3 Mar 2009 07:00
Press release | 3March 2009 |
Share plc
Share plc (AIM: SHRE.LN), parent company of The Share Centre (a leading independent retail stockbroker and operator of Sharemark, the trading platform for growing companies) and Sharefunds (the Group’s investment management and fund administration subsidiary), announces its unaudited annual results for the year ended 31 December 2008. |
·; Revenue rises by 2.1% to £12.0 million (2007: £11.7 million) |
·; Operating Profit rises by 12.3% to £1.3 million (2007: £1.2 million) |
·; Underlying (*) basic and diluted earnings per share consistent with 2007 at 1.1p |
·; Proposed dividend per share increases by 10.0% to 0.22p (2007: 0.20p) |
·; Strong balance sheet with £12.4 million in cash (**) (2007: £11.6 million) |
·; Growth of benchmarked revenue market share to 5.33% (2007: 5.16%) |
“This year has been a special one for the Group with the admission to AIM and successful Offer for Subscription both undertaken in May. In the context of highly volatile financial markets and rapidly deteriorating economic conditions I am pleased to report that the Group has continued to make progress, growing revenues and operating profit and enabling a continuation of our record of increased dividend payments to shareholders. The differentiation between the Group’s business model and that of its peers is now becoming more apparent and stands us in particularly good stead as we move forward. Trading in 2009 has started positively with strong revenue growth and activity levels relative to 2008, including significant numbers of new Share Accounts being opened. Driven by strong dealing commission and with our interest income underpinned (see Chairman’s Statement), we anticipate further significant advances in our key performance indicator – market share of benchmarked revenue – during 2009. With a strong balance sheet we also continue to actively pursue acquisition opportunities which we anticipate may be more forthcoming in these challenging economic times.” |
| Telephone | Mobile |
Gavin Oldham – CEO | 01296 439 100 | 07767 337696 |
Richard Stone - Finance Director | 01296 439 270 | 07919 220599 |
Guy Wiehahn / Oliver Stratton – KBC Peel Hunt – Nominated adviser and broker | 0207 418 8900 | - |
Katie Hayward - Lansons Communications | 0207 294 3631 | 07809 441 803 |
Risk Warning: This document is not intended to constitute an offer or agreement to buy or sell investments and does not constitute a personal recommendation. The investments and services referred to in this document may not be suitable for every investor and if in doubt independent financial advice should be sought. No liability is accepted whatsoever for any loss howsoever arising from any information in this document subject to the rules of the Financial Services Authority or the Financial Services and Markets Act 2000. Share prices, values and income can go down as well as up and investors may get back less than their initial investment. Sharemark is an auction-based dealing facility designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. The securities traded on Sharemark may not be listed. The Sharemark trading facility is operated by The Share Centre Limited. The Share Centre is a member of the London Stock Exchange and is authorised and regulated by the Financial Services Authority under reference 146768. Sharemark constitutes a Multilateral Trading Facility and is not a recognised investment exchange, clearing house or regulated market within the meaning of the Markets in Financial Instruments Directive. Notes for Editors: 1. Share plc is the parent holding company of The Share Centre Ltd and Sharefunds Limited and its shares are traded on Sharemark (www.sharemark.com), the auction-based trading platform designed especially for growing companies, as well as on AIM and PLUS Markets. 2. The Share Centre was formed in 1990 and provides a range of account-based services to enable investors to share in the wealth of the stock market. 3. Retail services include ISAs, CTF accounts and SIPPs, all with the benefit of investment advice, and dealing in a wide range of investments. 4. Services available to corporate clients include Share plan administration, Fund administration and ‘white-label’ dealing platforms. 5. For more details contact 0800 800 008, or visit www.share.com. |
Share plc Preliminary Results for the Year Ended 31 December 2008 Chairman’s statement The year has been a special one for the Group due to its entry on to AIM last May. We would thank again all those shareholders who participated in our Offer for Subscription which was four times oversubscribed, and thank all our staff for their contribution to the ongoing success of the Group. Although at the time of our AIM admission we anticipated a volatile period ahead, it has turned out to be a period of extraordinary market turmoil which has led to recession in the whole economy. I am pleased to report that Share plc has increased its turnover and the Group has made progress in these difficult circumstances. Our principal key performance indicator, benchmarked revenue share†, has improved. This is a real achievement in an exceptionally volatile year which saw stock market valuations, on which a significant element of our fees is based, reduce significantly (the FTSE 100 index fell by over 31%) and interest rates fall from 5.5% to 2.0%. I am also pleased to be able to report that as underlying profits of the business have proven robust the Board is recommending an increase of 10% in the dividend payable to shareholders. This will continue our record of progressively increased dividend returns. The crisis which has hit the banking industry has proved even deeper than many observers thought, and this has impacted us in several ways. Firstly, it has led to periods of intense trading interspersed by periods of market nervousness. We’ve seen large scale, deep discount rights issues and the share prices of banks falling to such levels that many investors have been drawn to make opportunistic purchases. But the spectre of nationalisation still hovers over the wounded behemoths: and there is no stability yet. Undoubtedly our trading has benefited from these bouts of activity, but not sufficiently to outshine the stockbroking subsidiaries of the banks themselves, who naturally see a disproportionate share when it comes to trading in their own shares. Secondly, interest rates have been driven down to historically low levels in an attempt to re-start lending. However falling interest rates hit savers hard, and people are increasingly looking for homes for their money which provide better returns than a cash deposit account, without taking on an unacceptable level of risk. Our advisers have helped to guide such decisions, highlighting investment grade corporate bonds, and equity stocks with the prospect of secure dividend yields. But low interest rates also affect the Group itself, as at any one time we are responsible for c. £100m of cash: both for customers and for the Group. Earning interest on this cash is a key part of our revenue mix, and for this reason we took out an interest rate protection policy in 2007 to guard against just the eventuality which has occurred. That policy is earning us £187,500 per month at the time this report is published, and contributed £134,000 to our 2008 revenues (see note 3 to the financial statements). This will underpin our interest income through to November 2010 enabling the Group to continue offering competitively priced investment services for our retail customers. Thirdly, the very insecurity of the banks has presented a significant challenge. Throughout 2008 Governments have sought to limit the concerns of people and businesses about the security of their cash deposits with major banks, but this has not proved entirely straightforward. Although the UK Government has indicated in its rescue of Northern Rock, Bradford & Bingley and finally RBS and HBOS that it was not prepared to see depositors lose out, the spectacle of the collapse of Lehman Brothers and the Icelandic banks has sent well-founded shocks through the market. For our part, we have striven to ensure the safest havens for the monies for which we are responsible, notwithstanding that the regulators do not allow customer trust status money to be placed into wholly Government backed instruments such as Treasury Bills. All parts of the Group contributed satisfactorily in 2008. Our main retail stockbroking services have seen an encouraging increase in the number of new accounts opened, particularly during the last quarter. This has mainly benefited Share Accounts and ISAs both of which offer online account opening. Internet usage has increased markedly during the year, and we look forward to introducing online account opening for Child Trust Funds, Stakeholder and Self-Invested Personal Pensions later in 2009. Our fund administration business, Sharefunds, is relatively young, with just 6 funds under administration. However notwithstanding the dire state of the market, Sharefunds has made good progress during the year. Despite the downturn in market valuations, funds under administration grew to £10.1m (2007: £7.0m), and discussions continue with a number of managers who are interested in using our facilities. Our share trading platform, Sharemark, continues to attract companies for whom trading requirements of the AIM and PLUS markets are not entirely suitable. Its single price dealing environment which is totally transparent offers substantial benefits in encouraging secondary market liquidity, and we are delighted to have opened a new relationship with London Capital Finance, a corporate advisor with a specialism in smaller companies, in addition to our support for Investbx, the West Midlands regional trading platform. Meanwhile the Group continues to explore prospects for acquisition in pursuit of its revenue objectives. Having a strong balance sheet which contains £12.4m in cash reserves, together with investors’ appetite for Share plc equity demonstrated in our fund raising before the AIM flotation, has put us in a strong position to take advantage from the difficult trading conditions now besetting the industry. The economic outlook for the year ahead is volatile and depressing, and predictions vary from a chronic state of grumbling deflation to a new surge of inflation, resulting from the huge scale of government borrowing. There’s a continuing concern over the falling value of Sterling, but also persistent worries over the integrity of the Euro, as Ireland and the Eurozone’s Mediterranean member states experience real economic strains. In all the uncertainty, however, business will seek the first opportunity to build on this extraordinary era of lower interest rates and, helped by government credit guarantees, will start to look ahead as the year progresses. Markets usually anticipate reviving activity by a considerable period; and we therefore see an improving situation for UK equities in the second half. Furthermore, as businesses find credit hard to come by they will turn increasingly to equity issuance. There may well be a point when institutional investors grow wary of the high prices – and low yields – of government stock, and look again to the equity market as a reliable home for their money. The personal investor will be an important part of such an equity revival, and we continue to lobby for improved access to primary markets: most recently, to share in the bidding for lapsed shares after rights issues. Our projections for market values for the year ahead are therefore cautiously optimistic. With dealing volumes continuing to be strong in the volatile markets, our interest income underpinned, and our strong balance sheet, if this proves correct we believe Share plc’s business will continue to make progress, both in absolute and comparative terms. Sir Martin Jacomb Chairman 3 March 2009 † Benchmark group includes: Alliance Trust Savings, Barclays Stockbrokers, E\* Trade Securities, Equiniti, Halifax Sharedealing, HSBC Stockbrokers, NatWest Stockbrokers, Saga Personal Finance, Selftrade, and T D Waterhouse Investor Services Europe |
Quarterly Data | Q1 06 | Q2 06 | Q3 06 | Q4 06 | Q1 07 | Q2 07 | Q3 07 | Q4 07 | Q1 08 | Q2 08 | Q3 08 | Q4 08 |
Market Share | 4.54% | 4.69% | 5.08% | 4.96% | 5.13% | 5.05% | 5.21% | 5.24% | 5.53% | 5.31% | 5.18% | 5.33% |
Annual Data | 2006 | 2007 | 2008 |
Market Share | 4.80% | 5.16% | 5.33% |
| Notes | 2008 | 2007 |
| | £’000 | £’000 |
| | | |
Revenue | | 11,973 | 11,721 |
| | | |
Administrative expenses | | (10,667) | (10,558) |
| | | |
| | | |
Operating profit | | 1,306 | 1,163 |
| | | |
Investment revenues | | 859 | 947 |
| | | |
Other gains and losses | | (55) | 1,203 |
| | | |
Non-recurring items – AIM costs | | (655) | - |
| | | |
| | | |
Profit before taxation | | 1,455 | 3,313 |
| | | |
Taxation | 4 | (588) | (867) |
| | | |
| | | |
Profit for the year | | 867 | 2,446 |
| | | |
| | | |
Earnings per share* | 6 | 0.5p | 1.5p |
| | | |
| | | |
Diluted earnings per share* | 6 | 0.5p | 1.5p |
| | | |
| | | |
| 2008 | 2007 |
| £’000 | £’000 |
| | |
(Losses)/Gains on revaluation of available-for-sale investments taken to equity | (3,097) | 1,492 |
| | |
Exchange gains on available-for-sale investments taken directly to equity | 447 | 175 |
| | |
Gains on revaluation of derivative taken directly to equity | 2,533 | - |
| | |
Tax on items taken directly to equity | 33 | (496) |
| | |
Net (expense)/income recognised directly in equity | (84) | 1,171 |
| | |
Transferred to profit or loss on the sale of available-for-sale investments | - | (1,163) |
| | |
Tax on transfers from equity | - | 350 |
| | |
| (84) | 358 |
| | |
Profit for the year | 867 | 2,446 |
| | |
Total recognised income for the year | 783 | 2,804 |
| | |
Attributable to equity shareholders | 783 | 2,804 |
| | |
| Group | Company | ||
| 2008 | 2007 | 2008 | 2007 |
| £’000 | £’000 | £’000 | £’000 |
Non-current assets | | | | |
| | | | |
Intangible assets | 52 | 68 | - | - |
| | | | |
Property plant and equipment | 102 | 156 | - | - |
| | | | |
Available for sale Investments | 2,722 | 5,373 | - | - |
| | | | |
Investment in subsidiaries | - | - | 264 | 264 |
| | | | |
| 2,876 | 5,597 | 264 | 264 |
Current assets | | | | |
| | | | |
Trade and other receivables | 6,669 | 5,717 | 163 | 150 |
| | | | |
Cash and cash equivalents | 12,372 | 11,642 | 1,714 | 703 |
| | | | |
Derivative financial instruments | 2,653 | 135 | - | - |
| | | | |
Deferred taxation | 155 | 178 | - | - |
| | | | |
| 21,849 | 17,672 | 1,877 | 853 |
| | | | |
Total Assets | 24,725 | 23,269 | 2,141 | 1,117 |
| | | | |
Current Liabilities | | | | |
| | | | |
Trade and other payables | (5,709) | (5,456) | (276) | (257) |
| | | | |
Current tax liabilities | (245) | (463) | - | - |
| | | | |
| (5,954) | (5,919) | (276) | (257) |
| | | | |
Net Current Assets | 15,895 | 11,753 | 1,601 | 860 |
| | | | |
Non-current Liabilities | | | | |
| | | | |
Deferred tax liabilities | (1,479) | (1,454) | - | - |
| | | | |
Total Liabilities | (7,433) | (7,373) | (276) | - |
| | | | |
NET ASSETS | 17,292 | 15,896 | 1,865 | 860 |
| | | | |
EQUITY | | | | |
| | | | |
Share capital | 801 | 779 | 801 | 779 |
| | | | |
Capital redemption reserve | 19 | 19 | 19 | 19 |
| | | | |
Share premium account | 931 | 29 | 931 | 29 |
| | | | |
Employee benefit reserve | (535) | (439) | - | - |
| | | | |
Retained earnings | 12,878 | 11,893 | 114 | 33 |
| | | | |
Revaluation reserve | 3,198 | 3,615 | - | - |
| | | | |
| | | | |
EQUITY SHAREHOLDERS’ FUNDS | 17,292 | 15,896 | 1,865 | 860 |
| Notes | 2008 | 2007 |
| | £’000 | £’000 |
| | | |
Net cash from operating activities | 7 | (874) | 236 |
| | | |
| | | |
Investing activities | | | |
| | | |
Interest received | | 698 | 811 |
| | | |
Dividend received from trading investments | | 161 | 137 |
| | | |
Proceeds on disposal of available-for-sale investments | | - | 1,163 |
| | | |
Purchase of property, plant and equipment | | (19) | (47) |
| | | |
Purchase of derivative financial instrument | | - | (95) |
| | | |
Net cash received from investing activities | | 840 | 1,969 |
| | | |
| | | |
Financing activities | | | |
| | | |
Equity dividends received | | - | - |
| | | |
Equity dividends paid | | (316) | (1,851) |
| | | |
Share capital redemption | | - | (765) |
| | | |
Issue of new shares | | 1,080 | - |
| | | |
Net cash form/(used in) financing | | 764 | (2,616) |
| | | |
Net increase/(decrease) in cash and cash equivalents | | 730 | (411) |
| | | |
Cash and cash equivalents at the beginning of the year | | 11,642 | 12,053 |
| | | |
| | | |
Cash and cash equivalents at the end of the year | | 12,372 | 11,642 |
| | | |
| 2008 | 2007 |
| £’000 | £’000 |
Current taxation | (585) | (891) |
Deferred taxation | (3) | 24 |
| (588) | (867) |
Corporation tax is calculated at 28.5 per cent (2007: 30 per cent) of the estimated assessable profit for the year.
| 2008 | 2007 |
| £’000 | £’000 |
| | |
Profit before taxation | 1,455 | 3,313 |
| | |
Tax at 28.5%/30% thereon | (415) | (994) |
Effects of | | |
Items not deductible for tax purposes | (157) | 86 |
Rate change | - | 3 |
UK dividend income | 12 | 22 |
Rate differences on current tax | 7 | 16 |
Share based payments | (35) | - |
| | |
| (588) | (867) |
| 2008 | 2007 |
| £’000 | £’000 |
Amounts recognised as distributions to equity holders in the period | | |
Final dividend for the year ended 31 December 2007 | 320 | 1,884 |
Less amount received on shares held via ESOP | (4) | (33) |
| | |
| 316 | 1,851 |
Dividends proposed for the 2008 financial year to be paid in 2009 per 0.5 pence ordinary share are 0.22 pence. This would amount to a gross dividend payment of £352,000 given the current share capital. This proposed final dividend is subject to approval at the Annual General Meeting and has not been included as a liability in the financial statements.
| 2008 | 2007 |
Earnings | £000s | £000s |
Earnings for the purpose of basic and diluted earnings per share, being net profit attributable to equity holders of the parent company | 867 | 2,446 |
Other gains and losses | 55 | (1,203) |
Non-recurring expense – Aim costs | 655 | - |
Share-based payments | 256 | 98 |
Related profit share paid | (63) | 132 |
Taxation impact of the above adjustments | (70) | 292 |
| | |
Earnings for the purposes of underlying basic and diluted earnings per share | 1,700 | 1,765 |
| | |
Number of shares | Number (‘000s) | Number (‘000s) |
Weighted average number of ordinary shares | 160,857 | 161,440 |
Non vested shares held by employee share ownership trust | (2,537) | (2,374) |
Basic earnings per share denominator | 158,320 | 159,066 |
Effect of potential dilutive share options | 1,252 | 522 |
Diluted earnings per share denominator | 159,572 | 159,588 |
| | |
| | |
Basic earnings per share (pence) | 0.5 | 1.5 |
| | |
Diluted earnings per share (pence) | 0.5 | 1.5 |
| | |
Underlying basic earnings per share (pence) | 1.1 | 1.1 |
| | |
Underlying diluted earnings per share (pence) | 1.1 | 1.1 |
7 Notes to the cash flow statements
| 2008 £000s | 2007 £000s |
Operating profit / (loss) | 1,306 | 1,163 |
AIM costs | (924) | - |
Other gains and losses | (143) | (118) |
Depreciation of property, plant and equipment | 73 | 75 |
Amortisation of intangible assets | 16 | 16 |
Share-based payments | 289 | 18 |
Operating cash flows before movement in working capital | 617 | 1,154 |
| | |
Decrease/(increase) in receivables | (944) | 506 |
(Decrease)/increase in payables | 242 | (454) |
Cash generated by operations | (85) | 1,206 |
| | |
Income taxes paid | (789) | (970) |
Net cash from operating activities | (874) | 236 |