TIDMARDN
RNS Number : 7453D
Arden Partners plc
01 July 2021
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Arden Partners plc
("Arden" or the "Company" or the "Group")
Unaudited results for the six months ended 30 April 2021
Arden Partners plc (AIM: ARDN.L), the institutional stockbroking
company, today announces its unaudited results for the six months
ended 30 April 2021 (the "period").
Highlights
-- The recovery in UK equity markets, the dramatic increase in
demand for capital triggered by the Covid 19 pandemic and improved
investor appetite provided favourable trading conditions throughout
the period.
-- Strong performances across all areas of the business
delivering a consistently profitable performance for the
period.
-- External recognition of the quality of our services with the
corporate and research teams winning a number of industry
awards.
-- Post the period end, the Company has seen a continuation of
the favourable trading environment and has continued to trade
profitably, with several corporate transactions completed and an
encouraging pipeline.
Financial highlights
-- Revenue: increased by 118% to GBP5.0m (2020: GBP2.3m) with
growth in all areas of the business
-- Profit before tax: GBP0.9m (H1 2020: Loss before tax of GBP1.5m)
-- Basic earnings per share: 3.5p (H1 2020: Loss per share of 5.7p)
-- No interim dividend proposed (H1 2020: nil)
-- Strong balance sheet with capital maintained at a level above minimum FCA requirements
Commenting Chief Executive Officer Donald Brown said:
"We are very pleased that the strong result delivered by o ur
team in the second half of the last financial year has continued
throughout the current year to date. As a result and despite the
unprecedented times, the Company has consistently traded
profitably.
The continued performance would not have been possible without
the efforts of our teams who have ensured that our business
activities suffered no disruption and that the quality of our
service was not compromised. I am grateful for their hard work and
commitment.
The second half has started well with a number of transactions
having already been completed, including an IPO. Market sentiment
has remained positive, continuing the favourable trading
environment. We have a very encouraging pipeline of transactions
and remain confident of delivering a profitable result for the year
as a whole, the scale of which will be determined by the delivery
of these pipeline deals."
Arden Partners plc 0207 614 5900
Donald Brown - Chief Executive Officer
James Reed-Daunter - Executive Director
Steve Douglas - Group Finance Director
GCA Altium (NOMAD) 0207 484 4040
Tim Richardson
SEC Newgate (Press enquiries)
Clotilde Gros/Richard Bicknell 0207 653 9850
Copies of this Interim Report are available from the Company's website
(www.arden-partners.com) and from its registered office, 5 George Road,
Edgbaston, Birmingham B15 1NP.
Notes for editors
Arden is a dedicated corporate adviser and multi-service stockbroker
to small and mid-cap companies in the UK and their investors.
The core of our business is the effective management of the needs of
our significant and growing base of corporate clients, and the effective
support of their relationships with existing and potential shareholders.
These relationships are enhanced by the quality of our corporate finance
advice and industry research, and the strong market presence of our sales
and trading teams.
Our corporate finance capabilities encompass M&A, corporate finance advisory,
broking and Sponsor and NOMAD services. We represent our clients in private
transactions and AIM and Main Market share issues.
Our research is designed to be sector focused, concentrating on top down
thematic trends which highlight companies giving investors an exposure
to the real growth areas of the small-cap and AIM markets.
It is the job of the sales team to keep institutions abreast of these
themes and stock ideas. When there is a requirement for our corporate
clients to raise money to fulfil their growth ambitions, the sales team
is in a strong position to effect this, with its entrenched relationships
with the UK institutional and non-institutional markets.
Our market making and trading teams provide liquidity in the shares of
our corporate clients. We also trade the shares of non-client corporates
on behalf of institutions.
The Arden Wealth Management team offers a bespoke service to our clients,
with the ability to trade/invest in equities, bonds and a range of global
investment funds, as well as allowing clients to participate in Primary
and Secondary equity placings.
CHIEF EXECUTIVE'S STATEMENT
Overview
Market sentiment throughout the period was positive with small
and mid-cap equities, in particular, performing strongly. Corporate
confidence rebounded and the demand for capital from equity markets
was extremely high. Lower levels of volatility also helped to
create a favourable environment for the equities division.
As a consequence, all areas of our business performed strongly
in the period. Revenues increased 118% when compared to the
comparable prior period and we recorded a profit before tax of
GBP0.9 million (H1 2020: loss before tax of GBP1.5 million).
Business Review
Summary
H1 2021 H1 2020 %
GBP'm GBP'm Change
------------------------------------- --------- --------- ---------
Equities 1.3 (1.1) 218.2
------------------------------------- --------- --------- ---------
Corporate Finance (incl. corporate
retainers) 3.5 3.4 2.6
------------------------------------- --------- --------- ---------
Wealth Management 0.2 0.0 529.4
------------------------------------- --------- --------- ---------
Revenue 5.0 2.3 118.0
------------------------------------- --------- --------- ---------
Equities
The major impact on this division's results for the period was
the profit made by the equity trading operations in the first half.
As a provider of liquidity in more volatile small and mid-cap
equities we are exposed to a certain level of systemic risk and we
benefitted from the strong equity performance of the small and
mid-cap market through the period.
In-line with internal budgets, other equity and research income
remained broadly flat year on year. The repercussions of MiFID II,
introduced in January 2018, will continue to impact this operation
for as long as they remain in force in their current guise.
Access to research is a vital part of small and mid-cap
investing. Our Research Portal provides investors with the greatest
possible access to our corporate client research and is available
by registering on our website (www.arden-partners.com). Our
research is also available via the ResearchTree portal where it has
been repeatedly highly ranked for its quality. We were delighted to
receive external recognition for our research offering in the
period, with various team members receiving industry accolades.
Corporate Finance
The Corporate Finance division experienced an increase in deal
volumes and maintained its average fees per deal level. We closed
fundraisings and M&A deals in both the public and private
markets, demonstrating the broad competency and reputation of our
team. We were delighted to receive external recognition for our
advisory services with the team winning a number of awards in the
period.
Retainer revenue from corporate clients was down modestly when
compared with the prior period and this impacted the division's
overall revenue growth for the period. The decrease in client
numbers was disappointing, although this was partly the result of
M&A and a number of delistings.
Wealth Management
Wealth Management remains in its infancy whilst we wait for more
stable market conditions to launch our full offering. Zoe Alexander
has recently been appointed to head up the Family Office team
within this division.
Costs
H1 2021 H1 2020 %
GBP'm GBP'm Change
-------------------------------- --------- --------- ---------
Staff costs 2.3 2.0 14.2
Non-staff costs 1.8 1.8 (2.1)
Total administrative expenses 4.1 3.8 6.3
Staff costs have risen compared to the comparable prior period
which in part reflects the competitive nature of our industry and
in part reflects an increase in the discretionary element of
employee's remuneration to reflect the Company's performance in the
period.
We anticipate an increase in headcount in the second half of the
year as we invest in personnel in order to allow us to transact on
the volume and complexity of the pipeline deals.
Non-staff costs continue to be tightly controlled.
Capital and liquidity
The Group's liquidity position (which comprises cash and cash
equivalents, long market making equity positions, trade and other
receivables) was GBP6.5 million at the period-end (31 October 2020:
GBP5.9 million). The Company's deferred PAYE creditor has been
repaid in full and the deferred VAT is being repaid in-line with
HMRC requirements.
The Directors believe that the liquidity position, which is an
alternative performance measure, provides more useful information
for shareholders on the underlying liquidity of the Group than the
reported net assets, as it focuses solely on the readily realisable
assets of the Group.
The Group's net assets at the period-end were GBP5.5 million (31
October 2020: GBP4.6 million). The capital adequacy ratio as at 30
April 2021 was 221% (31 October 2020: 249%).
The Group holds surplus capital on its balance sheet and
continually assesses this position throughout the year.
Current trading and outlook
Following on from the strong performance in the period under
review, trading in the second half of this financial year has
continued to be very encouraging. We have completed one IPO and
three secondary equity fundraisings (raising a cumulative GBP35
million) and have a good pipeline of transactions in the pipeline,
including some sizeable equity fundraisings and a number of M&A
transactions. Market sentiment remains positive and the trading
environment remains favourable.
We remain confident of delivering a profitable result for the
year as a whole, the scale of which will be determined by the
delivery of these pipeline deals.
I would like to thank all our clients and shareholders for their
continued support and to express the appreciation of the entire
Board for the considerable hard work and commitment of our
staff.
Donald Brown
Chief Executive Officer
30 June 2021
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the six month period ended 30 April 2021
Year
Six months Six months ended
ended ended 31 October
30 April 2021 30 April 2020 2020
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
--------------------------------------- ------ ---------------- ---------------- -------------
Revenue 2 5,026 2,305 5,929
Operating expenses 3 (4,040) (3,806) (7,105)
Expected credit loss 3 (40) (32) (210)
--------------------------------------- ------ ---------------- ---------------- -------------
Profit/(loss) from operations 946 (1,533) (1,386)
Finance income 2 15 44
Finance cost (8) (9) (14)
Profit/(loss) before tax 940 (1,527) (1,356)
Income tax (1) (2) (2)
--------------------------------------- ------ ---------------- ---------------- -------------
Profit/(loss) after tax attributable
to equity holders of the
parent 939 (1,529) (1,358)
Total comprehensive income
for the period 939 (1,529) (1,358)
======================================= ====== ================ ================ =============
Profit/(loss) per share
Basic 4 3.5p (5.7p) (5.0p)
======================================= ====== ================ ================ =============
Diluted 4 3.3p (5.7p) (4.7p)
======================================= ====== ================ ================ =============
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
At 30 April 2021
At At At
30 April 2021 30 April 2020 31 October
Unaudited Unaudited 2020 Audited
GBP'000 GBP'000 GBP'000
--------------------------------- ---------------- ---------------- ---------------
Assets
Non-current assets
Plant, property and equipment 72 79 71
Right of use assets 614 332 164
Deferred tax asset - - -
--------------------------------- ---------------- ---------------- ---------------
Total non-current assets 686 411 235
---------------------------------- ---------------- ---------------- ---------------
Current assets
Financial assets designated
at fair value through P&L 3,234 1,606 1,955
Trade and other receivables 3,179 2,963 2,464
Collateral deposits 10 620 48
Cash and cash equivalents 3,112 2,383 2,400
Total current assets 9,535 7,572 6,867
---------------------------------- ---------------- ---------------- ---------------
Total assets 10,221 7,983 7,102
---------------------------------- ---------------- ---------------- ---------------
Current liabilities
Financial liabilities held
at fair value (411) (1,131) (149)
Trade and other payables (3,738) (2,057) (2,199)
Lease liabilities (326) (283) (66)
---------------------------------- ---------------- ---------------- ---------------
Total current liabilities (4,475) (3,471) (2,414)
---------------------------------- ---------------- ---------------- ---------------
Non-current liabilities
Lease liabilities (243) - (52)
---------------------------------- ---------------- ---------------- ---------------
Total non-current liabilities (243) - (52)
---------------------------------- ---------------- ---------------- ---------------
Total liabilities (4,718) (3,471) (2,466)
================================== ================ ================ ===============
Net assets 5,503 4,512 4,636
================================== ================ ================ ===============
Equity:
Called up share capital 3,338 3,338 3,338
Share premium account 6,691 6,691 6,691
Employee Benefit Trust reserve (282) (974) (182)
Capital redemption reserve 700 700 700
Retained earnings (3,502) (3,801) (4,469)
---------------------------------- ---------------- ---------------- ---------------
Total equity before deduction
of own shares 6,945 5,954 6,078
Own shares (1,442) (1,442) (1,442)
---------------------------------- ---------------- ---------------- ---------------
Total equity 5,503 4,512 4,636
================================== ================ ================ ===============
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the six month period ended 30 April 2021
Six months Six months Year ended
ended ended 31 October
30 April 2021 30 April 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------- ---------------- ---------------- -------------
Operating activities before tax
Profit/(loss) from ordinary activities
before tax 940 (1,527) (1,356)
Adjustments for:
Fair value adjustments of derivative
financial assets (260) 42 (252)
Depreciation charges 197 202 403
Net interest receivable (2) (15) (44)
Net interest paid 8 9 14
Share based payments 28 (17) 147
----------------------------------------------- ---------------- ---------------- -------------
Operating cash flow before changes
in working capital 911 (1,306) (1,088)
(Increase)/decrease in operating assets (2,390) 675 1,691
Increase/(decrease) in operating liabilities 2,379 685 (139)
Cash generated from operations 900 54 464
Income taxes paid (1) - -
----------------------------------------------- ---------------- ---------------- -------------
Net cash flows from operating activities 899 54 464
----------------------------------------------- ---------------- ---------------- -------------
Investing activities
Purchases of property, plant and equipment (30) (3) (26)
Interest received 2 15 44
Net cash from investing activities (28) 12 18
----------------------------------------------- ---------------- ---------------- -------------
Financing activities
Payment of lease liability (51) (212) (395)
Net interest paid on lease liabilities (8) (9) (14)
Purchase of own shares (100) - (211)
Net cash flows from financing activities (159) (221) (620)
Increase/(decrease) in cash and cash
equivalents 712 (155) (138)
Net cash and cash equivalents at the
beginning of the period 2,400 2,538 2,538
Net cash and cash equivalents at the
end of the period 3,112 2,383 2,400
=============================================== ================ ================ =============
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
For the six month period ended 30 April 2021
Employee
Share Capital Benefit
Share Premium Redemption Own Trust Retained
capital account Reserve shares Reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ---------- ---------- -------------- ---------- ---------- ----------- ---------
Balance at
31 October 2019
(audited) 3,338 6,691 700 (1,442) (974) (2,255) 6,058
Loss for period - - - - - (1,529) (1,529)
Total comprehensive
loss for the period - - - - - (1,529) (1,529)
Contributions by
and distributions
to owners
Share based payments - - - - - (17) (17)
Balance at
30 April 2020 3,338 6,691 700 (1,442) (974) (3,801) 4,512
Profit for the period - - - - - 171 171
Total comprehensive
income for the period - - - - - 171 171
Contributions by
and distributions
to owners
Purchase of EBT
shares - - - - (211) - (211)
Distribution of
EBT shares - - - - 1,003 (1,003) -
Share based payments - - - - - 164 164
Balance at
31 October 2020
(audited) 3,338 6,691 700 (1,442) (182) (4,469) 4,636
Profit for period - - - - - 939 939
Total comprehensive
profit for the period - - - - - 939 939
Contributions by
and distributions
to owners
Purchase of EBT
shares - - - - (100) - (100)
Share based payments - - - - - 28 28
Balance at
30 April 2021 (unaudited) 3,338 6,691 700 (1,442) (282) (3,502) 5,503
============================= ========== ========== ============== ========== ========== =========== =========
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1) Basis of preparation
As permitted under AIM listing rules, IAS 34, 'Interim Financial
Reporting' has not been applied in this interim report.
The financial information presented in this report has been
prepared using accounting policies that are expected to be applied
in the preparation of the financial statements for the year ending
31 October 2021.
These policies are in accordance with the recognition and
measurement principles of International Financial Reporting
Standards, International Accounting Standards and Interpretations
(collectively IFRS) issued by the International Accounting
Standards Board as endorsed for use in the European Union, and
these principles are disclosed in the Financial Statements for the
year ended 31 October 2020.
The financial information in this interim report does not
constitute statutory accounts within the meaning of Section 435 of
the Companies Act 2006.
The Annual Report and Financial Statements for 2020 have been
filed with the Registrar of Companies. The Independent Auditors'
Report on the Annual Report and Financial Statement for 2019 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.
Going concern
The Directors believe that, taking into account its available
cash and liquid assets, the Group will have adequate resources to
continue in operational existence for the foreseeable future. The
Directors have assessed the continuing impact of COVID-19 on the
Group, running various scenarios taking into account the impact of
the pandemic to date and making various assumptions on the timing
and extent of the pandemic's longer term impact on the Group's
operations. The Directors are pleased to report that current
trading is ahead of the upside scenario they prepared although they
are very aware that this may not be an indicator of longer-term
trends. Further certain assets have been realised into cash during
the period. The combination of these exercises has reassured the
Directors that the Group's liquid assets could be accessed at short
notice should market conditions suddenly deteriorate. For this
reason, they continue to believe it is appropriate to adopt the
going concern basis in preparing the Financial Statements.
Accounting policies
The same accounting policies, presentation and methods of
computation are followed in these condensed set of financial
statements as are applied in the Group's latest audited Report and
Accounts for the year ended 31 October 2020.
2) Revenue
Year
Six months Six months ended
ended ended 31 October
30 April 2021 30 April 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------- ---------------- ---------------- --------------
Equities division 1,323 (1,128) (538)
Corporate Finance division 3,489 3,399 6,341
Wealth division 214 34 126
Total revenue 5,026 2,305 5,929
=========================== ================ ================ ==============
Services transferred at a point
in time 3,962 1,055 3,590
Services transferred over a period
of time 1,064 1,250 2,339
Total revenue 5,026 2,305 5,929
=================================== ============ ============ ============
Included within revenue of the Equities Division is a profit of
GBP803,000 (2020: Loss GBP1,415,000) derived from the equity
trading operation.
Included within revenue of the Equities Division is a profit of
GBP260,000 (2020: Loss GBP42,000) relating to the fair value
adjustment of warrants held within assets that are fair valued
through profit or loss.
3) Administrative expenses
Six months Six months
ended ended Year ended
30 April 2021 30 April 2020 31 October
Unaudited Unaudited 2020 Audited
GBP'000 GBP'000 GBP'000
------------------------------------------- ---------------- ---------------- ---------------
Staff costs including incentive
scheme 2,257 1,976 3,572
Other overheads 1,562 1,371 2,680
------------------------------------------- ---------------- ---------------- ---------------
Staff and overhead costs 3,819 3,347 6,252
Expected credit loss 40 32 210
Share based payments 28 (17) 147
Depreciation 193 203 403
Redundancy and restructuring
costs - 273 303
Total administrative expenses 4,080 3,838 7,315
=========================================== ================ ================ ===============
4) Earnings/(loss) per share
The basic earnings per share of 3.5p (2020: loss per share of
5.7p) is calculated on a profit after tax of GBP939,000 (2020: loss
after tax of GBP1,529,000) and a weighted average number of
ordinary shares in issue during the period (less shares held in
Treasury and by the Arden Partners Employee Benefit Trust) of
26,753,272 (2020: 26,763,511). For the year to 31 October 2020, the
basic loss per share of 5.0p is calculated on a loss after tax of
GBP1,358,000 and a weighted average number of ordinary shares in
issue during the year (less shares held in Treasury and by the
Arden Partners Employee Benefit Trust) of 27,308,302.
Diluted earnings per share takes account of the 1,676,219
weighted average number of outstanding options. In the prior period
the basic loss per share has not been so adjusted as the impact of
the weighted average outstanding share options would be to decrease
the loss per share.
The underlying diluted earnings per share for the six months
ended 30 April 2021 of 3.3p (2020: loss per share of 4.7p) is
calculated on a profit after tax of GBP967,000 (2020: loss after
tax of GBP1,273,000) being the profit after tax, adjusted for the
effect of IFRS 2 costs of GBP28,000 (2020: credit of GBP17,000) and
redundancy and restructuring costs of GBPNil (2020: GBP273,000).
The underlying diluted loss per share for the year to 31 October
2020 of 4.9p is calculated on a loss after tax of GBP1,358,000
being the loss after tax, adjusted for the effect of IFRS 2 costs
of GBP147,000.
INDEPENDENT REVIEW REPORT TO ARDEN PARTNERS PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 April 2021 which contains the Consolidated
Condensed Statement of Comprehensive Income, Consolidated Condensed
Statement of Financial Position, Consolidated Condensed Statement
of Cash Flows and Consolidated Condensed Statement of Changes in
Equity.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of and has been approved
by the directors. The directors are responsible for preparing the
interim report in accordance with the rules of the London Stock
Exchange for companies trading securities on AIM which require that
the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the Company's annual
accounts having regard to the accounting standards applicable to
such annual accounts.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
April 2020 is not prepared, in all material respects, in accordance
with the rules of the London Stock Exchange for companies trading
securities on AIM.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on AIM and for no other purpose. No person is entitled to rely on
this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London
30 June 2021
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
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