Interim Results - Six Months Ended 30 April 2018

Arden Partners plc

("Arden" or the "Company" or the "Group")

Unaudited results for the six months ended 30 April 2018

Arden Partners plc (AIM: ARDN.L), the institutional stockbroking company, today announces its unaudited results for the six month period ended 30 April 2018.

Operational highlights

· Significant investment made in every department across the platform as the business has been restructured over the last twelve months

· Substantial 32.5% growth in retained corporate client list from 40 to 53 over the last twelve months improving the robustness of revenues

· Post MIFID II, signed research service agreements with a significant number of institutional clients across the UK

· Strong start to the second half of the financial year - both in terms of profitability and cash generation - with a number of transactions completed

· The Board is confident that the investment made will produce profitable growth in the short and medium term

Financial Highlights

· Revenue: £2.6m (2017: £2.9m)

· Loss before tax: £2.3m (2017: £1.3m)

· Basic loss per share: 7.8p (2017: 7.1p)

· Underlying Basic loss per share: 6.9p (2017: 6.5p)

· No interim dividend proposed (2017: nil)

· Tier 1 Capital Adequacy Ratio at 30 April 2018: 535% (2017: 367%)

Commenting on the interim results and outlook for the business, CEO Donald Brown said:

"Since I joined the Company, I have led a restructuring of the Arden platform and made significant investments into the business as reflected in the first half results being announced today.

We have had a strong start to the second half, already closing a number of corporate transactions, giving the board confidence that this investment will produce profitable growth in the short and medium term. We have an exciting corporate pipeline and we are confident that we can execute on it."

CHIEF EXECUTIVE'S STATEMENT

Arden is a full-service investment bank acting as sponsor, nomad and broker to a growing list of retained corporate clients. 

The results for the first half of the year (£2.3m loss before tax on revenue of £2.6m) provide evidence of the significant investment that has been made in every department across the platform as we have restructured the business over the last twelve months. We have had a strong start to the second half with a number of transactions completing giving the Board confidence that this investment will produce profitable growth in the short and medium term.

I have always been very clear that our corporate clients are the thumping heart-beat of our business. As such, we are delighted by the substantial recent growth in our retained corporate client base, which has been due in large part to the talent in the corporate finance department and a number of excellent new additions to that team.

Over the past twelve months the number of retained corporate clients has grown from 40 to 53. Over the same time, the average market cap of our corporate clients has increased to £138m. This is a key building block of our business model, improving the robustness and visibility of our revenues and gives us confidence in the quality of the business moving forward. Whilst we will continue to look to grow our retained corporate client base, we also need to remain focused, working closely with our clients to provide them with the time, resource and advice they need to address some of the challenges of the public markets.

At the same time, we have more than doubled the size of our research team, making new hires which have helped to significantly upgrade the quality of our product. As a direct consequence (and justifying our investment), we have been able to sign research service agreements with a significant number of institutional clients across the UK. The number of large 'global institutions' that have signed up gives us great confidence that our investment into this department is already paying dividends.

Commission rates and levels remain challenging across the whole industry. However, we now have an institutional sales team of eight people, covering a wide spectrum of institutional clients, wealth managers and family offices, and which is, in my view, one of the best teams in our area of the market. As such, we have the capacity, alongside our hugely experienced trading desk, to execute for institutional clients and to create liquidity for our corporate clients.

The investments detailed above have come at a cost and the results for the first half of the year evidence the significance of the restructuring of the business. The Board is not proposing an interim dividend. At the period end, we had a significant pipeline of well-advanced corporate transactions. A number of these transactions have since completed and, consequently, we have had a strong start to the second half - both in terms of profitability and cash generation. The pipeline of transactions remains encouraging, giving the board confidence that the investments made will produce significant growth in the short and medium term and we expect to convert much of it into profits and cash throughout the remainder of this financial year. Delivery will always remain subject to market conditions.

In conclusion we have, over recent months, conducted a root and branch restructuring of the Arden platform and made significant investments into the business, having first stabilised the business with a significant fund raising in July 2017. We now have the resources and infrastructure in place to grow our business. The balance sheet remains robust, as evidenced by our tier one capital adequacy ratio of over 500% and our robust cash and cash equivalents position is at the same level today as at the date of the fund raising completed last year.

Donald Brown

Chief Executive Officer

30 July 2018

CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME

For the period ended 30 April 2018

CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

At 30 April 2018

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

For the period ended 30 April 2018

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY 

For the period ended 30 April 2018

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 2018.

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 2017.

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 2017 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2017 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

3) Operating expenses

4) Loss per share

The basic loss per share of 7.9p (2017: 7.1p) is calculated on a loss after tax of £2,344,000 (2017: £1,274,000) and 29,561,749 (2017: 17,962,894) 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 2017, the basic earnings per share of 3.3p is calculated on a profit after tax of £732,000 and 22,188,366 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.

The basic loss per share has not been adjusted in respect of a dilution as the impact of the weighted average outstanding share options would be to decrease the loss per share.

The underlying basic loss per share of 6.9p (2017: 6.5p) for the six months ended 30 April 2018 is calculated on a loss after tax of £2,031,000 (2017: £1,168,000) being the loss after tax, adjusted for the effect of IFRS 2 costs of £27,000 (2017: £27,000), redundancy and restructuring costs of £286,000 (2016: £79,000). The underlying basic profit per share of 5.6p for the year to 31 October 2017 is calculated on a profit after tax of £1,253,000 being the profit after tax, adjusted for the effect of IFRS 2 costs of £4,000 and restructuring of £517,000.

5) Dividends

The Directors have not proposed an interim dividend (2017: Nil).

INDEPENDENT REVIEW REPORT TO ARDEN PARTNERS PLC

Introduction

We have been engaged by the company to review the condensed interim set of financial statements in the half-yearly financial report for the six months ended 30 April 2018 which comprises the consolidated condensed statement of comprehensive income, the consolidated condensed statement of financial position, the consolidated condensed statement of cash flows, the consolidated condensed 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'', pursuant to the Financial Reporting Council's (FRC) guidance on Review of Interim Financial Information. 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 ISAs (UK) 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 2017 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

30 July 2018

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).