Draft Release                                                                                                              21 December 2011

 

Arden Partners plc

("Arden" or the "Company")

 

Preliminary results for the year ended 31 October 2011

 

 

Arden Partners plc (AIM: ARDN), the institutional stockbroking company, today announces preliminary results for the year ended 31 October 2011.

 

Financial highlights

 

·     Revenue £12.4 million (2010: £13.0 million)

 

·     Underlying profit before tax* £1.2 million (2010: £1.3 million)

 

·     Profit before tax £0.6m (2010: loss before tax £0.5m)

 

·     Basic earnings per share 2.2p (2010: loss per share 4.2p)

 

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

 

Operational highlights

 

·     Total funds raised for clients £265m (2010: £183m)

 

·     Twelve transactions during the year, comprising seven secondary fundraisings, four M&A, and one IPO

 

Commenting on the results and Arden's outlook, Lord Flight, Chairman, said:

 

"Given the significant business pressures I am pleased to report that Arden has remained profitable over the last financial year……….The Stockbroking sector is facing perhaps the most difficult and challenging conditions since  the 1970's, however the lower overhead base, a strong balance sheet and our Indian franchise should stand Arden in good stead for the new financial year…"

 

Arden Partners plc                                                                                                     020 7614 5900

Jonathan Keeling - Chief Executive Officer

Trevor Norris - Group Finance Director

 

Altium                                                                                                                         020 7484 4040

Phil Adams / Sam Fuller

 

Buchanan Communications                                                                                        020 7466 5000

Mark Edwards 

 

 

Chairman's Statement

The Stockbroking sector is facing perhaps the most difficult and challenging conditions since the 1970s.  For Arden Partners and its broking peer group, in addition to depressed markets resulting particularly from the Eurozone crisis, the development of electronic trading platforms has also had a major impact on business volumes.  Difficult market conditions have also constrained opportunities for IPO and other fee generating corporate finance activities.  Consequently, both commission revenues and corporate finance income are under pressure.

 

Given these significant business pressures, I am pleased to report that Arden has remained profitable over the last financial year.  For the year to 31^st October 2011, profits before tax were £0.6m, compared to a loss before tax of £0.5m in 2010, with underlying profits of £1.2m before accounting for share based payments and reorganisation costs.  While turnover was 5% down on last year, administrative expenses have been reduced by over £2m and should reduce further in the current year.  This reflects the Board's decision some time ago to implement cost saving measures in response to the changing environment.

 

This changing environment is evidenced by the fact that most brokers, including Arden, have implemented substantial cost saving measures over the last year.  Some have closed down or disposed of their UK Securities activities and some have been the subject of take-over or merger approaches. The long discussed small/mid cap broker consolidation is finally happening and is likely to continue throughout next  year. The Board is monitoring these developments closely and will give consideration to any possible opportunities for Arden.  The Board remains committed to maintaining a UK presence in the small/mid cap market and with the prospect of fewer competitors remaining in our space, there should be positive opportunities for Arden looking forward.

 

The lower overhead base, a strong balance sheet and our Indian franchise should stand Arden in good stead for the new financial year, but any further downturn in markets and market confidence may require further cost reductions.

 

I would like to thank all of our staff, clients and shareholders for their continuing support.

 

Lord Flight

Chairman

 

 

Chief Executive's Statement

I am pleased to report a profit for the year against a background of very uncertain economic and market conditions.

 

The second half of the year was particularly challenging with the ongoing problems in the Eurozone as cautioned in the interim statement.  Commissions remain under significant pressure, share trading volumes are low and market volatility meant that both the equity and corporate departments faced a near "perfect storm".  I am pleased to report that against this background our market makers did not incur any significant losses and Arden's balance sheet remains strong.

 

The executive team is focussed on ensuring the business  runs on the lowest fixed cost base possible and will, therefore, continue to drive costs out of the business in the forthcoming period to ensure when eventually market conditions improve, that Arden is in the strongest position possible to take full advantage.

 

In the meantime the global outlook is very uncertain given no solution has been found to the debt and currency crisis in Europe. Severe pressure on stockbroking is likely to continue for the whole of 2012.  So, despite a reasonable pipeline of business opportunities, the conversion rate will be heavily dependent on what happens externally to the markets.

 

Financial Review

Revenue in the year ended 31 October 2011 was £12.4m compared to £13.0m in 2010.  The underlying profit before tax was £1.2m compared to £1.3m in 2010.  The profit before taxation, which is stated after charging share-based payments and reorganisation costs, was £0.6m and compares to a loss before taxation in 2010 of £0.5m. 

 

The basic earnings per share were 2.2p compared to a loss per share of 4.2p in 2010.

 

At the year end the Company held 2,372,768 ordinary shares of 10 pence each in Treasury.  The total cost of these shares was £1.2m.

 

Equities Division

Our Equities Division revenue increased by 25% to £7.6m from £6.1m.  Income from pure commission and agency cheques were at the same overall level as last year but this was heavily weighted to the first half.

 

Corporate Finance

During the year we completed 12 corporate finance transactions (2010: 15) including seven secondary fundraisings four M&A mandates, and one IPO.  Including retainer income, total corporate finance revenue was some 32% down to £4.7m from £6.9m.

 

Statement of cash flow

The cash flow statement shows a reduction in cash balances over the year of £3.8m.  This movement comprises mainly the increase in trading investments of £2.7m and the purchase of own shares of £1.2m so the underlying cash and liquidity position remains very strong.

 

 

Finally, I would like to take this opportunity to thank our staff for their commitment through these challenging conditions.

 

Jonathan Keeling

Chief Executive Officer

 

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 October 2011

 

		2011	2010
	Note	£'000	£'000
Revenue	2	12,381	13,046
Administrative expenses		(11,826)	(13,622)
Profit/(loss) from operations		555	(576)
Finance income		60	73
Finance costs		(3)	(9)
Profit/(loss) before taxation		612	(512)
Income tax expense		(106)	(519)
Profit/(loss) after taxation		506	(1,031)
Other comprehensive income for the year		-	-
Total comprehensive income/(loss) for the year attributable to equity shareholders		506	(1,031)
Earnings/(loss) per share
Basic	3	2.2p	(4.2p)
Diluted	3	2.0p	(4.2p)