City of London Group plc
Annual report and accounts 2012 City of London Group plc
Overview
Highlights 1
Chairman’s statement 2
Strategy and business model
Chief Executives review  4
Unaudited directors’ valuation  6
Business model  7
Business review of key platforms
Trade Finance Partners Limited 10
Therium Capital Management Limited  11
Credit Asset Management Limited and  
Professions Funding Limited 12
Governance 
Directors’ report 13 
Corporate governance statement 18
Remuneration committees report   21 
Statement of risks  26
Financial statements 
Consolidated statement of comprehensive income  30
Consolidated statement of changes in equity  31
Company statement of changes in equity  32
Consolidated balance sheet  33
Company balance sheet 34 
Consolidated statement of cash ﬂows  35
Company statement of cash ﬂows  36
Notes to the ﬁnancial statements  37
Independent Auditors report 62
Statement of directors’ responsibilities  64
Shareholder and company information
Investor information and advisors  65
Four key platforms are 
now established and 
provide a well balanced 
business which is 
focused on lending  
to the SME market.
City of London Group plc (COLG) is an 
investment company with a wide range of 
national and international investments. A 
public company since 1986, the Company 
has had a full London Stock Exchange listing 
since August 1996.
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.
Henry Lafferty
Chairman
Board of directors
Directors’ biographies  8 City of London Group plc
1
Overview
Highlights
 Turnover for the year increased to £15.5m  
(2011: £0.8m)

 






 
 



creation in recent fund raise






 
 £15.5m
Turnover for the year
Third party funding
The trade ﬁnance 
business is trading 
proﬁtably and other 
platforms expected to 
follow in the near term
£35m
The unaudited 
proforma NAV per 
share including 
directors’ valuation  
is 99.2p 
 






 2 
City of London Group plc
Henry Lafferty

Chairman’s statement
The transformation 
into a ﬁnancial 
services investment 
group is now 
virtually complete. 
The transformation into a ﬁnancial services 
investment group is now virtually complete. 
Four key platforms are now established and 
provide a well balanced business which is 
focused on lending to the SME market. The 
legacy mining and energy equity investment 
portfolio will continue to be steadily 
unwound to fund the development of these 
new platforms. Our target is to apply our 
investment policy to this equity portfolio so 
that it represents no more than 20% of gross 
assets of the Company.
































This industry background is 
important to the repositioned 
City of London Group because 
our strategy is to invest in 
platforms targeted at providing 
alternative sources of ﬁnance 
including asset based ﬁnance 
to the SME market. City of London Group plc
3
Overview













a stated intention to increase the fund to £15m.








Financial
















Board












Outlook












Henry Lafferty
Chairman
25 June 2012
I expect the impact of the 
developments achieved in 
2011/12 to become apparent 
during 2012/13 as our 
platforms gain traction in 
each of their markets. 4 


City of London Group plc
Chief Executive’s review
Investment climate














Growth




























Strategy




Revenue
Eric Anstee 
 18000


12000
1000
8000


2000
0
2010 2011 2012
£’000

We will continue raising third 
party funds for our existing 
platforms and so far we are 
encouraged by the number of 
discussions we are holding.  5
City of London Group plc
Strategy and business model
Principal Holdings as at 31 March 2012
 Security Holding 
Book Cost (Net of 
Provision) 
£’000
Value 
£’000
 812 
 500 120 208 
 115 105   

Investment platforms




























Investment report
















Our strategy, which remains 
unchanged, is to invest 
in alternative investment 
platforms where we see 
opportunities for creating 
shareholder value and co-invest 
with experienced management 
teams, provide them with seed 
funding to get started and then 
seek third party funding to 
facilitate their growth. 6 


City of London Group plc
Other investments

























Dividend





Outlook













 
 

Eric Anstee
Chief Executive  
25 June 2012
Chief Executive’s review continued
Unaudited directors’ valuation






We will continue to focus 
on ways we can build or 
acquire new platforms in the 
area of ﬁnance for growing 
businesses. 7
City of London Group plc
Strategy and business model
Business model
Group structure and current investment platforms
City of London Group
Platform company Assets under management
Third party investors
Debt
Investment 
mandates
Working 
capital and 
equity stake
Income 
and equity 
returns
Asset class 
returns
Seed 
capital
Revenue
Funding Interest Funds
Asset 
class 
returns
City of London Group
Listed equities Legal/professions ﬁnancing Secured SME ﬁnancing
Investment 
Portfolio
Therium  
Capital 
Management
50%
City of London 
Law Funding
68%
Professions 
Funding
100%
Credit Asset 
Management
51%
Trade Finance 
Partners
52%
Mining and  
energy growth 
stocks
Litigation  
funding
Loans to law  
ﬁrm clients
Law ﬁrm and 
professions 
lending
Asset backed 
lending
Trade  
ﬁnance 8 


City of London Group plc
Directors’ biographies 
1 2 3
4 5 6
7 9
City of London Group plc
Board of directors
1. Henry Lafferty 
Non-executive Chairman



2. Eric Anstee 
Chief Executive






3. John Kent 
Deputy Chief Executive






4. Howard Goodbourn
Finance Director




5. Tony Brierley
Non-executive, Senior independent director and Chairman of audit and risk committee


6. John Greenhalgh
Non-executive 



7. John Williams 
Non-executive, Chairman of remuneration committee


 10 


City of London Group plc
Description of the business












The market 












Strategy










Finance






 






Outlook






Trade Finance Partners Limited
£15m
trade ﬁnance facility agreed  
with Macquarie Bank
Chris Ash William Tebbit 11
City of London Group plc
Business review of key platforms
Therium
Neil Purslow and John Byrne
Description of the business














The market

















Strategy 






 Finance















Outlook






300
investment opportunities  
reviewed to date 12 


City of London Group plc
Credit Asset Management Limited and Professions Funding Limited
James Frost Martin Parsons 
 Michael Hughes Chris Boobyer
Description of the business






ﬁnance intermediaries.
The market











into this sector. 




Strategy











Finance






Outlook











£5m
new business in 9 months  
to 31 March 2012 13
City of London Group plc
Governance
Directors’ report

 

Results and dividends




Principal activity





Business review



Principal risks and uncertainties



 

Events since the year end







 investment after 22 months. 











Investment policy











Strategy














Tax and investment company status


Regulation



 14 


City of London Group plc
Directors and their interests





J Kent
 
 


Share capital















At 1 April 2011 
(or date of 
appointment if 
later) At 31 March 2012 At 25 June 2012

 J Kent
Loan notes




Directors’ report continued 15
City of London Group plc
Governance
Takeover Directive disclosure




Rights and restrictions attaching to shares











Voting


























Restrictions on share transfers

























Number of 
ordinary shares at 
31 March 2012 %
Number of 
ordinary shares at 
25 June 2012 %
 8.20 8.20
 Major interests in ordinary shares

 16 


City of London Group plc
Directors’ report continued
Appointment and re-election of directors






for them to remain in office for a further three year term. 








 

























Amendment of articles








Agreements





Directors’ indemnities and insurance





Charitable and political donations


Policy for paying creditors







Statement of directors’ responsibilities



Going concern








have considered the uncertainties inherent in current and 









 17
City of London Group plc
Governance




Audit information

each of the directors confirms that: 






auditors are aware of such information.
Appointment of auditors




Annual General Meeting







L E Young
Company Secretary
25 June 2012 18 


City of London Group plc
Corporate governance statement
Introduction







 

Application of main principles
 

Leadership






























committee. Terms of reference for these committees are 


Effectiveness
The directors







Board procedures



















Performance evaluation












Board committees




 19
City of London Group plc
Governance
Audit and Risk committee


























Internal controls and risk management

 




















 
of authority.











Remuneration committee




21 to 25.










Nomination committee











 20 


City of London Group plc
Corporate governance statement continued
Board
Audit & Risk 
committee
Remuneration 
committee
Nomination 
committee
Attended
Eligible to 
attend Attended
Eligible to 
attend Attended
Eligible to 
attend Attended
Eligible to 
attend
 2222
 22
 8111111
 15 112211
J Kent 15
 0111
Attendance at meetings


Relations with Shareholders











Compliance with the Code




























 21
City of London Group plc
Governance
Introduction




unaudited information. 
Unaudited information 



















Director Date of contract Un-expired term Notice period
Compensation 
payable on early 
termination
 12 months J Kent 
 Director
Date of letter of 
appointment Unexpired term Notice period
Compensation 
payable on early 
termination
 n/a n/a
 n/a n/a n/a n/a
Remuneration committee’s report 22 


City of London Group plc








































Remuneration committee’s report continued 23
City of London Group plc
Governance












120
100

80
0

20
 2008 2010 2011 2012
 24 


City of London Group plc
Audited information






 Incentive scheme
Salary  
£
Beneﬁts  
£
Bonus  
£ 
Fees  
£ 
Sub-total 
£
Deferred 
£
Vested  
£
31 March 
2012  
£
31 March 
2011  
£
Executive 
directors
 J Kent Non-executive 
directors
 Total




1 April 2011 Vested Clawed back 31 March 2012
 ££££
 2010/11 deferred incentive (1st year) 2010/11 deferred incentive (2nd year) Total J Kent
 2010/11 deferred incentive (1st year) 2010/11 deferred incentive (2nd year) Total

Remuneration committee’s report continued 25
City of London Group plc
Governance

Date of 
Grant
At 
01/04/2011 
(or date of 
appointment 
if later)
Granted in 
year
Exercised 
in year
At 
31/03/2012
Exercisable 
from
Exercisable 
to
Exercise 
price
 11/02/2010 11/11/2012 J Kent 11/02/2010 11/11/2012 



John Williams
Chairman of the remuneration committee 
25 June 2012  26 


City of London Group plc
Statement of risks
Risk Area Risk Potential impact Mitigation strategies
1. Operational Risk
Business Continuity 
disaster etc.
 
 
data systems.
 documentation.
 
 
 Legal and regulatory 
 
 
 
 
 Compliance with the 
investment policy
 
 

Impact
High
Medium
Low
Medium
High
Probability
 
 
 
 27
City of London Group plc
Governance
Risk area 
(Operational Risk 
Cont) Risk Potential Impact Mitigation Strategies
Competition to invest.
 Exposure in relation 
to natural resource 
investee companies





 
to discovery.
 
 Risks relating to the 
Group’s investment 
platforms
 
 
 
 Exposure to country 
and regional 
risk (political, 
ﬁnancial, economic, 
geographical)
 
 Separation of  
managed funds


used and invested for 


 committees which ensure that the mandates for  
 
and adhered to. 
 People 
 
 
 
 Succession 
 
on the effectiveness.
 
 
 
 28 


City of London Group plc
Statement of risks continued
Risk Area Risk Potential Impact Mitigation Strategies
2. Financial Risk
Foreign Exchange  
Risk


 

overseas currencies.
 Interest Rate Risk 
to interest rate ﬂuctuations.
 Group Cash  
Flow Risks

 



 in order to raise cash.
 
 
 
 
 Platform Cash Flow 
to raise funds.




 
 
 Valuation Risk

 

 



Credit Risk 29
City of London Group plc
Governance
Risk Area Risk Potential Impact Mitigation Strategies
( Financial Risk Cont)
Price Volatility & 
Liquidity of Stocks:



investments and investments 


 



sectors and currencies.
 Risk Area Risk Potential Impact Mitigation Strategies
3. Project Risk
Litigation Risk in 
funding legal cases


and fees.




 



 Risk Area Risk Potential Impact Mitigation Strategies
4. Other Risks
Reputational Risk



 
 30 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
Consolidated statement of comprehensive income
for the year ended 31 March 2012
Note
31 March 2012 
£’000
31 March 2011
£’000
Revenue 4 15,540  792 
Cost of sales 4 (13,773) (333)
Gross proﬁt 1,767  459 
Administrative expenses 6 (4,159) (2,414)
Proﬁt on sale of investments 7 1,001  1,610 
Provision for impairment of investments 7 (65) (215)
(Loss) / proﬁt on legal cases 7 (725) 31 
Other operating income 8 208  23 
Operating (loss) (1,973) (506)
Financial expenses 10 (157) (45)
(Loss) before tax  (2,130) (551)
Income tax expense 11 54  99 
(Loss) for the year (2,076) (452)
Other comprehensive income
‘Available-for-sale’ assets
– Valuation gains / (losses) taken on equity investments (297) 3,564 
– Transferred to proﬁt or loss on sale (1,001) (1,610)
– Deferred tax provision 239  (397)
Other comprehensive income / (expense) (1,059) 1,557 
Total comprehensive income / (expense)  (3,135) 1,105 
Loss for the year attributable to:
Equity holders (1,433) 13 
Minority interest (643) (465)
 (2,076) (452)
Total comprehensive income / (expense) attributable to:
Equity holders (2,492) 1,570 
Minority interest (643) (465)
 (3,135) 1,105 
Basic total earnings per share 13 (8.24p) 0.12p
Diluted total earnings per share 13 (8.16p) 0.12p 31
City of London Group plc
Financial statements
Attributable to owners of the parent company
Attributable 
to minority 
interest
£’000
Total 
equity
£’000
Fair value 
reserve
£’000
Derivative 
Reserve
£’000
Retained 
earnings
£’000
Share 
premium
£’000
Share 
capital
£’000
Total 
£’000
At 31 March 2010 995  –  814  5,172  1,019  8,000  (271) 7,728 
‘Available-for-sale’ investments
–  Valuation gains / (losses) 
taken to equity 3,564  –  –  –  –  3,564  –  3,564 
–  Transferred to proﬁt  
or loss on sale (1,610) –  –  –  –  (1,610) – (1,610)
– Deferred tax provision (397) –  –  –  –  (397) – (397)
Total other  
comprehensive income 1,557  –  –  –  –  1,557  –  1,557 
Proﬁt / (loss) for the year –  –  13  –  –  13  (465) (452)
Total comprehensive income 1,557  13  –  –  1,570  (465) 1,105 
Value of employee services –  –  185  –  –  185 – 185 
Arising on business 
combination (note 14) –  (242) –  –  –  (242) 216  (26)
Dividends paid –  –  (104) –  –  (104) – (104)
Issue of shares –  –  –  619  95  714 – 714 
Sale of treasury shares (note 25) –  –  5  6  –  11 – 11 
At 31 March 2011 2,552  (242) 913  5,797  1,114  10,134  (520) 9,614 
‘Available-for-sale’ investments
–  Valuation gains / (losses) 
taken to equity (297) –  –  –  –  (297) – (297)
–  Transferred to proﬁt  
or loss on sale (1,001) –  –  –  –  (1,001) – (1,001)
– Deferred tax provision 239  –  –  –  –  239 – 239 
Net income recognised  
directly in equity (1,059) –  –  –  –  (1,059) –  (1,059)
Proﬁt for the year –  –  (1,433) –  –  (1,433) (643) (2,076)
Total comprehensive income (1,059) (1,433) –  –  (2,492) (643) (3,135)
Value of employee services –  –  (505) –  –  (505) –  (505)
Arising on business 
combination (note 14) –  45  –  –  –  45  (10) 35 
Dividends paid –  –  (268) –  –  (268) –  (268)
Issue of shares –  –  –  4,548  723  5,271  –  5,271 
Sale of treasury shares (note 25) –  –  56  79  –  135  –  135 
At 31 March 2012 1,493  (197) (1,237) 10,424  1,837  12,320  (1,173) 11,147 
Consolidated statement of changes in equity 32 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
Company statement of changes in equity
Fair value 
reserve
£’000
Retained 
earnings
£’000
Share 
premium
£’000
Share 
capital
£’000
Total
£’000
At 31 March 2010 995  836  5,172  1,019  8,022 
Changes in equity for year to 31 March 2011 – 
‘Available-for-sale’ investments
– Valuation gains / (losses) taken to equity 3,564  –  –  –  3,564 
– Transferred to proﬁt or loss on sale (1,610) –  –  –  (1,610)
– Deferred tax provision (397) –  –  –  (397)
Net income recognised directly in equity 1,557  –  –  –  1,557 
Proﬁt for the year –  519  –  –  519 
Total income and expense for the year 1,557  519  –  –  2,076 
Value of employee services –  185  –  –  185 
Dividends paid –  (104) –  –  (104)
Issue of shares –  –  619  95  714 
Sale of treasury shares (note 25) –  5  6  –  11 
At 31 March 2011 2,552  1,441  5,797  1,114  10,904 
Changes in equity for year to 31 March 2012
‘Available-for-sale’ investments
– Valuation gains / (losses) taken to equity (297) –  –  –  (297)
– Transferred to proﬁt or loss on sale (1,001) –  –  –  (1,001)
– Deferred tax provision 239  –  –  –  239 
Net income recognised directly in equity (1,059) –  –  –  (1,059)
Proﬁt for the year –  (946) –  –  (946)
Total income and expense for the year (1,059) (946) –  –  (2,005)
Value of employee services –  (94) –  –  (94)
Dividends paid –  (276) –  –  (276)
Issue of shares –  –  4,548  723  5,271 
Sale of treasury shares (note 25) –  56  80  –  136 
At 31 March 2012 1,493  181  10,425  1,837  13,936 33
City of London Group plc
Financial statements
Notes
31 March 2012 
£’000
31 March 2011
£’000
Non-current assets
Intangible assets 14 1,295  921 
Property, plant and equipment 15 107  87 
‘Available-for-sale’ ﬁnancial assets 16 5,237  6,963 
Operating investments 17 37  387 
Investments in legal cases 18 2,409  4,020 
Loans and leases receivable 20 2,201 – 
Total non-current assets 11,286  12,378 
Current assets
Inventories 19 156  15 
Trade and other receivables 20 12,071  2,235 
Cash and cash equivalents 21 2,194  2,255 
Total current assets 14,421  4,505 
Total assets 25,707  16,883 
Current liabilities
Borrowings 22 (4,415) (2,950)
Trade and other payables 22 (7,314) (3,701)
Total current liabilities (11,729) (6,651)
Non-current liabilities
Borrowings 23 (2,587) – 
Trade and other payables 23 –  (18)
Deferred taxation 24 – (297)
Derivative 23 (244) (303)
Total non-current liabilities (2,831) (618)
Total liabilities (14,560) (7,269)
Net assets 11,147  9,614 
Equity
Share capital 25 1,837  1,114 
Share premium 10,424  5,797 
Retained earnings (1,237) 913 
Fair value reserve 1,493  2,552 
Derivative reserve (197) (242)
 12,320  10,134 
Non-controlling interests 26 (1,173) (520)
Total equity 11,147  9,614
Consolidated balance sheet 
as at 31 March 2012 34 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
Notes
31 March 2012 
£’000
31 March 2011
£’000
Non-current assets
Property, plant and equipment 15 87  79 
‘Available-for-sale’ ﬁnancial assets 16 5,237  6,963 
Operating investments 17 3,663  1,198 
Investments in legal cases 18 916  3,420 
 9,903  11,660 
Current assets
Trade and other receivables 20 6,640  2,340 
Cash and cash equivalents 21 52  114 
 6,692  2,454 
Total assets 16,595  14,114 
Current liabilities
Borrowings 22 (2,068) (2,018)
Trade and other payables 22 (591) (877)
 (2,659) (2,895)
Non-current liabilities
Trade and other payables 23 – (18)
Deferred taxation 24 – (297)
– (315)
Net assets 13,936  10,904 
Equity
Share capital 25 1,837  1,114 
Share premium 10,425  5,797 
Retained earnings 181  1,441 
Fair value reserve 1,493  2,552 
Total equity 13,936  10,904
The notes on pages 37 to 61 are an integral part of these ﬁnancial statements.
The ﬁnancial statements were approved by the Board and authorised for issue on 25 June 2012.
They were signed on its behalf by:
H Goodbourn
Director
Company balance sheet 
as at 31 March 2012 35
City of London Group plc
Financial statements
Consolidated statement of cash ﬂows
for the year ended 31 March 2012
31 March 2012 
£’000
31 March 2011
£’000
Cash ﬂows from operating activities
(Loss) before taxation (2,130) (551)
Adjustments for:
Depreciation and amortisation 74  22 
Share based payments (504) 185 
Dividends receivable (104) (141)
Impairment of ‘available-for-sale’ ﬁnancial assets 65  215 
(Proﬁt) on disposal of investments (1,001) (1,610)
Loss/ (proﬁt) on legal cases 725  (32)
Interest receivable (148) (210)
Interest payable 55  45 
Changes in working capital:
(Increase) in stock (142) (15)
(Increase) in trade and other receivables (6,654) (1,094)
Increase in trade and other payables 1,285  2,568 
Cash used in operations (8,479) (618)
Income taxes – (2)
Net cash used in operating activates (8,479) (620)
Cash ﬂow from investing activities
Interest received 100  68 
Purchase of intangible assets (415) (28)
Purchase of property, plant and equipment (63) (87)
Purchase of non-current investments (3,762) (5,469)
Proceeds from investment in legal cases  4,068  682 
Acquisition of subsidiary companies (3) 200 
Dividends received 104  125 
Proceeds from sale of ‘available-for-sale’ investments 2,332  3,908 
Loans advanced (6,874) (1,210)
Loans repaid 1,522  350 
Net cash from/(used in) investing activities (2,991) (1,461)
Cash ﬂow from ﬁnancing activities
Interest paid (39) (4)
Dividends paid to company’s shareholders (268) (104)
Proceeds from issue of loans 1,698  1,600 
Proceeds from block discounting loans 3,322 –
Proceeds from issue of ordinary shares 5,272  714 
Proceeds from issue of preference shares 970 –
Sale of treasury shares 135  11 
Net cash from ﬁnancing activities 11,090  2,217 
Net increase/(decrease) in cash and cash equivalents (380) 136 
Cash and cash equivalents brought forward 1,506  1,370 
Net cash and cash equivalents 1,126  1,506 
Cash and cash equivalents 2,194  2,255 
Bank overdraft (1,068) (749)
Net cash and cash equivalents  1,126  1,506 36 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
Company statement of cash ﬂows
for the year ended 31 March 2012
31 March 2012 
£’000
31 March 2011
£’000
Cash ﬂows from operating activities
(Loss) / proﬁt before taxation (1,004) 418 
Adjustments for:
Depreciation charges 39  18 
Share based payments (94) 185 
Provision for losses in subsidiaries 99  90 
Dividends receivable (87) (141)
Impairment of ‘available for sale’ ﬁnancial assets 65  215 
(Proﬁt) on disposal of investments (1,001) (1,610)
Loss / (proﬁt) on legal cases 742  (25)
Interest receivable (428) (222)
Interest payable 44  1 
Decrease / (increase) in trade and other receivables 345  (945)
Increase / (decrease) in trade and other payables (321) 306 
Cash used in operation and net cash used in operating activities (1,601) (1,710)
Cash ﬂow from investing activities
Interest received 107  60 
Acquisition of property, plant and equipment (47) (82)
Acquisition of non-current investments (5,704) (5,120)
Dividends received 87  125 
Proceeds from sale of ‘available-for-sale’ investments 2,332  3,908 
Proceeds from investment in legal cases  3,936  609 
Loans advanced (7,347) (1,210)
Loans repaid 3,022  350 
Net cash from/(used in) investing activities (3,614) (1,360)
Cash ﬂow from ﬁnancing activities
Interest paid (28) (1)
Dividends paid (276) (104)
Loan drawn down 1,000  1,600 
Loan notes repaid (1,600) – 
Shares issued 5,351  714 
Sale / (purchase) of own shares 56  11 
Net cash from ﬁnancing activities 4,503  2,220 
Net (decrease) in cash and cash equivalents (712) (850)
Cash and cash equivalents brought forward (304) 546 
Net cash and cash equivalents  (1,016) (304)
Cash and cash equivalents  52  114 
Bank overdraft (1,068) (418)
Net cash and cash equivalents  (1,016) (304) 37
City of London Group plc
Financial statements
Notes to the ﬁnancial statements
1 General information
City of London Group plc is a company incorporated in the United Kingdom under the Companies Act 2006. The address of its 
registered ofﬁce is 30 Cannon Street, London, EC4M 6XH. The Company is listed on the London Stock Exchange.
City of London Group plc is a closed-ended investment company with a number of operating investments in the ﬁnancial 
services sector and a portfolio of ‘available for sale’ investments. Details of the activities of the Group are given in the 
directors’ report.
These consolidated and separate ﬁnancial statements have been approved for issue by the Board of directors on 25 June 2012.
2 Summary of signiﬁcant accounting policies
The principal accounting policies applied in the preparation of these consolidated ﬁnancial statements are set out below. These 
policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated and separate ﬁnancial statements of City of London Group plc have been prepared in accordance with 
International Financial Reporting Standards (IFRS) as adopted by the European Union. The consolidated and separate ﬁnancial 
statements have been prepared under the historical cost convention, as modiﬁed by the revaluation of ‘available-for-sale’ 
ﬁnancial assets (including operating investments, investment in legal funds) and derivatives. These ﬁnancial instruments are 
carried at fair value. 
The directors are satisﬁed that the Group has adequate resources to continue in operational existence for the foreseeable future, 
a period of not less than 12 months from the date of this report. The Group’s going concern position is further discussed in the 
directors’ report on page 16.
At the date of authorisation of these ﬁnancial statements, the following standards and interpretations which have not been 
applied in these ﬁnancial statements were in issue but not yet effective:
 IAS 1 – (Amendments) Presentation of items of Other Comprehensive Income
 IAS 12 – (Amendments) Deferred tax: Recovery of Underlying Assets (amended)
 IAS 19 – Employee Beneﬁts - Revised
 IAS 27 – Separate Financial Statements 
 IAS 28 – Investments in Associates and Joint Ventures
 IFRS 1 –  (Amendments) - Severe Hyperinﬂation and Removal of ﬁxed date for ﬁrst time adopters. (Amendments) -  
Government loans
 IFRS 7 –  (Amendments) Disclosures: Transfers of Financial Assets. (Amendments) Disclosures: Offsetting Financial Assets 
and Financial Liabilities
 IFRS 10 – Consolidated Financial Statements
 IFRS 11 – Joint Arrangements
 IFRS 12 – Disclosure of Interests in Other Entities
 IFRS 13 – Fair Value Measurement
 IFRIC 20 – Stripping costs in the Production Phase of a Surface Mine
The Group considers that of these amendments and revised standards only IAS 1, IFRS’s 7 and 12 will have a material impact 
on the disclosures and presentation of information in the ﬁnancial statements.
2.2 Consolidation
Subsidiaries are all entities over which the Group has the power to govern the ﬁnancial and operating policies generally 
accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that 
are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries 
are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that 
control ceases. 38 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
2 Summary of signiﬁcant accounting policies continued
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. 
Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies  
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the net assets of consolidated subsidiaries are identiﬁed separately from the Group’s equity therein. 
Non-controlling interests consist of the amount of those interests at the date of the original business combination and the 
minority’s share of changes in equity since the date of the combination. In accordance with IAS 27, the Group recognises any 
non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s 
net assets on a transaction by transaction basis.
2.3 Associates
An associate is an entity over which the Group is in a position to exercise signiﬁcant inﬂuence. Signiﬁcant inﬂuence is the power 
to participate in the ﬁnancial and operating policy decisions of the investee but is not control or joint control over those policies.
The results of associates are incorporated in these ﬁnancial statements using the equity method of accounting. Investments 
in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group’s share of the net 
assets of the associate, less any impairment in the value of individual investments. 
Any excess of the cost of acquisition over the Group’s share of the book values of the identiﬁed net assets of the associate at  
the date of acquisition is recognised as goodwill.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest 
in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the 
asset transferred.
2.4 Business combinations
The Group uses the acquisition method of accounting to account for business combinations. The cost of the acquisition is 
measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity 
instruments issued by the Group in exchange for control of the acquire. Acquisition related expenses are expensed as incurred. 
The acquiree’s identiﬁable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are 
recognised at their fair value at the acquisition date.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of 
the business combination over the Group’s interests in the net fair value of the identiﬁable assets, liabilities and contingent 
liabilities recognised.
On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value 
or at the non-controlling interests proportion share of the acquiree’s net assets. The Group treats transactions with the non-
controlling interest as transactions with equity owners of the Group. For purchases from non-controlling interests the difference 
between the consideration paid and the relevant share of net assets acquired is recorded in equity.
2.5 Intangible assets
Goodwill arising on consolidation represents the excess of the cost at acquisition over the Group’s interest in the fair value of 
the identiﬁable assets and liabilities of a subsidiary or associate at the date of acquisition. Goodwill is initially recognised as an 
asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as 
an asset is reviewed for impairment at least annually or more frequently when there is an indication it may be impaired. For the 
purposes of assessing impairment, goodwill is allocated to the cash-generating units expected to beneﬁt from the synergies of 
the combination. Any impairment is recognised immediately in proﬁt and loss and is not subsequently reversed. 
Other intangible assets are stated at historical cost less accumulated amortisation and impairment losses. Amortisation is 
provided to write off the cost less the estimated residual value of intangible assets by equal annual instalments over their 
estimated useful economic lives as follows:
Website development 3 years straight-line
Systems development 3 years straight-line
The other intangible assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Notes to the ﬁnancial statements continued 39
City of London Group plc
Financial statements
2.6 Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Depreciation 
is provided to write off the cost less the estimated residual value of property, plant and equipment by equal annual instalments 
over their estimated useful economic lives as follows:
Fixtures, ﬁttings & equipment 3 years straight-line
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
2.7 Impairment of non-ﬁnancial assets
The carrying value of the non-current assets is reviewed on an on-going basis to determine whether there is any indication of 
impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised for the 
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount of property, plant and 
equipment is the greater of its fair value less costs to sell and value in use. The recoverable amount of goodwill is its value in use.
In assessing value in use, the estimated future cash ﬂows are discounted to their present value using a pre-tax discount rate that 
reﬂects current market assessments of the time value of money and the risks speciﬁc to the asset. For an asset that does not generate 
largely independent cash inﬂows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
2.8 Financial assets
The Group and the Company classify ﬁnancial assets in the following categories: loans and receivables, ‘available-for-sale’ 
ﬁnancial assets, operating investments and investment in legal funds. The classiﬁcation depends on the purpose for which the 
ﬁnancial assets were acquired. Management determines the classiﬁcation of its ﬁnancial assets at initial recognition and re-
evaluates this designation at every reporting date.
(a) Loans and receivables
Loans and receivables are non-derivative ﬁnancial assets with ﬁxed or determinable payments that are not quoted in an active 
market. They are included in current assets, except for maturities greater than twelve months after the balance sheet date. These 
are classiﬁed as non-current assets. Loans and receivables are classiﬁed as ‘trade and other receivables’ in the balance sheet. 
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the 
effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established 
when there is objective evidence that the Group or Company will not be able to collect all amounts due according to the 
original terms of receivables. Signiﬁcant ﬁnancial difﬁculties of the debtor, probability that the debtor will enter bankruptcy or 
ﬁnancial reorganisation, and default or delinquency on payments are considered indicators that the trade receivable is impaired. 
The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future 
cash ﬂows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement within 
‘administrative expenses’.
In accordance with IAS 17, costs which are incremental to the initiation of new business (Initial Direct Costs or “IDC”) are 
capitalised and amortised over the expected life of the leases to which they relate. The IDC is included in lease receivables. 
The capitalisation of IDC relates to personnel and other operating expenses. The IDC amortisation is netted off against interest 
income and similar income in the income statement.
(b) vailable or sale nancial asse s
Available-for-sale ﬁnancial assets are non-derivatives that are either designated in this category or not classiﬁed in any of the 
other categories speciﬁed by IAS 39 Financial Instruments: Recognition and Measurement. 
Purchases and sales of investments are recognised on the trade date – the date on which the Group or Company commits 
to purchase or sell the asset. Investments are initially recognised at fair value, including directly attributable transaction costs. 
‘Available-for-sale’ ﬁnancial assets are subsequently carried at fair value and gains and losses arising from changes in fair 
value are recognised directly in equity. They are derecognised when the rights to receive cash ﬂows from the investments have 
expired or have been transferred and the Group or Company has transferred substantially all risks and rewards of ownership.
When securities classiﬁed as available-for-sale are sold or permanently impaired, the accumulated fair value adjustments 
recognised in equity are included in the income statement as ‘proﬁt on sale of investments’ and ‘provision for impairment of 
investments’ respectively. Interest accrued on available-for-sale securities carrying a ﬁxed interest rate is recognised in the 
income statement. Dividends on available-for-sale equity instruments are recognised in the income statement when the Group 
and Company’s right to receive payments is established. 40 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
2 Summary of signiﬁcant accounting policies continued
The fair values of quoted investments are based on bid prices prevailing at the balance sheet date. If the market for a ﬁnancial 
asset is not active (and for unlisted securities), the Group and Company establish fair value by using valuation techniques. These 
include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted 
cash ﬂow analysis and option pricing models, making maximum use of market inputs and relying as little as possible on entity-
speciﬁc inputs.
The Group assesses at each balance sheet date whether there is objective evidence that a ﬁnancial asset or a Group of 
ﬁnancial assets is impaired. In the case of equity securities classiﬁed as available for sale, a signiﬁcant or prolonged decline in 
the fair value of the security below its cost is considered an indicator that the security is impaired. If any such evidence exists 
for available-for-sale ﬁnancial assets, the cumulative loss – measured as the difference between the acquisition cost and the 
current fair value, less any impairment loss on that ﬁnancial asset previously recognised in proﬁt or loss – is removed from equity 
and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not 
subsequently reversed in the income statement unless the underlying instrument is derecognised.
(c) era in inves en s
Operating investments are substantial investments (typically below 20% of the equity of the investee company) that the 
Group intends to hold for the foreseeable future. Operating investments are initially recorded and subsequently measured in 
accordance with the principles laid out above for available-for-sale ﬁnancial assets but are separately disclosed on the face of 
the balance sheet, as the associated ﬁnancial risks differ from the portfolio of available-for-sale ﬁnancial instruments. 
(d) nves en s in le al nds
Seed funding is made into funds which are used to fund legal cases. Initial recognition of an investment is made when payment 
to the fund is made. The investments are subsequently carried at fair value and gains and losses arising from changes in fair 
value of each fund are recognised directly in equity in accordance with the principle outlined above for available-for-sale ﬁnancial 
instruments. De-recognition occurs when funds are returned and any proﬁts or losses are taken to the proﬁt and loss account at 
this time. 
(e) nves en in s bsidiaries
Investments in subsidiaries are accounted for at cost less impairment. Cost also includes directly attributable costs of investment.
2.9 Inventories
Inventories are stated at cost or net realisable value whichever is the lower. 
2.10 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, call deposits with maturity of less than three months and bank overdrafts. 
Funds held by brokers are classed as cash if held in an account in a group company name. If held in the brokers’ name, they are 
included in other debtors. Bank overdrafts are included in borrowings under current liabilities.
2.11 Financial liabilities and equity
Financial liabilities and equity instruments are classiﬁed according to the substance of the contractual obligations entered into. 
An equity instrument is any contract which evidences a residual interest in the assets of the Group after deducting all of its liabilities.
2.12 Share capital
Ordinary shares are classiﬁed as equity. Incremental costs directly attributable to the issue of new shares or options are shown 
in equity as a deduction, net of tax, from the proceeds.
When the Group purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly 
attributable issues costs is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or 
reissued. When such shares are subsequently reissued, any consideration received, net of any directly attributable incremental 
transaction costs is included in equity attributable to the Company’s equity holders. 
2.13 Dividends
Dividends declared on the Company’s equity share capital are recognised as a liability when an irrevocable obligation to pay the 
dividends is established. In the case of interim dividends this arises when the dividend is paid. In the case of ﬁnal dividends this 
is the date at which the dividends are approved at a shareholders’ general meeting.
2.14 Preference shares
Preference shares held by non-controlling interests in subsidiary companies are included as borrowings in non-current liabilities. 
The dividends on these preference shares are recognised in the income statement as interest expense. 
Notes to the ﬁnancial statements continued 41
City of London Group plc
Financial statements
2.15 Trade payables
Liabilities are recognised as trade payables when an invoice is received. Expenses incurred for which an invoice has not as 
yet been received are included in accruals and deferred income. Trade payables are initially measured at fair value, and are 
subsequently measured at amortised cost using the effective interest rate method.
2.16 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised 
cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income 
statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are 
recognised at transaction costs of the loan to the extent that it is probable the some or all of the facility will be drawn down.
2.17 Leases
Leases where the lessor retains substantially all the risks and beneﬁts of ownership of the asset are classiﬁed as operating leases. 
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
2.18 Derivative ﬁnancial instruments
Are initially recognised at fair value on the date of the contract is entered into and subsequently re-measured at their fair value.
2.19 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-
maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the 
operating segments, has been identiﬁed as the full Board of the Company.
2.20 Revenue
Revenue comprises dividend and interest income and investment management fees, arrangement fees, trade ﬁnance fees and 
stock sales. Dividend income is recognised when the right to receive payment is established. Interest income is recognised 
on an accruals basis using the effective interest rate method. Fee income is recognised in the period in which the underlying 
services are provided. Inventory sales are recognised on the date the title to the goods transfers.
2.21 Foreign currencies
The functional currency of the Company and its subsidiaries and associates is determined by the primary economic environment 
in which the entity operates. The functional and presentational currency of the Company and its subsidiaries is pound sterling 
(£). Transactions denominated in foreign currencies have been translated into sterling at the actual rates of exchange ruling 
at the date of the transaction or valuation when items are re-measured. Foreign exchange gains and losses resulting from 
the settlement of such transactions and from the translation of year-end exchange rates of monetary assets and liabilities 
denominated in foreign currencies are recognised in the income statement. 
Translation differences on non-monetary ﬁnancial assets, such as equities classiﬁed as ‘available-for-sale’, are included in other 
comprehensive income, to the extent that they are not considered permanently impaired where the impairment is charged 
through the proﬁt and loss.
2.22 Employee beneﬁts
 are based a en The Group operates a number of equity-settled share-based payment compensation plans under which the entity receives 
services from employees as consideration for equity instruments of the Group. 
The fair value of the employee services received by the Group is recognised as an expense. The total value of the expense is 
determined by reference to the fair value of the equity award granted including any market performance conditions, but excluding 
non-market conditions such as continued employee service periods. Non-market conditions are included in the assumptions 
about the number of equity awards that are expected to vest. The total expense is recognised over the vesting period, which is the 
period over which all the speciﬁed vesting conditions are to be satisﬁed. Where the employee services are received in advance of 
the formal grant date of the equity award, as is the case with the deferred element of the Group’s long term incentive plan, the fair 
value of the award is estimated at each reporting date preceding the grant date and the cumulative recognised charge is adjusted 
as appropriate when the fair value is ultimately calculated on grant. At each reporting date the Group updates its estimate of the 
number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to 
original estimates, if any, in the income statement with a corresponding adjustment to equity.
Where relevant the social security contributions payable in connection with the grant of equity awards is considered an integral 
part of the grant itself, and the charge will be treated as a cash settled transaction. 42 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
2 Summary of signiﬁcant accounting policies continued
 nn al and de erred incen ive sc e e
The Group recognises a liability and an expense for bonuses and proﬁt sharing based on the increase in the higher of total 
shareholder return or increase in net assets per share against a benchmark of 8% per annum. The liability is recognised where 
there is either a contractual obligation or past practice has established a constructive obligation. Deferred incentive scheme 
bonuses are treated as equity-settled share-based payments in accordance with the policy outlined above. 
2.23 Income tax
Income tax on the result for the period comprises current and deferred tax. Income tax is recognised in the income statement 
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantially enacted at 
the balance sheet date, and any adjustment to tax payable in respect of previous periods.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying 
amounts of assets and liabilities for ﬁnancial reporting purposes and the amounts used for taxation purposes. The amount 
of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and 
liabilities, using tax rates enacted or substantially enacted at the balance sheet date.
Deferred income tax assets are recognised to the extent that it is possible that future taxable proﬁt will be available against 
which the temporary differences can be utilised.
 
3 Judgements and estimates
The preparation of ﬁnancial information in conformity with IFRS requires management to make judgements, estimates and 
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The 
estimates and associated assumptions are based on historical experience and various other factors that are believed to be 
reasonable under the circumstances, the results of which form the basis for making the judgements about carrying values of 
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are 
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision 
and future periods if the revision affects both current and future periods.
 air en o available or sale nancial asse s
The Group and the Company follow the guidance from IAS 39 when determining whether an investment is other than 
temporarily impaired. This determination requires signiﬁcant judgement. In making this judgement, the Group and company 
evaluate, among other factors, the duration and extent to which the fair value of an investment is less than its cost; and the 
ﬁnancial health and near–far business outlook for the investee, including factors such as industry and sector performance, 
changes in technology and operational and ﬁnancing cash ﬂows.
If the impairments that were considered temporary had been considered permanent, retained earnings would be reduced and 
the revaluation reserve increased by £460,056 (2011: £274,311). There would be no overall effect on the net assets of the Group 
or Company.
 ssessin air val e o nlis ed available or sale nancial asse s
Fair values of unlisted ‘available-for-sale’ ﬁnancial assets are determined using valuation techniques. The Group and the 
Company use their judgement to select a variety of methods and make assumptions that are mainly based on market conditions 
existing at each balance sheet date. The Group’s most signiﬁcant unlisted investments are those in ‘available-for-sale’ ﬁnancial 
assets and ‘investments in legal funds’, both of which are separately disclosed on the balance sheet. 
Operating investments are valued using valuation techniques as described in note 2. Based on their knowledge of the underlying 
investee companies, management has concluded that no write down of value is appropriate in respect of these investments as 
the underlying performance is in line with expectations inherent in the Group’s initial investment. 
The fair value of investment in legal funds is inherently based on the potential value of the underlying legal claims for which the 
funds have provided ﬁnancing. While advice is taken on an on-going basis from legal counsel and extensive due diligence is 
carried out by the funds prior to providing ﬁnance for speciﬁc cases, there is an unavoidable risk that the ultimate outcome of 
the underlying cases will differ from expectations which could adversely affect the fair value of the overall investment. Cases are 
assessed on a case by case basis and impaired if considered necessary. 
Notes to the ﬁnancial statements continued 43
City of London Group plc
Financial statements
 c isi ion acco n in 
Goodwill arose during the year on the acquisition of further stakes in City of London Conﬁrming House Limited, Fundamental 
Tracker Investment Management Limited and the buy back of shares in Therium which were the subject of a dilution clause. The 
ﬁgures are based on the calculation of the fair values of identiﬁable assets and liabilities existing in the acquiree. As goodwill is not 
amortised but is instead subject to annual impairment review, any overstatement of goodwill may lead to increased volatility in the 
Group’s operating results arising from impairment charges. Further details of the fair values of the identiﬁable assets and liabilities of 
Therium, City of London Conﬁrming House Limited and FTIM Limited and the resulting goodwill may be found in note 14.
Li i ed Liabili ar ners i s
Therium Capital Management Limited has raised three separate Limited Liability Partnerships (LLP’s) in order to supplement 
monies directly invested in cases. The funds are not controlled or advised by City of London Group plc and the capital 
concerned has the litigation risk of the cases where the funds are invested. Accordingly these funds are therefore not 
consolidated as ‘Investments in legal cases’, except to the extent the Company has invested its money in the partnerships, nor 
are the monies managed from third parties accounted for as liabilities.
 air en o ood ill
Judgement as to the impairment of goodwill is based on the forecast proﬁtability of the underlying investments in the 
foreseeable future. As actual results may deviate from these expectations, and as noted above, there is a risk of increased 
volatility arising in the Group’s operating results from goodwill impairment if results are lower than anticipated. The goodwill 
associated with Fundamental Tracker Investment Management Limited was impaired in the previous year and the investment 
is now carried at book value. The performance of Therium Capital management Limited is still in accordance with expectations 
and no impairment was considered necessary. Trade Finance Partners Limited and SHF Legal Funding Limited are recent 
investments and as performance in the short time since the dates of the acquisition have been in line with expectations no 
impairment was considered necessary.
 
4 Revenue and cost of sales
Revenue
31 March 2012 
£’000
31 March 2011
£’000
Dividends receivable 104  142 
Interest receivable 148  210 
Income from investments 252  352 
Investment management fee income 267  17 
Lease and loan interest 226 –
Arrangement fees 396  47 
Trade ﬁnance fees 918  43 
Stock sales 13,481  333 
Total 15,540  792
Cost of sales
31 March 2012 
£’000
31 March 2011
£’000
Commissions and introduction fees 238  –
Stock purchases 13,020  333 
Other costs 515  –
 13,773  333 44 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
5 Segmental reporting
Pre-tax proﬁt and loss
Revenue
£’000
Operating proﬁt / 
(loss)
£’000
Financial 
expenses
£’000
Pre-tax proﬁt / 
(loss)
£’000
COLG Investment portfolio sales – 1,001 – 1,001 
Legal cases – (725) – (725)
Intra-Group 293  (207) (132) (339)
Other 235  (1,030) 89  (941)
 528  (961) (43) (1,004)
Platforms Litigation ﬁnancing 267  (635) (47) (682)
Trade ﬁnancing 14,750  209  (129) 80 
Lease and profession ﬁnancing 232  (484) (72) (556)
Other 56  (308) 1  (307)
Inter company (293) 207  132  339 
 15,540  (1,972) (158) (2,130)
£’000
Total 
£’000
COLG ‘Available-for-sale’ portfolio 5,237 
Investment in legal cases 916 
Platforms Litigation ﬁnancing 1,100 
Trade ﬁnancing 2,650 
Lease and profession ﬁnancing 2,330 
Other 2,397 
 8,477 
Other net assets (694)
Net assets per entity balance sheet 13,936 
Derivative reserve (244)
Other net liabilities of subsidiary companies (2,545)
Consolidated net assets 11,147
Notes to the ﬁnancial statements continued 45
City of London Group plc
Financial statements
6 Administrative expenses
31 March 2012
 £’000
31 March 2011
£’000
Staff costs
Payroll incentive award (see note 9) (95) 296 
Other payroll (see note 9) 2,174  1,122 
Other staff costs 212  105 
Establishment costs
Property costs 192  161 
Other 449  211 
Fees due to auditors (see below) 113  62 
Legal fees 446  168 
Consultancy fees 291  90 
Other professional fees 249  200 
Depreciation 43  21 
Amortisation 78  1 
Foreign exchange loss / (gain) 7  (23)
Total 4,159  2,414
Directors’ emoluments are shown in the report of the Remuneration committee. The notional value of the non-vested portion of 
the award is £179,251 (2011: £258,972).
Fees due to auditors
31 March 2012 
£’000
31 March 2011
£’000
Fees payable to the Company’s auditor for the audit of the parent company 
and consolidated ﬁnancial statements 57 26
Fees payable to the Company’s auditors for other services:
The audit of subsidiaries pursuant to legislation 42 19
Other services pursuant to legislation 6 4
Fees relating to share placing 72 0
Tax services 814
Total 185  63
 
7 Gains on ﬁnancial assets
31 March 2012 
£’000
31 March 2011
£’000
Proﬁt on sale of investments 1,001  1,610 
Provision for impairment of investments (65) (215)
(Loss) / proﬁt on legal cases (725) 31 
 936  1,395
The impairment loss of £65k includes the write down of Arc Fund Management Holdings plc (£24k) and BCD Resources 
Limited (£41k). 46 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
8 Other income
31 March 2012 
£’000
31 March 2011
£’000
Director services 31  12 
Consultancy 105  8 
Sundry income 72  3 
 208  23
 
9 Employee numbers and costs
The average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:
Group 31 March 2012 31 March 2011
Company 11 6
Subsidiaries 18 8
29 14
The aggregate payroll costs of these employees were as follows:
31 March 2012 
£’000
31 March 2011
£’000
Wages and salaries 1,905  950 
Bonus 43  1 
Social security costs 250  161 
Pensions 21  10 
Incentive scheme  Current – 152 
Deferred (95) 143 
Share option scheme 40 –
Initial direct costs relating to leases (84) –
 2,080  1,417
 
10 Financial expenses
31 March 2012 
£’000
31 March 2011
£’000
Bank interest 72  4 
Loan interest 17  12 
Subsidiary’s preference dividend 50  29 
Derivative interest 18 –
 157  45
Notes to the ﬁnancial statements continued 47
City of London Group plc
Financial statements
11 Income tax expense
31 March 2012 
£’000
31 March 2011
£’000
UK corporation tax
Current year charge 4 –
Under provision from prior years – 2 
Total current tax 4  2 
Deferred tax
Origination / reversal of timing differences (58) (101)
Total tax credit (54) (99)
Factors affecting the tax charge for the year
The tax charge for the year differs from the theoretical amount that would arise using the standard rate of corporation tax in the 
UK, which is 26% (2011: 28%). The differences are explained below.
Tax reconciliation
31 March 2012 
£’000
31 March 2011
£’000
Loss before tax (2,131) (551)
At standard rate of corporation tax in the UK (554) (154)
Effects of:
Depreciation in excess of capital allowances 5  1 
Expenses not deductible for tax purposes 11  89 
Under provision from prior years – 2 
Non-taxed dividend income (23) (40)
Movement on unrecorded deferred tax asset 507  3 
 (54) (99)
Deferred tax recognised in income  
The elements of deferred taxation provided are as follows:  
31 March 2012 
£’000
31 March 2011
£’000
Excess management charges  (159) (101)
Deferred tax recognised in equity  
The elements of deferred taxation provided are as follows:  
31 March 2012 
£’000
31 March 2011
£’000
Difference between cost and valuation of ‘available-for-sale’ investments 159  397  48 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
12 Dividends
Paid and recognised during the year
31 March 2012 
£’000
31 March 2011
£’000
Final 2011 dividend of 1.0p (2010: 0.5p) per ordinary share paid 183  50 
Interim 2012 dividend of 0.5p (2011: 0.5p) per ordinary share paid 92  54 
Total 275  104 
Paid to the Employee Beneﬁt Trust (7) –
Total 268  104 
Proposed for approval at the Annual General Meeting and not recognised as a liability
Proposed ﬁnal dividend of 0.5p (2011: 1.0p) per ordinary share 92  184
The amount shown for the 2011 ﬁnal includes that in respect of shares issued under the placing.
 
13 Earnings per share
Basic
Basic earnings per share is calculated by dividing the proﬁt attributable to equity holders of the Group by the weighted average 
number of ordinary share in issue during the year less those held in treasury and in the Employee Beneﬁt Trust (see note 25).
31 March 2012 
£’000
31 March 2011
£’000
Loss attributable to equity holders (1,433) 13 
Weighted average number of ordinary shares in issue 17,401 10,510 
Basic earnings per share (8.24p) 0.12p
Diluted
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 the incentive award. For share options, a calculation is made to determine the number of shares that could 
have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on 
the monetary value of the subscription rights attached to outstanding share options. Adjustment is made for the full number of 
shares that could be granted under the incentive awards, the Company being due no consideration for the shares to be issued. 
The number of shares calculated as above is compared with the number of shares that would have been issued assuming the 
exercise of the share options and all incentive awards granted.
31 March 2012 
£’000
31 March 2011
£’000
Loss attributable to equity holders (1,433) 13 
Weighted average number of ordinary shares in issue 17,400,547 10,510,308 
Adjustment for share options 163,905  605 
Weighted average number of ordinary shares for diluted earnings per share 17,564,453 11,115,199 
Diluted earnings per share (8.16p) 0.12p
Notes to the ﬁnancial statements continued 49
City of London Group plc
Financial statements
14 Intangible assets
Group
Goodwill
£’000
Systems 
development 
costs
£’000
Total
£’000
Cost
At 1 April 2010 689  1  690 
Additions 311  29  340 
Disposals – – –
At 31 March 2011 1,000  30  1,030 
Additions (see below) 98  306  404 
At 31 March 2012 1,098  336  1,434 
Accumulated amortisation and impairment
At 1 April 2010 107  1  108 
Charge for amortisation in the year – 1  1 
At 31 March 2011 107  2  109 
Charge for amortisation in the year 6  24  30 
At 31 March 2012 113  26  139 
Carrying amount
At 31 March 2012 985  310  1,295 
At 31 March 2011 893  28  921
The minority interest of 0.04% of Professions Funding Limited (previously SHF Legal Funding) was acquired for nil consideration 
during the year. Goodwill arising was £17. 
Goodwill of £6,491 arose in connection with the Group’s purchase of and additional 1.5% of Fundamental Tracker Investment 
Management Limited.
A further 7% stake in City of London Conﬁrming House Limited was acquired for nil consideration on 23 November 2011, 
generating £29,918 of goodwill. Further costs of £32k have been incurred in relation to the investment in Trade Finance Partners 
Limited, a subsidiary of City of London Conﬁrming House Limited.
Further to the related party transaction with Therium, announced on 9th March 2012, the Company bought back shares in 
Therium which had been lost due to the dilution clause. This generated a further £30,000 of goodwill.
Array Management Limited’s system development costs of £207,333 (2011: nil) have been deferred during the year. 50 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
15 Property, plant and equipment    
Group Company
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Cost
At 1 April 124  36  109  27 
Additions 63  88  47  82 
Disposals – – – –
At 31 March 187  124  156  109 
Depreciation
At 1 April 37  16  30  12 
Charge for the year 43  21  39  18 
Disposals ––––
At 31 March 80  37  69  30 
Net book value
At 31 March 107  87  87  79
 
16 Available for sale ﬁnancial assets   
Group and Company
31 March 2012 
£’000
31 March 2011
£’000
At 1 April 6,963  6,293 
Transferred from operating investments 1,125 –
Additions 580  1,229 
Disposals (2,331) (3,908)
Revaluation surplus transfer to equity (1,035) 3,564 
Written off to income statement (65) (215)
At 31 March 5,237  6,963 
Historic cost (net of provisions) of disposals 1,330  2,298
Listed securities
31 March 2012 
£’000
31 March 2011
£’000
Equity securities – Australia 1,258 1,212
Equity securities – USA and Canada 63 8
Equity securities – UK 1,685 3,346
Debentures – UK –15
Cumulative non-redeemable preference shares – UK 51 50
Non-cumulative non-redeemable preference shares – UK 46 344
Equity fund – UK 410 423
Convertible loan stock – UK – 174
Convertible loan notes – Australia 172 173
Unlisted securities – equity securities traded on inactive markets 427 1,218
FX Capital Limited 1,125 –
 5,237 6,963
Notes to the ﬁnancial statements continued 51
City of London Group plc
Financial statements
17 Operating investments and investments in subsidiaries
Group
Operating 
investments 
£’000
Investment in 
associates and 
joint ventures
 £’000
Total 
£’000
As at 31 March 2010 412 – 412 
Trade investment becoming subsidiary (125) – (125)
Additions in year 100 – 100 
As at 31 March 2011 387 – 387 
Additions in year –  37  37 
Revaluation 738 – 738 
Transfer to available-for-sale assets (1,125) – (1,125)
As at 31 March 2012 – 37  37
Company
Investments in 
subsidiaries
£’000
Investment in 
associates and 
joint ventures
£’000
Operating 
investments
£’000
Total
£’000
As at 31 March 2010 903  –  412  1,315 
Transfer (trade investment becoming subsidiary) 125  –  (125) – 
Additions in year 200  –  100  300 
Disposals –  –  –  – 
As at 31 March 2011 1,228  –  387  1,615 
Additions in year 2,902  49  –  2,951 
Revaluation –  – 738 738 
Disposals – – –  – 
Transfer to available-for-sale assets – – (1,125) (1,125)
As at 31 March 2012 4,130  49  –  4,179 
Provision for impairment
As at 31 March 2010 326  –  –  326 
Provided in year 91  –  –  91 
As at 31 March 2011 417  –  –  417 
Provided in year 99  –  –  99 
As at 31 March 2012 516  –  –  516 
Carrying amount
As at 31 March 2012 3,614  49  –  3,663 
As at 31 March 2011 811  –  387  1,198 52 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
17 Operating investments and investments in subsidiaries continued
Details of investments are as follows:     
Name of company subsidiary undertaking Holding
Proportion held 
directly by City of 
London Group plc
Proportion  
held indirectly
Nature of  
business
City of London Public Relations Limited Ordinary Shares 100% Dormant
City of London Financial Services Limited Ordinary Shares 100% General ﬁnancial
Fundamental Tracker Investment  
Management Limited Ordinary Shares 92.49% Investment management
Therium Capital Management Limited Ordinary Shares 50% Legal case funding
Therium (UK) Holdings Limited Ordinary Shares 100% Legal case funding
Therium Holdings Limited Ordinary Shares 100% Holding company
Therium ATE Limited Ordinary Shares 100% Dormant
Therium Litigation Funding Limited Ordinary Shares 100% Legal case funding
City of London Conﬁrming House Limited Ordinary Shares 87% Holding company
Trade Finance Partners Limited Ordinary Shares 63% Trade Finance
City of London Law Funding Limited Ordinary Shares 56% 24% Legal case funding
Professions Funding Limited  
(previously SHF Legal Funding Limited) Ordinary Shares 100% Profession funding
SHFLF 1 PLC Ordinary Shares 100% Profession funding
SHFLF 2 Limited Ordinary Shares 100% Profession funding
Credit Asset Management Limited Ordinary Shares 100% Leasing
Array Management Limited Ordinary Shares 100% Consultancy
COLG Services Limited Ordinary Shares 100% Dormant
Afﬁnia Capital (General Partners) Limited Ordinary Shares 100% Services
Operating investments
FX Capital Group Ltd Ordinary Shares 19.84% Foreign exchange dealer
Associate investments
Novitas Futures Limited Ordinary shares 50% Legal case funding
The shares in Therium (UK) Holdings Limited are held by Therium Capital Management Limited. 
The shares in Therium Holdings Limited and Therium ATE Limited are held by Therium UK (Holdings) Limited. 
The shares in Therium Litigation Funding Limited are held by Therium Holdings Limited. 
The shares in Trade Finance Partners Limited are held by City of London Conﬁrming House Limited. 
The shares held indirectly in City of London Law Funding Limited are held by Therium Capital Management Limited. 
The shares in SHFLF 1 PLC and SHFLF 2 Limited are held by SHF Legal Funding Limited.
All subsidiaries have a 31 March year end.
All subsidiaries are registered in England and Wales which the exceptions of Fundamental Tracker Investment  
Management Limited which is registered in Scotland and Therium Holdings Limited, Therium ATE Limited and Therium Litigation 
Funding Limited which are registered in Guernsey.
SHFLF Legal Funding Limited change its name to Professions Funding Limited on 5 May 2011.    
The Company established the following subsidiaries during the year:
Afﬁnia Capital (General Partners) Ltd 
COLG Services Limited
Notes to the ﬁnancial statements continued 53
City of London Group plc
Financial statements
18 Investments in legal cases 
Group Company
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
As at 1 April 4,020  530  3,420  413 
Additions 3,182  4,140  2,173  3,591 
Return of seed investment (2,360) (500) (2,827) (500)
Write off of legal cases (2,433) (150) (1,851) (84)
As at 31 March 2,409  4,020  915  3,420
 
19 Inventories    
Group Company
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Finished goods 156  15 – –
 
20 Trade and other receivables
Group Company
Non-current assets
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Loans and leases receivable 2,201 – – –
Group Company
Current assets
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Trade receivables 5,121  320 – 7 
Other debtors 2,726  597  725  55 
Less provisions (162) (15) – –
Prepayments and accrued income 375  473  402  328 
Loans and leases receivable 4,011  860  621  860 
Amounts owed by subsidiaries – – 4,892  1,090 
Deferred consideration – 117 – –
Less provisions – (117) – –
 12,071  2,235  6,640  2,340  54 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
20 Trade and other receivables continued
The gross amounts receivable under ﬁnance leases, hire purchase contracts and loan contracts as at 31 March 2012 are shown 
below (2011: nil).
Group Company
Minimum lease 
payments
£’000
Present value of 
minimum lease 
payments
£’000
Minimum lease 
payments
£’000
Present value of 
minimum lease 
payments
£’000
Gross amounts receivable:
Less than one year 2,772  2,244 – –
More than one year, less than ﬁve 2,527  2,201 – –
 5,299  4,445 – –
Less: unearned ﬁnance income (824) – – –
Less: bad debt provision (30) – – –
 4,445  4,445 – –
 
21 Cash and cash equivalents
Group Company
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Cash at bank 2,194  1,768  46  102 
Short-term deposits – 487  6  12 
 2,194  2,255  52  114
Within the Group cash balance of £2,194k, there is £178k of restricted cash.
 
22 Borrowings, trade and other payables: due within one year
Group Company
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Borrowings
Bank overdraft 1,068  749  1,068  418 
Loans payable 3,347  1,649  1,000  1,600 
Preference shares – 552 – –
 4,415  2,950  2,068  2,018 
Trade and other payables
Trade payables 4,649  337  123  179 
Dividends payable 1  1  1  1 
Corporation tax 4 – – –
Other taxation and social security 69  31  32  15 
Other creditors 10  2,191 – –
Block discounting loans 1,706 – – –
Amounts owed to subsidiaries – – 255  334 
Accruals and deferred income 875  1,141  180  348 
 7,314  3,701  591  877
The Company’s overdraft of £1,068 is secured on a listed share portfolio.
Notes to the ﬁnancial statements continued 55
City of London Group plc
Financial statements
23 Non-current liabilities
Group Company
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Borrowings
Preference shares of subsidiary 970 – – –
Block discounting loans 1,617 – – –
 2,587 – – –
Accruals – 18 – 18 
Deferred taxation (note 24) – 297 – 297 
Derivative 244  303 – –
Total 2,831  618 – 315
The derivative is in respect of a put option to buy-out the minority interest in a subsidiary company at fair value.
 
24 Deferred tax assets and liabilities
Group and company
Fair value gains
£’000
Tax losses
£’000
Total
£’000
Liability / (asset) at the 31 March 2010 – – –
Credit to income statement – (101) (101)
Charge to other comprehensive income 398 – 398 
Liability / (asset) at the 31 March 2011 398  (101) 297 
Credit to income statement – (58) (58)
Credit to other comprehensive income (239) – (239)
Liability / (asset) at the 31 March 2012 159  (159) –
Group Company
Unrecognised deferred tax assets
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Differences between tax and accounting  
base of available-for-sale assets 92 – 92 –
Trading losses 679  524 – –
Excess management charges 263 – 463 –
Timing differences (1) – – –
Total 1,033  524  555 –
25 Called-up share capital
Allotted, called up and fully paid
31 March 2012 
£’000
31 March 2011
£’000
18,369,657 (2011: 11,136,642) ordinary shares of £0.10 1,837  1,114 
The Company did not hold any shares in treasury at 31 March 2012 (2011: 190,273). 472,886 shares were held by the Employee 
Beneﬁt Trust at the 31 March 2012 (2011: nil).
During the year the Company did not sell any shares (2011: 16,826 £0.10 ordinary shares with an aggregate nominal value of 
£1,683) but the Company did transfer 190,273 shares from treasury to the directors and accordingly distributable reserves have 
been increased by £55,811 (2011: £4,935) being consideration originally paid on the purchase of these shares. 56 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
25 Called-up share capital continued
Shares in issue
Number
Shares in issue
£’000
As at 31 March 2010 10,186,642  1,019 
Issued in year 950,000  95 
As at 31 March 2011 11,136,642  1,114 
Issued in year 7,233,015  723 
As at 31 March 2012 18,369,657  1,837
£731,888 costs were incurred in relation to the issue of shares in the year. This cost has been offset against the Company’s 
share premium.
 
26 Non-controlling interest  
31 March 2012 
£’000
31 March 2011
£’000
At 1 April (520) (271)
Acquisition of and additional investment in subsidiaries:
Share of net assets 29  276 
Share of derivative put option (39) (61)
Share of loss (643) (465)
At 31 March (1,173) (521)
 
27 Operating lease commitments
Group Company
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Minimum lease payments under operating 
leases recognised in expense for the year 100  100  78  78 
The outstanding commitments for future minimum lease payments under non-cancellable operating leases, the majority of which related to 
buildings, fall due as follows:
Group Company
Land and buildings
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Less than one year 100  134  78  104 
Between one and ﬁve years 413  411  391  363 
Greater than ﬁve years 182 – 182 –
 695  545  651  467
 
Notes to the ﬁnancial statements continued 57
City of London Group plc
Financial statements
28 Capital commitments
Group Company
31 March 2012 
£’000
31 March 2011
£’000
31 March 2012 
£’000
31 March 2011
£’000
Loans 100 – 1,100  1,000 
Investment in legal funds 807  1,786  118  1,662 
Trade ﬁnance 1,358  630 – –
 2,265  2,416  1,218  2,662
The Company is committed to fund Therium Litigation Funding LLP no.3 £43,000 and Therium Capital Management Limited 
also has a commitment of its own to fund legal cases amounting to £807,434.
A subsidiary company, Trade Finance Partners Limited, has entered into purchasing commitments on behalf of its clients by way 
of Letters of Credit issued by that company’s bankers.
The Company is party to a loan agreement dated 24 June 2010, whereby the Company has agreed to loan up to £420,000 to 
Therium Capital Management Limited (“Therium”), of which £80,000 had been loaned at 31 March 2012. The Company has 
also agreed under the shareholders’ agreement with Therium to subscribe for preference shares in Therium or provide working 
capital loans of up to £720,000 to meet Therium’s operating expenditure, of which £60,000 had been loaned at 31 March 2012. 
Therium is permitted to charge the Company a management fee of 2% per annum on the asset value of the Company’s funded 
cases subject to a minimum levy of £30,000p.a.
First loss guarantees of 10% have been provided to two block discount loan providers with a total guarantee amount of £350,000.
A commitment has been entered into to loan £100,000 to Michael Hughes, CEO of Credit Asset Management Limited.
 
29 Related party transactions
Directors’ emoluments are disclosed in the part of the directors’ remuneration report subject to audit. The aggregate 
emoluments paid to directors during the year were £454,499 (2011: £223,931) and there were no awards under the incentive 
scheme for 2011/12 (2011: £388,465). There are no other persons having the authority and responsibility for planning, directing 
and controlling the activities of the Group, directly or indirectly. Accordingly, the aggregate amounts payable to directors equate 
to the aggregate compensation to key management personnel. As all directors’ emoluments are paid by the Company, the ﬁgure 
relates both to the Company and the Group.
Directors received the following dividends during the year:    
E Anstee £6,478
A Brierley Nil
H Goodbourn Nil
J Greenhalgh £39,942
J Kent £2,947
H Lafferty £1,202
J Williams Nil
P Tinkler, Chairman of Trade Finance Partners Limited, is regarded as a related party as he is a director and non-controlling 
interest holder of City of London Conﬁrming House Limited.
The following related parties hold preference shares in Trade Finance Partners Limited:    
No. of shares
E Anstee 50,000 
J Greenhalgh 25,000 
J Kent 25,000 
H Lafferty 25,000 
P Tinkler 50,000
E Anstee and J Kent are each 5% shareholders in Trafﬁcsmart Limited, a business that provides web analysis information to 
Trade Finance Partners Limited. During the year there was a contract in place for £400 per month for a three month trial. 58 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
29 Related party transactions continued
The following related parties have invested in funds managed by Therium Capital Management Limited:
31 March 2012 
£
31 March 2011
£
EE Anstee 70,400  30,000 
J C W Kent 25,000 –
H Lafferty 50,000 –
J Anstee, an employee of the Company, is considered a related party as he is the son of the Chief Executive, EE Anstee.  
J Anstee received remuneration of £33,186 during the year to 31 March 2012.
Charged by City 
of London Group 
plc in year
(prior year)
£’000
Charged to City of 
London Group plc 
in year
(prior year)
£’000
Loans due to  
City of London 
Group plc at 
31 March 2012
(31 March 2011)
£’000
Other amounts 
due to City of 
London Group plc 
at 31 March 2012
(31 March 2011)
£’000
Due from City of 
London Group plc 
at 31 March 2012
(31 March 2011)
£’000
City of London 
Group plc 
investments in 
funds managed 
by the subsidiary 
at 31 March 2012
(31 March 2011)
£’000
City of London Public  
Relations Limited
 – 
–
 – 
– 
 – 
– 
 108 
 104 
 – 
– 
 – 
– 
City of London Financial  
Services Limited
 – 
– 
 – 
– 
 – 
– 
 10 
– 
 105 
(96) 
 – 
– 
Fundamental Tracker Investment 
Management Limited
 – 
(3) 
 8 
(8) 
 – 
– 
 – 
– 
 – 
– 
 – 
(423)
Therium Capital  
Management Limited
 104 
–
 – 
–
 140 
(120)
 125 
–
 150 
–
 – 
(2,920)
City of London Conﬁrming  
House Limited
 111 
–
 – 
–
 2,293 
(300) 
 – 
–
 – 
–
 – 
–
Trade Finance Partners  
Trading Limited
 86 
(29)
 – 
–
 86 
(500)
 – 
(29)
 – 
–
 – 
–
Trade Finance Partners Limited 108 
–
 – 
–
 – 
–
 116 
–
 – 
–
 – 
–
City of London Law  
Funding Limited
 – 
–
 – 
–
 1,440 
–
 44 
–
 – 
–
 – 
–
Professions Funding Limited 10 
–
 – 
–
 – 
–
 10 
–
 – 
(229)
 – 
–
SHF 1 PLC – 
–
 – 
–
 – 
–
 – 
–
 – 
–
 – 
(100)
SHF 2 Limited – 
–
 – 
–
 – 
–
 – 
–
 – 
–
 – 
(400)
Credit Asset Management Limited 28 
–
 – 
–
 550 
–
 – 
(229)
 – 
–
 – 
–
Array Management Limited – 
–
 – 
–
 271 
–
 – 
–
 – 
–
 – 
–
The Company charges Fundamental Tracker Investment Managment Limited and Trade Finance Partners Limited for director 
services. It also charges Trade Finance Partners Limited and Credit Asset Managment Limited rent and loan interest. The 
Company charges Array Mangement Limited rent. The Company charges Therium Captial Mangement Limited loan interest 
and consultancy.
Notes to the ﬁnancial statements continued 59
City of London Group plc
Financial statements
30 Share-based payments
Share options are granted to directors and to selected employees. The exercise price of the granted ﬁxed price options is equal 
to the market price of the shares at the date of grant. These options are conditional on the employee completing three years’ 
service (the vesting period). The options have a contractual option term of ten years. The Group has no legal or constructive 
obligation to repurchase or settle the options in cash.
Movements in the number of share options outstanding are as follows:
Date  
of grant 01/04/11
Grant  
in year
Exercised  
in year 31/03/12
Exercisable 
from
Exercisable 
to
Exercise 
price
EE Anstee 11/02/10 100,000 – – 100,000 11/11/12 11/11/19 55.80p
H Goodbourn 30/11/11 – 143,267 – 143,267 30/11/14 30/11/24 69.80p
J Kent 11/02/10 70,000 – – 70,000 11/11/12 11/11/19 55.80p
Other staff 20/06/02 11,300 – – 11,300 20/06/05 19/06/12 104.00p
05/07/05 58,252 – – 58,252 05/07/08 4/07/15 55.50p
11/02/10 60,000 – – 60,000 11/11/12 11/11/19 55.80p
13/09/11 – 432,786 – 432,786 13/09/14 13/09/24 76.25p
 299,552  576,053 – 875,605 
City of London Group plc’s share price as at 31 March 2012 was 67 .5p pence (2011: 95p). The average for the year to 31 March 2012 
was 73.7p (2011: 83.5p)
The ﬁxed price options were valued using the Black-Scholes model.
Inputs to the model were as follows:
Strike price 69.8p
Share price 63.0p
Time to expiration 1,460 days
Volatility 54.38%
Annual risk free interest rate 0.87%
The Company will use the shares in the employee beneﬁt trust to cover the deferred incentive scheme awards.
 
31 Financial instruments
The Company’s and the Group’s ﬁnancial instruments comprise ‘available-for-sale’ ﬁnancial assets, trade debtors and other 
receivables, cash and cash equivalents and trade and other payables.
Financial risk management
The ﬁnancial risks faced by the Company include market risk (including price risk, foreign exchange (or currency) risk and fair 
value interest risk), credit risk, liquidity risk and cash ﬂow interest rate risk. The Board reviews and agrees policies for managing 
each of these risks. Neither the Company nor the Group uses derivative ﬁnancial instruments for trading purposes.
The Company’s main objectives in the management of ﬁnancial risk relate to price risk, foreign exchange risk and liquidity risk.
Price risk
The Group is subject to price risk on its ‘available-for-sale’ ﬁnancial assets, including its operating investments and investments 
in legal funds as well as its portfolio of ﬁnancial assets. The Group spreads its market risk in respect of the portfolio through 
diversiﬁcation. The Group holds ﬁxed income, preference shares and stocks of micro, small, mid and large capitalisation 
companies diversiﬁed over different countries, sectors and currencies. At 31 March 2012 29.6% of the Group’s portfolio was 
invested in unlisted equity securities. Top value holdings are set out in the Group’s annual and half-yearly reports. Price risk in 
respect of investments in unlisted operating investments and legal funds is managed by the Group having an overall investment 
portfolio which limits its exposure to unlisted investments individually and collectively.  60 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
31 Financial instruments continued
Foreign exchange risk
The Group’s earnings and liquidity are affected by ﬂuctuations in foreign currency exchange rates principally in respect of the 
foreign currency denominated bank accounts. There is also some exposure in respect of ‘available-for-sale’ and legal fund 
ﬁnancial assets denominated in overseas currencies. The carrying amounts of the Company’s ‘available-for-sale’ ﬁnancial assets 
denominated in foreign currencies are shown in note 16.
Carrying value of Group investment in legal funds:
Currency
31 March 2012 
£’000
31 March 2011
£’000
Sterling 1,381  3,320 
US dollars 500  217 
Euros 706  483 
Total 2,587  4,020 
The carrying amounts of the Group’s cash and cash equivalents are denominated in the following currencies:
31 March 2012 31 March 2011
Currency
Cash at bank 
and in hand 
£’000
Short-term 
investments
£’000
Total
£’000
Cash at bank 
and in hand
£’000
Short-term 
investments
£’000
Total
£’000
Sterling 1,583  –  1,583  1,650  483  2,133 
US dollars 221  –  221  14  4  19 
Euros 55  –  55  12  –  12 
Australian dollars 335  –  335  92  –  92 
Total 2,194  –  2,194  1,768  487  2,256 
Floating rate 2,194  –  2,194  1,768  –  1,768 
Fixed rate – –  –  –  487  487 
Total 2,194  –  2,194  1,768  487  2,255
Credit risk
All cash deposits (as shown above) 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. However, as the Group holds no collateral against the balances, some 
risk remains. 
Liquidity risk 
The Company has sufﬁcient cash to meet its current requirements. At 31 March 2012 the Company had a £1,600,000 bank 
overdraft facility. The total amount drawn on these facilities at the 31 March 2012 was £1,068,000. The overdraft facility expires 
this month (June) and is in the process of being renewed. Since the year end the Company has made a share placing details of 
which are given in the post balance sheet event note. 
Cash ﬂow and fair value interest rate risk
The Company has interest-bearing assets at ﬂoating or ﬁxed-for-one-month interest rates. At 31 March 2012 Company’s only 
substantial interest- bearing borrowings were its £1,000,000 loan and the £1,068,000 drawn on its bank overdraft. Interest 
on the loan was ﬁxed at 10% and is payable quarterly. The overdraft facility carries ﬂoating rate interest. These facilities are 
expected to be renewed.
Notes to the ﬁnancial statements continued 61
City of London Group plc
Financial statements
Fair value estimation 
The fair value of listed ﬁnancial assets is established by relevance to current bid market prices.
The fair value of unlisted investments is determined using valuation techniques as described in note 3.
The fair value of investments in legal funds is based on the opinion of legal counsel on the prospects of cases ﬁnanced by the funds.
Due to their short maturity proﬁles, management is of the opinion that there is no material difference between the fair value  
and carrying value of trade and other receivables, cash and cash equivalents, and trade and other payables. 
The directors therefore consider that carrying value of ﬁnancial instruments equates to fair value.
The following table presents the Group’s assets that are measured at fair value at 31 March 2012.
Level 1 
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
‘Available-for-sale’ ﬁnancial assets
Equity securities 3,103 410 1,552 5,065
Debt investments 0 0 172 172
Operating investments 0 0 37 37
Investment in legal funds 0 0 2,409 2,409
3,103 410 4,170 7,683
Level 1 assets are quoted ordinary shares, non redeemable preference shares and debentures.
Level 2 asset is a UK equity fund.
The movement on level 3 assets are as follows:
£’000
Balance at 1 April 2011 5,988 
Additions 3,218 
Disposals (5,130)
Valuation gain taken to comprehensive income 94 
Balance at 31 March 2012 4,170
Capital risk management
The Group is mainly funded from equity share capital which comprises a single class of share (see note 25). At 31 March 2012 
the Company had drawn down £1,068,000 on its overdraft and had a short term bank loan of £1,000,000.
 
32 Post balance sheet events 
Therium Capital Management Limited (“Therium”) has been awarded mandates to be managed on behalf of an institutional 
investor account for an initial amount of £5m, to be invested in a portfolio of third party litigation and arbitration claims. It is the 
parties’ stated intention in due course, to increase the size of this account to up to £15m. Therium has also announced that 
investors in its ﬁrst LLP fund have received interim distributions equivalent to their capital investment after 22 months. 
Trade Finance Partners Limited (“TFPL ”) has agreed the provision of a three year trade ﬁnance facility with Macquarie Bank 
Limited (“Macquarie”). The initial amount will be £15m with the option to increase by mutual agreement up to £25m within the 
period. Under the arrangements, Macquarie has invested £263,150 in new equity in TFPL representing a 5% shareholding. It 
has also invested £736,850 in unsecured convertible loan notes in TFPL, where the capital and accrued interest are convertible 
after three years. If converted in full, this would increase Macquarie’s shareholding in TFPL, on a fully diluted basis, to 20%. If not 
converted the convertible loan notes and interest become repayable in 2017. 62 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
We have audited the ﬁnancial statements of City of London Group plc for the year ended 31 March 2012 which comprise the 
consolidated statement of comprehensive income, the consolidated and parent company statements of changes in equity, the 
consolidated and parent company balance sheets, the consolidated and parent company cash ﬂow statements, and the related 
notes. The ﬁnancial framework that has been applied in their preparation is applicable law and International Financial Reporting 
Standards (IFRSs) as adopted by the European Union and, as regards the parent company ﬁnancial statements, as applied in 
accordance with the provisions of the Companies Act 2006. 
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies 
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters which are 
required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept 
or assume responsibility to anyone other than the Company and the Company’s members, as a body, for this report, or the 
opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statements, the directors are responsible for the preparation of ﬁnancial 
statements and for being satisﬁed that they give a true and fair view. Our responsibility is to audit the ﬁnancial statements and 
the part of the directors’ remuneration report to be audited in accordance with applicable law and International Standards on 
Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practice Board’s (APB’s) Ethical Standards  
for Auditors.
Scope of the audit of the ﬁnancial statements
An audit involves obtaining evidence about the amounts and disclosures in the ﬁnancial statements sufﬁcient to give reasonable 
assurance that the ﬁnancial statements and the part of the directors’ remuneration report to be audited are free from material 
misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are 
appropriate to the Group’s and the parent’s company’s circumstances and have been consistently applied and adequately 
disclosed; the reasonableness of signiﬁcant accounting estimates made by the directors; and the overall presentation of the 
ﬁnancial statements and the part of the directors’ remuneration report to be audited. In addition, we read all the ﬁnancial and 
non-ﬁnancial information in the annual report to identify material inconsistencies with the audited ﬁnancial statements. If we 
become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on ﬁnancial statements
In our opinion:
 the Group ﬁnancial statements give a true and fair view of the Group’s and of the parent company’s affairs as at 31 March 2012 
and of the Group’s loss for the year then ended;
 the ﬁnancial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and
 the ﬁnancial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards 
the Group ﬁnancial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion: 
 the part of the directors’ Remuneration Report to be audited has been properly prepared in accordance with the  
Companies Act 2006; and
 the information given in the directors’ report for the ﬁnancial period for which the ﬁnancial statements are prepared is 
consistent with the ﬁnancial statements.
Independent Auditor’s report 
to the members of City of London Group plc 63
City of London Group plc
Financial statements
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if,  
in our opinion:
 adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not 
been received from branches not visited by us; or
 the parent company ﬁnancial statements and the part of the Directors’ Remuneration Report to be audited are not  
in agreement with the accounting records and returns; or
 certain disclosures of directors’ remuneration speciﬁed by law are not made; or 
 we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
 the directors’ statement, in relation to going concern; and
 the part of the corporate governance statement relating to the Company’s compliance with the nine provisions of the  
June 2008 Combined Code speciﬁed for our review
 certain elements of the report to shareholders by the Board on directors’ remuneration.
Jonathan Munday 
(Senior Statutory Auditor)
For and on behalf of Rees Pollock, Statutory Auditor
London
25 June 2012 64 
Annual Report & Accounts 2012
Financial statements
City of London Group plc
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report, the Remuneration Report and the ﬁnancial statements in 
accordance with applicable laws and regulations. company law requires the directors to prepare ﬁnancial statements for 
each ﬁnancial year. Under that law, the directors are required to prepare ﬁnancial statements for the Group in accordance 
with International Financial Reporting Standards (IFRS) as adopted by the European Union and have also elected to prepare 
ﬁnancial statements for the Company in accordance with IFRS as adopted by the European Union (‘EU’). company law requires 
the directors to prepare such ﬁnancial statements in accordance with IFRS, the Companies Act 2006 and Article 4 of the IAS 
Regulation. Under company law the directors must not approve the ﬁnancial statements unless they are satisﬁed that they give  
a true and fair view of the state of affairs of the Group and the Company and of the proﬁt or loss of the Group for that period.
International Accounting Standard 1 requires that ﬁnancial statements present fairly for each ﬁnancial year the Company’s 
ﬁnancial position, ﬁnancial performance and cash ﬂows. This requires the faithful representation of the effects of transactions, 
other events and conditions in accordance with the deﬁnitions and recognition criteria for assets, liabilities, income and 
expenses set out in the International Accounting Standards Board’s ‘Framework for the preparation and Presentation of 
Financial Statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable 
International Financial Reporting Standards. Directors are also required to:
 properly select and apply accounting policies and then apply then consistently; 
 present information, including accounting policies, in a manner that provides relevant, reliable, comparable and 
understandable information; 
 make judgements and accounting estimates which are reasonable and prudent;
 state whether applicable IFRS as adopted by the EU have been followed subject to any material departures disclosed  
and explained in the ﬁnancial statements; and
 provide additional disclosures when compliance with speciﬁc requirements in IFRS is insufﬁcient to enable users to understand 
the impact of particular transactions, other events and conditions on the entity’s ﬁnancial position and ﬁnancial performance.
The directors are responsible for keeping adequate accounting records that are sufﬁcient to show and explain the Company’s 
transactions and disclose with reasonable accuracy at any time the ﬁnancial position of the Company, for safeguarding the 
assets, for taking reasonable steps for the prevention and detection of fraud and other irregularities and for the preparation of  
a directors’ report and directors’ remuneration report which comply with the requirements of the Companies Act 2006 and,  
as regards the Group ﬁnancial statements, Article 4 of the IAS Regulations.
The directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information included on the 
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of ﬁnancial statements 
differs from legislation in other jurisdictions.
Responsibility statement 
Each of the directors, whose names and functions are listed on pages 8 to 9 conﬁrm that, to the best of each person’s 
knowledge and belief:
 the ﬁnancial statements, prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the  
assets, liabilities, ﬁnancial position of the Group and the Company and of the loss of the Group; and
 the management report, which is incorporated into the Directors’ Report, includes a fair review of the development and 
performance of the business and the position of the Company and the Group, together with a description of the principal  
risks and uncertainties that they face.
By order of the Board
H Lafferty
Chairman 
25 June 2012 Shareholder and company information
Investor information and advisors
Financial calendar
We will hold our Annual General Meeting at Wax Chandlers’ Hall, 6 Gresham Street, London EC2V 7AD at 10.00am on  
17 September 2012 and hope that many shareholders will attend.
Ex-dividend date 29 August 2012
Record dated 31 August 2012
Final dividend to be paid 2 October 2012
Half-year results (available online only) November 2012
Trading record
For the year ended 31 March 2008 2009 2010 2011 2012
Shareholders’ attributable net proﬁt (£’000) 610 158 143 13 (1,433)
Earnings per share 5.99p 1.55p 1.45p 0.12p (8.24)p
Dividends interim paid 0.20p 0.00p 0.00p 0.50p 0.50p
Dividends ﬁnal proposed 1.20p 0.00p 0.50p 1.00p 0.50p
NAV per share 81.20p* 63.90p 77.40p* 87.80p* 62.30p*
*before ﬁnal dividend
NAV per share is calculated on the number of shares in issue less those held in treasury and in the Employee Beneﬁt Trust.
Share price information
The latest City of London Group share price is published daily in the Financial Times, the Daily Express and at www.ft.com . It can 
also be found on www.londonstockexchange.com code CIN or via a link from our own website www.cityoﬂondongroup.com .
Announcements by email
Company announcements are carried on the Company’s website at www.cityoﬂondongroup.com but shareholders wishing 
announcements to be emailed to them also should let us know by emailing us at ofﬁce@cityoﬂondongroup.com or sending us 
their name and email address.
Registered ofﬁce and general 
enquiries
30 Cannon Street
London EC4M 6XH
Tel: 020 7628 5518
Fax: 020 7628 8555
company number: 01539241
Email:ofﬁce@cityoﬂondongroup.com
Website: www.cityoﬂondongroup.com
Company Secretary 
Lorraine Young  
190 High Street
Tonbridge
Kent 
TN9 1BE
Stockbrokers
Singer Capital Markets
One Hanover Street
London
W1S 1YZ
Auditors 
Rees Pollock
35 New Bridge Street
London
EC4V 6BW
Bankers
Lloyds TSB Bank Plc
2nd Floor
25 Gresham Street
London  
EC2V 7HN
Registrar and transfer ofﬁce
For shareholder administration enquires,  
including changes of address,  
please contact:
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham 
Kent
BR3 4TU City of London Group plc
30 Cannon Street
London EC4M 6XH
Phone: 020 7628 5518
Fax: 020 7628 8555
Email: ofﬁce@cityoﬂondonGroup.com
Both papers contain material sourced 
from well-managed forests, certiﬁed 
in accordance with the FSC (Forest 
Stewardship Council)