RNS Number:0604M
City Of London Group PLC
9 June 2003


RELEASED ON BEHALF OF:
City of London Group PLC (LSE: CIN)

                                                                    JUNE 9, 2003


               CITY OF LONDON GROUP IN BETTER SHAPE THAN EXPECTED
                             AFTER A DIFFICULT YEAR


*  Pre-Tax Profit Of #369,208 Offset By Previously Announced       
   #2.6 Million Write Off Against Technology Investments

*  Value Of Twelve Largest Portfolio Investments Still In Line With Book Cost

*  Final Dividend Passed To Conserve Funds


City of London Group Plc, the specialist mining PR, portfolio and technology
investor, has come through a difficult year in far better shape than once
feared, with net assets at year end of 58p/share (98p/share), says chairman Mr
John Greenhalgh.

Pre-tax profits for the 12 months ended March 31, 2003 totalled #369,208
(#704,622), before the previously announced #2.6m write off against the Group's
technology investments.  A further sum of approximately #1.25m has been provided
against the fall in value of listed holdings.  After all the exceptional
provisions, Group losses for the year totalled 40.63p/share (profit 6.66p/
share).  The final dividend is being passed to conserve funds.

The company's investment portfolio of quoted holdings at market value, combined
with unlisted at #244,000 cost, totalled #5.57m at year-end, before deducting
bank borrowings of #2.96m.  This is equivalent to 32.8p/share, with an
additional 27.5p/share invested in Archive-it (formerly Rchive-it) through a mix
of equity and loans. The e-mail archiving specialist is now 91p.c. owned by COL
Group (before an 18p.c. options pool).

The Group continues to nurture its investment in Archive-it which is now income
producing but made a pre-interest loss of #242,456 on sales of #65,435 in the
final quarter of the year.  COL Group's portion of the loss has not been
consolidated, reflecting the Board's decision to sell or refinance Archive-it
during the coming year, provided favourable terms can be agreed, whilst
retaining an interest in its progress.  Comments Mr Greenhalgh: "My view is it
will probably go to the foresighted Americans as do so many good British
inventions."

At the operating level, the PR division made a pre-tax loss of #43,534 (profit
of #37,339) in difficult business conditions as the anticipated recovery of the
mining/exploration sector failed to materialise. Taking advantage of this weak
market, which has wreaked havoc in the PR industry, COL Group will seek a
suitable PR partner in the coming year, with particular emphasis on UK business,
states Mr Greenhalgh.  Dividends and interest income held up well, bringing in
#245,386 (#284,493) before bank charges which rose to #112,656 (#44,364) as
borrowings increased.  Realised capital gains from portfolio investment sales
amounted to #285,173 (#387,890).

Commenting on the Group's technology investments, Mr Greenhalgh says
Eceurope.com, the bulletin board trade site, successfully built up an initial
membership of 136,000 but failed to convert sufficient numbers into paying
members. This conversion failure led to the prompt closure of the site. Direct
BroadcastingCorporation, is a designer of media management software which
provides scheduling, production, distribution and automated billing for digital
networks.  This has been mothballed for the time being.  Both investments have
been written off but COL Group retains intellectual property rights over both
software systems.

                                                                              /2

COL GROUP  2

The third investment is Archive-it which has developed a system for email
archiving that meets compliance, legal admissibility and storage criteria.  Its
enterprise product, the Mailstore software system, is now winning clients and
generating revenue although take up is on the slow side. This reflects a lack of
business awareness of the real impact of email regulation, both in America and
the UK (where less than 5p.c. of businesses have adopted an email archiving
product to date).

"Our view is that the Archive-it product - it took longer to be better - is now
a 'Rolls Royce' engine designed to power many different planes in the email
world and provide safe and secure flights to and from all storage destinations",
comments Mr Greenhalgh.

Mailstore has been taken up by various police forces, local authorities and
government bodies and more recently by a leading firm of City solicitors.
Discussions for the integration of the system into a major manufacturer's
software have reached an advanced stage. Mailstore has also been re-badged in
the United States and marketing is about to start.  In the UK, a #100m turnover
enterprise solutions provider is undertaking a similar exercise. In addition,
Computacenter, the leading software channel, has also adopted Mailstore as a
priority product to promote through its government sales divisions.

However, Archive-it was always viewed as a five-year investment to yield major
returns, says Mr Greenhalgh.  Three years of this programme have been completed
and although the company is starting to secure sales and revenues, it remains
undercapitalised in terms of the market spend required for its destined role as
"best of breed" in the compliance archiving market. Although cash flow is
beginning to click in on a modest scale, a monthly break-even position is not
expected until the end of 2003 as the larger channel-driven sales start coming
through, he adds.

OPTIONS FOR ARCHIVE-IT BEING CONSIDERED

Against this background, an unsolicited approach was received from an American
company which likes the Archive-it product and has a strong corporate customer
base.  Other approaches followed.  Separately, talks are being held with a
second US company specialising in the email sector with a view to establishing
closer ties with Archive-it.  In addition, meetings have been held with UK
venture capitalists who have expressed an interest in Archive-it.

Discussions with a view to selling part or all of the Archive-it shareholding
are continuing and various options are being appraised.  These discussions with
interested parties are likely to continue throughout the summer, says Mr
Greenhalgh.

Turning to the outlook for the year ahead, Mr Greenhalgh comments that the heavy
provisions made in 2002-03 were a prudent measure that will help the Group meet
its objective of increasing shareholder value after the downturn.  With the 2004
US Presidential election now appearing on the horizon, the chairman believes
that the business tempo in the coming year will be set in America where,
traditionally, both the economy and stock markets improve ahead of such
elections.  This could be sufficient to kick-start a much-needed recovery of
other major economies, a development that could provide welcome opportunities
for COL Group, he says.

           COPIES OF FULL PRELIMINARY STATEMENT AVAILABLE ON REQUEST

Further Information:

     John Greenhalgh, Chairman City of London Group. Tel: 020-7628-5518; 
                                                          070500-39678 (mobile)
     Peter Doye, Deputy Chairman, City of London Group.  Tel: 020-7628-5518




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