8th Jan 2008 07:00
Arden Partners plc08 January 2008 For Immediate Release 8 January 2008 Arden Partners plc ("Arden" or the "Company") Preliminary results for the year ended 31 October 2007 Arden Partners plc (AIM: ARDN), the institutional stockbroking company, todayannounces preliminary results for the year ended 31 October 2007. Financial highlights • Turnover increased by 18% to £16.8 million (2006: £14.3 million) • Underlying profit before tax* increased by 18% to £5.5 million (2006: £4.7 million) • Profit after tax increased by 35% to £3.5 million (2006: £2.6 million) • Underlying basic earnings per share** increased by 13% to 15.4p (2006: 13.6p) • Final dividend proposed in respect of the year ended 31 October 2007 of 4.5p per ordinary share * Profit before tax as adjusted for the effect of share based payments (FRS 20) and exceptional costs ** Underlying earnings as adjusted for the after-tax effect of share based payments and exceptional costs (see note 4 to the Consolidated Financial Statements) Operational highlights • £205 million raised for clients in 2007 (2006: £137 million) • 22 transactions completed during the period, comprising 3 IPOs, 12 Secondary fundraisings, 1 pre-IPO, and 6 M&A based transactions • Corporate brokership clients increased by 9% to 36 (2006: 33) Commenting on the results and Arden's outlook, Sir David Rowe-Ham, Chairman,said: "I am delighted to report that the Company continues to meet its objectives ingrowing the business and has achieved a record year. In the light of thesestrong results the Board has decided to recommend an increase in the anticipatedfinal dividend. The market is facing difficult times and to have achieved these results undersuch circumstances speaks volumes for the underlying quality of Arden's businessmodel. Small cap markets in particular have become more difficult as riskaversion has increased amongst investors who have become more selective. I ampleased that we have made a good start to the current financial year and tradingto date has given the Board confidence that the Company can grow in challengingconditions." Arden Partners plc 0207 398 1630Jonathan Keeling- Chief Executive OfficerTrevor Norris- Group Finance DirectorTony Bartlett- Non Executive Director Altium 0207 484 4040Sam Fuller Buchanan Communications 0207 466 5000Mark EdwardsNick Melson Chairman's Statement I am delighted to report that the Company continues to meet its objectives ingrowing the business and has achieved a record year. In the light of thesestrong results the Board has decided to recommend an increase in the anticipatedfinal dividend. The market is facing difficult times and to have achieved these results undersuch circumstances speaks volumes for the underlying quality of Arden's businessmodel. Small cap markets in particular have become more difficult as riskaversion has increased amongst investors who have become more selective. I ampleased that we have made a good start to the current financial year and tradingto date has given the Board confidence that the Company can grow in challengingconditions. Since my last statement there have been a number of personnel changes not leastthe appointment of Jonathan Keeling as Chief Executive Officer (CEO). TonyBartlett stepped down in early January in a scheduled move having fully met hisobjectives for the Company. I offer him our sincere thanks for his leadershipskills whilst CEO and we are delighted that he will be remaining on the Board ina non-executive capacity. Jonathan has been involved with the Company since itsinception and I am positive that he will lead continued growth and that he canlook forward to the support of all. We have seen some consolidation moves within our industry and uncertain marketconditions will dictate more of the same. The Board will continue to be alert topotential opportunities that arise. Finally, I would like to say thank you to our staff and our many clients fortheir contribution in making this another successful year. Sir David Rowe-Ham Chairman Operational and Financial Review Introduction This has been our first full year as a Public Limited Company and we are pleasedto have delivered significant success across each area of our business and tohave delivered a record year. This continues the trend since the inception ofthe business some six years ago. Arden continues to attract new institutionaland corporate clients and this remains our strategy for future growth. We havealso continued to develop our research-led philosophy and we remain confidentthat this model minimises business risk in difficult and challenging markets. Financial Review For the year ended 31 October 2007, turnover rose by 18% to £16.8 million (2006:£14.3 million). Profit before tax increased by 27% to £5.2 million (2006: £4.1million). Underlying profit before tax increased by 18% to £5.5 million (2006:£4.7 million). Exceptional items in 2007 of £318,000 as reported in our interimrelease in July relates to costs associated with a potential acquisition whichwas terminated. Operating profit is stated after charging a provision of£500,000 (2006: £Nil) against certain investments held in the Balance Sheet. Our concentration on controlling overheads has resulted in an increase inunderlying operating margin to 33% (2006: 31%). Basic earnings per shareincreased by 27% to 14.0p from 11.0p and diluted earnings by 24% to 13.0p from10.5p. Underlying basic earnings per share (having adjusted for the effects ofshare based payments and exceptional items) increased by 13% to 15.4p from 13.6pand underlying diluted earnings per share increased by 10% to 14.3p from 13.0p. As the Chairman has stated, we are delighted by the performance of the Group inwhat has been difficult market conditions and where across our industry a numberof Initial Public Offerings ("IPOs") have been either aborted or delayed. Duringthe year we completed twenty-two transactions of which three were IPOs, twelvewere secondary fundraising with the remainder being M&A and pre-IPO basedtransactions. In total we raised over £205 million for our clients. The cash balance at the year end was £7.8m. Debtors include £2.2 m in respect offees on two corporate transactions which were completed in the financial yearwhere the cash was received shortly after the year end. The Board are proposing a final dividend in respect of the year ended 31 October2008 of 4.5p (2006: 1.8p) per ordinary share making a total of 6.7p (2006:3.55p) per ordinary share. An interim dividend of 2.2p (2006: 1.75p) perordinary share was paid on 4 October 2007. The final dividend will be paid on 11April 2008 to shareholders on the register of members at 14 March 2008. Equities Division This has again been a record year for our Equities Division: •Turnover 22% up from £6.1 million to £7.4 million We have continued to improve the quality of our Equities Team in terms of theunderlying staff, together with system requirements and our approach torelationship broking. We continue the search for outstanding candidates to joinArden to further strengthen the quality of our sales and execution capabilityand the quality of our research product. We are delighted that a number of ouranalysts have again been rated for their research input to institutionalclients. Corporate Finance Division The Corporate Finance Team has had another busy year delivering twenty-twotransactions of which sixteen involved raising funds: •Turnover 14% up from £8.2 million to £9.4 million •Funds raised for clients £205 million (2006: £137 million) In this financial year we delivered three IPOs in comparison with four last yearand whilst this is another indicator of changing market conditions for deliveryof new business to the AIM market it also indicates a strength that Arden is notheavily dependent on these transaction flows. We have to date introduced four Indian focused businesses to the AIM market. TheIndian market offers Arden a number of opportunities to see quality companies atan early stage in their cycle and we are keen to develop this market further inbalance with UK and European based opportunities. People We have continued to invest in our staff whilst maintaining a tight control overour overhead base. This year has seen the introduction of a new long-termincentive share option plan and we have already seen the benefit in the qualityof individuals who have joined this year. I would like to mention Tony Bartlett who has stepped down as CEO havingcompleted his objectives. Tony was instrumental in steering Arden through itsown IPO and in its early stages as a PLC and I am grateful for his continuedsupport in his new role. We have an excellent team at Arden and I should like to thank them for all theirachievements and hard work. We remain committed to grow the business and I lookforward to their continued support. Outlook We have started the new financial year on a positive note with a number ofsecondary fundraisings and commission levels are satisfactory. The pipeline ofpotential corporate transactions remains encouraging and a number of these areshowing reasonable visibility of delivery, however, we are always mindful oftiming and the state of the market. We will continue to grow the client base andbelieve that our ability to attract and retain high quality individuals willhelp us to maintain our position as a first class stockbroking business. Jonathan Keeling Chief Executive Officer CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 October 2007 Note 2007 2006 £'000 £'000 ---------------------------- -------- ---------- ----------Turnover 2 16,774 14,274Administrative expenses (12,071) (10,392)---------------------------- -------- ---------- ----------Operating profit 4,703 3,882Interest receivable and similar income 461 206Interest payable and similar charges (3) (38)---------------------------- -------- ---------- ----------Profit on ordinary activities before 5,161 4,050taxationTaxation on profit on ordinary (1,704) (1,489)activities -------- ---------- --------------------------------------Profit on ordinary activities after 3,457 2,561taxation ============================ ======== ========== ========== Earnings per share Basic 4 14.0 11.0p============================ ======== ========== ==========Diluted 4 13.0 10.5p============================ ======== ========== ========== CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the year ended 31 October 2007 --------------------------------- --------- -------- 2007 2006 £'000 £'000 --------------------------------- --------- --------Profit for the financial year and total recognised gainsand 3,457 2,561losses for the financial yearPrior year adjustment - preference share dividend - (337)--------------------------------- --------- --------Total gains and losses recognised since last FinancialStatements 3,457 2,224================================= ========= ======== CONSOLIDATED BALANCE SHEET At 31 October 2007 2007 2007 2006 2006 £'000 £'000 £'000 £'000 --------------------- --------- --------- --------- ---------Fixed assetsTangible assets 512 388 Current assetsLong market making positionsand 2,009 1,800similar investments --------- --------- --------- ------------------------------Market debtors 6,114 6,094Other debtors 3,639 1,075--------------------- --------- --------- --------- ---------Debtors 9,753 7,169Cash at bank and in hand 7,855 8,260--------------------- --------- --------- --------- --------- 19,617 17,229Creditors: amounts fallingdue within one (9,798) (9,828)year --------------------- --------- --------- --------- ---------Net current assets 9,819 7,401--------------------- --------- --------- --------- ---------Total assets less current 10,331 7,789liabilities ===================== ========= ========= ========= ========= Capital and reservesCalled up share capital 2,470 2,470Share premium account 2,646 2,646Employee Benefit Trust Reserve (200) (200)Profit and loss account 5,415 2,873--------------------- --------- ---------Shareholders' funds 10,331 7,789===================== ========= ========= COMPANY BALANCE SHEET At 31 October 2007 2007 2007 2006 2006 £'000 £'000 £'000 £'000 --------------------- --------- --------- --------- ---------Fixed assetsTangible assets 512 388Fixed asset investments - ---------------------- --------- --------- --------- --------- 512 388Current assetsLong market making positionsand 2,009 1,800similar investments --------------------- --------- --------- --------- ---------Market debtors 6,114 6,094Other debtors 3,639 1,075--------------------- --------- --------- --------- ---------Debtors 9,753 7,169Cash at bank and in hand 7,855 8,260--------------------- --------- --------- --------- --------- 19,617 17,229Creditors: amounts fallingdue within one (9,798) (9,828)year --------------------- --------- --------- --------- ---------Net current assets 9,819 7,401--------------------- --------- --------- --------- ---------Total assets less current 10,331 7,789liabilities ===================== ========= ========= ========= ========= Capital and reservesCalled up share capital 2,470 2,470Share premium account 2,646 2,646Employee Benefit Trust reserve (200) (200)Profit and loss account 5,415 2,873--------------------- --------- ---------Shareholders' funds 10,331 7,789===================== ========= ========= CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 October 2007 2007 2006 £'000 £'000 --------------------------- --------- ---------Net cash inflow from trading results 2,339 4,218Exceptional cash flow items (318) (613)--------------------------- --------- ---------Net cash inflow from operating activities 2,021 3,605Returns on investments and servicing of finance 458 (176)Taxation (1,575) (1,800)Capital expenditure and financial investment (360) (315)Dividends paid (equity) (949) (400)--------------------------- --------- ---------Cash inflow before use of liquid resources and financing (405) 914Management of liquid resources (1,393) 1,026Financing - 1,731--------------------------- --------- ---------Increase in cash (1,798) 3,671=========================== ========= ========= NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1) Basis of preparation The Group financial statements have been prepared under the historical costconvention and are in accordance with applicable UK accounting standards. Inpreparing these financial statements the Group has used the accounting policesadopted in the April 2007 interim financial statements. The financial information on the Group set out above does not constitutestatutory accounts within the meaning of section 240 of the Companies Act 1985.Information relating to the year ended 31 October 2006 is derived from thestatutory accounts for that year, which have been delivered to the Registrar ofCompanies. The auditors' report on those accounts was unqualified, did notinclude any matters to which the auditors drew attention by way of emphasis ofmatter without qualifying the audit report, and did not contain a statementunder section 237(2) or (3) of the Companies Act 1985. The financial informationabove has been derived from the audited financial statements of Arden Partnersplc for the year ended 31 October 2007. The financial information does notconstitute the Group's full financial statements for the year ended 31 October2007. The statutory accounts for 2007 will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting. 2) Turnover Turnover is wholly attributable to the principal activity of the Group andarises solely within the United Kingdom. ------------------------------- --------- --------- 2007 2006 £'000 £'000 ------------------------------- --------- ---------Commission and market making 7,396 6,082Corporate finance 9,378 8,192------------------------------- --------- --------- 16,774 14,274 =============================== ========= ========= The Directors are of the opinion that there are only two revenue streams andthat business resources can not be readily allocated to revenue streams for thepurposes of deriving either profit or net assets. 3) Employees Staff costs (including Directors) of the Company and Group consist of: ------------------------------- --------- --------- 2007 2006 £'000 £'000 ------------------------------- --------- ---------Wages and salaries 3,568 2,881Incentive payments 2,373 2,267Share-based payments 34 17Social security costs 737 655Other pension costs 408 313------------------------------- --------- --------- 7,120 6,133 =============================== ========= ========= The average number of employees (including Directors) during the year in theCompany and the Group was 50 (2006: 44) of which 43 (2006: 37) are front-officeand the remainder are administration. 4) Earnings per Share In addition to the basic earnings per share, underlying earnings per share hasbeen shown because the Directors consider that this gives a more meaningfulindication of the underlying performance of the Group. Where applicable, alladjustments are stated after taking into consideration the appropriate taxtreatment. ------------------- ----------------- ----------------- Year ended Year ended 31 October 2007 31 October 2006 ------------------- --------- --------- --------- --------- Pence per Numerator Pence per Numerator Share £'000 Share £'000 ------------------- --------- --------- --------- ---------Basic Earnings 14.0 3,457 11.0 2,561Add: FRS 20 share-basedpayments 0.1 34 - 17Add: Aborted acquisition costs 1.3 318 - -Add: FRS 25 flotation costs - - 2.6 613------------------- --------- --------- --------- ---------Underlying Basic Earnings 15.4 3,809 13.6 3,191=================== ========= ========= ========= ========= Diluted Earnings 13.0 3,457 10.5 2,561Add: FRS 20 share-basedpayments 0.1 34 - 17Add: Aborted acquisition costs 1.2 318 - -Add: FRS 25 flotation costs - - 2.5 613------------------- --------- --------- --------- ---------Underlying Diluted Earnings 14.3 3,809 13.0 3,191=================== ========= ========= ========= ========= Number Number ------------------- --------- --------- --------- ---------DenominatorWeighted average number ofshares in issue for BasicEarnings calculation 24,701,872 23,382,745Weighted average dilution foroutstanding share options 1,941,819 1,098,373------------------- --------- --------- --------- ---------Weighted average number forDiluted Earnings calculation 26,643,691 24,481,118=================== ========= ========= ========= ========= Notes 1) On 21 September 2007, 800,000 options were issued under the auspice of the Arden Partners Share Plan 2007 (a long-term incentive plan). 750,000 of these have performance targets which began on 1 November 2007 and which therefore have an effective exercise date beyond 31 October 2010. Accordingly, these options have been excluded from the weighted average calculation for diluted earnings and no FRS 20 charge is made to the Profit and Loss Account. 2) These accounts include a £500,000 provision for a permanent diminution against current asset investments. Should earnings per share be adjusted to take account of this adjustment basic and diluted earnings figures would be as follows: ------------------- ----------------- ----------------- Year ended Year ended 31 October 2007 31 October 2006 ------------------- --------- --------- --------- --------- Pence per Numerator Pence per Numerator Share £'000 Share £'000 ------------------- --------- --------- --------- ---------Underlying Basic Earnings perabove 15.4 3,809 13.6 3,191Add: After tax effect for theprovision for permanentdiminution in current assetinvestments 1.4 350 - -------------------- --------- --------- --------- ---------Underlying Basic Earningshaving adjusted for provisionfor permanent diminution 16.8 4,159 13.6 3,191=================== ========= ========= ========= ========= Diluted Earnings per above 14.3 3,809 13.0 3,191Add: After tax effect for theprovision for permanentdiminution in current assetinvestments 1.3 350 - -------------------- --------- --------- --------- ---------Underlying Diluted Earningshaving adjusted for provisionfor permanent diminution 15.6 4,159 13.0 3,191=================== ========= ========= ========= ========= 5) Annual Report & Accounts Copies of the 2007 Report and Accounts will be posted to shareholders in duecourse. Copies will also be sent to the AIM team and will be available from theCompany's registered office. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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