Spanning the investment markets · fashion or market circumstances. ... The savings and investment industry has, over the past few years, suffered a loss of reputation partly as a

SHARE plc2003 ANNUAL REVIEW AND FINANCIAL STATEMENTS

Spanning the

investment

markets

Turnover up

23% to £8.3m

Earnings per share

increased 40%

to 0.7p/share

Profit before tax

increased

43% to £1.7m

Dividend

increased 10%

to 0.132p/share

Strong Balance Sheet

includes £7.3m cash

THE GROUP 4

CHAIRMAN’S STATEMENT 5

THE BOARD 6

CHIEF EXECUTIVE’S STATEMENT 8

CORPORATE SERVICES REVIEW 10

RETAIL SERVICES REVIEW 12

CORPORATE GOVERNANCE 14

DIRECTOR’S REPORT 16

INDEPENDENT AUDITORS’ REPORT 18

CONSOLIDATED PROFIT AND LOSS ACCOUNT 19

BALANCE SHEETS 20

CONSOLIDATED CASH FLOW STATEMENT 21

NOTES TO THE CASH FLOW STATEMENT 22

NOTES TO THE ACCOUNTS 23

INFORMATION FOR SHAREHOLDERS 32

NOTIFICATION OF ANNUAL GENERAL MEETING 34

THE GROUP 2003

4 THE GROUP

Share plc

Share Nominees Limited &Stock Academy NomineesLimitedThe non-trading 'bare trustee' companieswhich act as nominee custodians of allour customers' individual shareholdings,thereby 'ring-fencing' them from our ownassets.

The Share Centre LimitedThe main trading arm of the group providing stockbrokingservices for private investors, together with a range ofshare-related services for employees and shareholdersof companies throughout the UK.

The company is a corporate member of, and shareholderin, the London Stock Exchange.

The Share Centre (Administration Services) LimitedThe services company through which systems andspecial projects are operated.

The Shareholder Limited Publisher of our regular magazine for customers, and thetrading vehicle for external products and services wemay, from time to time, offer to customers.

Personal Retirement Account Limited This company protects the name of our pension service,operated by The Share Centre in association with Sippdeal.

ShareMark LimitedSharemark is our alternative market on which Share plc,amongst others, is dealt. Although Sharemark currentlyoperates as a trading division of The Share Centre, thiscompany is expected to offer a separately regulatedentity in due course for ShareMark.

ShareSecure Limited The Trustee service provider for participants in ShareIncentive Plans.

The Share Centre (InvestmentMangement) LimitedThe Authorised Corporate Director of The Share Centre’sManaged Funds.

The parent company traded on ShareMark

Our Mission

TToo bbeeccoommee tthhee mmoosstt ssuucccceessssffuull pprroovviiddeerr ooff iinnvveessttmmeenntt sseerrvviicceess

ttoo pprriivvaattee iinnvveessttoorrss,, ccoommppaanniieess aanndd tthheeiirr eemmppllooyyeeeess,, iinn tteerrmmss

ooff pprrooffiittaabbiilliittyy,, iinnccoommee qquuaalliittyy aanndd ooppeerraattiioonnaall eeffffiicciieennccyy..

CHAIRMAN’S STATEMENT 2003

CHAIRMAN’S STATEMENT

increased reliance on personally owned securitiesrather than packaged investments. The Share plcGroup is well placed to deliver the services neededfor this. The Share Centre serves a wide range ofinvestors from the least experienced to the mostactive, with products and services which span ShareAccounts, ISAs, PEPs, pensions and employeeshare services. Its focus is concentrated onbringing, at low cost, the benefits of investmentdirectly to individuals as well as to the companies inwhich they choose to invest. Our focus does notchange (like many financial supermarkets) withfashion or market circumstances.

The team which has brought the Share plc Group toits position of strength after one of the longest bearmarkets in living memory - trading profitably on amonth-by-month basis throughout this period - hasbeen together for some years. However RogerWilson, our Finance Director, has decided to retireto seek other challenges after 11 years of service,and we welcome Sandra Kelly, previously FinanceDirector of AIM-listed Raft International, to join us asour new Group Finance Director.

We are all very grateful to Roger for his commitmentand good stewardship over these vital early yearsfor the company, and wish him well for the future.

We will also be saying farewell at the AGM to NeilCoutts, who will not be standing for re-election after9 years as a non-executive director. We are verygrateful to him for playing a key part in the Group'sgovernance, and extend best wishes to him for thefuture.

Finally and importantly, I would also like to thank allof our staff who are a loyal and hard working team.

Sir Martin Jacomb

Chairman

2003 has been a successful year for Share plc and,

as Gavin Oldham our CEO explains in his statement

on page 8, we have seen a change of attitude

among investors.

Rising activity in the stockmarket provides clearevidence that the long shadow of the bear market isat last being dispelled, as many investors arereturning from prolonged hibernation. It is hightime; for there is a real need for significantlyincreased Savings and Investment.

The savings ratio (the total of annual personalincome not spent on household expenditure as aproportion of the total) has slumped over the past tenyears from 10.8% to 5.9%. This is importantbecause a healthy level of personal discretionarysaving is vital for a nation's sound economic health;and we do not have this at the moment.

Saving is needed to provide the capital for business,and without adequate savings people will not havethe opportunity to enjoy a reasonable standard ofliving in old age. A concentrated bet on the value ofone's house at retirement is hardly the basis for aproperly constructed pension; but that is what manyare relying on. It is no substitute for savingsinvested in financial assets.

The savings and investment industry has, over thepast few years, suffered a loss of reputation partlyas a result of its own lack of prudence, but alsobecause of political attacks. This must be reversed.Positive encouragement to rebuild savings isneeded. Instead of any Government initiative toimprove savings levels, we have seen the opposite;additional tax burdens (for example on pensions)have been imposed, and tax incentives to save (forexample on PEPs and ISAs) have been curtailed.These discouragements, added to the forces behindthe long bear market, have in turn led individuals toretreat from the stock market into the housingsector, a trend which now seems overdone. A newemphasis from the Government on savings andinvestment is therefore needed now as we moveforward into 2004.

A consistent and determined approach towardspersonal investment will, we expect, involve

“The Share

Centre’s focus is

concentrated on

bringing, at low

cost, the benefits

of investment

directly to

individuals as

well as to the

companies in

which they choose

to invest”

5

THE BOARD 2003

6 THE BOARD

Front row from left to right:

Iain Wallace, Gavin Oldham,

Sir Martin Jacomb, Roger Wilson.

Back row from left to right:

Neil Coutts, Richard Tolkien,

Jeremy Helliwell, Sandra Kelly,

Peter Forster

7THE BOARD

Sir Martin Jacomb 74 Chairman, non-executive directorSir Martin was appointed Chairman with effect from 21st June 2001.His experience spans merchant banking (Kleinwort Benson), financialservices (Commercial Union; Barclays Bank plc and PrudentialCorporation) as well as Barclays de Zoete Wedd and PostelInvestment Management.

Gavin Oldham 54Chief ExecutiveGavin Oldham founded The Share Centre in March 1990, havingpreviously established Barclayshare (now Barclays Stockbrokers).He was prior to that a partner of Wedd Durlacher, the stockjobbingfirm. He is also a Church Commissioner, a member of the EthicalInvestment Advisory Group of the Church of England, and amember of the Archbishops’ Council’s Finance Committee.

Iain Wallace 34Director, Group Compliance and LegalServicesIain started his career at Greig Middleton & Co Ltd and BWD

Rensburg Ltd before joining the Securities and Futures Authority

as a Surveillance Inspector. He joined The Share Centre in

December 1999.

Peter Forster 55Director, Group Business Development Peter joined Barclays Bank plc in 1965 and was Head of Operationsat Barclayshare Ltd from 1986 to 1991. He joined The Share Centrein November 1991.

Jeremy Helliwell 48Director, Group OperationsJeremy was a director of Barclayshare Ltd from 1988 to 1993 andwas a project director with Barclays Bank plc from 1993 to 1998. Hejoined The Share Centre in September 1998.

Roger Wilson 48Group Finance DirectorAfter 11 years service as Group Finance Director, Roger hasannounced his desicion to seek fresh challenges and leaves theBoard as at 26 March 2004.

Sandra Kelly 43Group Finance DirectorSandra joins the Group with effect from 1 March 2004 from AIM listedRaft International plc where she was Chief Financial Officer. She hasalso previously worked as CFO for CarsDirect.com (a European on-line retail organistation) and as Acting Finance Director and FinancialController for BMW (GB) Limited.

Neil Coutts 57Non-Executive Director

Neil is the chairman of the Audit Committee. Having joined theBoard in May 1995 he will not be seeking re-election and leaves atthe AGM on 21 May 2004.

Richard Tolkien 49Non-Executive DirectorRichard Tolkien started his career at HM Treasury, before spending 15years at Morgan Grenfell, including being a managing director ofHSBC’s Corporate Finance and Advisory Division from 1997 to 2002.He became a director in February 2003.

CHIEF EXECUTIVE’S STATEMENT

8

Costs

We continue to maintain close control over costsand productivity with overheads up by 4% in 2003.Direct costs, however, have been impacted by thevolume of business generated through the low-costshareholder programmes and have risen by 8% in2003 compared with 2002.

Meanwhile staff levels continue to hold steady, andwe have further developed professional expertisewith a programme of market and business seminarson a company-wide basis.

Highlights of the Year

The dearth of trading in the first quarter, followed bya strong recovery, has made it an unusual year. Wehave concentrated on building business in both theretail and corporate sectors, and each has hadconsiderable success.

New initiatives in investor services have included aFASTRACK ISA, a revised tariff for Select ShareAccounts following a detailed programme ofcustomer research and analysis, and a self-investedpersonal pension scheme established in conjunctionwith Sippdeal, the Personal Retirement Account.Conscious of the need for significant increases inretirement savings and investment, referred to in theChairman’s statement, we are very pleased toinclude a self-select pension in our service range.

The relevance of investment education is particularlystrong at present, following three years of bearmarkets and reflecting the need to rebuild investorconfidence. To demonstrate our resolve in this areawe have established a new real investmentcompetition for students, Shares4Schools. Fifty-eightschools applied for the competition, which can befollowed on www.shares4schools.org, in September2003, and 16 schools received sponsorship to takepart. The Share Centre has benefited from extensivemedia coverage, and the scheme is proving popularwith the participating schools.

Trading conditions have improved steadily

throughout 2003, and the Group performance has

exceeded that of its peer group, with a significant

increase in operational profits.

Retail Stockbroking has historically been most activein the first quarter, followed by quarters 4, 2 and 3respectively. 2003 has almost completely reversedthat experience, due mainly to the impact of the warin Iraq on investors. Confidence has rebuilt steadilysince then, and it has been a particularly busy startto 2004.

A number of specific initiatives have combined withincreasing retail activity to increase Group pre-taxprofits from £1.2m in 2002 to £1.7m in 2003.Moreover, the 2002 results included sales of LondonStock Exchange shares (£0.6m), whereas therewere no such sales in 2003. These figurestherefore represent a 174% increase in operationalpre-tax profit. Meanwhile operational revenue(including net interest) has risen from £7.1m to£8.7m (an increase of 22%).

CHIEF EXECUTIVE’S STATEMENT

-

500

1,000

1,500

2,000

2,500

3,000

3,500

1997 1998 1999 2000 2001 2002 2003

-

2,000

4,000

6,000

8,000

10,000

12,000

1997 1998 1999 2000 2001 2002 2003

Revenue

Greater dealing activity has reduced the proportionof total income represented by fees and interest from67% to 61%. Meanwhile the Internet continues todeliver real benefits to customers and the businessitself, and the proportion of account-based ordersplaced by this means stood at just over 50% in 2003(47% in 2002). 21% of these internet orders wereplaced on a FASTRACK basis.

Our own-brand income is supplemented bycorporate services and third-party introducers, beingc.67%, 27% and 6% respectively. The introducerrelationships established as a result of our takeoverof StockAcademy's business in 2002 havecontributed effectively to these results, and low-costshareholder dealing programmes for Barclays, Avivaand Centrica have helped to build gross revenues.

Pre-tax Profit

Revenues

Other corporate initiatives will continue to be acentral part of our portfolio, and larger, maturecompanies with extensive shareholder registersincreasingly value the low-cost share-dealing andcorporate nominee services we are able to offer.

Our investor services will continue to receiveattention through an extended customer serviceprogramme. Unlike many of our competitors, we donot outsource our call centres and supportfunctions, preferring close involvement and greatersecurity as part of our guiding principle: that 'carefor others is at the heart of customer service'. Ourcustomer surveys have given us a much clearerpicture of the diversity of our customer base, andour aim is to respond actively to their needs.

In the medium/long term The Share Centre mayhave a significant involvement as a provider of theChild Trust Fund. This major Government initiativecomes into operation in early 2005, and we havealready taken part in the consultations behind itsintroduction. Our business models show that it willtake several years to deliver significant profitability,but it does have considerable potential onceadditional contributions and earnings growth havebuilt up average fund sizes.

The Group therefore has confidence in its futureprospects and an active strategy for growth, and welook forward to reporting further progress.

Gavin Oldham

Chief Executive

“linking together

companies and

their shareholders

is at the core of

our business

strategy”

CHIEF EXECUTIVE’S STATEMENT 9

We have also continued to keep a close watch onthe development of European regulations takingeffect over the next 2-3 years, many of which, in ourview, act against the interest of private investors. Insome cases these represent an additionalcompliance burden, but in others there is a realpotential cost to investors - such as the challenge toprice improvements offered by market makers in theDirective on Financial Instruments and Investment.Hopefully the publicity we have generated on thislatter issue may quash this risk to private investors,estimated at £100m across the market.

Corporate initiatives have included high volume,low-cost share-dealing services for Barclays, Avivaand Centrica in conjunction with GeorgesonShareholder, a leading role in the administration ofApproved Investment Funds for EIS holdings, andappointment as share exchange service provider toM&G. Our corporate sales team has also beenactive with ShareMark and the Share IncentivePlan: ShareMark has introduced Elektron plc andfountains plc, both AIM companies dual-traded onShareMark, while new Share Incentive Plansinclude Linx Printing and Arla Foods (previously,Express Dairies).

Shortly before our preliminary results wereannounced we heard that The Share Centre hassucceeded in winning the tender to act as marketoperator for the prospective West Midlands regionalstock market. We are delighted with thisappointment, which will make full use of ShareMark,and our investor and corporate services.

Future Prospects

Last year we looked ahead to solid returns from ouracquisition of StockAcademy's business, and I ampleased to report that those earnings are nowcontributing usefully to our bottom line. During theautumn we considered how to set our priorities for2004, and placed focus on a number of areas forshort/medium term performance.

It has been some years since primary fund-raisinghas been active in London, with the equity marketdepressed and low interest rates offering cheapcorporate borrowing. This is changing, however,and our new issues service will provide theopportunity to offer our extensive experience anddistribution potential in this area to a wide range ofsmall to medium-sized companies. With the abilityto engage with the main market, AIM or ShareMark,we can provide comprehensive coverage and goodaccess for investors.


10 CORPORATE SERVICES REVIEW

The provision of services to the Corporate sector

has long been one of our key routes to customer

acquisition and, with the development of further

services during 2003, we are well placed to deliver

both revenue and account growth through this

sales channel.

Building on our strong relationships with over 40companies using our Employee Share Scheme andLow-Cost Sharedealing services, including suchhousehold names as Sainsbury’s, ICI and Gallaher,over the year we have extended our range ofadministration services, delivered either on abranded or unbranded basis.

These new initiatives enable an even wider range ofcommercial organisations to outsource ‘back office’administration, extend customer service and focuson delivery of their core functions and have beenwell received by our target market; we look to buildon this success throughout 2004.

Besides new commercial contracts being concludedwith such leading organisations as M&G, and theprovision of shareholder dealing programmes forBarclays, Aviva and Centrica, the Group has alsoestablished itself as a principal provider of portfolioadministration services in Enterprise InvestmentSchemes, with seven schemes already beingadministered through us and two further schemespending Inland Revenue approval.

Our full range of corporate investment services now includes:

Low-Cost Share Dealing, PEPs andISAs for employees, shareholders andcustomers

The provision of share dealing services, ISAs andPEP transfers, particularly in response to Save AsYou Earn employee share scheme maturities,continue to form the core corporate share service toour listed company clients, who include BAT, ASDA-Walmart and George Wimpey. With many option-based schemes ‘underwater’, Account growth hasbeen restricted but, with the strengthening market,prospects for 2004 are much improved.

Share Incentive Plan administration

The Share Incentive Plan remains a mainstay ofGovernment policy in encouraging wider employeeparticipation; the Plan is already well establishedwithin FTSE 100 companies and there is continuingdevelopment within FTSE 250 businesses. We were pleased to set in place the administrationarrangements for LSE-listed Linx PrintingTechnologies and, in the first quarter of 2004, Arla Foods.

ShareMark, our trading facility forunlisted companies

During quiet capital market conditions in 2003, NewIssues across all markets have been much lowerthan in previous years; as a result the plans of anumber of various proposed ShareMark companieshave been delayed. However, the addition offountains and Elektron to our AIM/ShareMark dualtrading service, which accompanies our mainShareMark service for companies not otherwisetraded elsewhere, provided encouraging signs.

We also successfully took part in the tender formarket operator of the forthcoming local businessexchange in the West Midlands and are alreadyworking closely with the interested parties in the region.

Shareholder Dealing Programmes

A range of options enable listed companies toreduce their Shareholder Register costs, includingthe establishment of a corporate nominee register tostreamline shareholder communication, distributedividends and reduce the cost of distributing theAnnual Report & Accounts.

During 2003 these programmes were run inconjunction with our partner, GeorgesonShareholder. Following the sale of Georgeson to Computershare plc late in 2003, we are nowpursuing discussions with other prospectivepartners.

Collective Investment Scheme andEIS portfolio administration

As investors’ appetites for smaller companyinvestment opportunities increased throughout2003, we extended our EIS administration service to


Over the coming months, we intend to add further to this range of services through the launch of acapital raising service for new equity and fundissues, covering listed securities and funds, as well as stocks traded on AIM and ShareMark.

In addition, through strategic alliances with a selectrange of specialist service providers, we plan tobroaden our existing employee share schemeinvolvement to encompass a comprehensiveadvisory and administration service covering thewhole spectrum of both share and option-relatedschemes. This wide range of corporate shareservice solutions ensures that our target audienceincludes not just listed public companies, but alsounquoted companies.

Furthermore, by broadening our service range wehave extended our target market to include FundManagers, Corporate Financiers and other financialservices providers, enabling us to move further stilltowards achieving our objectives.

In doing so, we believe that we are now significantlybetter placed to grow our corporate revenues furtherby providing the high quality, high value, tailoredinvestment solutions required by our corporateclients for delivery to their shareholders andcustomers.

Iain Wallace

Director, Group Compliance and Legal Services

assist both Fund Managers and CorporateFinanciers, including Arc Fund Management, OxfordCapital Partners and Octopus Asset Management.

Building upon the in-house administrative expertisewe have developed through running our ownregulated fund, The Share Centre Growth andIncome Fund, we launched in Quarter 1, 2004 anadministration service for Fund Managers lookingfor a more cost-effective solution.

Share Exchange Facilities

This facility, provided on either a branded or un-branded basis, enables Fund Managers and IFAsto improve their service to customers whilststreamlining processes for re-investment of proceedsfrom existing shareholdings. Having been awardedthe tender for the provision of share exchangeservices for one of the leading fund managementhouses, M&G, discussions to introduce similarbranded services for other providers are taking place.

With further developments well underway to provide Receiving Agent services for New Issues,institutional dealing and settlement facilities and theestablishment of an ‘umbrella’ fund to facilitate HighNet Worth ‘single investor’ OEICs, we believe wecan offer one of the most comprehensive ranges ofadministration services available.

The outlook for the year ahead

Share plc entered 2004 with a much enhancedrange of service propositions for companies,employees and their shareholders.

“Share plc entered

2004 with a much

enhanced range of

service propositions

for companies,

employees and

their shareholders.”


12 RETAIL SERVICES REVIEW

Following one of the most long-lasting bear

markets, the return of investor confidence is clearly

illustrated by dealing patterns across 2003.

We saw just 16% of all 2003's deals carried out inQuarter 1, compared to some 29% completed ineach of quarters 3 and 4. Year-on-year comparisonwith 2002 equally demonstrates this effect, with anincrease in core dealing volumes of 28%. Thesteady growth in appeal of the dealing services weadminister on behalf of a range of corporatepartners, including Virgin Money and MoneyXtracontributed some 10% of overall dealing volumes.

As Iain Wallace's comments on the performance ofthe Corporate side of our business show, theincreased dealing through customer accounts wasaugmented by strong dealing volumes generatedthrough a range of Shareholder DealingProgrammes on behalf of Centrica, Barclays andAviva. The schemes reinforced our ability toprocess high volumes of paper-based transactionsover concentrated timescales, creating value forthese companies and their shareholders.

Despite these increased volumes, we maintainedhigh service standards, handling c.175,00 phonecalls and mailing c. 650,000 items yet receiving just28 complaints during the year.

As market conditions improved, so did portfolio anddealing values. The overall value of funds withinShare Nominees grew by 19% compared to year-end 2002; this improvement in market values feddirectly into fees and commissions, resulting in thestrong financial performance evidenced in thisyear's results. Our focus on relationship servicesand their associated administration fees plays asignificant part in maintaining and buildingshareholder value, enabling our business to weatherthe difficult trading conditions of 2002 and early2003; we emerged from that part of the marketcycle in a strong position, well placed to benefit fromthe upturn we have now seen.

Customer account numbers continued to grow well,as did individual portfolios where we now see anaverage of 1.57 portfolios per customer. Thephased introduction of an enhanced customerservice programme through 2004 and beyond aimsto build further on this performance. In October2003 we explored the potential of an ethicalinvestment fund to complement our Growth &Income Fund but investor demand proved to be

insufficient to justify the launch; we retain theinfrastructure and relationships to enable us toreturn to this approach should investor demandimprove.

2003 also saw investment in trialling a new initiativeaimed at educating and inspiring our customers oftomorrow - our Shares4Schools programme.Targeted at 6th form (year 12) students in schools ofall types around the UK, this investment competitioninjects a real-world element into the curriculum byenabling students to invest real money for thebenefit of their school. We are much encouragedby the response we have had to date from schools,students and education bodies and will be looking toextend the reach of the competition in future years.

Extending our reach through newservices

Our financial strength also enabled us to continue toinvest in developing new services which extend ourreach into new territories, enabling us to meet theneeds of the most active investors whilstmaintaining our headline low-cost offer for the less-frequent investor. Research in April 2003 wascarried out across our customer base to help usunderstand changing investment patterns, whichhad been influenced in part by market conditions.

Investors highlighted diverse issues, such as thedesire to protect portfolio values, an increasing aim to generate income (perhaps reflecting theimpact of a low interest rate environment), and thecontinued search for new ways to build capitalvalues, particularly through emerging investmentvehicles such as EIS and VCT Funds, and throughsmall-cap stocks.

These findings had a direct bearing on the prioritieswe set for new service development and lead to theintroduction of:

Trading in UK Gilts and Bonds

Gilts and Bonds were introduced in April 2003,accompanied by an investor's briefing note.Extending our dealing range to include these fixedinterest instruments has enabled customers tomanage better the dynamics of income, risk andportfolio spread.

For those looking to maximise the tax-efficiency oftheir investments through our range of PEP and ISA products, these instruments also serve as acounterbalance to the tax changes effective fromApril 2004.

and ISAs has been founded on the tax benefits theycarried. In practice, however, they have alwaysbeen most attractive to higher-rate taxpayers andthe more active investor, by virtue of the IncomeTax, Capital Gains Tax and simplified reportingregimes they encompass.

The major components of these benefits remainpost April 2004 and, with the ability to invest inBonds and Gilts (which pay interest gross), a returnto rising markets (and the inherent capital gains thatensue), plus the retention of the higher rate incometax relief, investors are likely to remain committedto their PEPs and ISAs.

A review of tariff structures was completed andannounced in the latter part of 2003: from January2004, Share account administration fees movedfrom a 'per stock held' to a 'per account' basis;customers holding two or more stocks benefit fromreduced administration fees and the businessbenefits from an improved fee collection rate.

In addition to the 'Dealing Commission Credit'generated by their holding in Share plc, the accountadministration fee is waived for shareholders whoretain just a Share plc holding in their Share Account.

We shall continue to review customer needs, markettrends and investment opportunities in order todevelop new responses to market issues, improveaccess to investor information and add further valueto our customer relationships.

Plans already in hand include exploration of thepossibilities of a more flexible Protected EquityBonds service, and of the potential frominvolvement in the Government's Child Trust Fundinitiative, plus the upgrading of our web-basedservices.

Jeremy Helliwell

Director, Group Operations

Personal Retirement Account

The issues of longer-term financial planning ingeneral, and pension provision in particular,continue to feature strongly on the Government's listof priorities. In addition, there is a growingunderstanding of the need for individuals to takeaction sooner rather than later, we were thereforepleased to extend our services to encompass aSelf-Invested Pension Plan (SIPP).

Offered in conjunction with our chosen partners,Sippdeal, the Personal Retirement Accountcompletes our range of tax-efficient investmentaccounts, and extends the individual's control oftheir long-term finances. Whilst aimed primarily atthe more active investor, this new account continuesour theme of providing diversity and choice, byoffering a range of tariffs suited to different investorprofiles.

Extended FASTRACK InternetAccount Services

The growing success of our Internet-basedFASTRACK Share Account, with its competitive£7.50 flat-rate dealing commission structure, led toits extension into the ISA sector through theintroduction in April 2003 of the FASTRACK ISA.

Aimed at the more active investor, the FASTRACKfamily of services, which also includes aFASTRACK Personal Retirement Account option,enables those trading more actively, or in higheramounts, to do so at highly attractive rates and withthe benefit of more sophisticated portfoliomanagement tools, such as Stop-Loss and specialTracking Stop-Loss functions.

Internet-based dealing continues to expand, withvolume growth of 43% over the last year. Suchactivity has a beneficial impact on both ourcustomers and our business, providing wider choiceand added convenience whilst lowering operatingcosts. With the upturn in trading activity, receivinginterest in the market from 'lapsed' investors and thecontinued growth in Internet-based trading, theprospects for further growth in this sector of ourbusiness look good.

2004 prospects

There has been much media speculation over theimpact on PEPs and, in particular, ISAs from theend of dividend tax credits from April 2004.Introduced and amended by successive respectiveGovernments since 1988, the broad appeal of PEPs

“Our focus on

relationship

services and their

associated

administration fees

plays a significant

part in maintaining

and building

shareholder value,

enabling our

business to

weather the

difficult trading

conditions of 2002

and early 2003”


CORPORATE GOVERNANCE

14 RETAIL SERVICES REVIEW

Regulatory control and compliance, and theapplication of the FSA rulebook

Client asset control and reconciliation, withappropriate exception reporting

Regular Executive Group meetings where risksand exposures are regularly monitored

Internal control and compliance reviews providingformal monitoring reporting of weaknesses indepartmental processes

Accounting and financial reporting policies thatensure the accuracy, consistency and integrity ofthe Group's financial records

The directors of Share plc are committed to goodcorporate governance and acknowledge theimportance of the new combined code. As a resultthey comply with its requirements insofar as theyapply to a group of the size and complexity of Share plc.

The Board

The Board consists of five executive directors and three non-executive directors, including thechairman. The structure and efficacy of the Boardand its subcommittees are constantly reviewed andtheir scope adjusted as appropriate. Thesecommittees are currently structured as follows:

Risk Management and InternalControls

The Board has overall responsibility for riskmanagement and internal controls. As shownabove, it has delegated detailed responsibility ofthese areas to the Risk and Audit Committeesrespectively.

The Group has established internal controlsappropriate to the regulatory and businessenvironment in which it operates. These controls are monitored, reviewed, and, where necessaryenhanced, by executive management through theExecutive Group, taking into account the risks towhich they feel the Group may become exposed.These controls include but are not limited to:

Going Concern

The directors have satisfied themselves that at thedate of approval of these financial statements theGroup has adequate resources to continue inoperational existence for the foreseeable future. As set out in the Statement of Director'sResponsibilities on page 17, they have thereforeprepared the financial statements on the goingconcern basis.

Board Board Chairman Quarterly Group Strategy and Regulatory Control

Executive Executive Directors Chief Executive Fortnightly Operational Managementof the Group

Audit Non-Executive Senior Non- Triannually Review of InternalDirectors Executive Controls, Compliance,

Cost and Effectiveness of the Audit

Risk Finance Director Finance Director Biannually Monitoring of Group RiskOperations Director Compliance Director

Remuneration Non-Executive Chairman Biannually Structure of BoardDirectors Remuneration Chief Executive

Meeting Attendees Chairman Frequency Purpose

DIRECTORS’ REPORT

AND FINANCIAL STATEMENTS 2003

DIRECTORS’ REPORT

16 DIRECTORS’ REPORT

The directors submit their report and the audited accounts for the year ended 31 December 2003.

PRINCIPAL ACTIVITIES

The business of the group is made up of two principal fully integrated activities: the provision of custodial administration whereby thecompany acts as nominee on a number of different types of accounts including share accounts, PEPs and ISAs; and a low-cost dealing serviceto allow customers holding accounts to trade in their shares.

DIVIDENDS AND TRANSFERS TO RESERVES

A final dividend of £201k is proposed (2002 - £178k). The retained profit after tax of £993k (2002 - £618k) has been transferred toreserves.

DIRECTORS AND THEIR INTERESTS

The directors who served throughout the year, and the interests in the company of those serving at the end of the year were as follows:

Ordinary shares of 0.5p each Ordinary shares of 0.5p each31 December 2003 31 December 2002

Sir Martin Jacomb (Chairman) 125,441 34,599

G D R Oldham 111,614,145 111,598,824

R E Wilson 1,432,647 1,944,319

P M Forster 1,601,707 1,593,347

Dr N M Coutts 3,121,884 3,121,349

M J Helliwell 1,947,225 47,365

I P Wallace 77,028 46,668

R I Tolkien - -

Under the company's executive share option scheme and enterprise management incentive scheme, as at 31 December 2003, options wereheld by directors over 1,633,889 (2002 - 3,912,389) ordinary 0.5p shares as follows:

Options at Granted Redeemed Options at Date of Exercise Date first ExpiryJanuary In year in year 31 December Grant price exercisable

2003 2003

Sir Martin Jacomb 165,000 - - 165,000 15/11/01 £0.20 21/06/04 15/11/11

R E Wilson 529,500 - 529,500 -

P M Forster 529,500 - 529,500 -

M J Helliwell 1,869,500 - 1,869,500 -

I P Wallace 200,000 - 50,000 150,000 28/01/00 £0.04 28/01/03 28/01/10

I P Wallace 61,111 - - 61,111 22/06/01 £0.36 22/06/04 22/06/11

I P Wallace 138,889 - - 138,889 15/11/01 £0.20 22/06/04 15/11/11

I P Wallace 200,000 - - 200,000 15/11/01 £0.20 22/12/05 15/11/11

I P Wallace 218,889 - - 218,889 15/11.01 £0.20 22/06/07 15/11/11

I P Wallace - 200,000 - 200,000 21/03/03 £0.12 21/03/06 22/03/13

I P Wallace - 200,000 - 200,000 21/03/03 £0.12 21/03/07 22/03/13

I P Wallace - 200,000 - 200,000 21/03/03 £0.12 21/03/08 22/03/13

R I Tolkien - 100,000 - 100,000 21/03/03 £0.12 21/03/06 22/03/13

The aggregate national gains made by directors on the exercise of share options during the year was £428,648.

SHARE CAPITAL

As at 27 February 2004 the following persons or entities had an interest of three percent or more in the issued share capital of the Company,other than shown above:

Cuillin Investments Ltd 4.0%

DIRECTORS’ REPORT

DIRECTORS’ REPORT 17

POLICY ON PAYMENT TO SUPPLIERS

The Group agrees terms and conditions for its business transactions with suppliers. Payment is then made on these terms, subject to theterms and conditions being met by the supplier. At 31 December 2003 Group trade creditors represented approximately 32 days (2002: 41 days).

CHARITABLE & POLITICAL DONATIONS

During the year the company made charitable donations of £4k (2002 £Nil). No political donations were made in the year (2002 £Nil).

EMPLOYMENT POLICIES

The Group seeks to offer equal opportunities to employees regardless of disability, sex, race or religion. The Group also recognises itsobligations to provide a safe working environment for its staff.

AUDITORS

On 1 August 2003, Deloitte & Touche, the company's auditors transferred their business to Deloitte & Touche LLP, a limited liabilitypartnership incorporated under the Limited Liability Partnerships Act 2000. The company's consent has been given to treating theappointment of Deloitte & Touche as extending to Deloitte & Touche LLP with effect from 1 August 2003 under the provisions of section26(5) of the Companies Act 1989.

Deloitte & Touche LLP have expressed their willingness to continue in office as auditors and a resolution to reappoint them will be proposedat the forthcoming Annual General Meeting.

Approved by the Board of Directors and signed on behalf of the Board

Sir Martin JacombChairman

22 March 2004

STATEMENT OF DIRECTORS' RESPONSIBILITIES

United Kingdom company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the group as at the end of the financial year and of the profit or loss of the company for thatperiod. In preparing those financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed;

• prepare the financial statements on the ‘going concern’ basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial positionof the company and the group and to enable them to ensure that the financial statements comply with the Companies Act 1985. They arealso responsible for the system of internal control, for safeguarding the assets of the company and hence for taking reasonable steps for theprevention and detection of fraud and other irregularities.

The maintenance and integrity of the Group's website is the responsibility of the directors; the work of the auditors does not involve aconsideration of these matters and accordingly, the auditors accept no responsibility for any changes that may have occurred to theinformation contained in the financial statements as they are presented on the website.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SHARE PLC

We have audited the financial statements of Share plc for the year ended 31 December 2003 which comprise the consolidated profit and loss account, the balance sheets, the consolidated cash flow statement, the notes to the consolidated cash flow statement and the relatednotes 1 to 20. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the company's members, as a body, in accordance with section 235 of the Companies Act 1985. Our auditwork has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors'report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than thecompany and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As described in the statement of directors' responsibilities, the company's directors are responsible for the preparation of the financialstatements in accordance with applicable United Kingdom law and accounting standards. Our responsibility is to audit the financial statementsin accordance with relevant United Kingdom legal and regulatory requirements and auditing standards.

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance withthe Companies Act 1985. We also report if, in our opinion, the directors' report is not consistent with the financial statements, if thecompany has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or ifinformation specified by law regarding directors' remuneration and transactions with the company and other members of the group is notdisclosed.

We read the directors' report and the other information contained in the annual report for the above year as described in the contentssection and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with thefinancial statements.

Basis of audit opinion

We conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment ofthe significant estimates and judgements made by the Directors in the preparation of the financial statements and of whether the accountingpolicies are appropriate to the circumstances of the company and the group, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provideus with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused byfraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in thefinancial statements.

Opinion

In our opinion the financial statements give a true and fair view of the state of affairs of the company and the group as at 31 December 2003and of the profit of the group for the year then ended and have been properly prepared in accordance with the Companies Act 1985.

DELOITTE & TOUCHE LLPChartered Accountants and Registered Auditors

London

22 March 2004

18 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SHARE PLC

CONSOLIDATED PROFIT AND LOSS ACCOUNT

CONSOILDATED PROFIT AND LOSS ACCOUNT 19

Year ended 31 December 2003

Note 2003 2002£'000 £'000

TURNOVER 1 8,283 6,717

Administrative expenses (6,702) (6,270)

Profit sharing bonus 3 (263) (183)

OPERATING PROFIT 5 1,318 264

Profit on sale of fixed asset investments - 568

Dividends receivable 44 38

Interest receivable 341 331

Interest payable and similar charges 6 (12) (16)

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 1,691 1,185

Tax charge on profit on ordinary activities 7 (497) (389)

PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 1,194 796

Equity dividend payable 8 (201) (178)

RETAINED PROFIT FOR THE YEAR 17 993 618

Earnings per share 9 0.7p 0.5p

Diluted earnings per share 9 0.7p 0.4p

All results are in respect of continuing operations.

There are no recognised gains or losses for the current or prior years other than as stated above. Accordingly no statement of totalrecognised gains and losses is given.

The accompanying notes form an integral part of this Profit and Loss account.

BALANCE SHEETS

CONSOLIDATED COMPANY

Note 2003 2002 2003 2002£’000 £’000 £’000 £’000

FIXED ASSETS

Tangible assets 10 342 550 - -

Investments 11 217 220 254 254

Intangible assets 12 132 150 - -

691 920 254 254

CURRENT ASSETS

Debtors 13 4,311 2,198 903 826

Cash at bank and in hand 14 7,281 5,534 100 33

11,592 7,732 1,003 859

CREDITORS: amounts falling due within one year 15 (5,350) (2,577) (355) (307)

NET CURRENT ASSETS 6,242 5,155 648 552

TOTAL ASSETS LESS CURRENT LIABILITIES 6,933 6,075 902 806

CAPITAL AND RESERVES

Called up share capital 16 798 777 798 777

Share premium account 17 29 2 29 2

Employee benefit reserve 18 (183) - - -

Profit and loss account 17 6,289 5,296 75 27

EQUITY SHAREHOLDERS’ FUNDS 17 6,933 6,075 902 806

These financial statements were approved by the Board of Directors on 27 February 2004.

Signed on behalf of the Board of Directors

Sir Martin Jacomb

Chairman

22 March 2004

31 December 2003

BALANCE SHEET20

The accompanying notes form an integral part of this Balance Sheet.

CONSOLIDATED CASH FLOW STATEMENT

21CONSOLIDATED CASH FLOW STATEMENT

Note 2003 2002£’000 £’000

NET CASH INFLOW FROM OPERATING ACTIVITIES 1 2,273 590

RETURNS ON INVESTMENTS AND SERVICING OF FINANCE

Proceeds from sale of fixed asset investments - 568

Interest received 341 331

Interest paid (12) (16)

Dividends received 44 38

NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 373 921

TAXATION (448) (741)

CAPITAL EXPENDITURE

Payments to acquire tangible fixed assets (69) (72)

Receipts from sale of fixed assets 5 -

Receipts from sale/(Payments for purchase) of investments 3 (187)

Payments to acquire shares for employee benefit trust (183) -

Payments to acquire goodwill - (28)

NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (244) (287)

EQUITY DIVIDENDS PAID (155) (153)

NET CASH INFLOW BEFORE FINANCING 1,799 330

FINANCING

Issue of ordinary share capital 48 8

Repayment of subordinated loan (100) -

NET CASH (OUTFLOW)/INFLOW FROM FINANCING (52) 8

INCREASE IN CASH 2,3 1,747 338


NOTES TO THE CASH FLOW STATEMENT

1 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES

2003 2002£’000 £’000

Operating profit 1,318 264

Depreciation and amortisation charges 292 347

Profit on sale of fixed assets (1) -

(Increase)/decrease in debtors (2,113) 141

Increase/(decrease) in creditors falling due within one year 2,777 (162)

Net cash inflow from operating activities 2,273 590

2 ANALYSIS OF CHANGES IN NET FUNDS

At 1 January Cash flows At 31 December2003 2003£’000 £’000 £’000

Cash at bank and in hand 5,534 1,747 7,281

Debt due in less than one year (150) 100 (50)

Total 5,384 1,847 7,231

3 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

£’000

Change in net funds 1,847

Net funds at 1 January 2003 5,384

Net funds at 31 December 2003 7,231


22 NOTES TO THE CASH FLOW STATEMENT

NOTES TO THE ACCOUNTS


1 ACCOUNTING POLICIES

The financial statements are prepared in accordance with applicable United Kingdom Law and accountingstandards. The particular accounting policies adopted are described below.

Accounting conventionThe financial statements are prepared under the historical cost convention.

ConsolidationThe Group accounts consolidate the financial statements of the company and its subsidiaries, which all make uptheir financial statements to 31 December 2003.

TurnoverTurnover primarily comprises gross commission receivable, turn on client money and fees earned in the provisionof broking and custodian services and is stated after deducting value added tax. Turnover is recognised on anaccruals basis. The group operates within one main geographical market being the United Kingdom.

Tangible fixed assetsDepreciation is provided on cost in equal annual instalments over the estimated useful lives of the assets. The ratesof depreciation are as follows:

Fixtures, fittings and equipment, computers and motor vehicles 25% per annum.

InvestmentsInvestments held as fixed assets are stated at cost less provision for any impairment.

Intangible assetsThe Groups' investment in the share.com domain name is amortised over 10 years on a straight line basis fromthe year of completion of the transaction purchase.

GoodwillGoodwill acquired is stated at cost less amortisation, which is calculated so as to write off the cost over its usefullife.

Operating leasesOperating lease rentals are charged to profit and loss in equal amounts over the lease term.

Deferred taxationDeferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date topay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based oncurrent tax rates and law. Timing differences arise from the inclusion of items of income and expenditure intaxation computations in periods different from those in which they are included in financial statements.

Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will berecovered.

Deferred tax assets and liabilities are not discounted.

Pension schemeIf requested the group contributes to a defined contribution pension scheme of the employees' choice.Contributions are charged to the profit and loss account as they become payable. The assets of these schemesare held separately from those of the group in independently administered funds.

Purchase of shares for Employee Benefit TrustDuring the year, the Group acquired a number of shares in Share Plc, which are held by ShareSecure Ltd, a trusteeprovider, 100% owned by Share Plc. This purchase was made to meet potential obligations arising from the issueof share options made to employees. The group has adopted the Accounting Standards Board Urgent Issues TaskForce abstract 38 'Accounting for ESOP Trusts', and these transactions have been accounted for under thisabstract. As such, the original cost of investment has been deducted in arriving at shareholders' funds (the amountsare shown in a separate reserve, called "Employee Benefit Reserve"). There has been no impact on the currentyear's profit and loss account, or balances in comparative periods.



2 PARENT COMPANY PROFIT AND LOSS ACCOUNT

The company has taken advantage of section 230 of the Companies Act 1985 not to present its own profit and loss account. Of theconsolidated profit for the financial year, a profit of £48k (2002 - profit of £17k) has been dealt with in the financial statements of thecompany.

3 GROUP STAFF COSTS

2003 2002No. No.

The average number of staff employed by the group, who are all involved in the provision of broking and custodian services, including executive directors and excluding non-executive directors and temporary staff, was: 102 106

2003 2002£'000 £'000

Staff costs during the year (including executive directors)

Wages and salaries 2,194 2,262

Profit sharing bonus 263 183

Social security costs 259 236

Pension costs 167 163

2,883 2,844

4 DIRECTORS

Emoluments of directors of the group (which are included in the above figure) were as follows:

2003 2002£'000 £'000

Emoluments (excluding pension contributions) 601 519

Pension contributions 31 30

Within the above emoluments is included £10k (2002 - £9k) made payable to third parties for making available the services of individuals asdirectors of the company.

The directors (and other staff) are entitled to deal in securities through the company in accordance with personal account dealing rules. Theseprovide that staff receive the same terms as clients, except they are entitled to reduced commission rates which are available to all staff.

2003 2002No. No.

Number of directors who made gains on the exercise of share options 4 -

2003 2002No. No.

Number of directors who are members of a defined contribution pension scheme 5 5

2003 2002£'000 £'000

Highest paid director's remuneration

Emoluments (excluding pension contributions) 126 109

Pension contributions 7 7


24 NOTES TO THE ACCOUNTS



5 OPERATING PROFIT

2003 2002£'000 £'000

The operating profit is arrived at after charging:

Depreciation of tangible fixed assets 274 322

Amortisation of goodwill and other intangibles 18 18

Profit on sale of fixed assets 1 -

Auditors' remuneration - audit fees 38 33

Auditors' remuneration - taxation 14 12

Auditors' remuneration - other services 3 12

Operating lease rentals - land and buildings 336 335

Operating lease rentals - other 93 124

6 INTEREST PAYABLE AND SIMILAR CHARGES

2003 2002£'000 £'000

Subordinated loan interest 4 9

Other loan interest 3 3

Bank overdrafts and other borrowings repayable within five years 5 4

12 16

7 TAX CHARGE ON PROFIT ON ORDINARY ACTIVITIES

2003 2002Tax on profit on ordinary activities: £'000 £'000i) Analysis of tax charge on ordinary activities

United Kingdom corporation tax at 30% (2002 - 30%) (506) (389)

Adjustments in respect of prior years 9 -

(497) (389)

ii) Factors affecting tax charge for the current year

The tax assessed for the year is lower than that resulting from applying the standard rate of corporation tax in the UK at 30% (2002 - 30%).

The differences are explained below: 2003 2002£'000 £'000

Profit on ordinary activities before tax 1,691 1,185

Tax at 30% thereon (507) (356)

Effects of:

Expenses not deductible for tax purposes (9) (25)

Capital allowances in excess of depreciation (25) (30)

UK dividend income 13 -

Rate differences on current tax 22 22

Prior period adjustments 9 -

Current tax charge for year (497) (389)



26

7 TAX CHARGE ON PROFIT ON ORDINARY ACTIVITIES (continued)

Deferred Tax

A deferred tax asset has not been recognised in respect of timing differences relating to accelerated capital allowances as it is uncertain thatthe asset will be recovered. The amount of the asset not recognised is £67k (2002 - £42k). The asset would be recovered if suitable profitswere to arise in future periods against which the asset would crystallise.

8 DIVIDEND

2003 2002£'000 £'000

Final dividend proposed:

0.132p per ordinary 0.5p share (2002 - 0.12p per ordinary 0.5p share) 201 178

Dividend payments to shareholders which total less than £3 are not paid away by the company in accordance with the Articles ofAssociation.

9 EARNINGS PER SHARE

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

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue assuming conversion of allpotential dilutive ordinary shares. The potential ordinary shares consist of those share options and warrants where the exercise price is lessthan the average price of the company's ordinary shares during the year, and convertible loan notes. The calculation results in a difference ofonly a small fraction of a penny, which is eliminated altogether in roundings.

2003 2002£'000 £'000

Profit for the financial year 1,194 796

Loan interest on convertible loan stock (Note 15) 4 4

Basic earnings attributable to ordinary shareholders 1,198 800

Diluted earnings attributable to ordinary shareholders 1,196 698

No. ('000) No. ('000)

Weighted average number of ordinary shares 160,223 161,878

Effect of potential dilutive share options 343 152

Adjusted weighted average number of ordinary shares 160,566 162,030

Basic earnings per share (pence) 0.7 0.5

Diluted earnings per share (pence) 0.7 0.4





10 TANGIBLE FIXED ASSETS

The Group

Motor Computers Fixtures, Totalvehicles fittings and

equipmentCost £'000 £'000 £'000 £'000

At 1 January 2003 13 1,548 355 1,916

Additions 12 57 - 69

Disposals (13) - - (13)

At 31 December 2003 12 1,605 355 1,972

Accumulated depreciation

At 1 January 2003 8 1,178 180 1,366

Charge for the year 3 193 78 274

Disposals (10) - - (10)

At 31 December 2003 1 1,371 258 1,630

Net book value

At 31 December 2003 11 234 97 342

At 31 December 2002 5 370 175 550

11 INVESTMENTS HELD AS FIXED ASSETS

The Group - cost

2003 2002£'000 £'000

Unlisted investment 217 217

Investments - listed on recognised stock exchanges in Great Britain - 3

217 220

The unlisted investment comprises 6,030 shares in Euroclear plc of one Euro each. These shares are stated at original cost representing theinvestment made in Crestco Ltd which was acquired by Euroclear plc during 2002. In the directors' opinion, the shares in Euroclear plc have avalue greater than the underlying cost.

The group is also the beneficial owner of 800,000 (2002 - 800,000) London Stock Exchange plc ordinary shares of 5p each which have beenincluded at £nil cost (2002 - £nil). At 31 December 2003 the London Stock Exchange plc shares had a market value of £2,672k.

The Company - cost

2003 2002£'000 £'000

Shares in subsidiaries 254 254


28

11 INVESTMENTS HELD AS FIXED ASSETS (continued)

The parent company and the group have investments in the following subsidiary undertakings:

Subsidiary undertakingsPrincipal activity Proportion of

ordinary shares held by company

The Share Centre Limited Retail stockbroking 100%

The Share Centre (Administration Services) Limited Administrative services 100%

The Shareholder Limited Publishing/Mail order 100%

Share Nominees Limited Bare trustee nominee 100%*

Stock Academy Nominees Limited Bare trustee nominee 100%*

Sharesecure Limited Bare trustee 100%

Personal Retirement Account Limited Pension service trade name holder 100%

ShareMark Limited Share-trading market 100%

The Share Centre (Investment Management) Ltd OEIC Authorised Corporate Director 100%

* ordinary shares held by The Share Centre Limited.

All of the above companies were registered and incorporated, and are operated, in England and Wales.

12 INTANGIBLE ASSETS

a) Goodwill 2003 2002

£'000 £'000

Cost

At 1 January 2003 and 31 December 2003 10 10

Amortisation

At 1 January 2003 8 6

Charge for the year 2 2

At 31 December 2003 10 8

Net book value

At 31 December 2003 - 2

At 31 December 2002 2 4

Group investments

b) Other intangibles

The company is the beneficial owner of the share.com domain name and is stated at original cost £164k which secured the rights to thename. The company is amortising this asset over a 10 year period and during the current year there was amortisation of £16k (2002 - £16k).At 31 December 2003 there was a balance of £132k (2002 - £148k).



29




13 DEBTORS

Group Company

2003 2002 2003 2002£'000 £'000 £'000 £'000

Trade debtors 2,983 934 - -

Amounts owed by group undertakings:

By subsidiaries due in under one year - - 753 676

By subsidiaries due in over one year - - 150 150

Other debtors 243 199 - -

Prepayments and accrued income 1,085 1,065 - -

4,311 2,198 903 826

14 CASH AT BANK AND IN HAND

Group Company

2003 2002 2003 2002£'000 £'000 £'000 £'000

Cash 5,946 4,756 100 34

Cash held on trust for clients (a) 1,335 778 - -

7,281 5,534 100 34

a) This amount is held by The Share Centre Limited in trust on behalf of clients but may be used to complete settlement of outstanding bargains and dividends due.

b) At 31 December 2003 segregated deposit amounts held by the group on behalf of clients in accordance with the client money rules of the Financial Services Authority amounted to £49,614k (2002 - £43,396k). The group has no beneficial interest in these deposits and accordingly they are not included in the balance sheet.

15 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group Company

2003 2002 2003 2002£'000 £'000 £'000 £'000

Subordinated loan (see note below) - 100 - -

Trade creditors 3,729 1,208 - -

Corporation tax 304 255 12 11

Other taxation and social security 228 186 - -

Accruals and deferred income 746 532 - -

Dividend payable 293 246 293 246

Convertible loan stock (see note below) 50 50 50 50

5,350 2,577 355 307

The subordinated loan of £100k was repaid in May 2003 with prior permission of the Financial Services Authority.

The Convertible Loan Stock bears interest at 7.5% p.a. and is convertible to ordinary shares at the option of the holder at the rate of £20loan notes for 500 ordinary 0.5p shares after 22 December 1999 or on earlier flotation, or is redeemable at par between 22 December 2001and 22 December 2005.


30

16 CALLED UP SHARE CAPITAL

2003 2002£'000 £'000

Authorised:

300,000,000 ordinary shares of 0.5p each(2002 - 300,000,000 ordinary shares of 0.5p each) 1,500 1,500

Allotted and fully paid:

159,629,729 ordinary shares of 0.5p each(2002 - 155,500,418 ordinary shares of 0.5p each) 798 777

The increase in Share Capital at par value was as a result of the issue of free shares to the group's customers and the exercising of EmployeeShare Options during the year.

The total cash consideration received for shares issued in the year was £48k (2002 - £8k)

The outstanding Employee Share Options at the 31 December 2002 were as follows:

Option First Exercise Last Exercise Options OptionsPrice Date Date outstanding at 31 outstanding on 31

£ December 2003 December 20020.011 29 July 1999 29 July 2006 350,000 450,000

0.011 6 April 2001 6 April 2008 693,750 2,295,000

0.011 18 March 2002 18 March 2009 512,500 2,783,500

0.040 28 January 2003 28 January 2010 150,000 200,000

0.360 21 June 2004 21 June 2011 182,937 182,937

0.200 21 June 2004 15 November 2011 303,889 303,889

0.200 21 December 2005 15 November 2011 200,000 200,000

0.200 21 June 2007 15 November 2011 218,889 218,889

0.220 22 December 2004 22 December 2011 215,266 215,266

0.160 22 June 2005 22 June 2012 332,622 332,622

0.100 22 December 2005 22 December 2012 596,200 596,200

0.140 22 June 2006 22 June 2013 220,000 -

0.160 22 December 2006 22 December 2013 220,000 -

0.120 21 March 2006 21 March 2013 300,000 -

0.120 21 March 2007 21 March 2013 200,000 -

0.120 21 March 2008 21 March 2013 200,000 -



31




17 MOVEMENT ON CONSOLIDATED SHAREHOLDERS' FUNDS AND STATEMENT OF MOVEMENTS ON RESERVES

Issued Share Employee Profitshare Premium Benefit and loss

capital Account Reserve Account TotalThe Group £’000 £’000 £’000 £’000 £’000

At 1 January 2003 777 2 - 5,296 6,075

Purchase of ESOP shares - - (183) - (182)

Retained profit for the year - - - 993 993

Proceeds from issue of shares in the year 21 27 - - 48

At 31 December 2003 798 29 (183) 6,289 6,933

The Company Profit andloss account

£’000

At 1 January 2003 27

Retained profit for the financial year 48

At 31 December 2003 75

The balance on the Share Premium account has arisen as a result of the exercise of share options by employees.

18 EMPLOYEE BENEFIT RESERVE

As explained in Note 1, the employee benefit reserve represents shares in Share plc purchased by ShareSecure Ltd, to meet potentialobligations arising from the issue of share options made to directors and employees. At 31st December 2003 this reserve consisted of1,182,082 shares in Share plc, purchased at an average of 15.5p each.

19 FINANCIAL COMMITMENTS

Operating leases

At 31 December 2003 the group was committed to making the following payments during the next year in respect of operating leases:

Land and buildings Other£'000 £'000

Leases which expire

Within one year - 55

Over five years 336 -

Other commitments

At 31 December 2003, the group was committed to pay up to a further £106k, in addition to the £1,634k already charged in the profit andloss account, in respect of the operation of various PEP accounts. The directors estimate this residual amount will be payable in the nextyear.

20 RELATED PARTY TRANSACTIONS

The company has taken advantage of exemptions granted by FRS8 not to disclose transactions with other group companies. There were noother related party transactions requiring disclosure.

No material transactions were undertaken between the group companies and other related parties during the year.

INFORMATION FOR SHAREHOLDERS

32 INFORMATION FOR SHAREHOLDERS

SHAREHOLDER BANDINGS

Size No of % of Shares % ofof holding shareholders shareholders held shares held

1 to 100 67,826 79.7 2,968,376 1.9

101 to 500 15,771 18.5 3,130,981 2.0

501 to 1000 821 1.0 548,841 0.3

1001 to 5000 470 0.6 956,041 0.6

5001 or greater 193 0.2 152,025,546 95.2

85,081 100.0 159,629,785 100.0

-

20,000

40,000

60,000

80,000

100,000

120,000

1 5 9 13 17 21 25 29 33 37 41 45 490.0

5.0

10.0

15.0

20.0

SHARE PRICE AND VOLUME TRADED

FINANCIAL CALENDER 2004

31 March 2004 Ex-dividend date for 2003 final dividend

21 May 2004 Annual General Meeting in Aylesbury

24 May 2004 Final dividend paid

22 July 2004 Results for half-year to 30 June announced

22 February 2005 Results for 2004 announced

January - December 2003

Weeks

Volume of shares Price in pence

33INFORMATION FOR SHAREHOLDERS

SHAREHOLDER SERVICES

Investor information

Press releases, half year results and otherinformation relevant to shareholders is available onour website, www.share.com.

Dealing in Share plc shares

Share plc shares are traded on ShareMark(www.sharemark.co.uk) and customers of The Share Centre can place orders via their personalportfolio accessed at www.share.com, by telephone (01296 41 42 43) or in writing, quoting their name,customer reference, portfolio number and thenumber of shares to buy / sell, together with theprice limit. Non-customers of The Share Centre maydeal in Share plc shares via a ShareMarkAuthorised Broker.

ShareMark dealings in Share plc shares are carriedout weekly at 3pm each Friday, except BankHolidays in which case deals are usually struck onthe working day immediately prior to the BankHoliday. For full details visit www.sharemark.co.ukor call 01296 41 41 41.

For a copy of 'The Investor's Guide to ShareMark'call us on 01296 41 41 41.

Share price information

The latest indicative and auction prices for shares inShare plc are available on, www.sharemark.co.uk,via the home page at www.share.com or by calling01296 439 175

Shareholder enquiries

The register of shareholders is maintained at CapitaRegistrars; holdings in the name of Share Nomineesare administered by The Share Centre Limited.Please contact Capita Registrars or The ShareCentre, as appropriate, for any enquiry about yourshare holding including change of name or address.

Shareholders who are also customers of The ShareCentre can access details of their shareholding,including its latest value, at www.share.com usingtheir unique log-in code. To obtain a personalInternet PIN, click on the Login button from the left-hand menu, on the home page, complete yourdetails at the foot of the Login page then 'submit' byclicking on the 'request / renew PIN' button.

Shareholder benefit

Your holding in Share plc qualifies you to receive'dealing commission credit' rebated againstcommission charged on sales and / or purchases ofany investment made through an account with TheShare Centre.

For every Share plc share you hold, you receive aquarterly 'dealing commission credit' of 3p, up to amaximum allowance of £300 per quarter. At the endof each quarter (typically 5th January, April, July andOctober), this shareholder benefit will be paid to youas a rebate against dealing commission on ordersmade in that quarter through any of your accountswith The Share Centre. Rebates earned on dealingthrough a PEP or ISA will, because of InlandRevenue regulations, be paid to your Share Account.

The rebate will be to a maximum of 30% of dealingcommission on orders placed via the Internet, or15% on orders placed by other means. Any creditnot used in any one quarter will lapse.

Further details can be obtained by calling us on 01296 41 41 41.

NOTIFICATION OF ANNUAL GENERAL MEETING

34 NOTIFICATION OF ANNUAL GENERAL MEETING

SHARE PLC (the “Company”)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at Oxford House, Oxford Road,Aylesbury, Bucks, HP21 8ZB on 21 May 2004 at 10am for the transaction of the following business:

AGENDA

1 To receive and adopt the financial statements for the year ended 31 December 2003 and receive the Directors' andAuditors' reports.

2 To declare a final dividend of 0.132p per ordinary share.

3 To re-elect G D R Oldham as director who retires by rotation in accordance with the Articles of Association.

4 To re-elect M J Helliwell as director who retires by rotation in accordance with the Articles of Association.

5 To re-elect S C Kelly as director who retires by rotation in accordance with the Articles of Association.

6 To re-appoint Deloitte & Touche as auditors to the Company until the conclusion of the next Annual General Meetingof the Company and to authorise the Directors to fix their remuneration.

BY ORDER OF THE BOARD

Glenvil Smith, Secretary

Date: 14th April 2004

Registered Office: Oxford House, Oxford Road, Aylesbury, Bucks, HP21 8SZ

1 Any member entitled to attend and vote at the meeting convened by the above notice may appoint one or moreproxies to attend and, on a poll, to vote instead of him. A proxy need not be a member of the Company. A form ofproxy is enclosed for your use if desired. Completion of a form of proxy does not preclude a member from attendingand voting at the meeting in person. To be valid, completed forms of proxy must be returned so as to arrive at theregistered office of the Company not later than 9.30 pm on 19 May 2004.

2 The Company specifies pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, that only thoseshareholders registered in the register of members of the Company as at 6.00 pm on 19 May 2004 shall be entitled toattend or vote at the meeting in respect of the number of shares registered in their respective names at that time.Changes to entries on the register after that time will be disregarded in determining any rights of any person to attendor vote at the meeting.

3 A copy of the annual consolidated accounts, together with a copy of the Directors' Report and Auditors' Report onthe accounts which are to be laid before the above meeting are enclosed.

Share plc Registered Office: Oxford House, Oxford Road, Aylesbury, Bucks, HP21 8SZ

Telephone 01296 41 41 41 Fax 01296 41 41 40 Email [email protected] Website www.share.com

Auditors: Deloitte and Touche

Bankers: Bank of Scotland, HSBC and Unity Trust Bank

Company Registrar: Capita RegistrarsThe Registry, 34, Beckenham Road, Beckenham, Kent BR3 4TU

This document constitutes a financial promotion under the Financial Services and Markets Act 2000 and has beenapproved by The Share Centre, a member of the London Stock Exchange. The Share Centre is authorised and regulated by the Financial Services Authority.

Sharemark is not a Recognised Investment Exchange and shares traded on ShareMark may be unlisted. It may be difficult for investors to buy and sell those shares and obtain reliable information about their value or the extentof the risks to which the share price is exposed. The share price of the shares traded on ShareMark mayfluctuate and could fall against investors’ interests. The share price may be subject to sudden and large falls invalue given the restricted marketability of the shares. Investors may get back less than their initial investment.

Share prices, values and income can go down as well as up and investors may get back less than their original investment. The investments and services contained within this document may not be suitable for all investors. If in doubt, independent advice should be sought.

Documents

Spanning the investment markets · fashion or market circumstances. ... The savings and investment industry has, over the past few years, suffered a loss of reputation partly as a