28 Jan 2010 07:00
| Immediate Release | 28 January 2010 |
Arden Partners plc
("Arden" or the "Company")
Preliminary results for the year ended 31 October 2009
Arden Partners plc (AIM: ARDN), the institutional stockbroking company, today announces preliminary results for the year ended 31 October 2009.
Financial highlights
Revenue £13.1 million (2008: £11.4 million)
Underlying profit before tax* £2.2 million (2008: £2.1 million)
Underlying basic earnings per share** 8.0p (2008: 6.1p)
Net cash £10.5m (2008: £9.5m)
* Profit before tax as adjusted for the effect of share based payments
** Basic earnings per share as adjusted for the after-tax effect of share based payments
Operational highlights
Increased client brokerships from 30 to 39
Sixteen transactions completed during the year, comprising nine M&A, six secondary fundraisings, and one IPO
Equities revenue increased by 31%
Commenting on the results and Arden's outlook, Sir David Rowe-Ham, Chairman, said:
"There is no doubt that this has been a challenging year for the City, however the second half of our financial year has reflected an improvement in market conditions and the Board is satisfied with the overall results. We have a strong balance sheet and have generated cash and improved profitability. We closed the year with a cash balance of £10.5 million.
Trading since our year end has been satisfactory. While volumes in the market have been low we have seen a number of corporate transactions complete and we have a satisfactory pipeline of new business subject to market conditions."
Arden Partners plc 020 7614 5900
Jonathan Keeling - Chief Executive Officer
Trevor Norris - Finance Director
Altium 020 7484 4040
Phil Adams / Sam Fuller
Buchanan Communications 020 7466 5000
Mark Edwards
Chairman's Statement
There is no doubt that this has been a challenging year for the City, however the second half of our financial year has reflected an improvement in market conditions and the Board is satisfied with the overall results. We have a strong balance sheet and have generated cash and improved profitability. We closed the year with a cash balance of £10.5 million.
Current market conditions represent a significant opportunity for the business to grow. We have continued to recruit high calibre staff in all areas of the business. We continue to increase market sector coverage as part of our strategy for growth. The withdrawal of a number of investment banks from the small and mid cap markets has provided opportunities for the Group to not only recruit staff but to also win corporate clients and gain market share, capitalising on these opportunities is a key aspect of our growth strategy.
Trading since our year end has been satisfactory. While volumes in the market have been low we have seen a number of corporate transactions complete and we have a satisfactory pipeline of new business subject to market conditions. For the year ended 31 October 2009 the Board has decided to invest within growth areas of the business and to take advantage of such opportunities rather than pay a final dividend. We believe this policy will be of long-term benefit to our shareholders.
Finally, I would like to thank all staff and clients for their commitment to the business.
Sir David Rowe-Ham
Chairman
Chief Executive's Statement
Introduction
I am pleased to report that the Group has had a satisfactory year in a challenging market. The profit before tax result of £1.5m should be read within the context of a first-half loss before tax of £0.3m.
Financial Review
Revenue in the year ended 31 October 2009 was up by 15% to £13.1m (2008: £11.4m). Underlying profit before tax increased by 5% to £2.2m (2008: £2.1m). Profit before tax, which is stated after charging share-based payments, is up 7% to £1.5m (2008: £1.4m). Cash generation was again strong with balances at the year end of £10.5m (2008: £9.5m) which represented some 370% of our regulatory capital requirement.
Underlying basic earnings per share (before charging share based payments) increased by 31% to 8.0p (2008: 6.1p) with underlying diluted earnings per share increasing by 36% to 7.5p (2008: 5.5p). Basic earnings per share increased by 65% to 5.1p (2008: 3.1p).
Equities Division
Our Equities Division revenue increased by 31% to £8.5m (2008: £6.5m) against an increase in the FTSE All Share index of 18% over the same period. Since the year end, commission income levels have been satisfactory.
Corporate Finance
During the year we completed sixteen corporate finance transactions (2008: twelve) including nine M&A, six secondary fundraisings and one IPO.
Outlook
The current year has started satisfactorily and Arden has to date raised some £111m for corporate clients. We have relocated our main office to 125 Old Broad Street which provides the space and infrastructure for future growth.
Finally, I would like to take this opportunity to thank our staff for their commitment through challenging conditions.
Jonathan Keeling
Chief Executive Officer
Consolidated Income Statement
For the year ended 31 October 2009
| 2009 | 2008 | ||
| Note | £'000 | £'000 | |
| Revenue | 2 | 13,059 | 11,431 |
| Administrative expenses | (11,622) | (10,541) | |
| Profit from operations | 1,437 | 890 | |
| Finance income | 86 | 509 | |
| Finance costs | (1) | - | |
| Profit before taxation | 1,522 | 1,399 | |
| Income tax expense | (276) | (652) | |
| Profit after taxation | 1,246 | 747 | |
| Earnings per share | |||
| Basic | 4 | 5.1p | 3.1p |
| Diluted | 4 | 4.8p | 2.8p |
Consolidated Balance Sheet
At 31 October 2009
| 2009 | 2009 | 2008 | 2008 | ||||
| £'000 | £'000 | £'000 | £'000 | ||||
| Assets | |||||||
| Non-current assets | |||||||
| Property, plant and equipment | 258 | 323 | |||||
| Deferred tax asset | 618 | 88 | |||||
| Total non-current assets | 876 | 411 | |||||
| Current assets | |||||||
| Trading investments | 2,660 | 220 | |||||
| Trade and other receivables | 15,660 | 3,146 | |||||
| Cash and cash equivalents | 10,523 | 9,481 | |||||
| Total current assets | 28,843 | 12,847 | |||||
| Total assets | 29,719 | 13,258 | |||||
| Current liabilities | |||||||
| Trade and other payables | (17,182) | (2,943) | |||||
| Corporation tax liability | (685) | (197) | |||||
| Total current liabilities | (17,867) | (3,140) | |||||
| Non-current liabilities | |||||||
| Deferred tax liability | (44) | - | |||||
| Total non-current liabilities | (44) | - | |||||
| Total liabilities | (17,911) | (3,140) | |||||
| Net assets | 11,808 | 10,118 | |||||
| Equity | |||||
| Called up share capital | 2,494 | 2,470 | |||
| Share premium account | 2,736 | 2,646 | |||
| Employee Benefit Trust Reserve | (648) | (200) | |||
| Available for sale reserve | - | (2) | |||
| Retained earnings | 7,226 | 5,204 | |||
| Total equity | 11,808 | 10,118 |
Consolidated Cash Flow Statement
For the year ended 31 October 2009
| 2009 | 2008 | ||
| £'000 | £'000 | ||
| Operating activities before taxation | |||
| Net profit before tax | 1,522 | 1,399 | |
| Adjustments for: | |||
| Fair value adjustments | (116) | (38) | |
| Depreciation | 256 | 278 | |
| Profit on disposal of available for sale investments | - | (218) | |
| Impairment of available for sale investments | 20 | 342 | |
| Net interest receivable | (85) | (509) | |
| Share based payments | 702 | 584 | |
| Operating cash flow before changes in working capital | 2,299 | 1,838 | |
| (Increase)/decrease in trade and other receivables | (12,525) | 6,564 | |
| (Increase)/decrease in financial assets | (2,313) | 1,520 | |
| Increase/(decrease) in trade and other payables | 14,235 | (6,079) | |
| Purchases of available for sale investments | (27) | (108) | |
| Proceeds from disposal of available for sale investments | - | 368 | |
| Cash generated from operations | 1,669 | 4,103 | |
| Income taxes paid | (200) | (1,277) | |
| Cash flows from operating activities | 1,469 | 2,826 | |
| Investing activities | |||
| Purchases of property, plant and equipment | (191) | (89) | |
| Interest received | 98 | 499 | |
| Net cash from investing activities | (93) | 410 | |
| Financing activities | |||
| Purchase of own shares | (448) | - | |
| Issue of shares | 114 | - | |
| Dividends paid to equity shareholders | - | (1,610) | |
| Net cash from financing activities | (334) | (1,610) | |
| Increase in cash and cash equivalents | 1,042 | 1,626 | |
| Cash and cash equivalents at the beginning of the year | 9,481 | 7,855 | |
| Cash and cash equivalents at the end of the year | 10,523 | 9,481 |
Consolidated Statement of changes in equity
For the year ended 31 October 2009
| Share Capital | Share Premium Account | Employee Benefit Trust reserve | Available for sale reserve | Retained earnings | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 31 October 2008 | 2,470 | 2,646 | (200) | (2) | 5,204 | 10,118 |
| Changes in equity for 2009: | ||||||
| Increase in fair value of investments | - | - | - | 2 | - | 2 |
| Tax taken to equity | - | - | - | - | 74 | 74 |
| Net income recognised directly in equity | - | - | - | 2 | 74 | 76 |
| Profit for the year | - | - | - | - | 1,246 | 1,246 |
| Total recognised income and expense for the year | - | - | - | 2 | 1,320 | 1,322 |
| Share based payments | - | - | - | - | 702 | 702 |
| Issue of shares | 24 | 90 | - | - | - | 114 |
| Purchase of own shares | - | - | (448) | - | - | (448) |
| Balance at 31 October 2009 | 2,494 | 2,736 | (648) | - | 7,226 | 11,808 |
Consolidated Statement of changes in equity
For the year ended 31 October 2008
| Share Capital | Share Premium Account | Employee Benefit Trust reserve | Available for sale reserve | Retained earnings | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 31 October 2007 | 2,470 | 2,646 | (200) | 35 | 5,893 | 10,844 |
| Changes in equity for 2008: | ||||||
| Available for sale investments: | ||||||
| - Increase in fair value of investments | - | - | - | 156 | - | 156 |
| - Gain transferred to the income statement on disposal of investments | - | - | - | (218) | - | (218) |
| Tax taken to equity | - | - | - | 25 | (410) | (385) |
| Net income recognised directly in equity | - | - | - | (37) | (410) | (447) |
| Profit for the year | - | - | - | - | 747 | 747 |
| Total recognised income and expense for the year | - | - | - | (37) | 337 | 300 |
| Dividends | - | - | - | - | (1,610) | (1,610) |
| Share based payments | - | - | - | - | 584 | 584 |
| Balance at 31 October 2008 | 2,470 | 2,646 | (200) | (2) | 5,204 | 10,118 |
Notes
The Employee Benefit Trust reserve represents shares held in the parent company by the Arden Partners Employee Benefit Trust, which is consolidated in these financial statements.
The Available for Sale reserve represents unrealised gains and losses on available for sale investments, being the difference between the acquisition cost and fair value at the balance sheet date. The reserve is shown net of related deferred tax.
NOTES
The financial information set out in this announcement has been prepared in accordance with the recognition and measurement principles of IFRS as endorsed for use in the European Union.
The financial information set out in this announcement does not constitute the group's statutory accounts for the year ended 31 October 2009 or the year ended 31 October 2008 under the meaning of s434 Companies Act 2006, but is derived from the 2009 annual report and accounts.
Statutory accounts for the years ended 31 October 2008 and 31 October 2009 have been reported on by the Independent Auditors.
The Independent Auditors' Report on the Annual Report and Financial Statements for year ended 31 October 2008 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 237(2) or 237(3) of the Companies Act 1985.
The Independent Auditors' Report on the Annual Report and Financial Statements for year ended 31 October 2009 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.
Statutory accounts for the year ended 31 October 2008 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 October 2009 will be delivered to the Registrar in due course.
Revenue is wholly attributable to the principal activity of the Group and arises solely within the United Kingdom.
| 2009 | 2008 | ||
| £'000 | £'000 | ||
| Equities Division | 8,456 | 6,547 | |
| Corporate Finance Division | 4,603 | 4,884 | |
| Total revenue | 13,059 | 11,431 |
Included within revenue of the Corporate Finance Division is an amount of £155,000 (2008: £nil) relating to the fair value adjustment of derivatives held within trading investments that are fair valued through the income statement.
The Directors are of the opinion that there are only two business segments and that business resources cannot be readily allocated to segments for the purposes of deriving either profit or net assets.
Staff costs (including Directors) of the Group consist of:
| 2009 | 2008 | ||
| £'000 | £'000 | ||
| Wages and salaries | 4,100 | 3,790 | |
| Incentive payments | 944 | 610 | |
| Share based payments | 702 | 584 | |
| Social security costs | 582 | 496 | |
| Other pension costs | 419 | 349 | |
| 6,747 | 5,829 |
The average number of employees (including Directors) of the Group during the year was 55 (2008: 51) of which 41 (2008: 40) are front-office and the remainder are administration.
In addition to the basic earnings per share, underlying earnings per share has been shown because the Directors consider that this gives a more meaningful indication of the underlying performance of the Group. Where applicable, all adjustments are stated after taking into consideration the appropriate tax treatment.
| Year ended 31 October 2009 | Year ended 31 October 2008 | ||||
| Pence per Share | Numerator £'000 | Pence per Share | Numerator £'000 | ||
| Basic Earnings | 5.1 | 1,246 | 3.1 | 747 | |
| Add: IFRS2 share-based payments | 2.9 | 702 | 2.5 | 584 | |
| Add: Aborted bid costs | - | - | 0.5 | 131 | |
| Underlying Basic Earnings | 8.0 | 1,948 | 6.1 | 1,462 | |
| Diluted Earnings | 4.8 | 1,246 | 2.8 | 747 | |
| Add: IFRS2 share-based payments | 2.7 | 702 | 2.2 | 584 | |
| Add: Aborted bid costs | - | - | 0.5 | 131 | |
| Underlying Diluted Earnings | 7.5 | 1,948 | 5.5 | 1,462 | |
| Year ended 31 October 2009 | Year ended 31 October 2008 | |||
| Number | Number | |||
| Denominator | ||||
| Weighted average number of shares in issue for Basic Earnings calculation | 24,209,343 | 24,032,272 | ||
| Weighted average dilution for outstanding share options | 1,828,105 | 2,340,528 | ||
| Weighted average number for Diluted Earnings calculation | 26,037,448 | 26,372,800 | ||
The shares held by the Arden Partners Employee Benefit Trust have been treated as cancelled and excluded from the denominator. The comparative has been restated to reflect this treatment.
Copies of the 2009 Report and Accounts will be posted to shareholders in due course. Copies will also be available from the Company's registered office and from the Company's website.