1 1 AGM 10 June 2014 8 8 AGM 10 June 2014 10 10 AGM 10 June - - PowerPoint PPT Presentation

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1 1 AGM 10 June 2014 8 8 AGM 10 June 2014 10 10 AGM 10 June 2014 AGENDA The business a one page summary Delivering our strategy 2013 performance Future growth drivers 11 11 AGM 10 June 2014 THE BUSINESS CASE A ONE

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AGENDA

The business – a one page summary Delivering our strategy 2013 performance Future growth drivers

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THE BUSINESS CASE – A ONE PAGE SUMMARY

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  • Parent company of The Share Centre

Limited and Sharefunds Limited

  • Principal business (98% of revenues) –

retail execution-only stockbroking

  • Largest independent publicly quoted

retail execution-only stockbroker

  • The Share Centre founded in 1990
  • Over 40,000 customer shareholders
  • Circa 270,000 accounts for 228,000

customers

  • Over £2.4bn 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, NatWest Stockbrokers (RBS), Saga Personal Finance, Selftrade and TD Direct Investing

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DELIVERING OUR STRATEGY

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KEY DEVELOPMENTS IN 2013

  • Introduction of a revised tariff
  • Conversion of fund holdings to clean share classes
  • Return of large scale retail initial public offerings (IPOs)
  • New website launch
  • New partners
  • Management succession

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INTRODUCTION OF REVISED TARIFF

  • First major change in tariff for over 10 years
  • Detailed market research
  • Simple, low-cost fixed fee
  • Empowering customers not penalising their success
  • Clear and distinct market positioning
  • Generally well received – low level of complaints

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COMPETITOR PRICING

Service from: Annual Cost (exc VAT) Share plc (via The Share Centre) (no fund-specific charge) £18 Charles Stanley (0.25%) £125 NatWest Stockbrokers (0.3%) £150 T D Direct Investing (0.3%) £150 Fidelity (0.35%) £175 Barclays Stockbrokers (0.35%) £175 Hargreaves Lansdown (0.45%) £225

The contrast in custody fees for holding £50,000 worth of funds in a dealing account is now stark

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CONVERSION TO CLEAN SHARE CLASSES

  • Proactive approach in customers’ interest
  • Only clean share classes available on our website
  • Conversion on ex-dividend date
  • Combined with fixed fee tariff – customers experience reduced

costs even compared to ‘super clean’ classes

eg Neil Woodford’s new fund – generally available at 0.75% Annual Management Charge Available through Hargreaves Lansdown with 0.6% AMC … but they also charge 0.45% fee for holding funds on their platform = overall cost of 1.05% per annum The Share Centre cost is 0.75% AMC plus the fixed monthly administration charge £20,000 invested via a share account will cost: £210 per annum with Hargreaves Lansdown and £171.60 per annum with The Share Centre

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RETURN OF LARGE SCALE RETAIL IPOS

The logos are registered trademarks of the respective businesses and are reproduced with their kind permission

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NEW WEBSITE

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NEW PARTNERS

  • Launch of a branded service for First Shares and Red Hot Penny

Shares

  • Continued growth in EIS administration
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MANAGEMENT SUCCESSION

  • Gavin Oldham – Chief Executive to Executive Chairman
  • Richard Stone – Finance Director to Chief Executive
  • Recruitment of Mike Birkett as Finance Director
  • Recruitment of a new Director of Customer Experience for The Share

Centre Limited

  • Smooth transition process
  • Continuity of strategy and stability of ownership
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DELIVERING OUR STRATEGY – 2013

putting customers first focus on core brand partnerships & acquisitions

New website New tariff AIM dealing offer (Oct 13)

Voted Online Stockbroker of the Year & Execution Only Stockbroker of the Year by readers of the FT & Investors Chronicle

Sharefunds refocus New tariff Retail IPOs Management succession New white labels

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OUR PERFORMANCE - 2013

  • Revenue market share* at record level – up 5% to 7.16%
  • Revenue increased by 7.8% to £15.0m
  • Operating profit increased by 51% to £1.4m
  • Profit before tax increased by 157% to £1.7m
  • Underlying basic and diluted earnings per share increased to 1.3p
  • Final (and total) dividend proposed of 0.52p per share up 21%
  • Strong balance sheet – net cash increased 12% to £13.6m

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

2012 6.80% £13.9m £0.9m £0.7m 0.9p 0.43p £12.2m

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OUR PERFORMANCE – 2013 – REVENUES

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REVENUE PERFORMANCE RELATIVE TO PEER GROUP

2013 v 2012

7.8%

%

1.4%

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OUR PERFORMANCE – MARKET SHARE

a record high

Revenues: market share

4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 2007 2008 2009 2010 2011 2012 2013

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

HSBC Stockbrokers, NatWest Stockbrokers (RBS), Saga Personal Finance, Selftrade and TD Direct Investing

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OUR PERFORMANCE - PROFITABILITY

10 11 12 13 14 15 16 0.5 1 1.5 2 2.5 3 3.5 2007 2008 2009 2010 2011 2012 2013

Revenues Operating Profit

Operating profit £m Revenues £m

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2013 FINANCIAL RESULTS

Dividend

Continued pattern of c.20% growth per annum

0.1 0.2 0.3 0.4 0.5

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

pence per share

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2013 FINANCIAL RESULTS

Increase of over £1m in cash balances held Increase in value of investments

Balance sheet strength

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PERFORMANCE – Q1 2104

  • Revenues 6.3% higher than same period last year
  • Stronger performance than our peer group
  • Assets under management at £2.4bn
  • Record ISA season, with net transfers in for the first time
  • Budget changes from July 2014

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MARKET OVERVIEW

Low interest rates Seeking guidance Improving Costs & opportunity FCA

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THE REGULATORY ENVIRONMENT

  • Increased transparency of charges
  • Desire to support online guidance
  • New client money rules
  • European regulation
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FUTURE GROWTH DRIVERS

putting customers first focus on core brand partnerships & acquisitions

Value and regulation Increased need to save and make own arrangements Customer service and independence Fund conversions/ transfers Service development, eg website AIM share trading Ongoing marketing spend Corporate gateways Scalable business model Infrastructure already established and proven

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SUMMARY & OUTLOOK

  • Business strategy is clearly defined
  • Delivered against strategy in 2013
  • Financial performance improved in 2013
  • Increased market visibility
  • Growth drivers supporting long term revenue growth
  • Scalability of business can deliver margin expansion
  • Positive start to 2014
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AGM RESOLUTIONS

1. Report & financial statements for y/e 31 December 2013 2. Directors’ remuneration report for y/e 31 December 2013 3. Final dividend for y/e 31 December 2013 4. Re-elect Gavin David Redvers Oldham as director 5. Re-elect Richard Ian Tolkien as director 6. Elect Michael David Birkett as director 7. Re-appoint Deloitte LLP as auditors 8. Authorise directors to allot shares (section 551) 9. Disapply section 561 Companies Act 2006

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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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