1 1 business presentation - March 2015
AGENDA The business: a summary Delivering our strategy 2014 performance Future growth drivers 2 2 business presentation - March 2015
THE BUSINESS: A ONE PAGE SUMMARY • Parent company of The Share Centre • £2.6bn of assets under administration Limited and Sharefunds Limited • Over 80% of transactions undertaken • Principal business (97% of revenues) – online retail execution-only stockbroking • Revenue model split between dealing • Largest independent publicly quoted commission, fees and interest income retail execution-only stockbroker • Gaining market share of revenues • The Share Centre founded in 1990 relative to peers* • Over 38,000 customer shareholders • Profitable since 1996, and throughout the last two bear markets • Circa 265,000 accounts for 227,000 customers * The peer group comprises: Alliance Trust Savings, Barclays Stockbrokers, Equiniti, Halifax Sharedealing (HBoS), HSBC Stockbrokers, Saga Personal Finance, Selftrade and TD Direct Investing 3 3 business presentation - March 2015
THE BUSINESS MODEL: FINANCIAL ASPECTS • Scalable delivery • Strong balance sheet • Aligned stakeholder interests ‐ Employees ‐ Customers ‐ Shareholders 4 4 business presentation - March 2015
OUR STRATEGY 5 5 business presentation - March 2015
DELIVERING OUR STRATEGY – 2014 putting focus on core partnerships customers first business & acquisitions 6 6 business presentation - March 2015
DELIVERING OUR STRATEGY – 2014 Awards 2014 Best Stockbroker for Customer Service – Financial Times & Investors Chronicle Best Online Stockbroker – Personal Finance Awards Best ISA Provider – Shares Magazine putting Highest Overall Client Satisfaction - Investment Trends Best Customer Service – Investment Trends customers first Best Stockbroker – MoneyAM Best Customer Service - MoneyAM Management changes Website Awards 2015 Opening hours Best Online Stockbroker – ADVN Self Select ISA Provider of the Year - ADVN 7 7 business presentation - March 2015
DELIVERING OUR STRATEGY – 2014 focus on core partnerships business & acquisitions Bolder marketing Barclays contract IPOs Share Radio EIS administration 8 8 business presentation - March 2015
EXPERIENCED MANAGEMENT MIKE BIRKETT FINANCE DIRECTOR RICHARD STONE Joined from Thomas CHIEF EXECUTIVE Cook 2014 1 1 Share plc & JOHN SARGEANT 1 The Share Centre IT DIRECTOR GAVIN OLDHAM 2 1 Joined from One Stop CHAIRMAN (Tesco) 2014 DIRECTORS 2 The Share Centre only GARETH THOMAS DARREN CORNISH 3 2 Career at John Lewis DIRECTOR OF CUSTOMER 3 Joined 2014 Non-Executive Director EXPERIENCE Joined from E.ON 2015 3 3 RICHARD TOLKIEN FRANCESCA ECSERY 9 9 business presentation - March 2015
REGULATORY CHANGES April 2014 RDR 2 April 2014 AIM Stamp Duty removed 2014 – 15 Pension and ISA changes July 2014 CASS rules To come MiFID II 10 10 business presentation - March 2015
MARKET BACKDROP FTSE All Share 3800 3700 Year of two halves – • 3600 volatility increased in H2 3500 Impact on personal • investor activity 3400 3300 3200 3100 11 11 business presentation - March 2015
2014 PERFORMANCE 12 12 business presentation - March 2015
OUR PERFORMANCE – 2014 2013 • Revenue market share* at record level 7.16% ‐ Including interest: 7.66% ‐ Excluding interest: 8.69% 7.64% • Revenue flat: £15.0m £15.0m ‐ Including interest: 0.2% ‐ Excluding interest: 2.6% £1.4m • Operating profit: £0.4m • Headline profit before tax: £0.8m £1.7m • Underlying earnings (profit after tax): £1.5m £1.8m £13.6m • 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 13 13 business presentation - March 2015
OUR PERFORMANCE – 2014 – REVENUES 7,000 6,000 5,000 £000s 4,000 3,000 2,000 1,000 0 Dealing Commission Fees Interest 2013 2014 14 14 business presentation - March 2015
REVENUE PERFORMANCE RELATIVE TO PEER GROUP – 2014 Dealing Overall Fees Commission excluding Interest 10% 6.3% 5% 3.2% 2.6% Peer Group 0% -0.8% TSC -5% -10% -10.4% -13.2% -15% • 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%) the peer group comprises: Alliance Trust Savings, Barclays Stockbrokers, Equiniti, Halifax Sharedealing (HBoS), HSBC Stockbrokers, Saga Personal Finance, Selftrade and TD Direct Investing 15 15 business presentation - March 2015
OUR PERFORMANCE – 2014 – MARKET SHARE 8.0% Record 7.66% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 2010 2011 2012 2013 2014 the peer group comprises: Alliance Trust Savings, Barclays Stockbrokers, Equiniti, Halifax Sharedealing (HBoS), HSBC Stockbrokers, Saga Personal Finance, Selftrade and TD Direct Investing 16 16 business presentation - March 2015
OUR PERFORMANCE – 2014 - COST BASE £m 17 17 business presentation - March 2015
OUR PERFORMANCE – 2014 – PROFITABILITY 16,000 3,000 15,000 2,500 Underlying earnings £000s 14,000 2,000 Revenues £000s 13,000 1,500 12,000 1,000 11,000 500 10,000 0 2010 2011 2012 2013 2014 Revenues Underlying earnings (profit after tax) 18 18 business presentation - March 2015
OUR PERFORMANCE – DIVIDEND HISTORY 0.7 0.6 0.5 pence per share Continued pattern of c.20% growth 0.4 per annum 0.3 0.2 0.1 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 19 19 business presentation - March 2015
OUR PERFORMANCE – 2014 – BALANCE SHEET STRENGTH 25,000 20,000 15,000 £ 000s 10,000 Net cash £12.7m 5,000 0 2012 2013 2014 -5,000 Cash Investments Other 20 20 business presentation - March 2015
TRADING IN SHARE PLC SHARES • 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 21 21 business presentation - March 2015
22 22 business presentation - March 2015
MARKET OVERVIEW Deflation Uncertainty FCA Changing landscape Increased freedom 23 23 business presentation - March 2015
FUTURE GROWTH DRIVERS putting focus on core partnerships customers first business & acquisitions Customer service and Service development, Corporate partnerships independence eg website Market consolidation Value and regulation Ongoing marketing New entrants spend Increased need to save and make own arrangements Scalable business model underpinned by greater commerciality 24 24 business presentation - March 2015
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 25 25 business presentation - March 2015
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. 26 26 business presentation - March 2015
27 27 business presentation - March 2015
HISTORY OF SHARE PLC GROUP 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 28 28 business presentation - March 2015
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