Half Yearly Report

CHARLES STANLEY GROUP PLC

RESULTS FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2010

Charles Stanley is one of the UK's leading independently owned, full service stockbroking and investment management groups, advising on substantial funds. Today it announces its interim results for the half-year ended 30 September 2010.

Highlights:

§ Revenue for the half-year £ 59.7 million (2009/10: £55.9 million) 7% increase

§ Reported profit before tax £7.3 million (2009/10: £5.5 million) 33% increase

§ Adjusted profit before tax £8.2 million (2009/10: £6.6 million) 24% increase

§ Funds under management and administration £13.5 billion (30 September 2009: £11.6 billion) 16% increase

§ Private client income £49.9 million (2009/10: £45.7 million) 9% increase

§ Reported earnings per share 11.53p (2009/10: 8.60p) 34% increase

§ Adjusted earnings per share 12.92p (2009/10: 10.37p) 24% increase

§ Interim dividend per share 2.50p (2009/10: 2.20p) 14% increase

Commenting on the outlook Sir David Howard, Chairman said:

"Charles Stanley has produced another excellent set of half-year results, with an increase of 33% in our profit before tax compared with 12 months ago, and an increase in the same period of 16% in clients' funds under management and administration. The second six months of our year have started strongly, and although the uncertainties for the medium-term make it difficult to see very far ahead, the performance of share prices suggests that investors are taking a positive view. I think they are right. While there is still some way to go before we can be clear about the broader outlook, in relation to Charles Stanley I feel a degree of optimism about the months ahead."

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CHAIRMAN'S STATEMENT

Charles Stanley Group is pleased to report another excellent half-year's results for the six months ended 30 September 2010. Despite quiet conditions during the half-year, revenue rose by 7% from £55.9 million (in the half-year to 30 September 2009) to £59.7 million at 30 September 2010, a new record. But firm control of costs led to an improvement in our reported profit before tax of 33% from £5.5 million in the first six months of the previous year to £7.3 million in the latest six months, and of 24% in our adjusted profit from £6.6 million to £8.2 million over the same period.

The revenue improvement was almost wholly due to an increase in fee income in our Private Client division. Our Financial Services division showed a resilient performance, coming in slightly ahead of the figure 12 months ago, while Charles Stanley Securities, our corporate finance and broking and institutional sales division, had a mixed performance, with overall revenue about 10% lower. This reflects principally a decline in the income generated by our bond trading team, in light of quieter bond markets, while elsewhere in the division the results were broadly in line with the previous period.

At 30 September 2010 the total value of clients' funds under management and administration was £13.5 billion, up 5.5% compared with £12.8 billion at 31 March 2010 and up 16.4% compared with £11.6 billion at 30 September 2009. Over the same twelve months to 30 September 2010 the FTSE-100 Share Index rose by 8.1%, the FTSE All-Share Index by 8.8% and the APCIMS Balanced Index by 7.0%. Within the overall figure of funds under management and administration the managed funds alone (including discretionary funds) increased over the twelve month period by 13.8% to £6.6 billion.

The present low interest rate regime continues to impact on our income in relation to the very substantial cash balances that we maintain both for the Group and for our clients. The Group's own cash balances stood at £35.1 million at 30 September 2010, up from £34.6 million at 30 September 2009. These Group cash balances vary from day to day in response to settlement requirements for clients' transactions, but the overall daily figure runs typically at around £40 million. As ever, and even more so in these unsettled times, we continue to pay particular emphasis to the strength of the Group's balance sheet and our levels of cash.

In the light of these results the Directors have decided to increase the interim dividend from 2.20p to 2.50p (an increase of 13.6%). We will once again be offering shareholders an alternative to the cash dividend in the form of shares of equivalent value (a "scrip" dividend). The dividend will be paid on 31 December 2010 to shareholders registered on 19 November 2010. Further details about the scrip dividend alternative are set out on page 5.

Change of auditors

Following a formal tender process, the Group's Board of Directors and Audit Committee have decided to change the Group's auditor to KPMG Audit Plc. Saffery Champness and its predecessor firms have served as the Group's auditors for more than 50 years, and we are extremely grateful for all their diligence and advice over those years.

Review of operations

Private Client division

The Private Client division has performed strongly during the half-year ended September 2010, with revenues increasing by 9.2% to £49.9 million. This figure arises from essentially two major streams, commission on stock exchange transactions and fees for investment management and administration. The uncertain economic outlook during the six months led to rather quieter trading conditions, so that, despite the growth in our client numbers and the value of their portfolios, commission income on stock exchange transactions remained steady at £26.1 million (2009/10: £26.1 million). However the level of fee income in the latest half-year rose to reflect this growth in client numbers and portfolio values to £23.8 million (2009/10: £19.6 million).

Financial Services

We have previously announced a number of developments over the past two or three years, to build on our growing Financial Services offering. Most recently, in their first year as part of Charles Stanley, the Matterley fund management team have gained increasing support from institutional and retail investors for their successful management style. This is a key element in developing our in-house funds, which have grown in value during the latest half-year from £104 million to £122 million as at 30 September 2010. 

More generally, our Financial Services division has enjoyed a good half-year, achieving a further increase in income to £4.5 million compared with £4.3 million for the half-year to 30 September 2009, and this during a period of ongoing consolidation of our businesses offering employee and corporate benefits.

Charles Stanley Securities

Against a backdrop of historically low activity in small and mid cap equity fundraisings and corporate activity the division has achieved solid results. Corporate finance income remained steady at £1.8 million and equity commissions were up during the period. The decline in the overall income in this division relates to our institutional bond trading arm, CS Sutherlands, which - in line with bond markets generally - has experienced a reduction in trading activity during this period.

The Charles Stanley team

We have to work hard to produce these results. We pride ourselves on the quality of service and professionalism that we offer our clients, and we are constantly looking for ways to improve this. Our shareholders are generous in their praise for the Charles Stanley team and on behalf of both the shareholders and Directors I would like to thank everyone, throughout the Group, for their efforts in producing another good set of results.

Outlook

Since my last statement to shareholders the global economy has veered between glimmers of hope and then fears over currency wars which now dominate the news. In the 1930s the disjointed pursuit of individual economic agendas by the global powers led to disaster, and one lives in hope that the modern collaborative process, such as the G20 gatherings, will deliver a co-ordinated response to steer the world towards a resumption of growth and of stability in the capital markets. Conditions remain uncertain, and there is still some way to go before we can be clear about the outlook.

Share prices continue to rise, but we cannot say how much of this is due to the liquidity being pumped into the economy by the government, some of which was always likely to fuel a rise in asset prices and which will need to be withdrawn again at some stage; how much is due to the continuing strength of the corporate sector, which is seeing a steady improvement in profits which might also be a consequence of this excess liquidity in the economy; and how much is based on an expectation by investors that the economy has turned a corner. Of course, what has altered significantly in the past six months is the dramatic change of political scenery - from profligate and out-of-control spending, leading to exponential growth in the national deficit, to tight controls and savage cuts. Will this trigger a return to growth and sound finances, or will it cause another downturn? The performance of share prices suggests that investors are taking a positive view, and I think they are right.

Meanwhile we face a further slew of regulation which we continue to grapple with and to try and understand and implement. Most of our sector had little or nothing to do with the causes of the crisis, but we are in the front line when it comes to dealing with the consequences of it. Often the policy responses have been blunt and poorly targeted. We have this amazing world-beating industry - the financial services sector - based in the City of London and in our great financial centres such as Edinburgh, and by and large this continues to contribute significantly to the national wealth and to be best-of-breed, globally. This continues to function well, and we should like to see more precision in the way that the undoubted problems are cauterised.

The second six months of our year have started strongly, but the uncertainties for the medium-term make it difficult to see very far ahead. I have expressed a degree of optimism in my last two or three reports to shareholders. This has proved justified, and I feel a similar degree of optimism about the months ahead.

Sir David Howard

Chairman

10 November 2010

CHARLES STANLEY GROUP PLC

FUNDS UNDER MANAGEMENT AND ADMINISTRATION

Interim dividend

The Board is recommending an interim dividend of 2.50p (2009/10: 2.20p). A scrip alternative will be offered giving shareholders the opportunity to increase their shareholding without incurring dealing costs or stamp duty.

Details of the scrip dividend, including an election form, will be sent to shareholders with the interim report on 25 November 2010. If your shareholding is in uncertificated form in CREST (and was in uncertificated form as at the relevant record date), you can only elect to receive your dividend in the form of new shares by means of the CREST procedure to effect such an election.

 Calendar

CHARLES STANLEY GROUP PLC

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

SIX MONTHS ENDED 30 SEPTEMBER 2010

Earnings per share

CHARLES STANLEY GROUP PLC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

AT 30 SEPTEMBER 2010

CHARLES STANLEY GROUP PLC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

SIX MONTHS ENDED 30 SEPTEMBER 2010

CHARLES STANLEY GROUP PLC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

SIX MONTHS ENDED 30 SEPTEMBER 2010

CHARLES STANLEY GROUP PLC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1 GENERAL INFORMATION

Charles Stanley Group PLC is the parent company of a group of companies ("the Group") which provides a range of investment and financial services within the United Kingdom. The Company is a public limited company which is listed on the London Stock Exchange and is incorporated and domiciled in the United Kingdom.

The annual consolidated financial statements of the Group at 31 March 2010 are available upon request from the Company's registered office at 25 Luke Street, London EC2A 4AR or at www.charlesstanleyplc.co.uk.

1.1 Basis of preparation

 The Group's consolidated financial statements are prepared on a going concern basis and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU. These condensed consolidated interim financial statements are presented in accordance with IAS 34 Interim Financial Reporting. The condensed consolidated interim financial statements have been prepared on the basis of the accounting policies, methods of computation and presentation set out in the Group's consolidated financial statements for the year ended 31 March 2010. The condensed consolidated interim financial statements should be read in conjunction with the Group's audited financial statements for the year ended 31 March 2010.

The comparative figures for the financial year ended 31 March 2010 are not the Company's statutory accounts for the financial year. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

These condensed consolidated interim financial statements were approved by the Board of Directors on 10 November 2010.

1.2 Principal risks and uncertainties

The Directors believe that the nature of the principal risks and uncertainties facing the Group during the six months to 30 September 2010 and during the remainder of its financial year remain unchanged from those described on pages 15, 16 and 17 of the 2010 Annual Report and Financial Statements. These are summarised below.

1.3 Related party transactions

Related party transactions are described on page 81 of the 2010 Annual Report and Financial Statements. No transactions took place during the six months to 30 September 2010 that would materially affect the financial position or performance of the Group during the period.

1.4 Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 March 2010. In particular, there were no changes in the following areas:

Retirement benefit obligations

The Directors requested the Company's actuaries to up date their valuation from 31 March 2010 to 30 September 2010. Due to the offsetting effect of changes to some of the underlying assumptions used in the valuation the deficit was not materially different from that used in the year end accounts.

Intangible assets

No trigger event occurred during the half-year to 30 September 2010 that would lead to an impairment review.

Available for sale financial assets

No new information has become available that would require a change in the valuation of unlisted investments.

1.5 Forward looking statements

These condensed consolidated interim financial statements contain certain forward looking statements which are made by the Directors in good faith based on the information available to them at the time of their approval of the accounts. Forward looking statements should be treated with caution due to the inherent uncertainties, including economic, regulatory and business risk factors underlying any such forward looking statements. We undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise. The condensed consolidated interim financial statements have been prepared by Charles Stanley Group PLC to provide information to its shareholders and should not be relied upon by any other party or for any other purpose.

2 SEGMENT INFORMATION

For management purposes the Group is organised into three divisions - Private Clients, Financial Services and Charles Stanley Securities. The principal activity of the Private Client division is the provision of investment management services to individuals, trusts and charities. The Financial Services division includes a SIPP administrator, a discount financial intermediary, employee benefits providers and financial planning and wealth management areas. Charles Stanley Securities is the Group's advisory, broking and corporate finance arm for smaller and mid cap UK listed companies. Sales between segments are carried out at arm's length. All of the Group's activities are undertaken in the United Kingdom.

3 EMPLOYEE BENEFIT EXPENSES

4 OPERATING PROFIT

The following items have been included in arriving at operating profit:

5 FINANCE INCOME - NET

6 TAX EXPENSE

7 EARNINGS PER SHARE

The Directors believe that a truer reflection of the performance of the Group's ongoing business is given by a number of different measures of earnings per share. "Adjusted earnings" represent earnings before gains and losses on available for sale financial assets, one-off costs and amortisation of customer relationships. This measure is also followed by the analyst community as a benchmark of the Group's on-going performance.

8 DIVIDENDS PAID

The Directors are proposing an interim dividend in respect of the six months ended 30 September 2010 of 2.50p per share which will absorb an estimated £1.1 million of shareholders' funds. A scrip alternative will also be offered. It will be paid on 31 December 2010 to shareholders who are on the register of members on 19 November 2010.

9 INTANGIBLE ASSETS

10 PROPERTY, PLANT AND EQUIPMENT

11 AVAILABLE FOR SALE FINANCIAL ASSETS

12 TRADE AND OTHER RECEIVABLES