SHRE.L Regulatory News (SHRE)

Share plc - Press Release

Preliminary Results for the Year Ended 31 December 2011

Share plc (AIM: SHRE.LN), parent company of The Share Centre (a leading independent retail stockbroker and operator of Sharemark, the trading platform for growing companies) and Sharefunds (the Group's investment management and fund administration subsidiary), announces its unaudited results for the year ended 31 December 2011.

Highlights

§ Underlying revenue(*) increased by 7% and underlying operating profit(*) increased by 43% to £14.3m (2010: £13.3m) and £1.6m (2010: £1.1m) respectively

§ Overall revenues decreased by 9% and operating profit decreased by 49% to £14.3m (2010: £15.6m) and £1.6m (2010: £3.0m) respectively

§ Growth in benchmarked revenue market share to 6.1% (2010: 5.6%(*))

§ Adjusted (**) basic and diluted earnings per share decreased to 1.0p (2010: 1.7p)

§ Final dividend proposed increases by 20% for 2011 to 0.36p per share (2010: 0.30p)

§ Strong balance sheet with significant capital resources

(*) excludes the impact of the Group's Interest Rate Floor Policy which expired in November 2010.

(**) excludes the impact of some items, particularly any large non-recurring items, as defined in note 7 to this preliminary announcement. Basic and diluted earnings per share decreased to 0.9p (2010: 1.5p)

Sir Martin Jacomb, Chairman, commented on the results:

"The Share plc Group has delivered another good set of results in 2011 in spite of challenging market conditions. The benefit of the Interest Rate Floor Policy (IRFP) in the 2010 results masks good underlying growth in revenue and profits.

Through its retail stockbroking business, The Share Centre, the Group aims to offer industry leading stockbroking services to personal investors. The attractiveness of this offering has helped us further increase our market share. We continuously seek to improve and develop our services and have already launched a new competitive range of ISAs in 2012. The business is characterised by the high level of engagement from our customers and the high standard of customer service delivered by our staff, for which we are very grateful.

Looking forward, management is focused on delivering increased revenues. This is underpinned by continued growth in the market for online self-select investment services, combined with the scalability of the business model and potential upside arising from any increase in interest rates. Against a backdrop of challenging conditions for personal investors this growth may be constrained in the near term, but the Board has significant confidence in the Group's longer term ability to grow and expand margins."

Gavin Oldham - Chief Executive 01296 439 100 / 07767 337 696

Richard Stone - Finance Director 01296 439 270 / 07919 220 599

Stephanie Reynolds - PR Manager 01296 439 256

Guy Wiehahn / Emma Riza 0207 418 8900

Peel Hunt LLP Nominated advisor

Zoe Biddick / Sophie McNulty 020 3178 6378

Biddicks Financial PRRisk 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 Services 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. Sharemark is an auction-based dealing facility designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. The securities traded on Sharemark may not be listed. The Sharemark trading facility is operated by The Share Centre Limited. The Share Centre is a member of the London Stock Exchange and is authorised and regulated by the Financial Services Authority under reference 146768. Sharemark constitutes a Multilateral Trading Facility and is not a recognised investment exchange, clearing house or regulated market within the meaning of the Markets in Financial Instruments Directive.

Notes for Editors:

1. Share plc is the parent holding company of The Share Centre Limited and Sharefunds Limited and its shares are traded on AIM and also on Sharemark (www.sharemark.com), the auction-based trading platform designed especially for growing companies.

2. 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 stock market.

3. Retail services include Share Accounts, ISAs, CTF accounts and SIPPs, all with the benefit of investment advice, and dealing in a wide range of investments.

4. Services available to corporate clients include share plan administration, fund administration and 'white-label' dealing platforms.

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

Chairman's Statement

Overview of 2011

I am pleased to present the 2011 Annual Report for Share plc. The Group has performed well in challenging market conditions, underpinned by our strong service culture, financial strength and recurring revenue streams. Our underlying performance shows encouraging growth. In particular, we have continued to grow our market share (to 6.1% from 5.6% last year) as well as improving our underlying operating margin to 11% (2010: 8%). As a result, underlying revenues increased 7% whilst underlying operating profit increased over 43%.

The decline in the headline figures reflects the impact of the continuing environment of historically low interest rates following the expiry of our Interest Rate Floor Policy (IRFP) in November 2010. This was expected and highlighted by management in our 2010 Annual Report. As noted above, the underlying performance of the Group excluding the impact of the IRFP shows that revenues and profits grew in 2011 and are responding to a number of strategic initiatives.

Group strategy

The strategy of the Group continues to focus on the main UK-based retail stockbroking business - The Share Centre. Enabling more people to enjoy straightforward investing has been at the core of the Group's activities since The Share Centre started trading 20 years ago. Increasing volumes, and thus revenues, particularly through the delivery of first class customer service, remains our principal objective. This requires services and tariffs which are appropriate for personal investors, regardless of their individual wealth or trading preferences.

We believe that delivery of growth in customer accounts and activity, if serviced by scalable and efficient operations, will lead to increased revenues and enhanced financial performance. Our aim remains to deliver a rate of growth so that the Group can grow to a size which would merit inclusion in the FTSE-350.

We have introduced a number of service changes during 2011 designed to accelerate revenue growth, including more focus on those who trade frequently, a comprehensive range of Junior ISAs, and a new primary fundraising service for SMEs. We have been awarded 'best small cap broker' for the third year in succession by Shares magazine.

All our services are well supported by both marketing and public relations, where we consistently achieve a share of voice alongside the market leaders. We are making more use of video in this respect to draw attention to our approachability and customer service standards.

Our other operations, in addition to retail stockbroking, comprise Sharemark and Sharefunds. Sharemark has significant opportunities in the future if capital raising share issues by smaller companies begin to flow. In respect of Sharefunds, external conditions are changing as a consequence of increased regulatory scrutiny being applied to hosted fund arrangements. This has led us to review our approach in this area, a review which is still under consideration.

Financial performance

Excluding the impact of the IRFP, total revenue for the year grew by 6.9% to £14.3m (2010: £13.3m) and operating profit increased by 43.4% to £1.6m (2010: £1.1m). This reflects a considerable increase in the underlying operating margin from 8% to 11%. The Board believes that this is still significantly lower than the business is capable of delivering in the medium term as the Group scales up and interest rates return to more normal levels. It is worth noting that, excluding the IRFP, 60% of revenues were recurring, being derived from fees and interest, as compared to 54% in 2010.

The Group's growth in market share of revenues as measured against a peer group(*) of nine other retail stockbrokers has been particularly encouraging. This market share increased to 6.1% from 5.6% (excluding the IRFP) in 2010. In Q4 2011, market share was 6.49% (Q4 2010: 6.29% excluding the IRFP).

The Group's balance sheet continues to be very strong with £10.5m of its own cash resources (2010: £11.0m) and overall shareholder funds of £16.1m (2010: £15.4m) which amounts to just over 11 pence per share in issue.

Dividend

For the year ended 31 December 2011 the Board is proposing a dividend of 0.36 pence per share (2010: 0.30 pence per share). I am pleased that this continues the policy of 20% growth per annum in the dividend per share, reflecting the Board's confidence in the stability, financial strength and growth prospects of the business. Subject to approval at the Annual General Meeting, the proposed dividend will be paid on 27 June 2012 to shareholders on the register on 25 May 2012.

Shareholders

Participation is a strong principle which underpins the Group. There is a significant mutual benefit to be gained from creating an environment in which there is a significant overlap between customers, shareholders and employees, resulting in a virtuous alignment of interests which benefits all. To that end, I am pleased to announce that from July 2012 we will be enhancing our shareholder benefit so that holders of 500 or more Share plc shares will enjoy a 30% discount on all deals transacted online through their accounts with The Share Centre. This reduces their minimum dealing commission to £5.25, one of the lowest rates in the market.

People and awards

As I noted above, delivery of first class customer service and efficient operations are two key aspects of our business. These successes can only be achieved with the dedication and commitment of all employees. We recognise the importance of our people in a number of ways with every member of staff receiving a quarterly payment linked to the profits of the business and being able to participate in the Group's Share Incentive Plan. The large majority of our employees own shares in Share plc. The Board would like to thank all of the Group's employees for their hard work and achievements during 2011, and welcomes re-accreditation under the Investors in People scheme last autumn.

The Board has been strengthened over the past year by the appointment of Francesca Ecsery, formerly Global Business Development Director at Cheapflights Media. Francesca's experience of online marketing provides significant non-executive input to a vital part of the Group's strategy.

It is particularly pleasing when the Group's performance is recognised by others. I am delighted that this year has seen the Group win a number of awards. In particular I would highlight the Financial Times and Investors Chronicle Award for Best Online Broker and the Highest Overall Client Satisfaction Award from Investment Trends. These both speak to the delivery of first class customer service and our online offering - www.share.com.

Campaigning

The Group has always worked hard for the interests of personal investors and 2011 was no exception. The European Commission's MiFID review challenged the concept of execution-only investing in shares, and our initiative resulted in hundreds of e-mails being sent to Brussels to object. We are pleased to be able to report that the idea has now been comprehensively dropped.

Other issues we have campaigned on during the year include financial education for young people and the re-privatisation of the bank shareholdings, where we support plans for a general distribution based on individual registration of interest.

Current trading and outlook

The Group delivered good underlying growth during 2011 against a backdrop of challenging markets. Across the sector as a whole, 2011 divided into three good quarters followed by a weaker fourth quarter where valuations remained weak and dealing volumes were subdued. Despite these challenges, Share plc was able to grow its market share in Q4, a testimony to the strength of our offering.

2012 started with a rally in market values which increased by 5% between the end of December and the beginning of February, although dealing volumes were still subdued. Continuing economic austerity might appear to have diverted investors' attention, but the stock market has regained a considerable amount of ground as it looks ahead. While uncertainties remain in the Eurozone and with the forthcoming US elections, corporate earnings and cash balances remain strong and emerging markets continue to do well. The stock market thrives on anticipation rather than current conditions, and with the financial crisis now well into its fifth year we are optimistic that market conditions will continue to show improvement throughout 2012.

The Share Centre aims to offer an industry leading combination of service and rates and this will continue to underpin our success. To this end, in 2012 we have already launched a new range of ISAs with a flat annual charge of £50 (plus VAT) designed to appeal to the market as we enter the main 'ISA season' around the end of the tax year. We are also investing in the delivery of mobile access to facilitate customers' dealing requirements and in new technology to support our website. These projects have now started and will complete during 2012.

Overall, given a slow start to the year relative to 2011 and the investments we are making, we see 2012 as likely to deliver reasonably robust results, but unlikely to reflect the revenue and profit growth which we believe the business can achieve in the medium term.

The Board believes the independence, financial strength and recurring revenues within our business model provide a very firm foundation on which to build. This gives the Board confidence in the Group's long term prospects and in particular its ability to grow revenues and expand margins as market activity and interest rates return to more normal levels.

Sir Martin Jacomb

Chairman

6 March 2012

* The peer group comprises: Alliance Trust Savings, Barclays Stockbrokers, Equiniti, Halifax Sharedealing (HBoS), HSBC Stockbrokers, NatWest Stockbrokers (RBS), Saga Personal Finance, Selftrade and TD Waterhouse Investor Services Europe.

Consolidated Income Statement

All results are in respect of continuing operations.

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

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated statement of changes in equity

Consolidated cash flow statement

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 in the Business Review in the full annual report which will be published in due course.

The preliminary announcement is 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 2011 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.

At the date of this preliminary announcement, the following Standards and Interpretations, which have not been applied, were in issue but not yet effective. New standards, amendments and interpretations issued but not effective and yet to be endorsed by the EU are as follows:

- IFRS 9, 'Financial instruments'

- IFRS 10, 'Consolidated financial statements'

- IFRS 12, 'Disclosures of interests in other entities'

- IFRS 13, 'Fair value measurement'

- IAS 19 (revised 2011) 'Employee benefits'

- IAS 27 (revised 2011) 'Separate financial statements'

- Amendment to IAS 12, 'Income taxes' on 'deferred tax'

- Amendment to IFRS 7, 'Financial instruments: Disclosures'

- Amendment to IAS 1, 'Presentation of financial statements' on 'OCI'

The directors do not expect that the adoption of the standards 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 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's business activities, together with the factors likely to affect its future development, performance and position, will be set out in the Business Review of the full Annual Report for 2011 to be published shortly (see note 10). This will also include a discussion of the Group's cash flows and liquidity position as well as details of how the Group manages risk. The notes to the Financial Statements will include a discussion of credit and liquidity risk.

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 this preliminary announcement.

The Group's detailed accounting policies are as detailed in the full financial statements which will be published shortly as per note 10 below. These policies are consistent with those applied in the financial statements for the year ended 31 December 2010.

3 Revenue

An analysis of the Group's revenue is as follows:

4 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 three business divisions:

The Share Centre - this is the main trading business and provides stockbroking and custodian services to retail investors. The vast 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.

Sharemark - this is the division which operates an alternative share market on which Share plc shares, amongst others, are dealt. This business division has a corporate customer base being those clients whose securities are traded on the Sharemark platform. The market can also be provided as a trading platform to third parties on a white-label basis and Sharemark may generate consulting fees in respect of supporting those third parties.

The split of revenues and operating profit are therefore as below. On the grounds of materiality, Sharemark is not separately identified but is included within The Share Centre.

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 an intangible asset of £318,000 (2010: £Nil) representing software development and cash of £465,000 (2010: £150,000). Therefore no separate disclosure of the balance sheet is provided.

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 £129,000 (2010: £576,000) has been credited directly to equity. A current tax credit of £11,000 (2010: £nil) and deferred tax charge of £29,000 (2010: £15,000) relating to excess deductions on share-based payments have been taken directly to equity

The reduction in the main rate of UK corporation tax to 25% from 1 April 2012, followed by the proposed reductions to 23% by April 2013, which have not been enacted, are not expected to materially affect future tax charges.

6 Distribution to shareholders

The Directors are proposing a final dividend of 0.36p per share in respect of the year to 31 December 2011. This would amount to a gross dividend payment of £515,000 given the current share capital.

7 Earnings per share

Basic earnings per share is 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 altogether 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. In 2011 the main adjustments are in respect of the share-based payment charge and the Financial Services Compensation Scheme (FSCS) Interim Levy which was charged on all investment class firms arising from the compensation costs met by the FSCS in respect of failed firms which is then funded by other firms within the industry. The Directors consider that the underlying earnings per share represent a more consistent measure of the underlying performance of the Group.

8 Note to the cash flow statement

9 Preliminary announcement

The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 2010. The financial information for the year ended 31 December 2010 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, did not draw attention to any matters by way of emphasis without qualifying their report and 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 2011 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 following the Company's annual general meeting.

10 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.

11 Annual General Meeting

The annual general meeting is to be held on Tuesday 19 June 2012. Notice of the AGM will be dispatched to shareholders with the Group's report and accounts.