4th Mar 2015 10:10
LONDON (Alliance News) - Share PLC Wednesday reported a drop in pretax profit for 2014 due to higher costs and lower interest income, but it was relatively confident about its outlook after introducing a flat fee structure and winning a new three-year deal with Barclays Stockbrokers.
The retail stockbroker which operates The Share Centre has issued a profit warning in December, saying a usual seasonal pickup in trading volumes in the fourth quarter failed to materialise after a subdued third quarter. It had blamed personal investors' response to increased uncertainty in the markets.
It reported a pretax profit of GBP792,000 for 2014, down from GBP1.7 million in 2013, even though revenue was flat at GBP15.0 million.
Its interest income dropped 14.5% to GBP1.8 million from GBP2.1 million as client money term deposits that were historically placed at higher rates matured into a lower interest rate environment, and as new rules prevented it from using term deposits.
Overall costs for the year rose 7.4% to GBP14.6 million, from GBP13.6 million, as it bolstered its customer-facing teams, restructured and hired new people for the senior management team, and increased marketing spend by 15%.
Still it increased its final dividend to 0.62 pence, from 0.52p in 2013, reflecting the strength of its balance sheet which contained net cash of GBP12.7 million at the end of 2014, down just slightly from GBP13.6 million at the end of 2013. Its stated dividend policy is to seek to increase dividends by 20% a year for so long as the profitability and potential of the group supports such growth.
Share said it remains very encouraged about its prospects, despite expecting investors to be hesitant ahead of the UK General Election in May.
"This year, uncertainty ahead of the UK General Election will make personal investors hesitant and this is reflected in trading volumes. The usual ISA season is now open and whilst new account openings have been encouraging, the build-up so far has been a little slower than last year. The fundamentals of the business though, not least in terms of assets under management, customer deposits and transfers, visibility of our brand and PR messaging, are all strong and we look forward to the rest of 2015 with confidence," Chief Executive Richard Stone said.
It said it would continue trying to raise awareness of The Share Centre and grow its customer base. It said its revenue market share grew to 7.66% in 2014, up from 7.16% in 2013, which it said was a record level.
Its confidence is partly being driven by its new deal with Barclays Stockbrokers, part of Barclays PLC, which it expects to add about 5% to revenue in 2015. The deal means The Share Centre will provide certificated dealing services to customers introduced to it by Barclays, with revenue generated from the service shared between the two. It said Barclays will initially be writing to 11,500 customers who have used the service more than once in the last year.
Share also expects the deal to "materially" benefit profitability in 2015 and beyond.
It's also confident about the longer-term market outlook.
"Looking forward, the UK's strengthening economic recovery, backed by loose monetary policy and low interest rates should be positive for equity markets and investors. The Board strongly believes that the Group is well positioned relative to its peers and capable of growing its customer base in the years ahead," Share Chairman Gavin Oldham said.
Share PLC shares were down 0.3% at 39.65 pence Wednesday morning. The stock fell sharply over November and December last year, but has recovered early this year and is up 23.7% so far in 2015.
By Steve McGrath; [email protected]; @stevemcgrath1
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