15th Jan 2007 07:01
Arden Partners plc15 January 2007 For Immediate Release 15 January 2007 Arden Partners plc ("Arden" or the "Company") Preliminary results for the year ended 31 October 2006 Arden Partners plc (AIM: ARDN.L), the institutional stockbroking company, todayannounces preliminary results for the year ended 31 October 2006. Financial highlights • Turnover increased by 36% to £14.3 million (2005: £10.5 million) • Profit before tax and exceptional float costs increased by 62% to £4.7 million (2005: £2.9 million) • Profit after tax increased by 37% to £2.6 million (2005: £1.9 million) • Underlying* basic earnings per share increased by 51% to 13.6p (2005: 9.0p) • Final dividend proposed in respect of the year ended 31 October 2006 of 1.8 p per ordinary share * Underlying earnings as adjusted for the after-tax effect of share based payments (FRS 20) and exceptional costs on flotation (FRS 25) Operational highlights • Successful flotation on the Alternative Investment Market in July 2006 at 162p per share • Advised on transactions with a value over £1.0 billion • Corporate brokership clients increased by 18% to 33 (2005: 28) • Research stock coverage increased by 22% to 126 (2005: 103) • Market making stocks increased to 47 Commenting on the results and Arden's outlook, Sir David Rowe-Ham, Chairman,said: "We are delighted to report a strong set of results. The current year hasstarted well, and in the months ahead we aim to continue to offer ourshareholders an above average dividend return, together with growth within thecore business. To our corporate and institutional clients, we are committed tocontinue to provide a quality professional service." Arden Partners plc 0207 398 1630Tony Bartlett - Chief Executive OfficerJonathan Keeling - Executive DirectorTrevor Norris - Group Finance Director Altium - NOMAD to Arden Partners plc 0207 484 4040Garry Levin Buchanan Communications 0207 466 5000Mark Edwards Nick Melson Chairman's Statement I was delighted to be appointed Chairman of Arden Partners plc prior to thecompany's flotation on the Alternative Investment Market ("AIM") in July 2006. Arden Partners Limited was formed in 2002 by a small team of individuals most ofwhom had previously worked together for a number of years at Albert E SharpSecurities and subsequently at Old Mutual Securities. In a relatively shortperiod of time, this team made its mark within the financial services industryas specialist institutional stockbrokers and advisors to small and medium sizedcompanies quoted on the London Stock Exchange, both on the Official List and onAIM. Arden Partners has continued to expand since its formation and now employs 49people who are all focused and high-quality individuals. Amongst their manyachievements in the year ended 31 October 2006, they raised substantial fundsfor the corporate client base. At the time of writing, this client baseincludes 33 listed companies with a combined market capitalisation of £3.9billion and it is very much the Company's intention to continue to enlarge thisbase and further grow this sector of the business. Within our team, we have specialist research, sales and market making resources,all of which contributed to a strong set of results for the Company. Corporatefinance has also been active during the twelve months to the end of October 2006with significant activity both in fund raisings and in mergers and acquisitionsfor our corporate clients. Some commentators have expressed caution concerningthe immediate future for investment banking, questioning the continuing demandfor listings on AIM and noting that after such a successful bull run in mergersand acquisitions activity, the rapid and profitable pace of corporate activitymay slow down. For our part, given the solid performance in delivery ofcorporate finance transactions and an encouraging pipeline, we continue to lookforward with optimism and will concentrate on expanding our business on allfronts. We also believe that there may be some further consolidation within ourindustry and we will continue to be alert to opportunities which will enhanceshareholder value. The current year has started well, and in the months ahead we aim to continue tooffer our shareholders an above average dividend return, together with growthwithin the core business. To our corporate and institutional clients, we arecommitted to continue to provide a quality professional service. Finally, I would like to thank our staff and clients for their contribution inmaking this year successful. Sir David Rowe-HamChairman14 January 2007 Operational and Financial Review Introduction In a year which saw Arden Partners plc admitted to AIM, we have also deliveredsignificant success across all of our business streams. Arden has continued toattract new institutional and corporate clients and this remains our strategyfor future growth. We have also continued to develop our research-ledphilosophy and are confident that this approach will continue to be beneficialto the ongoing growth of the Group. Financial Review For the year ended 31 October 2006, turnover rose by 36% to £14.3 million (2005:£10.5 million). Profit before tax increased by 41% to £4.1 million (2005: £2.9million). Profit before tax and exceptional costs on flotation increased by 62%to £4.7 million (2005: £2.9 million). Exceptional items of £0.6 million relatedto the costs associated with the Company's admission to AIM. Basic earnings per share increased by 33% to 11.0p from 8.3p and dilutedearnings by 27% to 10.5p from 8.3p. Underlying basic earnings per share (havingadjusted for the effects of share based payments and exceptional costs onflotation) increased by 51% to 13.6p from 9.0p and underlying diluted earningsper share increased by 44% to 13.0p from 9.0p. We are delighted by the performance of the Group, which was achieved against abackdrop of a difficult IPO market, particularly since May 2006, as we have seenan increase in both secondary issues and other corporate transactions includingM&A advisory work. We are pleased to announce that the Directors are proposing a final dividend inrespect of the year ended 31 October 2006 of 1.8p per ordinary share and thiswill be paid on 11 April 2007 to shareholders on the register of members at 9March 2007. Research, Sales and Market Making Sales and market making is a competitive sector where the emphasis is on strongproduct and client service. • Turnover 17% up from £5.2 million to £6.1 million • Research stock coverage 22% up from 103 to 126 • Market making stocks 47 at end of October 2006 Arden Partners intends to continue to grow its client base and to continue toexpand and improve its core product- research. Over the year we have added newstaff and increased the number of stocks we cover, adding new sectors whilst atthe same time strengthening existing ones. We continue to look for high calibrestaff to strengthen our offering. We are now beginning to see regular payments from institutions in respect of theunbundling process and continue to feel that this will have a positive impact onrevenue. In August 2006, we invested in electronic connections to the RetailService Platform which has led to an increase in income and we are hopeful thatthis trend will continue as we gradually and conservatively add furthermarket-making stocks. Corporate Finance and Broking We have seen another year of growth, not only in turnover, but the number oftransactions completed and funds raised. With the widely reported tighteningof the IPO market, it is pleasing to report that we have also seen ArdenPartners participate in a number of corporate transactions not involving theraising of funds. Most notably these included the acquisition of Metal Bulletinby Euromoney. In addition we have continued to grow the number of retainedcorporate clients and have a firm strategy in place to attract new clients. • Turnover 55% up from £5.3 million to £8.2 million • Corporate brokerships 18% up from 28 to 33 • Value of transactions £1 billion People We have continued to invest in our staff whilst maintaining a tight control overour overhead base. Our headcount has increased from 40 to 49. Ourconcentration on controlling overheads has ensured an increase in operatingmargin to 31% (2005: 28%). We have assembled an excellent team and I should like to thank them all fortheir achievements and hard work. We have made a commitment to grow thebusiness and we look forward to their continued support. Outlook We are pleased with the start to the new financial year. In our corporatefinance and broking division, we are pleased to have started the currentfinancial year on a positive note having successfully raised £31.0 million inNovember for KSK Power Ventur plc, an Indian power infrastructure supplier,which was our third successful Indian IPO. We were also successful in raising£8.4 million during November for Baltic Oil Terminals PLC. Our pipeline ofbusiness is encouraging and we are confident that our research led philosophywill help the continued growth in our secondary market revenues. We willcontinue to expand our corporate client base and believe that our ability toattract high quality individuals will serve the Company well in its objective ofbeing a first class stockbroking business based on the fundamentals ofrelationship broking. Tony BartlettChief Executive Officer14 January 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 October 2006 Trading results Exceptional Total Restated costs Total on flotation Note 2006 2006 2006 2005 £ £ £ £ Turnover 1 14,273,576 - 14,273,576 10,514,788Administrative expenses (9,778,216) (613,362) (10,391,578) (7,608,377)Operating profit 4,495,360 (613,362) 3,881,998 2,906,411Interest receivable and similar income 206,595 - 206,595 101,981Interest payable and similar charges (38,301) - (38,301) (125,317)Profit on ordinary activities before 4,663,654 (613,362) 4,050,292 2,883,075taxationTaxation on profit on ordinary activities (1,489,418) - (1,489,418) (977,089)Profit on ordinary activities after 3,174,236 (613,362) 2,560,874 1,905,986taxation Earnings per shareBasic 2 11.0p 8.3pDiluted 2 10.5p 8.3p Note - All results are in respect of continuing activities. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the year ended 31 October 2006 Restated 2006 2005 £ £Profit the financial year and total recognised gains and losses for 2,560,874 1,905,986the financial yearPrior year adjustment - preference share dividend (336,763)Total gains and losses recognised since last financial statements 2,224,111 CONSOLIDATED BALANCE SHEETAs 31 October 2006 Restated 2006 2006 2005 2005 £ £ £ £Fixed assetsTangible assets 388,475 218,547 Current assetsLong market making positions and 1,799,811 748,221similar investmentsMarket debtors 6,094,227 5,612,026Other debtors 1,074,797 740,776Debtors 7,169,024 6,352,802Cash at bank and in hand 8,259,649 5,614,764 17,228,484 12,715,787Creditors: amounts falling due within (9,828,016) (9,954,128)one yearNet current assets 7,400,468 2,761,659Total assets less current liabilities 7,788,943 2,980,206 Capital and reservesCalled up share capital 2,470,187 1,365,002Share premium account 2,645,678 20,000Employee Benefit Trust Reserve (200,000) -Profit and loss account 2,873,078 1,595,204Shareholders' funds 7,788,943 2,980,206 CONSOLIDATED CASH FLOW STATEMENTFor year ended 31 October 2006 2006 Restated 2005 £ £ Net cash inflow from trading results 4,217,725 4,399,415Exceptional cash flow - listing costs (613,362) -Net cash inflow from operating activities 3,604,363 4,399,415 Returns on investments and servicing of finance (175,618) 97,427Taxation (1,799,873) (9,589)Capital expenditure and financial investment (314,850) (187,973)Dividends paid (equity) (400,000) -Cash inflow before use of liquid resources and financing 914,022 4,299,280Management of liquid resources 1,026,300 (3,114,125)Financing 1,730,863 (38,451)Increase in cash 3,671,185 1,146,704 NOTES TO THE PRELIMINARY 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 policiespresented in the October 2005 accounts except it has adopted the followingFinancial Reporting Standards ("FRS"): • FRS 20 - Share-based Payment (adopted early) • FRS 21 - Events after The Balance Sheet date • FRS 25 - Financial Instruments: Disclosure and Presentation (presentational aspects only) The 2005 balance sheet has been restated for debtors and creditors with theheading for investments created following the move to disclose the gross amountof market making positions and market debtors and creditors. This follows bestpractice within the Group's peer group. 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 period ended 31 October 2005 is derived from thestatutory accounts for that year, which have been delivered to the Registrar ofCompanies. The auditors' report on those accounts was unqualified and did notcontain a statement under section 237(2) or (3) of the Companies Act 1985. Thefinancial information above has been derived from the audited financialstatements of Arden Partners plc for the year ended 31 October 2006. Thefinancial information does not constitute the Group's full financial statementsfor the year ended 31 October 2006. The statutory accounts for 2006 will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. 2) Turnover Turnover is wholly attributable to the principal activity of the Group andarises solely within the United Kingdom. 2006 2005 £ £ Commission and market making 6,082,099 5,190,596Corporate finance 8,191,477 5,324,192 14,273,576 10,514,788 The Directors are of the opinion that there are only two business segments andthat business resources can not be readily allocated to segments for thepurposes of deriving either profit or net assets. 3) Earnings per share In addition to the basic earnings per share, an underlying earnings per sharehas been shown because the Directors consider that this gives a more meaningfulindication of the underlying performance of the Group. Year ended Year ended 31 October 2006 31 October 2005 Pence per Numerator Pence per Numerator Share £ Share £Basic Earnings 11.0 2,560,874 8.3 1,905,986Add: FRS 20 share-based payments - 17,000 0.7 150,000Add: after tax effect of FRS 25 flotation 2.6 613,362 - -costsUnderlying Basic Earnings 13.6 3,191,236 9.0 2,055,986 Diluted Earnings 10.5 2,560,874 8.3 1,905,986Add: after tax effect of FRS 20 share-based - 17,000 0.7 150,000paymentsAdd: after tax effect of FRS 25 flotation 2.5 613,362 - -costsUnderlying Diluted Earnings 13.0 3,191,236 9.0 2,055,986 Number NumberDenominatorWeighted average number of shares in issue for 23,382,745 22,850,020Basic Earnings calculationWeighted average dilution for outstanding 1,098,373 -share optionsWeighted average number for Diluted Earnings 24,481,118 22,850,020calculation 4) Employees Staff costs (including directors) of the Company and Group consist of: 2006 Restated 2005 £ £ Wages and salaries 5,148,010 4,386,447Share-based payments 17,000 150,000Social security costs 654,904 548,375Other pension costs 312,896 214,366 6,132,810 5,299,188 The average number of employees (including Directors) during the year was 44(2005: 33) of which 37 (2005: 31) are front-office and the remainder areadministration. The 2005 charge of £150,000 within the share-based payments represents theexcess of market value over consideration paid for shares in the Companypurchased from the Arden Partners Employee Benefit Trust. 5) Annual Report & Accounts Copies of the 2006 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. -ENDS- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ARDN.L