13th Jan 2009 07:00
|
Immediate Release |
13 January 2009 |
Arden Partners plc
("Arden" or the "Company")
Preliminary results for the year ended 31 October 2008
Arden Partners plc (AIM: ARDN), the institutional stockbroking company, today announces preliminary results for the year ended 31 October 2008.
Financial highlights
Revenue £11.4 million (2007: £16.8 million)
Underlying profit before tax* £2.1 million (2007: £5.5 million)
Underlying basic earnings per share** 5.9p (2007: 15.5p)
Net cash £9.5m (2007: £7.9m)
* Profit before tax as adjusted for the effect of share based payments and aborted bid costs
** Basic earnings per share, as adjusted for the after-tax effect of share based payments and aborted bid costs
Operational highlights
£75 million raised for clients in 2008 (2007: £205 million)
12 transactions completed during the year, comprising eight M&A and pre-IPO based transactions, two IPOs and two secondary fundraisings
Commenting on the results and Arden's outlook, Sir David Rowe-Ham, Chairman, said:
"Arden has performed satisfactorily despite poor markets. We continue to capitalise on and expand our relationship broking model, aiming to grow further from our already strong base. We have generated cash as well as making a profit such that our cash at the year end was £9.5m, putting Arden in a strong position to grow our franchise at an opportunistic time.
Earnings for the year to October 2008 are, as with other UK brokers, below earnings in 2007. Current conditions do however present opportunities for our business to grow its franchise. The withdrawal of many investment banks from the small and mid cap markets is no doubt an opportunity for Arden, which has both the people and the capacity to reap benefits from the downturn."
Arden Partners plc 020 7398 1630
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
Arden has performed satisfactorily despite poor markets. We continue to capitalise on and expand our relationship broking model, aiming to grow further from our already strong base. We have generated cash as well as making a profit such that our cash at the year end was £9.5m, putting Arden in a strong position to grow our franchise at an opportunistic time.
Earnings for the year to October 2008 are, as with other UK brokers, below earnings in 2007. Current conditions do however present opportunities for our business to grow its franchise. The withdrawal of many investment banks from the small and mid cap markets is no doubt an opportunity for Arden, which has both the people and the capacity to reap benefits from the downturn.
We are now able to hire high-calibre staff at considerably lower cost than was the case 12 months ago. To this end we have during the course of the year hired 11 senior staff, with a further five joining in the two months since our October year end. In 2008 we also expanded our sector coverage, adding financials, electronics and electrical equipment, and healthcare.
It is the Board's view that the current markets must represent an opportunity rather than a threat, given the strength of our balance sheet.
Trading since October has remained difficult but we are on a sound footing with a strong balance sheet and a pipeline of new business that is creditable given difficult markets. The Board has decided to retain cash for building the platform, and has therefore not declared a final dividend.
Finally, I would like to thank all concerned for their contribution in these very challenging times.
Sir David Rowe-Ham
Chairman
Chief Executive's Statement
Introduction
Arden's performance in the year to October 31 has been satisfactory, given weak markets. The FTSE All Share index was down 37% over the year while revenue in our equities division was down 12%. Arden completed 12 corporate finance transactions, despite the scarcity of finance available for deals.
Financial Review
Revenue in the year ended 31 October 2008 was down by 32% to £11.4m (2007: £16.8m). Underlying profit before tax declined by 62% to £2.1m (2007: £5.5m). Profit before tax - after share-based payments and one-off costs from adviser fees related to aborted bid talks - was down by 73% to £1.4m (2007: £5.2m). Cash generation was strong with balances up 20% to £9.5m (2007: £7.9m). Net cash is some 430% of our £2.2m regulatory capital requirements.
Underlying basic earnings per share (before aborted bid costs and share-based payments) fell to 5.9p from 15.5p with underlying diluted earnings per share down to 5.4p from 14.4p. Basic earnings per share fell to 3.0p from 14.1p while diluted earnings per share declined to 2.7p from 13.1p.
Equities Division
Our equities business is proving to be very defensive with revenue down 12% to £6.5m (2007: £7.4m) against a decline of 37% in the FTSE All Share index over the same period. Since the year end, commission revenue has continued to be challenging, as negative sentiment magnified the usual seasonal decline in volumes.
Corporate Finance
During the year we completed 12 corporate finance transactions including eight M&A and pre-IPO deals, two IPOs and two secondary fundraisings, raising £75m for our clients, compared with £205m in 2007. Corporate Finance activity is weak compared with recent years. I believe, though, that corporate finance will drive any sustained recovery in the wider market and our strong team will seize the opportunities.
Dividend
The Board is not proposing a final dividend for the year ended 31 October 2008 (2007: 4.5p). Arden paid an interim dividend of 2.2p (2007: 2.2p) per ordinary share on 3 October 2008.
Outlook
We remain focussed on growing our business by taking advantage of opportunities arising from the market downturn. Equities revenue remains challenging since the year end. The corporate finance pipeline is creditable, although as ever the timing of deals is uncertain.
The number of high-quality staff available to recruit continues to rise, and it is our intention to take full advantage of all opportunities arising from the market conditions.
Jonathan Keeling
Chief Executive Officer
Consolidated Income Statement
For the year ended 31 October 2008
|
Note |
2008 |
2007 |
|
|
£'000 |
£'000 |
||
|
Revenue |
2 |
11,431 |
16,819 |
|
Administrative expenses |
10,541 |
12,071 |
|
|
Profit from operations |
890 |
4,748 |
|
|
Finance income |
509 |
461 |
|
|
Finance costs |
- |
3 |
|
|
Profit before taxation |
1,399 |
5,206 |
|
|
Income tax expense |
652 |
1,717 |
|
|
Profit on ordinary activities after taxation |
747 |
3,489 |
|
|
|
|||
|
Earnings per share |
|||
|
Basic |
4 |
3.0p |
14.1p |
|
Diluted |
4 |
2.7p |
13.1p |
Consolidated Balance Sheet
At 31 October 2008
|
|
||||||
|
2008 |
2008 |
2007 |
2007 |
|||
|
£'000 |
£'000 |
£'000 |
£'000 |
|||
|
Assets |
||||||
|
Non-current assets |
||||||
|
Property, plant and equipment |
323 |
512 |
||||
|
Deferred tax |
88 |
507 |
||||
|
Total non-current assets |
411 |
1,019 |
||||
|
Current assets |
||||||
|
Financial assets - held for trading |
215 |
1,652 |
||||
|
Financial assets - available for sale |
5 |
443 |
||||
|
Trade and other receivables |
3,146 |
9,701 |
||||
|
Cash and cash equivalents |
9,481 |
7,855 |
||||
|
Total current assets |
12,847 |
19,651 |
||||
|
Total assets |
13,258 |
20,670 |
||||
|
Current liabilities |
||||||
|
Trade and other payables |
2,943 |
8,992 |
||||
|
Corporation tax liability |
197 |
806 |
||||
|
Total current liabilities |
3,140 |
9,798 |
||||
|
Non-current liabilities |
||||||
|
Deferred tax |
- |
28 |
||||
|
Total non-current liabilities |
- |
28 |
||||
|
Total liabilities |
3,140 |
9,826 |
||||
|
Net assets |
10,118 |
10,844 |
||||
|
Equity |
|||||
|
Called up share capital |
2,470 |
2,470 |
|||
|
Share premium account |
2,646 |
2,646 |
|||
|
Employee Benefit Trust Reserve |
(200) |
(200) |
|||
|
Available for sale reserve |
(2) |
35 |
|||
|
Retained earnings |
5,204 |
5,893 |
|||
|
Total equity |
10,118 |
10,844 |
Consolidated Cash Flow Statement
For the year ended 31 October 2008
|
2008 |
2007 |
||
|
£'000 |
£'000 |
||
|
Operating activities before taxation |
|||
|
Net profit from ordinary activities before tax |
1,399 |
5,206 |
|
|
Adjustments for: |
|||
|
Fair value adjustments |
(38) |
45 |
|
|
Depreciation |
278 |
236 |
|
|
Profit on disposal of available for sale investments |
(218) |
- |
|
|
Impairment of available for sale investments |
342 |
500 |
|
|
Net interest receivable |
(509) |
(458) |
|
|
Share based payments |
584 |
34 |
|
|
Operating cash flow before changes in working capital |
1,838 |
5,563 |
|
|
Decrease/(increase) in trade and other receivables |
6,564 |
(2,629) |
|
|
Decrease/(increase) in financial assets |
1,520 |
(444) |
|
|
Decrease in trade and other payables |
(6,079) |
(159) |
|
|
Purchases of available for sale investments |
(108) |
(310) |
|
|
Proceeds from disposal of available for sale investments |
368 |
- |
|
|
Cash generated from operations |
4,103 |
2,021 |
|
|
Income taxes paid |
(1,277) |
(1,575) |
|
|
Cash flows from operating activities |
2,826 |
446 |
|
|
Investing activities |
|||
|
Purchases of property, plant and equipment |
(89) |
(360) |
|
|
Interest received |
499 |
458 |
|
|
Net cash from investing activities |
410 |
98 |
|
|
Financing activities |
|||
|
Dividends paid to equity shareholders |
(1,610) |
(949) |
|
|
Increase/(decrease) in cash and cash equivalents |
1,626 |
(405) |
|
|
Cash and cash equivalents at the beginning of the year |
7,855 |
8,260 |
|
|
Cash and cash equivalents at the end of the year |
9,481 |
7,855 |
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 |
Consolidated Statement of changes in equity
For the year ended 31 October 2007
|
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 2006 |
2,470 |
2,646 |
(200) |
(105) |
3,022 |
7,833 |
|
Changes in equity for 2007: |
||||||
|
Available for sale investments: |
||||||
|
- Increase in fair value of investments |
- |
- |
- |
200 |
- |
200 |
|
- Tax taken to equity |
- |
- |
- |
(60) |
297 |
237 |
|
Net income recognised directly in equity |
- |
- |
- |
140 |
297 |
437 |
|
Profit for the year |
- |
- |
- |
- |
3,489 |
3,489 |
|
Total recognised income and expense for the year |
140 |
3,786 |
3,926 |
|||
|
Dividends |
- |
- |
- |
- |
(949) |
(949) |
|
Share based payments |
- |
- |
- |
- |
34 |
34 |
|
Balance at 31 October 2007 |
2,470 |
2,646 |
(200) |
35 |
5,893 |
10,844 |
Notes
The Employee Benefit Trust reserve represents shares held in the parent company by Arden Partners EBT Limited, a corporate trustee company which is consolidated in the group 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
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 2008 or the year ended 31 October 2007 under the meaning of s240 Companies Act 1985, but is derived from the 2008 annual report and accounts.
Statutory accounts for 2007 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 October 2008 will be delivered to the Registrar of Companies following the company's annual general meeting.
The auditors have reported on the accounts for the years ended 31 October 2007 and 31 October 2008. Their reports were unqualified, and did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and the reports did not contain statements under section 237(2) or (3) of the Companies Act 1985.
2) Revenue
Revenue is wholly attributable to the principal activity of the Group and arises solely within the United Kingdom.
| 2008 |
2007 |
||
| £'000 |
£'000 |
||
| Equities Division |
6,547 |
7,444 |
|
| Corporate Finance Division |
4,884 |
9,375 |
|
| Total revenue |
11,431 |
16,819 |
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.
3) Employees
Staff costs (including Directors) of the Group consist of:
| 2008 |
2007 |
||
| £'000 |
£'000 |
||
| Wages and salaries |
3,790 |
3,568 |
|
| Incentive payments |
610 |
2,150 |
|
| Share based payments |
584 |
34 |
|
| Social security costs |
496 |
737 |
|
| Other pension costs |
349 |
631 |
|
| 5,829 |
7,120 |
The average number of employees (including Directors) during the year in the Group was 51 (2007: 50) of which 40 (2007: 43) are front-office and the remainder are administration.
4) 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 the appropriate tax treatment.
| Year ended 31 October 2008 |
Year ended 31 October 2007 |
||||
| Pence per Share |
Numerator £'000 |
Pence per Share |
Numerator £'000 |
||
| Basic Earnings |
3.0 |
747 |
14.1 |
3,489 |
|
| Add: IFRS2 share-based payments |
2.4 |
584 |
0.1 |
34 |
|
| Add: Aborted bid costs |
0.5 |
131 |
1.3 |
318 |
|
| Underlying Basic Earnings |
5.9 |
1,462 |
15.5 |
3,841 |
|
| Diluted Earnings |
2.7 |
747 |
13.1 |
3,489 |
|
| Add: IFRS2 share-based payments |
2.2 |
584 |
0.1 |
34 |
|
| Add: Aborted bid costs |
0.5 |
131 |
1.2 |
318 |
|
| Underlying Diluted Earnings |
5.4 |
1,462 |
14.4 |
3,841 |
|
| Year ended 31 October 2008 |
Year ended 31 October 2007 |
|||
| Number |
Number |
|||
| Denominator |
||||
| Weighted average number of shares in issue for Basic Earnings calculation |
24,701,872 |
24,701,872 |
||
| Weighted average dilution for outstanding share options |
2,340,528 |
1,941,819 |
||
| Weighted average number for Diluted Earnings calculation |
27,042,400 |
26,643,691 |
||
5) Annual Report and Accounts
Copies of the 2008 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.
Related Shares:
ARDN.L