SHRE.L Regulatory News (SHRE)

Share plc - Press Release 1 March 2011

Preliminary Results for the Year Ended 31 December 2010

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 2010.

Highlights

§ Revenue increased by 10.4% to £15.6m (2009: £14.1m)

§ Operating profit increased by 41.2% to £3.0m (2009: £2.2m)

§ Underlying (*) basic and diluted earnings per share increased to 1.7p (2009: 1.3p)

§ Final dividend proposed for 2010 of 0.30p per share (2010 Interim dividend: 0.25p)

§ Strong balance sheet with £11.0m in cash (2009: £13.8m) (**)

§ Growth in benchmarked revenue market share to 6.52% (2009: 5.76%)

(*) excludes the impact of some items, in particular any large non-recurring items including the FSCS Interim Levy charge, as defined in note 7 to this preliminary statement. Basic and diluted earnings per share increase by 36% to 1.5p (2009: 1.1p)

(**) In addition, cash on the balance sheet includes £1.0m (2009: £0.7m) of money held in trust for clients.

Sir Martin Jacomb, Chairman, commented on the results:

"The Share plc Group has delivered another strong performance in 2010, with significant further growth in revenues and profits. This has been achieved through the increasing attractiveness and relevance of The Share Centre's investor proposition, 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.

The Group, like others in our industry, was impacted by the Financial Services Compensation Scheme (FSCS) Interim Levy which highlights the costs of failing firms which are borne by those who abide by the rules of regulation. The results include the costs of this Interim Levy and would have improved further without it.

Looking forward, we continue to experience strong demand from new and existing customers. We will not enjoy the benefit of the interest rate floor policy in 2011, following its expiry in November 2010. Management is focused on delivering increased revenue growth, including higher interest income, to minimise the impact of the ending of that policy and position the Group for strong growth in the future."

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

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

Barbara Pierssene - Company Secretary 01296 414 141

Stephanie Reynolds - PR Manager 01296 439 256

Guy Wiehahn / Emma Riza 0207 418 8900

Peel Hunt LLP Nominated advisor

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 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 Sharemark (www.sharemark.com), the auction-based trading platform designed especially for growing companies, as well as on AIM and PLUS Markets.

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.share.com.

Chairman's Statement

I am pleased to report a strong set of results achieved by your company in 2010, notwithstanding the backdrop of continuing economic uncertainty and market volatility. That said, the stockmarket staged something of a recovery during the latter part of the year, with plenty of activity driven by investors' search for income underpinned by continued strength in corporate earnings.

The company has delivered significant growth, building further on the performance achieved in 2009. Operating profit for 2010 was £3.0m (2009: £2.2m), growth of 41%. Revenues were 10.4% higher at £15.6m (2009: £14.1m). Of the £1.5m growth in revenue, £0.9m or 61% fed through into operating profit. This was achieved by limiting the increase in costs to 4.8% - including the impact (1.7%) of the Financial Services Compensation Scheme (FSCS) Interim Levy. Headcount growth and increased profit sharing payments to all staff (arising from the Group's improved profitability) was offset by a small reduction in the amount spent on marketing in the year. This reflects the ability to command marketing space at reduced rates in an economic downturn, combined with an increased proportion of marketing delivered online.

Thus over the last two years, since 2008, the Group has grown revenues by more than 30% and operating profit by 133%.

Dealing commission and fee income showed growth of 18.3% in the year, building still further of the significant growth (28.8%) in these revenue streams in 2009. These were the principal drivers of the Group's growth in 2010 as interest income in the continuing low interest rate environment held back the overall headline growth rate.

The increase in activity reflects the empowerment customers enjoy when using our services. Research published during 2010 has shown that The Share Centre's style of business - self-directed (often described as execution only) and offering a high degree of transparency and investor control - is responsible for a substantial rise in UK personal share ownership. Moreover not only has our sector grown strongly but our market share has increased.

Our revenue growth, underpinned by the increased activity levels, is well ahead of that experienced by our peers(*). We measure our market share of revenues relative to a consistent peer group of nine other brokers, and our share has increased significantly during 2010. Excluding the benefit to revenues of the interest rate floor policy which matured in November 2010, our market share has still shown substantial improvement.

Overall for the year our market share of peer group revenues was 5.62% (2009: 4.76%) excluding the interest rate floor policy. (The market share was 6.52% (2009: 5.76%) including the impact of the interest rate floor policy.)

We have welcomed thousands of new customers to The Share Centre during the year, most of whom use our services online. During 2010 we also welcomed several thousand former customers of Wills & Co Stockbrokers Limited to The Share Centre. The acquisition of these accounts in circumstances where their existing provider was ceasing business involved detailed discussions between ourselves and the Financial Services Authority (FSA) which we consider reflects well on the quality of our service. By year end, The Share Centre's accounts exceeded 275,000.

The number of trades executed by The Share Centre in 2010 was just over 600,000, up 3% on 2009, which itself showed an increase of 75% on 2008. This compares to a fall in trading activity reported elsewhere. Meanwhile, our fund distribution activities have grown significantly during the year with fund purchases and transfers inwards rising by 61% relative to the prior year.

Our interest rate floor policy ended on 1 November 2010. We originally took out the policy in 2007 at a time when we felt the economic environment may turn deflationary, as there was no evidence of inflation in spite of an overheating economy. We therefore considered that interest rates could go exceptionally low in the event of an economic downturn and the insurance policy compensated for a reduction in interest rates for its duration. In the event the benefit we obtained from the policy over the last two years was substantial. The policy cost £94,500 and has contributed £4.96m to revenues since November 2008.

Unfortunately the policy is not replaceable. However, we have sought to improve the interest income we earn without adversely impacting liquidity, a task which is not easy in such a flat, low interest rate environment. Steps taken have included an innovative agreement with a building society where the Group will earn 2.5% above base rate on deposits. Those deposits are secured by a charge over the building society's assets. This arrangement protects the security of those deposits which is of paramount importance.

Other parts of the Group also continue to make good progress. Following the transaction in October 2009 with WAY Fund Managers Limited, the fund accounting service in respect of the collective funds they administer was transferred to Sharefunds. That process was completed in the first half of 2010 and started to contribute fully to group revenues in July.

As in the past, we have presented underlying earnings per share, which excludes the impact of one-off items. This year, one particular exceptional item is the impact of the additional levy charged on The Share Centre Limited by the FSCS. This is our compulsory contribution to cover the compensation costs paid out to customers of failed investment firms. The total interim levy charged on the industry was £326m. This charge relates to the 2010-11 financial year and takes The Share Centre's compulsory levy payment to just over £333,000 for that period. This very high cost is mostly because of the compensation payments made by the FSCS relating to the failure of a firm called Keydata. That firm, which was regulated by the FSA, had nothing to do with us. We did not sell its products and never would have done so. This charge thus highlights the burden of failures of regulation to prevent losses caused by those who do not operate within the spirit as well as the letter of those regulations.

The Group continues to have a strong balance sheet. In August 2010 the company undertook a 'share buyback' which resulted in the purchase by the company of just over 17m of its own shares which were then cancelled. The Group paid out £3.8m to buy back these shares. At the same time we offered a commission-free dealing opportunity to our shareholders to facilitate trading, particularly for those with smaller shareholdings for whom the buyback would have involved suffering a discount to the market price. We were delighted that the demand from existing shareholders to purchase shares was more than double the amount of shares offered for commission-free dealing sale by shareholders. Yet again this demonstrates the significant support we have from our shareholders, the majority of whom are also our customers, and for which we are very grateful. In order to facilitate future trading by shareholders with smaller holdings as well as to encourage new shareholders, I am pleased to report that the Board has decided to continue indefinitely to offer commission-free dealing in Share plc shares for all customers of The Share Centre.

The Group continues to have in excess of £11m of cash. The Group has capital well in excess of the levels required by the FSA and adequate resources to invest in the growth of the business, both organically and through acquisition.

Given the performance this year and the strength of our balance sheet I am pleased to be able to report that the Board is recommending a final dividend of 0.30p per share (2010 interim dividend in lieu of a 2009 final dividend was 0.25p per share). This represents growth of 20% on the last dividend paid, a step up from the growth rate in dividend payments which the Group has delivered for the last seven years of around 10%, and a rate of dividend growth the Board believes will be deliverable for the foreseeable future.

In terms of contribution to the UK economy, it should also be noted that in 2010 we paid and/or collected a total of £6.1m in tax revenues (2009: £5.8m).

In April 2011 The Share Centre will celebrate its 20th anniversary. This will be a milestone for the Group and an opportunity to reflect on past success as well as look forward with enthusiasm to a future which will certainly be challenging, but which will continue to present good opportunities for the Group. Finally, I would therefore like to take this opportunity to thank all of our staff who have contributed this year, and in the past 20 years, to making this business the success that it is. I would also like to thank our customers for their support and loyalty. The combination of shareholders, employees and customers creates a very special sense of purpose and belonging, on which our success continues to be built.

Sir Martin Jacomb

Chairman

1 March 2011

* 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 underlying earnings per share 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

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 do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information is extracted from the 2010 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 various amendments to International Financial Reporting Standards (IFRSs) were made as part of Improvements to IFRSs (2009). None of those amendments or any of the new standards introduced during the year were directly relevant to the Group.

At the date of this preliminary announcement, the following Standards and Interpretations, which have not been applied, were in issue but not yet effective.

IFRS 9 Financial Instruments

IAS 24 (Amended) Related Party Disclosures

Improvements to IFRSs (May 2010)

The directors do not expect that the adoption of these standards 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 2010 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 2009.3 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.

In 2009 Sharemark and Sharefunds contributed a combined total of less than £350,000 in revenues and as such neither was material to the Group's performance to a level where disclosure of the performance of the segment would have been meaningful.

In 2010 Sharefunds has expanded, as anticipated in 2009, such that it is meaningful to disclose the performance of that division separately. The split of revenues and operating profit are therefore as below. On the grounds of materiality, prior year comparatives are not disclosed and 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 and 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 £576,000 (2009: £84,000) has been credited directly to equity. This has arisen as the interest rate floor policy fair value held in the revaluation reserve at the end of 2009 has been progressively reduced to nil and the associated deferred tax liability has similarly unwound over time to the date of the policy's maturity in November 2010.

6 Distribution to shareholders

The directors are proposing a final dividend of 0.30p per share in respect of the year to 31 December 2010. This would amount to a gross dividend payment of £432,000 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 2010 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 2010 or 2009. The financial information for the year ended 31 December 2009 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 2010 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, Bucks, HP21 8SZ.

11 Annual General Meeting

The annual general meeting is to be held on Friday 10 June 2011. Notice of the AGM will be dispatched to shareholders with the Group's report and accounts.