Compliance with continuous Disclosure

Lombard Group Limited (LOM) – Compliance with continuous Disclosure

We are responding in this letter to NZX’s general inquiry of listed finance companies as to compliance with the obligation under Listing Rule 10.1.1 for continuous disclosure.

Lombard Group strongly supports the requirements of NZX for continuous disclosure of material information, as it is this transparency that differentiates listed companies and should engender investor confidence in the investment market. Lombard’s Board takes this requirement very seriously and reflects on it at board meetings on a regular basis. The Board confirms that it has disclosed all material matters and will continue to do so.

The recent failures in the finance industry have unfortunately affected many Mum and Dad investors and so we are happy to take this further opportunity to clearly set out the type of business that our finance company subsidiary Lombard Finance & Investments Limited carries out.

Lombard Finance primarily lends money which is secured against property. Our property lending risk is diversified in that it is spread by borrower, over various types of property exposure and over various geographic locations. After considering the risk profile, the mortgage security held and the location and nature of each secured property, the directors of Lombard Finance remain comfortable with the risk profile as disclosed in our annual accounts to 31 March 2007. Since balance date, there has been a slight improvement in these risk measurements. The Board remains confident that Lombard Finance can meet all its obligations to depositors.

We also believe the following two policies are important for investor safety:

Local Lending policy: We lend only within New Zealand as we believe that foreign market risks or foreign political risks are not in the best interests of our investors.

No related party lending policy: We have no related party lending, as we believe one of the key aspects of lending money is that every transaction should be carried out after considered assessment of the risk, which cannot occur if you sit on both sides of the transaction.

Lombard Group’s AGM was held on 25 July 2007, covering its audited results for the financial year to 31 March 2007. I commented at that meeting that the company had suspected Bridgecorp was fragile and, in anticipation of a general market reaction, the company had increased its cash holding to $35 million to ensure it was well prepared for any tightening in the market.

We acknowledge that the recent failures in the finance industry and the impact of this on investor confidence have had the very result that we anticipated, with a resulting tightening in the investment market. While these issues are beyond our control, we have factored this change into our cash management policy. The company continues to hold cash at levels higher than our and the industry’s historical norms. The holding of large amounts of cash comes at a cost in terms of returns to shareholders, but in view of prudent liquidity needs this is a cost which is appropriate to bear. Lombard Finance continues to enjoy good support from its depositor base. Reinvestment rates are satisfactory and the company only receives a small portion of its deposits from an adviser network

Since releasing our year end results we can confirm to date that the major factors being liquidity, equity and quality of assets have continued to improve. Going forward, the actual and opportunity costs of holding additional cash will mean that the environment is challenging and requires calmness and resolve.

Review of Operations at 31 March 2007 (as previously announced)

Lombard Group’s consolidated net profit before tax was $7.7 million ($4 million March 2006) and net profit after tax was $4.9 million ($2.3 million March 2006).

The marketplace in which Lombard Group’s main business, Lombard Finance & Investments Limited operates, remained competitive. It is pleasing to note that in this competitive environment the company’s net profit after tax increased to $5.8 million from $3.2 million in March 2006.

While achieving this result our Group Shareholders’ equity increased $7.9 million to $30.6 million ($25.1 million net of intangible assets). Loans and advances remained stable at $161.2 million ($163.8 million March 2006) and cash at bank remained strong at $19.7 million ($21.8 million March 2006).

Lombard is fortunate to have a strong and loyal client base which has contributed to the sound profit result.

Yours sincerely LOMBARD GROUP LIMITED

Michael Reeves CEO - Director

ENDS

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