28 Jul 2016 07:00
Arden Partners plc
("Arden" or the "Group")
Interim results for the six months ended 30 April 2016
Arden Partners plc (AIM: ARDN.L), the institutional stockbroking company, today announces its unaudited interim results for the six month period ended 30 April 2016.
Highlights
· Revenue £2.7m (2015: £2.7m)
· Loss before tax £0.7m (2015: £1.2m)
· Basic loss per share 4.2p (2015: 4.9p)
· Annualised cost base reduction in excess of £500k
· No interim dividend proposed (2015: nil)
Commenting on the interim results and outlook for the business CEO James Reed-Daunter said:
"....following a difficult first half we are currently mandated on a strong pipeline of corporate work the delivery of which, subject to market conditions, will provide a much improved performance for the full year…. "
Arden Partners plc |
0207 614 5900 |
James Reed-Daunter - Chief Executive Officer |
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Steve Wassell - Chief Operating Officer |
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Altium - NOMAD to Arden Partners plc | 0207 484 4040 |
Sam Fuller
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CHIEF EXECUTIVE'S STATEMENT
Financial Review
The first 6 months of our financial year has resulted in the operating loss of £766k (2015 loss: £1,238k).
The difficult global trading conditions seen in the Autumn of 2015 continued into the first 3 months of Arden's new financial period resulting in a disappointing performance for both the Equities and Corporate Finance divisions of the business.
The sector continues to experience the effects of regulatory change and the associated impact on institutional commission revenues in particular.
I am however pleased to report that the second quarter saw a marked improvement, particularly in Equities revenues, ultimately resulting in an Equities division outturn for the first half in line with management expectation at £1,332k (2015: £1,309k).
Although corporate revenues were below internal budgets for the half year, the division completed more than a dozen transactions including, together with the distribution team, the high profile acquisition of Brighton Pier by Eclectic Bars (now renamed The Brighton Pier Group).
We have taken selective action to further reduce overheads - in line ultimately with sizing the business appropriate to sustainable revenue levels - and have thus far in 2016, taken in excess of £500k out of the annualised cost base.
The Directors are not proposing to pay an interim dividend (2015: Nil).
Outlook
As expected, trading volumes were muted in the run up to the EU Referendum and whilst there now remains a degree of general uncertainty with regard to the global economic outlook, the 'Brexit' result has not so far had any material effect on the business, with most sectors trading on a 'business as usual' basis.
It is worth noting that a number of our Indian based corporate clients have announced significant improvements in trading performance over recent months, which the market has reflected positively and which might signal a further positive period going forward, in what is an important business niche for Arden Partners.
Notwithstanding the above, the UK remains our core focus and Arden is mandated for the second half on a strong pipeline of UK corporate business, including a number of potential M&A transactions for private companies, the delivery of which, subject to market conditions, will materially improve upon the first half performance.
James Reed-Daunter
Chief Executive
28 July 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 April 2016
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| Six months ended 30 April 2016 Unaudited | Six months ended 30 April 2015 Unaudited | Year ended 31 October 2015 Audited |
| Note | £'000 | £'000 | £'000 |
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Revenue | 2 | 2,740 | 2,725 | 5,486 |
Operating expenses | 3 | (3,506) | (3,963) | (7,646) |
Operating expenses include: |
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Share based payments |
| (37) | (56) | (111) |
Other expenses |
| (3,469) | (3,907) | (7,535) |
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Loss from operations |
| (766) | (1,238) | (2,160) |
Finance income |
| 22 | 34 | 65 |
Finance cost |
| (1) | (1) | (2) |
Loss before tax |
| (745) | (1,205) | (2,097) |
Income tax |
| (32) | 240 | - |
Loss after tax attributable to equity holders of the parent |
| (777) | (965) | (2,097) |
Other comprehensive income for the period: Items that may be reclassified subsequently to profit or loss: Decrease in fair value on available for sale financial assets |
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(2) |
(4) |
(7) |
Deferred tax taken to equity |
| 7 | - | 6 |
Total comprehensive income for the period |
| (772) | (969) | (2,098) |
Loss per share |
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Basic and diluted | 4 | 4.2p | 4.9p | 10.8p |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 April 2016
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| At 30 April 2016 Unaudited | At 30 April 2015 Unaudited | At 31 October 2015 Audited |
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| £'000 | £'000 | £'000 |
Assets |
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Non-current assets |
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Plant, property and equipment |
| 28 | 34 | 25 |
Deferred tax asset |
| 59 | 86 | 84 |
Total non-current assets |
| 87 | 120 | 109 |
Current assets |
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Financial assets designated at fair value through profit and loss |
| 1,830 | 1,657 | 1,703 |
Available for sale financial assets |
| 555 | 510 | 507 |
Trade and other receivables |
| 2,269 | 4,751 | 2,138 |
Stock borrowing collateral |
| 36 | - | 120 |
Cash and cash equivalents |
| 4,621 | 5,906 | 5,372 |
Corporation tax asset |
| 7 | 248 | 16 |
Total current assets |
| 9,318 | 13,072 | 9,856 |
Total assets |
| 9,405 | 13,192 | 9,965 |
Current liabilities |
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Financial liabilities designated at fair value through profit and loss |
| (24) | (90) | (92) |
Trade and other payables |
| (2,212) | (4,118) | (1,979) |
Total current liabilities |
| (2,236) | (4,208) | (2,071) |
Total liabilities |
| (2,236) | (4,208) | (2,071) |
Net assets |
| 7,169 | 8,984 | 7,894 |
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Equity: |
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Called up share capital |
| 2,063 | 2,063 | 2,063 |
Share premium account |
| 2,933 | 2,933 | 2,933 |
Capital redemption reserve |
| 700 | 700 | 700 |
Available for sale reserve |
| (8) | (3) | (6) |
Retained earnings |
| 2,615 | 4,419 | 3,348 |
Total equity before deduction of own shares |
| 8,303 | 10,112 | 9,038 |
Employee Benefit Trust reserve |
| (849) | (849) | (849) |
Own shares |
| (285) | (279) | (295) |
Total equity |
| 7,169 | 8,984 | 7,894 |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 April 2016
| Six months ended 30 April 2016 Unaudited | Six months ended 30 April 2015 Unaudited | Year ended 31 October 2015 Audited |
| £'000 | £'000 | £'000 |
Operating activities before tax |
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Loss from ordinary activities before tax | (745) | (1,205) | (2,097) |
Adjustments for: |
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Fair value adjustments of derivative financial assets | - | 286 | 287 |
Depreciation of fixtures, fittings and computer equipment | 13 | 14 | 25 |
Net interest receivable | (21) | (33) | (63) |
Share based payments | 37 | 56 | 111 |
Operating cash flow before changes in working capital | (716) | (882) | (1,737) |
(Increase) / decrease in operating assets | (175) | 527 | 2,976 |
Decrease / (increase) in operating liabilities | 165 | (751) | (2,892) |
Purchase of available for sale asset | (50) | (513) | (513) |
Proceeds from disposal of available for sale asset | - | 466 | 466 |
Cash generated from operations | (776) | (1,153) | (1,700) |
Income taxes refunded | 10 | - | - |
Net cash flows from operating activities | (766) | (1,153) | (1,700) |
Investing activities |
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Purchases of property, plant and equipment | (16) | (5) | (7) |
Net interest received | 21 | 33 | 63 |
Net cash from investing activities | 5 | 28 | 56 |
Financing activities |
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Proceeds from the sale of own shares | 10 | 10 | 10 |
Purchase of own shares | - | (1,120) | (1,136) |
Dividends paid to shareholders | - | (141) | (140) |
Net cash flows from financing activities | 10 | (1,251) | (1,266) |
Decrease in cash and cash equivalents | (751) | (2,376) | (2,910) |
Net cash and cash equivalents at the beginning of the period | 5,372 | 8,282 | 8,282 |
Net cash and cash equivalents at the end of the period | 4,621 | 5,906 | 5,372 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 April 2016
| Share capital | Share Premium account |
Capital Redemption Reserve |
Own shares | Employee Benefit Trust Reserve |
Available for sale Reserve | Retained earnings | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 31 October 2014 | 2,296 | 2,933 | 467 | (264) | (849) | (33) | 6,597 | 11,147 |
Loss for period | - | - | - | - | - | - | (965) | (965) |
Revaluation of available for sale assets | - | - | - | - | - | (4) | - | (4) |
Transferred to retained earnings on disposal of available for sale assets | - | - | - | - | - | 34 | (34) | - |
Total comprehensive loss for the period | - | - | - | - | - | 30 | (999) | (969) |
Contributions by and distributions to owners |
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Purchase of own shares | - | - | - | (1,120) | - | - | - | (1,120) |
Sale of own shares | - | - | - | 10 | - | - | - | 10 |
Own shares cancelled | (233) | - | 233 | 1,095 | - | - | (1,095) | - |
Share based payments | - | - | - | - | - | - | 56 | 56 |
Dividends paid to equity shareholders | - | - | - | - | - | - | (140) | (140) |
Balance at 30 April 2015 | 2,063 | 2,933 | 700 | (279) | (849) | (3) | 4,419 | 8,984 |
Loss for period | - | - | - | - | - | - | (1,132) | (1,132) |
Deferred tax taken to equity | - | - | - | - | - | - | 6 | 6 |
Revaluation of available for sale financial assets | - | - | - | - | - | (3) | - | (3) |
Total comprehensive income for the period | - | - | - | - | - | (3) | (1,126) | (1,129) |
Contributions by and distributions to owners |
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Purchase of own shares | - | - | - | (16) | - | - | - | (16) |
Share based payments | - | - | - | - | - | - | 55 | 55 |
Balance at 31 October 2015 | 2,063 | 2,933 | 700 | (295) | (849) | (6) | 3,348 | 7,894 |
Loss for period | - | - | - | - | - | - | (777) | (777) |
Deferred tax taken to equity | - | - | - | - | - | - | 7 | 7 |
Revaluation of available for sale assets | - | - | - | - | - | (2) | - | (2) |
Total comprehensive loss for the period | - | - | - | - | - | (2) | (770) | (772) |
Contributions by and distributions to owners |
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Sale of own shares | - | - | - | 10 | - | - | - | 10 |
Share based payments | - | - | - | - | - | - | 37 | 37 |
Balance at 30 April 2016 | 2,063 | 2,933 | 700 | (285) | (849) | (8) | 2,615 | 7,169 |
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1) Basis of preparation
As permitted under AIM listing rules, IAS 34, 'Interim Financial Reporting' has not been applied in this interim report.
The financial information presented in this report has been prepared using accounting policies that are expected to be applied in the preparation of the financial statements for the year ending 31 October 2016.
These policies are in accordance with the recognition and measurement principles of International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board as endorsed for use in the European Union, and these principles are disclosed in the Financial Statements for the year ended 31 October 2015.
The financial information in this interim report does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006.
The Annual Report and Financial Statements for 2015 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2015 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
Going concern
The financial statements of the Group have been prepared on a going concern basis as the Directors have satisfied themselves that, at the time of approving the financial statements and having taken into consideration the strength of the Group's statement of financial position and cash balances, the group has adequate resources to continue trading for the foreseeable future.
2) Revenue
| Six months ended 30 April 2016 Unaudited | Six months ended 30 April 2015 Unaudited | Year ended 31 October 2015 Audited |
| £'000 | £'000 | £'000 |
Equities division | 1,332 | 1,309 | 2,172 |
Corporate Finance division | 1,408 | 1,416 | 3,314 |
Total revenue | 2,740 | 2,725 | 5,486 |
3) Operating expenses
| Six months ended 30 April 2016 Unaudited | Six months ended 30 April 2015 Unaudited | Year ended 31 October 2015 Audited |
| £'000 | £'000 | £'000 |
Staff costs including incentive scheme | 1,923 | 2,082 | 3,992 |
Other overheads | 1,280 | 1,468 | 2,949 |
Staff and overhead costs | 3,203 | 3,550 | 6,941 |
Share based payments | 37 | 56 | 111 |
Depreciation | 13 | 14 | 25 |
Total overhead costs | 3,253 | 3,620 | 7,077 |
Variable overheads including settlement costs | 253 | 343 | 569 |
Total operating expenses | 3,506 | 3,963 | 7,646 |
4) Loss per share
The basic loss per share of 4.2p (2015: 4.9p) is calculated on a loss after tax of £777,000 (2015: £965,000) and 18,698,303 (2015: 19,858,823) being the weighted average number of ordinary shares in issue during the period less shares held in Treasury and by the Arden Partners Employee Benefit Trust. For the year to 31 October 2015, the basic loss per share of 10.8p is calculated on a loss after tax of £2,097,000 and 19,282,644 being the weighted average number of ordinary shares in issue during the period less shares held in Treasury and by the Arden Partners Employee Benefit Trust.
No adjustment has been made to the diluted loss per share of 4.0p as the dilution effect of the weighted average number of outstanding share options of 770,364 would be to decrease the loss per share.
The underlying basic loss per share of 4.0p (2015: 4.6p) for the six months ended 30 April 2016 is calculated on a loss after tax of £740,000 (2015: £909,000) being the loss after tax, adjusted for the effect of IFRS 2 costs of £37,000 (2015: £56,000). The underlying basic loss per share of 9.4p for the year to 31 October 2015 is calculated on a loss after tax of £1,809,000 being the loss after tax, adjusted for the effect of IFRS 2 costs of £111,000 and reorganisation costs of £177,000.
5) Dividends
The Directors have not proposed an interim dividend (2015: Nil).
INDEPENDENT REVIEW REPORT TO ARDEN PARTNERS PLC
Introduction
We have been engaged by the company to review the interim set of financial statements in the half-yearly financial report for the six months ended 30 April 2016 which comprises the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity and the related explanatory notes that have been reviewed.
We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the company a conclusion on the interim set of financial statements in the half-yearly financial report based on our review.
Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim set of financial statements in the half-yearly financial report for the six months ended 30 April 2016 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
BDO LLP
Chartered Accountants and Registered Auditors
London
United Kingdom
28 July 2016
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).