1 1 business presentation - March 2015 AGENDA The business: a - - PowerPoint PPT Presentation

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business presentation - March 2015

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AGENDA

The business: a summary Delivering our strategy 2014 performance Future growth drivers

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THE BUSINESS: A ONE PAGE SUMMARY

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• Parent company of The Share Centre

Limited and Sharefunds Limited

• Principal business (97% of revenues) –

retail execution-only stockbroking

• Largest independent publicly quoted

retail execution-only stockbroker

• The Share Centre founded in 1990
• Over 38,000 customer shareholders
• Circa 265,000 accounts for 227,000

customers

• £2.6bn of assets under administration
• Over 80% of transactions undertaken
• nline
• Revenue model split between dealing

commission, fees and interest income

• Gaining market share of revenues

relative to peers*

• Profitable since 1996, and throughout

the last two bear markets

* The peer group comprises: Alliance Trust Savings, Barclays Stockbrokers, Equiniti, Halifax Sharedealing (HBoS),

HSBC Stockbrokers, Saga Personal Finance, Selftrade and TD Direct Investing

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THE BUSINESS MODEL: FINANCIAL ASPECTS

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• Scalable delivery
• Strong balance sheet
• Aligned stakeholder interests

‐ Employees ‐ Customers ‐ Shareholders

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OUR STRATEGY

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DELIVERING OUR STRATEGY – 2014

putting customers first focus on core business partnerships & acquisitions

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DELIVERING OUR STRATEGY – 2014

Management changes Website Opening hours

Awards 2014

Best Stockbroker for Customer Service – Financial Times & Investors Chronicle Best Online Stockbroker – Personal Finance Awards Best ISA Provider – Shares Magazine Highest Overall Client Satisfaction - Investment Trends Best Customer Service – Investment Trends Best Stockbroker – MoneyAM Best Customer Service - MoneyAM

Awards 2015

Best Online Stockbroker – ADVN Self Select ISA Provider of the Year - ADVN

putting customers first

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DELIVERING OUR STRATEGY – 2014

Bolder marketing IPOs EIS administration

focus on core business

Barclays contract Share Radio

partnerships & acquisitions

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EXPERIENCED MANAGEMENT

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MIKE BIRKETT FINANCE DIRECTOR Joined from Thomas Cook 2014 GAVIN OLDHAM CHAIRMAN RICHARD STONE CHIEF EXECUTIVE RICHARD TOLKIEN FRANCESCA ECSERY GARETH THOMAS Career at John Lewis Joined 2014 DARREN CORNISH DIRECTOR OF CUSTOMER EXPERIENCE Joined from E.ON 2015 JOHN SARGEANT IT DIRECTOR Joined from One Stop (Tesco) 2014

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Share plc & The Share Centre The Share Centre only Non-Executive Director

DIRECTORS

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REGULATORY CHANGES

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April 2014 RDR 2 April 2014 AIM Stamp Duty removed 2014 – 15 Pension and ISA changes July 2014 CASS rules To come MiFID II

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MARKET BACKDROP

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3100 3200 3300 3400 3500 3600 3700 3800

FTSE All Share

• Year of two halves –

volatility increased in H2

• Impact on personal

investor activity

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2014 PERFORMANCE

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OUR PERFORMANCE – 2014

• Revenue market share* at record level

‐ Including interest: 7.66% ‐ Excluding interest: 8.69%

• Revenue flat: £15.0m

‐ Including interest: 0.2% ‐ Excluding interest: 2.6%

• Operating profit: £0.4m
• Headline profit before tax: £0.8m
• Underlying earnings (profit after tax): £1.5m
• Strong balance sheet: net cash £12.7m and available for sale

investments £9m

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

2013

7.16% 7.64% £15.0m £1.4m £1.7m £1.8m £13.6m

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OUR PERFORMANCE – 2014 – REVENUES

1,000 2,000 3,000 4,000 5,000 6,000 7,000 Dealing Commission Fees Interest

2013 2014 £000s

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REVENUE PERFORMANCE RELATIVE TO PEER GROUP – 2014

• 13.2%

3.2%

• 10.4%
• 0.8%

6.3% 2.6%

• 15%
• 10%
• 5%

0% 5% 10%

Peer Group TSC

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

Dealing Commission Fees Overall excluding Interest

• Interest income for the Group fell 14.5% (peer group rose 24.4%)
• Overall revenue growth including interest was 0.2% (peer group fell 6.4%)

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OUR PERFORMANCE – 2014 – MARKET SHARE

4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 2010 2011 2012 2013 2014

Record 7.66%

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

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OUR PERFORMANCE – 2014 - COST BASE

£m

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OUR PERFORMANCE – 2014 – PROFITABILITY

500 1,000 1,500 2,000 2,500 3,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 2010 2011 2012 2013 2014 Revenues Underlying earnings (profit after tax)

Revenues £000s Underlying earnings £000s

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OUR PERFORMANCE – DIVIDEND HISTORY

Continued pattern of c.20% growth per annum

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

pence per share

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OUR PERFORMANCE – 2014 – BALANCE SHEET STRENGTH

Net cash £12.7m

• 5,000

5,000 10,000 15,000 20,000 25,000

2012 2013 2014

£ 000s

Cash Investments Other

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TRADING IN SHARE PLC SHARES

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• Share plc shares traded on AIM
• Ownership: 76% Oldham family
• Employee share scheme requirements bought in secondary

market

• Substantial benefit for customer shareholders with 500 or more

Share plc shares: 30% discount on internet and mobile dealing commissions makes The Share Centre’s effective frequent trader commission just £5.25 per transaction

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MARKET OVERVIEW

Deflation Increased freedom Uncertainty Changing landscape FCA

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FUTURE GROWTH DRIVERS

putting customers first focus on core business partnerships & acquisitions

Customer service and independence Value and regulation Increased need to save and make own arrangements Service development, eg website Ongoing marketing spend Scalable business model Corporate partnerships Market consolidation New entrants underpinned by greater commerciality

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SUMMARY & OUTLOOK

• Business strategy is clearly defined
• Delivering against strategy
• Consistent financial performance
• Strong balance sheet
• Increased market visibility
• Growth drivers supporting long term revenue growth
• Scalability of business can deliver margin expansion

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This presentation does not constitute investment advice and should not be relied upon for investment decisions. The information in this presentation is not an invitation, inducement or other solicitation for the purchase or sale of any investment. It was obtained from sources believed to be reliable but its accuracy or completeness cannot be

• guaranteed. Any opinions expressed are given in good faith but are

subject to change without notice.

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HISTORY OF SHARE PLC GROUP

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1990 Gavin Oldham left Barclayshare to establish The Share Centre 1991 The Share Centre started trading (privatisations & newspaper services) 1999 Acquisition: Bradford & Bingley Corporate PEPs 2000 Free Share Offer & SIP/EMI program 2002 Acquisition: Stock Academy 2005 Re-branding & retail promotion 2008 AIM flotation 2010 Acquisition: Wills & Co customer base 2012 Acquisition: JPJ Share.com customer base 2014 Management succession & RDR

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EXPERIENCED MANAGEMENT

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Gavin Oldham, 65 Executive Chairman Founder of The Share Centre, having previously established Barclayshare (now Barclays Stockbrokers) for Barclays Bank, Gavin plays an active role in business affairs and is a regular contributor to radio and TV. He received the Editor’s award for services to private investors from the FT/Investors Chronicle in 2013. In 2005 he founded The Share Foundation and in 2014 founded Share Radio Limited. He is Chief Executive of both those organisations. Richard Stone, 41 Chief Executive Richard’s responsibilities include all aspects of oversight, including the Group’s strategy for growth, and encompass control and management of the Group’s business. A qualified Chartered Accountant, he joined Share plc in April 2006, from his previous role as a Director of Huntswood - an outsourcing business serving the financial services sector. His earlier investment market experience as an equity research analyst with the US investment bank, Robertson Stephens, included involvement in a number of initial public offerings across Europe. Prior to 2014 Richard was Group Finance Director and Chief Operating Officer. Mike Birkett, 43 Finance Director Mike joined The Share Centre in February 2014 and has responsibility for the finance, settlement and other account administration functions in addition to Human Resources. Mike is a Chartered Accountant and a Chartered Fellow of the CISI. Previous to this, Mike was Finance Director at Thomas Cook Online, the e-commerce centre of excellence within Thomas Cook Group Plc. Prior to that he worked for eight years with Betfair Group plc, initially as Head of Financial Planning and Analysis and then as Finance Director of Betfair Group plc’s financial trading exchange, LMAX. Richard Tolkien, 60 Non-Executive Director Richard started his career with five years at HM Treasury, and then went on to spend 24 years as an investment banker with advisory and management experience gained in senior corporate finance and executive roles with Morgan Grenfell, HSBC and Macquarie Bank. He is retained as an independent expert witness on banking and corporate finance in litigation and arbitration and is the Chairman of the trustees of Stoke Mandeville Spinal Research.

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EXPERIENCED MANAGEMENT

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Francesca Ecsery, 51 Non-Executive Director Francesca has a background in consumer-led organisations, with particular expertise in online sales, marketing and service delivery. Francesca was most recently the Global Business Development Director at Cheapflights Media, and prior to that Managing Director, International, at STA Travel Group, the world’s largest student travel company. Francesca also uses this expertise to play a leading role as Publications Officer within the Women in Advertising and Communications London (WACL) organisation – a not-for-profit group of influential women working in marketing and communications. She is also a Non-Executive Director of Good Energy Group plc and Foreign and Colonial Investment Trust. Gareth Thomas, 57 Non-Executive Director Gareth joined the Group as Non-Executive Director in December 2014. Gareth was an executive Board director of John Lewis plc (“John Lewis”), the UK retailer, for ten years until his retirement in2010, having begun his career at the retailer in 1979 as a graduate trainee. At John Lewis, he established a track record for delivering strong growth and financial results, and was a passionate believer in the importance of customer service and brand. Since leaving John Lewis, Gareth has continued to provide consultancy advice to retailers and is a Director of NaturePaint Ltd, the manufacturer of natural paints. He is also Non-Executive Director and Trustee of TATE, one of the world’s leading art galleries. John Sargeant, 44 IT Director – The Share Centre Limited John joined The Share Centre in November 2014 and has responsibility for all of the Group’s systems architecture, development and infrastructure. John was previously Head of IT at One Stop, the retail convenience subsidiary of Tesco plc with over 750 stores across England and Wales. Prior to his seven years with One Stop, John was Business Systems Manager with Signet Jewellers Limited, the largest speciality jewellery retailer in the US, UK and Canada, whose brands include H Samuel and Ernest Jones. Darren Cornish, 44 Director of Customer Experience – The Share Centre Limited Darren joined The Share Centre in January 2015 and has responsibility for the customer experience, from customer acquisition through to customer engagement and service delivery. Darren was previously UK Head of Residential Operations and In-House Sales at E.ON, responsible for servicing the company’s 5.2 million UK customers. Before joining E.ON, Darren worked for Aviva plc, the multinational insurer, for 16 years, ultimately assuming the position of Director of Customer Experience.