Half Yearly Report

 CHARLES STANLEY GROUP PLC

RESULTS FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2013

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 2013.

Highlights:

§ Total funds £18.5 billion (31 March 2013: £17.7 billion, 30 September 2012: £15.6 billion)

§ Discretionary funds £6.9 billion (31 March 2013: £6.4 billion, 30 September 2012: £5.4 billion)

§ Revenue £70.0 million (first half 2012/13: £59.7 million) 17.2% increase

§ Underlying1 profit before tax £8.0 million (first half 2012/13: £5.6 million) 42.9% increase

§ Underlying1 earnings per share 13.74p (first half 2012/13: 9.78p) 40.5% increase

§ Profit before tax £4.9 million (first half 2012/13: £3.4 million) 44.1% increase

§ Basic earnings per share 8.52p (first half 2012/13: 6.00p) 42.0% increase

§ Interim dividend per share 3.00p (first half 2012/13: 2.75p) 9.1% increase

§ New office opened in Leicester

1 Underlying profit before tax and underlying earnings per share exclude amortisation of customer relationships, FSCS levy and one-off costs relating to our new Charles Stanley Direct service and the opening of our new office in Leicester.

Commenting on the results Sir David Howard, Chairman said:

"As a result of the increase in both fee and commission income, profit before tax for the half-year has improved and now stands at £4.9 million as against £3.4 million for the equivalent period last year. Underlying profit before tax was £8.0 million, up 42.9% from £5.6 million. Despite continuing concerns about financial markets at the global level the upturn in the UK economy looks increasingly sustainable. Our greater optimism at our March year-end has proved to be justified and at this stage the signs are looking reasonably favourable for the second half-year too."

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CHAIRMAN'S STATEMENT

Charles Stanley Group continues to grow clients' funds which now stand at £18.5 billion compared with £17.7 billion at 31 March 2013 and with £15.6 billion at 30 September 2012 - increases of 4.5% and 18.6% respectively. This growth in funds is reflected in a 17.2% increase in revenue for the half-year to £70.0 million from £59.7 million and a 42.9% increase in underlying1 profit before tax to £8.0 million compared with £5.6 million for the equivalent period last year.

Within clients' funds, managed funds rose by 4.3% since March 2013 - with funds under discretionary management alone rising by 7.8% since March 2013. Market movements since 31 March 2013 accounted for a 0.2% decrease in the value of clients' funds with the balance of the net movement in total funds due to a net inflow of funds from clients - equivalent to an annualised growth rate of 9.8%. The decrease of 0.2% in market values compares with an increase in the FTSE 100 Share Index of 0.8% since March 2013 and a decrease in the APCIMS/WMA Balanced Portfolio Index of 0.2% since March 2013.

We are delighted to welcome the staff at our new branch in Leicester and the members of staff of our Asset Management department in London who joined us during the period.

As part of our response to regulatory changes - in particular the Retail Distribution Review - we have undertaken a significant re-modelling of our pricing structure, which will begin to take effect from the close of this half-year. One of the drivers of this has been the continuing shift in the investment world away from advisory services and towards, at one end of the spectrum, discretionary fund management, and at the other, non-advised dealing-only services. This trend has been under way for several years and has been the subject of my comments to shareholders in the past. We think this trend is accelerating, but Charles Stanley remains committed to providing its clients with an advisory service too.

However we have to recognise the broader industry trend and, as part of the growing move towards dealing-only services our very successful launch of Charles Stanley Direct in the early part of 2013 has received highly favourable press coverage. Charles Stanley Direct offers clients "clean" prices on fund products such as unit trusts, which means that they are free of the opaque payments to our competitors which are built into the price paid by the investor.

During this period the Group continued to invest in its infrastructure with the acquisition of a freehold property and the refurbishment of its London properties. This has resulted in a drop in cash balances which stood at £27.7 million at 30 September 2013, down from £40.3 million at 31 March 2013.

Dividend

In the light of these results the Directors have decided to increase the interim dividend by 9.1% to 3.00p per share (first half 2012/13: 2.75p). The dividend will be paid on 13 December 2013 to shareholders registered on 22 November 2013.

The Charles Stanley team

I know that shareholders will want to join me in thanking everyone at Charles Stanley for their hard work in producing these results. We are operating against the background of increasingly intensive regulation. This is due at least in part to the way in which our legislators in Brussels are grouping investment firms with the banks - and we are clearly in a very different part of the financial services industry with a very different history and business model. We believe that we will emerge as an even stronger business as a result of this very heavy regulatory programme of industry change. In the shorter term it is posing significant demands throughout the company.

1 Underlying profit before tax excludes amortisation of customer relationships, FSCS levy and one-off costs relating to our new Charles Stanley Direct service and the opening of our new office in Leicester

Outlook

The results for the half-year to 30 September 2013 have been achieved against a background of continuing economic and market uncertainty. At the global level the financial concerns remain as strong as ever. But the domestic economy is showing signs of a recovery and although this could still be blown off course the upturn looks increasingly sustainable. Our greater optimism at our March year-end has proved to be justified and at this stage the signs are looking reasonably favourable for the second half-year too.

Sir David Howard

Chairman

14 November 2013

BUSINESS REVIEW

Client funds for the Group increased by 4.5% over the half-year to 30 September 2013 and are summarised below.

The strong performance of Discretionary Funds under Management and Execution only services has been influenced by the continuing migration by many clients from Advisory services to either Discretionary or Execution only services.

The increase in client funds has driven the trend of increasing total fees - some 12.8% higher compared with the half-year to 30 September 2012. The higher fees also reflect improved contributions from our Financial Services and Charles Stanley Securities divisions - with increases in income of 12.5% and 25.6% respectively. In addition commission income also showed a healthy increase of 24.4% at £28.5 million compared with £22.9 million for the same period last year.

As a result of the increase in both fee and commission income, profit before tax for the half-year has improved and now stands at £4.9 million as against £3.4 million for the equivalent period last year. Underlying profit before tax was £8.0 million, up 42.9% from £5.6 million. Underlying profits are arrived at by excluding amortisation of customer relationships, Financial Services Compensation Scheme levy and one-off costs relating to the development of our new direct-to-client service - Charles Stanley Direct, and to the opening of a new office in Leicester.

Excluding amortisation of customer relationships, FSCS levy and one-off costs, underlying costs increased by 14.7% over the period. This increase is driven in the main by the 17.2% increase in revenue resulting in increased profit share payments. Average employee numbers have risen by 3.9% to 854 from 822. Together with the increase in revenue sharing this has given rise to an increase of 9.6% in total staff costs.

The Group is organised into four operating divisions: Investment Management Services ("IM Services"), Financial Services, Charles Stanley Direct and Charles Stanley Securities. Our direct-to-client service, Charles Stanley Direct, was launched in January 2013. This new operating division was created by combining our existing online dealing service, Fastrade, with our discount intermediary service, Garrison. All comparatives in the following tables have been adjusted to show the income from these existing departments under the Charles Stanley Direct Division.

Investment Management Services

Funds managed and administered for our Investment Management Service clients and the movements during the half-year are analysed below:

Revenues in our Managed business have grown by 23.7%, while the Administered business has increased by 6.2%.

Fees earned on managed funds increased by 19.4% in line with a 20.7% increase in average funds held. Together with the recovery in transaction volumes this has resulted in an improved revenue margin up from 86 to 88 basis points.

Income from administered clients is analysed below. The drop in fees reflects a reduction in net interest earned as a result of lower rates on deposits and a decline in trail income. This has been offset by the increase in transaction volumes over the same period.

As shown in note 2 below the combined revenues of this division of £57.3 million have shown overall growth of 17.9%. Costs within the Investment Management Services division have increased by 17.2%, in line with the increase in revenue, resulting in a 20.3% increase in contribution for the half-year to £16.5 million.

Financial Services

Total income for the division grew by 12.5% to £6.3 million from £5.6 million. The costs of the division have been affected by additional recruitment of personnel in the Financial Planning area in order to further expand our holistic Wealth Management proposition and these have increased in this period by 8.4%. However, as shown in note 2 to the financial statements, the division has experienced an improvement in profitability from £184,000 for the six months to 30 September 2012 to £429,000 for the current period.

Financial planning and wealth management

The financial planning and wealth management business recorded another solid six months of growth with gross revenue increasing to £2.6 million from £2.1 million, an increase of 23.8%.

The process of amalgamating the Jobson James offering with financial planning and wealth management was completed during the period and forms a solid base from which to develop an integrated investment management and financial planning proposition.

EBS Management PLC

Despite the fact that we now have 6,270 SIPPs under administration compared with 5,894 at 31 March 2013, revenue for the half-year to 30 September 2013 remained static at £1.1 million due to a reduction in interest turn.

Charles Stanley Financial Solutions Limited

Revenue decreased slightly from the same period last year. The business will benefit from the enhanced focus produced by the amalgamation of substantially all of the Group's benefit consultancy business within Charles Stanley Financial Solutions. We expect progress in the business as regulatory changes in areas such as pension auto-enrolment offer additional opportunities.

Matterley

Our fund management business has enjoyed a strong performance with funds under management rising 9.5% from £203 million to £222 million and income increasing to £1.0 million from £0.6 million.

Charles Stanley Direct

In January 2013 we launched Charles Stanley Direct. This division provides a direct-to-client investment service and was created by combining our existing online dealing service, Fastrade, with our discount intermediary business, Garrison. The proposition has been received well by the market with over 10,000 accounts using the service - including 2,500 new clients. Funds held under Administration within the division now stand at £1.3 billion compared with £1.1 billion at 31 March 2013 - an increase of 18.2%. During this launch period migrating clients received an introductory offer of no charge for platform or custody fees from 1 January 2013 to 30 September 2013 - hence the reduction in fee revenue.

Over the same period costs have increased resulting in a negative contribution of £442,000 (2012/13: positive £359,000) from the division as shown in note 2 below. This increase in costs was due to one-off costs associated with the launch of the division of £270,000 and an increase in staff numbers of 43.5%.

Charles Stanley Securities

Charles Stanley Securities, the Group's equity capital markets business, is focussed on providing advisory, broking and research services to the small and mid-cap sector, together with WG Partners, a specialist team within the division advising companies in the Healthcare and Technology Sectors. It also conducts agency bond trading.

Charles Stanley Securities has experienced improving trading conditions in the current financial period with fee revenues increasing by 61.1% and secondary commissions broadly flat on the same period last year

Charles Stanley Securities, together with WG Partners, has increased its retained corporate client base in the current financial year and now acts for 58 corporate clients. Since 1 April 2013, the division has acted for clients on three IPOs and a number of secondary fundraisings and public and private M&A transactions and continues to have an encouraging pipeline of new business opportunities.

The increase in revenues and tight control of costs resulted in an operating profit of £708,000 compared with a loss of £403,000 for the corresponding period.

CHARLES STANLEY GROUP PLC

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

SIX MONTHS ENDED 30 SEPTEMBER 2013

Earnings per share

CHARLES STANLEY GROUP PLC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

AT 30 SEPTEMBER 2013

CHARLES STANLEY GROUP PLC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

SIX MONTHS ENDED 30 SEPTEMBER 2013

CHARLES STANLEY GROUP PLC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

SIX MONTHS ENDED 30 SEPTEMBER 2013

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 2013 are available upon request from the Company's registered office at 25 Luke Street, London EC2A 4AR or at www.charles-stanley.co.uk/investor-relations

1.1 Basis of preparation

 The Group's consolidated financial statements are prepared and presented 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 prepared and presented in accordance with IAS 34 Interim Financial Reporting and the Disclosure and Transparency Rules issued by the Financial Conduct Authority.

The comparative figures for the financial year ended 31 March 2013 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 14 November 2013.

1.2 Significant accounting policies

The condensed consolidated interim financial statements for the six months ended 30 September 2013 have been prepared in accordance with the accounting policies, methods of computation and presentation set out in the Group's consolidated financial statements for the year ended 31 March 2013, except for the adoption of new standards and interpretations effective 1 April 2013, as set out below:

IAS 19 Employee Benefits (Revised 2011) (IAS 19R)

IAS 19R has several amendments to accounting for defined benefit plans. The main impact on the Group is that 'expected returns on plan assets' are no longer recognised in profit or loss; instead 'net interest' is now calculated as the 'net defined benefit liability/(asset)' multiplied by the discount rate that is used to measure the defined benefit obligation.

Additional changes are in respect of accounting for taxes and administration costs payable by the plan. Some additional disclosures are also required by the standard. The amended standard requires recognition of termination benefits at the earlier of when the entity recognises related restructuring costs and when it can no longer withdraw the offer of those benefits.

Other amendments to the standard include the distinction between long-term and short-term employee benefits, which are now based on expected timing of settlement, rather than when the employees are entitled to the benefits. Further details regarding the Groups defined benefit pension arrangements are shown in note 16.

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The application of IFRS 13 has not impacted the fair value measurements carried out by the Group.

IFRS 13 also requires specific disclosures on fair values, some of which replace existing disclosure requirements in other standards. Some of these disclosures are specifically required by IAS 34 Interim Financial Reporting for financial instruments. They have therefore been included in these interim financial statements as shown in note 17.

Several other new standards and amendments that have no material impact are set out below:

- IAS 1 Presentation of Items of Other Comprehensive Income - Amendments to IAS 1;

- IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7;

- IAS 1 Clarification of the requirement for comparative information (amendment);

- IAS 32 Tax effects of distributions to holders of equity instruments (amendments); and

- IAS 34 Interim financial reporting and segment information for total assets and liabilities (amendment).

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The condensed consolidated interim financial statements should be read in conjunction with the Group's audited financial statements for the year ended 31 March 2013.

1.3 Principal risks and uncertainties

The Directors believe that the nature of the principal risks and uncertainties facing the Group during the half-year to 30 September 2013 and during the remainder of its financial year remain unchanged from 31 March 2013. A full assessment of the risks and uncertainties, together with the controls and processes which are in place to monitor and mitigate the risks where possible, are set out on pages 19, 20 and 21 of the 2013 Annual Report and Financial Statements. The risks are summarised below.

1.4 Related party transactions

Related party transactions are described on page 89 of the 2013 Annual Report and Financial Statements. No transactions took place during the half-year to 30 September 2013 that would materially affect the financial position or performance of the Group during the period.

1.5 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 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 2013. The following areas were reviewed by management and changes made as noted below:

Retirement benefit obligations

The Directors requested the Company's actuaries to up-date their valuation from 31 March 2013 to 30 September 2013. This resulted in a decrease in the actuarial deficit of £779 million which has been reflected in these financial statements.

Intangible assets

During the period market valuations and volumes have increased. Management have carried out an impairment review of intangible assets and have concluded that there is no impairment to the carrying value of intangible assets.

Available for sale financial assets

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

1.6 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 four Divisions - Investment Management Services, Financial Services, Charles Stanley Direct and Charles Stanley Securities. The principal activity of the Investment Management Services Division ("IM Services") is the provision of investment services to individuals, trusts and charities. The Financial Services Division includes a SIPP administrator, employee benefits providers and financial planning and wealth management areas. Charles Stanley Direct provides a direct-to-client investment service including online dealing. 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.