Panmure Gordon & Co. plc, a leading independent institutional stockbroker and investment bank, today announces preliminary results for the year ended 31 December 2013.

Financial highlights

Profit before tax on continuing operations increased by 95% to £1.17m (2012: £0.60m)
29% increase in net commission and fee income to £27.32m (2012: £21.22m)
Earnings per share on continuing operations of 5.36p (2012: 0.21p (restated))
Basic earnings per share of 1.32p (2012: loss of 23.08p per share (restated))
Debt-free balance sheet

Operational highlights

35% increase in corporate clients to 130 (2012: 96)
Helped to raise more than £1.4bn for our corporate clients (2012: £373m)
Investment in key people/teams to drive future profitability
Recognised as Small Cap Adviser of the Year at the Small Cap Awards 2013
Recognised as top mid cap brokerage firm at European TIM Ideas Top Performer Awards

Chief executive Phillip Wale commented:

“We have continued to build upon the turn-around of 2012 and these results reflect the strength of our core business. We remain firmly focused on serving our corporate and institutional clients and aligning our resources to revenue opportunities.

“As 2014 has commenced, we have continued to grow our corporate client list and win further transaction mandates. For the short to medium term at least, equity capital markets are expected to be receptive to high quality, sensibly priced transactions. With the support of our major shareholder, QInvest, Panmure Gordon is well-positioned to build on this momentum.”

Enquiries:

Panmure Gordon

Ed Warner, Chairman 020 7886 2500

Phillip Wale, Chief Executive 020 7886 2500

Capital MSL

Simon Evans 020 3219 8809

Grant Thornton Corporate Finance (Nominated Adviser)

Philip Secrett/Salmaan Khawaja/Jen Clarke 020 7383 5100

CHAIRMAN’S STATEMENT

I am pleased to report a much increased operating profit for the continuing business of £1.2m (2012: £0.6m). As I reported last year, the board implemented a turn-around strategy to reinvigorate our business based on three key principles: to exit our loss-making US business; to diversify revenue generation; and to manage cost appropriately while strengthening our client franchise.

As demonstrated by the increasing profitability of our business, this strategy is being well-executed and it is achieving its goals. Panmure Gordon is now focused on its core business of providing outstanding equity capital markets advice to our UK-listed corporate clients, and those seeking a London listing, as well as execution services to our institutional clients founded on insightful, actionable research.

While modest, our statutory profit of £0.2m (2012: loss of £3.5m) reflects the further diminution of the impact of our former US business and the strength of our core revenue-generating activities. We believe it is an indication of the Company’s ability to take advantage of the continued recovery in the UK capital markets from the challenging conditions of recent years.

The increase in the continuing business operating profit has its roots in our extensive, and still growing, corporate client list which at year-end totalled 130 (2012: 96), and markets which were more receptive to sensible, well-priced transactions. The board has been very pleased with the growth of the firm’s corporate client list and the number and variety of transactions on which Panmure Gordon worked during the year.

In addition to stabilising and strengthening our business, our turn-around strategy is laying the foundations of a future return to the dividend list. At last year’s annual general meeting, shareholders voted in favour of the share capital reorganisation which was an important first step.

Given our recent trading performance and balance sheet strength, the board believes the time is right to recommend to shareholders a share capital reduction. Due to losses incurred in previous years, an accumulated deficit – or negative retained earnings – is held in the Company’s profit and loss account. If approved by shareholders, the Company will apply to Court for an Order to cancel the deferred shares, which have no voting rights, and the share premium account. Subject to Court approval, the reduction will create distributable reserves and put the Company in a position to pay a dividend in the future when trading conditions and profits allow.

During the year, I and my fellow board directors bid farewell to Shahzad Shabaz as a non-executive director. We were then delighted to welcome his QInvest colleague, Michael Katounas, to the board. Michael is Deputy CEO at QInvest and brings significant investment banking experience to the board.

Panmure Gordon’s reputation for integrity is built on its exceptional client-centric culture. This culture is embodied in Panmure Gordon’s employees and on behalf of the board I thank them for all their efforts in 2013, especially in supporting our clients in both good and challenging times. Our improved results in 2013 are a testament to their success.

Ed Warner, OBE

Chairman

Chief Executive’s review

This year it is pleasing to report continued strong progress across the business: increased operating profit of £1.15m (2012: £0.57m), driven by a 29% increase in net commission and fee income to £27.32m (2012: £21.22m), our first statutory profit since 2007 of £0.21m (2012: loss of £3.52m), a strong and growing corporate client list with 130 clients at year-end (2012: 96), and appropriately aligned costs.

Panmure Gordon is today significantly stronger than it was at the outset of our turn-around strategy in 2012. While the focus ought rightly to be on the significant improvement in Panmure Gordon’s operating profit in 2013, our first statutory profit since 2007 tells an important story: we have put behind us the effects of our former loss-making US business, which was exited in 2012.

The executive team is solely focused on further strengthening Panmure Gordon’s business. While global financial and political shocks have always, and will always, continue to challenge financial markets, our job is to take a long-term view and build a firm that is able to withstand those shocks. We have made significant progress since 2012 in doing so.

Panmure Gordon’s reputation for integrity helps us win and retain corporate clients – the lifeblood of our firm – and to attract talented people. A key part of our turn-around strategy and the building of a more robust Panmure Gordon has been to hire selectively across the firm to support our growth, diversify our earnings and drive our profitability. Our investment in these key hires is already flowing through to bottom-line profitability.

It has been especially pleasing to see the corporate client list grow extensively over the past two years: from 76 clients at the end of 2011 to 96 in 2012 and 130 at the end of this reporting period.

A significant driver of this growth was the hire in late 2012 of an integrated investment funds team to boost Panmure Gordon’s traditional strength in the sector and help diversify the firm’s earnings. Since its arrival, the team has attracted a large number of new clients to the firm. In the reporting period fund raisings on behalf of clients included the launch of the £135m Polar Capital Global Financials Trust and the £79m JP Morgan Senior Secured Loan Fund.

The firm and our clients benefited from markets which were more receptive to high quality transactions and this is reflected in a 49% uplift in corporate finance fee income to £18.10m (2012: £12.16m) and in the value of the transactions on which Panmure Gordon worked. In total this year, Panmure Gordon helped raise in excess of £1.46 bn for its clients (2012: £373m) across 11 IPOs and 20 fundraisings and was recognised as Small Cap Adviser of the Year at the Small Cap Awards 2013.

Panmure Gordon’s corporate client mix continues to reflect the depth and breadth of our corporate finance and industry sector experience. We have grown both our AIM and main market corporate client lists to 63 (2012: 52) and 66 (2012: 42) respectively.

Panmure Gordon’s securities business, comprising institutional equity sales & trading and market making, as well as thought-leading equity research, is essential to our client service offering.

Since the global financial crisis, equity markets have been highly volatile and, in a very competitive market place, our clients quite rightly demand the best possible research and execution services. In the third quarter, we hired the firm’s first Head of Securities to lead the development and co-ordination of our securities team, as well as a new Head of Trading.

Reflecting 2013 performance, Panmure Gordon was recently named as the top mid-sized brokerage firm for having the best overall idea performance at the annual European TIM Ideas Top Performer Awards. The awards identify and quantify the best performing equity sales people and their brokerage firms based on outperformance, or alpha, of their ideas. The awards are the only quantitative rankings of their kind and, additionally, recognised one of our senior sales people in Europe’s Top 10 for best overall idea performance.

While equity capital markets have been receptive to the many transactions on which the firm worked this year, the continued lack of volume in equity markets as well as volatile trading conditions saw only a modest 8% increase in net commission and trading income to £9.80m (2012: £9.07m).

Our institutional relationships are much valued by the firm and, with hard work and strategic thinking, working with our counterparts and affiliates in Qatar, Switzerland, Singapore, the US and India, we are well-placed to continue building this revenue stream and executing superbly for our corporate and institutional clients.

Our research department is frequently the public face of the business. Regarded as key influencers, our analysts’ expert view on companies and industries is regularly sought by both media and corporate leaders. Our analysts are also often instrumental in helping the firm win new corporate clients and then helping those clients remain in the eye of the investment community.

Given their output, it is always pleasing to see our analysts recognised externally in the prestigious Thomson Reuters Extel and StarMine Awards.

Extel awards are based on votes received by institutional clients and this year Panmure was recognised as a Top 3 house across four sectors in the Mid & Small Cap awards.

StarMine examines stock picking and earnings estimation ability. Three analysts were recognised as Top 3 for stock picking ability in two sectors: media and consumer & business services, and two analysts were recognised as Top 3 for earnings estimation in two sectors: transportation and insurance. In addition, our technology analyst was recognised as Small Cap Analyst of the Year at the Small Cap Awards 2013.

Dividend

The board has not recommended a dividend for the year. However, as noted in the Chairman’s statement, a share capital reduction is being planned which would put the Company in a position to pay a dividend in future when trading conditions and profits allow.

Outlook

We have continued to build upon the turn-around of 2012 and these results reflect the strength of our core business. We remain firmly focused on serving our corporate and institutional clients and aligning our resources to revenue opportunities.

As 2014 has commenced, we have continued to grow our corporate client list and win further transaction mandates. For the short to medium term, equity capital markets are expected to be receptive to high quality, sensibly priced transactions. With the support of our major shareholder, QInvest, Panmure Gordon is well-positioned to build on this momentum.

Phillip Wale

Chief Executive

Consolidated income statement

For the year ended 31 December 2013

2013

2012

£‘000

£‘000

Continuing operations

Commission and trading income

11,264

10,139

Commission and trading expense

(1,469)

(1,072)

Net commission and trading income

9,795

9,067

Corporate finance and other fee income

18,103

12,156

Loss on corporate investments

(580)

Net commission and fee income

27,318

21,223

Net (loss)/gain on available for sale investments

(39)

1,286

Administrative costs1

(24,569)

(20,464)

Redundancy, restructuring and other non-recurring charges1

(1,209)

(504)

Operating profit before share-based payments

1,501

1,541

Share-based payments1

(349)

(969)

Operating profit

1,152

572

Financial income

34

28

Financial expense

(19)

(5)

Net financial income

15

23

Profit before tax from continuing operations

1,167

595

Taxation

(335)

(563)

Profit from continuing operations

832

32

Discontinued operation

Loss on discontinued operation (net of tax)

(627)

(3,555)

Profit/(loss) for the period attributable to the owners of the Company

205

(3,523)

Basic earnings per share from continuing operations2

5.36p

0.21p

Diluted earnings per share from continuing operations2

5.28p

0.20p

Basic earnings/(loss) per share2

1.32p

(23.08)p

Diluted earnings/(loss) per share2

1.30p

(23.08)p

1 Administrative expenses which total £26.1m (2012: £21.9m) have been presented separately here owing to their individual nature and size

2 The comparative figures have been restated to reflect the share capital reorganisation which took place during the year

Consolidated statement of comprehensive income & expense

For the year ended 31 December 2013

2013

2012

£‘000

£‘000

Profit/(loss) for the period attributable to the owners of

the Company

205

(3,523)

Other comprehensive loss

Foreign exchange translation differences

(56)

Foreign currency translation reserve recycled on disposal of subsidiary

(3,084)

Total other comprehensive profit/(loss) for the period net of tax

205

(3,140)

Total comprehensive profit/(loss) for the period attributable to the owners of the Company

205

(6,663)

Consolidated statement of financial position

As at 31 December 2013

2013

2012

£‘000

£‘000

Assets

Intangibles

13,201

13,201

Plant and equipment

2,011

1,683

Available for sale investments

8

188

Deferred tax asset

857

1,179

Other receivables

1,311

1,917

Total non-current assets

17,388

18,168

Securities held for trading

11,224

4,563

Trade and other receivables

29,894

15,712

Cash and cash equivalents

6,058

13,591

Total current assets

47,176

33,866

Current liabilities

Trade payables

(21,832)

(11,743)

Tax and social security

(823)

(846)

Corporation tax liabilities

(7)

Other payables

(4,582)

(5,421)

Held for trading liabilities

(4,891)

(1,759)

Total current liabilities

(32,135)

(19,769)

Net current assets

15,041

14,097

Deferred tax liability

(952)

(973)

Total non-current liabilities

(952)

(973)

Net assets

31,477

31,292

Equity

Issued share capital

6,187

6,183

Share premium account

36,740

36,709

Merger reserve

21,810

21,810

Special reserve

9,595

Other reserve

(7,441)

(6,734)

Treasury shares

(303)

Retained earnings

(25,819)

(35,968)

Total equity

31,477

31,292

Approved by the board on 24 March 2014 and signed on its behalf by:

Philip Tansey

Chief Financial Officer

Consolidated statement of cash flow

Year ended 31 December 2013

Year ended 31 December 2012

£‘000

£‘000

Cash flows from operating activities

Profit/(loss) after tax

205

(3,523)

Net financial expense

(15)

(23)

Depreciation and amortisation

295

200

Net loss/(gain) on available for sale investments

39

(1,286)

Loss on disposal of subsidiary

1,815

Movement in securities held for trading

(3,527)

821

Decrease in net amounts owed by market counterparties

(3,286)

(956)

(Increase)/decrease in trade and other receivables

(408)

200

(Decrease)/increase in trade payables and provisions

(668)

3,212

IFRS 2 share-based payment charges

349

1,397

Income tax expense

335

563

Net cash (outflow)/inflow from operating activities

(6,681)

2,420

Income taxes received/(paid)

Net cash from operating activities

(6,681)

2,420

Cash flows from investing activities

Financial income received

34

28

Acquisition of plant and equipment

(623)

(1,654)

Proceeds from disposal of investments

125

2,418

Disposal of discontinued operation net of cash

(4,954)

Net cash from investing activities

(464)

(4,162)

Cash flows from financing activities

Proceeds from the issue of share capital

35

177

Purchase of own shares for EBT

(532)

(663)

Financial expense

(19)

(5)

Repayment of EBT loan

128

25

Net cash from financing activities

(388)

(466)

Net decrease in cash and cash equivalents

(7,533)

(2,208)

Cash and cash equivalents at 1 January

13,591

15,855

Effect of exchange rate fluctuations

(56)

Cash and cash equivalents at 31 December

6,058

13,591

Consolidated statement of changes in equity for the year ended 31 December 2013

£‘000

Issued share capital

Share premium

Merger reserve

Special reserve

Other reserve

Treasury shares

Retained earnings

Total equity

At 1 January 2013

6,183

36,709

21,810

9,595

(6,734)

(303)

(35,968)

31,292

Total comprehensive income for the period

Profit for the year

205

205

Other comprehensive income

Foreign currency translation differences

Foreign currency translation recycled to P&L on disposal

Other items recorded directly in equity

Share-based payments

349

349

Shares issued under employee share plans

4

31

35

Shares transferred under employee share plans

(303)

303

Transfer of special reserve to retained earnings

(9,595)

9,595

Purchase of own shares for EBT

(532)

(532)

Decrease in shares held by EBT

128

128

At 31 December 2013

6,187

36,740

21,810

(7,441)

(25,819)

31,477

Consolidated statement of changes in equity for the year ended 31 December 2012

£‘000

Issued share capital

Shares to be issued

Share premium

Merger reserve

Special reserve

Other reserve

Foreign currency translation reserve

Treasury shares

Retained earnings

Total equity

At 1 January 2012

6,009

86

36,620

21,810

9,595

(3,873)

3,140

(2,526)

(33,842)

37,019

Total comprehensive income for the period

Loss for the year

(3,523)

(3,523)

Other comprehensive income

Foreign currency translation differences

(56)

(56)

Foreign currency translation recycled to P&L on disposal

(3,084)

(3,084)

Other items recorded directly in equity

Share-based payments

1,397

1,397

Shares issued under employee share plans

174

(86)

89

177

Shares transferred under employee share plans

(2,223)

2,223

Purchase of own shares for EBT

(663)

(663)

Decrease in shares held by EBT

25

25

At 31 December 2012

6,183

36,709

21,810

9,595

(6,734)

(303)

(35,968)

31,292

1 Segmental analysis

The Group reports its operating segments according to how the Group’s chief operating decision maker (“CODM”) allocates resources to each segment and assesses performance. In this respect the Group’s CODM has been defined as the Group’s CEO.

In previous years the CODM has allocated resources across the Group based on results and performance in each geographic area of operation. Following the disposal of the Group’s US business during 2012, the geographical division is now made between the UK and Swiss operations only. In the segmental table below, the results of the Swiss office appear in the ‘Other’ column, together with the impact of the discontinued US operation.

The basis of segmentation in respect of assets and non-current assets has also changed as above. There are no regular major customers that account for more than 10% of revenue.

Segmental analysis for the year ended 31 December 2013 and reconciliation to the statutory income statement is set out below:

UK

Other

Total

2013

2012

2013

2012

2013

2012

£‘000

£‘000

£‘000

£‘000

£‘000

£‘000

Net commission and trading income

8,672

7,834

1,123

1,233

9,795

9,067

Corporate finance fee income

17,635

11,923

38

162

17,673

12,085

Loss on corporate investments

(580)

(580)

Wealth management and other income

430

71

430

71

Net (loss)/gain on AFS investments

(39)

1,286

(39)

1,286

Foreign exchange (loss)/gain

(17)

(9)

6

(3)

(11)

(12)

On-going administration costs

(23,200)

(19,073)

(1,358)

(1,379)

(24,558)

(20,452)

Segmental operating profit/ (loss)

2,901

2,032

(191)

13

2,710

2,045

Redundancy and restructuring charges

(1,209)

(504)

(1,209)

(504)

Share-based payment charges

(349)

(969)

(349)

(969)

Operating profit/(loss)

1,343

559

(191)

13

1,152

572

Net financial income

15

23

15

23

Profit/(loss) before tax

1,358

582

(191)

13

1,167

595

Income tax on continuing operations

(335)

(563)

(335)

(563)

Loss on disposal of discontinued operation

(627)

(3,555)

(627)

(3,555)

Profit/(loss) for period attributable to the owners of the Company

1,023

19

(818)

(3,542)

205

(3,523)

All revenue is from external customers. There are no regular major customers that account for more than 10% of revenue. The segmental operating profit/(loss) reconciles to the statutory profit/(loss) above, which was the basis for segmental disclosure in the Report and Financial Statements 2012.

UK

Other1

Total

2013

2012

2013

2012

2013

2012

£‘000

£‘000

£‘000

£‘000

£‘000

£‘000

Non-current assets (inc goodwill)

17,388

18,168

17,388

18,168

Current assets

47,176

33,866

47,176

33,866

Current liabilities

(32,135)

(19,769)

(32,135)

(19,769)

Non-current liabilities

(952)

(973)

(952)

(973)

Capital expenditure

(623)

(1,654)

(623)

(1,654)

1 The Swiss business operates as a representative office of the UK business and therefore shares assets with the UK business.

2 Staff costs

Group

Year ended 31 December 2013

Year ended 31 December 2012

£‘000

£‘000

Staff costs including directors’ emoluments

Wages and salaries

14,066

11,962

Social security costs

1,548

1,334

Pensions (defined contribution scheme)

955

366

Total

16,569

13,662

The Group operates a defined contribution pension scheme. At the balance sheet date the Group had no outstanding pension contribution liabilities. The charge for the period to 31 December 2013 was £0.96m (2012: £0.37m).

Actual number of persons, including directors, employed by the Group as at 31 December 2013:

Group total 2013

UK 2013

Swiss 2013

Group total 2012

Institutional equities

43

40

3

53

Corporate finance

28

28

28

Investment funds

11

11

10

Other

42

39

3

36

Total

124

118

6

127

Average number of persons, including directors, employed by the Group during the year was:

Group total 2013

UK 2013

Swiss 2013

Group total 2012

Institutional equities

48

45

3

48

Corporate finance

28

28

26

Investment funds

11

11

2

Other

41

38

3

36

Total

128

122

6

112

3 Income tax expense

The analysis of the total income tax credit/(expense) is as follows:

Year ended 31 December 2013

Year ended 31 December 2012

£‘000

£‘000

Analysis of tax credit/(charge) in period:

UK corporation tax at 23.3% (2012: 24.5%)

Current year tax credit/(charge)

Prior year adjustment
(6)

Other prior year adjustments
(28)

(4)

(34)

(4)

Deferred tax

Prior year adjustments to deferred tax credit
8

3

Current year deferred tax charge
(309)

(562)

(301)

(559)

Tax charge on profits on ordinary activities

(335)

(563)

Effective tax rate charge

62.0%

(19.0)%

Factors affecting tax charge:

Profit/(loss) on ordinary activities after tax

205

(3,523)

Tax on continuing operations

358

563

Tax on discontinued operation

(23)

/(loss) on ordinary activities before tax

540

(2,960)

Profit/(loss) on ordinary activities multiplied

by rate of UK corporation tax at 23.3% (2012: 24.5%)

(125)

725

Effects of:

Expenses not deductible for tax purposes

(89)

(133)

Tax losses not recognised from continuing operations

(151)

Tax losses not recognised from discontinued operation

(119)

(871)

Differences relating to share schemes

(16)

(105)

Effects of foreign tax

(21)

(4)

Change in corporation tax rate

34

(27)

Deemed goodwill on amortisation

106

122

Goodwill on consolidation

(106)

(122)

Adjustment to tax charge in respect of previous periods

1

3

Total tax charge on profits on ordinary activities

(335)

(563)

4 Earnings per share

Earnings per share (EPS) are calculated on a net basis using the profit on ordinary activities after taxation divided by the weighted average number of shares detailed below.

Year ended

Year ended

31 December

31 December

2013

20121

£‘000

£‘000

Profit from continuing operations after taxation (PAT)

832

32

Weighted average number of shares in issue

15,538,145

15,266,450

Fully diluted weighted average number of shares in issue

15,766,145

15,642,460

Basic earnings per share from continuing operations (based on PAT)

5.36p

0.21p

Diluted earnings per share from continuing operations (based on PAT)

5.28p

0.20p

Year ended

Year ended

31 December

31 December

2013

20121

£‘000

£‘000

Profit/(loss) on ordinary activities after taxation (PAT/(LAT))

205

(3,523)

Weighted average number of shares in issue

15,538,145

15,266,450

Fully diluted weighted average number of shares in issue

15,766,145

15,642,460

Basic earnings/(loss) per share (based on PAT/(LAT))

1.32p

(23.08)p

Diluted earnings/loss per share (based on PAT/(LAT))

1.30p

(23.08)p

1 The comparative figures have been restated to reflect the share capital reorganisation which took place during the year.

5 Discontinued operation

In June 2012 the Group completed the sale of its entire interest in ThinkEquity LLC to management. Following that, ThinkEquity LLC and its 100% shareholder, ThinkEquity Holdings LLC, filed for protection under chapter 7 of the US bankruptcy code on 6 November 2012. Subsequently, certain claims were asserted against Panmure Gordon for which provisions were taken in 2012. In 2013 claims were finally concluded which, in addition to the write-off of certain receivables from the administrator of the estate of ThinkEquity which are no longer believed to be recoverable, resulted in an additional charge of £0.6m to provisions all of which are due to be settled in 2014. It is not anticipated that any further material claims or costs associated with ThinkEquity not covered by provisions will develop in the future.

Results from discontinued operation

As at

As at

31 December

31 December

2013

2012

Trading activities

£‘000

£’000

Revenue

9,340

Expenses

(11,080)

Results from operating activities

(1,740)

Results of trading activities

(1,740)

Discontinued operation

Fair value of net assets disposed of

(3,186)

Foreign currency translation reserve recycled to other comprehensive income

3,084

Other costs

(627)

(1,713)

Loss on disposal of discontinued operation

(627)

(1,815)

Loss for the year on discontinued operation

(627)

(3,555)

Cash flow from discontinued operation

As at

As at

31 December

31 December

2013

2012

£‘000

£’000

Net cash from operating activities

(1,152)

Cash flows from investing activities

(1,367)

(4,954)

Net cash from financing activities

(11)

Net cash flow for the year

(1,367)

(6,117)

Effect of disposal on the financial position of the Group

Property, plant and equipment

(1,275)

Investment in associate

(221)

Available for sale investments

(55)

Cash and cash equivalents

(4,954)

Trade and other receivables

(2,110)

Trade and other payables

5,429

Net assets and liabilities

(3,186)

Cash and cash equivalents disposed of

(4,954)

Net cash outflow

(4,954)

The financial information set out above does not constitute the Company’s statutory accounts for the year ended 31 December 2013, but is derived from those accounts. The annual report and statutory accounts will be sent to shareholders and will be made available to the public from the Company’s website: www.panmure.com or, upon request, at the registered office of Panmure Gordon & Co. plc, One New Change, London EC4M 9AF.