14 Jan 2015 07:00
Arden Partners plc
("Arden" or the "Group")
Preliminary results for the year ended 31 October 2014
Arden Partners plc (AIM: ARDN), the institutional stockbroking company, today announces preliminary results for the year ended 31 October 2014.
Financial highlights
· Revenue £8.0 million (2013: £10.1 million)
· Profit before tax £0.08 million (2013: £1.3 million)
· Underlying profit before tax* £0.15million (2013: £1.4million)
· Basic earnings per share 0.5p (2013: 4.7p)
· Proposed final dividend per share of 0.75p (2013: 1.75p)
* Profit before tax as adjusted for the effect of share based payments
Operational highlights
· Funds/Debt issuances for clients £457m
· Eighteen corporate transactions during the year
· Retained corporate clients 44
Commenting on the results and Arden's outlook, Peter Moon, Chairman, said:
"……following a slower than expected first half, I am pleased that the second half saw a rebound in revenue, allowing a small profit to be reported for the full year and the scope for the Board to recommend a final dividend. We remain focused on a strategy to develop the range of corporate and research services offered and to develop our corporate client base towards an optimum number..."
Arden Partners plc James Reed-Daunter - Chief Executive Officer Steve Wassell - Chief Operating Officer
| 020 7614 5900 |
Altium Phil Adams / Sam Fuller
| 020 7484 4040 |
Chairman's Statement
After a slower than expected first half, the second half of the financial year saw a rebound in revenue, allowing a small profit to be reported for the full year.
As mentioned previously, the sector is undergoing structural change and commission revenues continue to decline. The Board continues to evolve the Arden business model to reflect these changes and to be more focussed on the range of corporate and research services offered. Proactive recruitment of personnel has been, and is being, undertaken to reflect this.
As was announced at the time, the Company bought back in aggregate 661,087 of its own Ordinary shares in November 2013 and subsequent to this, 200,000 of these shares were re-sold, with the balance being currently held, for the time being, in Treasury. The Board is minded in due course to make further market purchases of its own Ordinary shares into Treasury, with a view, ultimately, to cancelling these shares.
Although the scope for dividend payments, in the Board's view, has been limited during the year, in line with the Board's stated policy to reward stakeholders in the business and shareholders equally, a final dividend of 0.75 pence per share is recommended (interim dividend Nil per share), which if approved will result in a total dividend for the year of 0.75 pence per share (2013: 3.0 pence per share).
Finally, I would like to thank all concerned for their contribution during the year.
Peter Moon
Chairman
Chief Executive's Statement
After a difficult first half of the financial year I am pleased to report an improved performance and a good return to profit in the second half. The profit before tax result of £0.08m for the full year should be read within the context of a first half loss of £0.5m.
The above reflects the structural change happening in the industry, in particular to commission income driven by new top down guidelines and compliance regulations. Over the past 12 months we have been positioning the business to reflect this and will continue to do so in the first half of 2015.
We have invested into those areas of the business at the core of our strategy and believe we have a strong platform to deliver growing and sustainable revenues within the corporate finance division of the business. In support of this, it is encouraging to see our retained client base increasing in number to 44 at the year end (2013: 39).
Whilst the Board expects no significant recovery in commission revenues we do expect a better performance from market making and trading and this remains a cornerstone of our service offering to both institutional and corporate clients.
Financial Review
Revenue in the year ended 31 October 2014 was £8.0m compared to £10.1m in 2013. The underlying profit before tax was £0.15m compared to £1.4m in 2013. The profit before tax which is stated after charging share-based payments was £0.08m and compares to a profit before tax in 2013 of £1.3m.
The basic earnings per share was 0.5p compared to 4.7p in 2013. Arden's capital adequacy at the period end was significantly ahead of regulatory requirements.
At the year end the Company held 461,087 ordinary shares of 10 pence each in Treasury, the total value of which was £0.2m.
Equities Division
The equities division revenue fell from £5.1m in 2013 to £2.6m this year, further reflecting the reduced commission rates in the industry.
Trading Investments
As reported at the interim stage, certain long term investments saw a decline in mark to market book accounting values during the first half and whilst these are non-cash items, they resulted in a loss of £0.4m against a profit of £0.3m in 2013.
Corporate Finance
Corporate Finance fees, including retainers, increased to £5.3m in the year, from £5.1m in 2013.
During the year we were involved in 18 transactions, compared to 11 in 2013. In aggregate we placed £93m (2013: £283m) in equity, in addition to £364m (2013: Nil) of debt issuances, for corporate clients.
Outlook
The current year has started satisfactorily. Arden has completed one IPO to date and is mandated on several other corporate finance transactions which, subject to market conditions, will deliver in the first half.
Further out the corporate finance pipeline of work is very encouraging and although still market dependant, gives confidence for a significantly improved performance for the year.
Finally, I would like to take this opportunity to thank all our staff and clients for their continued support and commitment to the business.
James Reed-Daunter
Chief Executive Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 October 2014
| 2014 | 2013 | |
| Note | £'000 | £'000 |
Revenue | 2 | 7,955 | 10,103 |
Administrative expenses | (7,936) | (8,829) | |
Profit from operations | 19 | 1,274 | |
Finance income | 61 | 71 | |
Finance expense | (5) | (4) | |
Profit before taxation | 75 | 1,341 | |
Income tax credit/(expense) | 40 | (351) | |
Profit after taxation | 115 | 990 | |
Other comprehensive income for the year: Items that will or may be reclassified subsequently to profit or loss: Decrease in fair value of available for sale financial assets |
(12) |
(11) | |
Total comprehensive income for the year attributable to equity shareholders | 103 | 979 | |
|
| ||
Earnings per share |
| ||
Basic | 3 | 0.5p | 4.7p |
Diluted | 3 | 0.5p | 4.5p |
Consolidated Statement of Financial Position
At 31 October 2014
|
| 2014 | 2014 | 2013 | 2013 | ||
| Note | £'000 | £'000 | £'000 | £'000 | ||
Assets |
|
|
|
|
| ||
Non-current assets |
|
|
|
|
| ||
Property, plant and equipment |
|
| 43 |
| 92 | ||
Deferred tax asset |
|
| 86 |
| 83 | ||
Total non-current assets |
|
| 129 |
| 175 | ||
Current assets |
|
|
|
|
| ||
Assets held at fair value |
| 2,350 |
| 6,756 |
| ||
Available for sale financial assets |
| 467 |
| 479 |
| ||
Trade and other receivables |
| 4,770 |
| 18,578 |
| ||
Stock borrowing collateral |
| 102 |
| 1,098 |
| ||
Cash and cash equivalents |
| 8,282 |
| 3,733 |
| ||
Corporation tax asset |
| 8 |
| - |
| ||
Total current assets |
|
| 15,979 |
| 30,644 | ||
Total assets |
|
| 16,108 |
| 30,819 | ||
Current liabilities |
|
|
|
|
| ||
Financial liabilities held at fair value |
| (75) |
| (178) |
| ||
Trade and other payables |
| (4,886) |
| (18,893) |
| ||
Corporation tax liability |
| - |
| (315) |
| ||
Total current liabilities |
|
| (4,961) |
| (19,386) | ||
Total liabilities |
|
| (4,961) |
| (19,386) | ||
Net assets |
|
| 11,147 |
| 11,433 | ||
Shareholders' equity |
|
|
|
|
|
Called up share capital |
|
| 2,296 |
| 2,296 |
Capital redemption reserve |
|
| 467 |
| 467 |
Share premium account |
|
| 2,933 |
| 2,933 |
Employee Benefit Trust reserve |
|
| (849) |
| (1,046) |
Available for sale reserve |
|
| (33) |
| (21) |
Retained earnings |
|
| 6,597 |
| 6,804 |
Total equity before deduction of own shares |
|
| 11,411 |
| 11,433 |
Own shares |
|
| (264) |
| - |
Total equity |
|
| 11,147 |
| 11,433 |
Consolidated Statement of Cash Flows
For the year ended 31 October 2014
|
| 2014 | 2013 |
|
| £'000 | £'000 |
Operating activities before taxation |
|
|
|
Profit before tax |
| 75 | 1,341 |
Adjustments for: |
|
|
|
Fair value adjustments of derivative financial assets |
| 538 | 193 |
Depreciation of fixtures, fittings and computer equipment |
| 82 | 123 |
Net interest receivable |
| (57) | (67) |
Share based payments |
| 77 | 76 |
Operating cash flow before changes in working capital |
| 715 | 1,666 |
Decrease/(increase) in operating assets |
| 18,673 | (11,514) |
(Decrease)/increase in operating liabilities |
| (14,111) | 10,001 |
Cash generated from operations |
| 5,277 | 153 |
Income taxes paid |
| (286) | (116) |
Net cash flows from operating activities |
| 4,991 | 37 |
Investing activities |
|
|
|
Purchases of property, plant and equipment |
| (33) | (24) |
Net interest received |
| 57 | 67 |
Net cash flows from investing activities |
| 24 | 43 |
Financing activities |
|
|
|
Proceeds from the sale of own shares |
| 222 | 332 |
Purchase of own shares |
| (322) | (1,322) |
Issue of shares |
| - | 25 |
Dividends paid to equity shareholders |
| (366) | (264) |
Net cash flows from financing activities |
| (466) | (1,229) |
Increase/(decrease) in cash and cash equivalents |
| 4,549 | (1,149) |
Cash and cash equivalents at the beginning of the year |
| 3,733 | 4,882 |
Cash and cash equivalents at the end of the year |
| 8,282 | 3,733 |
Consolidated Statement of Changes in Equity
For the year ended 31 October 2014
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 1 November 2012 | 2,501 | 2,933 | 237 | (661) | (607) | (10) | 7,214 | 11,607 |
Profit for year | - | - | - | - | - | - | 990 | 990 |
Revaluation of available for sale financial assets | - | - | - | - | - | (11) | - | (11) |
Total comprehensive income for the year | - | - | - | - | - | (11) | 990 | 979 |
Issue of shares | 25 | - | - | - | - | - | - | 25 |
Purchase of own shares | - | - | - | (696) | (626) | - | - | (1,322) |
Sale of own shares | - | - | - | 299 | - | - | - | 299 |
Own shares cancelled | (230) | - | 230 | 1,058 | - | - | (1,058) | - |
Share based payments | - | - | - | - | - | - | 76 | 76 |
Sale of shares by Employee Benefit Trust to satisfy employee share schemes | - | - | - | - | 187 | - | (154) | 33 |
Dividends paid to equity shareholders | - | - | - | - | - | - | (264) | (264) |
Balance at 31 October 2013 | 2,296 | 2,933 | 467 | - | (1,046) | (21) | 6,804 | 11,433 |
Profit for year | - | - | - | - | - | - | 115 | 115 |
Revaluation of available for sale financial assets | - | - | - | - | - | (12) | - | (12) |
Total comprehensive income for the year | - | - | - | - | - | (12) | 115 | 103 |
Purchase of own shares | - | - | - | (322) | - | - | - | (322) |
Sale of own shares | - | - | - | 58 | - | - | - | 58 |
Share based payments | - | - | - | - | - | - | 77 | 77 |
Sale of shares by Employee Benefit Trust to satisfy employee share schemes | - | - | - | - | 197 | - | (33) | 164 |
Dividends paid to equity shareholders | - | - | - | - | - | - | (366) | (366) |
Balance at 31 October 2014 | 2,296 | 2,933 | 467 | (264) | (849) | (33) | 6,597 | 11,147 |
Notes
1. The capital redemption reserve represents the nominal value of shares that have been cancelled that were previously held as Own Shares.
2. Own Shares represents shares purchased to be held as treasury shares at historical cost.
3. 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 in accordance with the accounting policy in note 1.
During the year 343,168 ordinary shares were issued from the employee benefit trust to satisfy employee share options (2013: 325,000).
NOTES
1) Basis of preparation
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 2014 or the year ended 31 October 2013 under the meaning of s434 Companies Act 2006, but is derived from those accounts.
Statutory accounts for the years ended 31 October 2014 and 31 October 2013 have been reported on by the Independent Auditors.
The Independent Auditors' Report on the Annual Report and Financial Statements for the years ended 31 October 2014 and 31 October 2013 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 2013 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 October 2014, prepared under IFRS, will be delivered to the Registrar in due course.
2) Revenue
Revenue is wholly attributable to the principal activity of the Group and arises solely within the United Kingdom.
|
| 2014 | 2013 |
|
| £'000 | £'000 |
Equities Division |
| 2,689 | 5,046 |
Corporate Finance Division |
| 5,266 | 5,057 |
Total revenue |
| 7,955 | 10,103 |
Included within revenue of the Equities Division is a loss of £538,000 (2013: loss £190,000) relating to the fair value adjustment of derivatives held within assets that are fair valued through profit or loss.
The Directors are of the opinion that there are only two operating segments and while segment revenues are reviewed internally business resources are not allocated to segments for the purposes of deriving either profit or assets. In 2014, none of the Group's customers contributed 10% or more of the Group's revenue.
3) Earnings per Share
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 current tax treatment ignoring deferred tax.
| Year ended 31 October 2014 | Year ended 31 October 2013 | |||
| Pence per Share | Numerator £'000 | Pence per Share | Numerator £'000 | |
Basic earnings per share | 0.5 | 115 | 4.7 | 990 | |
Add: IFRS2 share-based payments | 0.4 | 77 | 0.4 | 76 | |
Underlying basic earnings | 0.9 | 192 | 5.1 | 1,066 | |
|
|
|
|
| |
Diluted earnings per share | 0.5 | 115 | 4.5 | 990 | |
Add: IFRS2 share-based payments | 0.4 | 77 | 0.4 | 76 | |
Underlying diluted earnings | 0.9 | 192 | 4.9 | 1,066 | |
| Year ended 31 October 2014 |
| Year ended 31 October 2013 |
| |
| Number |
| Number |
| |
Denominator |
|
|
|
| |
Weighted average number of shares in issue for basic earnings calculation | 20,818,253 |
| 21,008,130 |
| |
Weighted average dilution for outstanding share options | 1,132,883 |
| 740,730 |
| |
Weighted average number for diluted earnings calculation | 21,951,136 |
| 21,748,860 |
| |
|
| ||||
The 1,480,700 (2013: 1,823,868) shares held by the Arden Partners Employee Benefit and the 461,087 (2013: Nil) shares held in Treasury have been excluded from the denominator.
4) Annual Report and Accounts
Copies of the 2014 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.
5) Dividend
The final dividend, if approved, will be paid on 27 March 2015 to shareholders on the register at close of business on 27 February 2015, with an ex-dividend date of 26 February 2015.