Profit Watch UK - Latest Report

AIM: SHRE

Share plc

("Share" or "the Group")

Publication of latest "Profit Watch UK" report

Share, which operates The Share Centre Limited, a leading independent UK stockbroker, is pleased to announce the publication of its latest quarterly issue of "Profit Watch UK", which analyses the revenues and profitability of the top 350 UK listed companies. The report examined the financial results of companies with year ends up to the end of 31 December 2014 and which reported results in the quarter to 31 March 2015. A full copy of the report can be found on The Share Centre website at https://www.share.com/experienced-investors/profit-watch-uk.

Profit Watch UK notes:

· FTSE 350 revenues fall to £1.44trn, down 7.7% on like-for-like basis - worst performance since 2010

· FTSE 350 sees declining profits at all levels - from gross to net profit

· 21 sectors see operating profits fall, while 9 saw them rise - worst ratio since 2007

· Net profits drop 9.8% to £64.3bn, lowest total since 2008

· FTSE 250 sees stronger growth than FTSE 100 companies, boosted by UK economic growth

· Resurgent dollar will bring currency gains in 2015, while UK economic growth will support stronger company results

UK plc posted its weakest sales and profits performance in years, as sterling strength, falling oil prices and spluttering global growth took its toll, according to the latest Profit Watch UK report from The Share Centre.

Total annual revenues for FTSE 350 companies with year ends up to the end of December 2014, and that reported them during the first quarter, were £1.44 trillion, down by £116bn compared to a year ago. On a like-for-like basis, this was a 7.7% fall. This is the worst performance by this cohort since 2010.

Falling oil prices, low commodity prices, and weak global economic growth all hit revenues in the UK stock market's three largest sectors - oil, mining and banking. The oil sector lost £63bn, the banking sector was down £24bn and mining companies were down £23bn. The strength of sterling in 2014 also took its toll, especially for companies that report in dollars. One third of the total decline in revenues was due to the higher value of sterling.

The decline was mirrored in company profits. Gross profits totaled £208.4bn, representing a fall of 11.7% on a like-for-like basis. 21 sectors saw operating profits fall, compared to nine who saw them rise - the weakest ratio since at least 2007. Overall, operating profits fell by a fifth (down 18.4% like for like), declining to £91.3bn - a drop of over £20bn.

At pre-tax level, profits fell by 15.8% (like-for-like) to £88.0bn. This slightly better performance than the decline in operating profit was principally due to lower write-downs from mining companies, and a strong performance in the financial industry. Financials were the standout performer, raising pre-tax profits by 43% and adding £10.8bn to its total. Financials were the biggest contributors to UK profits for the first time since 2010. However, the oil sector saw pre-tax profits decline by £26bn, reflecting the weight of restructuring in an industry reacting to lower oil prices.

Overall, companies reporting annual results in the first quarter of 2015 recorded net profits of £64.3bn. This represented a like-for-like fall of 9.8%, and was the lowest level of profit since 2008, when this cohort posted post-tax profits of £33.8bn. While miners and financials made positive contributions, this was overshadowed by the declining profitability of the oil sector, pharmaceuticals, gas utilities, aerospace and tobacco. The number of sectors with net profits rising actually outnumbered those witnessing falls (20 vs 17), but the sheer size of the sectors which saw falls led to profits falling.

UK focus sees mid caps outperform

While the performance of the UK's biggest, most multinational companies weighed on the overall revenues and profits of the FTSE 350, companies in the FTSE 250 have broadly been moving at a different speed. Revenues actually rose in the FTSE 250 (+0.6% like-for-like), while operating profits of mid caps saw a much smaller decline (-0.6% like-for-like) than their large cap peers (-20.3%). Further down the profit and loss account, the picture was less rosy, with the FTSE 250 seeing a 15.8% fall in pre-tax profits, although this was skewed by a £1.4bn loss by Serco.

Broadly, companies exposed to the resurgent UK economy, and less reliant on global trends, performed well. For this reason, property, house construction, support services, retail, and travel and leisure sectors all saw sales grow.

Helal Miah, investment research analyst at The Share Centre, said:

"The goliaths in the FTSE 100 came under intense pressure from a potent cocktail of negative currency effects, falling oil prices and spluttering global growth in 2014. This has taken its toll on results across the UK stock market, with company profits at their lowest level in six years.

"The worst should now be behind us. Oil prices will continue to challenge the sector, and the eurozone remains a concern. However, the pound has now fallen sharply against the dollar, which will boost the results of the UK's largest companies and the financial sector should continue to strengthen. With the domestic economy recovering healthily, alongside real household incomes now rising, we believe profits should increase strongly, especially for mid-caps in more domestically orientated sectors.

"With the UK index so concentrated in the oil, mining and large banks, the index is actually far less diversified than in many other countries. If challenging global trends hit simultaneously, as we saw last year, investors focused on the UK index can be left exposed and facing more risk than expected. It's crucial to be diversified throughout different sectors and size companies, not least because it will allow greater exposure to faster growing, domestically sensitive companies."

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Notes to editors

Methodology

The Share Centre analysed raw data from the financial reports of the UK's largest 350 listed companies (provided by Factset, excluding equity investment trusts), cross referencing with additional data from the London Stock Exchange. The researchers compiled the data for the whole market and analysed by sector and index. This report analyses financial data for companies with year ends up to 31 December 2014 and which reported up to 31 March 2015.

About Share plc

The Share Centre was established in 1990 to provide value-for-money share services for private investors. Its range of services includes buying and selling shares (by Internet, telephone and post) and a comprehensive share administration and safe custody service. Tax-efficient investment 'wrappers' including ISAs, CTFs and SIPPs are also available.

The Share Centre's Advice team provides comment on market sectors, individual shares and funds on www.share.com. Access is available to customers and registered users of the site. Registration is free. To understand how our Advice team arrive at their views please read our Investment Research Policy. The Share Centre blog is also available at http://blog.share.com.

2015

Self Select ISA Provider of the Year - ADVFN International Financial Awards

Best Online Stockbroker - ADVFN International Financial Awards

2014

Best Stockbroker for Customer Service - Financial Times and Investors Chronicle

Best Online Stockbroker - Personal Finance Awards

Best ISA Provider - Shares Magazine

Highest Overall Client Satisfaction award - Investment Trends

Best Customer Service - Investment Trends

Best Stockbroker - MoneyAM

Best Customer Service - MoneyAM

2013

Online Stockbroker of the Year - Financial Times and Investors Chronicle

Execution-only Stockbroker of the Year - Financial Times and Investors Chronicle

Best Online Stockbroker - Personal Finance Awards

2012

Stockbroker of the Year - Financial Times and Investors Chronicle

Execution-only Stockbroker of the Year - Financial Times and Investors Chronicle

Best Online Stockbroker - Personal Finance Awards

Highest Overall Client Satisfaction award - Investment Trends

Best Value for Money - Investment Trends

Best Trading Platform - Investment Trends

2011

Best Online Stockbroker - Financial Times and Investors Chronicle

Best Online ISA Provider - MoneyAM

Best Small Cap Broker - Shares Magazine

Highest Overall Client Satisfaction award - Investment Trends

2010

Best Small Cap Broker - Shares Magazine

Best Online Funds Service - MoneyAM

Risk Warnings:

Investing in general, and the products and services mentioned above may not be suitable for all: if in doubt, individuals should seek independent financial advice. The value of investments and the income from them can go down as well as up and investors may not get back their original investment. Past performance is not a reliable indicator of future performance.

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