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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Share Plc | LSE:SHRE | London | Ordinary Share | GB0001977866 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 25.75 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMSHRE
RNS Number : 4592N
Share PLC
09 August 2017
9 August 2017
AIM: SHRE.LN
Share plc
("Share" or "the Group" or "Company")
Parent of the leading independent retail stockbroker, which operates The Share Centre
Half year results
for the six months to 30 June 2017
HIGHLIGHTS
Financial
Hot Features
Premium
* Results ahead of original management expectations -
driven by buoyant trading volumes and new partnership
agreements
* Outperformance against peer group(1) - market share
(excluding interest) at a new high of 12% (H1 2016:
9.77%)
* Total revenues up 23% to GBP8.9m (H1 2016: GBP7.2m),
a record six month high. Excluding interest income,
revenues up 27% to GBP8.5m (H1 2016: GBP6.7m)
* Underlying(2) profit before tax increased to
GBP310,000 (H1 2016: GBP110,000) and statutory profit
before tax of GBP75,000 (H1 2016: GBP190,000 which
included a GBP628,000 gain from sale of London Stock
Exchange Group plc shares)
* Underlying(2) earnings per share of 0.2p (H1 2016:
0.1p) and statutory earnings per share of 0.0p (2016:
0.1p)
* Assets under administration increased by 26% to a
record GBP4.3bn (H1 2016: GBP3.4bn)
* Balance sheet remains strong with shareholders' funds
at GBP17.7m (H1 2016: GBP17.6m)
Operational
* Services for Computershare launched in Q2 - will
continue to benefit revenues and profits materially
* Continued investment in Digital Transformation
Programme - innovations being delivered
* "Best Stockbroker" in the 2017 Investment Trends UK
Online Broking Report, with the highest overall
investor satisfaction rating among share investors,
for the fourth consecutive year
o Net Promoter Score of +49 in independent research
conducted by Investment Trends - a market-leading
result
Outlook
* Ongoing delivery of the Digital Transformation
Programme will enhance the Group's market position
and long term prospects
* Trading performance to date remains positive
Note 1 - as measured by Compeer Limited.
Note 2 - excludes the impact of some items, in particular any large non-recurring items and share based payment charges as defined in note 7. Basic earnings per share was 0.0p and diluted earnings per share was 0.0p (2016: 0.1p and 0.1p respectively).
Richard Stone, Chief Executive, commented:
"These encouraging results are ahead of our original expectations and reflect both strong trading volumes and the benefits of the partnership agreements signed in 2016, including the launch of services for Computershare. Significantly half the growth in the period was organic, achieved through our core business which trades as The Share Centre, and through share.com. The Group delivered record first half revenues of GBP8.9m and assets under administration also rose to their highest level to date at GBP4.3bn. I am also delighted to report that Share outperformed its peer group across key measures, including market share of revenues excluding interest. This hit a new peak of 12%.
"While affecting profitability in the short term, the major investment programme we started in 2016 has helped to support these results. Our Digital Transformation Programme, which forms the major part of our investment, is ongoing and enabled us to deliver new functionality over the first half and will position the Group better for long term profitable growth.
"The customer experience remains at the heart of what we do and therefore the retention of Investment Trends' prestigious award of "Best Stockbroker", with the highest overall investor satisfaction rating among share investors for the fourth consecutive year, was a particular highlight in the first half. Alongside that, The Share Centre won four other industry awards for outstanding customer service levels.
"Trading in the second half of the year to date has been ahead of the comparable period last year as we continue to benefit from the new partnerships and customer accounts we acquired in 2016. If this continues, we expect to report strong year-on-year growth for 2017. Meanwhile, we continue to invest with confidence in the business."
Contacts:
Share plc
01296 439 270/07919
Richard Stone - Chief Executive 220 599
Mike Birkett - Finance Director 01296 439 479
Joe Dumont - Head of Corporate
Communications 01296 439 426
Cenkos Securities plc (Nominated
Adviser)
Ivonne Cantu/Mark Connelly 020 7397 8900
KTZ Communications (Financial
Public Relations)
Katie Tzouliadis/Emma Pearson 020 3178 6378
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 Conduct 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. The Share Centre is a member of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority under reference 146768.
About Share plc:
Share plc is the parent holding company of The Share Centre Limited and its shares are traded on AIM. The Share Centre started trading in 1991 and provides a range of account-based services to enable personal investors to share in the wealth of the stock market. Retail services include Share Accounts, ISAs, Junior ISAs and SIPPs, all with the benefit of investment advice, and dealing in a wide range of investments. Services available to corporate clients include Enterprise Investment Scheme administration and 'white-label' dealing platforms.
www.shareplc.com or www.share.com.
Chairman's statement
Introduction
Share has made strong progress in the first half, helped by favourable market conditions as well as the benefits of the major new partnership agreements signed in 2016 coming through, including the launch of services for Computershare. The Company's financial performance, including profitability, was significantly ahead of our original expectations and revenues at GBP8.9m reached a new six month high. Customer assets also hit a record GBP4.3bn at the end of June, a rise of 14% over the six month period. This compares to 3.3% growth in the FTSE All Share index over the same period. Over GBP1bn of customer assets are now held in funds, up 59% since 30 June 2016, reflecting the attraction of our fixed-rate account administration fee against the more widespread model of fees based on the value of customer holdings.
I am also pleased to report that Share has continued to outperform against its peer group*, with the Group's market share (excluding interest) in the first half rising to 12%, the highest in the Company's history. A fuller review of Share's performance against its peer group is included in the report.
We were pleased to receive five industry awards in the first half, including "Best Stockbroker" with the highest overall investor satisfaction rating among share investors, in the 2017 Investment Trends UK Online Broking Report. This is the largest annual survey of retail investor opinions undertaken in the UK and we were delighted to have retained the award for the fourth consecutive year.
As planned, 2017 marks a second year of major investment as we continue with our Digital Transformation Programme. This Programme supports the Group's long term growth ambitions and will help us to innovate and enhance customer service levels and experience.
Strategic Delivery
Our growth strategy has three key elements, 'Putting Customers First', 'Focus on the Core Business' and 'Strategic Partnerships and Acquisitions' and we are pleased to report on continued delivery against all three.
While we are pursuing organic growth, a major component of our growth strategy remains building partnerships and the acquisition of books of customers and we are pleased to see benefits of this approach coming through more strongly. Following the signing of a major partnership agreement in 2016 with Computershare, one of the UK's leading share registrars and the largest registrar globally, we launched a certificated dealing and corporate nominee dealing service for Computershare customers in May 2017, following this with a white label share dealing service in July. In the first half, we also completed the migration of investment trust accounts from Invesco Perpetual, over 95% of which have remained with The Share Centre Limited after their migration.
In April 2017, we completed the transfer of our non-core Authorised Corporate Director role, with the sale of Sharefunds Limited. Whilst we have sold that business, we continue to manage our three 'in-house' fund of funds. Over the first half, the total value of funds under management increased by 29% to GBP90m from GBP70m and, for the year to date, the flow of gross new monies into the three funds of funds is up 37% compared to the same period in 2016. We are now looking at expanding the distribution channels for these funds and, with effect from August, have reduced the ongoing charges figure ('OCF') by at least 0.25%, which should help to stimulate investor interest. All three funds are ranked in the first quartile of their sectors for the year to date.
A key aspect of our growth strategy is technological transformation to improve our digital proposition which will enable us to enhance the overall customer experience. In March, we launched a new funds research centre within our website, which enables customers to research, select and buy funds more easily. Having launched our first mobile App in 2016, later this month we will deliver a significant upgrade to its functionality to enable customers to trade and fund their accounts from the App. We expect this new functionality will help drive user numbers. We are also working on transforming our website to optimise its utilisation on different screen sizes including mobile phones and tablets, and providing customers with a better user experience, with enhanced performance analysis.
A core pillar of our IT strategy is our ability to build technology solutions in-house. This helps us to be agile in our response and fast-to-market with product and proposition developments. At the start of the new tax year - as soon as regulation allowed - we were pleased to launch the Lifetime ISA product and were one of only three execution-only brokers to do so. Following our quick delivery of Flexible ISA capability in 2016, we hope to build on our record of making new products available to customers ahead of most of our peers. Along with our Junior ISA and Child Trust Fund, the Lifetime ISA is also important in enabling us to reach a younger set of customers, who have many years of investment ahead.
We continue to believe that our market leading customer service and flat fee pricing structure are key to differentiating our proposition from our peers. We were therefore delighted to achieve "Best Stockbroker" in the 2017 Investment Trends UK Online Broking Report, with the highest overall investor satisfaction rating among share investors, for the fourth consecutive year. This prestigious award was based on an independent survey of 13,800 individual personal investors, making it the largest annual survey of retail investor opinions undertaken in the UK.
We also secured four other awards in the first half, "Best Online Stockbroker" and "Best Self-Select Stockbroker", both from ADVFN International Financial Awards, and "Best Stockbroker" and "Best Customer Service" from Online Personal Wealth Awards.
We are now starting to track our Net Promoter and Customer Effort Scores and our initial scores have been very encouraging with the Investment Trends survey recording a Net Promoter Score for The Share Centre of +49, the highest level of client advocacy of any online broker.
Financial results
Revenues
Total revenues in the first half increased by 23% to GBP8.9m (2016: GBP7.2m) and, excluding interest income, revenues rose by 27% to GBP8.5m from GBP6.7m. Even allowing for a weaker comparative last year, which reflected subdued investor activity ahead of the EU Referendum, our performance was particularly strong. Our growth compared very well to the collective peer group where total revenues increased by 3%, and revenue excluding interest income rose by 1%.
A detailed breakdown of revenues is below:
-- Dealing commission income
Income from commission increased by 45% year-on-year, driven by buoyant trading volumes in our core business and the launch of Computershare services towards the end of the first half. Trading volumes increased by 17%.
According to Compeer estimates our peer group experienced an increase of 4% over the same period and retail firms (including wealth managers) generally saw on-exchange trades decrease by 17% in H1 2017 compared to H1 2016.
-- Fee income
Income from fees increased by 8% year-on-year while our peer group experienced a 9% decrease in fee income in the period.
-- Interest income
Notwithstanding the significant increase in client money balances to GBP359m (31 December 2016: GBP296m), interest income now accounts for less than 4% of Group revenues and decreased by 33% relative to H1 2016. This reflected lower interest rates and the continuing reluctance of banks to accept client money deposits. Interest income for the peer group increased by 4% (for reasons set out in previous statements) and continued to exceed fee income.
-- Interest income (continued)
In April 2017, the Financial Conduct Authority ('FCA') issued The Share Centre with a Direction allowing up to 60% of the firm's client money balances to be deposited for up to 95 days rather than the 30 day limit specified in the current Client Money rules. This should help address the issue of failing appetite within the banking sector for 'on-call' client money deposits but is unlikely to have a significant impact upon our total revenues.
Profitability
With the growth in revenues, the Group generated a significantly reduced operating loss of GBP199,000 in the first half (H1 2016: loss of GBP668,000). Underlying profit before tax increased to GBP310,000 (H1 2016: GBP110,000) and underlying earnings per share doubled to 0.2p (2016 H1: 0.1p) These underlying figures are stated after removing one-off items (as shown in note 7 below), which included non-cash share-based payment charges and, in 2016, the partial sale of the Group's shares in the London Stock Exchange Group plc ('LSE') which realised proceeds of GBP700,000 and a profit upon sale of GBP628,000.
On a statutory basis, profit before tax was GBP75,000 (H1 2016: GBP190,000, which included the profit on the LSE share sale) and statutory earnings per share were 0.0p (H1 2016: 0.1p per share).
Costs
Total costs were 15% higher year-on-year at GBP9.1m (H1 2016: GBP7.9m). This reflected three factors: firstly, given the rise in trading volumes, we saw an increase in our transactional costs particularly in respect of the Computershare services. The Share Centre retains a proportion of dealing commission (certificate and corporate nominee respectively) paid by the customer, with the remainder returned to Computershare. Secondly, amortisation costs increased with the purchase of customer accounts from third parties and systems development for our technology programme, primarily our first mobile App. We also hired additional headcount in our customer facing functions in order to support the new Computershare services. We expect staff costs to increase somewhat in the second half of the year, as we see the full year effect of recruitment for our new partnerships.
Our marketing spend in 2017 was similar to 2016. We are now increasingly able to use our own digital marketing capability, reducing the need for external spending. Our recent SIPP campaign, with the theme 'taking control of your retirement', for example, was generated and managed internally.
Cash flows and balance sheet
Cash and cash equivalents were GBP7.8m at 30 June 2017. This compares to GBP16.1m at the same point in 2016. However balances in June 2016 were abnormally high due to an increase in trading activity after the EU Referendum result, which resulted in us holding, on a short term basis, a larger than normal amount of cash in trust on behalf of customers to complete settlement of outstanding trades with the market. With these trades settled, cash balances then returned to more typical levels.
During the period, a dividend of GBP359,000 was paid (H1 2016: GBP1.1m).
The Group is investing in its Digital Transformation Programme. The IT development work undertaken in-house to deliver these new customer enhancements is now material and these costs, together with third party development costs, will be capitalised as an intangible asset and amortised over their useful economic life, in accordance with the recognition criteria of IAS 38. During the period, GBP0.7m of costs were capitalised.
The Group's balance sheet remains strong with shareholders' funds totalling GBP17.7m or 12.3p per ordinary share in issue. The Group continues to hold significant levels of capital over and above the levels required by the FCA. As at 30 June 2017, the Group had capital resources of GBP15.3m, 2.7 times the requirement (H1 2016: 3.3 times).
Market share
The Group's performance relative to a peer group of eight other stockbrokers is surveyed monthly by Compeer, an independent company which gathers and reports data on the wealth management sector.
The latest data released by Compeer shows that the Group's share of revenues increased significantly, as a result of the growth in our core business and the new Computershare services which were formerly operated by one of our peers. Market share excluding interest in the first half of the year was a record at 12% compared to 9.77% for the same period in 2016 (H2 2016: 9.93%). For the second quarter of the year, the Group's revenue market share excluding interest increased to 13% from 11% in the first quarter (Q2 2016: 10%).
Period H1 17 H2 16 H1 16 H2 15 H1 15 H2 14 H1 14 -------------- ------ ------ ------ ------ ------ ------ ------ Market share 12% 9.93% 9.77% 9.90% 9.65% 8.60% 8.76% -------------- ------ ------ ------ ------ ------ ------ ------
Including interest, market share for the first half increased to 9.07%, compared to 7.69% for the same period in 2016 (H2 2016: 7.60%). For the second quarter of the year, market share including interest increased to 9.73% from 8.42% in the first quarter (Q2 2016: 7.87%).
(*) Benchmarked revenue peer group: Alliance Trust Savings, Barclays Stockbrokers, Equiniti, Halifax Share Dealing, HSBC Stockbrokers, Saga Personal Finance, Selftrade and TD Direct Investing.
Outlook
We are preparing for further forthcoming regulatory changes, in particular the introduction of the Markets in Financial Instruments Directive number two ('MiFID2') and the General Data Protection Regulations ('GDPR'). Both pieces of regulation will affect the way that we hold data and market to customers and while they will not take effect until 2018, we will be using resource in 2017 to prepare for them as well as communicating with customers.
Trading in the first half was strong, and as we have entered the summer months, volumes have moderated in line with the normal seasonal trading activity at this time of year. However, the economic and political backdrop has also changed, and it is difficult to predict the longer term impact of the increased political instability following the General Election on personal investor activity. A recent survey of our customer base suggested one third felt less confident making investment decisions in the aftermath of the General Election.
Nonetheless we continue to benefit from the new partnerships and customer accounts we acquired in 2016 and therefore expect to report strong year-on-year growth for 2017. Meanwhile, we continue to invest with confidence in the business and, in particular, in our Digital Transformation Programme. The Group's position in its market place is strong, particularly in regard to its reputation for first class customer service, and I believe that the changes we are making will help drive long term growth opportunities further.
Gavin Oldham
Chairman
9 August 2017
Condensed consolidated income statement
For the six months ended 30 June 2017
Notes Six months Six months Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------- ------ ------------- ------------- -------------
Revenue 4 8,875 7,224 14,610
Administrative expenses (9,074) (7,892) (15,956)
Operating loss (199) (668) (1,346)
Investment revenues 207 230 248
Other gains 12 67 628 2,119
Profit before tax 75 190 1,021
Taxation 6 (62) (56) (284)
Profit for the period 13 134 737
Earnings per share:
Basic earnings per
share* 7 0.0p 0.1p 0.5p
Diluted earnings per
share* 7 0.0p 0.1p 0.5p
* The Directors consider that the underlying earnings per share as presented in note 7 represents a more consistent measure of the underlying performance of the business as this measure excludes one-off items of income or expense.
Notes 1 to 12 form part of these financial statements.
Condensed consolidated statement of comprehensive income
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016 (audited)
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------- ------------- -----------------
Profit for the year 13 134 737
Items that may be classified
subsequently to profit
or loss:
Gains/(losses) on revaluation
of available-for-sale
investments taken to
equity 247 (262) 110
Deferred tax on (gains)/losses
on revaluation of available-for-sale
investments taken to
equity (44) 53 (19)
Exchange gains on available-for-sale
investments taken directly
to equity 99 446 577
Deferred tax on exchange
gains on available-for-sale
investments taken directly
to equity (19) (89) (115)
Deferred tax impact of
change in tax rates - - 50
283 148 603
Items that have been
re-classified to profit
or loss:
Gains on revaluation
of available-for-sale
investments taken to
profit and loss on disposal - (628) (2,122)
Deferred tax on revaluation
of available-for-sale
investments taken to
profit and loss on disposal - 125 424
- (503) (1,698)
Net gain/(loss) recognised
directly in equity 283 (355) (1,095)
Total comprehensive income/(loss)
for the period 296 (221) (358)
--------------------------------------- ------------- ------------- -----------------
Attributable to equity
shareholders 296 (221) (358)
--------------------------------------- ------------- ------------- -----------------
Notes 1 to 12 form part of these financial statements.
Condensed consolidated balance sheet
As at As at As at
Notes 30 June 30 June 31 December
2017 2016 2016
(unaudited) (restated (audited)
& unaudited)
GBP'000 GBP'000 GBP'000
----------------------------- ------- ------------- --------------- -------------
Non-current assets
Intangible assets 2,602 855 1,970
Property, plant and
equipment 245 212 263
Available-for-sale
investments 6,309 7,124 5,963
Deferred tax assets 130 127 145
9,286 8,318 8,341
------------- --------------- -------------
Current assets
Trade and other receivables 32,384 34,328 12,462
Cash and cash equivalents 8 7,754 16,175 11,421
Current tax asset 52 - -
------------- --------------- -------------
40,190 50,503 23,883
------------- --------------- -------------
Total assets 49,476 58,821 32,224
------------- --------------- -------------
Current liabilities
Trade and other payables (30,611) (39,785) (13,225)
Current tax liability - (58) (159)
(30,611) (39,843) (13,384)
Net current assets 9,579 10,660 10,499
------------- --------------- -------------
Non-current liabilities
Deferred tax liabilities (1,158) (1,335) (1,096)
Total liabilities (31,769) (41,178) (14,480)
Net assets 17,707 17,643 17,744
----------------------------- ------- ------------- --------------- -------------
Equity
Share capital 718 718 718
Capital redemption
reserve 104 104 104
Share premium account 1,064 1,064 1,064
Employee benefit reserve (1,600) (1,956) (1,863)
Retained earnings 12,835 12,910 13,418
Revaluation reserve 4,586 4,803 4,303
Equity shareholders'
funds 17,707 17,643 17,744
----------------------------- ------- ------------- --------------- -------------
This condensed set of financial statements was approved by the Board on 8 August 2017.
Signed on behalf of the Board
Gavin Oldham
Chairman
Notes 1 to 12 form part of these financial statements.
Condensed consolidated statement of changes in equity
Share Capital Share Employee Retained Revaluation Attributable
capital redemption premium benefit earnings reserve to equity
reserve account reserve holders
of the
company
------------------------ --------- ------------ --------- --------- ---------- ------------ -------------
Balance at 1 January
2016 (unaudited) 718 104 1,064 (2,010) 13,309 5,515 18,700
Prior year adjustments - - - - 117 (117) -
Balance at 1 January
2016 (restated and
audited) 718 104 1,064 (2,010) 13,426 5,398 18,700
Total comprehensive
income/(loss) for
the period - - - - 491 (712) (221)
Dividends - - - - (1,019) - (1,019)
Reclassification
of Employee Benefit
Reserve - - - 7 - - 7
Purchases of ESOP
shares - - - (249) - - (249)
Sales of ESOP shares - - - 110 - - 110
Cost of matching
and free shares
in the SIP - - - 125 (125) - -
Profit on sale of
ESOP shares and
dividends received - - - 61 (61) - -
Share-based payment - - - - 308 - 308
Deferred tax on
share-based payment - - - - 6 - 6
Share-based payment
current year taxation - - - - 1 - 1
------------------------ --------- ------------ --------- --------- ---------- ------------ -------------
Balance at 30 June
2016 (restated and
unaudited) 718 104 1,064 (1,956) 13,027 4,686 17,643
Total comprehensive
income/(loss) for
the period - - - - 246 (383) (137)
Purchases of ESOP
shares - - - (177) - - (177)
Sales of ESOP shares - - - 117 - - 117
Cost of matching
and free shares
in the SIP - - - 116 (116) - -
Profit on sale of
ESOP shares and
dividends received - - - 37 (37) - -
Share-based payment - - - - 294 - 294
Deferred tax on
share-based payment - - - - 1 - 1
Share-based payment
current year taxation - - - - 3 - 3
Balance at 31 December
2016 (audited) 718 104 1,064 (1,863) 13,418 4,303 17,744
Total comprehensive
income/(loss) for
the period - - - - 13 283 296
Dividends - - - - (346) - (346)
Purchases of ESOP
shares - - - (327) - - (327)
Sales of ESOP shares - - - 83 - - 83
Cost of matching
and free shares
in SIP - - - 137 (137) - -
Profit on sale of
ESOP shares and
dividends received - - - 370 (370) - -
Share-based payment - - - - 271 - 271
Deferred tax on
share-based payment - - - - 10 - 10
Disposal of subsidiary
(net assets less
share capital) - - - - (24) - (24)
Balance at 30 June
2017 (unaudited) 718 104 1,064 (1,600) 12,835 4,586 17,707
------------------------ --------- ------------ --------- --------- ---------- ------------ -------------
Notes 1 to 12 form part of these financial statements.
Condensed consolidated cash flow statement
Notes Six months Six months Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (restated (audited)
& unaudited)
GBP'000 GBP'000 GBP'000
-------------------------------------- ------ ------------- --------------- -------------
Net cash (used in)/from
operating activities 9 (2,482) 5,629 492
Investing activities:
Interest received - 28 32
Dividend received
from trading investments 141 144 216
Purchase of property,
plant and equipment (48) (51) (162)
Purchase of available-for-sale
investments - (3) (3)
Proceeds from disposal
of available-for-sale
investments - 700 2,360
Cash proceeds received
on disposal of subsidiary 60 - -
Cash transferred in
disposal of subsidiary (41) - -
Non-cash assets and
liabilities transferred
in disposal of subsidiary:
Trade and other receivables (1,910) - -
Trade and other payables 1,904 - -
Current tax liabilities 13 - -
Purchase of intangible
assets (714) (778) (1,960)
Net cash (used in)/received
from investing activities (595) 40 483
Financing activities:
Equity dividends paid 10 (346) (1,019) (1,019)
Shares purchased through
employee benefit reserve (327) (249) (426)
Shares sold through
employee benefit reserve 83 111 228
Net cash used in financing (590) (1,157) (1,217)
Net (decrease)/increase
in cash and cash equivalents (3,667) 4,512 (242)
------------- ---------------
Cash and cash equivalents
at the beginning of
the period 11,421 11,663 11,663
Cash and cash equivalents
at the end of the
period 7,754 16,175 11,421
Notes 1 to 12 form part of these financial statements.
Notes to the condensed accounts
1 Basis of preparation
The financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ('IFRS') as adopted by the European Union. However, this announcement does not itself contain sufficient information to comply with IFRS. The financial information contained in these Interim Financial Statements does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group's published full financial statements comply with IFRS. A copy of the statutory accounts for the year ended 31 December 2016 has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.
The following standards, amendments and interpretations have been issued with the corresponding implementation date, subject to EU endorsement in some cases:
-- Amendments to IAS 7 Disclosure Initiative effective 1 January 2017
-- Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses effective 1 January 2017
-- AIP IFRS 12 Disclosure of Interests in Other Entities - Clarification of the scope of the disclosure requirements in IFRS 12 effective 1 January 2017
-- IFRS 15 Revenue from Contracts with Customers effective 1 January 2018 -- IFRS 9 Financial Instruments effective 1 January 2018
-- Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions effective 1 January 2018
-- Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts - Amendments to IFRS 4 effective 1 January 2018
-- Transfers of Investment Property (Amendments to IAS 40) 12 1 January 2018
-- IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration effective 1 January 2018
-- AIP IFRS 1 First-time Adoption of International Financial Reporting Standards - Deletion of short-term exemptions for first-time adopters effective 1 January 2018
-- AIP IAS 28 Investments in Associates and Joint Ventures - Clarification that measuring investees at fair value through profit or loss is an investment-by-investment choice effective 1 January 2018
-- IFRS 16 Leases effective 1 January 2019
-- Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Those amendments with an effective date of 1 January 2017, where relevant to the financial statements of the Group, have been applied. The impact of future standards and amendments on the financial statements is being assessed by the Group and the Company.
The Group accounts consolidate the financial statements of the Company and its subsidiaries, The Share Centre Limited, and The Share Centre (Administration Services) Limited, which all make up their financial statements. Other subsidiaries are not included in the Share plc consolidation as they are not trading and not material to the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. On 7 April 2017, one of the Group's subsidiaries, Sharefunds Limited, was sold. Therefore, as at the period end, this company was no longer part of the Share plc consolidation.
The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing these condensed financial statements.
2 Accounting policies
The same accounting policies, presentation and methods of computation are followed in this condensed set of financial statements as applied in the Group's latest annual audited financial statements.
As per the 2016 year end accounts, the consolidated financial statements were restated to correct the accounting treatment for foreign exchange gains and losses on available-for-sale assets. These had historically been included within retained earnings rather than in the revaluation reserve, and so have been reclassified.
The consolidated financial statements were also restated to account for the cash reserves of the employee benefit reserve within assets (cash and cash equivalents) rather than equity (employee benefit reserve).
The June 2016 comparative figures have been restated to be consistent with the 2016 accounts where these restatements are explained further.
3 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis, but currently remain unchanged against those applied in the Group's latest annual audited financial statements.
4 Business and geographical segments
IAS 34 Interim Financial Reporting requires disclosure of segment information within the interim report as the Group is required to disclose segment information in its annual financial statement under IFRS 8 Operating Segments.
The Share
Centre Fund management Total
-------------------------
2017 2016 2017 2016 2017 2016
Six months GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
ended 30 June
(unaudited)
------------------------- -------- -------- -------- -------- -------- --------
Revenue 8,474 6,833 401 391 8,875 7,224
Operating (loss)/profit (406) (760) 207 92 (199) (668)
------------------------- -------- -------- -------- -------- -------- --------
It should be noted that the accounting policies of the reportable segments are the same as the Group's accounting policies and that there were no major customers contributing more than 10% of revenues in the Group as a whole.
Following the sale of Sharefunds Limited, The Share Centre continued to manage the three fund of funds and therefore the majority of Sharefunds revenue has remained within the Group.
5 Disposal of subsidiary
On 7 April 2017 Share plc disposed of all its shares in Sharefunds Limited, a wholly owned subsidiary for a total cash consideration of GBP84,000. After costs, the pre-tax gain was calculated to be GBP66,000.
The results of Sharefunds Limited for the period up until disposal have been included in the Group's Income Statement and are presented below:
Period ended Six months Year ended
ended
7 April 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
Income statement for GBP'000 GBP'000 GBP'000
Sharefunds Limited
------------------------- ------------- ------------- -------------
Revenue 259 391 847
Administrative expenses (194) (299) (667)
------------- ------------- -------------
Operating profit 65 92 180
Investment revenues - 1 1
Profit before tax 65 93 181
Tax (13) (19) (36)
------------- ------------- -------------
Profit for the period 52 74 145
------------- ------------- -------------
As at As at As at
7 April 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
-----------------------------
Balance sheet of Sharefunds GBP'000 GBP'000 GBP'000
Limited
----------------------------- ------------- ------------- -------------
Current assets
Trade and other receivables 1,910 308 138
Cash and cash equivalents 41 625 774
Current liabilities
Trade and other payables (1,904) (336) (254)
Current tax liabilities (13) (45) (36)
Net assets 34 552 622
----------------------------- ------------- ------------- -------------
Equity
Share capital 10 10 10
Retained earnings 24 542 612
Equity shareholders'
funds 34 552 622
----------------------------- ------------- ------------- -------------
Period ended Six months Year ended
ended
7 April 30 June 31 December
2017 (unaudited) 2016 2016
(unaudited) (audited)
---------------------------
Net cash flows (used GBP'000 GBP'000 GBP'000
in)/generated from
Sharefunds Limited
were as follows:
--------------------------- ------------------- ------------- -------------
Operating activities (93) 68 217
Investing activities - 1 1
Financing activities (640) - -
--------------------------- ------------------- ------------- -------------
Net cash inflow/(outflow) (733) 69 218
--------------------------- ------------------- ------------- -------------
6 Taxation
Tax for the six month period is charged at 19.25% (six months ended 30 June 2016: 20%), representing the best estimate of the average annual effective tax rate expected for the full year. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. In 2017, this is 19% (2016: 20%).
7 Earnings per share
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
Earnings: GBP'000 GBP'000 GBP'000
-------------------------------- ------------- ------------- -------------
Earnings for the purpose
of basic and diluted
earnings per share, being
net profit attributable
to equity holders of
the parent company 13 134 737
Other gains and losses (67) (628) (2,122)
FSCS levies 96 228 272
Share-based payments 271 308 602
One-off redundancy/termination
costs - - 24
One-off adjustment to
available-for-sale investment
valuation - - 3
Profit share impact of
the above adjustments (65) 12 154
Taxation impact of the
above adjustments 7 78 334
Earnings for the purposes
of underlying basic and
diluted earnings per
share 255 132 4
-------------------------------- ------------- ------------- -------------
Underlying earnings as presented above is on the basis of Profit for the period. In respect of Profit before Tax, underlying earnings were GBP310,000 (six months ended 30 June 2016: GBP110,000).
Number Number Number
Number of shares: '000 '000 '000
------------------------------ ---------- ---------- ----------
Weighted average number
of ordinary shares 144,781 145,135 145,007
Non-vested shares held
by employee share ownership
trust (5,097) (5,903) (5,679)
Basic earnings per share
denominator 139,684 139,232 139,328
Effect of potential dilutive
share options 3,177 4,102 4,111
Diluted earnings per
share denominator 142,861 143,334 143,439
------------------------------ ---------- ---------- ----------
Basic earnings per share
(pence) 0.0 0.1 0.5
Diluted earnings per
share (pence) 0.0 0.1 0.5
------------------------------ ---------- ---------- ----------
Underlying (basic and
diluted) earnings per
share (pence) 0.2 0.1 0.0
------------------------------ ---------- ---------- ----------
8 Cash and cash equivalents
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------- ------------- ------------- -------------
Cash at bank and in
hand 6,471 54 9,837
Cash held in trust
for clients (a) 1,283 16,121 1,584
--------------------- ------------- ------------- -------------
7,754 16,175 11,421
--------------------- ------------- ------------- -------------
(a) This amount is held by The Share Centre Limited in trust on behalf of clients but may be used to complete settlement of outstanding bargains and dividends due.
Cash and cash equivalents decreased to GBP7.8m at 30 June 2017 (2016: GBP16.2m). The decrease in cash is linked to the investment in digital transformation, a dividend payment, increased administration expenditure and, unlike in recent years, there were no disposals of available-for-sale investments during the first half of the year. The higher cash levels in the first half of 2016 were attributed to the short term impact of the EU Referendum result, which resulted in an increase in trading activity. As a result, the Group temporarily held a larger than normal amount of cash in trust on behalf of customers, to complete settlement of outstanding trades with the market.
At 30 June 2017 segregated deposit amounts held by the Group on behalf of clients in accordance with the client money rules of the Financial Conduct Authority amounted to GBP359m (30 June 2016: GBP295m). The Group has no beneficial interest in these deposits and accordingly they are not included on the balance sheet.
9 Cash flow
Reconciliation of operating profit to net cash inflow from operating activities
Six months Six months Year ended
ended ended
30 June 2017 30 June 31 December
2016 2016
(unaudited) (restated (audited)
& unaudited)
GBP'000 GBP'000 GBP'000
-----------------------------
Operating loss for the
year (199) (668) (1,346)
Other gains/(losses) 1 6 6
Depreciation of property,
plant and equipment 66 61 121
Amortisation of intangible
assets 84 40 108
Share-based payments 271 308 602
Operating cash flows
before movement in working
capital 223 (253) (509)
(Increase)/decrease
in receivables (19,922) (26,350) (4,484)
Increase/(decrease)
in payables 17,386 32,104 5,544
Cash generated by operations (2,313) 5,501 551
Income taxes (paid)/received (169) 128 (59)
-----------------------------
Net cash (used in)/from
operating activities (2,482) 5,629 492
----------------------------- ------------- -------------- ------------
Included in 'Other gains/(losses)' for the six month ended 30 June 2017, is a GBP1,000 final payment from Greenko Group plc, a liquidated investment held by the Group. 'Other gains/(losses)' for the prior periods relate to the reclassification of the cash reserves held in the employee benefit trust following the 2016 audit.
10 Distribution to shareholders
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------------- ------------- ------------- -------------
Final Dividend paid
in current year of
0.25p per ordinary
share (2015: 0.74p) 359 1,063 1,063
Less amount received
on shares held via
ESOP (13) (44) (44)
346 1,019 1,019
11 Share-based payments
The Group continues to grant share options under Company Share Ownership Plan ('CSOP') at six-monthly intervals and discretionary grants to senior managers and directors as deemed appropriate by the Board Remuneration and Nomination Committee. In addition, the Group has an Unapproved Share Option Scheme, Long Term Equity Incentive Plan ('LTEIP') and a Co-ownership Equity Incentive Plan ('CEIP'). There are numerous options still outstanding on the Enterprise Management Incentive ('EMI') scheme. All options expire ten years after the date of grant and, with the exception of some options granted under the unapproved share option scheme, the vesting period for options is three to four years.
In respect of the CEIP, the shares are jointly held with the Employee Benefit Trust. The individual recipients are able to sell the shares concerned between three and ten years after the grant date and benefit from the excess of the sales price at that time over and above the price specified in the Co-ownership agreement. That price is set at a c.20% premium to the market price at the date of grant.
The Group has applied the requirements of IFRS 2 in respect of share-based payments. In the period, the Group made an equity-settled share-based payment under the Group's CSOP scheme of 330,000 shares on 4 May 2017. In all cases, all options have been granted with an exercise price equal to market value - being the closing mid-price on the day prior to grant. A fair value has been determined during the year using the Black Scholes model. In addition, the Group made an equity-settled share-based payment under the Group's LTEIP to directors and managers of 6,100,000 shares on 4 May 2017. In all cases, all options have been granted in the form of nil cost options. These options will vest subject to an absolute Total Shareholder Return performance condition and a non-market based performance condition, specifically growth in Profit before tax. Fair values have been determined using Monte Carlo and Black Scholes models. The main assumptions are as follows:
CSOP LTEIP
Grant date 04/05/17 04/05/17
Share price at date of
grant 26.0p 26.0p
Exercise price 26.0p Nil
Risk-free interest rate 0.50% 0.22%
Dividend yield 1.00% 0.96%
Volatility (based on
historic share price
movements) 30.0% 26.2%
Average maturity at exercise 5 years 3 - 4 years
Fair value per option 6.27p 25.0p -
25.3p
Details of the share options outstanding during the year are as follows:
As at 30 June 2017 As at 31 December
2016
(unaudited) (audited)
Number Weighted Number Weighted
of share average of share average
options exercise options exercise
price (pence) price (pence)
---------------------- ------------ --------------- ----------- ---------------
Outstanding at the
beginning of the
period 11,179,356 25.1 11,001,527 22.0
Granted during the
period 6,430,000 1.3 909,555 28.0
Exercised during
the period (1,145,103) 2.5 (329,134) 20.1
Expired or forfeited
during the period (149,285) 32.1 (402,592) 32.6
---------------------- ------------ --------------- ----------- ---------------
Outstanding at the
end of the period 16,314,968 15.0 11,179,356 25.1
---------------------- ------------ --------------- ----------- ---------------
Exercisable at the
end of the period 2,389,178 32.5 1,656,813 25.1
---------------------- ------------ --------------- ----------- ---------------
The weighted average market share price at the date of exercise for options exercised during the first six months of 2017 was 25.0p (the first six months of 2016: 27.2p).
In addition the Group operates a Share Incentive Plan ('SIP'); further detail of this scheme is available from the Group's annual report and accounts.
The total expense for equity-settled share-based payments for the Group in respect of awards made in the first half of 2017 was GBP532,000 (six months ended 30 June 2016: GBP174,000). This expense is then applied across the vesting periods. An adjustment is made to this figure in respect of members of staff to whom options and shares have been granted but who have left the Group's employ during the vesting period. The overall net charge taken in the income statement for the first half of 2017 is GBP271,000 (six months ended 30 June 2016: GBP308,000).
12 Other gains and losses
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------- ------------- ------------- -------------
Disposal of subsidiary
(note 5) 66 - -
Disposal of LSE shares - 628 2,122
Liquidation proceeds
from Greenko Group
plc 1 - -
Write-off of investment
in Greenko Group plc - - (3)
67 628 2,119
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BRGDIXUGBGRI
(END) Dow Jones Newswires
August 09, 2017 02:00 ET (06:00 GMT)
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