Arden Partners plc 15 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, today announces 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 has started well, and in the months ahead we aim to continue to offer our shareholders an above average dividend return, together with growth within the core business. To our corporate and institutional clients, we are committed to continue to provide a quality professional service." Arden Partners plc 0207 398 1630 Tony Bartlett - Chief Executive Officer Jonathan Keeling - Executive Director Trevor Norris - Group Finance Director Altium - NOMAD to Arden Partners plc 0207 484 4040 Garry Levin Buchanan Communications 0207 466 5000 Mark Edwards Nick Melson Chairman's Statement I was delighted to be appointed Chairman of Arden Partners plc prior to the company'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 of whom had previously worked together for a number of years at Albert E Sharp Securities and subsequently at Old Mutual Securities. In a relatively short period of time, this team made its mark within the financial services industry as specialist institutional stockbrokers and advisors to small and medium sized companies quoted on the London Stock Exchange, both on the Official List and on AIM. Arden Partners has continued to expand since its formation and now employs 49 people who are all focused and high-quality individuals. Amongst their many achievements in the year ended 31 October 2006, they raised substantial funds for the corporate client base. At the time of writing, this client base includes 33 listed companies with a combined market capitalisation of £3.9 billion and it is very much the Company's intention to continue to enlarge this base 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. Corporate finance has also been active during the twelve months to the end of October 2006 with significant activity both in fund raisings and in mergers and acquisitions for our corporate clients. Some commentators have expressed caution concerning the immediate future for investment banking, questioning the continuing demand for listings on AIM and noting that after such a successful bull run in mergers and acquisitions activity, the rapid and profitable pace of corporate activity may slow down. For our part, given the solid performance in delivery of corporate finance transactions and an encouraging pipeline, we continue to look forward with optimism and will concentrate on expanding our business on all fronts. We also believe that there may be some further consolidation within our industry and we will continue to be alert to opportunities which will enhance shareholder value. The current year has started well, and in the months ahead we aim to continue to offer our shareholders an above average dividend return, together with growth within the core business. To our corporate and institutional clients, we are committed to continue to provide a quality professional service. Finally, I would like to thank our staff and clients for their contribution in making this year successful. Sir David Rowe-Ham Chairman 14 January 2007 Operational and Financial Review Introduction In a year which saw Arden Partners plc admitted to AIM, we have also delivered significant success across all of our business streams. Arden has continued to attract new institutional and corporate clients and this remains our strategy for future growth. We have also continued to develop our research-led philosophy and are confident that this approach will continue to be beneficial to 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: £2.9 million). 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 related to the costs associated with the Company's admission to AIM. Basic earnings per share increased by 33% to 11.0p from 8.3p and diluted earnings by 27% to 10.5p from 8.3p. Underlying basic earnings per share (having adjusted for the effects of share based payments and exceptional costs on flotation) increased by 51% to 13.6p from 9.0p and underlying diluted earnings per share increased by 44% to 13.0p from 9.0p. We are delighted by the performance of the Group, which was achieved against a backdrop of a difficult IPO market, particularly since May 2006, as we have seen an increase in both secondary issues and other corporate transactions including M&A advisory work. We are pleased to announce that the Directors are proposing a final dividend in respect of the year ended 31 October 2006 of 1.8p per ordinary share and this will be paid on 11 April 2007 to shareholders on the register of members at 9 March 2007. Research, Sales and Market Making Sales and market making is a competitive sector where the emphasis is on strong product 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 to expand and improve its core product- research. Over the year we have added new staff and increased the number of stocks we cover, adding new sectors whilst at the same time strengthening existing ones. We continue to look for high calibre staff to strengthen our offering. We are now beginning to see regular payments from institutions in respect of the unbundling process and continue to feel that this will have a positive impact on revenue. In August 2006, we invested in electronic connections to the Retail Service Platform which has led to an increase in income and we are hopeful that this trend will continue as we gradually and conservatively add further market-making stocks. Corporate Finance and Broking We have seen another year of growth, not only in turnover, but the number of transactions completed and funds raised. With the widely reported tightening of the IPO market, it is pleasing to report that we have also seen Arden Partners participate in a number of corporate transactions not involving the raising of funds. Most notably these included the acquisition of Metal Bulletin by Euromoney. In addition we have continued to grow the number of retained corporate 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 over our overhead base. Our headcount has increased from 40 to 49. Our concentration on controlling overheads has ensured an increase in operating margin to 31% (2005: 28%). We have assembled an excellent team and I should like to thank them all for their achievements and hard work. We have made a commitment to grow the business and we look forward to their continued support. Outlook We are pleased with the start to the new financial year. In our corporate finance and broking division, we are pleased to have started the current financial year on a positive note having successfully raised £31.0 million in November 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 of business is encouraging and we are confident that our research led philosophy will help the continued growth in our secondary market revenues. We will continue to expand our corporate client base and believe that our ability to attract high quality individuals will serve the Company well in its objective of being a first class stockbroking business based on the fundamentals of relationship broking. Tony Bartlett Chief Executive Officer 14 January 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNT For 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 10,514,788 Administrative expenses (9,778,216) (613,362) (10,391,578) (7,608,377) Operating profit 4,495,360 (613,362) 3,881,998 2,906,411 Interest receivable and similar income 206,595 - 206,595 101,981 Interest payable and similar charges (38,301) - (38,301) (125,317) Profit on ordinary activities before 4,663,654 (613,362) 4,050,292 2,883,075 taxation Taxation 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 1,905,986 taxation Earnings per share Basic 2 11.0p 8.3p Diluted 2 10.5p 8.3p Note - All results are in respect of continuing activities. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the year ended 31 October 2006 Restated 2006 2005 £ £ Profit the financial year and total recognised gains and losses for 2,560,874 1,905,986 the financial year Prior year adjustment - preference share dividend (336,763) Total gains and losses recognised since last financial statements 2,224,111 CONSOLIDATED BALANCE SHEET As 31 October 2006 Restated 2006 2006 2005 2005 £ £ £ £ Fixed assets Tangible assets 388,475 218,547 Current assets Long market making positions and 1,799,811 748,221 similar investments Market debtors 6,094,227 5,612,026 Other debtors 1,074,797 740,776 Debtors 7,169,024 6,352,802 Cash at bank and in hand 8,259,649 5,614,764 17,228,484 12,715,787 Creditors: amounts falling due within (9,828,016) (9,954,128) one year Net current assets 7,400,468 2,761,659 Total assets less current liabilities 7,788,943 2,980,206 Capital and reserves Called up share capital 2,470,187 1,365,002 Share premium account 2,645,678 20,000 Employee Benefit Trust Reserve (200,000) - Profit and loss account 2,873,078 1,595,204 Shareholders' funds 7,788,943 2,980,206 CONSOLIDATED CASH FLOW STATEMENT For year ended 31 October 2006 2006 Restated 2005 £ £ Net cash inflow from trading results 4,217,725 4,399,415 Exceptional 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) 97,427 Taxation (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 4,299,280 Management 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 cost convention and are in accordance with applicable UK accounting standards. In preparing these financial statements the Group has used the accounting policies presented in the October 2005 accounts except it has adopted the following Financial 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 the heading for investments created following the move to disclose the gross amount of market making positions and market debtors and creditors. This follows best practice within the Group's peer group. The financial information on the Group set out above does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. Information relating to the period ended 31 October 2005 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The financial information above has been derived from the audited financial statements of Arden Partners plc for the year ended 31 October 2006. The financial information does not constitute the Group's full financial statements for the year ended 31 October 2006. The statutory accounts for 2006 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 2) Turnover Turnover is wholly attributable to the principal activity of the Group and arises solely within the United Kingdom. 2006 2005 £ £ Commission and market making 6,082,099 5,190,596 Corporate 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 and that business resources can not be readily allocated to segments for the purposes of deriving either profit or net assets. 3) Earnings per share In addition to the basic earnings per share, an 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. 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 1,905,986 Add: FRS 20 share-based payments - 17,000 0.7 150,000 Add: after tax effect of FRS 25 flotation 2.6 613,362 - - costs Underlying Basic Earnings 13.6 3,191,236 9.0 2,055,986 Diluted Earnings 10.5 2,560,874 8.3 1,905,986 Add: after tax effect of FRS 20 share-based - 17,000 0.7 150,000 payments Add: after tax effect of FRS 25 flotation 2.5 613,362 - - costs Underlying Diluted Earnings 13.0 3,191,236 9.0 2,055,986 Number Number Denominator Weighted average number of shares in issue for 23,382,745 22,850,020 Basic Earnings calculation Weighted average dilution for outstanding 1,098,373 - share options Weighted average number for Diluted Earnings 24,481,118 22,850,020 calculation 4) Employees Staff costs (including directors) of the Company and Group consist of: 2006 Restated 2005 £ £ Wages and salaries 5,148,010 4,386,447 Share-based payments 17,000 150,000 Social security costs 654,904 548,375 Other 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 are administration. The 2005 charge of £150,000 within the share-based payments represents the excess of market value over consideration paid for shares in the Company purchased from the Arden Partners Employee Benefit Trust. 5) Annual Report & Accounts Copies of the 2006 Report and Accounts will be posted to shareholders in due course. Copies will also be sent to the AIM team and will be available from the Company's registered office. -ENDS- This information is provided by RNS The company news service from the London Stock Exchange