Quayle Munro Holdings PLC
Interim Report 2011

for the six months ended 31 December 2011

Company registration number

SC 72014


Highlights

· Creditable outcome in difficult market conditions.

· Revenue £5.0m compared with £5.3m in 2010 on a like-for-like basis.

· Loss after tax of £(0.5)m (2010: £(0.6m)).

· Advised on a number of major transactions, including Virgin Group on the acquisition of Northern Rock plc by Virgin Money.

· Good current pipeline of work across the business.

· Interim dividend of 11p per share has been declared (2010: 10p per share).

· Net assets of £39.7m (2010: £38.8m).

· Andrew Adams appointed Chief Executive of Quayle Munro Holdings PLC. Andrew Tuckey to stand down as Executive Chairman at the AGM remaining as a Senior Adviser.

Andrew Tuckey, Chairman, commented:"The business is well capitalised and in a strong position to meet the current market challenges. We are encouraged by the good pipeline of new business and the strength of our dedicated team and we expect a satisfactory result for the year."

For further information:

Andrew Tuckey, Chairman, Quayle Munro +44 (0)20 7907 4200

John Kiely/Gemma Froggatt, Smithfield: +44 (0)20 7360 4900

Sandy Fraser, N+1 Brewin +44 (0)131 529 0385


Chairman's Statement

This has not been an easy period for Quayle Munro, with the Group having to contend with a subdued M&A market and generally depressed economic conditions, particularly in Europe. Taking into account the difficult environment in which we operate at present, I regard the Group result for the half year as a creditable outcome.

Results

The Group result was broadly in line with the first six months of last year.

Revenues for the period were £5.0m compared with £5.3m for the previous period, a decline of 6%.

The loss on ordinary activities after taxation for the period was £(0.5)m (2010: £(0.6)m). The loss on ordinary activities after taxation for the period is stated after £0.7m of long term incentive scheme and deferred bonus costs (2010: £1.0m).

Basic loss per share was reduced to (11.2)p (2010: loss per share of (14)p) with fully diluted loss per share of (10.3)p (2010: loss per share of (13.6)p).

Advisory Business

A number of significant deals were closed during the period, the most notable being the successful purchase by Virgin Money of Northern Rock, a transaction on which Quayle Munro advised the Virgin Group over a number of years. In the public market we advised the Board of LMS Capital plc on the company's new investment strategy and board composition and in the media sector we advised on the sale of Doctors.net to M3, Inc., a publicly listed company on the Tokyo stock exchange. Our energy and infrastructure teams advised Barclays Infrastructure Funds on the acquisition and financing of Wadlow, a 26MW wind farm near Cambridge. We are working with a number of bidders for Non-Profit Distributing infrastructure projects in Scotland and have consolidated our leading position in the higher education sector with a wide range of ongoing projects.

Three of our senior executives have recently left the Group, all for different reasons; Stuart Roberts has taken up an appointment as group finance director of the Robertson Group (a long standing client), Andreas Wesemann has moved to work with former colleagues and Rashmi Sinha is pursuing other business opportunities in the retail sector. On the other hand we have hired some outstanding new talent at all levels and we are busy in both London and Edinburgh.

The M&A market remains difficult at present; however, the talented team we have at Quayle Munro continues to provide high quality advice and services to our clients and I believe we are well placed to benefit from an improvement in market conditions.

Investments

Morris Homes, in which we have a 22.96% shareholding, has traded satisfactorily in the nine month period to 31 December 2011 with sales turnover of £101m (2010: £82m) and operating profits of £14m (2010: £11m). Reservations and visitors to the open sites have been encouraging during the early weeks of the year.

Of our other smaller investments, AMG delivered an impressive set of results for 2011 and we have increased the valuation of our shareholding by £0.3m. Moneybarn (formerly Duncton) continued to perform satisfactorily during 2011, although marginally behind budget. Nevis Range has continued to broaden its product offering but with the lack of snow so far this winter, may not match last year's visitor numbers. Tayside Flow Technologies has recently changed its name to Vascular Flow Technologies and has hired a new Chief Executive with significant industry experience. Following the successful raising of significant new debt and equity finance in December 2011 the company is now in a position to move ahead with its business plan.

There has been no change in the fair value of the investments held other than AMG.


Net Assets and liquidity

The Group continues to maintain significant cash resources. These are held on short term deposits with three major UK retail banks. In the current difficult economic environment and in the absence of new investment opportunities, we continue to believe this is the most prudent strategy for the time being.

The Group balance sheet as at 31 December 2011 shows net assets of £39.7m which is equivalent to 870p per share and this compares with 908p as at 30 June 2011.

After payment of the proposed dividends set out below the Group has cash resources of approximately £16m.

Dividend

The Directors propose an interim dividend of 11p per share (2010: 10p per share) to be paid on 10 April 2012 to shareholders on the register at the close of business on 23 March 2012.

Prospects

After two record years and taking account of current market conditions and the difficulty in anticipating the timing of deal completions, I think it is unlikely our revenues for the current year will match those of last year. However, with a good pipeline of new business and a strong and dedicated team in both our offices, we expect a satisfactory result for the full year.

The Board considers that the principal risks and uncertainties facing the Group are consistent with those disclosed in the Annual Report and Accounts 2011 where a list of the risks and uncertainties can be found on pages 14 and 15.

Board and Management Changes

The Board is pleased to announce the appointment of Andrew Adams as Chief Executive of Quayle Munro Holdings PLC as of today's date. Andrew has been with the Group since the acquisition of van Tulleken in 2008 and he has made an outstanding contribution to the Advisory Business over that period.

I have been Chief Executive since 2009 and Executive Chairman since 2010. I intend to stand down from the Board at the AGM later this year but will remain with the Group as a Senior Adviser. We will now seek a new independent Non-Executive Chairman to take over from me.

Andrew Tuckey

14 March 2012