Arden Partners plc

("Arden" or the "Company")

 

Audited results for the year ended 31 October 2016

 

Arden Partners plc (AIM: ARDN), the institutional stockbroking company, today announces audited results for the year ended 31 October 2016.

 

Financial highlights

·     Revenue £5.9 million (2015: £5.5 million)

·     Loss before tax £0.4 million (2015: £2.1 million)

·     Underlying loss before tax* £0.5 million (2015: £1.8 million)

·     Basic loss per share 2.5p (2015: 10.8p)

·     Capital adequacy ratio 404% (2015: 392%)

 

* Profit before tax as adjusted for the effect of share based payments, lease settlement credit and reorganisation costs

 

Operational highlights

·     Funds raised for clients £61m

·     Retained corporate clients 39

 

Commenting on the results and Arden's outlook, Luke Johnson, Chairman, said:

 

"While the sector background and competitive forces remain ferocious, I am cautiously optimistic that in the medium term Arden can achieve a satisfactory level of profitability".

 

 

Arden Partners plc James Reed-Daunter - Chief Executive Officer Steve Wassell - Chief Operating Officer   GCA Altium Limited  Sam Fuller

020 7614 5900       020 7484 4040

 

 

 

 

Chairman's Statement

 

Together with other small and mid-market stockbrokers, your company found trading conditions difficult in 2016.

 

However, the second half year delivered a better result than the first half, so that the full year loss was reduced from that recorded at the half year, and helped deliver a better result than in 2015.

 

We continue to face challenges: commissions are under pressure, and the regulatory burden grows remorselessly.  All brokers like Arden will have to increasingly rely on their corporate client list to generate fees in order to succeed.

 

Given these circumstances, the executive have managed the company's cost base tightly.  Cash is being preserved.  At the end of the year under review, Arden recruited a first-rate execution team from a rival firm.  Early indications are that they will add materially to equity trading commissions, and they are helping to grow Arden's corporate list in the current financial year.

 

I hope we will be able to announce further hires of able stockbrokers in the months to come.  We will also look to evaluate potential acquisitions of complementary businesses to take advantage of synergies and cost savings.  The industry must consolidate further if it is to prosper, and Arden has cash, and an excellent corporate client list.

 

While the sector background and competitive forces remain ferocious, I am cautiously optimistic that in the medium term Arden can achieve a satisfactory level of profitability.

 

Given the loss for the year it would be inappropriate to pay a dividend.

 

I would like to thank our institutional and corporate clients for their continued loyalty to Arden, and all the staff for their hard work during the 2016 financial year.

 

Luke Johnson

Chairman

 

 

 

Chief Executive's Statement

 

I am pleased to report that Arden ended the year on a positive note, producing a profit of £0.3m in the second half, thereby reducing the H1 loss of £0.7m previously reported.

 

In October we were delighted to announce the hiring of a top rated small and mid cap Sales and Trading team. Early indications are positive with a strong increase of revenues in this area and a number of corporate client wins.

 

Financial Review

Revenue in the year ended 31 October 2016 was £5.9m compared to £5.5m in 2015. The underlying loss before taxation, which is stated before adjusting for share-based payments, lease settlement credit and reorganisation costs, was £0.5m and compares to a loss before taxation in 2015, of £1.8m.

 

Overheads continue to be managed tightly, resulting in a further £0.9m reduction year on year.

 

The Board has continued to buy back the Company's shares, under the shareholders authority granted at the last AGM. During the year ended 31 October 2016, the Company purchased net, 744,266 ordinary shares for a consideration of £0.287m. At the financial year end the Company held 1,200,242 ordinary shares in treasury at a total cost to the Company of £0.5m.

 

Outlook

Arden has managed its cost base tightly over the past two years, during what has been a difficult trading environment for the small and mid cap sector. Notwithstanding the generally harsh industry backdrop, we are encouraged by recent hires and are keen to recruit further quality individuals and teams on to what is a clean and financially strong platform. This will be key to continuing the momentum generated in H2 2016 into Arden's current financial year.

 

Finally may I take this opportunity to thank all our clients for their continued support and our staff for their dedication and hard work throughout the year.

 

James Reed-Daunter

Chief Executive Officer

 

 

 

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 October 2016

		2016	2015
	Note	£'000	£'000
Revenue	2	5,857	5,486
Administrative expenses		(6,323)	(7,646)
Loss from operations		(466)	(2,160)
Finance income		40	65
Finance expense		(3)	(2)
Loss before taxation		(429)	(2,097)
Income tax charge		(41)	-
Loss after taxation		(470)	(2,097)
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		(5)	(7)
Deferred tax taken to equity		-	6
Total comprehensive income for the year attributable to equity shareholders		(475)	(2,098)
Loss per share
Basic	3	(2.5p)	(10.8p)
Diluted	3	(2.5p)	(10.8p)

 

 

 

 

Consolidated Statement of Financial Position

At 31 October 2016

			2016	2016	2015		2015
	Note		£'000	£'000	£'000		£'000
Assets
Non-current assets
Property, plant and equipment				27			25
Deferred tax asset				50			84
Total non-current assets				77			109
Current assets
Assets held at fair value			1,489		1,703
Available for sale financial assets			552		507
Trade and other receivables			2,544		2,138
Stock borrowing collateral			58		120
Cash and cash equivalents			5,170		5,372
Corporation tax asset			-		16
Total current assets				9,813			9,856
Total assets				9,890			9,965
Current liabilities
Financial liabilities held at fair value			(48)		(92)
Trade and other payables			(2,719)		(1,979)
Total current liabilities				(2,767)			(2,071)
Total liabilities				(2,767)			(2,071)
Net assets				7,123			7,894

 

Shareholders' equity
Called up share capital			2,063		2,063
Capital redemption reserve			700		700
Share premium account			2,933		2,933
Employee Benefit Trust reserve			(849)		(849)
Available for sale reserve			(11)		(6)
Retained earnings			2,836		3,348
Total equity before deduction of own shares			7,672		8,189
Own shares			(549)		(295)
Total equity			7,123		7,894

 

 

 

 

Consolidated Statement of Cash Flows

For the year ended 31 October 2016

		2016	2015
		£'000	£'000
Operating activities before taxation
Loss before tax		(429)	(2,097)
Adjustments for:
Fair value adjustments of derivative financial assets		(205)	287
Depreciation of fixtures, fittings and computer equipment		23	25
Net interest receivable		(37)	(63)
Share based payments		22	111
Operating cash flow before changes in working capital		(626)	(1,737)
Decrease in operating assets		88	2,976
Increase/(decrease) in operating liabilities		683	(2,892)
Purchase of available for sale investments		(50)	(513)
Proceeds from disposal of available for sale investments		-	466
Cash generated from operations		95	(1,700)
Income taxes paid		10	-
Net cash flows from operating activities		105	(1,700)
Investing activities
Purchases of property, plant and equipment		(26)	(7)
Net interest received		37	63
Net cash flows from investing activities		11	56
Financing activities
Exercise of share options		(31)	-
Proceeds from the sale of own shares		133	10
Purchase of own shares		(420)	(1,136)
Dividends paid to equity shareholders		-	(140)
Net cash flows from financing activities		(318)	(1,266)
Decrease in cash and cash equivalents		(202)	(2,910)
Cash and cash equivalents at the beginning of the year		5,372	8,282
Cash and cash equivalents at the end of the year		5,170	5,372

 

 

 

 

Consolidated Statement of Changes in Equity

For the year ended 31 October 2016

	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 2014	2,296	2,933	467	(264)	(849)	(33)	6,597	11,147
Profit for year	-	-	-	-	-	-	(2,097)	(2,097)
Deferred tax taken to equity	-	-	-	-	-	-	6	6
Revaluation of available for sale financial assets	-	-	-	-	-	(7)	-	(7)
Transferred to retained earnings on disposal of available for sale assets	-	-	-	-	-	34	(34)	-
Total comprehensive income for the year	-	-	-	-	-	27	(2,125)	(2,098)
Contributions by and distributions to owners
Purchase of own shares	-	-	-	(1,136)	-	-	-	(1,136)
Sale of own shares	-	-	-	10	-	-	-	10
Own shares cancelled	(233)	-	233	1,095	-	-	(1,095)	-
Share based payments	-	-	-	-	-	-	111	111
Dividends paid to equity shareholders	-	-	-	-	-	-	(140)	(140)
Balance at 31 October 2015	2,063	2,933	700	(295)	(849)	(6)	3,348	7,894
Profit for year	-	-	-	-	-	-	(470)	(470)
Deferred tax taken to equity	-	-	-	-	-	-	-	-
Revaluation of available for sale financial assets	-	-	-	-	-	(5)	-	(5)
Total comprehensive income for the year	-	-	-	-	-	(5)	(470)	(475)
Contributions by and distributions to owners
Purchase of own shares	-	-	-	(420)	-	-	-	(420)
Sale of own shares	-	-	-	134	-	-	-	134
Share based payments	-	-	-	-	-	-	22	22
Share options exercised	-	-	-	32	-	-	(64)	(32)
Balance at 31 October 2016	2,063	2,933	700	(549)	(849)	(11)	2,836	7,123

 

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 the Group's financial statements.

 

 

 

 

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 2016 or the year ended 31 October 2015 under the meaning of s434 Companies Act 2006, but is derived from those accounts.

 

Statutory accounts for the years ended 31 October 2016 and 31 October 2015  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 2016 and 31 October 2015 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 2015 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 October 2016, 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.

 

		2016	2015
		£'000	£'000
Equities Division		2,430	2,172
Corporate Finance Division		3,427	3,314
Total revenue		5,857	5,486

 

            Included within revenue of the Equities Division is a profit of £205,000 (2015: loss £287,000) 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 2016, none of the Group's customers contributed 10% or more of the Group's revenue.  In 2015 one of the Group's customers contributed more than 10% of the Group's revenue, the amount was £914,000.

      

 

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 2016			Year ended             31 October 2015
	Pence per Share	Numerator £'000	Pence per Share		Numerator £'000
Basic loss per share	(2.5)	(470)	(10.8)		(2,097)
Add:  IFRS2 share-based payments	0.1	22	0.5		111
Add: Reorganisation payments	-	-
Less: Lease settlement credit	(0.8)	(150)	0.9		177
Underlying basic loss	(3.2)	(598)	(9.4)		(1,809)
Diluted loss per share	(2.5)	(470)	(10.8)		(2,097)
Add: IFRS2 share-based payments	0.1	22	0.5		111
Add: Reorganisation payments	-	-
Less: Lease settlement credit	(0.8)	(150)	0.9		177
Underlying diluted loss	(3.2)	(598)	(9.4)		(1,809)

 

	Year ended 31 October 2016		Year ended 31 October 2015
	Number		Number
Denominator
Weighted average number of shares in issue for basic earnings calculation	18,734,234		19,282,644
Weighted average dilution for outstanding share options	541,383		840,385
Weighted average number for diluted earnings calculation	19,275,617		20,123,029

The 1,480,700 (2015: 1,480,700) shares held by the Arden Partners Employee Benefit and the 1,200,242 (2015: 455,976) shares held in Treasury have been excluded from the denominator.

 

No adjustment has been made to the diluted loss per share of 2.4p as the dilution effect of the weighted average number of outstanding share options of 541,383 would be to decrease the loss per share.

 

4)         Annual Report and Accounts

            Copies of the 2016 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.