SHRE.L Regulatory News (SHRE)

9 March 2016

AIM: SHRE

Share plc

("Share")

PRELIMINARY RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2015

Share plc (AIM: SHRE.LN), parent company of The Share Centre (a leading independent retail stockbroker) and Sharefunds (the Group's investment management and fund administration subsidiary), announces its unaudited results for the year ended 31 December 2015.

HIGHLIGHTS

Financial

· Revenue market share (*) at a record level of 7.79% (2014: 7.66%)

· Revenue of £14.1m (2014: £15.0m)

- 3% lower, excluding interest income, at £12.8m (2014: £13.2m)

· Profit before tax increased to £0.9m (2014: £0.7m)

- this includes a one-off net gain of £1.5m resulting from the profit on the partial sale of the holding in the London Stock Exchange Group plc (£1.7m) offset by a write down (£0.2m) of the cost of the investment in WAY Group Limited 

· Underlying earnings (**) of £0.6m (2014: £1.4m) in line with revised market expectations

· Underlying (**) basic and diluted earnings per share of 0.4p (2014: 1.0p). Basic and diluted earnings per share of 0.5p (2014: 0.4p)

· Final (and total) dividend proposed of 0.74p per share up 19% (2014: 0.62p). Move to a new dividend policy based on earnings and cash generated

· Balance sheet remains strong, with net cash of £11.7m (2014: £12.7m)

· Shareholders' funds of £18.7m or 13.0 p per share in issue (2014: £20.7m, 14.4p per share)

Operational

· Highest number of industry awards ever won, including retaining awards for:

- 'Highest Overall Client Satisfaction' and for 'Best Customer Service' in the Investment Trends 2015 research

· Major new partnerships and acquisitions agreed with Barclays and Henderson in the second half

· In advanced discussions to transfer our non-core Authorised Corporate Director role to another party

Outlook

· 2016 to be a year of significant investment and transformation - to position the Group for ongoing growth

(*) the peer group comprises: Alliance Trust Savings, Barclays Stockbrokers, Equiniti, Halifax Sharedealing, HSBC Stockbrokers, Saga Personal Finance, Selftrade and TD Direct Investing.

(**) excludes the impact of one-off items and share based payments, as defined in Note 7 to the financial statements in this preliminary announcement.

Gavin Oldham, Chairman, commented on the results:

"Against a very difficult market backdrop, particularly in the second half of the financial year, Share has continued to make encouraging strategic progress and has delivered a resilient performance, supported by our simple flat fee structure and high levels of customer service.

We continue to pursue our strategy of Putting Customers First and it is therefore very pleasing to see that the Business has won its highest number of industry awards ever in 2015. This element of our strategy supports our wider growth ambitions and has played a significant part in securing our agreements with Barclays and Henderson, which have added material new customer bases. The benefits of both are expected to come through more strongly in 2016.

We are embarking on a major programme of investment and transformation in 2016 to position the Group for ongoing growth. A major part of this investment will be in our IT systems and our objective is to put in place, market-leading technology which will support new functionality and innovation in the way we engage with customers and provide our services.

This investment will be reflected in the overall performance for the year but we expect to exit 2016 substantially stronger still and with the Group firmly positioned for long term sustainable profitable growth."

Richard Stone, Chief Executive, commented on the results:

"We are delighted that Share continues to make progress relative to our peer group, despite another year of market volatility and subsequent weaker dealing volumes, particularly in the second half. The Group's market share of revenues rose to a record high of 7.79% in the year. Whilst the Group's revenues declined to £14.1m from £15.0m last year, stripping out interest income, revenues were down by only 3%. This reflects our resilient model based on a simple flat fee structure and attractive dealing terms. Still, the decline in traded volumes impacted us and underlying earnings have decreased to £0.6m from £1.4m. Reported profit before tax increased to £0.9m which includes certain one-off benefits.

The Board has significant growth ambitions for the Group and our investment and transformation programme planned for 2016, will move the Business forward significantly. This initiative, combined with the Group's strong balance sheet and well-established reputation for customer service, underpins our confidence in the medium and long term prospects for the Group in a market where there is a growing need for services like ours."

RISK WARNING

This document is not intended to constitute an offer or agreement to buy or sell investments and does not constitute a personal recommendation. The investments and services referred to in this document may not be suitable for every investor and if in doubt independent financial advice should be sought. No liability is accepted whatsoever for any loss howsoever arising from any information in this document subject to the rules of the Financial Conduct Authority or the Financial Services and Markets Act 2000. Share prices, values and income can go down as well as up and investors may get back less than their initial investment. The Share Centre is a member of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority under reference 146768. Sharefunds is authorised and regulated by the Financial Conduct Authority under reference 227807.

ABOUT SHARE PLC

Share plc is the parent holding company of The Share Centre Limited and Sharefunds Limited and its shares are traded on AIM. The Share Centre started trading in 1991 and provides a range of account-based services to enable investors to share in the wealth of the stockmarket. These include share accounts, ISAs, Junior ISAs and SIPPs, all with the benefit of investment advice, and dealing in a wide range of investments. Services available to corporate clients include Enterprise Investment Scheme administration and 'white-label' dealing platforms.

For more details contact 0800 800 008, or visit www.shareplc.com or www.share.com.

CHAIRMAN'S STATEMENT

Overview of 2015

Last year's Chairman's statement was entitled 'Progress in a tough market'. The same statement could apply again this year, which bore similar characteristics to 2014.

Trading conditions in the first half of 2015 picked up and the stockmarket hit new highs in April 2015. However, there was significantly increased volatility throughout the second half of the year as investor confidence waned, reflecting the greater global economic uncertainty. As a result, we saw weaker dealing volumes as retail investors stood back from trading. Traded volumes on the London Stock Exchange by retail firms showed a decrease of 8% in the second half of 2015 compared to 2014, itself a relatively weak half. Global conditions as well as stockmarket volatility, also meant any expectation of an increase in interest rates moved out yet further and in fact deposit rates have been subject to further cuts as banks remain burdened with excess liquidity.

Against this difficult market backdrop, particularly in the second half of the year, Group revenues decreased to £14.1m (2014: £15.0m) and underlying earnings decreased to £0.6m (2014: £1.4m). Reported profit before tax increased to £0.9m (2014: 0.7m). This included £0.2m of one-off costs relating to the write down of the holding cost of our investment in WAY Group Limited and the partial sale of our holding in the London Stock Exchange Group plc ('LSE') which realised a profit of £1.7m.

I am pleased to report that Share has continued to make progress against its peer group, with the Group's market share of revenue measured against the consistent benchmark of eight peers rising to 7.79% in the year, setting a new record high (2014: 7.66%).

The Group continues to maintain a strong balance sheet with net cash at the year end of £11.7m (2014: £12.7m) and shareholder funds of £18.7m (2014: £20.7m) or 13.0p per share (2014: 14.4p). This represents 3.6 times the Group's regulatory capital requirement (2014: 6.4 times).

Dividend

The Board proposes an increased final (and total) dividend for the year of 0.74p per share, subject to shareholder approval. This is an increase of 19% on the prior year (2014: 0.62p). The proposed final dividend will be paid on 15 June 2016 to shareholders on the register at 13 May 2016.

This is the sixth consecutive year that the dividend has increased by c.20%. However, the Board recognises that this is also the second year in which underlying performance of the Group does not support such dividend growth and that this year's proposed dividend represents a return of cash to shareholders following the sale of the LSE shares, which is also supported by the Group's significant cash resources.

As we indicate in our comment in the Outlook, the current financial year's performance is not expected to deliver earnings growth likely to support a further 20% increase and, as a result, the Board is taking this opportunity to move to a policy where the dividend will be paid out each year based on earnings and cash generated.

It remains the Board's ambition to grow the dividend further and to do so strongly as the Group's performance improves.

Partial sale of holding in the London Stock Exchange Group plc

Having taken up our rights in the LSE's rights issue and following the stock's strong subsequent performance, our investment in the LSE had become a sizeable element of our balance sheet. Given that the value of this holding is in many ways linked to the success of the market, as is our core, we took the decision to reduce this correlation with our balance sheet and pared our holding Business back to a level just below that held prior to the rights issue.

Strategic Delivery

Share's headline figures mask the strong performance and progress being made to position the Group for future growth. In particular we are tightening our focus on positioning the Group to deliver commercial opportunities and strengthening our existing systems to support a market-leading customer proposition for service, content and price.

We are investing heavily in the Group's information technology ('IT') systems and when this programme of investment is completed, Share's technology infrastructure will be market-leading and will underpin the innovations we have planned to support our customer proposition. As we transform aspects of our operations and service delivery, increased automation should assist in driving the scalability of the Group. New technology will also enable new functionality and new ways for us to engage with customers.

We have delivered against our business strategy of 'Putting Customers First'; 'Focus on our Core Business' and delivering 'Strategic Partnerships or Acquisitions'. These elements are expanded on in more detail in the Strategic Report section below. Our agreements with Barclays and the acquisition of accounts from Henderson Global Investors Limited ('Henderson'), are especially significant and have delivered large numbers of new customers. These agreements reflect the Group's ability to do business with large organisations, to take on services and customer bases and to satisfy both our corporate partners and the end customer. We see growth through these partnerships and acquisitions as being especially important and the Group currently has more opportunities here than it has ever had.

Staff

I would like to take this opportunity to thank all staff for their hard work and continuous focus on delivering for our customers in 2015. We have grown our headcount - particularly in our Technology and Marketing teams - as we invest for the future and I am delighted to welcome the new and talented individuals who have joined us. We have a phenomenal team and a strong and energised Executive, capable of delivering for our customers, partners and shareholders.

Outlook

As we have entered 2016, the market volatility and global economic concerns which led to weak trading volumes in the second half of 2015 have continued. While dealing activity has picked up and we have seen some Initial Public Offerings ('IPO's) coming to market, the slide into a bear market, weighed down by concerns over "Brexit", China and the Middle East and continuing weak commodity prices, does nothing for investor confidence.

We believe we have the customer proposition and the strategy to differentiate ourselves in the market and to deliver significant growth. Current market machinations will pass. Overall social and economic factors are driving an ever increasing need for individuals to save and invest more for their future financial security. Regulation and technology are combining to make advice unattainable for most and facilitating greater confidence in using self-select services, such as those we provide, supported by appropriate tools and resources to aid and simplify decision making.

We believe that we will continue to be successful by continuing to focus on ensuring that we have a deep understanding of our customer, their needs and how to provide them with first class service, helping them navigate the world of investment in a straightforward way. First and foremost we see ourselves as a retail business which operates in financial services. Reflecting this, we have strengthened our retail focus by bringing into the Group, senior executives with large scale retail backgrounds.

With ambition to grow substantially, partnerships and acquisitions will play an important part in our future growth, alongside a continued investment in our own brand and taking that proposition to the market. We hope to be able to announce more such agreements through 2016.

Overall we expect 2016 to be characterised by the key themes of investing, transforming and delivering: investing in our systems, marketing and people; transforming our customer proposition and operational efficiency; and delivering against our strategy. Financially, the balance of 2016 will be heavily towards investment as we position Share for the future and prepare ourselves to deliver services for corporate partners. This will be reflected in the overall performance for the year but we expect to exit 2016 substantially stronger still.

We therefore look forward with confidence and a belief that as the market continues to go through challenging times, our focus on investment, transformation and delivery will position Share plc for long term sustainable profitable growth.

Gavin Oldham

Chairman

9 March 2016

A REVIEW OF 2015

STRATEGIC REPORT - KEY EXTRACTS

Key extracts from the Strategic Report are set out below. The full Strategic Report will be available in the 2015 Annual Report.

DELIVERY OF THE STRATEGY

The business strategy of the Group is based on three key elements: 'Putting Customers First'; 'Focus on our Core Business'; and delivering 'Strategic Partnerships or Acquisitions'.

PUTTING CUSTOMERS FIRST

We continually strive to ensure that customers are at the forefront of all that we do. Our simple flat fee structure that we introduced in July 2013 looks increasingly competitive, compared to other firms who have opted to maintain value-related charging structures, which penalise investors' investment diligence and success. This has been reflected once again in our continued strong rate of transfers-in relative to transfers-out and our fee revenue performance in 2015 relative to our peer group.

We are always listening to our customers and looking at ways of improving the service we deliver to them. In 2015, we launched our first Target Date Funds, a range of 'all-in-one' investment funds designed to help our customers invest for their medium to long-term goals. We also now offer our preferred index tracker funds, handpicked by our analysts for their tracking ability, strong management and low costs. Our three in-house 'Fund of Funds', categorised to investor risk appetite, finished the year with two of the funds first in terms of performance in their whole sector and the other being in third place. The value of funds under management increased by 40% to £50m, which bodes well for investor appetite for these straightforward investment options in 2016.

Whilst the retail appeal of IPOs was reduced in 2015, as we have entered 2016 we have been again acting as an intermediary in a number of offerings, enabling our customers to invest in those companies as they come to the stock market. Finally during the 2015 ISA-season, we extended our opening hours during the week, as well as adding weekend opening in the run-up to the end of the tax year helping ensure that we were there to support our customers when they need us. Going into 2016, our reputation for award-winning Customer Service will be reinforced with further investment in training and looking to extend our opening hours. The impact of this investment will be measured by our service delivery in terms of call and task handling times, quality and customer satisfaction.

Our success in 'Putting Customers First' is measurable through customer testimony, such as that which we are now receiving on Trustpilot - a review site for customers - where our average score was 8.8 out of 10 (2014: 8.8). Having confidence in the service that platforms such as The Share Centre provide, is of increasing importance to investors. In 2015, we won eight industry awards, our highest number ever. This included retaining the Investment Trends research 'Highest Overall Client Satisfaction' and 'Best 'Customer Service' awards, which incorporated the views of over 11,000 personal investors and is the largest annual survey of retail investor opinion undertaken in the UK.

Across many industries, there is increasing demand from consumers for the provision of simple modern technology and service innovation. Share's IT platform which drives our internal processes and customer touchpoints, has been successfully developed within the Business over the last twenty five years. However as technology has advanced, we have recognised the need to invest in our internal operational systems and digital capability, in order to be more innovative with our customer offering.

In 2015, we therefore refreshed our IT strategy which is a core component of the wider strategy for Share. 2016 will be the busiest year of technology change in The Share Centre's history. Our IT strategy defines our technology vision and direction as we strive to enable more people to enjoy straightforward investing. Whilst investor sentiment was subdued, focus in 2015 was placed on building our organisational capability, to ensure we are positioned strongly, as we embark on a transformation of our customer proposition and experience. In 2016 we will deliver new customer enhancements, including our first mobile application, designed specifically for customers to manage their accounts and a re-designed responsive website. This Digital Transformation will enable us to reach out to a wider audience, moving towards an "investor lifecycle", including targeting younger and less experienced investors, who prioritise the user experience when choosing a platform.

Our IT strategy will also see us taking significant steps to migrate to a suite of modern, highly scalable systems that will provide the platform for business growth over the coming years. Importantly, these changes will be implemented in a way that reduces the risks associated with a transformational change programme, with for example, IT changes being tested and released through a phased approach.

2015 saw an increase in cybercrime incidents across the world and this is clearly one of the biggest threats to online businesses such as ourselves. We will therefore also deliver additional mitigation against the risks of cyber threats together with the risks of software failure and business continuity.

FOCUS ON OUR CORE BUSINESS

We continue to be focused on our core business of retail stockbroking - providing custody and transactional services to personal investors either in our own brand or through the brands of other organisations. In February 2016, we announced that we were in advanced discussions to transfer our non-core Authorised Corporate Director ('ACD') role to another party. This move impacts eight funds for which the Group acts as ACD through its Sharefunds Limited subsidiary. Subject to regulatory approval by the FCA, the transfer is due to take effect by August 2016. The exit is expected to have minimal impact on the Group's revenue and profitability but will reduce the Group's risk exposure. The Group will continue to be the manager of the portfolio of three funds of funds we offer our customers and on which we earn a management fee.

We continue to promote our business and brand through our advertising and public relations activities. In 2015, our public relations awareness was particularly strong, with a record amount of press coverage.

STRATEGIC PARTNERSHIPS OR ACQUISITIONS

We have had little material to report in this area in recent years, so in 2015 it was pleasing to be able to report the launch of the certificated dealing services provided by The Share Centre to Barclays customers. Nearly 9,000 Barclays customers have now registered to use this service. Following the success of this, we were delighted to announce in December 2015 that we would acquire up to 3,000 nominee share dealing accounts currently serviced by Barclays Stockbrokers, the largest element of these being Investment Clubs. These services were transferred to The Share Centre in February 2016. Additionally in December 2015, we also acquired around 1,700 Investment Trust ISA accounts from Henderson with assets of over £40m.

These contracts, which we hope will be a precursor to other similar relationships, demonstrate our ability to win in competitive tendering situations and we will look to repeat this success as we identify other prospects. Our focus is on developing relationships with large organisations, whose customers would value an investment service as an extension of that partners' service offering. Although no acquisition opportunities materialised during 2015, we continue to look for any suitable opportunities.

FINANCIAL PERFORMANCE

The second half of 2014 had been challenging from a market perspective and 2015 offered a return to more normal trading conditions. Other encouraging signs were that Government policy was signalling that the ISA was the personal savings vehicle of choice and rule changes would permit Child Trust Fund to Junior ISA switches. However, 2015 turned out to be a more than challenging year. Whilst political uncertainty was reduced by a clear UK General Election result, global market volatility and uncertainty has never really disappeared with the result that retail investors have shied away from the market. Most notably whilst trading volumes usually pick up after a quieter period through the Summer, volumes this year were weak, especially towards the end of the year.

Nevertheless, our revenue generation was stronger than our peer group, helped by our more balanced revenue model which generates predictable recurring revenue. The key elements are set out in more detail below.

REVENUE

Overall revenue at £14.1m decreased by 6% (2014: £15.0m). Whilst disappointing, this performance was ahead of the market as a whole and enabled the Group to grow its market share further.

Commission income

Commission reduced slightly by 3% to £6.4m (2014: £6.6m) reflecting subdued investor activity driven by stock market volatility, particularly in the second half. ComPeer, an independent company which gathers and provides data and analysis to the wealth management community, estimates that on-exchange trades by retail firms fell by 5% in 2015 compared to 2014.

Despite being our lowest commission revenue for three years, our commission performance compared favourably with the peer group, which experienced a decrease of 12%, indicating that the impact of the industry trend of lower trading volumes was less pronounced for the Group. The certificated dealing service for Barclays, launched in April 2015, generated healthy commission but, as seen in our wider business, volumes in the second half were more subdued. In anticipation of the Retail Distribution Review ('RDR'), The Share Centre was amongst the earliest in our market both to start and complete the conversion of their customers' fund holdings to 'clean' share classes (those that do not pay trail commission and which typically have a lower annual management charge). In contrast, we believe that some in our sector have belatedly had to accelerate the conversion of their customers' fund holdings to these 'clean' classes. This early conversion has though resulted in our trail commission ending in 2014, earlier than others in the sector and consequently adversely impacting our 2015 reported revenues by c.£0.4m.

Fee income

Revenue from fees reduced by 3% from £6.6m to £6.4m, compared to a fall of 8% for the peer group. Whilst the Group saw strong transfer-in activity of accounts, new account acquisition was reduced on 2014. This reflected trends in the wider market as highlighted by the July 2015 UK Online Broking Report by Investment Trends, which estimated that a record number of investors (177,000 of 870,000 online investors) became dormant in the year to July 2015 and that the number of new to the market investors was the lowest seen since 2010.

The peer group's reduction in fees may partly be explained by loss of trail commission discussed above, that has required companies to review their charging structures towards fee-based charges. Some of these fee-based charges are based on the value of a customer's holding and therefore increase or decrease with the value of that holding, or in some instances are waived based upon the trading activity of a customer in a period. In contrast, The Share Centre's fixed administration fee does not relate to the value of a customer's holdings or trading activity. As the market share data suggests, this positions The Share Centre very competitively, especially against value-related fee structures and particularly in weak markets.

Interest income

Whilst cash held on behalf of customers at 31 December 2015 was up 6% on the same period last year to £179m, interest income reduced by 31% to £1.3m (2014: £1.8m). This was mainly due to two reasons. Firstly, client money term deposits that were historically placed at higher rates, matured into a lower interest rate environment, an environment which has seen banks reducing their rates during 2015 and into 2016. Secondly, in 2015 we saw the full year effect of the changes to the Client Asset rules in July 2014, where firms such as ours became unable to use unbreakable term deposits of more than 30 days. Historically where we used these deposits, the interest rate that we could earn on client money was higher.

Excluding interest income, revenue decreased by 3% but was flat if also excluding the impact of trail commission, this is also outside our control. With the reduction of interest income, the revenue mix between commission, fees and interest shifted to 45%, 46% and 9% respectively in 2015 from 44%, 44% and 12% respectively in 2014.

The Group has always placed a high degree of importance on the quality of revenue and the level of recurring revenue represented by fees and interest, which with the reduction in interest income, decreased in 2015 to £7.7m (2014: £8.4m) and covered 51% of the Group's costs (2014: 58%).

COSTS

Whilst overall costs for the year increased by 2% to £14.9m (2014: £14.7m), this was driven by an increase in transactional costs from £1.5m to £1.9m as a result of launching the Barclays service. Overheads of £13.0m (2014: £13.2m) were down 2%, highlighting good overall cost control.

Staff costs rose by 5% to £7.3m (2014: £7.0m), due to our strategic decision to strengthen our IT and Digital Marketing expertise, as we invest in our systems and transform our customer proposition. There was only limited headcount growth in our customer facing and support functions, despite launching the Barclays service, highlighting the scalability of the core business. There were one-off costs of £0.1m, relating to senior management changes and restructuring costs. Recruitment fees were also higher due to an increase in staff turnover.

The second largest cost incurred by the Group is marketing. The challenging market conditions reduced the opportunities for customer account acquisition and whilst we were keen to maintain brand presence, our spend decreased by 19% to £1.9m (2014: £2.3m). Enhancing our digital marketing capability should allow us to reduce our use of some third parties for some services. Finally, share-based payment charges for long term equity incentives were higher at £0.6m (2014: £0.5m). The share-based charge is recorded as a cost and then credited back to reserves as it does not impact the financial resources of the Business.

Overall staff costs and marketing spend together totalled £9.8m (2014: £10.0m) being 65% (2014: 69%) of total costs. Other expenditure relates to premises, IT systems and professional fees. Finally the Group incurs regulatory fees and levies and irrecoverable VAT. In 2015, our costs in respect of the Financial Services Compensation Scheme ('FSCS') were 40% higher at £478,000 (2014: £342,000). The basis of allocation for the FSCS levy is based on past revenues rather than taking into account the risk profile of firms and the amount of capital that they hold. This levy remains a material cost for the Group, unpredictable and beyond our control.

PROFITABILITY

Group profits decreased in the year as a result of the lower commission from reduced trading volumes, lower interest income and the increase in transactional costs. As a result, the Group made an overall operating loss of £0.9m (2014: operating profit £0.3m). During 2015, we sold 77,000 of our 222,727 shares in the LSE, realising proceeds of £1.9m, which further strengthened the Company's balance sheet. A profit on sale of £1.7m was recognised in our consolidated income statement. Following an impairment review, we have written down the holding cost of our investment in WAY Group Limited by £0.2m.

The Board believes that underlying earnings per share which strip out one-off items (such as the sale of the LSE shares) and non-cash share-based payment charges, better reflects the performance of the Business. On this basis, earnings decreased to 0.4p (2014: 1.0p). At a reported level, earnings per share increased to 0.5p (2014: 0.4p restated).

DIVIDENDS

The Board of Directors is proposing a final dividend of 0.74p per share (2014: 0.62p), which at 19% again represents growth of nearly 20% on the prior year dividend. As discussed above, this dividend is supported by the sale of the LSE shares, as well as the Group's strong cash position. Going forward, we have adopted a new dividend policy based on earnings and cash generated.

The proposed dividend will be paid on 15 June 2016 to shareholders on the register on 13 May 2016, subject to approval at the Annual General Meeting.

BALANCE SHEET

The Group's balance sheet remains very strong with no debt and significant cash balances of £11.7m (2014: £12.7m). Whilst the sale of our shares in the LSE realised proceeds of £1.9m, as part of Gavin Oldham's offer of shares in June 2015, Sharesecure Limited (a Trustee of the Employee Benefit Trust) purchased 3.7m shares for £1.2m.

The Group's financial position is further strengthened by high quality available-for sale investments of £7.6m (2014: £9.0m), primarily in the LSE and Euroclear plc, the largest international central securities depository in the world. The dividends from these investments totalled £207,000 (2014: £198,000), which is substantially in excess of the current interest return on Group cash.

The decrease in the carrying value of our shares in Euroclear plc to £3.3m (2014: £3.6m), predominately arising from the reduction of the value of the Euro in the period, reflects the estimated fair value of each share. After the write down of the investment in WAY Group Limited, the only other significant investment that the Group holds to which it attributes a carrying value is Professional Partners Administration Limited, valued at £0.2m.

Overall shareholder funds as at 31 December 2015 were £18.7m (2014: £20.7m). This represents 13.0p per share in issue (2014: 14.4p). The remaining working capital balances on the balance sheet principally reflect the open customer positions with the Group and the market, i.e. unsettled customer sales and purchases, which all effectively net to zero as each side has both an asset and a liability with the Group as agent in the middle. Finally the remaining balances net to a small liability largely in respect of non-current deferred tax.

KEY PERFORMANCE INDICATORS

The Group uses a number of key performance indicators to monitor and measure its progress through the year. These are both quantitative and qualitative, and relate to activity levels as well as financial metrics. The key performance indicators discussed below are consistent with those disclosed in previous Annual Reports.

BUSINESS PERFORMANCE

MARKET SHARE

The principal key performance indicator, on which the Group reports quarterly, is its market share of benchmarked revenues. This is measured using the peer group of eight other retail stockbrokers and serves to identify whether our performance is exceeding that of our peers, irrespective of underlying market trends which affect the industry as a whole. The data for the measurement of this indicator is drawn from ComPeer.

This data shows that the Group has outperformed its peers during the year in terms of revenue growth. Overall revenues for the Group decreased by 6% compared to the collective peer group which experienced a decrease of 8%. For the year as a whole, our market share increased to a record 7.79% (2014: 7.66%). The fourth quarter data showed a market share of 7.17% (Q4 2014: 7.61%).

Marketing and customer

We measure the levels of interactions with customers and prospective customers through a range of metrics. As for other online businesses, these metrics include our website up-time and analysing our marketing "funnel" from website traffic to accounts opened (including transfers-in from other brokers). Our website continues to attract high numbers of visitors and remains the predominant route through which new accounts are opened. In 2015, the average monthly number of unique visitors grew to over 173,000 (2014: 160,000). We also report our customer activity and income which they generate by product. At the end of 2015, there were 248,000 accounts which contained assets (2014: 251,000). Whilst net new account acquisition was positive during the year, we took the opportunity to close a number of dormant and empty accounts.

We also closely measure the level of customer satisfaction, primarily through Trustpilot, a review site for customers, where our average score in 2015 was 8.8 (2014: 8.8) and with over two thirds of our 400 reviewers giving us the full five star rating. In 2015, we received 2.18 complaints per 1,000 customers. This was a decrease on the levels we experienced in 2014 (2.86 per 1,000). We continue to have very low levels of complaints referred to the Financial Ombudsman, with just seven in 2015 (2014: eight), with only one upheld against us (2014: none).

People

The high levels of customer satisfaction that we aspire to are only achievable with the dedication and commitment of our employees. We are very proud of the people we employ who are all critical to our customer proposition. We monitor levels of headcount, staff costs and absence on a monthly basis. At 31 December 2015, due to the investment explained above, our headcount increased to 169 (2014: 149). We also assess staff turnover rates which in 2015 increased to 22% (2014: 15%). The ratio of male to female employees is approximately 4:5.

Our core values, in particular Respect for Others, underpin the way we interact with our customers but also with each other. We offer our employees a range of benefits including the contribution of 8% of base salary into a pension of their choice, participation by all employees in the Group's profit share arrangements which pays a profit related bonus, and a Share Incentive Plan with 2:1 matching of employee contributions. This latter benefit means a significant proportion of our employees are shareholders, with nearly 120 employees making regular monthly contributions into the scheme.

In 2015, we repeated the annual staff survey first conducted in 2011. This again showed strong levels of satisfaction amongst our employees with 87% (2014: 91%) of staff agreeing with the assertion "I am proud to work for The Share Centre" and 87% (2014: 91%) of staff agreeing that they "would recommend The Share Centre as a good employer".

FINANCIAL

REVENUE

We monitor the absolute levels of revenue and the mix between the different revenue streams. Data for these metrics is given in the 'Review of 2015' section of the Strategic Report above.

OPERATING MARGIN

We monitor the level of operating margins as explained above where the data for 2015 is given. As a result of the changes to the Client Asset rules, the potential for generating interest income and growing operating margins is reduced but as revenues expand further, and when interest rates return to historically more normal levels, we would expect to see this margin increase significantly.

ASSETS UNDER ADMINISTRATION

The level of assets under administration measures the collective value of the investments and cash held by our customers. We look at this in both absolute terms and at the rate of change relative to overall market levels. At the end of the year, this value was £2.8bn (2014: £2.5bn), an increase of 10%, which even with the impact of acquiring the accounts from Henderson, shows significant growth compared to a decrease of 2.5% in the FTSE All Share index over the same period. The increase of 10% was shared between funds and equities but with funds showing a more significant growth than seen in 2014, highlighting the attractiveness of our fixed fee pricing. A rate of increase greater than the market as a whole indicates the Group's ability to attract new accounts, additional investment from existing customers and new partnerships or acquisitions. As a proxy, assuming our customers performed in line with the FTSE All Share index this would imply a net inflow of funds of c.£320m during 2015 (2014: £260m).

CASH FLOW

The Group's full cash flow statement is presented below. We monitor cash flows on a monthly basis and in particular review the Group's ability to translate post-tax profits into cash.

FINANCIAL RESOURCES

Two of the entities within the Group are regulated by the FCA (The Share Centre Limited (FCA registration number: 146768) and Sharefunds Limited (FCA registration number: 227807)). This means that the Group has to hold a certain amount of regulatory capital. The Group has a stated policy to maintain at least twice the amount of regulated capital required. In recent years as profits and cash generated have been retained the level of capital has increased relative to the minimum required. As at 31 December 2015, the Group was holding 3.6 times the capital required by the FCA for 2016 (2015: 6.4 times).

The Group has in place an Internal Capital Adequacy Assessment Process ('ICAAP'), which assesses the level of capital and financial resources that the Business should hold. In summary, the Pillar II requirement (being the amount that the Group has to hold, as it is in excess of the Pillar I requirement) is £5.1m for 2016 (2015: £3.1m). Full details of our capital requirements are required to be disclosed under Pillar III of the Capital Requirements Directive and can be found on our website - www.shareplc.com.

PROSPECTS

During 2015, the Business has significantly increased its investment in people and systems. As outlined in our 2014 Annual Report, the Board believes there is a market opportunity arising out of demographic change, regulatory change and the general increased awareness of the need to save and the increased capability and confidence to do that on a self-select basis facilitated by technology.

In 2015 we have reshaped the senior management team, increased headcount, particularly in IT and Marketing, and started a programme of investment. Through investing in the future of the Business we will transform our customer proposition and our efficiency and scalability and delivery a bigger, bolder and more profitable enterprise for all stakeholders.

To be successful in this endeavour we will pursue our clearly defined strategy which has been set out consistently by the Board over recent periods.

Putting Customers First

Transforming our digital proposition is a key aspect of our intentions going forward. This will involve launching our mobile app during 2016 and looking for every opportunity to simplify the customer experience. We strongly believe investing should be an enjoyable enterprise and the complexity of language and process which normally surrounds financial services contrasts against the simple, easy-to-use experience which customers are used to in the rest of their lives. We will continue to invest in new tools, improved research and providing guidance to help customers navigate the different investment types and account wrappers so that they can make clear decisions which are most suitable for their needs.

Focus on the Core Business

At the heart of the Business is the customer relationship, which is reflected in our focus on putting the customer first. That relationship is based on the provision of custody for the customer's assets and the facilitation of trading in those assets. We will continue to ensure we remain focused on that provision of custody and transaction services for the personal investor.

We expect the process to move the ACD responsibilities away from Sharefunds to another ACD completing during 2016. We will then look to cease operating Sharefunds Limited as a separate subsidiary. The three Funds of Funds we offer - currently through the SF Portfolio - will remain a core part of The Share Centre's proposition. They allow an easy access point for retail investors into what is an otherwise complex and crowded funds market. The performance of these funds of funds has been particularly strong in 2015. The Group will continue to manage these funds and the decoupling from Sharefunds, should enable us to look at expanding the distribution channels for these funds helping grow funds under management.

Strategic Partnerships and Acquisitions

Retail investment service firms such as The Share Centre have experienced a number of significant challenges to their business models. We too have been affected although not to the same extent. We believe that this is because of our focus on the long term stability of the Group and the more balanced revenue model that we have operated. The loss of interest income as rates have remained low and the loss of trail commission - both of which have also been impacted by regulatory change - have caused firms to run losses and require additional capital. We believe that these changes may drive opportunities in the market for The Share Centre.

We have seen this already in our agreements with Barclays to provide their certificated dealing service and taking on their investment club, corporate and charity accounts. We were also able to acquire some ISA accounts from Henderson.

The Group is in discussions on a number of other corporate relationships which could deliver significant benefits to the Group. There is, of course, no certainty that these will materialise, but our increasing number of successes provides a track record of delivery to help win other opportunities. Financially these opportunities typically have a lag in that some development work and investment is required on our part up front, ahead of the opportunity delivering customers and revenues.

Overall Outlook

The Board remains very positive about the overall prospects for the Group. We believe that the macro conditions remain favourable, albeit tempered by some short term uncertainties and volatility. The competitive landscape is also encouraging as difficulties faced by others may present the Group with opportunities. In that context the Board is confident in investing in the Business, transforming the proposition and delivering for stakeholders. Near term financials will be impacted by the continued market volatility and investment in the Business but there should be a substantial positive impact from 2017 onwards, particularly if some of the partnership opportunities materialise.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties facing the Group may change over time as new risks emerge and others cease to be of concern. The ongoing identification, understanding and mitigation of risks forms part of the ICAAP and is core to the decision making processes within the Group. The Group's operational risk monitoring system consists of a combination of the 'bottom up' monitoring work, evaluation of departmental controls and review by the Compliance Team, combined with the 'top down' approach of the Risk Sub-Committee (which utilises the Risk Register as a template for regularly examining and measuring each identified element of risk). The Risk Sub-Committee reports to the Audit and Risk Committee and ultimately the Board, ensuring that the Board regularly reviews and challenges the Group's risk profile.

The principal risks to the Group are detailed below. The Directors believe that the identified risks have been addressed and where possible, and within the Group's control, mitigating actions have been taken to ensure processes and procedures are in place and followed to limit any impact which could arise.

CONSOLIDATED INCOME STATEMENT

YEAR ENDED 31 DECEMBER 2015

All results are in respect of continuing operations.

* The Directors consider that the underlying earnings per share as presented in Note 7 represent a more consistent measure of the underlying performance of the Business as this measure excludes the impact of some items, including any large non-recurring items. 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER 2015

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

YEAR ENDED 31 DECEMBER 2015

NOTES TO THE PRELIMINARY ANNOUNCEMENT

1 GENERAL INFORMATION

Share plc is a company incorporated in the United Kingdom under the Companies Act. The address of the registered office is Oxford House, Oxford Road, Aylesbury, Buckinghamshire, HP21 8SZ. The nature of the Group's operations and its principal activities will be set out the in Strategic Report in the Group's Annual Report for 2015, which will be available as set out in Note 9 below.

The financial statements are presented in pounds Sterling which is the currency of the primary economic environment in which the Group operates.

2 BASIS OF PREPARATION

The financial information contained in this preliminary announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information is extracted from the 2015 Group financial statements which have yet to be signed and which have been prepared in accordance with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB (together "IFRS") as endorsed by the European Union.

In the current year, the following new and revised Standards and Interpretations have been adopted and have had no impact on these financial statements:

- Amendments to IAS 19 Defined Benefit Plans: Employee Contributions

- Annual Improvements to IFRSs: 2011-2013 Cycle which include:

- IFRS 2 Share-based Payment

- IFRS 3 Business Combinations

- IFRS 8 Operating Segments

- IFRS 13 Fair Value Measurement

- IAS 16 Property, Plant and Equipment

- IAS 24 Related Party Disclosures

- IAS 38 Intangible Assets

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not yet been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

- Amendments to IAS 1 Disclosure Initiative

- IFRS 9 "Financial Instruments"

- Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations

- IFRS 14 Regulatory Deferral Accounts

- IFRS 15 "Revenue from Contracts with Customers"

- Amendments to IAS 16 & 38 - Clarification of Acceptable Methods of Depreciation and Amortisation

- Amendments to IAS 27 - Equity Method in Separate Financial Statements

- Improvements 2014 - Annual Improvements to IFRSs: 2012-2014 Cycle effective from 1st January 2016.

Other than to expand certain disclosures within the financial statements, the directors do not expect that the adoption of the standards and interpretations listed above will have a material impact on the financial statements of the Group in future periods.

The Group accounts consolidate the financial statements of the Company and its subsidiaries, The Share Centre Limited, The Share Centre (Administration Services) Limited, The Shareholder Limited, and Sharefunds Limited, which all make up their annual financial statements to 31 December. Other subsidiaries are not included in the Share plc consolidation as they are not trading and not material to the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

The Group has considerable financial resources and no external debt. With a diversified customer base and core recurring revenue streams along with large elements of discretionary spending in the Group's cost base, the directors believe that the Group is well placed to manage its business risks successfully despite the uncertain economic outlook. Therefore, after making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the going concern basis has continued to be used in the preparation of these financial statements.

The Group's detailed accounting policies are as detailed in the full financial statements which will be published shortly as per Note 11 below. These policies are consistent with those applied in the financial statements for the year ended 31 December 2014.

2014 Restatement

IAS 19 requires companies to accrue for accumulated paid absence not taken by staff at the year end. A cost of £98,000 has been applied retrospectively for 2014, as this is now a material amount to the Group. Administration fees of £22,000 were identified relating to 2014 within Sharefunds Limited and have also been adjusted to recognise the revenue within the period that it was earned.

The effects of the restatement are as follows:

Balance Sheet

Of the holiday pay provision reduction in equity funds of £78,000, £83,000 debit relates to the periods to 1 January 2014 and £5,000 credit relates to the year ended 31 December 2014.

3 BUSINESS AND GEOGRAPHICAL SEGMENTS

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. The reportable segments are therefore represented by the following two business divisions:

The Share Centre - this is the main trading business and provides stockbroking and custodian services to retail investors. Operating wholly in the UK, the great majority of this business is done directly with those retail customers, though in some cases the relationship is through a third party, typically on a white-labelled basis.

Sharefunds - this is the division which operates a fund administration service. The division's customers are authorised funds for whom a range of administration services may be provided. This can include taking on the role of Authorised Corporate Director. In addition to external third party funds, Sharefunds acts as investment manager to Sharefunds' three Funds of Funds.

The split of revenues and operating profit are therefore as below.

It should be noted that the accounting policies of the reportable segments are the same as the Group's accounting policies described in Note 2 and that there were no major customers contributing more than 10% of revenues in the Group as a whole. The assets of the Group are principally used by The Share Centre. The services offered by the Group vary by business division as described above. However, within each business division there is only one principal revenue stream and therefore there is no separate or further segmentation by service offered. Sharefunds has no material assets which would meaningfully be separated from The Share Centre, other than cash of £556,000 (2014: £430,000).

In the year the group sold 77,000 LSE 5p ordinary shares at £25.14 receiving a consideration of £1,9m.

The average weighted cost of the shares to the Group was £2.77 per share. The Group also wrote down the holding cost of the available-for-sale investment in the WAY Group Limited by £235,000 and Professional Partners Administration Limited by £11,000. In 2014, the Group sold 14,384 Asset Match shares at £4.20 receiving a consideration of £60,000.

5 TAXATION

The tax assessed for the current year can be reconciled to the profit per the income statement as follows:

In addition to the amount charged to the income statement, deferred tax relating to the revaluation of the Group's investments amounting to £197,000 (2014: £389,000) has been debited directly to other comprehensive income. A current tax credit of £12,000 (2014: £80,000) and deferred tax charge of £1,000 (2014: credit of £18,000) relating to excess deductions on share-based payments have been taken directly to equity.

The current year tax rate used above (20.25%) arises from the reduction in the corporation tax rate on 1 April 2015 form 21% to 20%. The standard rate of corporation tax in the UK will change from 20% to 19% with effect from 1 April 2017, and 18% with effect from 1 April 2020 as per the Finance Act (No. 2) 2015, enacted on 18 November 2015.

6 DIVIDENDS

The Directors are proposing a final dividend of 0.74p per share in respect of the year to 31 December 2015. This would amount to a gross dividend payment of £1.1m given the current share capital.

7 EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares during the year.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue assuming conversion of all potential dilutive ordinary shares. The potential ordinary shares consist of those share options and warrants where the exercise price is less than the average price of the Company's ordinary shares during the year. The calculation results in a difference of only a small fraction of a penny, which is eliminated in roundings.

Underlying basic and diluted earnings per share are calculated as for basic and diluted earnings per share but using an adjusted earnings figure before any one-off gains, losses, income or expense. The Directors consider that the underlying earnings per share represent a more consistent measure of the underlying performance of the Group.

8 NOTES TO THE CASH FLOW STATEMENTS

9 AVAILABILITY OF REPORT AND ACCOUNTS

The Group's full report and accounts will be dispatched to shareholders, including those in nominee accounts who have opted-in to receive it, as soon as is practicable. Copies will also be available on the Group's website, www.shareplc.com, and on request from the Group's head office at Oxford House, Oxford Road, Aylesbury, Buckinghamshire, HP21 8SZ.

10 ANNUAL GENERAL MEETING

The Annual General Meeting is to be held on Wednesday 8th June 2016. Notice of the AGM will be despatched to shareholders with the Group's report and accounts.

11 PRELIMINARY ANNOUNCEMENT

The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 31 December 2015 or 2014. The financial information for the year ended 31 December 2014 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, it did not draw attention to any matters by way of emphasis without qualifying their report and it did not contain a statement under s498(2) or (3) Companies Act 2006. The audit of the statutory accounts for the year ended 31 December 2015 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies before the Company's Annual General Meeting.