Arden Partners plc
Annual Report 2012
17758ARDENPARCVR.indd 1
17758
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
5
8
9
12
16
17
19
20
21
22
23
24
25
26
48
49
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 2012
HIGHLIGHTS
FINANCIAL
Revenue
Profit 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
Year ended
31 October
2012
Year ended
31 October
2011
£9.8m
£12.4m
£0.2m
£0.8m
£1.0m
0.6p
3.4p
0.6p
3.2p
0.65p
Nil
£0.6m
£0.6m
£1.2m
2.2p
4.7p
2.0p
4.3p
Nil
Nil
£166m
£265m
36
37
32
49
* Profit before tax as adjusted for the effect of share based payments and reorganisation costs
† Basic earnings per share as adjusted for the after-tax effect of share based payments and reorganisation costs, ignoring
‡ Diluted earnings per share as adjusted for the after-tax effect of share based payments and reorganisation costs,
deferred tax
ignoring deferred tax
- 1 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
CHAIRMAN’S STATEMENT
It gives me great pleasure to set down my first statement as Chairman of Arden Partners plc. My appointment
as Chairman in January 2013 was alongside a number of other Board changes. James Reed-Daunter was
appointed Chief Executive Officer and Jonathan Keeling took the post of Deputy Chairman with direct
responsibility for developing international relationships to broaden Arden’s existing global franchise. These
Board changes are somewhat reflective of a continually changing environment for Arden’s peer group of small
and mid-cap brokers and the difficult economic conditions that have prevailed over the last few years.
Markets have been tough and only brokers who have made substantial changes to their business models have
survived in good shape. Arden has changed by reducing overheads significantly year-on-year for the past two
years and is now in a more positive position of expected revenues against its overhead base.
I am pleased to report that Arden has remained profitable over the last financial year. For the year to 31
October 2012, profit before tax was £0.2m compared to a profit before tax of £0.6m in 2011. Underlying profit
before tax in 2012 was £1.0m before deducting share based payments and reorganisation costs of £0.8m. Whilst
turnover was some 21% down on 2011, cost savings have significantly reduced the impact on the bottom line.
This Board is committed to challenge overhead levels generally and is adamant that costs be maintained at the
appropriate level compared with projected revenues. The model now allows stakeholders within the business
and shareholders to benefit equally in profits that accrue to the business.
The strong balance sheet has allowed the Board to make a significant investment in buying-back its own shares
and over the last two years some £2.25m has been spent on share purchases. These buy-backs and subsequent
cancellation of shares in treasury have led to 17% reduction in total share capital. An interim dividend of 0.65p
per share was paid this year representing £0.2m.
I wish to express my gratitude to Lord Flight, who retired from the Board at the end of December 2012, and
Trevor Norris who retires today. Trevor was one of the original founding partners in 2002 and his enthusiasm
will be missed.
I would like to thank all of our staff, clients and shareholders for their continuing support.
Peter Moon
Chairman
15 January 2013
- 2 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
CHIEF EXECUTIVE’S STATEMENT
In presenting my first statement since taking over as Chief Executive on 1st January 2013, I am pleased to report
that the Group made a profit for the year. As stated in previous announcements, the Board had implemented an
overhead reduction strategy to protect operational cash outflows, and over the year, this has ensured overall
profitability, despite lower revenues than the previous year. Cost reductions effected in the latter part of the
financial year will further reduce the overhead base in 2013 and my focus going forward will be on cost
management as well as performance delivery.
The market sectors in which we operate have continued to contract and pressures from reduced volumes and
commission rates are likely to impact further, however we feel the steps we have taken will mitigate the effect
on Arden. The balance sheet remains strong and is key to our ability to attract and retain corporate clients.
Strong cash generation enabled the Board to declare an interim dividend and purchases of own shares into
Treasury were effected both in the latter stages of the year and into the current year.
Trading in the first two months of the year has been satisfactory. The pipeline of corporate transactions is
reasonable but as ever delivery remains dependent on market conditions. We are recruiting, very selectively,
into key areas of strategic development and are encouraged at both the pool of labour available to us as well as a
new realism by candidates with regard to remuneration expectation.
Financial review
Revenues during the year ended 31 October 2012 were £9.8m compared to £12.4m in 2011. Administrative
expenses for the year totalled £9.6m (2011: £11.8m) including restructuring costs of £0.6m (2011: £0.1m).
Underlying profit before tax was £1.0m (2011: £1.2m) after allowing for restructuring costs and share-based
payments. Profit before tax was £0.2m (2011: £0.6m).
After adjusting for the effect of restructuring costs and share based payments, underlying basic earnings per
share were 3.4p compared to 4.7p in 2011. Basic earnings per share were 0.6p (2011: 2.2p).
In June 2012 the Company cancelled 2,372,768 shares which it held in Treasury at the end of the previous
financial year. During October 2012 and November 2012 the Company has purchased in aggregate 2,301,529
ordinary shares to be held, for the time being in Treasury, for consideration of £1.1m.
Cash generation from operational activities was positive at £0.4m (2011: Outflow of £2.6m) but the impact of
the shares acquired into Treasury meant that overall cash balances reduced by £0.3m.
Equities Division
Revenues fell from £7.6m to £6.4m. This is generally reflective of market conditions which have seen trading
volumes fall by some 20%.
- 3 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
CHIEF EXECUTIVE’S STATEMENT
Corporate Finance Division
During the year we were involved in 15 transactions compared to 12 in 2011. In aggregate we placed £166m for
our corporate clients. Since the year end we have placed a further £96m for our clients.
Including retainer income, corporate revenues were down from £4.7m to £3.4m. This reflects the lack of IPO
activity during the year.
I am pleased to report that we extended our corporate client list during the year, with the addition of companies
operating in the UK, Continental Europe and the Indian sub-continent.
Finally, I would like to take this opportunity to thank our staff and other stakeholders for their continued
support.
James Reed-Daunter
Chief Executive Officer
15 January 2013
- 4 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
CORPORATE GOVERNANCE
Introduction
Whilst the Group, consisting of Arden Partners plc and those entities outlined in Note 12, is not obliged to
comply with the Combined Code (2010), the Directors have agreed to adopt the ethos of those regulations and
to disclose certain information relating to corporate governance.
The Directors and the Board
The composition is as follows:
Peter Moon
Independent Chairman (Non-Executive)
Chairman of Nominations Committee
Deputy Chairman (Executive)
Jonathan Keeling
James Reed-Daunter Chief Executive Officer
Chief Operating Officer
Steve Wassell
Senior Independent Director (Non-Executive)
Mark Ansell
Chairman of Audit Committee
Chairman of Remuneration Committee
Trevor Norris, Group Finance Director and Company Secretary, retires from the Board today. Steve Wassell
assumes the role of Company Secretary.
Biographical details of all the Directors are set out on page 8.
UK Corporate Governance Code
On 28 September 2012, the Financial Reporting Council (“FRC”) published revised codes and guidance on
corporate governance. This included the UK Corporate Governance Code and the UK Stewardship Code and
re-emphasis of the need for a company to ensure that the board comprises an appropriate balance of skills,
experience and independence and operates in such a way as to actively encourage constructive challenge. The
Board of Arden believes that the composition is appropriate to the size and complexity of the business.
The Board carries out an annual assessment of its efficacy and performance and confirms that the non-executive
directors have access to both the Company’s NOMAD and lawyers when external advice is required. Where
appropriate, copies of any instructions and advice are circulated to the full Board.
Board meetings
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. All directors receive appropriate information
on a timely basis to enable them to discharge their duties accordingly. The Board 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 2012 was as follows:
- 5 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
CORPORATE GOVERNANCE
Total number of meetings
Lord Flight
James Reed-Daunter1
Jonathan Keeling
Trevor Norris
Steve Wassell
Mark Ansell
Peter Moon
Grahame Whateley2
Board
6
6
2
5
4
6
5
6
1
Audit
Committee
2
Remuneration
Committee
1
Nominations
Committee
1
2
n/a
n/a
n/a
n/a
2
1
n/a
1
n/a
n/a
n/a
n/a
1
1
n/a
1
n/a
n/a
n/a
n/a
1
1
n/a
Notes:
1.
2.
James Reed-Daunter attended all but one meetings required subsequent to his appointment.
Grahame Whateley attended all but one meeting required prior to his resignation.
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, James Reed-Daunter is required to retire at the forthcoming Annual General
Meeting and, being eligible, offers himself for re-election. The Board supports this re-appointment having
assessed performance and value to the Board.
Remuneration Committee
The Remuneration Committee, which comprises the Independent Non-Executive Directors, is chaired by Mark
Ansell and has responsibility for determining remuneration of Executive Directors and senior 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, including whether the Board’s responsibility to present
an annual report that is fair, balanced and understandable. The Audit Committee evidences this review in
a report to the Board following its meeting with the auditors to discuss their Report to the Audit
Committee and includes an assessment of the information provided in support of the Board’s statement
on going concern and on any significant issues and how those issues were addressed.
Independence of auditors, including a review of the non-audit services provided and the level of such fees
relative to the audit fee. The Audit Committee is satisfied that the independence of BDO LLP as auditors
has not been impaired through the provision of non-audit services. Details of auditor’s fees are shown in
note 3 of the financial statements on page 31. A review is also carried out on the effectiveness of external
audit.
- 6 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
CORPORATE GOVERNANCE
•
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 including an assessment of diversity profile, 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.
Operations Board
The Group is managed by an Operations Board which has responsibility for implementation of strategy and
monitoring progress of delivery against key objectives, along with management of operational risk. The
Committee also reviews financial performance against budgets and key performance indicators. The Operation
Board is chaired by the Chief Operating Officer.
Risk Committee
The Risk Committee is now chaired by the Chief Operating Officer and has the Director of Compliance and the
Corporate Finance Technical Director 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 24 to the Financial Statements.
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. The Group’s system of internal control includes appropriate levels of authorisation and segregation of
duties. Financial information is presented to the Board each month comprising management accounts and other
financial data which allows for a rigorous review of performance.
Insurance
The Group maintains appropriate insurance cover in respect of litigation against the Directors and Officers of
the Group.
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.
- 7 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
BOARD OF DIRECTORS
Peter Moon (Independent Chairman and 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.
Jonathan Keeling (Executive Deputy Chairman)
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 was Chief Executive Officer from January 2008 until
31 December 2012 when he became Executive Deputy Chairman.
James Reed-Daunter (Chief Executive Officer)
James is a Business Economics and Accountancy graduate of Southampton University. He joined Albert E
Sharp in 1992 in their private clients unit working on their unit trust and fund management desk. In 1995 he
moved to become an equity sales director selling small-mid cap stocks to UK investing institutions. James is a
founding partner of Arden, joining in November 2002 as Head of Equity Sales, and was appointed Chief
Executive Officer on 1 January 2013.
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. Mark is the Senior Independent Director.
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. He resigned on 15 January 2013.
- 8 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
REPORT OF THE DIRECTORS
The Directors present their Annual Report and audited Financial Statements for the financial year ended 31
October 2012.
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. Following the recent changes in the Board structure a review of KPI’s is being
carried out but in the main these will be revenue focused.
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
24.
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 (2011: Nil) and paid an interim dividend of
0.65p per share (2011: Nil). The intention is to reward shareholders via dividend where circumstances allow.
Directors
The Directors of the Company who held office since 1 November 2011 were:
Jonathan Keeling
James Reed-Daunter
Trevor Norris
Steve Wassell
Mark Ansell
Peter Moon
Previous Directors:
Grahame Whateley
Lord Flight
Chief Executive Officer (until 31 December 2012)
Deputy Chairman (Executive) (with effect from 1 January 2013)
Director (Executive) (Appointed 14 June 2012)
Chief Executive Officer (with effect from 1 January 2013)
Group Finance Director and Company Secretary (resigns on 15 January 2013)
Chief Operating Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director (resigned 31 December 2011)
Chairman and Non-Executive Director (resigned 31 December 2012)
Directors’ Interests
The interests of current Directors in shares and options are disclosed in the Directors’ Remuneration Report set
out on pages 12 to 15.
- 9 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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 (total voting rights)
at 15 January 2013:
Institutional Holders
Universities Superannuation Scheme
Marlborough Fund Managers
Others:
John Grahame Whateley
Alasdair Locke
Richard Day
Robert Griffiths
Mark Braddock
Colin Kettle
Arden Partners Employee Benefit Trust
David Larkam
Tony Bartlett
Benjamin Thefaut
%
9.34
3.43
15.39
6.01
5.74
4.84
4.40
4.38
4.29
4.19
3.88
3.16
Share Capital
Information relating to the Company’s ordinary share capital (including share repurchase and cancellation) is
shown in note 19 to the Financial Statements.
Treasury Shares
At 31 October 2012 the company held 1,512,928 of its own shares in Treasury at a cost of £0.7m.
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 2012 the Trust held 974,838
(4.29% of total voting rights) (2011: 997,576 (4.05% of total voting rights)) 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 42) 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 £350 (2011: £1,051) during the year. The Group did not
make any political donations (2011: £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 34 days (2011: 24 days).
- 10 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
REPORT OF THE DIRECTORS
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 2012 and remains in
force at the date of this Report.
Financial Instruments
Details of the use of financial instruments by the Group and Company are contained in note 24 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
15 January 2013
- 11 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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
certain 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 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 principle 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.
- 12 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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 19 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. Where appropriate such measures may include non-financial performance measures. All
remuneration incentives are set in context to the Group’s risk policies.
Directors’ Remuneration
A summary of the total remuneration paid to Directors who served during the year ended 31 October 2012 is set
out below:
Executive Directors
James Reed-Daunter1, 2
Jonathan Keeling2
Steve Wassell
Trevor Norris
Non-Executive Directors
Lord Flight
Mark Ansell3
Peter Moon
Grahame Whateley
Total
Salary,
fees and
benefits
£’000
Pension
contributions
£’000
Incentive
payments
£’000
Compensation
on retirement
from office
£’000
Total
2012
£’000
63
191
126
124
30
42
45
6
627
7
23
12
15
-
-
-
-
50
30
-
-
-
-
-
-
-
-
-
123
-
-
-
18
120
244
138
262
30
42
45
24
57
80
141
905
Notes:
1.
2.
3.
James Reed-Daunter was appointed a Director on 14 June 2012 and his salary is apportioned from this
date.
The incentive payments to James Reed-Daunter and Jonathan Keeling reflected their ongoing sales roles.
Remuneration was paid to a third party company, Mark Ansell Consulting Limited.
- 13 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
DIRECTORS’ REMUNERATION REPORT
A summary of the total remuneration paid to current Directors who served during the year ended 31 October
2011 is set out below:
Executive Directors
Jonathan Keeling
Steve Wassell
Trevor Norris
Non-Executive Directors
Sir David Rowe-Ham
Tony Bartlett
Lord Flight
Mark Ansell
Peter Moon
Grahame Whateley
Total
191
105
127
10
9
33
52
29
40
596
Salary,
fees and
benefits
£’000
Pension
contributions
£’000
Incentive
payments
£’000
Gain on
Exercise of
Share Options
£’000
Total
2011
£’000
543
117
142
10
9
33
52
29
40
49
12
15
-
-
-
-
-
-
85
-
-
-
-
-
-
-
-
218
-
-
-
-
-
-
-
-
76
85
218
975
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
James Reed-Daunter
Trevor Norris
Steve Wassell
Non-Executive Directors
Howard Flight
Mark Ansell
Peter Moon
31 October
2012
Number
Percentage
Interest
31 October
2011
Number
1,515,391
1,182,541
559,600
373,743
123,000
50,000
50,000
6.45%
5.03%
2.38%
1.59%
0.52%
0.21%
0.21%
1,506,881
n/a
679,600
178,743
123,000
50,000
50,000
- 14 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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
Trevor Norris
Steve Wassell
James Reed-Daunter
Totals
Notes
1
2
3
31 October
2012
Number
Options
exercised in
year
Number
167,399
200,000
125,000
492,399
-
-
-
-
31 October
2011
Number
167,399
200,000
125,000
492,399
Notes:
1.
2.
3.
These options were granted under the Arden Partners Limited Share Option Scheme (“the Old Scheme”)
on 24 April 2006 in this capacity as Executive Director 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.
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 became 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.
These options were granted on 22 October 2009 under the Arden Partners Share Plan 2007. The
performance criteria having been met, these options became 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 19 to the Financial Statements.
Approval
This Report was approved by the Remuneration Committee and signed on its behalf by:
Mark Ansell
Chairman of Remuneration Committee
15 January 2013
- 15 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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
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.
- 16 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
INDEPENDANT AUDITOR’S REPORT TO THE MEMBERS OF ARDEN
PARTNERS PLC
For the year ended 31 October 2012
We have audited the financial statements of Arden Partners plc for the year ended 31 October 2012 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 2012 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.
- 17 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
INDEPENDANT AUDITOR’S REPORT TO THE MEMBERS OF ARDEN
PARTNERS PLC
For the year ended 31 October 2012
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.
Neil Fung-On (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
- 18 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 October 2012
Revenue
Administrative expenses
Profit from operations
Finance income
Finance costs
Profit before taxation
Income tax expense
Profit after taxation
Other comprehensive income for the year
Decrease in fair value on available for sale financial assets
Total comprehensive income for the year attributable to
equity shareholders
Earnings per share
Basic
Diluted
Note
2
7
8
9
10
10
2012
£’000
9,785
(9,634)
2011
£’000
12,381
(11,826)
151
64
(4)
211
(70)
141
(10)
131
0.6p
0.6p
555
60
(3)
612
(106)
506
-
506
2.2p
2.0p
- 19 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 October 2012
Note
2012
£’000
2012
£’000
2011
£’000
2011
£’000
11
13
14
15
16
17
18
19
Assets
Non-current assets
Property, plant and equipment
Deferred tax asset
Total non-current assets
Current assets
Trading investments
Available for sale financial assets
Trade and other receivables
Stock borrowing collateral
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Corporation tax liability
Total current liabilities
Total liabilities
Net assets
Shareholders’ equity
Called up share capital
Capital redemption reserve
Share premium account
Employee Benefit Trust reserve
Available for sale reserve
Retained earnings
Total equity before deduction of own
shares
Own shares
Total equity
5,058
490
9,943
107
4,882
(9,068)
(130)
191
134
325
20,480
20,805
(9,198)
(9,198)
11,607
2,501
237
2,933
(607)
(10)
7,214
12,268
(661)
11,607
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
The Financial Statements were approved by the Board of Directors and authorised for issue on 15 January 2013.
Trevor Norris
Group Finance Director
Mark Ansell
Chairman of the Audit Committee
The notes on pages 26 to 47 form part of these financial statements
- 20 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
COMPANY STATEMENT OF FINANCIAL POSITION
At 31 October 2012
Company number: 4427253
Assets
Non-current assets
Property, plant and equipment
Investments
Deferred tax asset
Total non-current assets
Current assets
Trading investments
Available for sale financial assets
Trade and other receivables
Stock borrowing collateral
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Corporation tax liability
Total current liabilities
Total liabilities
Net assets
Shareholders’ equity
Called up share capital
Capital redemption reserve
Share premium account
Employee Benefit Trust reserve
Available for sale reserve
Retained earnings
Total equity before deduction of own
shares
Own shares
Total equity
Note
2012
£’000
2012
£’000
2011
£’000
2011
£’000
5,058
490
10,131
107
4,876
(9,250)
(130)
11
12
13
14
15
16
17
18
19
191
-
134
325
20,662
20,987
(9,380)
(9,380)
11,607
2,501
237
2,933
(607)
(10)
7,214
12,268
(661)
11,607
5,920
-
24,060
-
5,197
(23,553)
(126)
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
The Financial Statements were approved by the Board of Directors and authorised for issue on 15 January 2013.
Trevor Norris
Group Finance Director
Mark Ansell
Chairman of the Audit Committee
The notes on pages 26 to 47 form part of these financial statements
- 21 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 October 2012
Note
Operating activities before taxation
Net profit before tax
Adjustments for:
Fair value adjustments
Depreciation
Net interest receivable
Share based payments
Operating cash flow before changes in working capital
Decrease/(increase) in trade and other receivables
Decrease/(increase) in trading investments
Increase in stock borrowing collateral
(Decrease)/increase in trade and other payables
Purchase of available for sale investment
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
Dividends paid to equity shareholders
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
17
2012
£’000
211
(548)
249
(60)
233
85
13,941
1,349
(107)
(14,247)
(500)
521
(75)
446
(46)
60
14
(661)
38
(156)
(779)
(319)
5,201
4,882
2011
£’000
612
(34)
214
(57)
512
1,247
(17,629)
(2,679)
-
16,477
-
(2,584)
(49)
(2,633)
(207)
57
(150)
(1,193)
163
-
(1,030)
(3,813)
9,014
5,201
The notes on pages 26 to 47 form part of these financial statements
- 22 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 October 2012
Note
Operating activities before taxation
Net profit before tax
Adjustments for:
Fair value adjustments
Depreciation
Net interest receivable
Share based payments
Operating cash flow before changes in working capital
Decrease/(increase) in trade and other receivables
Decrease/(increase) in trading investments
Increase in stock borrowing collateral
(Decrease)/increase in trade and other payables
Purchase of available for sale investment
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
Dividends paid to equity shareholders
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
17
2012
£’000
211
(548)
249
(60)
233
85
13,939
1,349
(107)
(14,247)
(500)
519
(75)
444
(46)
60
14
(661)
38
(156)
(779)
(321)
5,197
4,876
2011
£’000
612
(34)
214
(57)
512
1,247
(17,629)
(2,679)
-
16,477
-
(2,584)
(49)
(2,633)
(207)
57
(150)
(1,193)
163
-
(1,030)
(3,813)
9,010
5,197
The notes on pages 26 to 47 form part of these financial statements
- 23 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 October 2012
Consolidated statement of changes in equity for the year ended 31 October 2012
Share
capital
£’000
Share
Premium
account
£’000
Capital
Redemption
Reserve
£’000
Own
shares
£’000
Employee
Benefit
Trust
Reserve
£’000
Available
for sale
Reserve
£’000
2,700
2,933
(1,193)
(612)
Balance at
31 October 2011
Profit for year
Revaluation of available
for sale assets
Total comprehensive
income for the year
Share based payments
Issue of shares
Purchase of own shares
Sale of shares held by
Employee Benefit Trust
Dividends paid to
equity shareholders
Balance at
31 October 2012
Own shares cancelled
(237)
-
-
-
-
38
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(661)
237
1,193
-
-
-
-
-
-
-
-
-
-
-
5
-
Retained
earnings
£’000
Total
£’000
8,189
12,017
141
-
141
233
-
-
(1,193)
-
141
(10)
131
233
38
(661)
-
5
(156)
(156)
-
-
(10)
(10)
-
-
-
-
-
-
2,501
2,933
237
(661)
(607)
(10)
7,214
11,607
Consolidated statement of changes in equity for the year ended 31 October 2011
Share
capital
£’000
2,544
-
-
-
156
-
-
Share
Premium
account
£’000
2,926
-
-
-
7
-
-
Own
shares
£’000
-
-
-
-
-
(1,193)
-
2,700
2,933
(1,193)
Employee
Benefit Trust
Reserve
£’000
(648)
-
-
-
-
-
36
(612)
Retained
earnings
£’000
7,171
506
506
512
-
-
-
Total
£’000
11,993
506
506
512
163
(1,193)
36
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
Notes
1.
2.
3.
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.
Own Shares represents shares purchased to be held as treasury shares at historical cost.
The capital redemption reserve is due to the cancellation of 2,372,768 ordinary shares in June 2012. It
represents the nominal value of shares that have been cancelled that were previously held as Treasury
Shares.
The notes on pages 26 to 47 form part of these financial statements
- 24 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 October 2012
Company statement of changes in equity for the year ended 31 October 2012
Share
capital
£’000
Share
Premium
account
£’000
Capital
Redemption
Reserve
£’000
Own
shares
£’000
Employee
Benefit
Trust
Reserve
£’000
Available
for sale
Reserve
£’000
2,700
2,933
(1,193)
(612)
Balance at
31 October 2011
Profit for year
Revaluation of available
for sale assets
Total comprehensive
income for the year
Share based payments
Issue of shares
Purchase of own shares
Sale of shares held by
Employee Benefit Trust
Dividends paid to
equity shareholders
Balance at
31 October 2012
-
-
-
-
38
-
-
-
Own shares cancelled
(237)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(661)
237
1,193
-
-
-
-
-
-
-
-
-
-
-
5
-
Retained
earnings
£’000
Total
£’000
8,189
12,017
141
-
141
233
-
-
(1,193)
-
141
(10)
131
233
38
(661)
-
5
(156)
(156)
-
-
(10)
(10)
-
-
-
-
-
-
2,501
2,933
237
(661)
(607)
(10)
7,214
11,607
Company statement of changes in equity for the year ended 31 October 2011
Share
capital
£’000
2,544
-
-
-
156
-
-
Share
premium
account
£’000
2,926
-
-
-
7
-
-
Own
shares
£’000
-
-
-
-
-
(1,193)
-
2,700
2,933
(1,193)
Employee
Benefit Trust
Reserve
£’000
(648)
-
-
-
-
-
36
(612)
Retained
earnings
£’000
7,171
506
506
512
-
-
-
Total
£’000
11,993
506
506
512
163
(1,193)
36
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
Notes
1.
2.
3.
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.
Own Shares represents shares purchased to be held as treasury shares at historical cost.
The capital redemption reserve is due to the cancellation of 2,372,768 ordinary shares in June 2012. It
represents the nominal value of shares that have been cancelled that were previously held as Treasury
Shares.
The notes on pages 26 to 47 form part of these financial statements
- 25 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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 £141,000 (2011: £506,000).
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, but are not yet effective for the year ended 31 October 2012 include:
IAS 1 Presentation of Items of Other Comprehensive Income (Amendment)
1 Jul 2012
Amendments to IFRS 7 Offsetting Financial Assets and Financial Liabilities
1 Jan 2013
IFRS 13 Fair Value Measurement
Annual Improvements to IFRSs (2009-2011 Cycle)
IFRS 10 Consolidated Financial Statements
1 Jan 2013
1 Jan 2013
1 Jan 2014
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities
1 Jan 2014
IFRS 9 Financial Instruments
1 Jan 2015
- 26 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
The Board 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.
Financial assets
Financial assets comprise trading investments, available for sale assets, 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:
- 27 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
•
•
•
•
•
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.
Available for sale assets: Non-derivative financial assets not included in the above categories are
classified as available for sale. They are carried at fair value with changes in fair value recognised
directly in a separate component of equity (available for sale reserve). Where there is a significant
or prolonged decline in the fair value of an available for sale financial asset (which constitutes
objective evidence of impairment), the full amount of the impairment, including any amount
previously charged to equity, is recognised in the income statement. Purchases and sales of
available for sale financial assets are recognised on contract date with any change in fair value
between trade date and the balance sheet date being recognised in the revaluation reserve. On sale,
the amount held in the available for sale reserve associated with that asset is removed from equity
and recognised in the Statement of Comprehensive Income.
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:
- 28 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
•
•
•
•
Held for trading: Held for trading liabilities represent short market-making positions and are
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.
Stock borrowing collateral
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.
- 29 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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.
Own Shares
The cost of purchasing Treasury Shares held by the company are shown as a deduction against equity and
are declared as Own Shares.
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.
- 30 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
Those assumptions are described in note 19 and include, among others, the dividend growth rate and
expected volatility.
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
2012
£’000
6,424
3,361
9,785
2011
£’000
7,638
4,743
12,381
Included within revenue of the Equities Division is an amount of £486,000 (2011: £304,000) 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 2012 none of the Group’s customers contributed more than 10% of the groups
revenue. 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.
3)
Profit from operations
This is arrived at after charging:
Depreciation of property, plant and equipment
Operating lease costs
Auditor’s remuneration:
Audit services:
Company
Subsidiaries
Tax services
Audit related assurance services
Foreign currency losses
Share based payments
Reorganisation costs
2012
£’000
2011
£’000
249
248
38
1
6
12
1
233
559
214
243
36
1
18
12
1
512
122
4)
Dividends
Dividends recognised in the year consisted of the 2012 interim dividend of £156,000 (0.65p per share).
No dividends were recognised in the prior year.
The amounts shown above in respect of dividends paid by the Group exclude dividends paid to the Arden
Partners Employee Benefit Trust amounting to £2,000 in 2012 (2011: £Nil).
- 31 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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 19 for further details)
Social security costs
Other pension costs
2012
£’000
4,015
200
233
472
291
5,211
2011
£’000
4,477
524
512
519
276
6,308
Staff costs include an amount of £559,000 (2011: £122,000) in respect of reorganisation payments. The
average number of employees (including Directors) of the Group and Company during the year was 37
(2011: 49) of which 23 (2011: 33) are front-office and the remainder are administration.
During the year a pension accrual of £120,000 (2011: £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
Gain on exercise of share options
Compensation for loss of office
2012
£’000
707
57
-
141
905
2011
£’000
681
76
218
-
975
There were 4 Directors in defined contribution pension schemes during the year (2011: 3).
The total amount payable to the highest paid Director in respect of emoluments was £221,000 (2011:
£276,000). Company pension contributions of £23,000 (2011: £49,000) were provided towards a money
purchase scheme on his behalf. A gain was realised on the exercise of share options of £Nil (2011:
£218,000).
Further details of Directors’ remuneration are set out in the Report on Directors’ Remuneration on pages
12 to 15.
7)
Finance income
Bank and other interest receivable
2012
£’000
64
2011
£’000
60
- 32 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
8)
Finance costs
Bank loans and overdrafts
9)
Income tax expense
UK Corporation tax
Current tax on profit 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
2012
£’000
4
2012
£’000
118
(39)
79
(36)
-
8
19
(9)
70
2011
£’000
3
2011
£’000
115
(111)
4
93
(49)
14
44
102
106
The tax assessed for the year is higher (2011: lower) than the standard rate of corporation tax in the UK.
The differences are explained below:
Profit before tax
Profit on ordinary activities at the standard rate of corporation tax
in the UK of 24% (2011: 26%)
Effect of:
Expenses not deductible for tax purposes
Prior year current tax over 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
2012
£’000
211
2011
£’000
612
51
159
46
(39)
19
15
(12)
(10)
-
70
2
(111)
44
14
(13)
60
(49)
106
As a result of a change in legislation the Directors anticipate that profits for the year ending 31 October
2013 will be taxed at a rate of 23%.
- 33 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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 per share
Add: IFRS2 share-based payments
Add: Reorganisation payments
Underlying basic earnings
Diluted earnings per share
Add: IFRS2 share-based payments
Add: Reorganisation payments
Underlying diluted earnings
Year ended
31 October 2012
Pence per
Share
0.6
1.0
1.8
Numerator
£’000
141
233
425
3.4
0.6
0.9
1.7
3.2
799
141
233
425
799
Year ended
31 October 2011
Pence per
Share
2.2
2.2
0.3
4.7
2.0
2.0
0.3
4.3
Numerator
£’000
506
512
90
1,108
506
512
90
1,108
Year ended
31 October 2012
Number
Year ended
31 October 2011
Number
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
23,741,595
951,788
24,693,383
23,354,081
1,821,144
25,175,225
The weighted average dilution for outstanding share options was 951,788 (2011: 1,821,144). The
974,838 (2011: 997,576) shares held by the Arden Partners Employee Benefit Trust and the 1,512,928
(2011: 2,372,768) shares held in Treasury have been treated as cancelled and excluded from the
denominator.
- 34 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
11) Property, plant and equipment
Group and Company as at 31 October 2012
Cost
At 1 November 2011
Additions
At 31 October 2012
Depreciation
At 1 November 2011
Provided for the year
At 31 October 2012
Net book value
At 31 October 2012
At 31 October 2011
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
Improvements
to leasehold
buildings
£’000
Fixtures,
fittings and
computer
equipment
£’000
494
-
494
395
84
479
15
99
1,535
46
1,581
1,240
165
1,405
176
295
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
Total
£’000
2,029
46
2,075
1,635
249
1,884
191
394
Total
£’000
1,822
207
2,029
1,421
214
1,635
394
401
At 31 October 2012, the Group and Company had capital commitments of £Nil (2011: £Nil).
- 35 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
12)
Investments
Company
Cost
At 1 November 2011 and 31 October 2012
Group
undertakings
£
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 during the current or prior year.
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 2012, the Arden Partners Employee Benefit Trust held 974,838
ordinary shares in Arden Partners plc (2011: 997,576 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 current or prior year.
- 36 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
13) Deferred tax
Group and Company - 2012
Accelerated
capital
allowances
and temporary
differences Share option
£’000
£’000
Total deferred
tax asset
£’000
Financial
assets
£’000
At 1 November 2011 –
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 2012
Deferred taxation comprises:
Accelerated capital allowances
Other timing differences
Share options
Total deferred tax asset
54
(19)
26
(3)
58
71
-
10
(5)
76
125
(19)
36
(8)
134
2012
£’000
41
17
76
134
-
-
-
-
-
2011
£’000
15
39
71
125
Deferred tax liability on financial assets
-
-
- 37 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
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
138
(44)
(33)
(7)
54
142
-
(60)
(11)
71
280
(44)
(93)
(18)
125
(53)
-
49
4
-
14) Trading investments
Group and Company
Long market making positions
Other investments:
Options and warrants
2012
£’000
4,044
1,014
5,058
2011
£’000
5,392
528
5,920
At 31 October 2012 the historical cost of long market making positions was £4,219,000 (2011
£5,630,000). There are no long market making positions denominated in foreign currency (2011: £Nil).
At 31 October 2012 the historical cost of other investments was £87,000 (2011: £87,000). There are no
other investments denominated in foreign currency (2011: £Nil).
- 38 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
15) Available for sale financial assets
Group and Company
Listed investments
2012
£’000
490
2011
£’000
-
At 31 October 2012 the historical cost of the listed investments was £500,000 (2011: £Nil). There are no
listed investments denominated in foreign currency (2011: £Nil).
Listed investments relates to a holding in Treasury Gilts which is pledged as security to BNP Paribas
Securities Services.
16) 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
2012
£’000
7,570
1,351
541
481
9,943
2012
£’000
7,570
1,351
729
481
10,131
2011
£’000
21,048
1,112
1,244
468
23,872
2011
£’000
21,048
1,112
1,432
468
24,060
There are no amounts denominated in foreign currency included within trade receivables of the Group
and the Company at 31 October 2012 (2011: £Nil).
The fair value of market, trade and other receivables approximates to amortised cost.
An analysis of overdue trade receivables is shown in note 24. No other receivables are overdue.
- 39 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
17) Cash and cash equivalents
Group
Cash and bank balances
Call deposits
Company
Cash and bank balances
Call deposits
2012
£’000
237
4,645
4,882
2012
£’000
231
4,645
4,876
2011
£’000
2,855
2,346
5,201
2011
£’000
2,851
2,346
5,197
Included within cash and bank balances of the Group and the Company at 31 October 2012 is an amount
of £150,000 (2011: £220,000) which is denominated in US$.
18) Trade and other payables
Group
Held for trading liabilities
Market payables
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
2012
£’000
-
7,379
304
262
365
758
9,068
2011
£’000
2,409
18,407
275
215
930
1,133
23,369
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 £8,135,000 (2011: £19,688,000).
- 40 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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
2012
£’000
-
7,379
304
262
547
758
9,250
2011
£’000
2,409
18,407
275
215
1,114
1,133
23,553
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 £8,317,000 (2011: £19,872,000).
19) Share capital
Equity share capital
40,000,000 Ordinary shares of 10p each
25,005,594 (2011: 26,995,718) Ordinary shares
of 10p each
Authorised
2012
£’000
2011
£’000
Allotted, called up
and fully paid
2012
£’000
2011
£’000
4,000
4,000
-
-
-
-
2,501
2,700
During the year the Company issued in aggregate 382,644 (2011: 1,551,475) ordinary shares of 10p each
to satisfy the exercise of share options. Gross proceeds were £38,000 (2011: £163,000) of which £38,000
(2011: £156,000) has been credited to share capital and £Nil (2011: £7,000) to the Share Premium
account.
In June 2012 the company cancelled 2,372,768 (2011: Nil) ordinary shares that it held in Treasury at the
beginning of the financial year.
During September and October 2012 the company purchased in aggregate 1,512,928 (2011: 2,372,768)
ordinary shares at a price of 43.5 pence per share to be held in Treasury. The total cost of the shares was
£0.7m (2011: £1.2m).
In November 2012 the Company purchased a further 788,601 ordinary shares at 50 pence per share for
consideration of £0.4m. These shares are again to be held in Treasury.
- 41 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
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)
2012
24.9
Weighted
Average
Exercise price
(pence)
2011
19.7
Number of
Options
2011
3,959,325
(10.0)
(1,551,475)
-
(16.5)
28.1
530,000
(432,991)
2,504,859
(10.4)
10.0
(10.6)
24.9
Number of
Options
2012
2,504,859
(382,644)
-
(96,740)
2,025,475
At 1 November 2011
Exercised during the year
Granted during the year
Lapsed during the year
At 31 October 2012
The weighted average market price of the Company’s shares at the date of exercise of options during the
year was 34.4p (2011: 53.8p).
The share options outstanding at the year end have a weighted average exercise price and expected
remaining life as follows:
31 October 2012
31 October 2011
Number of
share
options
Exercise
price
(pence)
Weighted
average
expected
remaining
life
(months)
Number of
share
options
Exercise
price
(pence)
970,475
47.8
42
987,215
47.8
1,055,000
10.0
87
1,517,644
10.0
2,025,475
2,504,859
Weighted
average
expected
remaining
life
(months)
54
94
Arden
Partners Old
Scheme
Arden
Partners Share
Plan 2007
- 42 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
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 2012 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%
120
120
87
1,055,000
100%
600,000
21/4/2006
3.5p
47.8p
30.0p
30%
5%
3.5%
120
120
42
970,475
100%
970,475
Notes:
1.
2.
3.
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.
The Arden Partners Old Scheme was established in April 2006 with the stock price having been
agreed with the Inland Revenue Share Valuation Office.
Expected volatility is based on historic information adjusted to take effect of future trends in
economic conditions, behavioural considerations and exercise restrictions.
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)
20) Pensions
2012
£’000
233
2011
£’000
512
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 £291,000 (2011: £276,000).
Contributions amounting to £75,000 (2011: £81,000) were payable to schemes and are included in
payables.
- 43 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
21) 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
2011
£’000
307
227
440
2012
£’000
227
227
213
667
974
22) 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 Contributions
Share-based payments
Compensation for loss of office
Year ended
31 October
2012
£’000
707
57
106
141
1,011
Year ended
31 October
2011
£’000
681
76
100
-
857
The Group has paid £42,000 (2011: £52,000) 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 2012, included within accruals and deferred income in note 18 is
an amount owed to Trevor Norris of £122,500 (2011: £Nil) and Mark Ansell Consulting Limited of
£7,110 (2011: £1,713).
23) Post balance sheet events
On 2 November 2012 the company purchased 788,601 ordinary shares to be held in Treasury. The total
cost of the shares was £0.4m.
24) 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
•
•
Liquidity risk
Operational risk
24.1 Equity price 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.
- 44 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
24.2 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 2011
and 2012 capital has been maintained at a level above minimum FSA requirements. Such levels
have been established by reference to an internal ICAAP assessment. 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 reputable financial institution.
All cash and cash equivalents are short-term, highly liquid investments that are readily convertible
into known amounts of cash.
24.3 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
Collateral deposits
Trade receivables
Other receivables
Cash and cash equivalents
Group
2012
£’000
7,570
107
1,351
541
4,882
Total loans and receivables
14,451
2011
£’000
21,048
-
1,112
1,244
5,201
28,605
Company
2012
£’000
7,570
107
1,351
729
4,876
14,633
2011
£’000
21,048
-
1,112
1,432
5,197
28,789
- 45 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
The ageing of trade receivables at the reporting date was:
Not past due
Past due 31-60 days
Past due 61-90 days
Past due 91-120 days
Past due 121+ days
Provisions
Total
Movement in provision
Opening balance at 1 November 2011
Amounts released
Amounts written off
Increase in provision
Closing balance at 31 October 2012
31 October
2012
£’000
1,332
9
-
10
-
-
1,351
31 October
2012
£’000
-
(10)
(5)
15
-
31 October
2011
£’000
989
48
67
8
-
-
1,112
31 October
2011
£’000
43
(47)
(43)
47
-
24.4 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 2012 in respect of
US$241,000 (£150,000). There was a currency exposure for the Group and the Company at 31
October 2011 of US$351,000 (£220,000). The effect of a 10% movement in the US$/£ exchange
rate from the rate ruling at the balance sheet date would be to impact profit/(loss) and net assets by
approximately £15,000 (2011: £22,000).
Fixed rate cash financial assets of £4,645,000 (2011: £2,346,000) comprise sterling cash deposits
on money markets at an average rate of 0.50% (2011: 0.50%). 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 2012, the profit before taxation would have
been decreased or increased by approximately £5,000. In the year ended 31 October 2011 a 0.5%
movement in rates would have increased or decreased the profit before taxation by approximately
£6,000.
- 46 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notes to the Consolidated Financial Statements
24.5 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.
The following table presents the Group’s and Company’s assets and liabilities that are measured at
fair value at 31 October 2012:
Group and Company as at 31 October 2012
Assets
Trading investments:
Long market making positions
Options and warrants
Available for sale financial assets
Liabilities
Held for trading liabilities
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
4,044
-
490
4,534
-
1,014
-
1,014
-
-
-
-
-
-
-
4,044
1,014
490
5,548
-
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
- 47 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Corporate Information
Company Secretary
Steve Wassell
Arden House, Edgbaston
Birmingham,
B15 3DU
Tel: 0121 423 8900
Company Number
4427253
Nominated Advisor
Financial PR Adviser
Altium Capital Limited
30 St James’s Square
London
SW1Y 4AL
Buchanan Communications
107 Cheapside
London
EC2V 6DN
Registrar
Lawyers
Auditors
Bankers
Registered Office
Capita IRG Plc
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Eversheds LLP
1 Wood Street
London
EC2V 7WS
BDO LLP
55 Baker Street
London
W1U 7EU
HSBC Bank plc
120 Edmund Street
Birmingham
B3 2QZ
Arden House
Highfield Road
Edgbaston
Birmingham
B15 3DU
- 48 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
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 14 March 2013 at 11.00 a.m. for the following purposes:
Ordinary Business
1.
2.
3.
To receive and adopt the Company’s Financial Statements for the year ended 31 October 2012, together
with the Directors’ Report, Directors’ Remuneration Report and Report of the Independent Auditor on
those Financial Statements.
To re-elect James Reed-Daunter as a Director, who is retiring 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 4 as an ordinary resolution and as to resolutions numbered 5 and 6 as special resolutions:
4.
5.
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 £756,802.16, 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 4 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:
5.1
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
- 49 -
ARDEN PARTNERS PLC ANNUAL REPORT 2012
Notice of Meeting
5.2
otherwise than pursuant to sub-paragraph 5.1 above, up to an aggregate nominal amount of
£125,027.97, 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.
6.
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 3,405,609 ordinary shares of 10p each in the capital of the Company (being approximately
15 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:
6.1
6.2
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 2014 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
Steve Wassell
Company Secretary
15 January 2013
Registered office:
Arden House
17 Highfield Road
Edgbaston
Birmingham
B15 3DU
- 50 -
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
17758ARDENPARCVR.indd 4
17758
26/02/2009
Proof 5
02/03/2010 12:04