Trading platform now has 8,000 users with £200m under management
Companies: Sharetronic Data Technology Co. Ltd. Class A
AIM-listed trading platform Share Plc (LSE: SHRE), has published a solid trading update this morning, reporting good revenue growth in Q3 and a hefty increase in total assets held, after a string of successful acquisitions during the period.
SHRE saw revenue (excluding interest) increase 7% year-on-year, up from the 1% growth in H1, as it increased assets held by 34% yoy to £3.6bn. Its acquisition of a book of 8,000 client accounts (mostly ISAs) with c.£200m of assets under administration, is expected to complete in April 2017.
The company, operating under the Share Centre brand, gets 48% of its revenues from dealing commission which increased 9% versus Q3 2015, in what management say was a particularly strong quarter:
"This growth was supported by the Barclays Investment Club accounts acquired in February 2016, as well as healthy trading volumes since the EU Referendum Result. The peer group experienced an increase of 14%"
The lionshare of the rest of its revenue comes from Fee income, which increased 6% yoy. Share's fee income (47% of total) is considerably higher than its peers where fee income is collectively only about 13% of revenues. Whilst fee income increased 6% at SHRE, its competitors averaged 29% growth comparatively, which SHRE say is due to the EU-referendum boosting trading activitity:
"Fee-based charges are often based on the value of customer holdings and therefore increase or decrease with the value of those holdings, thereby penalising the customer in a rising market as seen in the last quarter.
By contrast, The Share Centre has adopted a simple low fixed-rate account administration fee. Whilst this positions The Share Centre very competitively, especially against value-related fee structures and particularly in weak markets, it does not benefit to the same extent in rising markets as the last quarter demonstrates."
CEO Richard Stone said Share's performance in Q3 was in line with expectations, saying the results reflected the benefits of the acquisitions the firm had made and net account transfers-in from other brokers.
"We are also delighted to announce that we have reached terms to acquire a book of 8,000 active accounts and will be providing further information on this acquisition in due course. This new agreement highlights our high quality customer service and compelling flat-fee pricing proposition.
The Share Centre remains a compelling home for wealth management businesses looking to find a suitable provider of execution-only services or looking to exit the execution-only element of their operations."
Share's market share for Q3 was 10.08%, increasing 0.02% on Q2 but falling 0.8% yoy. The company's share price opened up 3.45% this morning, and currently trades on a P/E ratio of 68.8 based on 2015 earnings of 0.4p per share, but looking to 2016 consensus forecasts, analysts are expecting a loss per share of c.0.49p.
