Interim Results

Close Brothers Group PLC
5 March 2001


Close Brothers


Embargoed for release 7.00 am Monday 5th March, 2001


                           CLOSE BROTHERS GROUP plc

                    The specialist merchant banking group


                            INTERIM RESULTS 2001



HIGHLIGHTS                                                31st
                                                       January,
                                                   2001        2000

*     Operating profit before
      taxation, exceptional                      £57.9m      £75.2m       -23%
      costs and goodwill
      amortisation

*     Operating profit before
      taxation on ordinary                       £56.1m      £66.2m       -15%
      activities

*     Earnings per share                         27.02p      33.46p       -19%

*     Interim dividend per share                   9.0p        8.0p       +12%

*     Shareholders' funds                         £402m       £338m       +19%


*     Asset Management showed substantial growth in profitability and now
      represents 22% of operating profits (previously 10%).

*     Corporate Finance diversified and widened its source of revenue.

*     Market-Making performed well in difficult conditions; profits were
      £25.9 million compared to £52.3 million, although last year's first
      half profits included exceptional boom profits of some £29 million.

*     Banking showed significant progress.


Commenting on the results, Sir David Scholey, Chairman, said:


'The fall in profits was expected and should be seen by shareholders in the
context of the boom conditions in the securities market in our last financial
year.  If last year's first half boom profits of £29 million are excluded,
then our first half profits showed an underlying increase of 25 per cent.

The depth and length of the slowdown in the US economy is unclear, as is the
effect that this may have on the UK.  Although we remain cautious about the
next few months, we are clear that our strategy of having a well spread mix of
diverse activities remains the correct way to achieve ongoing growth of the
group.'


Enquiries to:

Rod Kent/Peter Winkworth
Close Brothers Group plc                                          020 7426 4000

John Sunnucks
Brunswick Group Limited                                           020 7404 5959


Webcast video interview with Rod Kent, Managing Director, Close Brothers Group
plc at www.closebrothers.co.uk


DIRECTORS' STATEMENT

Profit and Dividend

The operating profit on ordinary activities before taxation and after
deducting goodwill amortisation of £1.8 million (2000 - £1.0 million) and
exceptional reorganisation costs of £Nil (2000 - £7.9 million) for the six
months ended 31st January, 2001 was £56.1 million compared to £66.2 million
last year, a decline of 15.3 per cent. The profit before taxation, and before
goodwill amortisation and reorganisation costs for the six months ended 31st
January, 2001 was £57.9 million compared to £75.2 million last year.  Earnings
per share on profit attributable to shareholders were 27.02p compared to
33.46p last year, a fall of 19.2 per cent.

This fall in profits was expected and should be seen by shareholders in the
context of the boom conditions in the securities market in our last financial
year.

At the time of last year's annual results, we explained that there had been an
exceptional boom period between November 1999 and March 2000 in stock market
trading, particularly in technology stocks, which had given rise to additional
profits in our market-making division, Winterflood Securities ('WINS'), of
approximately £50 million.  Of this we estimate that some £29 million fell in
the first half of our last financial year.  If this boom profit is excluded
from last year's first half figures, then our first half profits (before
goodwill amortisation and reorganisation costs) showed an underlying increase
of 25 per cent.

The directors have declared an interim dividend of 9p net per share, an
increase of 12.5 per cent. over last year.  This is payable on 18th April,
2001 to shareholders on the register at the close of business on 16th March,
2001.


Overall Business Review     

We have broken down the mix of operating profits before central costs from our
main areas of activity in greater detail than before:


                              First half          First half          Full year
                                    2001                2000               2000

Asset Management                     22%                 10%                 9%
Corporate Finance                     7%                  6%                 6%
Banking                              31%                 20%                20%
Market-Making                        40%                 64%                65%


The previous category of asset finance has been combined with our other
banking and lending activities, reflecting the similarity of these businesses.
Asset management includes all of our offshore activities.

This demonstrates that the overall mix of our businesses has returned to a
more balanced level.  The contribution from market-making, whilst still
substantial, dropped to a more normal percentage of the total, and the
contribution from asset management increased very substantially from last
year.

Over the last six and twelve months, the group loan book has grown by 22 per
cent. and 32 per cent. respectively, reflecting both good organic growth and
PROMPT's recent acquisition of a rival insurance premium financing business.
Net interest income grew by 24 per cent. compared to the first half of last
year.  The annualised charge for bad debts remained at 1.5 per cent. of the
net average group loan book.

Since the year end, shareholders' funds have increased to £402 million from £
368 million and total assets to £2.9 billion from £2.6 billion.



DIRECTORS' STATEMENT

Divisional Business Review

Asset Management

Our Asset Management division showed substantial growth in profitability both
from existing operations and from acquisitions.  Investment funds under
management at the period end were some £3.1 billion (2000 - £2.6 billion) with
further substantial cash and trust assets managed and administered offshore.
Relative to their benchmarks and objectives our funds have performed well and
several have been outstanding, particularly our technology funds.

The mix of the different types of funds under management is as follows:


                                               31st January,         31st July,
                                                        2001               2000
Specialist investment
   and unit trusts                                       38%                37%
Private clients                                          32%                28%
Protected unit  trusts
and tracker funds                                        13%                18%
Tax sheltered
   products                                              10%                11%
Private equity                                            7%                 6%


During the period we acquired an 80 per cent. interest in OLIM Limited which
manages funds for private clients and undertakes specialist mandates,
including direct property investment for investment trusts, pension funds and
charities.

Offshore we acquired a trust management business in Jersey from Abbey National
which complements our existing operations in Guernsey, the Isle of Man and
Geneva.  We intend to increase the geographical spread of our offshore
activities.


Corporate Finance

Having established itself as a leading provider of M&A advice to mid-market
growth companies in the UK, our Corporate Finance division has taken
deliberate steps to diversify and widen its sources of revenue.  During the
period we set up several new teams, notably in debt restructuring, energy
finance (concentrating on the Middle East) and private placements.  In France we
restructured our operations so that they are now carried out solely by Dome,
which offers purely advisory services.  We continued the expansion of Freyberg
in Germany and took a 10 per cent. participation in our new Spanish associate,
Atlas Capital.  Our new relationship with Houlihan Lokey Howard & Zukin, a large
mid-market adviser in  the US, is beginning to show promising levels of two-way
business.

In our core European M&A business we experienced a strong start, but a patchy
finish to the period.  Although deal activity levels remain high and we expect
further growth, we see a more difficult market for the remainder of the year
with the probability of lower conversion rates.


Market-Making

Although its profits were substantially down compared to the boom conditions
of the comparable period last year, Market-Making performed well in difficult
conditions.  As the leading jobber in small and mid-cap UK stocks, WINS makes
markets in a large number of technology stocks.  Thus, whilst bargain numbers
remained pleasingly buoyant in the circumstances, WINS' profits were affected
by the sharp fall in the value of its net equity position, even though we
benefited from the valuation of our London Stock Exchange shares (£4 million).
WINS' operating profits were £25.9 million compared to £52.3 million.  We
estimate that last year's first half profits included exceptional boom profits
of some £29 million.

The securities market continues to evolve at a rapid rate, with new entrants,
new trading platforms and increasing internationalisation.  Whilst some of
these changes pose competitive threats to WINS, they also present
opportunities.


DIRECTORS' STATEMENT

WINS continued to diversify its business by launching several new initiatives.
We extended the number and size of UK stocks in which we deal, and continued
to increase the range of European equities in which we make markets.  In
November 2000 we began to deal in retail orders for a wide range of NYSE and
NASDAQ stocks and in the Spring we will be launching, in conjunction with
others, a new gilts and bond trading platform.

The second half of the year has started modestly and seen further weakness in
the indices.  We anticipate that the stock market may be distorted in the run
up to a general election.


Banking (including asset finance)

Our Banking division showed significant progress.  Our treasury, property
lending, PROMPT and credit management operations all increased profits.  Our
overall asset finance operations saw marginally lower results with new product
start-up costs, some increase in bad debts on printing equipment business
written in earlier years when the DM/sterling rate was considerably lower, and
the continued reorganisation of Warrior all having an impact during the
period.  Conversely, our used car finance activity saw its profits recover
from the low point last year.

On the development front PROMPT's acquisition added some 56 per cent. to its
loan book which had already shown substantial organic growth in the period;
it now represents the largest part of the group loan book.  This new business
will be merging into PROMPT's new Tolworth headquarters later in the year
which will provide significant economies of scale.


The mix of our group loan book has changed somewhat in the past six months:


                                       31st January,             31st July,
                                               2001                    2000

Insurance                                       25%                     15%
Printing equipment                              20%                     23%
Cars                                            15%                     17%
Property                                        12%                     14%
Commercial vehicles                                      
 and aircraft                                   11%                     12%
Other                                           17%                     19%


Outlook

The depth and length of the slowdown in the US economy is unclear, as is the
effect that this may have in the UK.  With such uncertainty, stock market
activity and levels may be subdued and this may impact certain parts of our
business.  However, in other parts of our business, notably the merchant bank,
the development of additional building blocks initiated in the last two years
is beginning to bear fruit.  Although we remain cautious about the next few
months, we are clear that our strategy of having a well spread mix of diverse
activities remains the correct way to achieve ongoing growth of the group.


CONSOLIDATED PROFIT AND LOSS ACCOUNT


                                           Six months ended          Year ended
                                             31st January,           31st July,
                                         2001             2000             2000
                                   (Unaudited)       (Unaudited)       (Audited)
                                        £'000            £'000            £'000

Interest receivable                   101,630           77,864          166,123
Interest payable                     (56,641)         (41,491)         (90,609)

Net interest income                    44,989           36,373           75,514

Dividend income                            41              272              479
Fees and commissions receivable        70,402           57,717          122,048
Fees and commissions payable          (8,381)         (12,569)         (25,708)
Net dealing income - market-making     47,418          104,092          203,954
Other operating income                  3,361            3,492            6,764

Other income                          112,841          153,004          307,537

Operating income                      157,830          189,377          383,051

Administrative expenses - ordinary     89,294          105,887          209,724
                        - exceptional       -            7,940            8,040
       
Depreciation                            3,200            2,545            5,688
Provisions for bad and doubtful         7,414            5,733           12,533
debts
Amortisation of goodwill                1,827            1,039            2,305

Total operating expenses              101,735          123,144          238,290

Operating profit on ordinary           56,095           66,233          144,761
activities before taxation
Taxation on profit on ordinary         18,508           21,012           46,857
activities

Profit on ordinary activities          37,587           45,221           97,904
after taxation
Minority interests - equity             1,360            1,144            2,668

Profit attributable to                 36,227           44,077           95,236
shareholders

Interim dividend                       12,121           10,770           33,356

Retained profit                        24,106           33,307           61,880


Interim dividend per share (net)         9.0p
                                                          8.0p            25.0p

Earnings per share before
amortisation of goodwill
and exceptional costs                   28.38p           38.47p           77.79p
   

Earnings per share on profit           27.02p
attributable to shareholders                             33.46p           71.88p

Diluted earnings per share             26.82p
                                                        33.19p           71.28p



All income and profits are in respect of continuing operations.

CONSOLIDATED BALANCE SHEET


                                                            
                                                31st January,          31 July,
                                           2001             2000           2000
                                     (Unaudited)       (Unaudited)     (Audited)
                                          £'000            £'000          £'000
Assets
Cash and balances at central banks          362              153            235
Loans and advances to banks             562,885          557,259        631,824
Loans and advances to customers       1,088,191          825,327        895,334
Debt securities - long positions         31,935           17,047         23,521
Debt securities - other                 529,942          290,187        486,488
Settlement accounts                     355,212          914,868        301,340
Equity shares - long positions           54,943           60,416         52,917
Loans to money brokers against stock     71,462           58,881         85,491
advanced
Equity shares - investments              28,414           25,498         21,100
Intangible fixed assets - goodwill       83,733           48,519         50,264
Tangible fixed assets                    20,403           18,278         20,817
Other assets                             38,442           37,549         51,038
Deferred taxation                         7,906            6,088          6,949
Prepayments and accrued income           24,322           20,399         17,508

Total assets                          2,898,152        2,880,469       2,644,826


Liabilities
Deposits by banks                        87,042           34,007         67,382
Customer accounts                     1,055,687          924,376      1,066,388
Bank loans and overdrafts               610,190          416,567        453,685
Debt securities in issue - loan          36,281           54,422         36,281
notes
Debt securities in issue - short         29,247           18,942         25,891
positions
Settlement accounts                     298,608          740,475        249,741
Equity shares - short positions          15,897           17,765         10,657
Loans from money brokers against         47,174           83,154         39,127
stock advanced
Other liabilities                       180,542          170,791        204,618
Accruals and deferred income             74,050           54,540         63,302
Subordinated loan capital                51,937           21,937         51,937
Minority interests - equity               9,928            4,997          7,975

Total liabilities                     2,496,583        2,541,973      2,276,984

Shareholders' funds
Called up share capital                  34,008           33,656         33,760
Share premium account                   192,156          184,262        185,243
Profit and loss account                 175,405          120,578        148,839

Total equity shareholders' funds        401,569          338,496        367,842

Total liabilities and shareholders'   2,898,152        2,880,469      2,644,826
funds


Memorandum items
Contingent liabilities - guarantees      14,317            1,525          3,717
Commitments - other                     138,941          133,178        139,402



CONSOLIDATED CASH FLOW STATEMENT


                                                       
                                          Six months ended          Year ended  
                                             31st January,          31st July,
                                           2001             2000          2000
                                     (Unaudited)       (Unaudited)    (Audited)
                                          £'000            £'000          £'000

Net cash inflow from operating           40,637           71,500        117,306
activities (Note 1(a))

Returns on investments and servicing
of finance:
Dividends paid to minorities            (1,307)            (513)          (719)

Taxation:
UK corporation taxation paid           (17,510)          (9,929)       (36,983)

Capital expenditure and financial
investment:
Purchase of tangible fixed assets       (3,210)          (6,834)       (13,033)
Sale of tangible fixed assets               537              584          1,014
Purchase of equity shares held for      (9,173)          (3,323)        (6,279)
investment
Sale of equity shares held for            1,651                -          7,505
investment

                                       (10,195)          (9,573)       (10,793)

Acquisitions and disposals:
Minority interests (acquired)/sold      (6,374)              967          2,443
for cash
Purchase of subsidiaries (Note 1(b))   (13,524)         (12,565)       (15,103)

                                       (19,898)         (11,598)       (12,660)

Equity dividends paid                  (22,697)         (14,365)       (25,024)

Net cash (outflow)/inflow before       (30,970)           25,522         31,127
financing

Financing:
Issue of ordinary share capital           1,961            1,821          2,906
including premium
Issue of subordinated loan capital            -                -         30,000
(Decrease)/increase in cash            (29,009)           27,343         64,033

In the directors' view, cash is an integral part of the operating activities of
the group, since it is a bank's stock in trade.  Nevertheless, as required by
Financial Reporting Standard No. 1 (Revised), cash is not treated as cash flow
from operating activities but is required to be shown separately in accordance
with the format above.


THE NOTES


1.    Consolidated cash
      flow statement
                                            31st January,            31st July,
                                           2001             2000           2000
                                     (Unaudited)       (Unaudited)     (Audited)
                                          £'000            £'000          £'000
(a)   Reconciliation of profit
      on ordinary activities
      before taxation to
      net cash inflow from
      operating activities

      Operating profit on                56,095           66,233        144,761
      ordinary activities
      before taxation
      (Increase)/decrease in
      interest receivable and
      prepaid expenses                   (1,557)          (4,191)           609

         
      Increase in interest                7,775            9,769         17,367
      payable and accrued
      expenses

      Increase in net                   (5,005)        (135,884)       (13,090)
      settlement accounts

      Decrease/(increase) in              3,214         (16,924)       (16,533)
      net equity shares held
      for trading

      (Increase)/decrease in            (5,058)               71            546
      net debt securities held
      for trading

      Depreciation and                    5,027            3,584          7,993
      amortisation

      Net cash inflow/                   60,491         (77,342)        141,653
      (outflow) from trading
      activities

      Net (increase)/decrease
      in:
      Debt securities held for         (43,454)           19,313       (176,988)
      liquidity

      Loans and advances to            (93,714)          (18,588)       (88,595)
      customers

      Loans and advances to              39,803          104,914        104,100
      banks not repayable on
      demand

      Other assets less other            21,828           58,243       (10,197)
      liabilities

      Net increase/(decrease)
      in:
      Deposits by banks                  19,660         (56,502)       (23,177)

      Customer accounts                (10,701)            (187)        109,922
      Bank loans and                     46,819           41,531         78,649
      overdrafts

      Debt securities in issue                -                -       (18,141)
      - loan notes

      Exchange adjustment                  (95)              118             80

      Net cash inflow from               40,637           71,500        117,306
      operating activities

(b)   Analysis of net cash
      outflow in respect of
      purchase of subsidiaries

      Cash consideration of            (20,780)         (44,386)       (46,924)
      purchases                                                        

      Net movement in cash                7,256           31,821         31,821
      balances                                                           

                                       (13,524)         (12,565)       (15,103)

(c)   Analysis of changes in
      financing

      Share capital (including
      premium) and
      subordinated
      loan capital:

      Opening balance                   270,940          192,958        192,958
                                                         
      Shares issued for cash              1,961            1,821          2,906
                                                           
      Shares issued other than            5,200           45,076         45,076
      for cash                                            
      Subordinated loan                       -                -         30,000
      capital issued                                           
      Closing balance                   278,101          239,855        270,940

(d)   Analysis of        Movement
      cash balances   in the period
                          £'000

      Cash and             127              362              153            235
      balances at
      central banks

      Loans and
      advances to
      banks repayable  (29,136)           93,929           86,457        123,065
      on demand        (29,009)           94,291           86,610        123,300


THE NOTES


2.    Basis of preparation

The interim accounts, which are unaudited, have been prepared on the basis of
the accounting policies set out in the 2000 group accounts.  The figures shown
for the full year ended 31st July, 2000 represent an abridged version of the
full accounts of Close Brothers Group plc for that year, which have been filed
with the Registrar of Companies and on which the auditors have given an
unqualified report.  The financial information contained in this interim
report does not constitute the group's statutory accounts within the meaning
of section 240 of the Companies Act 1985.


3.     Earnings per share

The earnings per share in 2001, both on profits before amortisation of
goodwill and exceptional costs and on profit attributable to shareholders, is
based on a weighted average of 134,079,000 (2000 - 131,714,000) ordinary
shares in issue during the period.  The diluted earnings per share is based on
a weighted average of 135,087,000 (2000 - 132,782,000) ordinary shares after
allowing for the exercise of options under the sharesave and executive share
option schemes.


INTERIM REVIEW REPORT


Interim Review Report to Close Brothers Group plc


Introduction

We have been instructed by the company to review the financial information set
out on pages 4 to 8 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.


Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors.  The Listing
Rules of the UK Listing Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes,
and the reasons for them, are disclosed.


Review work performed

We conducted our review in accordance with guidance contained in Bulletin 
1999/4 issued by the Auditing Practices Board.  A review consists principally of
making enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed.  A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions.   It is substantially less in scope than an audit performed
in accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit.  Accordingly, we do not express an audit opinion on
the financial information.


Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31st January, 2001.


Deloitte & Touche
Chartered Accountants

Hill House, 1 Little New Street, London EC4A 3TR


5th March, 2001