Arden Partners plc
Annual Report 2013
17758ARDENPARCVR.indd 1
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26/02/2009
Proof 5
02/03/2010 12:04
Arden Partners plc
Arden Partners plc is an established stockbroker which provides a range of financial services to
corporate and institutional clients. Based in the United Kingdom and with strong international
links, Arden Partners plc’s shares trade on London's AIM market, part of the London Stock
Exchange.
Contents
Page:
1
2
3
4
6
7
10
13
17
18
20
21
22
23
24
25
26
27
50
51
Highlights
Chairman’s Statement
Chief Executive’s Statement
Strategic Report
Board of Directors
Report of the Directors
Corporate Governance
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 2013
HIGHLIGHTS
FINANCIAL
Revenue
Profit before tax
Share based payments and reorganisation costs
Underlying profit before tax *
Earnings 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
2013
Year ended
31 October
2012
£10.1m
£9.8m
£1.3m
£0.07m
£1.4m
4.7p
5.1p
4.5p
4.9p
1.25p
1.75p
£0.2m
£0.8m
£1.0m
0.6p
3.4p
0.6p
3.2p
0.65p
Nil
£283m
£166m
37
39
36
37
* 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 2013
CHAIRMAN’S STATEMENT
It gives me great pleasure to present this year’s statement as Chairman of Arden Partners plc.
Equity markets globally have shown an improvement since the early part of 2013, with increased volumes in
UK markets offsetting, to some extent, the continuing erosion of institutional commissions. Arden has
produced an improved performance and the Board is broadly satisfied with Arden’s overall result for the year.
We have a strong balance sheet and have – before purchases of our own shares – generated cash and improved
profitability.
Our balance sheet strength has allowed the Board to continue the policy of buying-back our own shares and
over the last 3 years some £2.6m has been spent on share purchases. These buy-backs and subsequent
cancellation of shares in treasury have led to a 17% reduction in total share capital.
In line with the Board’s stated policy to reward shareholders where circumstances allow, a final dividend of
1.75pence per share is recommended (interim dividend 1.25 pence per share), which if approved will result in a
total dividend for the full year of 3.0 pence per share (2012: 0.65 pence per share).
Current market conditions represent a significant opportunity for the group to grow and we are currently
recruiting into a number of core areas of the business, in support of our strategy to develop our corporate client
base.
Trading since the year end has been satisfactory and we have an encouraging pipeline of potential new business.
Finally, I would like to thank all of our staff, clients and shareholders for their continuing support.
Peter Moon
Chairman
14 January 2014
- 2 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
CHIEF EXECUTIVE’S STATEMENT
The Group has made a profit for the year and continues progress towards delivering its strategy.
We have achieved growth in revenues against a backdrop of industry change which is pleasing, and together
with tight control of overheads has led to a healthy level of Group profitability. The Group has a robust platform
to strongly grow revenues going forward, whilst maintaining control of costs.
The Company has continued to make purchases of its own shares into Treasury throughout the year, as well as
into the current year. Our balance sheet strength, with a capital adequacy ratio of 283% at the year end, is
significant to our ability to attract new corporate clients and increase the breadth of our offering.
Given the Board’s improved level of confidence in the market outlook, we are pleased to recommend a final
dividend, having already paid an interim dividend in August 2013.
Trading in the first two months of the year has been satisfactory. The pipeline of corporate transactions is strong
but as ever delivery remains dependent on market conditions.
Financial review
Revenues during the year ended 31 October 2013 were £10.1m compared to £9.8m in 2012. Administrative
expenses for the year totalled £8.8m (2012: £9.6m including restructuring costs of £0.6m) Underlying profit
before tax was £1.4m (2012: £1.0m) after allowing for restructuring costs and share-based payments. Profit
before tax was £1.3m (2012: £0.2m).
After adjusting for the effect of restructuring costs and share based payments, underlying basic earnings per
share were 5.1p compared to 3.4p in 2012. Basic earnings per share were 4.7p (2012: 0.6p).
In April 2013 the Company cancelled 2,301,529 shares held in treasury, representing approximately 9% of the
total share capital of the company. During November 2013 the Company purchased, in aggregate, 661,087
ordinary shares to be held for the time being in Treasury, for consideration of £0.3m.
Cash generation from operational activities was positive at £0.037m (2012: positive of £0.4m) but the impact of
the shares acquired into Treasury and the Interim Dividend paid resulted in overall cash balances reducing by
£1.15m.
Equities Division
Revenues fell from £6.4m in 2012 to £5.0m this year, generally reflecting the structural change in the industry
with reduced commission rates.
Corporate Finance Division
Including retainer income, corporate revenues were up from £3.4m in 2012 to £5.1m this year.
During the year we were involved in 11 transactions compared to 15 in 2012. In aggregate we placed £283m for
our corporate clients.
Finally, I would like to take this opportunity to thank our staff for the efforts they continually deliver and other
stakeholders for their continued support.
James Reed-Daunter
Chief Executive Officer
14 January 2014
- 3 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
STRATEGIC REPORT
Business Review
Arden Partners is pleased to report that the group made a profit for the year. Our focus on cost management has
enabled Arden to protect operational cash flow and profitability despite continued pressures on revenue streams
particularly from institutional commissions.
Healthy balance sheet and cash balances at the year-end puts Arden in a strong position to withstand further
pressures and also gives us the opportunity to capitalise on any further market upturn.
Strategy
Our strategy is to become the institutional and corporate broker of choice for small and mid cap companies
trading on London based markets. We aim to achieve this through:
• Providing incisive research material in a number of key sectors
• Providing an efficient execution and trading platform to institutional clients
• Providing a premium corporate broking service to an optimum number of corporate clients
• Selective and proactive recruitment into key areas to support and enhance the quality of our offer
• Growing sustainable revenue streams, both organically and generically
• Managing cost and risk exposure
This will then enable us to provide shareholder value through earnings growth and dividend distribution.
Key Performance Indicators (KPI’s)
Arden Partners Key Performance Indicators include the following measures:
• Profit before Tax
• Earnings per share
• Corporate Client Base
• Funds Raised for clients
• Capital adequacy
Performance against KPI’s is discussed in the Chief Executive’s report - this is considered as an extension of the
Strategic Report.
- 4 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
STRATEGIC REPORT
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.
By order of the Board
Steve Wassell
Company Secretary
14 January 2014
- 5 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 2013 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 and Company Secretary)
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.
- 6 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
REPORT OF THE DIRECTORS
The Directors present their Annual Report and audited Financial Statements for the financial year ended 31
October 2013.
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.
Results and Dividends
The Consolidated Statement of Comprehensive Income for the year is set out on page 20.
The Directors propose to pay a final dividend of 1.75p per share (2013: Nil). This, when taken with the interim
dividend of 1.25p (2012: 0.65p per share) per share gives a total dividend of 3p per share in respect of the year
ended 31 October 2013 (2012: 0.65p per share).
The final dividend, if approved, will be paid on the 28th March 2014 to shareholders on the register at close of
business on 28th February 2014, with an ex-dividend of 26th February 2014.
Directors
The Directors of the Company who held office since 1 November 2012 were:
Jonathan Keeling
James Reed-Daunter
Steve Wassell
Mark Ansell
Peter Moon
Previous Directors:
Lord Flight
Trevor Norris
Chief Executive Officer (until 31 December 2012)
Deputy Chairman (Executive) (with effect from 1 January 2013)
Director (Executive) (until 31 December 2012)
Chief Executive Officer (with effect from 1 January 2013)
Chief Operating Officer and
Company Secretary (with effect from 15 January 2013)
Non-Executive Director
Non-Executive Director
Chairman and Non-Executive Director (resigned 31 December 2012)
Group Finance Director and Company Secretary (resigned 15 January 2013)
Directors’ Interests
The interests of current Directors in shares and options are disclosed in the Directors’ Remuneration Report set
out on pages 13 to 16.
- 7 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
REPORT OF THE DIRECTORS
Significant Shareholdings
In addition to the current Directors’ interests shown on page 15, 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 14 January 2014:
Arden Partners Employee Benefit Trust
Richard Day
Alasdair Locke
Mark Braddock
Robert Griffiths
David Larkam
Colin Kettle
Tony Bartlett
John Grahame Whateley
Benjamin Thefaut
Hargreave Hale
Unicorn Asset Management
%
8.18
6.14
6.12
5.49
4.93
4.72
4.46
3.87
3.48
3.21
3.07
3.05
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
The board continued its programme of buying back the company’s shares in order to enhance earnings under the
authority granted by the Shareholders.
During the year ended 31 October 2013 the company purchased 1,536,810 ordinary shares for a consideration of
£0.7m. Of these purchases 788,601 shares together with Treasury Shares held at 31 October 2012 of 1,512,928
were cancelled and total share capital was reduced accordingly. The remaining balance of 748,209 shares were
subsequently re-sold .
At 31 October 2013 the company held none of its own shares in Treasury (2012: 1,512,928 (£0.7m)).
Post the year end the Company purchased, in aggregate, 661,087 ordinary shares to be held for the time being in
Treasury, for consideration of £0.3m.
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 2013 the Trust held
1,823,868 (7.94% of total voting rights) (2012: 974,838 (4.29% of total voting rights)) shares. The Trustees
have agreed to hold these shares to satisfy options granted under various share option scheme’s.
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.
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 2013 and remains in
force at the date of this Report.
- 8 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
REPORT OF THE DIRECTORS
Financial Instruments
Details of the use of financial instruments by the Group and Company are contained in note 24 of the Financial
Statements.
Auditors
The Directors have taken all 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
Steve Wassell
Company Secretary
14 January 2014
- 9 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
CORPORATE GOVERNANCE
Introduction
The company has not applied the “comply or explain” principles of the UK Corporate Governance Code (“the
code”) and the information in this report does not explain how the code has been applied. The company refers
to the code in order to ascertain best practice.
The Directors and the Board
The composition is as follows:
Peter Moon
Independent Chairman (Non-Executive)
Chairman of Nominations Committee
Executive Deputy Chairman
Jonathan Keeling
James Reed-Daunter Chief Executive Officer
Steve Wassell
Mark Ansell
Chief Operating Officer and Company Secretary
Senior Independent Director (Non-Executive)
Chairman of Audit Committee
Chairman of Remuneration Committee
Biographical details of all the Directors are set out on page 6.
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 2013 was as follows:
Total number of meetings
James Reed-Daunter
Jonathan Keeling
Steve Wassell
Mark Ansell
Peter Moon
Board
6
5
6
6
6
6
Audit
Committee
2
Remuneration
Committee
1
Nominations
Committee
1
n/a
n/a
2
2
2
n/a
n/a
n/a
1
1
n/a
n/a
n/a
1
1
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, Steve Wassell, Mark Ansell and Peter Moon are required to retire at the
forthcoming Annual General Meeting and, being eligible, offers themselves for re-election. The Board supports
their re-appointments having assessed their performance and value to the Board.
- 10 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
CORPORATE GOVERNANCE
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 33. A review is also carried out on the effectiveness of external
audit.
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 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.
- 11 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
CORPORATE GOVERNANCE
Internal Control
The Board confirms that there is an ongoing process for identifying, evaluating and managing 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.
- 12 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 and therefore full disclosure required by the regulations
have not been made.
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 2012 the Group became subject to the conditions of the Financial Conduct Authority’s (“the
FCA’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.
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 and when compared to similar salary levels elsewhere in the business.
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.
- 13 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 2013 is set
out below:
Executive Directors
James Reed-Daunter1
Jonathan Keeling1
Steve Wassell
Non-Executive Directors
Peter Moon
Mark Ansell2
Total
Salary,
fees and
benefits
£’000
Pension
contributions
£’000
Incentive
payments
£’000
Gain on
exercise of
share options
£’000
Total
2013
£’000
157
172
120
35
29
513
19
20
12
-
-
51
80
90
25
-
-
195
46
-
73
-
-
119
302
282
230
35
29
878
Notes:
1.
2.
The incentive payments to James Reed-Daunter and Jonathan Keeling reflected their ongoing sales roles.
An element of the remuneration was paid to a third party company, Mark Ansell Consulting Limited.
- 14 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
DIRECTORS’ REMUNERATION REPORT
A summary of the total remuneration paid to current Directors who served during the year ended 31 October
2012 is set out below:
Executive Directors
James Reed-Daunter
Jonathan Keeling
Steve Wassell
Trevor Norris
Non-Executive Directors
Lord Flight
Mark Ansell
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
-
-
-
-
57
50
30
-
-
-
-
-
-
80
-
-
-
123
-
-
-
18
120
244
138
262
30
42
45
24
141
905
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
James Reed-Daunter
Jonathan Keeling
Steve Wassell
Non-Executive Directors
Peter Moon
Mark Ansell
31 October
2013
Number
Percentage
Interest
31 October
2012
Number
2,853,644
2,534,334
763,743
112,500
111,750
12.43%
11.04%
3.33%
0.49%
0.49%
1,182,541
1,515,391
373,743
50,000
50,000
- 15 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
DIRECTORS’ REMUNERATION REPORT
Directors’ Interests in Share Options
The following Directors had interests in options over ordinary shares of the Company as shown below:
Notes
1
Executive Directors
James Reed-Daunter
Steve Wassell
Totals
31 October
2012
Number
Options
granted in
year
Number
Options
exercised in
year
Number
31 October
2013
Number
125,000
200,000
500,000
-
(125,000)
(200,000)
325,000
500,000
(325,000)
500,000
-
500,000
Notes:
1.
These options were granted on 23 July 2013 under the Arden Partners Share Plan 2013 and are
exercisable subject to the achievement of Company performance related conditions. These options
cannot be exercised until 31 December 2015, and have an expiry date of 31 December 2022.
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
14 January 2014
- 16 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 (Including Director’s Report and Strategic
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.
- 17 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ARDEN
PARTNERS PLC
For the year ended 31 October 2013
We have audited the financial statements of Arden Partners plc for the year ended 31 October 2013 which
comprise the consolidated statement of comprehensive income, the consolidated and company statement of
financial position, the consolidated and company statement of cash flows, the consolidated and company
statement 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 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 Financial Reporting Council’s
website at www.frc.org.uk/auditscopeukprivate.
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 2013 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 and the strategic report for the financial year for
which the financial statements are prepared is consistent with the financial statements.
- 18 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ARDEN
PARTNERS PLC
For the year ended 31 October 2013
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
14 January 2014
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
- 19 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 October 2013
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:
Items that may be reclassified subsequently to profit or
loss:
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
2013
£’000
10,103
(8,829)
1,274
71
(4)
1,341
(351)
990
(11)
979
4.7p
4.5p
2012
£’000
9,785
(9,634)
151
64
(4)
211
(70)
141
(10)
131
0.6p
0.6p
- 20 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 October 2013
Note
2013
£’000
2013
£’000
2012
£’000
2012
£’000
11
13
14
15
16
24
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
6,756
479
18,578
1,098
3,733
92
83
175
30,644
30,819
(19,071)
(315)
(19,386)
(19,386)
11,433
2,296
467
2,933
(1,046)
(21)
6,804
11,433
-
11,433
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
The Financial Statements were approved by the Board of Directors and authorised for issue on 14 January 2014.
Steve Wassell
Company Secretary
Mark Ansell
Chairman of the Audit Committee
The notes on pages 27 to 49 form part of these financial statements
- 21 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
COMPANY STATEMENT OF FINANCIAL POSITION
At 31 October 2013
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
2013
£’000
2013
£’000
2012
£’000
2012
£’000
6,756
479
18,766
1,098
3,728
(19,254)
(315)
11
12
13
14
15
16
24
17
18
19
92
-
83
175
30,827
31,002
(19,569)
(19,569)
11,433
2,296
467
2,933
(1,046)
(21)
6,804
11,433
-
11,433
5,058
490
10,131
107
4,876
(9,250)
(130)
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
The Financial Statements were approved by the Board of Directors and authorised for issue on 14 January 2014.
Steve Wassell
Company Secretary
Mark Ansell
Chairman of the Audit Committee
The notes on pages 27 to 49 form part of these financial statements
- 22 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 October 2013
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
(Increase)/decrease in trade and other receivables
(Increase)/decrease in trading investments
Increase in stock borrowing collateral
Increase/(decrease) 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
Proceeds from the sale of own shares
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
2013
£’000
1,341
193
123
(67)
76
1,666
(8,635)
(1,888)
(991)
10,001
-
153
(116)
37
(24)
67
43
332
(1,322)
25
(264)
(1,229)
(1,149)
4,882
3,733
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
The notes on pages 27 to 49 form part of these financial statements
- 23 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 October 2013
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
(Increase)/decrease in trade and other receivables
(Increase)/decrease in trading investments
Increase in stock borrowing collateral
Increase/(decrease) 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
Proceeds from the sale of own shares
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
2013
£’000
1,341
193
123
(67)
76
1,666
(8,634)
(1,888)
(991)
10,001
-
154
(116)
38
(24)
67
43
332
(1,322)
25
(264)
(1,229)
(1,148)
4,876
3,728
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
The notes on pages 27 to 49 form part of these financial statements
- 24 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 October 2013
Share
capital
£’000
Share
Premium
account
£’000
2,700
2,933
Capital
Redemption
Reserve
£’000
Own
shares
£’000
Employee
Benefit
Trust
Reserve
£’000
Available
for sale
Reserve
£’000
(1,193)
(612)
Own shares cancelled
(237)
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
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 own shares
Sale of shares by
Employee Benefit Trust to
satisfy employee share
schemes
Dividends paid to equity
shareholders
Balance at
31 October 2013
-
-
-
-
38
-
-
-
-
-
-
-
25
-
-
-
-
Own shares cancelled
(230)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(661)
237
1,193
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(696)
299
230
1,058
-
-
-
-
-
-
-
-
-
-
5
-
-
-
-
-
-
(626)
-
-
187
-
2,501
2,933
237
(661)
(607)
Retained
earnings
£’000
Total
£’000
8,189
12,017
141
-
141
233
-
-
(1,193)
-
141
(10)
131
233
38
(661)
-
5
(156)
(156)
7,214
11,607
990
-
990
76
-
-
-
(1,058)
990
(11)
979
76
25
(1,322)
299
-
(154)
33
(264)
(264)
-
-
(10)
(10)
-
-
-
-
-
-
(10)
-
(11)
(11)
-
-
-
-
-
-
-
2,296
2,933
467
(1,046)
(21)
6,804
11,433
Notes
1.
The Employee Benefit Trust reserve represents shares held in the parent company by the Arden Partners
Employee Benefit Trust which is consolidated in these financial statements in accordance with the
accounting policy in note 1. During the year the Employee Benefit Trust purchased 1,174,030 shares at a
price of £0.53 pence per share.
During the year 325,000 ordinary shares were issued from the employee benefit trust to satisfy employee
share options (2012: Nil).
2.
3.
Own Shares represents shares purchased to be held as treasury shares at historical cost.
The capital redemption reserve represents the nominal value of shares that have been cancelled that were
previously held as Treasury Shares.
The notes on pages 27 to 49 form part of these financial statements
- 25 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 October 2013
Share
capital
£’000
Share
Premium
account
£’000
2,700
2,933
Capital
Redemption
Reserve
£’000
Own
shares
£’000
Employee
Benefit
Trust
Reserve
£’000
Available
for sale
Reserve
£’000
(1,193)
(612)
Own shares cancelled
(237)
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
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 own shares
Sale of shares by
Employee Benefit Trust to
satisfy employee share
schemes
Dividends paid to equity
shareholders
Balance at
31 October 2013
-
-
-
-
38
-
-
-
-
-
-
-
25
-
-
-
-
Own shares cancelled
(230)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(661)
237
1,193
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(696)
299
230
1,058
-
-
-
-
-
-
-
-
-
-
5
-
-
-
-
-
-
(626)
-
-
187
-
2,501
2,933
237
(661)
(607)
Retained
earnings
£’000
Total
£’000
8,189
12,017
141
-
141
233
-
-
(1,193)
-
141
(10)
131
233
38
(661)
-
5
(156)
(156)
7,214
11,607
990
-
990
76
-
-
-
(1,058)
990
(11)
979
76
25
(1,322)
299
-
(154)
33
(264)
(264)
-
-
(10)
(10)
-
-
-
-
-
-
(10)
-
(11)
(11)
-
-
-
-
-
-
-
2,296
2,933
467
(1,046)
(21)
6,804
11,433
Notes
1.
The Employee Benefit Trust reserve represents shares held in the parent company by the Arden Partners
Employee Benefit Trust which is consolidated in these financial statements in accordance with the
accounting policy in note 1. During the year the Employee Benefit Trust purchased 1,174,030 shares at a
price of £0.53 pence per share.
During the year 325,000 ordinary shares were issued from the employee benefit trust to satisfy employee
share options (2012: Nil).
2.
3.
Own Shares represents shares purchased to be held as treasury shares at historical cost.
The capital redemption reserve represents the nominal value of shares that have been cancelled that were
previously held as Treasury Shares.
The notes on pages 27 to 49 form part of these financial statements
- 26 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 50.
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 £990,000 (2012: £141,000).
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 2013 include:
Amendments to IFRS 7 Offsetting Financial Assets and Financial Liabilities
1 Jan 2013
IFRS 13 Fair Value Measurement
Annual Improvements to IFRSs (2009-2012 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
- 27 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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:
- 28 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
•
Trading investments: Trading investments comprise held for trading investments:
o
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.
Fair value through profit or loss: This category comprises only in-the-money derivatives.
They are carried in the statement of financial position at fair value with changes in fair value
recognised in the consolidated statement of comprehensive income in the finance income or
expense line. Other than derivative financial instruments which are not designated as
hedging instruments, the Group does not have any assets held for trading nor does it
voluntarily classify any financial assets as being at fair value through profit or loss.
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.
•
•
•
- 29 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
•
Cash and cash equivalents: Cash and cash equivalents comprise cash in hand, bank balances and
call deposits that are readily convertible to a known amount of cash and are not subject to a
significant risk of changes in value. Cash and cash equivalents all have original dates to maturity
of three months or less.
Financial liabilities
The Group classifies its financial liabilities into one of the categories discussed below, depending on the
purpose for which the liability was acquired. The Group's accounting policy for each category is as
follows:
•
•
•
•
Held for trading: Held for trading liabilities represent short market-making positions and are
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.
- 30 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
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.
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
Operating lease rentals are charged to the Profit and Loss account within 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.
- 31 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
Critical accounting estimates
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of assets, liabilities, income and expense. The estimates and
associated assumptions are based on historical experience and various other factors that are believed to be
reasonable in the circumstances, the results of which form the basis of judgements about carrying values
of assets and liabilities. Actual results may differ from those amounts.
Judgements made by management that may have a significant effect on the financial statements relate
principally to the Group’s equity-settled share-based remuneration schemes for employees. Employee
services received, and the corresponding increase in equity, are measured by reference to the fair value of
the equity instruments at the date of grant. The fair value of share options is estimated by using valuation
models, such as Black-Scholes, on the date of grant based on certain assumptions.
Those assumptions are described in note 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
2013
£’000
5,046
5,057
10,103
2012
£’000
6,424
3,361
9,785
Included within revenue of the Equities Division is a loss of £190,000 (2012: profit £486,000) 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 2013, one of the Group’s customers contributed 10% or more of the Group’s
revenue. The amount was £1,400,000 which is reflected in the Corporate Finance division revenue. In
2012 none of the Group’s customers contributed 10% or more of the groups revenue.
- 32 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
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
2013
£’000
123
244
35
1
6
12
(2)
76
-
2012
£’000
249
248
33
1
6
12
1
233
559
4)
Dividends
Dividends recognised in the year consisted of the 2013 interim dividend of £264,000 (1.25p per share).
Dividends recognised in the prior year consisted of the 2012 interim dividend of £156,000 (0.65p per
share).
The amounts shown above in respect of dividends paid by the Group exclude dividends paid to the Arden
Partners Employee Benefit Trust amounting to £Nil in 2013 (2012: £2,000).
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
2013
£’000
3,116
838
76
504
218
4,752
2012
£’000
4,015
200
233
472
291
5,211
Staff costs include an amount of £Nil (2012: £559,000) in respect of reorganisation payments. The
average number of employees (including Directors) of the Group and Company during the year was 39
(2012: 37) of which 25 (2012: 23) are front-office and the remainder are administration.
During the year a pension accrual of £41,000 (2012: £120,000) which had been accrued in previous years
has been released to the Statement of Comprehensive Income.
- 33 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
6)
Directors' remuneration
Directors' emoluments
Company contributions to money purchase pension schemes
Gain on exercise of share options
Compensation for loss of office
2013
£’000
708
51
119
-
878
2012
£’000
707
57
-
141
905
There were 3 Directors in defined contribution pension schemes during the year (2012: 4).
The total amount payable to the highest paid Director in respect of emoluments was £302,000 (2012:
£221,000). Company pension contributions of £19,000 (2012: £23,000) were provided towards a money
purchase scheme on his behalf. A gain was realised on the exercise of 125,000 share options of £46,000
(2012: £Nil).
Further details of Directors’ remuneration are set out in the Report on Directors’ Remuneration on pages
13 to 16.
7)
Finance income
Bank and other interest receivable
8)
Finance costs
Bank loans and overdrafts
2013
£’000
71
2013
£’000
4
2012
£’000
64
2012
£’000
4
- 34 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
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 share options
Change in tax rate
Adjustment in respect of previous periods
Total deferred tax
Total taxation expense
2013
£’000
2012
£’000
304
(3)
301
7
41
6
(4)
50
351
118
(39)
79
(36)
-
8
19
(9)
70
The tax assessed for the year is higher (2012: higher) 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 23% (2012: 24%)
Effect of:
Expenses not deductible for tax purposes
Prior year current tax over provision
Prior year deferred tax (over)/under provision
Change in tax rate
Marginal relief
Deferred tax on share options
Total taxation expense
2013
£’000
1,341
308
3
(3)
(4)
6
-
41
351
2012
£’000
211
51
46
(39)
19
15
(12)
(10)
70
As a result of a change in legislation the Directors anticipate that profits for the year ending 31 October
2014 will be taxed at a rate of 21%.
- 35 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 2013
Pence per
Share
4.7
0.4
-
Numerator
£’000
990
76
-
Year ended
31 October 2012
Pence per
Share
0.6
1.0
1.8
Numerator
£’000
141
233
425
5.1
4.5
0.4
-
4.9
1,066
990
76
-
1,066
3.4
0.6
0.9
1.7
3.2
799
141
233
425
799
Year ended
31 October 2013
Number
Year ended
31 October 2012
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
21,008,130
740,730
21,748,860
23,741,595
951,788
24,693,383
The weighted average dilution for outstanding share options was 740,730 (2012: 951,788). The
1,823,868 (2012: 974,838) shares held by the Arden Partners Employee Benefit have been treated as
cancelled and excluded from the denominator. 250,000 shares have been excluded from the diluted
earnings per share calculations because as at 31 October 2013 these shares were anti dilutive.
In the prior year 1,512,928 shares held in treasury were treated as cancelled and excluded from the
denominator.
- 36 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
11) Property, plant and equipment
Group and Company as at 31 October 2013
Cost
At 1 November 2012
Additions
Disposals
At 31 October 2013
Depreciation
At 1 November 2012
Provided for the year
Disposals
At 31 October 2013
Net book value
At 31 October 2013
At 31 October 2012
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
Improvements
to leasehold
buildings
£’000
Fixtures,
fittings and
computer
equipment
£’000
494
-
(193)
301
479
15
(193)
301
-
15
1,581
24
(415)
1,190
1,405
108
(415)
1,098
92
176
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
Total
£’000
2,075
24
(608)
1,491
1,884
123
(608)
1,399
92
191
Total
£’000
2,029
46
2,075
1,635
249
1,884
191
394
At 31 October 2013, the Group and Company had capital commitments of £Nil (2012: £Nil).
- 37 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
12)
Investments
Company
Cost
At 1 November 2012 and 31 October 2013
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 2013, the Arden Partners Employee Benefit Trust held 1,823,868
ordinary shares in Arden Partners plc (2012: 974,838 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.
- 38 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
13) Deferred tax
Group and Company - 2013
Accelerated
capital
allowances
and temporary
differences Share option
£’000
£’000
Total deferred
tax asset
£’000
Financial
assets
£’000
At 1 November 2012 –
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 2013
Deferred taxation comprises:
Accelerated capital allowances
Other timing differences
Share options
Total deferred tax asset
58
(4)
(5)
-
49
76
-
(39)
(3)
34
134
(4)
(44)
(3)
83
2013
£’000
49
-
34
83
-
-
-
-
-
2012
£’000
41
17
76
134
Deferred tax liability on financial assets
-
-
- 39 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
13) Deferred tax - continued
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
54
(19)
26
(3)
58
71
-
10
(5)
76
125
(19)
36
(8)
134
-
-
-
-
-
14) Trading investments
Group and Company
Long market making positions
Convertible loan note
Other investments:
Options and warrants
2013
£’000
5,732
201
823
6,756
2012
£’000
4,044
-
1,014
5,058
At 31 October 2013 the historical cost of long market making positions was £6,246,000 (2012
£4,219,000). There are no long market making positions denominated in foreign currency (2012: £Nil).
At 31 October 2013 the historical cost of convertible loan note was £200,000 (2012 £Nil). There are no
convertible loan notes denominated in foreign currency (2012: £Nil).
At 31 October 2013 the historical cost of other investments was £86,000 (2012: £87,000). There are no
other investments denominated in foreign currency (2012: £Nil).
- 40 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notes to the Consolidated Financial Statements
15) Available for sale financial assets
Group and Company
At 1 November 2012
Purchased during the year
Transfer to equity
At 31 October 2013
2013
£’000
490
-
(11)
479
2012
£’000
-
500
(10)
490
At 31 October 2013 the historical cost of the listed investments was £500,000 (2012: £500,000). There
are no listed investments denominated in foreign currency (2012: £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
2013
£’000
16,345
756
1,018
459
18,578
2013
£’000
16,345
756
1,206
459
18,766
2012
£’000
7,570
1,351
541
481
9,943
2012
£’000
7,570
1,351
729
481
10,131
There are no amounts denominated in foreign currency included within trade receivables of the Group
and the Company at 31 October 2013 (2012: £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.
- 41 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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
2013
£’000
123
3,610
3,733
2013
£’000
118
3,610
3,728
2012
£’000
237
4,645
4,882
2012
£’000
231
4,645
4,876
Included within cash and bank balances of the Group and the Company at 31 October 2013 is an amount
of £9,000 (2012: £150,000) 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
2013
£’000
178
16,307
365
151
1,461
609
19,071
2012
£’000
-
7,379
304
262
365
758
9,068
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 £18,084,000 (2012: £8,135,000).
- 42 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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
2013
£’000
178
16,307
365
151
1,644
609
19,254
2012
£’000
-
7,379
304
262
547
758
9,250
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 £18,266,000 (2012: £8,317,000).
19) Share capital
Equity share capital
40,000,000 Ordinary shares of 10p each
22,959,065 (2012: 25,005,594) Ordinary shares
of 10p each
Authorised
2013
£’000
2012
£’000
Allotted, called up
and fully paid
2013
£’000
2012
£’000
4,000
4,000
-
-
-
-
2,296
2,501
During the year the Company issued in aggregate 255,000 (2012: 382,644) ordinary shares of 10p each to
satisfy the exercise of share options. Gross proceeds were £25,000 (2012: £38,000) of which £25,000
(2012: £38,000) has been credited to share capital and £Nil (2012: £Nil) to the Share Premium account.
In April 2013 the company cancelled 2,301,529 (2012: 2,372,768) ordinary shares that it held in Treasury
at the beginning of the financial year.
In November 2013 the Company purchased 661,087 ordinary shares at 48.5 pence per share for
consideration of £0.3m. These shares are to be held in Treasury.
- 43 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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)
2013
28.1
Weighted
Average
Exercise price
(pence)
2012
24.9
Number of
Options
2012
2,504,859
(10.0)
(382,644)
32.2
47.8
33.0
-
(96,740)
2,025,475
(10.0)
-
(16.5)
28.1
Number of
Options
2013
2,025,475
(580,000)
1,068,250
(167,399)
2,346,326
At 1 November 2012
Exercised during the year
Granted during the year
Lapsed during the year
At 31 October 2013
The weighted average market price of the Company’s shares at the date of exercise of options during the
year was 47.0p (2012: 34.4p).
The share options outstanding at the year end have a weighted average exercise price and expected
remaining life as follows:
31 October 2013
31 October 2012
Weighted
Average
exercise
price
(pence)
Weighted
average
expected
remaining
life
(months)
Number of
share
options
Weighted
average
exercise
price
(pence)
Weighted
average
expected
remaining
life
(months)
Number of
share
options
803,076
47.8
30
970,475
47.8
475,000
10.0
87
1,055,000
10.0
1,068,250
32.2
117
-
-
2,346,326
2,025,475
42
87
-
Arden
Partners Old
Scheme
Arden
Partners Share
Plan 2007
Arden
Partners Share
Plan 2013
- 44 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 2013 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 2013
Arden Partners
Share Plan 2007
Arden Partners
Old Scheme
23/07/2013 to
25/09/2013
8p to 44p
32.2p
18.8p
30%
0.5%
5%
120
120
117
1,068,250
100%
-
17/04/2008 to
24/03/2012
45p to 148p
10.0p
91.0p
30%
4% to 5.75%
5%
120
120
87
475,000
100%
100,000
21/4/2006
3.5p
47.8p
30.0p
30%
5%
5%
120
120
30
803,076
100%
803,076
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
2013
£’000
76
2012
£’000
233
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 £187,000 (2012: £291,000).
Contributions amounting to £27,000 (2012: £75,000) were payable to schemes and are included in
payables.
- 45 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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
2012
£’000
227
227
213
2013
£’000
227
213
-
440
667
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 13 to 16. 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
2013
£’000
708
51
4
-
763
Year ended
31 October
2012
£’000
707
57
106
141
1,011
The Group has paid £15,000 (2012: £42,000) 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 2013 there were no amounts due to Mark Ansell Consulting
Limited (2012: £7,110).
23) Post balance sheet events
On 2 November 2013 and 3 November 2013 the company purchased a total of 661,087 ordinary shares to
be held in Treasury. The total cost of the shares was £0.3m.
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.
- 46 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 2012
and 2013 capital has been maintained at a level above minimum FCA 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 FCA 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
2013
£’000
16,345
1,098
756
1,018
3,733
2012
£’000
7,570
107
1,351
541
4,882
Total loans and receivables
22,950
14,451
Company
2013
£’000
16,345
1,098
756
1,206
3,728
23,133
2012
£’000
7,570
107
1,351
729
4,876
14,633
- 47 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 2012
Amounts released
Amounts written off
Increase in provision
Closing balance at 31 October 2013
31 October
2013
£’000
698
7
14
62
-
(25)
756
31 October
2013
£’000
-
-
-
25
25
31 October
2012
£’000
1,332
9
-
10
-
-
1,351
31 October
2012
£’000
-
(10)
(5)
15
-
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 2013 in respect of
US$15,000 (£9,000). There was a currency exposure for the Group and the Company at 31
October 2012 of US$241,000 (£150,000). The effect of a 10% movement in the US$/£ exchange
rate from the rate ruling at the balance sheet date would be to impact profit/(loss) and net assets by
approximately £1,000 (2012: £15,000).
Fixed rate cash financial assets of £3,611,000 (2012: £4,645,000) comprise sterling cash deposits
on money markets at an average rate of 0.50% (2012: 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 2013, the profit before taxation would have
been decreased or increased by approximately £10,000. In the year ended 31 October 2012 a 0.5%
movement in rates would have increased or decreased the profit before taxation by approximately
£5,000.
- 48 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 2013:
Group and Company as at 31 October 2013
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Assets
Trading investments:
Long market making positions
Convertible loan note
Options and warrants
Available for sale financial assets
Stock borrowing collateral
5,732
201
-
479
1,098
7,510
-
-
824
-
-
824
Liabilities
Held for trading liabilities
178
-
Group and Company as at 31 October 2012
-
-
-
-
-
-
-
5,732
201
824
479
1,098
8,334
178
Assets
Trading investments:
Long market making positions
Options and warrants
Available for sale financial assets
Stock borrowing collateral
Liabilities
Held for trading liabilities
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
4,044
-
490
107
4,641
-
1,014
-
-
1,014
-
-
-
-
-
-
-
-
4,044
1,014
490
107
5,655
-
- 49 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Corporate Information
Company Secretary
Steve Wassell
Arden House 17 Highfield Road
Edgbaston
Birmingham
B15 3DU
Direct Line: 0121 423 8993
Company Number
4427253
Nominated Advisor
Registrar
Lawyers
Auditors
Bankers
Registered Office
Altium Capital Limited
30 St James’s Square
London
SW1Y 4AL
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
1st Floor
60 Queen Victoria Street
London
EC4N 4TR
Arden House
17 Highfield Road
Edgbaston
Birmingham
B15 3DU
- 50 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
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 20 March 2014 at 11.00 a.m. for the following purposes:
Ordinary Business
1.
2.
3.
4.
5.
6.
To receive and adopt the Company’s Financial Statements for the year ended 31 October 2013,
together with the Directors’ Report, Directors’ Remuneration Report and Report of the Independent
Auditor on those Financial Statements.
To re-elect Mark John Ansell as a Director, who is retiring by rotation in accordance with the
Company’s Articles of Association.
To re-elect Peter Geoffrey Moon as a Director, who is retiring by rotation in accordance with the
Company’s Articles of Association.
To re-elect Stephen Michael Wassell as a Director, who is retiring by rotation in accordance with the
Company’s Articles of Association.
To reappoint BDO LLP as auditors to the Company, to hold office from the conclusion of this
meeting until the conclusion of the next Annual General Meeting at which the Financial Statements
are laid and to authorise the Directors to fix their remuneration.
That the Company declare a final dividend for the year ended 31 October 2013 of 1.75 pence per
ordinary share of 10 pence each in the Company, to be paid on 28 March 2014 to members whose
names appear on the register of members at the close of business on 28 February 2014 with an ex-
dividend date of 26 February 2014.
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 numbered 7 as an ordinary resolution and as to resolutions numbered 8 and 9 as special resolutions:
7.
8.
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 £743,265.90, 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 7 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:
- 51 -
ARDEN PARTNERS PLC ANNUAL REPORT 2013
Notice of Meeting
8.1
8.2
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
otherwise than pursuant to sub-paragraph 8.1 above, up to an aggregate nominal amount of
£111,489.89, 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.
9.
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 3,344,696 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:
9.1
9.2
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 2015 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
Stephen Wassell
Company Secretary
14 January 2014
Registered office:
Arden House
17 Highfield Road
Edgbaston
Birmingham
B15 3DU
- 52 -
www.arden-partners.co.uk
London
125 Old Broad Street
London
EC2N 1AR
Tel 020 7614 5900
Fax 020 7614 5901
Birmingham
Arden House
17 Highfield Road
Edgbaston
Birmingham
B15 3DU
Tel 0121 423 8900
Fax 0121 423 8901
Bristol
Broad Quay House
Prince Street
Bristol
BS1 4DJ
Tel 020 7614 5900
Fax 020 7614 5901
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