Share plc profiting from industry changes Tax changes, stock market conditions, industry dynamics and the interest rate environment mean that profits at Share plc are set to hit record levels. Share plc is the company behind online stockbroker thesharecentre. Headquartered in Aylesbury, Bucks, thesharecentre has been operating since 1991. Share plc listed on AIM in 2008. The first thing to understand about Share plc is the dominance of its founder, Executive Chairman, Gavin Oldham. Mr Oldham’s family concert party owns 76% of the company’s shares.
Mr Oldham can control any aspect of the company’s management and strategy When a small company has a large management shareholding, any appraisal requires special care. Mr Oldham can control any aspect of the company’s management and strategy. He could even delist the company. The current set up, with a new CEO in place in the form of Richard Stone, while Mr Oldham acts as Executive Chairman is rather unusual. There can be very few listed companies with both an Executive Chairman and a Chief Executive. However, with such a large shareholding, no claim of ‘non-
executive’ or ‘independent’ status for Mr Oldham would be credible. Mr Oldham has ensured that shareholders have been rewarded as the company has grown. In 2008, Share plc made revenues of £12.0m and paid a dividend of 0.22p per share. By 2013, sales hit £15.0m and the company declared a dividend for the year of 0.52p. A collection of tailwinds mean that thesharecentre’s growth could accelerate from here.
thesharecentre’s growth could accelerate from here The UK’s private investor community are, in aggregate, a predictable bunch. They are frequently drawn to trading the same large caps (Lloyds, Vodafone) and have a strong propensity toward AIM shares. This can be seen in the ‘most traded’ statistics from stockbrokers where AIM-quoted shares such as Quindell Portfolio and Gulf Keystone Petroleum can be traded more than the blue-chips. AIM stocks account for around 30% of all thesharecentre’s trades. The recent change to allow trading in AIM shares within ISAs has already provided a significant increase in trading volumes at thesharecentre. A further boost will likely arrive when the self-select ISA limit is increased to £15,000 in July this year. Interest received on customer deposits will increase significantly when the expected rate rises begin.
Management estimates that a 0.5% increase in the base rate would boost Share plc profits by £750k per annum. The Royal Mail IPO, forthcoming sale of TSB and the government disposal of its stake in Lloyds will raise public interest in share investment. If new offerings are successful, a growing number of new investors will be drawn to share ownership. The size of a retail broker’s addressable market could realistically triple in the next five years. thesharecentre’s award-winning offering will likely be a significant beneficiary, taking Share plc profits to record levels.
increase in the base rate would boost Share plc profits by £750k There can be few businesses on AIM that are operating in such a favourable environment. Although the current valuation looks punchy, the potential is very real. Short-term market moves won’t change that and may present an opportunity should the shares take a step back. Share (LON:SHRE) FOR Excellent market opportunities Strong brand AGAINST Rich valuation Revenues dependent on market conditions Market cap Bid:offer P/E (forecast) Yield (forecast) 52week low:high
£61m 42p:44p 35 1.2% 20p:53p
Published on May 30, 2014