PLUS Markets Group plc (“PMG” or the “Group”) reports its interim results for the six months to 30 June 2010.
Financial highlights
- Revenues at £1.53 million (2009 – £1.49 million) on administrative expenses of £4.03 million (2009 – £7.38 million).
- Loss before depreciation, amortisation, impairment and interest received of £2.54 million (2009 – £5.85 million). Loss after depreciation, amortisation, impairment and interest of £2.48 million (2009 – £5.71 million).
- The Group has no debt and retained a cash balance of £9.73 million (2009 – £10.26 million) as at the balance sheet date.
Commenting on the interim results, Chief Executive Officer Cyril Théret said: “PLUS Markets has embarked on a radical and aggressive strategy to transform itself. We have made some clear decisions about the future direction of the Company. We now seek to broaden our services and products to both the small and mid-cap sector and a wider group of users in order to generate revenues and greater future value.”
Chairman’s statement
This is the first set of results under the new management team which took office in February 2010. The new team embarked on a radical and aggressive strategy to turn PLUS Markets Group plc from a reporting venue into a fully-fledged competitive stock exchange for London, providing listing and execution services in cash equities and derivatives.
During the period, the management team have been extremely busy establishing a clear direction for the exchange based on customer requirements. The outcome of this work, if successfully implemented, will transform the position of the PLUS stock exchange.
Key highlights of this work included:-
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- reducing the cost base by 40% to annual level of below £5 million from 2011;
- headcount reduction from 52 to 28 generating savings of over £1m on an annualised basis;
- notice given on the existing Facilities Management Agreement, reducing technology infrastructure costs from over £2 million p/a to under £0.5 million p/a projected for 2011 for the in-house built quote and trade reporting facility.
- completion of strategic review on 25 August 2010; -
- new technology offering providing market making, bilateral and multilateral electronic execution services; and -
- proposed launch of new products: corporate bond product for small and mid cap, retail execution services, and PLUS Derivatives Exchange. -
The Board now have a clear focus on driving the Group to profitability within two years.
Financial performance
The first half of 2010 saw continuing difficult market conditions, particularly in respect of low Initial Public Offering (“IPO”) activity on the PLUS-quoted market. The market held steady with twelve new companies admitted during the period (2009 - 12) while 17 left (2009 – 24), resulting in 174 companies on the market at the period end.
Sales in real-time products and other services remained unchanged in a muted environment. In March, PLUS launched a fixed income trade reporting service, increasing the variety of products for retail investors on the exchange.
Revenues in the first six months increased slightly to £1.53 million (2009 – £1.49 million), on administrative expenses of £4.03 million (2009 – £7.38 million).
Trading activity
Retail trading activity reported on PLUS remained healthy, with a 44% increase in value traded as against the same period last year (2010 - £43.1 billion; 2009 - £29.9 billion), although the number of bargains declined (2010 – 3.6 million; 2009 – 5.1 billion), in line with declining volumes across the sector. This is an activity from which the exchange intends to generate revenues in the future.
Market conditions
The cash equity markets remain uncertain with a general lack of IPOs and falling equity volumes, leading to consolidation of the sector, including Multilateral Trading Facilities (“MTFs”). The exchange’s marketplace continues to evolve rapidly post-MIFID, while investment firms face new challenges and seek to reduce operational and systemic risks.
The change of UK government in May resulted in HM Treasury launching new consultations that are directly relevant to PLUS, relating to the City regulatory framework and the important role of the private sector in economic recovery. The PLUS stock exchange welcomes focus on the importance of funding Small and Medium sized Enterprises (“SMEs”) in a credit-constrained environment, as outlined in the Green Paper “Financing a Private Sector Recovery”.
Future plans
Against this backdrop, as recently announced, the Group is broadening its offering to our customers, while seeking to build a sustainable revenue base.-
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- SME offering – PLUS continues to increase the profile of its issuers through the commissioning of equity research from Edison Research and holding regional roadshows across the UK. Sales initiatives across the Far East and Middle East regions are ongoing, as they offer better IPO prospects. Our current offering will also be enhanced by a new corporate bond product; -
- Retail execution services –,PLUS plans to improve its offering through an RSP hub based on a Request For Quote (“RFQ”) model providing best execution, single fill and price improvement opportunities to retail investors. -
- PLUS Derivatives Exchange (“PDX”) - PLUS intends to launch a new range of interest rate swap products, providing efficient access to full fixed-for-floating rate interest exposure through the FTSE MTIRS (Medium Term Interest Rate Swap) Index Series. This will initially be through an over-the-counter (“OTC”) cleared service, developing subsequently, subject to market demand, into a new exchange-traded product known as an Exchange-Traded Index (“ETI”), listed and traded on PLUS. -
- Proposed new trading platform - PLUS intends to launch a new lit book (order book) in 2011, subject to funding of up to £10 million from potential users, using next generation platform technology provided by Algo Technologies Ltd. -
Board changes
As PLUS Markets rolls out its new developments and new initiatives, it will continue to review the shape and composition of its Board to meet new challenges and opportunities. Stephen Allcock, Non-Executive Director, stepped down from the Board on 14 September 2010, following over four years’ service to the Company, and we are grateful for his valuable contribution. We are seeking to replace him as soon as possible. Also, Simon Brickles has decided to relinquish the post of Vice Chairman and left the Board on 14 September 2010; therefore this role will no longer exist. The Board recognises the work he has undertaken over many years in helping formulate and promote London’s equity markets in support of smaller companies and wishes him well for the future.
Outlook
The result of all the above activity is to give a clear understanding to both our customers and shareholders as to the company’s direction, in what is widely acknowledged to be a difficult environment. We do not underestimate the challenges that we face but the speed of change in the company already indicates we are prepared to fulfil the role of a truly competitive stock exchange.
Giles VardeyChairman
15 September 2010
Condensed Consolidated Statement of Comprehensive Income