the fund up to £15 million. Work has commenced on a
Therium fund to be launched in Jersey and all the necessary regulatory
approvals have now been received. At the same time Therium is continuing to
explore opportunities with a number of other institutions and family offices
for managed accounts. This is expected to result in further funding, although
progress has been slower than originally anticipated. In the meantime, while
none of the existing funded cases settled during the period, applications to
Therium for new case funding continue to grow and are significantly up on last
year. During the period a number of new cases were funded.



The management team at Therium has also worked to build up the Novitas joint
venture which provides funds to clients of law firms. The Novitas loan book is
currently at £2.7 million and demand continues to be strong.



Professions Funding Limited (PFL)



PFL provides loans to professional firms such as solicitors and accountants,
mainly for short term requirements such as the payment of insurance premiums
for professional indemnity cover. Its loan book consists of more than 150
loan agreements, with a book value of £3.2 million. It also won a £10 million
managed account in August, of which some £2.5 million has so far been
deployed.



Credit Asset Management Limited (CAM)



CAM provides equipment leasing to SMEs and accesses the market largely through
brokers and intermediaries. Its leasing book currently stands at £2.6 million
spread across 215 leases. It has unutilised facilities of £1.5m and is in
advanced discussions with third party funders with the objective of
significantly increasing the funds it can deploy.



Taken together, PFL and CAM have facilities and managed accounts amounting to
£17.5 million of which £9.2 million has been deployed. The activities are now
close to breaking even on a month by month basis before paying the dividends
due on their preference shares. Bad debts are running below anticipated
levels and are no more than 1% of the average outstanding balance. Demand for
both professional loans and leases remains high.



Other investments



(a) Listed and unlisted investments for resale

COLG's equity portfolio reduced from £4.1 million (excluding £1.2 million
relating to FX Capital) to £2.8 million at 30 September 2012. This decrease of
£1.3 million was as a result of sales of £0.7 million and a reduction in value
of the remaining portfolio of £0.6 million. Two of our larger value holdings,
FAR Ltd and Tertiary Minerals plc suffered from falls in market value of 27%
and 22% respectively although their values are still well above cost. The
Company aims to release further substantial capital from its listed investment
portfolio in order to fund the development of existing and new platforms.



(b) Fundamental Tracker Investment Management Limited (FTIM)/The Munro Fund

Over the period the investment performance of the fund has improved slightly.
However, attracting new funds under management has continued to prove
difficult against its three year performance and it continues to be below the
critical mass needed to achieve break even. COLG has continued to fund FTIM's
operating deficit of c.£100,000 per annum but is undertaking a strategic
review of this business.





(c) Array Management Limited

The objective of this investment is to launch an index-linked, asset-backed
product for sale to institutional or high net worth investors. We continue to
look for an appropriate asset on which to base a first fund.



(d) FX Capital Limited

As previously reported, we successfully sold our entire holding in this early
stage investment for £1,175,000 cash representing 2.7 times the original cost
and £50,000 over the carrying value at 31 March 2012.



Related party transactions



Related party transactions are disclosed in note 6.



Risks



The key risk factors faced by the Group are set out in the financial
statements to 31 March 2012 and are summarised in note 7.



Liquidity and going concern



The Company has renewed its bank overdraft facility at £1m through to 30
September 2013, secured on its UK listed investment portfolio. The actual
facility size available is restricted to half the value of the Company's UK
listed investment portfolio. This is currently around £0.8m which is expected
to be sufficient to meet current liquidity requirements. Since the period end
the Company has received the proceeds from the share placing of £1.3 million.
The Company continues to hold a total portfolio of "available for sale"
investments (valued at £2.8 million at 30 September) of which £2.4 million are
listed and can be sold at relatively short notice.



Liquidity is managed by approving annual budgets for each platform and
reviewing monthly performance against those budgets. Rolling 12 month
cashflow forecasts for the Group are produced and updated monthly. The
financial resources available are expected to meet the needs of the Group for
the foreseeable future. The condensed financial statements have therefore been
prepared on a going concern basis.



Outlook



The considerable economic uncertainty in Europe and deleveraging by the banks
in the UK and the rest of Europe has continued to make finance in the UK
market extremely tight. Therefore the rationale for the Company's strategy of
developing investment platforms to provide specialist finance to the SME
market remains as sound as ever. However, the uncertain economic climate has
meant that attracting third party monies to new investment platforms has been
slower than originally envisaged. Despite this, the Company is pursuing a
number of opportunities with the aim of increasing third party funds available
to the investment platforms in the second half and beyond.



Unaudited directors' valuation



The directors have included an indication of the incremental value they
attribute to the investment platforms which in aggregate show additional value
(over book value) of £8.5 million made up of £4.6 million for TFP, £3.1
million for Therium and £0.8 million for Credit Asset Management and
Professions Funding combined. This equates to an additional value of 42.0p per
share. This valuation is a judgment based on market comparatives.



Interim dividend



The directors have declared an interim dividend of 0.33p per share (2011:
0.5p) payable on 4 January 2013 to shareholders on the register on 7 December
2012.This reflects the Boards intention to rebalance the payout of potential
dividends for the year to market norms of one third at the interim stage.





Henry Lafferty Eric
Anstee

Chairman Chief
Executive





This half-yearly report  may contain certain  statements about 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  half-yearly report  has been  drawn up  and 
presented with  the  purpose of  complying  with English  law.  Any  liability 
arising out of or in connection with the half-yearly report for the six months
to 30 September 2012  will be determined in  accordance with English law.  The 
half-yearly results for 2012 and 2011 are unaudited.



19 November 2012



Unaudited interim results

Condensed consolidated income statement

                            6 months to        6 months to
                                30/09/12            30/09/11  Year to 31/03/12
                                   £'000               £'000             £'000
Revenue                  15,177    5,644    15,540
Cost of sales           (13,860)   (4,588)   (13,773)
Gross profit             1,317    1,056   1,767
Administrative
expenses                (2,436)   (2,025)  (4,159)
Profit on sale of
'available for sale'
investments             950   469   1,001
Provision for
impairment of                    
investments                          -                 -              (65)
                                                    
Loss on legal cases                 (43)  (843)             (725)
Share of profit /                                              
(loss) of associate    22  (22)               -
Other operating
income                 47   14  208
                          
Operating loss                     (143)   (1,351)  (1,973)
                                                                  
Financial expenses     (309)  (58)             (157)
Loss before tax        (452)   (1,409)  (2,130)
Income tax                                      
(expense)/credit                 (158)  (101)                54
Loss for the period    (610)   (1,510)  (2,076)
Loss for the year
attributable to:
                          
Owners of the parent               (300)   (1,303)  (1,433)
Non-controlling                                                   
interest               (310)  (207)             (643)
                       (610)   (1,510)  (2,076)
Earnings per share:
Basic total earnings
per share                        (1.67p)             (7.78p)           (8.24p)
Diluted total
earnings per share               (1.67p)             (7.78p)           (8.24p)





Condensed consolidated statement of comprehensive income

                              6 months to       6 months to
                                  30/09/12           30/09/11 Year to 31/03/12
                                     £'000              £'000            £'000
                                                                     
Loss after tax           (610)  (1,510)          (2,076)
Valuation losses on
'available for sale'                                              
investments              (619)  (1,534)            (297)
Transferred to profit                                   
or loss on sale          (950)              (469)          (1,001)
                                                  
Deferred tax provision               158  397              239
Total comprehensive                                                  
expense                   (2,021)  (3,116)          (3,135)
Total comprehensive
expense attributable
to:
                                                                     
Owners of the parent      (1,711)  (2,909)          (2,492)
Non-controlling                                      
interest                 (310)              (207)            (643)
                                                                     
                          (2,021)  (3,116)          (3,135)



Condensed consolidated balance sheet

                                      As at                As at
                                                                         As at
                                  30/09/12             31/03/12      30/09/11
                                      £'000                £'000         £'000
Non-current assets
Intangible assets       1,264  1,295  1,244
Property, plant and                           
equipment               187                  107  80
'Available-for-sale'
financial assets        2,848  5,237  4,323
                                                
Operating investments                    59   37           930
Investments in legal
cases                   3,534  2,409  6,353
Loans and leases                                
receivable              3,127                2,201    970
Total non-current
assets                   11,019   11,286  13,900
Current assets
                                                  
Inventories                              69  156           280
Trade and other                                   
receivables              16,351               12,071   5,088
Cash and cash
equivalents             3,613  2,194  2,677
                                                  
Total current assets     20,033               14,421   8,045
Total assets             31,052   25,707  21,945
Current liabilities
                                              
Borrowings                          (6,000)              (4,415)       (3,579)
Trade and other                               
payables                            (8,437)              (7,314)       (6,785)
Total current                                                            
liabilities             (14,437)  (11,729)      (10,364)
Non-current
liabilities
                                
Borrowings                          (5,897)            (2,587)       -
Trade and other             
payables                                -                    -         (1)
                                   
Derivative                              -                (244)         (315)
Total non-current                   
liabilities                         (5,897)              (2,831)   (316)
                                                                         
Total liabilities       (20,334)  (14,560)      (10,680)
Net assets               10,718   11,147  11,265
Equity
Share capital           2,021  1,837  1,837
Share premium            11,531   10,424  10,428
Fair value reserve on                           
investments             82                1,493    946
Derivative reserve                        -                (197)         (242)
Retained earnings                   (1,952)              (1,237)         (980)
Owners of the parent     11,682   12,320  11,989
Non-controlling                                  
interests                (964)              (1,173)   (724)
Total equity             10,718   11,147  11,265





Condensed consolidated statement of changes in equity

               Attributable to owners of
              the parent company
                                                                  Attributable to
                 Fair
                value Derivative Retained   Share   Share         non-controlling Total
                                                

              reserve    reserve earnings premium capital   Total    interest    equity
                £'000      £'000    £'000   £'000   £'000   £'000       £'000     £'000
                                                                
At 31 March
2012            1,493      (197)  (1,237)  10,424   1,837  12,320     (1,173)    11,147
Available for
sale
investments
-Valuation
gains taken
to equity      (619)          -        -       -       -   (619)           -     (619)
-Transferred
to profit or
loss on sale    (950)          -        -       -       -   (950)           -     (950)
-Deferred tax
provision
writeback         158          -        -       -       -     158           -       158
Total other
comprehensive
income        (1,411)          -        -       -       - (1,411)           -   (1,411)
Profit for
the period          -               (300)                   (300)       (310)     (610)
Total other
comprehensive
income        (1,411)          -    (300)       -       - (1,711)       (310)   (2,021)
Value of
employee
services            -          -     (19)       -       -    (19)           -      (19)
Arising on
business
combination         -        197    (345)       -       -   (148)         519       371
Dividend paid       -          -     (89)       -       -    (89)           -      (89)
Issue of
shares              -          -        -   1,107     184   1,291                 1,291
Disposal of
own shares          -          -       38       -       -      38           -        38
At 30
September
2012               82          -  (1,952)  11,531   2,021  11,682       (964)    10,718



               Attributable to owners of
              the parent company
                                                                   Attributable to
                 Fair
                value Derivative Retained    Share   Share         non-controlling Total
                                                 
                 
              reserve    reserve earnings premium  capital   Total    interest    equity
                £'000      £'000    £'000    £'000   £'000   £'000       £'000     £'000
                                                                 
At 31 March
2011            2,552      (242)      913    5,797   1,114  10,134       (520)     9,614
Available for
sale
investments
Valuation
gains taken
to equity     (1,534)          -        -        -       - (1,534)           -   (1,534)
Transferred
to profit or
loss on sale    (469)          -        -        -       -   (469)           -     (469)
Deferred tax
position          397          -        -        -       -     397           -       397
Total other
comprehensive
income        (1,606)          -        -        -       - (1,606)           -   (1,606)
Profit for
the period          -          -  (1,303)        -       - (1,303)       (207)   (1,510)
Total other
comprehensive
income        (1,606)          -  (1,303)        -       - (2,909)       (207)   (3,116)
Value of
employee
services            -          -     (78)        -       -    (78)           -      (78)
investment in
subsidiaries        -          -        -        -       -       -           3         3
Dividends           -          -    (184)        -       -   (184)           -     (184)
Issue of
shares                                       4,552     723   5,275                 5,275
Sale of
treasury
shares              -          -       56       79       -     135           -       135
Purchase of
shares by
ESOT                -          -    (384)        -       -   (384)           -     (384)
At 30
September
2012              946      (242)    (980) (10,428)   1,837  11,989       (724)    11,265



Condensed consolidated statement of cash flows

                                                   6 months to  Year to
                          6 months to 30/09/12         30/09/11       31/03/12
                                         £'000            £'000          £'000
Loss before taxation                     (452)          (1,409)        (2,120)
Adjustments for
Depreciation and
amortisation                                52               25             74
Share based payments                      (19)             (85)          (504)
Dividends receivable                      (15)             (65)          (104)
Impairment of 'available
for sale' assets                             -                -             65
Profit/loss on disposal
of investments                           (950)              469        (1,001)
Profit and loss of
associates                                (22)               22              -
Loss on legal cases                         43              843            725
Interest receivable                      (106)             (85)          (148)
Interest payable                           141               58             55
Decrease/(increase) in
stock                                       87            (265)          (142)
Increase in trade and
other receivables                      (2,679)          (2,807)        (6,654)
Increase in trade and
other payables                           2,867              478          1,285
Cash used in operations                (1,053)          (2,821)        (8,469)
Income taxes                                 -                -              -
Net cash used in
operating activities                  (1,053)         (2,821)       (8,469)
Cash flow from investing
activities
                                                                   
Interest received                          16              189            100
Purchase of intangible
assets                                    (44)           (325)         (415)
Purchase of property,                                              
plant and equipment                     (107)            (12)           (63)
Purchase of non-current
investments                           (1,243)         (2,443)       (3,762)
Investment by                                                    
non-controlling interest                    -                3            -
Proceeds from investment
in legal cases                              -              703  4,068
Acquisition of subsidiary                                        
companies                                (85)             (5)            (3)
                                               
Dividends received                        15               65            104
Proceeds from sale of
'available-for-sale'
investments                              1,845              705  2,332
Loans advanced                        (5,670)         (2,035)       (6,874)
Loans repaid                             4,523              958  1,522
Net cash used in
investing activities                    (750)         (2,197)       (2,991)
Cash flow from financing
activities
                                                                   
Interest paid                           (141)            (31)           (39)
Dividends paid to
company's shareholders                   (89)           (184)         (268)
Proceeds from issue of
loans                                    5,509              -  1,698
Repayment of loans and
loan notes                             (2,298)         (1,600)              -
Proceeds from block
discounting loans                          867                -  3,322
Proceeds from issue of
ordinary shares                              -            5,275  5,272
Proceeds from issue of                                             
preference shares                            -                -            970
Proceeds from shares
issued by subsidiary                       263                -              -
                                                                   
Sale of treasury shares                      -           (249)            135
Net cash from financing
activities                               4,111            3,211   11,090
Net increase/(decrease)
in cash and cash                   
equivalents                              2,308          (1,807)          (380)
Cash and cash equivalents
brought forward                          1,126            1,506  1,506
Net cash and cash
equivalents                              3,434           (301)  1,126
Cash and cash equivalents                3,613            2,677  2,194
Bank overdraft                          (179)         (2,978)       (1,068)
Net cash and cash
equivalents                              3,434           (301)  1,126



Notes to condensed financial statements

1 Basis of preparation



1.1 These interim financial results do not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. Statutory accounts for
the year end 31 March 2012 were approved by the directors on 25 June and
delivered to the Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement within the meaning of section 498 of the
Companies Act 2006.



1.2 These condensed consolidated financial statements have been prepared in
accordance with IAS 34, "Interim Financial Reporting" as adopted by the
European Union. They do not include all of the information required for full
annual financial statements and should be read in conjunction with the annual
financial statements for the year ended 31 March 2012, which were prepared in
accordance with IFRS as adopted by the European Union. As required by the
Disclosure and Transparency Rules of the Financial Services Authority, the
condensed consolidated financial statements have been prepared applying the
accounting policies and presentation that were applied in the preparation of
the Company's published consolidated financial statements for the year ended
31 March 2012.



1.3 Because the charge for taxation is for a period of less than one year, the
provision is based on the best estimate of the effective rate for the full
year.



1.4 On 28 September 2012 the Company placed 1,836,960 ordinary shares of 10p
("Ordinary Shares") at 70p per share. Before costs the placing raised
£1,285,872.



1.5 The calculation of earnings per Ordinary Share is based on the loss
attributable to equity shareholders of £300,000 (2011: loss £1,303,000;
2011/12 full year: loss £1,433,000) and on the number of shares in issue being
the weighted average number of shares in issue during the period (excluding
those held in treasury and employee benefit trust) of 17,943,192 (2011:
16,757,641; 2011/12 full year: 17,400,547). Diluted earnings per share is
calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all dilutive potential ordinary shares.
Dilutive potential Ordinary Shares relate to share options and shares that may
be granted under incentive award. The number is 18,285,713 (2011: 17,299,733;
2011/12 full year: 17,564,453). In accordance with convention, as the EPS is
negative, the diluted EPS is deemed to be the same as the undiluted EPS.



1.6 The directors have declared an interim dividend for the year ended 31
March 2013 of 0.33p per Ordinary Share (2011/12: 0.5p per Ordinary Share). The
directors recommended a final dividend of 0.5p per Ordinary Share for the year
ended 31 March 2012 and this was paid on 2 October 2012.



1.7 The interim report, including the financial information contained therein
is the responsibility of, and was approved by, the directors on 19 November
2012. The Listing

Rules require that accounting policies and presentation applied to the interim
figures should be consistent with those applied in preparing annual accounts
except where any changes, and the reason for them, are disclosed. There have
been no changes to the Group's accounting policies for the period ended 30
September 2012.

1.8 Each of the persons who is director confirms that as far as they are
aware:



- The condensed set of financial statements, which has been prepared in
accordance with the applicable accounting standards, gives a true and fair
view of the assets, liabilities, financial position and profit or loss of the
undertakings included in the consolidation as a whole as required by
Disclosure and Transparency Rule 4.2.4

- The interim management report includes a fair review of the information
required to be included as required by Disclosure and Transparency Rules 4.2.7
and 4.2.8.


- These condensed consolidated financial statements have been prepared in
accordance with IAS 34, "Interim Financial Reporting" as adopted by the
European Union. They do not include all of the information required for full
annual financial statements and should be read in conjunction with the annual
financial statements for the year ended 31 March 2012, which were prepared in
accordance with IFRS as adopted by the European Union. As required by the
Disclosure and Transparency Rules of the Financial Services Authority, the
condensed consolidated financial statements have been prepared applying the
accounting policies and presentation that were applied in the preparation of
the Company's published consolidated financial statements for the year ended
31 March 2012.

2 Available for sale' financial assets



                                                      As at    As at    As at
                                                    30/09/12 31/03/12 30/09/11

                                                        £000     £000     £000
Listed securities
Equity
Equity securities - Australia                            769    1,258      665
 - US and Canada                44       63        7
 - UK                        1,195    1,685    1,726
Cumulative non-redeemable preference shares                         
- UK
                                                           -       51       46
Non-cumulative non-redeemable preference shares -                          
UK
                                                           -       46      280
Equity fund - UK                                         414      410      369
Debt
Convertible loan stock - UK                                -        -      125
Convertible loan notes - Australia                         -      172      150
                                                       2,422    3,685    3,368
Unlisted securities                                                        

Equity securities traded on inactive markets             426    1,552      955

                                                                             
                                                       2,848    5,237    4,323







Principal holdings at 30 September 2012

   Holding Security                    Cost Value

                                      £'000 £'000
20,055,480 FAR Ltd                      279   452
   500,300 Munro UK Funds               500   414
 7,680,000 Tertiary Minerals plc        351   403
   283,340 Hurricane Exploration        120   383
19,500,000 Sunrise Resources plc        210   263
 2,100,000 Target Energy Ltd             71   156
   472,600 AFC Energy plc                74   121
 2,729,583 Netalogue Technologies plc    62    62
           Other                      1,098   594
     Total                            2,765 2,848



Principal holdings at 31 March 2012

   Holding Security                Cost Value
                                  £'000 £'000
   702,874 FX Capital Limited       387 1,125
25,055,480 FAR Limited              349   812
 6,500,000 Tertiary Minerals Plc    301   439
   500,300 Munro UK Funds           500   410
   283,340 Hurricane Exploration    120   383
22,000,000 Sunrise Resources plc    237   275
    20,000 Secure Trust Bank plc    144   208
 3,408,075 Target Energy ltd        115   196
   672,600 AFC Energy plc           105   175
 1,910,397 SIPA Resources            83   129
 1,103,570 Platinum Australia       204   123
           Other                  1,041   962
     Total                        3,586 5,237



Principal holdings at 30 September 2011

   Holding Security                   Cost Value
                                     £'000 £'000
   878,000 Flow Energy                 522   608
   500,300 Munro UK Funds              500   369
 7,766,666 Tertiary Minerals plc       359   369
    28,334 Hurricane Exploration       120   315
   240,000 Barclays 14% Prefs          234   247
   672,600 AFC Energy plc              105   225
   354,000 Prime People                178   219
19,500,000 Sunrise Resources plc       207   205
 2,310,347 SIPA Resources              100   187
   150,000 Target Energy Loan Notes     92   150
 2,750,000 Red Rock Resources           28   138
   165,000 Vatukoula Gold              103   127
   125,000 SUSD Loan Notes             125   125
           Other                     1,266 1,039
     Total                           3,939 4,323







3 Administrative
expenses
                                              6 months to
                            6 months to
                               30/09/12          30/09/11     Year to 31/03/12

                                                                           
                                  £'000             £'000                £'000
Staff costs
      Payroll expenses      1,416         903     2,174
      Payroll
      incentive award     61     (37)    (95)
      Other staff
      costs               29       96     212
Establishment costs
      Property costs      75      105     192
      Other                256      455     449
Fees due to auditors      48       57   113
Legal fees               229      153     446
Consultancy fees           149      102   291
Other professional
fees                       213      168     249
Depreciation              24     23    43
Amortisation                28      7  78
Foreign exchange loss
/ (gain)                  (92)  (7)      7
Total                       2,436       2,025     4,159





4 Segmental reporting



The principal trading subsidiaries are considered to operate in business
segments other than the principal activity of the parent company.

Pre-tax profit and loss                 Operating Financial            Pre-tax
                                Revenue  profit /  expenses      profit/(loss)
Half-year to September 2012                (loss)
                                  £'000     £'000     £'000              £'000
COLG      Investment portfolio     -       950         -                950
          sales
          Legal cases             -      (43)    -               (43)
         Intra-group               405       405         -                405
          Other                      35   (1,048)      (61)            (1,109)
                                  440       264      (61)                203
Platforms                                               
          Litigation fund           120     (316)      (35)              (351)
         management
         Trade financing        14,410       103     (171)               (68)
         Lease financing           176      (59)     (119)              (178)
         Professions financing     268       141     (141)  -
         Legal case financing       99       121      (86)                 35
         Other                      69      (30)      (63)               (93)
         Inter company           (405)     (367)       367                  -
                                 15,177     (143)     (309)              (452)



Pre-tax profit and loss                     Operating  Financial       Pre-tax
                                    Revenue  profit /   expenses profit/(loss)
Half-year to September 2011                    (loss)
                                      £'000     £'000      £'000         £'000
COLG      Investment portfolio           -       469 -           469
          sales
          Legal cases                -     (843)       -         (843)
         Intra-group                   114       203          -           203
          Other                         109     (782)        (3)         (785)
                                      223     (953)        (3)         (956)
Platforms                                                    
          Litigation fund               255     (125)       (44)         (169)
         management
         Trade financing             5,213        73       (91)          (18)
         Lease financing                 6     (185)        (6)         (191)
         Professions financing          49        30       (28)           2
         Legal case financing            -      (22)          -          (22)
         Other                          12      (55)          -          (55)
         Inter company               (114)     (114)        114             -
                                      5,644   (1,351)       (58)       (1,409)





Net assets at 30/09/12

                                                                     Total
                                                    £'000            £'000
COLG       Investment portfolio                            2,848
           Investment in legal cases                       759
Platforms
           Litigation fund management     1,650
           Trade financing                3,446
           Lease financing                1,255
           Professions financing          1,095
           Legal case financing                     1,324
           Other                                      431
                                                                     9,201
                                                                    12,808
           Amount due re share placing                               1,291
           Other net liabilities                                     (345)
Net assets per entity balance sheet                                 13,754
Net liabilities of subsidiary companies                            (3,036)
Consolidated net assets                                             10,718





Net assets as at 31/03/12

                                                                     Total
                                                    £'000            £'000
COLG       Investment portfolio                            5,237
           Investment in legal cases                       916
Platforms
           Litigation fund management     1,100
           Trade financing                2,650
           Lease financing                1,255
           Professions financing          1,075
           Legal case financing                     1,489
           Other                                      908
                                                                     8,477
                                                                    14,630
           Amount due re share placing                                   -
           Other net liabilities                                     (694)
Net assets per entity balance sheet                                 13,936
Net liabilities of subsidiary companies                            (2,789)
Consolidated net assets                                             11,147





Net assets at 30/09/11

                                                                                                     Total
                                                                                   £'000             £'000
          Investment
COLG      portfolio                                                                        4,323
          Investment
          in legal                                                                            
          cases                                                                                      1,565
Platforms
          Litigation
          fund
          management                                                       780
          Trade
          financing                                                      2,951
          Lease
          financing                                                        955
          Professions
          financing                                                        850
          Legal case
          financing                                                                  299
          Other                                                                      306
                                                                                                     6,141
                                                                                                    12,029
                                                                                         
          FX Capital                  949
          Other net
          assets                                                                                       437
Net assets per entity
balance sheet                                                                                       13,415
Net liabilities of
subsidiary companies                                                                               (2,150)
Consolidated net
assets                                                                                              11,265



5 Capital commitments



                               As at    As at    As at
                            30/09/12 31/03/12 30/09/11
                               £'000    £'000    £'000
Investment in legal funds        488      807      382
Trade financing                  737    1,358      138
Leases                             -        -      939
Loans                              -      100      143
                               1,225    2,265    1,602



6 Related parties

J Anstee, an employee of the Company, is considered a related party as he is
the son of the Chief Executive, E Anstee. J Anstee received remuneration of
£19,345 during the six months to 30 September 2012. A payment of £110,000 was
made to the Company by John Greenhalgh in August in connection with a proposed
share placing which did not proceed. The payment was repaid three weeks later
with an interest at a rate of 4.25% per annum.

7 Risks statement

The key risk factors faced by the Group are set out in financial statements to
31 March 2012 and are summarised below. The Board reviews and agrees policies
for managing each of these risks.

Price risk

The Group is subject to price risk on its 'available-for-sale' financial
assets, in particular its investment share portfolio which is predominantly in
the natural resource sector. The price risk in respect of investments in
unlisted companies is managed by the Group having an overall investment
portfolio which limits its exposure to unlisted investments. The value of the
unlisted investments at 30 September 2012 was £426,000. The Group is
mitigating the risk on the total portfolio by steadily unwinding it to invest
in the new platforms.



Credit risk

The Group is subject to credit risk of counterparties to which it has lent or
to which it has cash on deposit. The risk is mitigated by upfront credit
checks, asset security, guarantees and credit insurance. All cash deposits are
made with major financial institutions and the directors are of the opinion
that credit risk in relation to cash and cash equivalents is minimal.





Cashflow risk

The Company has renewed its bank overdraft facility at £1m through to 30
September 2013, secured on its UK listed investment portfolio. The actual
facility size available is, however, restricted to half the value of the
Company's UK listed investment portfolio. The facility size is currently
approximately £0.8m and this is expected to be sufficient to meet current
requirements. A considerable portion of the total investment portfolio would
be easily realisable if the need arose, but half of any disposals of UK listed
investments would be applied to reduce the overdraft facility. Also, there is
a risk that if platforms are unable to raise third party funds this would
restrict their development. This is mitigated by Group support for attracting
third party funds.



Fair value estimation

The fair value of listed financial assets is established by reference to
current bid market prices. The fair value of unlisted investments is estimated
based on historical experience and other various factors that are believed to
be reasonable. The fair value of investments in legal funds is based on the
opinion of legal counsel on the prospect of cases financed by the funds.



Legal and regulatory risks

The Company may fail to comply with its legal and regulatory obligations,
which could have a material adverse effect on its business or lead to its
shares being suspended from trading. External advisers are used to provide
specialist advice and training is also provided for directors and senior
management.



Interest rate risk

Investee companies are financed through third party borrowings which may lead
to an increase in investment risk and exposure to interest rate fluctuations.
This is mitigated where possible by passing this risk on to clients in the
nature of trade of the underlying business.



Litigation risk in funding legal cases

There can be no guarantee that legal cases will be successful or will pay the
returns targeted by the Board. The risk is mitigated by a screening process,
restricting investment levels in any one case to no more than £1m and
insurance against costs awarded to the other side if the case is lost. With
the asset management model the direct risk for the Company is primarily in
relation to its remaining seed investments in legal cases of £759k at 30
September 2012. Indirectly, however, poor outcomes would likely restrict third
part fund raising and therefore the development of the business.



Competition

The Company may become subject to increased competition in sourcing and making
investments. This could lead to the Company finding it difficult to raise
funds and find attractive investment opportunities. The mitigation is to
remain focussed in niche and complex areas where the barriers to entry are
higher. Our ability to demonstrate superior returns from investing in the
platforms is our best mitigation.



Foreign exchange risk

The Group's earnings and liquidity are affected by fluctuations in currency
exchange rates, principally in respect of 'available-for-sale' financial
assets denominated in overseas currencies. This risk is mitigated by the
gradual unwinding of the investment portfolio. The Group holds a limited
amount of overseas currencies in bank accounts.



Independent Review Report to City of London Group plc

Introduction

We  have  been  engaged  by  the  company  to  review  the  condensed  set  of 
consolidated financial statements in the half-yearly financial report for  the 
six months ended 30 September 2012 which comprises the condensed  consolidated 
statement of  comprehensive income,  the condensed  consolidated statement  in 
changes of equity,  the condensed  consolidated balance  sheet, the  condensed 
consolidated statement of cash flows and the related notes.



We have  read the  other information  contained in  the half-yearly  financial 
report and  considered  whether  it contains  any  apparent  misstatements  or 
material  inconsistencies  with  the  information  in  the  condensed  set  of 
consolidated financial statements.



Directors' responsibilities

The half-yearly  financial  report  is  the responsibility  of  and  has  been 
approved by the directors.  The directors are  responsible for preparing  the 
half-yearly  financial   report  in   accordance  with   the  Disclosure   and 
Transparency Rules of the United Kingdom's Financial Services Authority.



As disclosed  in note  1, the  annual financial  statements of  the group  are 
prepared  in  accordance  with  International  Financial  Reporting  Standards 
(IFRSs) as adopted  by the  European Union.  The condensed  set of  financial 
statements included in this half-yearly financial report has been prepared  in 
accordance with  International  Accounting Standard  34,  ''Interim  Financial 
Reporting'', as adopted by the European Union.



Our responsibility

Our responsibility is to express to the company a conclusion on the  condensed 
set of financial statements in the  half-yearly financial report based on  our 
review.



Our report has been prepared in accordance with the terms of our engagement to
assist the company in meeting  its responsibilities in respect of  half-yearly 
financial reporting in accordance with  the Disclosure and Transparency  Rules 
of the United Kingdom's Financial Services Authority and for no other purpose.
No person is entitled to rely on this report unless such a person is a  person 
entitled to rely  upon this report  by virtue of  and for the  purpose of  our 
terms of engagement or  has been expressly  authorised to do  so by our  prior 
written consent.  Save as  above, we  do not  accept responsibility  for  this 
report to any other person  or for any other  purpose and we hereby  expressly 
disclaim any and all such liability.



Scope of review

We conducted our review  in accordance with  International Standard on  Review 
Engagements (UK and Ireland) 2410,  ''Review of Interim Financial  Information 
Performed by the Independent Auditor of  the Entity'', issued by the  Auditing 
Practices Board for use in the United Kingdom. A review of interim  financial 
information consists of making enquiries, primarily of persons responsible for
financial and accounting  matters, and  applying analytical  and other  review 
procedures. A review is substantially less  in scope than an audit  conducted 
in accordance with International  Standards on Auditing  (UK and Ireland)  and 
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.



Conclusion

Based on our  review, nothing  has come  to our  attention that  causes us  to 
believe that the  condensed set  of consolidated financial  statements in  the 
half-yearly financial report for the six months ended 30 September 2012 is not
prepared,  in  all  material   respects,  in  accordance  with   International 
Accounting Standard 34, as adopted by  the European Union, and the  Disclosure 
and Transparency Rules of the United Kingdom's Financial Services Authority.



BDO LLP

Chartered Accountants and Registered Auditors, London, United Kingdom

19 November 2012



BDO LLP is  a limited liability  partnership registered in  England and  Wales 
(with registered number OC305127).

                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IR LFFVLLRLTLIF -0- Nov/19/2012 07:00 GMT