Arden Partners plc
Annual Report 2011
17758ARDENPARCVR.indd 1
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26/02/2009
Proof 5
02/03/2010 12:04
Arden Partners plc
Arden Partners plc is an established stockbroker which provides a range of financial services to
corporate and institutional clients. Based in the United Kingdom and with strong international
links, Arden Partners plc’s shares trade on London's AIM market, part of the London Stock
Exchange.
Contents
Page:
1
2
3
4
7
8
11
15
16
18
19
20
21
22
23
24
25
47
48
Highlights
Chairman’s Statement
Chief Executive’s Statement
Corporate Governance
Board of Directors
Report of the Directors
Directors’ Remuneration Report
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Corporate Information
Notice of Meeting
ARDEN PARTNERS PLC ANNUAL REPORT 2011
HIGHLIGHTS
FINANCIAL
Year ended
31 October
2011
Year ended
31 October
2010
Revenue
£12.4m
£13.0m
Profit/(loss) before tax
Share based payments and reorganisation costs
Underlying profit before tax *
Earnings/(loss) per share:
Basic
Underlying Basic †
Diluted
Underlying Diluted ‡
Dividend per ordinary share:
Interim
Proposed final
NON-FINANCIAL
Funds raised for clients
Client brokerships
Average number of staff
£0.6m
£0.6m
£1.2m
2.2p
4.7p
2.0p
4.3p
Nil
Nil
(£0.5m)
£1.8m
£1.3m
(4.2p)
2.4p
(4.2p)
1.6p
Nil
Nil
£265m
£183m
32
48
41
58
* Profit before tax as adjusted for the effect of share based payments and reorganisation costs
† Basic earnings per share are stated after taking into consideration the current tax treatment, ignoring deferred tax.
‡ Diluted earnings per share are stated after taking into consideration the current tax treatment, ignoring deferred tax.
- 1 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
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 31st 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
20 December 2011
- 2 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
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 are 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 was 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 Flows
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 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
20 December 2011
- 3 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
CORPORATE GOVERNANCE
Introduction
Whilst the Group is not obliged to comply with the Combined Code (May 2010), the Directors have agreed to
adopt the ethos of those regulations and to disclose information relating to corporate governance.
The Directors and the Board
The Board comprises of seven Directors, three of whom are Executive, three Independent Non-Executive and
one Non-Executive. The current composition is as follows:
Lord Flight*
Jonathan Keeling
Trevor Norris
Steve Wassell
Mark Ansell*
Peter Moon*
Grahame Whateley
Chairman
Chief Executive Officer
Group Finance Director and Company Secretary
Chief Operating Officer (appointed 22/12/2010)
Chairman of Audit Committee (appointed 31/12/2010)
Chairman of Remuneration Committee
Chairman of Nominations Committee (appointed 31/12/2010)
Non-Executive
(* denotes Independent Non-Executive Director)
Biographical details of all the Directors are set out on page 7.
The Board has regular scheduled full meetings and will meet at other times as necessary. The Board is
responsible for strategic and major operational issues affecting the Group. It reviews financial performance,
regulatory compliance, and monitors key performance indicators. It will consider any ad hoc matters of
significance to the Group including corporate activity. Attendance at meetings by members of the Board during
the year ended 31 October 2011 was as follows:
Board
Audit
Committee
Remuneration
Committee
Total number of meetings
Lord Flight
Jonathan Keeling
Trevor Norris
Steve Wassell
Mark Ansell 1
Peter Moon 1
Grahame Whateley
Sir David Rowe-Ham 2 (Resigned 31/12/2010)
Tony Bartlett 2 (Resigned 31/12/2010)
6
6
5
6
6
4
4
6
2
2
2
2
n/a
n/a
n/a
1
1
n/a
1
n/a
2
2
n/a
n/a
n/a
2
2
n/a
n/a
n/a
Notes:
1. Mark Ansell and Peter Moon attended all Board meetings and Audit Committee meetings subsequent to their
appointment.
2. Sir David Rowe-Ham and Tony Bartlett attended all meetings required prior their resignation.
- 4 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
CORPORATE GOVERNANCE
Re-election of Directors
In accordance with the Company’s Articles, and to ensure compliance with the UK Corporate Governance
Code, certain of the Directors are required to be re-elected at Annual General Meetings of the Company. In
accordance with the Articles, Jonathan Keeling and Trevor Norris are required to retire at the forthcoming
Annual General Meeting and, being eligible, offers themselves for re-election. The Board supports their re-
appointments having assessed their performance and value to the Board.
Remuneration Committee
The Remuneration Committee, which comprises the Independent Non-Executive Directors, is chaired by Peter
Moon and has responsibility for determining remuneration of Executive Directors and key members of staff.
This Committee makes decisions in consultation with the Chief Executive Officer and no Director plays a part
in any decision about their own remuneration. This Committee also reviews bonus and equity arrangements for
the Group’s senior employees and in addition has responsibility for supervising the Arden Partners Share
Option Scheme and the grant of options under its terms.
The remuneration of all Non-Executive Directors is fixed by the Board.
Audit Committee
The Audit Committee, which comprises the Independent Non-Executive Directors, is chaired by Mark Ansell
and has responsibilities which include the review of:
•
•
•
•
•
the Group’s internal control environment;
financial risks (including market risk in relation to the Group’s market making activities);
financial statements, reports and announcements;
independence of auditors;
ensuring the Group has a policy which allows any member of staff to raise, in confidence, any concern
about possible impropriety in matters of financial reporting or other matters, and to ensure that suitable
arrangements are in place for a proportionate independent investigation of such matters including any
follow-up action required.
Nominations Committee
The Committee’s responsibilities include; ensuring that the size and composition of the Board is appropriate for
the needs of the Group, selecting the most suitable candidate or candidates for the Board and to oversee
succession planning aspects for the Board. This Committee is chaired by Peter Moon.
Operational Structure
The Group is managed by an Operations Committee which has responsibility for implementation of strategy and
monitoring progress of delivery against key objectives. The Committee also reviews financial performance
against budgets and key performance indicators. This Committee is chaired by Steve Wassell in his role as
Chief Operating Officer and has both Jonathan Keeling and Trevor Norris as permanent members.
Risk Committee
The Risk Committee is chaired by the Group Finance Director and has both the Chief Operating Officer and the
Director of Compliance as permanent members. This Committee is charged with monitoring risk exposures
including those which arise through trading and holding financial instruments, regulatory and compliance,
capital adequacy and financial reporting risk. This Committee also has responsibility for monitoring the
Group’s internal control environment.
A further explanation of risks which are faced by the Group, is set out in note 23 to the Financial Statements.
- 5 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
CORPORATE GOVERNANCE
Internal Control
The Board confirms that there is an ongoing process for identifying, evaluating and managing the significant
risks faced by the Group, which complies with the guidance “Internal Control: Guidance for Directors on the
Combined Code”. This has been in place throughout the year and up to the date of approval of the Financial
Statements. The process is regularly reviewed by the Board.
The Directors are responsible for the Group’s system of internal control and for reviewing its effectiveness.
However, such a system can only provide reasonable, but not absolute, assurance against material misstatement
or loss.
Going Concern
After making enquiries, the Directors have a reasonable expectation that the Group will have adequate resources
to continue in operational existence for the foreseeable future. For this reason, they continue to believe it is
appropriate to adopt the going concern basis in preparing the Financial Statements.
- 6 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
BOARD OF DIRECTORS
Lord Flight (Independent Chairman)
Howard has significant experience of the investment management and broking sectors having held senior
positions at Guinness Mahon, Guinness Flight, Investec Asset Management and more recently at Panmure
Gordon. Howard is also a Commissioner at The Guernsey Financial Services Commission and is a Member of
the House of Lords.
Lord Flight is the Senior Independent Director.
Jonathan Keeling (Chief Executive Officer)
Jonathan is one of the founder members of Arden Partners. A graduate in economics, he joined Albert E Sharp
as an Equity Salesman in 1985, was made a Director in 1989 and Head of Small Cap Sales in the early 1990s.
Jonathan left Albert E Sharp in 2001 and then briefly worked for Harris Allday and Old Mutual Securities
before joining the team to form Arden Partners. Jonathan became Chief Executive Officer on 1 January 2008.
Trevor Norris (Group Finance Director and Company Secretary)
Trevor is a Chartered Accountant. Having spent several years with KPMG and a brief period as a sole
practitioner, Trevor joined Midlands Electricity plc in 1995 as a Financial Consultant in establishing their
embryonic energy services company, where he became Managing Director. Trevor left in 2000 to act as a
Consultant to a number of public companies before becoming involved in the early stage formation of Arden
Partners and was appointed Group Finance Director in June 2002.
Steve Wassell (Chief Operating Officer)
Having established and developed his own business in the outdoor leisure sector over a fifteen year period, prior
to it being acquired by Tandem Group plc in 2000, Steve subsequently held a number of senior operational roles
in private and publicly quoted companies within a diverse range of sectors, including Automotive, Leisure and
Social Care. Steve joined Arden Partners as Operations Director in January 2009.
Mark Ansell (Independent Non-Executive Director)
Mark is a Chartered Accountant and has significant experience as a business consultant and director involved in
strategic and corporate finance advice and in management and leadership roles. Mark has previously held
senior roles in many organisations including being the Deputy Chief Executive and Finance Director of Aston
Villa plc, Interim Chief Executive of Marketing Birmingham and as a Senior Partner and Partner in charge of
Corporate Finance of Deloitte in Birmingham and the Midlands.
Peter Moon (Independent Non-Executive Director)
Peter has been involved in the institutional investment business for many years. In 2009 he retired from the
Universities' Superannuation Scheme Limited where he was Chief Investment Officer running a fund of some
£27.5 billion. Previous institutions where he has worked include British Airways Pensions, National Provident
and Slater Walker Investment Management. Peter has also acted as adviser to a number of Councils including
Lincolnshire and Middlesbrough. He has served as Chairman of the NAPF Stock Exchange Sub-Committee and
as a member of the NAPF Investment Committee.
Grahame Whateley (Non-Executive Director)
After qualifying as a surveyor, Grahame formed the privately owned Cedar Group of companies over 39 years
ago. He is Chairman of The Local Shopping REIT plc, the first REIT to be floated on the main market.
Grahame is also the Chairman of Castle Marinas, which has over 2,000 marina berths on 8 sites throughout
Great Britain. Formerly Chairman of Arden Partners, he has been involved in the business since its formation.
- 7 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
REPORT OF THE DIRECTORS
The Directors present their Annual Report and audited Financial Statements for the financial year ended 31
October 2011.
Principal Activities
Arden Partners plc is an established stockbroker which provides a range of financial services to corporate and
institutional clients. Based in the United Kingdom and with strong international links, Arden’s shares trade on
London’s AIM market, part of the London Stock Exchange.
Business Review and Future Developments
A review of the Group’s operations and performance during the financial year, setting out the position at the
year end, significant changes during the year and an indication of the outlook for the future, is contained in the
Chief Executive’s Statement.
Principal Risks and Uncertainties
By far the major risk the business faces is stock market conditions. Adverse market conditions may have a
significant negative effect on revenues and profitability. The Group mitigates some of this risk by targeting
revenues across a number of sectors of the market and by careful control of overheads.
Other risks include liquidity risk, credit risk and operational risk, and an explanation of these is set out in note
23.
Results and Dividends
The Consolidated Statement of Comprehensive Income for the year is set out on page 18.
The Directors are not proposing to pay a final ordinary dividend (2010: Nil) and did not pay an interim dividend
(2010: Nil).
Directors
The Directors of the Company who held office since 1 November 2010 were:
Current Directors as at 20 December 2011:
Lord Flight
Jonathan Keeling
Trevor Norris
Steve Wassell
Mark Ansell
Peter Moon
Grahame Whateley
Interim Chairman and Non-Executive
Chief Executive Officer
Group Finance Director and Company Secretary
Chief Operating Officer (appointed 22/12/2010)
Non-Executive (appointed 31/12/2010)
Non-Executive (appointed 31/12/2010)
Non-Executive
Previous Directors:
Sir David Rowe-Ham Previous Chairman and Non-Executive (Resigned 31/12/2010)
Non-Executive (Resigned 31/12/2010)
Tony Bartlett
Chief Executive Officer (Resigned 04/01/2011)
Jeremy Grime
Directors’ Interests
The interests of current Directors in shares and options are disclosed in the Directors’ Remuneration Report set
out on pages 11 to 14.
- 8 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
REPORT OF THE DIRECTORS
Significant Shareholdings
In addition to the current Directors’ interests shown on page 13, the Directors have been notified that the
following shareholders had interests in 3% or more of the Company’s ordinary share capital at 14 December
2011:
Institutional Holders
Universities Superannuation Scheme
Scottish Widows
AEGON
Others:
Alasdair Locke
Richard Day
James Reed-Daunter
Robert Griffiths
Arden Partners Employee Benefit Trust
Mark Braddock
Tony Bartlett
John Cassie
%
8.65
6.85
3.76
5.55
5.29
4.80
4.77
3.88
3.75
3.58
3.05
Share Capital
Information relating to the Company’s ordinary share capital is shown in note 18 to the Financial Statements.
Treasury Shares
At 31 October 2011 the company held 2,372,768 shares in Treasury at a cost of £1.2m.
Employee Share Trusts
The Group currently operates one Employee Benefit Share Trust, the Arden Partners Employee Benefit Trust,
which administers the Arden Partners plc share schemes as Trustee. At 31 October 2011 the Trust held 997,576
(2010: 774,994) shares. The Trustees have agreed to hold these shares to satisfy options granted under a share
option scheme (the Arden Partners Old Scheme – see page 41) prior to the Company’s admission on to AIM.
Employment Policies
Employees are encouraged to participate in the success of the Group through a performance based incentive
scheme incorporating bonus and share option arrangements. Employees are kept informed of progress at
regular review meetings.
Charitable and Political Donations
The Group made charitable donations amounting to £1,051 (2010: £2,400) during the year. The Group did not
make any political donations (2010: £Nil).
Supplier Payment Policy
It is the Group’s policy to settle debts with its creditors on a timely basis, taking into consideration the terms
and conditions offered by each supplier. The number of supplier days outstanding at the year end, based on the
average monthly outstanding creditor balances, was 24 days (2010: 39 days).
Directors’ and Officers’ Liability Insurance
The Company purchases and maintains liability insurance for its Directors and Officers as permitted by the
Companies Act 2006. This insurance was in force throughout the year ended 31 October 2011 and remains in
force at the date of this Report.
- 9 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
REPORT OF THE DIRECTORS
Financial Instruments
Details of the use of financial instruments by the Group and Company are contained in note 23 of the Financial
Statements.
Auditors
All of the current Directors have taken all of the steps that they ought to have taken to make themselves aware
of any information needed by the Company’s auditors for the purposes of their audit and to establish that the
auditors are aware of that information. The Directors are not aware of any relevant audit information of which
the auditors are unaware.
The Audit Committee reviews and approves the appointment of external auditors and monitors their
independence. BDO LLP have expressed their willingness to continue in office and an ordinary resolution re-
appointing them as auditors and authorising the Directors to determine their remuneration will be proposed at
the forthcoming Annual General Meeting.
By order of the Board
Trevor Norris
Company Secretary
20 December 2011
- 10 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
DIRECTORS’ REMUNERATION REPORT
Introduction
Whilst the Group is not obliged to comply with The Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008, the Directors have agreed to adopt the ethos of those regulations and to disclose
information relating to the current Directors. The Directors are not intending to comply fully with Schedule
VIII of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, but are
providing disclosures on a voluntary basis.
The Report also describes how the Board has applied the Principles of Good Governance relating to Directors’
remuneration. This Report is not subject to audit and a resolution to approve it will be proposed at the Annual
General Meeting of the Company at which the Financial Statements are to be approved.
On 1 January 2011 the Group became subject to the conditions of the Financial Services Authority’s (“the
FSA’s”) Remuneration Code (“the Remuneration Code”). The Remuneration Committee believes that the
Group’s Remuneration Policies and procedures are both relevant and proportionate to the Remuneration Code
requirements. The Group is classified as a “Tier 3” entity and to that extent is not subject to the detailed
provisions relating to deferral and retained shares.
Remuneration Policy
Arden Partners plc has a policy to attract, motivate and reward individuals of the highest calibre who are
committed to grow the value of the business and to maximise returns to shareholders.
This policy is as relevant to Executive Directors as it is to employees and the rewards of Executive Directors are
aligned with those of shareholders in reflecting the performance of the Group.
The Group operates in a business environment where it is common practice to pay bonuses. The Group’s policy
is predicated on a principal that all bonuses are discretionary and are based on a measure of Group profitability.
The Group’s business is such that profits and losses from trading are essentially of a short-term nature and can
be accurately measured. Where appropriate the bonus pool is adjusted to take account of any unrealised profits
and, given the Group’s risk policies and associated controls, the Remuneration Committee is of the opinion that
the bonus policy does not encourage behaviour that may conflict with the Group’s overall approach to risk.
Whilst the Group is not subject to Remuneration Code guidelines regarding deferral and retained shares, the
Remuneration Committee believes that an element of deferral and claw-back of bonus is appropriate in certain
circumstances including the level of bonus. As a policy no bonus under £100,000 would be subject to deferral
but may be subject to claw-back.
The Remuneration Committee does not believe that bonuses should be capped by reference to salary levels for
any employee, including Executive Directors, as this could have an adverse impact on performance. Basic
salary levels for Executive Directors are set at reasonable levels by reference to observable peer group
comparators.
Where appropriate, an employee’s overall remuneration package may involve the grant of options under the
Group’s share option scheme as noted below.
Directors’ Service Contracts
No Director has a service contract for longer than twelve months and no contract contains provisions for sums
to be paid on termination. Copies of Directors’ service contracts will be available for inspection at the Annual
General Meeting.
- 11 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
DIRECTORS’ REMUNERATION REPORT
Pension Arrangements
The Group does not operate a final salary pension scheme. Executive Directors who are entitled to receive
pension contributions may nominate a defined contribution pension scheme into which the Company makes
payments on their behalf.
Share Options
Details of the Arden Partners plc Share Option Scheme are given in note 18 to the Financial Statements. The
Remuneration Committee has responsibility for supervising the scheme and the grant of options under its terms.
The Company’s policy is to use the Share Option Scheme to attract and retain key senior employees including
the Executive Directors. Any grant of options is at the discretion of the Remuneration Committee and will take
into account individual performance and responsibilities. Where appropriate, a grant of options will incorporate
performance criteria and for Executive Directors may incorporate earnings per share, total shareholder return
and return on capital employed. Some of these aspects will be bench-marked against a pool of similar
competitors.
Directors’ Remuneration
A summary of the total remuneration paid to Directors who served during the year ended 31 October 2011 is set
out below:
Salary,
fees and
benefits
£’000
Pension
contributions
£’000
Incentive
payments
£’000
Gain on
Exercise
of Share
Options
£’000
218
-
-
-
-
-
-
-
-
Total
2011
£’000
543
117
142
10
9
33
52
29
40
49
12
15
-
-
-
-
-
-
85
-
-
-
-
-
-
-
-
76
85
218
975
Executive Directors
Jonathan Keeling 1
Steve Wassell
Trevor Norris
Non-Executive Directors
Sir David Rowe-Ham
Tony Bartlett
Lord Flight
Mark Ansell 2
Peter Moon
Grahame Whateley
Total
191
105
127
10
9
33
52
29
40
596
Notes:
1. The incentive payment to Jonathan Keeling reflected his ongoing sales role.
2. Remuneration was paid to a third party company Mark Ansell Consulting Limited.
- 12 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
DIRECTORS’ REMUNERATION REPORT
A summary of the total remuneration paid to current Directors who served during the year ended 31 October
2010 is set out below:
Salary, fees
and
benefits
£’000
Pension
contributions
£’000
Incentive
payments
£’000
Compensation
for loss of office
£’000
Total
2010
£’000
Executive Directors
Jonathan Keeling
Trevor Norris
Jeremy Grime
Non-Executive Directors
Sir David Rowe-Ham
Tony Bartlett
Philip Dayer
Lord Flight
Grahame Whateley
Total
187
127
54
57
29
26
14
29
523
22
15
2
-
-
-
-
-
39
-
-
4
-
-
-
-
-
4
-
-
40
-
-
-
-
-
209
142
100
57
29
26
14
29
40
606
Directors’ Interests in Ordinary Shares of Arden Partners plc
The Directors in office at the year end had interests in the ordinary share capital of the Company (all of which
were beneficial) as shown below:
Executive Directors
Jonathan Keeling
Trevor Norris
Steve Wassell
Non-Executive Directors
Howard Flight
Mark Ansell
Peter Moon
Grahame Whateley
31 October
2011
Number
Percentage
Interest
31 October
2010
Number
1,506,881
679,600
178,743
123,000
50,000
50,000
1,174,010
6.18%
2.76%
0.73%
0.50%
0.20%
0.20%
4.77%
1,216,881
630,600
17,000
-
-
-
1,174,010
- 13 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
DIRECTORS’ REMUNERATION REPORT
Directors’ Interests in Share Options
The following Directors had interests in options over ordinary shares of the Company as shown below:
Executive Directors
Jonathan Keeling
Trevor Norris
Steve Wassell
Totals
Notes
1
2
3
31 October
2010
Number
490,000
167,399
200,000
857,399
Options
exercised in
year
Number
(490,000)
-
-
(490,000)
31 October
2011
Number
-
167,399
200,000
367,399
Notes:
1. These options were granted on 6 February 2008 under the Arden Partners Share Plan 2007 and are
exercisable subject to the achievement of Company performance related conditions. The options were
exercised on 15 April 2011 at a price of 10.0 pence per share.
2. These options were granted under the Arden Partners Limited Share Option Scheme (“the Old Scheme”) on
24 April 2006 in their capacity as Executive Directors and no performance criteria are attached to the
exercise of these options. These options became eligible for exercise on 24 April 2009 at a price of 47.8
pence per share and have an expiry date of 24 April 2016.
3. These options were granted on 22 October 2009 under the Arden Partners Share Plan 2007 and no
performance criteria are attached to the exercise of these options. These options become eligible for
exercise on 31 January 2012 at a price of 10.0 pence per share and have an expiry date of 21 October 2019.
Further details of option schemes are set out in note 18 to the Financial Statements.
Approval
This Report was approved by the Remuneration Committee and signed on its behalf by:
Peter Moon
Chairman of the Remuneration Committee
20 December 2011
- 14 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE
ANNUAL REPORT AND THE FINANCIAL STATEMENTS
Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the Group and Company financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the Group and Company and of the profit or loss of the Group for that period. The Directors are
also required to prepare financial statements in accordance with the rules of the London Stock Exchange for
companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
•
state whether they have been prepared in accordance with IFRSs as adopted by the European Union,
subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group and Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website Publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the Company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility
of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements
contained therein.
- 15 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ARDEN
PARTNERS PLC
We have audited the financial statements of Arden Partners plc for the year ended 31 October 2011 which
comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of
Financial Position, the Consolidated and Company Statements of Cash Flows, the Consolidated and Company
Statements of Changes in Equity and the related notes. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union and, as regards the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs
as at 31 October 2011 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
The notes on pages 25 to 46 form part of these financial statements.
- 16 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ARDEN
PARTNERS PLC
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Peter Chidgey (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
20 December 2011
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
The notes on pages 25 to 46 form part of these financial statements.
- 17 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 October 2011
Revenue
Administrative expenses
Profit/(loss) from operations
Finance income
Finance costs
Profit/(loss) before taxation
Income tax expense
Profit/(loss) after taxation
Other comprehensive income for the year
Total comprehensive income/(loss) for the year
attributable to equity shareholders
Earnings/(loss) per share
Basic
Diluted
Note
2
7
8
9
10
10
2011
£’000
12,381
(11,826)
555
60
(3)
612
(106)
506
-
506
2.2p
2.0p
2010
£’000
13,046
(13,622)
(576)
73
(9)
(512)
(519)
(1,031)
-
(1,031)
(4.2p)
(4.2p)
The notes on pages 25 to 46 form part of these financial statements.
- 18 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 October 2011
Note
2011
£’000
2011
£’000
2010
£’000
2010
£’000
11
13
14
15
16
17
13
18
Assets
Non-current assets
Property, plant and equipment
Deferred tax asset
Total non-current assets
Current assets
Trading investments
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Corporation tax liability
Total current liabilities
Non-current liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Called up share capital
Share premium account
Employee Benefit Trust reserve
Retained earnings
Total equity before deduction of own
shares
Own shares
Total equity
5,920
23,872
5,201
(23,369)
(126)
394
125
519
34,993
35,512
(23,495)
-
-
(23,495)
12,017
2,700
2,933
(612)
8,189
13,210
(1,193)
12,017
3,207
6,210
9,014
(6,895)
(171)
401
280
681
18,431
19,112
(7,066)
(53)
(53)
(7,119)
11,993
2,544
2,926
(648)
7,171
11,993
-
11,993
The Financial Statements were approved by the Board of Directors and authorised for issue on 20 December
2011.
Trevor Norris
Group Finance Director
Mark Ansell
Chairman of the Audit Committee
The notes on pages 25 to 46 form part of these financial statements.
- 19 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
COMPANY STATEMENT OF FINANCIAL POSITION
At 31 October 2011
Company number: 4427253
Assets
Non-current assets
Property, plant and equipment
Investments
Deferred tax asset
Total non-current assets
Current assets
Trading investments
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Corporation tax liability
Total current liabilities
Non current liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Called up share capital
Share premium account
Employee Benefit Trust reserve
Retained earnings
Total equity before deduction of own
shares
Own shares
Total equity
Note
2011
£’000
2011
£’000
2010
£’000
2010
£’000
5,920
24,060
5,197
(23,553)
(126)
11
12
13
14
15
16
17
13
18
394
-
125
519
35,177
35,696
(23,679)
-
-
(23,679)
12,017
2,700
2,933
(612)
8,189
13,210
(1,193)
12,017
3,207
6,398
9,010
(7,079)
(171)
401
-
280
681
18,615
19,296
(7,250)
(53)
(53)
(7,303)
11,993
2,544
2,926
(648)
7,171
11,993
-
11,993
The Financial Statements were approved by the Board of Directors and authorised for issue on 20 December
2011.
Trevor Norris
Group Finance Director
Mark Ansell
Chairman of the Audit Committee
The notes on pages 25 to 46 form part of these financial statements.
- 20 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 October 2011
Note
Operating activities before taxation
Net profit/(loss) before tax
Adjustments for:
Fair value adjustments
Depreciation
Net interest receivable
Share based payments
Operating cash flow before changes in working capital
(Increase)/decrease in trade and other receivables
Increase in trading investments
Increase/(decrease) in trade and other payables
Cash generated from operations
Income taxes paid
Cash flows from operating activities
Investing activities
Purchases of property, plant and equipment
Net interest received
Net cash from investing activities
Financing activities
Purchase of own shares
Issue of shares
Net cash from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
16
2011
£’000
612
(34)
214
(57)
512
1,247
(17,629)
(2,679)
16,477
(2,584)
(49)
2010
£’000
(512)
(155)
236
(64)
1,079
584
9,439
(400)
(10,266)
(643)
(790)
(2,633)
(1,433)
(207)
57
(150)
(1,193)
163
(1,030)
(3,813)
9,014
5,201
(379)
63
(316)
-
240
240
(1,509)
10,523
9,014
The notes on pages 25 to 46 form part of these financial statements.
- 21 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 October 2011
Note
Operating activities before taxation
Net (loss)/profit before tax
Adjustments for:
Fair value adjustments
Depreciation
Net interest receivable
Share based payments
Operating cash flow before changes in working capital
(Increase)/decrease in trade and other receivables
Increase in trading investments
Increase/(decrease) in trade and other payables
Cash generated from operations
Income taxes paid
Cash flows from operating activities
Investing activities
Purchases of property, plant and equipment
Net interest received
Net cash from investing activities
Financing activities
Purchase of own shares
Issue of shares
Net cash from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
16
2011
£’000
612
(34)
214
(57)
512
1,247
(17,629)
(2,679)
16,477
(2,584)
(49)
2010
£’000
(512)
(155)
236
(64)
1,079
584
9,439
(400)
(10,266)
(643)
(790)
(2,633)
(1,433)
(207)
57
(150)
(1,193)
163
(1,030)
(3,813)
9,010
5,197
(379)
63
(316)
-
240
240
(1,509)
10,519
9,010
The notes on pages 25 to 46 form part of these financial statements.
- 22 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 October 2011
Consolidated Statement of changes in equity for the year ended 31 October 2011
Share
capital
£’000
2,544
-
Share
Premium
account
£’000
2,926
-
-
-
156
-
-
-
-
7
-
-
Employee
Benefit
Trust
reserve
£’000
(648)
-
-
-
-
-
Own
shares
£’000
-
-
-
-
-
(1,193)
-
36
Retained
earnings
£’000
7,171
506
506
512
-
-
-
Total
£’000
11,993
506
506
512
163
(1,193)
36
2,700
2,933
(1,193)
(612)
8,189
12,017
Balance at 31 October 2010
Profit for year
Total comprehensive income for
the year
Share based payments
Issue of shares
Purchase of own shares
Sale of shares held by Employee
Benefit Trust
Balance at 31 October 2011
Consolidated Statement of changes in equity for the year ended 31 October 2010
Balance at 31 October 2009
Loss for year
Total comprehensive income for
the year
Tax taken to equity
Share based payments
Issue of shares
Balance at 31 October 2010
-
-
-
-
-
-
-
-
50
2,544
190
2,926
Share
capital
£’000
2,494
Share
premium
account
£’000
Employee
Benefit Trust
reserve
£’000
2,736
(648)
Retained
earnings
£’000
7,226
(1,031)
Total
£’000
11,808
(1,031)
(1,031)
(1,031)
(103)
1,079
-
(103)
1,079
240
-
-
-
-
-
(648)
7,171
11,993
Notes
1. The Employee Benefit Trust reserve represents shares held in the parent company by the Arden Partners
Employee Benefit Trust which is consolidated in these financial statements in accordance with the
accounting policy in note 1.
2. Own Shares represents shares purchased to be held as treasury shares at historical cost.
The notes on pages 25 to 46 form part of these financial statements.
- 23 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 October 2011
Company Statement of changes in equity for the year ended 31 October 2011
Share
capital
£’000
2,544
-
Share
premium
account
£’000
2,926
-
-
-
156
-
-
-
-
7
-
-
Employee
Benefit
Trust
reserve
£’000
(648)
-
-
-
-
-
Own
shares
£’000
-
-
-
-
-
(1,193)
-
36
Retained
earnings
£’000
7,171
506
506
512
-
-
-
Total
£’000
11,993
506
506
512
163
(1,193)
36
2,700
2,933
(1,193)
(612)
8,189
12,017
Balance at 31 October 2010
Profit for year
Total comprehensive income for
the year
Share based payments
Issue of shares
Purchase of own shares
Sale of shares held by Employee
Benefit Trust
Balance at 31 October 2011
Company Statement of changes in equity for the year ended 31 October 2010
Share
Capital
£’000
2,494
Share
premium
account
£’000
Employee
Benefit Trust
reserve
£’000
2,736
(648)
Balance at 31 October 2009
Loss for year
Total comprehensive income for
the year
Tax taken to equity
Share based payments
Issue of shares
Balance at 31 October 2010
-
-
-
-
-
-
-
-
50
2,544
190
2,926
Retained
earnings
£’000
7,226
(1,031)
Total
£’000
11,808
(1,031)
(1,031)
(1,031)
(103)
1,079
-
(103)
1,079
240
-
-
-
-
-
(648)
7,171
11,993
Notes
1. The Employee Benefit Trust reserve represents shares held in the parent company by the Arden Partners
Employee Benefit Trust which is consolidated in these financial statements in accordance with the
accounting policy in note 1.
2. Own Shares represents shares purchased to be held as treasury shares at historical cost.
The notes on pages 25 to 46 form part of these financial statements.
- 24 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
1)
Accounting policies
Arden Partners plc is a public limited company incorporated in the United Kingdom under the
Companies Act. The address of the Company’s registered office is set out on page 47.
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out
below. The policies have been consistently applied to the Group and Company to all the years
presented unless otherwise stated.
These policies are in accordance with 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. The Group and Company Financial
Statements have been prepared in accordance with IFRS. These financial statements have also been
prepared in accordance with those parts of the Companies Act 2006 that are applicable to companies
preparing their financial statements in accordance with IFRS.
The Consolidated and Company Financial Statements have been prepared under the historical cost
convention as modified by the revaluation of certain financial assets, financial liabilities and derivative
instruments to fair value.
Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the financial and operating
policies of another entity or business so as to obtain benefits from its activities, it is classified as a
subsidiary. The consolidated financial statements present the results of the Company and its
subsidiaries (the “Group”) as if they formed a single entity. Intercompany transactions and balances
between group companies are therefore eliminated in full.
The Company has taken advantage of Section 408 of the Companies Act 2006, and the Statement of
Comprehensive Income of the parent company is not presented. The parent company’s profit after
taxation for the financial year amounted to £506,000 (2010: loss after taxation £1,031,000).
New Standards effective during the year
None of the new standards, interpretations or amendments, which are effective for the first time in these
financial statements, has had a material impact on these financial statements.
Standards that have been issued in the year, but are not yet effective for the year ended 31 October
2011 include:
Revised IAS 24 Related Party Disclosures
Improvements to IFRSs (2010):
- IFRS 7 ‘Financial instruments: Disclosures’
- IAS 1 (Revised 2007) ‘Presentation of financial statements’
IFRS 7 Financial Instruments: Disclosures (Amendment)
IAS 12 Deferred Taxation (Amendment)
Effective date
(periods beginning or after)
1 Jan 2011
1 Jan 2011
1 July 2011
1 Jan 2012
- 25 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
IAS 1 Presentation of Items of Other Comprehensive Income (Amendment)
1 Jan 2012
IFRS 10 Consolidated Financial Statements
IFRS 13 Fair Value Measurement
IFRS 9 Financial Instruments
1 Jan 2013
1 Jan 2013
1 Jan 2015
The group is currently assessing the impact of IFRS 13 and IFRS 9. All other standards and
interpretations are not expected to have a material impact on the financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently by the
Group to all periods presented in these consolidated financial statements.
Revenue
Revenue comprises the net realised and unrealised trading gains or losses of shares traded on a principal
basis, commissions and fees earned from trading shares on an agency basis, together with fees derived
from corporate finance activities, broking services and retainers.
Revenue is recognised at the fair value of the consideration receivable, to the extent that it is probable
that the economic benefits associated with the transaction will flow to the Group. Where consideration
includes financial instruments or other non-cash items, revenue is measured at fair value using an
appropriate valuation method.
Corporate Finance Division
The Group recognises revenue at the point of completing an assignment to the extent that it has obtained
the right to consideration through performance of its services to clients.
Deal fees and placing commissions are only recognised once there is certainty of the contractual
entitlement for the Group to receive them.
Corporate retainers are recognised on an accruals basis.
Equities Division
Institutional commissions are recognised on trade dates. Net trading gains or losses are the realised and
unrealised profits and losses from market making long and short positions on a trade date basis.
Interest receivable
Financial income, which comprises principally interest received, is recognised using the effective
interest rate method.
Property, plant and equipment
Property, plant and equipment is stated at cost, net of depreciation and impairment in value.
Depreciation is provided to write off the cost, less estimated residual values, of all tangible fixed assets
evenly over their expected useful lives on a straight line basis. It is calculated at the following rates:
Improvements to leasehold buildings
Fixtures, fittings and computer equipment
-
-
33.33% per annum
33.33% per annum
Investments
Investments in subsidiaries are stated at cost less, where appropriate, provision for impairment.
- 26 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
Financial assets
Financial assets comprise trading investments, trade receivables, other receivables, and cash and cash
equivalents. The Group classifies its financial assets into one of the categories discussed below,
depending on the purpose for which the asset was acquired. The Group has not classified any of its
financial assets as held to maturity.
The Group's accounting policy for each category is as follows:
• Trading investments: Trading investments comprise held for trading investments:
o Held for trading: Held for trading investments represent long market making positions
and other investments held for resale in the near term and are stated at fair value with
gains and losses from changes in fair value being taken to the Statement of
Comprehensive Income. For trading investments which are quoted in active markets,
fair values are determined by reference to the current quoted bid price. Other trading
investments may include options and warrants which are valued using the Black-
Scholes model.
• Loans and receivables: These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They arise principally through
the provision of goods and services to customers (e.g. trade receivables), but also incorporate
other types of contractual monetary asset. They are initially recognised at fair value plus
transaction costs that are directly attributable to their acquisition or issue, and are subsequently
carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant
financial difficulties on the part of the counterparty or default or significant delay in payment)
that the Group will be unable to collect all of the amounts due under the terms receivable, the
amount of such a provision being the difference between the net carrying amount and the
present value of the future expected cash flows associated with the impaired receivable. For
trade receivables, which are reported net, such provisions are recorded in a separate allowance
account with the loss being recognised within administrative expenses in the Statement of
Comprehensive Income. On confirmation that the trade receivable will not be collectable, the
gross carrying value of the asset is written off against the associated provision.
The Group’s loans and receivables comprise trade and other receivables and cash and cash
equivalents in the Statement of Financial Position.
• Market receivables: comprise sold security transactions awaiting settlement at the year end.
These balances are shown gross and are recognised by trade date.
• Cash and cash equivalents: Cash and cash equivalents comprise cash in hand, bank balances
and call deposits that are readily convertible to a known amount of cash and are not subject to a
significant risk of changes in value. Cash and cash equivalents all have original dates to
maturity of three months or less.
Financial liabilities
The Group classifies its financial liabilities into one of the categories discussed below, depending on the
purpose for which the liability was acquired. The Group's accounting policy for each category is as
follows:
• Held for trading: Held for trading liabilities represent short market-making positions and are
- 27 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
stated at fair value. Gains and losses from changes in fair value are taken to the Statement of
Comprehensive Income.
For trading liabilities which are quoted in active markets, fair values are determined by
reference to the current quoted offer price.
• Fair value through profit or loss: The Group does not have any financial liabilities designated
as being at fair value through profit or loss.
• Other financial liabilities: These comprise market payables, trade payables, other payables and
accruals. They are initially recognised at fair value and subsequently carried at amortised cost
using the effective interest method.
• Market payables: These comprise purchased security transactions awaiting settlement at the
year end. These balances are shown gross and are recognised by trade date.
Pledged assets
The Group may enter into stock borrowing arrangements with certain institutions which are entered into
on a collateralised basis with securities or cash advances received as collateral.
Under such arrangements a security is purchased with a commitment to return it at a future date at a
future agreed price. The securities purchased are not recognised on the Statement of Financial Position
and the transaction is treated as a secured loan made for the purchase price.
Where cash has been used to effect the purchase, the cash collateral amount is recorded as a pledged
asset on the Statement of Financial Position.
Foreign currency transactions
Transactions in foreign currencies are translated into sterling at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies at the Statement of
Financial Position date are translated into sterling at the exchange rate ruling at the Statement of
Financial Position date. Foreign exchange differences arising on translation are recognised in the
Statement of Comprehensive Income.
Taxation
Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income
tax is recognised in the Statement of Comprehensive Income except to the extent that it relates to items
recognised directly in equity, in which case it is recognised directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the Statement of Financial Position date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the Statement of Financial Position date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is
no longer probable that the related tax benefit will be realised.
- 28 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are
recognised when paid. Final equity dividends are recognised when approved by shareholders at an
Annual General Meeting. Dividends unpaid at the Statement of Financial Position date are only
recognised as a liability at that date to the extent that they are appropriately authorised and are no longer
at the discretion of the Company.
Treasury Shares
The cost of purchasing Treasury Shares held by the company are shown as a deduction against equity.
Leased assets
Assets acquired under finance leases where the Group has substantially all the risks and rewards of
ownership are capitalised. The outstanding future lease obligations are shown in trade and other
payables. Operating lease rentals are charged to the Statement of Comprehensive Income on a straight
line basis over the period of the lease.
Pension costs
Contributions to defined contribution pension schemes are charged to the Statement of Comprehensive
Income in the period in which they become payable.
Employee Benefit Trust
Arden Partners Employee Benefit Trust is a trust established by Trust deed in 2006 and the assets and
liabilities are held separately from the Company. Its assets and liabilities are fully consolidated in the
consolidated and company Statements of Financial Position, and holdings of Arden Partners plc shares
by the Arden Partners Employee Benefit Trust are shown as a deduction from company and
consolidated equity under the heading “Employee Benefit Trust reserve”.
Share based payments – equity settled
All options granted are recognised as an employee expense with a corresponding increase in equity.
The fair value is measured at grant date and spread over the period during which the employees become
unconditionally entitled to the options. The fair value is measured using the Black-Scholes model,
taking into account the terms and conditions upon which the options were granted.
Non-market vesting conditions are taken into account by adjusting the number of equity instruments
expected to vest at each Statement of Financial Position date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options that eventually vest. Market
vesting conditions are factored into the fair value of the options granted. As long as all other vesting
conditions are satisfied, a charge is made irrespective of whether the market conditions are satisfied.
The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Critical accounting estimates
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of assets, liabilities, income and expense. The estimates
and associated assumptions are based on historical experience and various other factors that are believed
to be reasonable in the circumstances, the results of which form the basis of judgements about carrying
values of assets and liabilities. Actual results may differ from those amounts.
Judgements made by management that may have a significant effect on the financial statements relate
principally to the Group’s equity-settled share-based remuneration schemes for employees. Employee
services received, and the corresponding increase in equity, are measured by reference to the fair value
of the equity instruments at the date of grant. The fair value of share options is estimated by using
valuation models, such as Black-Scholes, on the date of grant based on certain assumptions. Those
assumptions are described in note 18 and include, among others, the dividend growth rate and expected
volatility.
- 29 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
2)
Revenue
Revenue is wholly attributable to the principal activity of the Group and arises solely within the United
Kingdom.
Equities Division
Corporate Finance Division
Total revenue
2011
£’000
7,638
4,743
2010
£’000
6,113
6,933
12,381
13,046
Included within revenue of the Equities Division is an amount of £304,000 (2010: £37,000) relating to
the fair value adjustment of derivatives held within trading investments 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 2011 two of the Group’s customers each contributed more than 10% of the
Group’s revenue. The amounts were £1,572,000 which is reflected in the Corporate Finance division
revenue and £1,425,000 which is reflected in the Equities Division revenue. In 2010 two of the Group’s
customers contributed more than 10% of the Group’s revenue. The amounts were £2,395,000 and
£1,400,000 both are reflected in the Corporate Finance Division revenue.
3)
Profit/(loss) from operations
2011
£’000
214
243
-
39
1
18
13
-
1
512
122
2010
£’000
236
273
33
59
1
20
11
23
1
1,078
693
This is arrived at after charging:
Depreciation of property, plant and equipment
Operating lease costs
Aborted bid costs
Auditor’s remuneration:
Audit services:
Company
Subsidiaries
Tax services
Pension services
Corporate finance services:
Included within aborted bid costs
Foreign currency (gains)/losses
Share based payments
Reorganisation costs
4)
Dividends
No dividends were recognised in the year (2010: £Nil).
- 30 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
5)
Employees
Staff costs (including Directors) of the Company and Group consist of:
Wages and salaries
Incentive payments
Share based payments (see note 18 for further details)
Social security costs
Other pension costs
2011
£’000
4,477
524
512
519
276
6,308
2010
£’000
5,669
365
1,079
571
474
8,158
Staff costs include an amount of £122,000 (2010: £693,000) in respect of reorganisation payments. The
average number of employees (including Directors) of the Group and Company during the year was 49
(2010: 58) of which 33 (2010: 43) are front-office and the remainder are administration.
During the year a provision of £100,000 which had been accrued in previous years has been released to
the Statement of Comprehensive Income.
6)
Directors' remuneration
Directors' emoluments
Company contributions to money purchase pension schemes
2011
£’000
899
76
975
2010
£’000
567
39
606
There were 3 Directors in defined contribution pension schemes during the year (2010: 3).
The total amount payable to the highest paid Director in respect of emoluments was £543,000 (2010:
£209,000). Company pension contributions of £49,000 (2010: £22,000) were provided towards a
money purchase scheme on his behalf.
Further details of Directors’ remuneration are set out in the Report on Directors’ Remuneration on
pages 11 to 14.
7)
Finance income
Bank and other interest receivable
8)
Finance costs
Bank loans and overdrafts
- 31 -
2011
£’000
60
2011
£’000
3
2010
£’000
73
2010
£’000
9
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
9)
Income tax expense
UK Corporation tax
Current tax on profit/(loss) of the year
Adjustment in respect of previous periods
Total current tax
Deferred tax
Origination and reversal of timing differences
Deferred tax on financial assets
Change in tax rate
Adjustment in respect of previous periods
Total deferred tax
Total taxation expense
2011
£’000
115
(111)
4
93
(49)
14
44
102
106
2010
£’000
223
53
276
221
10
12
-
243
519
The tax assessed for the year is lower (2010: higher) than the standard rate of corporation tax in the UK.
The differences are explained below:
Profit/(loss) before tax
Profit/(loss) on ordinary activities at the standard rate of
corporation tax in the UK of 26% (2010: 28%)
Effect of:
Expenses not deductible for tax purposes
Prior year current tax (over)/under provision
Prior year deferred tax under provision
Change in tax rate
Marginal relief
Deferred tax on share options
Deferred tax on financial assets
Total taxation expense
2011
£’000
612
2010
£’000
(512)
159
(143)
2
(111)
44
14
(13)
60
(49)
106
361
53
-
12
(12)
238
10
519
As a result of a change in legislation the Directors anticipate that profits for the year ending 31 October
2012 will be taxed at a rate of 25%.
- 32 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
10)
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.
Basic earnings/(loss) per share
Add: IFRS2 share-based payments
Add: Reorganisation payments and
aborted bid costs
Underlying basic earnings
Diluted earnings/(loss) per share 1
Add: IFRS2 share-based payments
Add: Reorganisation payments and
aborted bid costs
Underlying diluted earnings
Year ended
31 October 2011
Pence per
Share
2.2
2.2
Numerator
£’000
506
512
Year ended
31 October 2010
Pence per
Share
(4.2)
4.4
Numerator
£’000
(1,031)
1,079
0.3
4.7
2.0
2.0
0.3
4.3
90
1,108
506
512
90
1,108
2.2
2.4
(4.2)
3.9
1.9
1.6
532
580
(1,031)
1,079
532
580
Denominator
Weighted average number of shares in
issue for Basic Earnings calculation
Weighted average dilution for
outstanding share options
Weighted average number for diluted
earnings calculation
Year ended
31 October
2011
Number
23,354,081
1,821,144
25,175,225
Year ended
31 October
2010
Number
24,540,847
3,092,296
27,633,143
Note 1: As the Group made a loss for the year ended 31 October 2010, in accordance with IAS 33 no
adjustment is made to the basic loss per share in deriving the diluted loss/earnings per share.
The weighted average dilution for outstanding share options was 1,821,144 (2010: 3,092,296). The
997,576 (2010: 774,994) shares held by the Arden Partners Employee Benefit Trust and the 2,372,768
(2010: Nil) shares held in Treasury have been treated as cancelled and excluded from the denominator.
- 33 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
11)
Property, plant and equipment
Group and Company as at 31 October 2011
Cost
At 1 November 2010
Additions
At 31 October 2011
Depreciation
At 1 November 2010
Provided for the year
At 31 October 2011
Net book value
At 31 October 2011
At 31 October 2010
Group and Company as at 31 October 2010
Cost
At 1 November 2009
Additions
At 31 October 2010
Depreciation
At 1 November 2009
Provided for the year
At 31 October 2010
Net book value
At 31 October 2010
At 31 October 2009
Improvements
to leasehold
buildings
£’000
Fixtures,
fittings and
computer
equipment
£’000
494
-
494
310
85
395
99
184
1,328
207
1,535
1,111
129
1,240
295
217
Improvements
to leasehold
buildings
£’000
Fixtures,
fittings and
computer
equipment
£’000
338
156
494
238
72
310
184
100
1,105
223
1,328
947
164
1,111
217
158
Total
£’000
1,822
207
2,029
1,421
214
1,635
394
401
Total
£’000
1,443
379
1,822
1,185
236
1,421
401
258
At 31 October 2011, the Group and Company had capital commitments of £Nil (2010: £Nil).
- 34 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
12)
Investments
Company
Cost
At 1 November 2010
Disposals
At 31 October 2011
Group
undertakings
£
43
(1)
42
The Company owns the whole of the issued share capital of Arden Partners Nominees Limited, a
company registered in England. This company's sole activity is the holding of investments for clients
of Arden Partners plc. The company has not traded.
The Company also owns the whole of the issued share capital of Arden Partners EBT Limited, a
company registered in England. The company's sole activity is to act as payment agent for the Arden
Partners Employee Benefit Trust. At 31 October 2011, the Arden Partners Employee Benefit Trust
held 997,576 ordinary shares in Arden Partners plc (2010: 774,994 ordinary shares).
The Company also owns the whole of the issued share capital of Arden Partners Asset Management
Limited, a company registered in England which was formed as a name protection company. The
company has not traded.
During the year Arden Partners (Singapore) Private Limited was dissolved.
- 35 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
13)
Deferred tax
Group and Company - 2011
Accelerated
capital
allowances
and temporary
differences Share option
£’000
£’000
Total deferred
tax asset
£’000
Financial
assets
£’000
At 1 November 2010 –
asset/(liability)
Adjustments in respect of previous
periods
(Charged)/credited to statement of
comprehensive income
Change in tax rate –
(charged)/credited to statement of
comprehensive income
At 31 October 2011
Deferred taxation comprises:
Accelerated capital allowances
Other timing differences
Share options
Total deferred tax asset
138
(44)
(33)
(7)
54
142
-
(60)
(11)
71
280
(44)
(93)
(18)
125
2011
£’000
15
39
71
125
(53)
-
49
4
-
2010
£’000
60
78
142
280
Deferred tax liability on financial assets
-
(53)
- 36 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
Group and Company – 2010
Accelerated
capital
allowances
and temporary
differences Share option
£’000
£’000
Total deferred
tax asset
£’000
Financial
assets
£’000
At 1 November 2009 –
asset/(liability)
(Charged)/credited to statement of
comprehensive income
Change in tax rate –
(charged)/credited to statement of
comprehensive income
Transferred to equity
Change in tax rate - equity
At 31 October 2010
125
17
(4)
-
-
138
493
(238)
(10)
(95)
(8)
142
618
(221)
(14)
(95)
(8)
280
(44)
(10)
1
-
-
(53)
14)
Trading investments
Group and Company
Long market making positions
Other investments:
Options and warrants
2011
£’000
5,392
2010
£’000
2,999
528
208
5,920
3,207
At 31 October 2011 the historical cost of long market making positions was £5,630,000 (2010:
£2,963,000). There are no long market making positions denominated in foreign currency (2010:
£Nil).
At 31 October 2011 the historical cost of other investments was £87,000 (2010: £77,000). There are no
other investments denominated in foreign currency (2010: £Nil).
- 37 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
15)
Trade and other receivables
Group
Market receivables
Trade receivables
Other receivables
Prepayments and accrued income
Company
Market receivables
Trade receivables
Other receivables
Prepayments and accrued income
2011
£’000
21,048
1,112
1,244
468
23,872
2011
£’000
21,048
1,112
1,432
468
24,060
2010
£’000
4,011
624
1,037
538
6,210
2010
£’000
4,011
624
1,225
538
6,398
There are no amounts denominated in foreign currency included within trade receivables of the Group
and the Company at 31 October 2011 (2010: £Nil).
The fair value of market, trade and other receivables approximates to amortised cost.
An analysis of overdue trade receivables is shown in note 23. No other receivables are overdue.
- 38 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
16)
Cash and cash equivalents
Group
Cash and bank balances
Call deposits
Company
Cash and bank balances
Call deposits
2011
£’000
2,855
2,346
5,201
2011
£’000
2,851
2,346
5,197
2010
£’000
6,228
2,786
9,014
2010
£’000
6,224
2,786
9,010
Included within cash and bank balances of the Group and the Company at 31 October 2011 is an
amount of £220,000 (2010: £75,000) which is denominated in US$.
17)
Trade and other payables
Group
Held for trading liabilities
Market payables
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
2011
£’000
2,409
18,407
275
215
930
1,133
23,369
2010
£’000
56
4,050
634
218
1,093
844
6,895
There are no differences between the fair values and the amortised cost of any of the trade and other
payables. Included in the above are financial liabilities amounting to £19,688,000 (2010: £5,496,000).
- 39 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
Company
Held for trading liabilities
Market payables
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
2011
£’000
2,409
18,407
275
215
1,114
1,133
23,553
2010
£’000
56
4,050
634
218
1,277
844
7,079
There are no differences between the fair values and the amortised cost of any of the trade and other
payables. Included in the above are financial liabilities amounting to £19,872,000 (2010: £5,680,000).
18)
Share capital
Equity share capital
40,000,000 Ordinary shares of 10p each
26,995,718 (2010: 25,444,243) Ordinary
shares of 10p each
Authorised
2011
£’000
2010
£’000
Allotted, called up
and fully paid
2011
£’000
2010
£’000
4,000
4,000
-
-
-
-
2,700
2,544
During the year the Company issued in aggregate 1,551,475 (2010: 504,267) ordinary shares of 10p
each to satisfy the exercise of share options. Gross proceeds were £163,000 (2010: £240,000) of which
£156,000 (2010: £50,000) has been credited to share capital and £7,000 (2010: £190,000) to the Share
Premium account.
During the year the company purchased 2,372,768 (2010: Nil) ordinary shares to be held in Treasury.
The total cost of the shares was £1.2m (2010: £Nil).
Options over the Company’s shares outstanding
Movements in the number of share options and their weighted average exercise prices are as follows:
Weighted
Average
Exercise price
(pence)
2011
19.7
(10.4)
10.0
(10.6)
24.9
Number of
Options
2011
3,959,325
(1,551,475)
530,000
(432,991)
2,504,859
Weighted
Average
Exercise price
(pence)
2010
23.7
(47.8)
10.0
(10.0)
19.7
Number of
Options
2010
4,173,153
(504,267)
300,000
(9,561)
3,959,325
At 1 November 2010
Exercised during the year
Granted during the year
Lapsed during the year
At 31 October 2011
The weighted average market price of the Company’s shares at the date of exercise of options during
- 40 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
the year was 55p (2010: 103p).
The share options outstanding at the year end have a weighted average exercise price and expected
remaining life as follows:
31 October 2011
31 October 2010
Number of
share
options
Exercise
price
(pence)
Weighted
average
expected
remaining
life
(months)
Number of
share
options
Exercise
price
(pence)
Weighted
average
expected
remaining
life
(months)
987,215
47.8
-
1,012,325
47.8
-
1,517,644
10.0
19.4
2,947,000
10.0
12.3
2,504,859
3,959,325
Arden
Partners Old
Scheme
Arden
Partners
Share Plan
2007
The number of options outstanding by issue date and exercise price, together with the vesting periods,
fair values, and the assumptions used to calculate the fair value, and the actual remaining contractual
life as at 31 October 2011 are as follows:
Grant dates
Weighted average fair value at grant date 1
Average exercise price
Weighted average share price at date of grant 2
Expected volatility 3
Risk free interest rate
Dividend yield
Option life (months)
Weighted average option life (months)
Weighted average life remaining (months)
Number of options outstanding
Percentage of options expected to vest
Number of options vested but unexercised
Arden Partners
Share Plan 2007
Arden Partners
Old Scheme
17/04/2008 to
24/03/2011
45p to 148p
10.0p
91.0p
30%
4% to 5.75%
3%
12-36
31.8
19.4
1,517,644
100%
575,000
21/4/2006
3.5p
47.8p
30.0p
30%
5%
3.5%
36
36.0
-
987,215
100%
987,215
Notes:
1. The estimate of the fair value of the services received is measured based on the Black-Scholes
model. The contractual life is the life of the option in question and growth in dividend yield is
based on the best current estimate of future yields over the contractual period.
2. The Arden Partners Old Scheme was established in April 2006 with the stock price having been
agreed with the Inland Revenue Share Valuation Office.
3. Expected volatility is based on historic information adjusted to take effect of future trends in
economic conditions, behavioural considerations and exercise restrictions.
- 41 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
Share-based payments
The share options granted during the year under the Arden Partners Share Plan 2007 are equity settled
options. The vesting condition for all options requires the option holders to still be in the employment
of the Company at the exercise date; for certain options, performance conditions must also be satisfied.
These include both market and non-market conditions.
The fair value of services received in return for share options granted are measured by reference to the
fair value of share options granted. During the year the weighted average fair value of options granted
was 45p (2010: 97p).
The total expense recognised for the year arising from share based payments is as follows:
Expensed during the year (equity settled)
(included within employee costs as set out in note 5)
2011
£’000
512
2010
£’000
1,079
19)
Pensions
The Company operates a defined contribution pension scheme. The assets of the scheme are held
separately from those of the Company in an independently administered fund. Where members of staff
do not join the Company scheme, contributions are made to their own nominated schemes all of which
are defined contribution. The pension charge for the year amounted to £276,000 (2010: £474,000).
Contributions amounting to £81,000 (2010: £216,000) were payable to schemes and are included in
payables.
20) Commitments under operating leases
The Group and the Company were committed to making the following payments under non-cancellable
operating leases as set out below:
Within one year
Between one and two years
Between two and five years
Land and buildings
2010
£’000
140
272
668
2011
£’000
307
227
440
974
1,080
- 42 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
21) Related party disclosures
The key management are considered to be the Board of Directors of Arden Partners plc, whose
remuneration can be seen in the Directors’ Remuneration Report on pages 11 to 14. The compensation
in total for each category required by IAS 24 is as follows:
Salaries and short term employee benefits Pension & ERS
Share-based payments
Year ended
31 October
2011
£’000
975
100
1,075
Year ended
31 October
2010
£’000
606
211
817
The Group has paid £52,000 (2010: £Nil) to Mark Ansell Consulting Limited for the services of Mark
Ansell as a Non-Executive Director, Mark Ansell is a director of both Mark Ansell Consulting Limited
and Arden Partners plc. At 31 October 2011, included within trade payables in note 17 is an amount
owed to Mark Ansell Consulting Limited of £1,713 (2010: £Nil).
22)
23)
Post balance sheet events
There have been no significant events between the end of the year and the date the Financial Statements
were approved.
Financial instruments and risk profile
The Group and Company’s financial instruments comprise cash and cash equivalents, trading positions,
trade receivables and trade payables arising from operations. The Group and Company have recognised
the following risks arising from these financial instruments:
Equity price risk
•
• Credit risk
23.1 Equity price risk
• Liquidity risk
• Operational risk
The Group and Company face risk arising from holding trading investments in markets that
fluctuate. The Group and Company manage equity price risk by establishing individual stock
limits and overall investment criteria, and management reports are prepared daily in support of
a review regime. The Board reviews trading investments on a monthly basis.
23.2 Liquidity risk
Liquidity risk is the risk that the Group and Company are unable to raise sufficient funding to
enable them to meet their obligations and is managed as follows:
• maintaining a strong capital base
•
forecasting future cash-flow requirements
• monitoring of cash positions on a daily basis
• monitoring of market making positions on a daily basis
•
control over timely settlement of trade receivables
•
control over timely settlement of market receivables and payables.
Capital management
The Group and Company’s policy in respect of capital adequacy is to maintain a strong capital
base so as to retain investor, creditor and market confidence. During the years ended 31
October 2010 and 2011 capital has been maintained at a level above minimum FSA
requirements. Such levels have been established by reference to an internal ICAAP assessment.
- 43 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
The Group and Company’s capital resources consist of Tier 1 equity capital and Tier 3 retained
earnings.
The Group and Company hold their cash and cash equivalents with a number of reputable
financial institutions. All cash and cash equivalents are short-term, highly liquid investments
that are readily convertible into known amounts of cash.
23.3 Credit risk
Credit risk represents the possibility that the Group or Company will suffer a loss from a
counterparty failing to meet its obligations. Credit risk is managed as follows:
robust client account opening and vetting procedures
•
• general policy to deal only with FSA registered counterparties
• general policy on limiting exposure to concentration risk
• control over timely settlement of market receivables
•
review of daily settlement reports by the Risk Committee
Exposure to credit risk
The carrying value of financial assets represents the maximum credit exposure. The maximum
exposure to credit risk at the reporting date was:
Market receivables
Trade receivables
Other receivables
Cash and cash equivalents
Group
2011
£’000
21,048
1,112
1,244
5,201
2010
£’000
4,011
624
1,037
9,014
Total loans and receivables
28,605
14,686
The ageing of trade receivables at the reporting date was:
Company
2011
£’000
21,048
1,112
1,432
5,197
28,789
2010
£’000
4,011
624
1,225
9,010
14,870
Not past due
Past due 31-60 days
Past due 61-90 days
Past due 91-120 days
Past due 121+ days
Provisions
Total
31 October
2011
£’000
989
48
67
8
-
-
1,112
31 October
2010
£’000
572
38
7
-
50
(43)
624
- 44 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
Movement in provision
Opening balance at 1 November 2010
Amounts released
Amounts written off
Increase in provision
Closing balance at 31 October 2011
31 October
2011
£’000
43
(47)
(43)
47
-
31 October
2010
£’000
53
(35)
(18)
43
43
23.4 Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, staff or
systems, or from external causes whether deliberate, accidental or natural. This would also
include risk from changes in legislation, regulation, currency or interest rate risk.
Operational risk is managed by the Operations Committee with day-to-day control exercised by
the Chief Operating Officer. The Group and Company also has contingency plans in place to
cover loss of systems, property and other eventualities.
The Group and Company had an aggregate currency exposure at 31 October 2011 in respect of
US$351,000 (£220,000). There was a currency exposure for the Group and the Company at 31
October 2010 of US$119,000 (£75,000). The effect of a 10% movement in the US$/£ exchange
rate from the rate ruling at the balance sheet date would be to impact profit/(loss) and net assets
by approximately £22,000 (2010: £7,500).
Fixed rate cash financial assets of £2,346,000 (2010: £2,786,000) comprise sterling cash
deposits on money markets at an average rate of 0.50% (2010: 0.60%). Remaining cash was
held on current accounts attracting interest based on LIBID. Other financial assets do not have
maturity dates and do not currently attract interest.
If the average level of interest received on cash deposits had been 0.5% higher or lower than the
level actually received in the year ended 31 October 2011, the profit before taxation would have
been decreased or increased by approximately £6,000. In the year ended 31 October 2010 a
0.5% movement in rates would have increased or decreased the loss before taxation by
approximately £21,000.
23.5 Fair value estimation
The Company has adopted the amendment to IFRS 7 for financial instruments which are
measured at fair value at the balance sheet date. This requires disclosure of fair value
measurements by level of the following fair value measurement hierarchy:
• Level 1: Quoted prices unadjusted in active markets for identical assets or liabilities;
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, observed either directly as prices or indirectly from prices; and
• Level 3: Inputs for the asset or liability that are not based on observable market data.
- 45 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notes to the Consolidated Financial Statements
The following table presents the Group’s and Company’s assets and liabilities that are measured
at fair value at 31 October 2011:
Group and Company as at 31 October 2011
Assets
Trading investments:
Long market making
positions
Options and warrants
Liabilities
Held for trading liabilities
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
5,392
-
5,392
-
528
528
2,409
-
-
-
-
-
5,392
528
5,920
2,409
Group and Company as at 31 October 2010
Assets
Trading investments:
Long market making
positions
Options and warrants
Liabilities
Held for trading liabilities
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
2,999
-
2,999
-
208
208
56
-
-
-
-
-
2,999
208
3,207
56
- 46 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Corporate Information
Company Secretary
Trevor Norris
125 Old Broad Street
London EC2N 1AR
Tel: 020 7614 5900
Company Number
4427253
Corporate Brokers
Financial PR Adviser
Altium Capital Limited
30 St James’s Square
London
SW1Y 4AL
Buchanan Communications
45 Moorfields
London
EC2Y 9AE
Registrar
Lawyers
Auditors
Bankers
Registered Office
Capita IRG Plc
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Eversheds LLP
115 Colmore Row
Birmingham
B3 3AL
BDO LLP
55 Baker Street
London
W1U 7EU
HSBC Bank plc
130 New Street
Birmingham
B2 4JU
Arden House
Highfield Road
Edgbaston
Birmingham
B15 3DU
- 47 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notice of Meeting
Notice is hereby given that the Annual General Meeting of Arden Partners plc (the “Company”) will be held at
125 Old Broad Street, London, EC2N 1AR on 29 March 2012 at 11.00 a.m. for the following purposes:
Ordinary Business
1.
2.
3.
4.
To receive and adopt the Company’s Financial Statements for the year ended 31 October 2011,
together with the Directors’ Report, Directors’ Remuneration Report and Report of the Independent
Auditor on those Financial Statements.
To re-elect Trevor Norris as a Director, who is retiring by rotation in accordance with the Company’s
Articles of Association.
To re-elect Jonathan Keeling as a Director, who is retiring by rotation in accordance with the
Company’s Articles of Association.
To reappoint BDO LLP as auditors to the Company, to hold office from the conclusion of this
meeting until the conclusion of the next Annual General Meeting at which the Financial Statements
are laid and to authorise the Directors to fix their remuneration.
To transact any other ordinary business of the Company.
Special Business
As special business, to consider and, if thought fit, pass the following resolutions which will be proposed as to
resolution number 5 as an ordinary resolution and as to resolutions numbered 6 and 7 as special resolutions:
5.
6.
That, subject to and in accordance with Article 12 of the Articles of Association of the Company, the
Directors of the Company be generally and unconditionally authorised in accordance with section 551
of the Companies Act 2006 (in substitution for any existing authority to allot relevant securities) to
exercise all the powers of the Company to allot relevant securities (within the meaning of such
section) up to a maximum aggregate nominal value of £823,519.80, being approximately one third of
the current issued share capital (excluding treasury shares), such authority to expire on the conclusion
of the next Annual General Meeting of the Company but so that the Company may before such expiry
make offers or agreements which would or might require relevant securities of the Company to be
allotted after such expiry, and the Directors may allot relevant securities in pursuance of such offers
or agreements as if the authority conferred by this resolution had not expired.
That, subject to the passing of resolution 5 as set out in the notice of this meeting, and in accordance
with Article 13 of the Articles of Association of the Company, the Directors be empowered pursuant
to section 570 of the Companies Act 2006 to allot equity securities (as defined in section 560 of the
Companies Act 2006) for cash pursuant to the general authority and be empowered pursuant to
section 573 of the said Act to sell ordinary shares (as defined in section 560 of the said Act) held by
the Company as treasury shares (as defined in section 724 of the said Act, for cash) as if section
561(1) of the Companies Act 2006 did not apply to such allotment or sale, provided that this power
shall be limited to allotments of equity securities and the sale of treasury shares:
6.1
in connection with or pursuant to an offer of such securities by way of rights, open offer or
other pre-emptive offer to the holders of ordinary shares in the Company and other persons
entitled to participate therein in proportion (as nearly as practicable) to their respective
holdings, subject to such exclusions or other arrangements as the Directors may consider
necessary or expedient to deal with fractional entitlements or any legal or practical problems
under the laws of any territory or the regulations or requirements of any regulatory authority or
any stock exchange in any territory; and
- 48 -
ARDEN PARTNERS PLC ANNUAL REPORT 2011
Notice of Meeting
6.2
otherwise than pursuant to sub-paragraph 6.1 above, up to an aggregate nominal amount of
£135,391.81, and such power shall expire on the conclusion of the next Annual General
Meeting of the Company provided that the Company may before such expiry make an offer or
agreement which would or might require equity securities to be allotted after such expiry, and
the Directors of the Company may allot equity securities in pursuance of such offer or
agreement as if the power conferred by this resolution had not expired.
7.
That the Company be generally and unconditionally authorised, pursuant to section 701 of the
Companies Act 2006, to make market purchases (as defined in section 693(4) of the Companies Act
2006) of up to 2,470,559 ordinary shares of 10p each in the capital of the Company (being
approximately 10 per cent of the current issued ordinary share capital of the Company (excluding
treasury shares)) on such terms and in such manner as the Directors of the Company may from time to
time determine, provided that:
7.1
7.2
the amount paid for each share (exclusive of expenses) shall not be:
(i) more than the higher of (1) five per cent above the average of the middle market quotation
for ordinary shares as derived from the AIM Appendix to the Daily Official List of the
London Stock Exchange plc for the five business days before the date on which the
contract for the purchase is made, and (2) an amount equal to the higher of the price of the
last independent trade and current independent bid as derived from the trading venue
where the purchase was carried out; or
(ii) less than 10p per share; and
the authority herein contained shall expire on the conclusion of the Annual General Meeting of
the Company to be held in 2013 provided that the Company may, before such expiry, make a
contract to purchase its own shares which would or might be executed wholly or partly after
such expiry, and the Company may make a purchase of its own shares in pursuance of such
contract as if the authority hereby conferred hereby had not expired.
By order of the Board
Trevor Norris
Company Secretary
27 January 2012
Registered office:
Arden House
17 Highfield Road
Edgbaston
Birmingham
B15 3DU
- 49 -
www.arden-partners.co.uk
London
125 Old Broad Street
London
EC2N 1AR
Tel 020 7614 5900
Fax 020 7614 5901
Birmingham
Arden House
17 Highfield Road
Edgbaston
Birmingham
B15 3DU
Tel 0121 423 8900
Fax 0121 423 8901
Bristol
Broad Quay House
Prince Street
Bristol
BS1 4DJ
Tel 020 7614 5900
Fax 020 7614 5901
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