Panmure Gordon & Co. plc

(“Panmure Gordon” or the “Group”)

Preliminary Results for the year ended 31 December 2016

Panmure Gordon (AIM: PMR), the independent institutional stockbroker and investment bank, today announces its preliminary results for the year ended 31 December 2016.

Key Points

  • Full year return to profit; consolidated profit after tax for the year of £1.1m (2015 loss of £16.7m)
  • Increase of 41% in corporate finance and other fee income to £18.0m (2015: £12.8m)
  • Increase of 22% in net commission and fee income to £28m (2015: £23m)
  • Assisted clients in raising over £0.7bn in the year.
  • Investment of £2m in new business technology enabled prime services platform, PrimeXtend Limited
  • Cash at 31 December 2016 of £9.4m (2015: £5.0m)
  • On-going cost control resulting in administrative costs down 7.9% to £24.4m (2015: £26.5m)
  • Proposed recommended offer for the Company as announced on 17 March 2017 by Ellsworthy Limited, which in turn is controlled by QInvest LLC and Atlas Merchant Capital LLC

Chief Executive Patric Johnson commented:

2016 was a year of consolidation and focus for the core business as we continued implementing our sector based corporate driven model accompanied by our unwavering commitment to quality in everything that we do. We have returned four successive quarters of profitability, made a significant strategic investment, re-established our US broker dealer and concentrated on ensuring we match our service expectations with our clients’ requirements.

 “The 2017 macro landscape continues to be challenging. That said, the year has started positively for the firm. The first quarter has seen us execute nine transactions including advising on two M&A mandates. Commission and trading income continues to perform in line with our expectations and the pipeline, as discussed in January, is progressing well. As such we remain confident for the year ahead.

“We are excited about the recent offer for the issued share capital of the firm as announced on Friday 17 March 2017, and the prospect of Atlas Merchant Capital joining our existing long-term supportive shareholder QInvest as part of Ellsworthy Limited.”

The full audited Report and Accounts for the year ended 31 December 2016 will, today, be made available on the Company’s website (www.panmure.com) and will be sent to shareholders in due course

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Panmure Gordon 
Patric Johnson, Chief Executive020 7886 2500
Buchanan
Bobby Morse/Stephanie Watson 020 7886 2500
panmure@buchanan.uk.com
Grant Thornton Corporate Finance (Nominated Adviser)
Philip Secrett/Salmaan Khawaja/Jen Clarke 020 7383 5100

CHAIRMAN’S STATEMENT

I am pleased to present my first statement since assuming the role of Chairman in May 2016.

In the ten months since my appointment I have had the chance to witness at first hand the quality of service that Panmure Gordon represents, the excellent staff that work for the Company and impressively, the good feedback from clients both institutional and corporate. Panmure Gordon has, deservedly, a well-respected brand, but at a time of great challenge and change needs to deploy renewed energy and innovation to succeed in one of the most competitive landscapes I have seen the City of London face in the last 35 years.

Panmure Gordon has progressed steadily since the appointment of Patric Johnson as Chief Executive in February 2016. The business has been re-focussed on a sector based corporate driven model, costs have been reduced accordingly and we have continued to benefit from the financial support of our major shareholder, Qinvest. Indeed the latter provided a financing facility of £5m in February 2016 of which £3m was drawn down in March 2016 and that has allowed us to invest in PrimeXtend, an exciting opportunity that I am glad to report is on track with its original plan.

2016 has been a challenging year, yet the Company raised over £0.7bn for our clients and I am glad to report that revenue earned as a result has helped bring the Company back into profit. Since the year end, costs have continued to be removed from the business and the strategic focus continues to be sharpened which allows us to look towards the future positively, whilst acknowledging the many challenges and uncertainties that remain.

The year end date of 31 December saw the departure of Anthony Cann after over nine years of excellent service as a Non-Executive Director to the Company and we are all thankful for his counsel and guidance over that time. Also, since the year end, Philip Tansey has retired after almost exactly six years as our Chief Financial Officer and we thank him for all his work over that time and wish him all the best in his future endeavours.

The announcement on 17 March 2017 regarding the proposed offer for the issued share capital of Panmure Gordon, by Ellsworthy Limited, a company owned and controlled by QInvest LLC and a subsidiary of a fund managed by Atlas Merchant Capital LLC, opens an exciting chapter for the Company, that subject to the court-sanctioned scheme being approved, will provide a stronger framework with better access to additional capital on which to continue to grow the business, enabling us to better  support our client needs, both corporate and institutional.

As such, I am confident that Panmure Gordon, with the support of its current long term investor, QInvest, and potentially the additional support of Atlas Merchant Capital, will continue to be well positioned to execute on its strategy for the future whilst remaining sufficiently able to respond to any challenges as and when they present themselves.

Andrew Adcock

Chairman

4 April 2017

 

 

 

CHIEF EXECUTIVE’S REVIEW

 

Macro review

UK equities returned 17% in local currency terms in 2016, their best year since 2010. A revival in commodity prices, an acceleration in global growth and an expectation of reflation and higher US interest rates pushed financials stocks forward during Q4 in particular. By contrast returns in US Dollar terms (-2.7%: 2016) were held back by the sharp devaluation in Sterling, particularly since the UK’s EU referendum.

The London equity market remained open for new business throughout the year barring China-related growth concerns in February and Brexit related worries during the summer. Over the course of 2016 the London market raised £25.9bn in IPO funds, up from £24.9bn in 2015.

Looking ahead into 2017, much hinges on the policy-induced reflation plans from the new US administration as well as the evolution of political events in Europe. The disruption of global systems from digitalisation and globalisation continues apace which should ensure over the near term that inflation and interest rates remain below their historic averages.

 

Overview

With a challenging macro-economic environment following the UK referendum and the US presidential elections, 2016 was a year of consolidation and focus for the core business as we continued implementing our sector based corporate driven model accompanied by our unwavering commitment to quality in everything that we do. We have returned four successive quarters of profitability, made a significant strategic investments and concentrated on ensuring we match our service expectations with our clients’ requirements.

It has been pleasing to see the steady progress made in our corporate driven approach whilst reinforcing our commitment to both corporate and institutional clients. All sections of the business have performed positively and it is noteworthy to report the increase of 22% of net income to £28m (2015: £23m) despite the reduction in headcount to 109 at year-end (2015: 122).

Net commission and trading income declined by 10% to £9.5m (2015: £10.5m). However, this was entirely on account of the closure of our Swiss representative office which contributed only one month of activity in 2016. On a standalone basis, UK net commission and trading income has increased by 1.1% to £9.4m (2015: £9.3m) which is an excellent achievement when set against the year-on-year declines in volume and commission in advance of the well-publicised changes in the regulatory landscape represented by MiFiD II.

Corporate finance and other income increased in 2016 by a solid 41% to £18.0m (2015: £12.8m) which reflects an equally impressive spread of engagements including five IPOs, twelve M&A transactions and a total of forty four fee generating deals and advisory engagements across all of our seven key business areas.

Costs have been trimmed to reflect the specialisation and focus around key business lines and, whilst there is still more that we can do, it is pleasing to report that administrative costs have declined by 7.9% to £24.4m (2015: £26.5m) over the year. Fixed employment costs, the major constituent of total administrative costs, have significantly declined over the course of 2016 reflecting the effective management of total headcount.

 

 

Dividend

The Board is not recommending the payment of a dividend (2015: nil per ordinary share).

 

Investment in PrimeXtend

On 21 September 2016 the Group committed to a strategic investment in a newly incorporated company, PrimeXtend Limited (“PrimeXtend”), a business at the convergence of risk management and technology focused on global execution and prime services. The Group has committed to an all-cash investment of £2m as part of a staged payment plan. Payments totalling £1.1m were made in 2016, in accordance with this plan. PrimeXtend will operate under an appointed representative agreement with Panmure Gordon (UK) Limited, and operate from our London offices.

The investment allows PrimeXtend to deploy an integrated global execution and prime services business operating alongside Panmure Gordon. PrimeXtend provides a full service, single entry point to global markets including multi-product execution and a full range of prime financing solutions across asset classes. The platform, which was built in response to the evolving financial market ecosystem, combines leading edge risk management practices and state-of-the-art automated trade processing systems and operational protocols to service international, mid-market institutional investors.

I am pleased to report that the set-up of PrimeXtend’s technology infrastructure is fully complete and that client uptake has progressed well. PrimeXtend is well on track to achieve the financial forecasts agreed at the time of the investment.

 

Overseas offices

On 29 January 2016 conduct by the Group of regulated business from the Nyon, Switzerland location ceased and the office was closed. A number of closure expenses were incurred as a result of this action resulting in a net loss impact of £0.2m on the results for 2016. Furthermore, our Singapore office, which introduced companies from that region that wished to access the London markets to our London corporate broking teams, was closed in May 2016 with a net loss impact of £0.1m on the results for 2016.

 

US Broker Dealer

2016 saw us re-establish our US presence, Panmure Gordon Securities Limited, a US FINRA registered broker dealer has been incorporated and  will further strengthen our commitment to service our corporate client base directly with US investors.

 

 QInvest

We are fortunate to have as a key shareholder, QInvest, who is supportive of our business, strategy and our management. Their granting of financing to enhance our financial strength and liquidity has allowed us to accelerate our plans for the near future.

 

Offer for the Company

On 17 March 2017 the Company and the Board of Directors announced the recommended acquisition of the Company by Ellsworthy Limited (“BidCo”) a private company limited by shares incorporated on 31 January 2017 for the purpose of implementing the acquisition. BidCo is a company owned and controlled by our supportive major shareholder QInvest and a third party investor, Atlas Merchant Capital LLC (“Atlas”). The acquisition is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act. Under the terms of the proposed acquisition, each shareholder will be entitled to receive £1.00 in cash for each share held and as such the Board agreed to recommend it. The acquisition will be conditional on, amongst other things, the approval by a majority of shareholders and the FCA.

 

2017 Outlook

2017 has started positively for the firm despite the continued challenges faced by all areas of the financial services industry. Volatility spikes and a continued decline in trading volumes across the market, coupled with the backdrop of United Kingdom’s exit from Europe will ensure that the coming two years will remain challenging. However I am pleased to report that we have started the year well and the first quarter has seen the business execute nine transactions including advising on two M&A mandates. Commission and trading income continues to perform in line with our expectations and the pipeline, as announced in January, is progressing well as we continue to win new mandates; as such we remain confident for the year ahead.

 

Patric Johnson

Chief Executive

4 April 2017

  

KEY PERFORMANCE INDICATORS

Financial

KPI

Objective

Performance

Trend

Corporate finance and other fee income

To add selectively high quality corporate clients to our list in such a way as to ensure that we can provide the highest quality service and which in turn will generate superior revenue opportunities.

2016: £18.02m

2015: £12.79m

2014: £20.70m

 

After the disruption caused by difficult markets in 2015 growth has been resumed in 2016.

Net commission and trading income

To maintain a steady level of commission and trading income.

2016: £9.50m

2015: £10.51m

2014: £9.44m

 

Despite difficult markets, 2016 saw a healthy increase on the prior year in the UK and the total overall decrease is entirely on account of the closure of our Swiss office.

Basic earnings/Profit (loss) per share  

To grow earnings per share for shareholders.

      2016: 8.25p

2015: (107.3)p

2014: 9.64p

 

Action taken in 2016 to address costs and the sector based strategy for revenue has returned positive earnings.

Profit /(Loss)

To increase profit from operations by increasing income while managing operating costs.

2016: £1.08m

2015: £(16.68m)

2014: £1.50m

 

A challenging year in 2015 which included an impairment  of goodwill of £13.2m, reversed the trend of the previous 3 years but profitability has been resumed.

 

Operational

KPI

Objective

Performance

Trend

Revenue per employee (£’000)

To increase the level of revenue per employee, whilst keeping a stable number of employees.

2016: 207

2015: 181

2014: 263

 

The difficult period of 2015 has been reversed by the encouraging results of 2016.

Ratio of employee compensation to turnover

To retain a high calibre and fairly rewarded team who generate increasing levels of revenue.  As the fee income grows this ratio should maintain a reducing trend.

2016: 56%

2015: 80%

2014: 59%

 

The ratio was impacted by the reduced revenue in 2015 though in 2016 we have seen a reversal back to an improving trend which it is hoped will continue in 2017.

Number of corporate clients

To grow our list of retained clients across a range of sectors in order to maximise retainer and transaction based income.

2016: 126

2015: 152

2014: 123

 

The client list increased further in 2015 with the acquisition of Charles Stanley Securities though, with a focus on quality rather than purely numbers in 2016, this number has been reduced in a managed manner.

 

Consolidated income statement

 For the year ended 31 December 2016

 

 

 

 

2016

 

2015

 

 

 

£‘000

 

£‘000

Continuing operations

 

 

 

 

 

Commission and trading income

 

 

10,461

 

11,687

Commission and trading expense

 

 

(999)

 

(1,180)

 

 

 

 

 

 

Net commission and trading income

 

 

9,462

 

10,507

 

 

 

 

 

 

Corporate finance and other fee income

 

 

18,017

 

12,788

Gain or Loss on corporate investments

 

 

569

 

(270)

 

 

 

 

 

 

Net commission and fee income

 

 

28,048

 

23,025

 

 

 

 

 

 

 

 

 

 

 

 

Administrative costs1

 

 

(24,447)

 

(26,493)

 

 

 

 

 

 

Redundancy, restructuring and other non-recurring charges1

 

 

(1,378)

 

(1,730)

 

 

 

 

 

 

Operating profit /(loss) before share-based payments and goodwill impairment

 

 

2,223

 

(5,198)

 

 

 

 

 

 

Share-based payments1

 

 

(642)

 

(470)

Goodwill impairment 1

 

 

 

(13,201)

 

 

 

 

 

 

Operating profit/(loss)

 

 

1,581

 

(18,869)

 

 

 

 

 

 

Financial income

 

 

 

1

Financial expense

 

 

(115)

 

(17)

 

 

 

 

 

 

Net financial expense

 

 

(115)

 

(16)

 

 

 

 

 

 

Profit/(loss) before tax from operations

 

 

1,466

 

(18,885)

 

 

 

 

 

 

Taxation

 

 

(383)

 

2,210

 

 

 

 

 

 

Profit/(loss) for the period

 

 

 

1,083

 

(16,675)

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

Equity holders of the Company

 

 

1,282

 

(16,675)

Non-controlling interests

 

 

(199)

 

Total

 

 

1,083

 

(16,675)

 

 

 

 

 

 

Basic earnings/(loss) per share

 

 

8.25p

 

(107.3)p

 

 

 

 

 

 

Diluted earnings/(loss) per share

 

 

7.75p

 

(107.3)p

 

1   Administrative expenses which total £26.4m (2014: £41.9m) have been presented separately here owing to their individual nature and size

Consolidated statement of comprehensive income & expense

For the year ended 31 December 2016

 

 

 

 

2016

 

2015

 

 

 

£‘000

 

£‘000

 

 

 

 

 

 

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

       the Company

 

 

1,282

 

(16,675)

Total comprehensive income/(loss) for the period

       attributable to the owners of the Company

 

 

1,282

 

(16,675)

The Group had no other comprehensive income for the period.

Consolidated statement of financial position 

 

As at 31 December 2016

 

 

 

2016

 

2015

 

 

£‘000

 

£‘000

Assets

 

 

 

 

 

 

 

 

 

Goodwill and other intangibles

 

2,423

 

2,012

Plant and equipment

 

1,535

 

1,913

Available for sale investments

 

100

 

100

Deferred tax asset

 

1,017

 

1,547

Other receivables

 

527

 

409

 

 

 

 

 

Total non-current assets

 

6,009

 

5,981

 

 

 

 

 

Securities held for trading

 

6,439

 

5,804

Trade and other receivables

 

12,931

 

20,239

Cash and cash equivalents

 

9,414

 

4,985

 

 

 

 

 

Total current assets

 

28,785

 

31,028

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Finance facilities

 

(3,000)

 

Trade payables

 

(4,556)

 

(14,115)

Tax and social security

 

(426)

 

(601)

Corporation tax liabilities

 

(81)

 

Other payables

 

(3,619)

 

(4,126)

Securities held for trading

 

(3,604)

 

(1,595)

 

 

 

 

 

Total current liabilities

 

(15,286)

 

(20,437)

 

 

 

 

 

Net current assets

 

13,499

 

10,591

 

 

 

 

 

Deferred tax liability

 

(253)

 

(338)

 

 

 

 

 

Total non-current liabilities

 

(253)

 

(338)

 

 

 

 

 

Net assets

 

18,849

 

16,234

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

Issued share capital

 

622

 

622

Merger reserve

 

21,810

 

21,810

Other reserve

 

(8,242)

 

(8,112)

Retained earnings

 

3,838

 

1,914

Equity attributable to equity holders of the Company

 

18,028

 

16,234

Non-controlling interests

 

821

 

 

 

 

 

 

Total equity

 

18,849

 

16,234

Approved by the board on 4 April 2016 and signed on its behalf by:

 

Patric Johnson

Chief Executive Officer

 

Consolidated statement of cash flow

 

 

 

Year ended

31 December 2016

 

Year ended

31 December 2015

 

 

£‘000

 

£‘000

Cash flows from operating activities

 

 

 

 

Profit /(Loss) after tax

 

1,083

 

(16,675)

Net financial expense

 

115

 

16

Depreciation and amortisation

 

438

 

421

Intangibles impairment and amortisation

 

398

 

13,404

Movement in securities held for trading

 

1,374

 

(976)

(Increase) in net amounts owed by market      counterparties

 

(494)

 

(449)

Decrease / (increase) in trade and other receivables

 

(862)

 

(119)

(Decrease) / increase in trade payables and provisions

 

(1,303)

 

1,686

IFRS 2 share-based payment charges

 

642

 

470

Income tax expense

 

383

 

(2,210)

Net cash from / (used in) operating activities

 

1,774

 

(4,432)

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Financial income received

 

1

 

1

Acquisition of plant and equipment

 

(105)

 

(288)

Acquisition of intangible assets

 

 

(1,877)

Acquisition of available for sale investments

 

 

(100)

Net cash used in investing activities

 

(104)

 

(2,264)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Purchase of own shares for EBT

 

(130)

 

(326)

Funding from major shareholder

 

3,000

 

Financial expense

 

(115)

 

(17)

Dividend paid

 

 

(366)

Repayment of EBT loan

 

4

 

4

Net cash from financing activities

 

2,759

 

(705)

 

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

 

4,429

 

(7,401)

Cash and cash equivalents at 1 January

 

4,985

 

12,386

Cash and cash equivalents at 31 December

 

9,414

 

4,985

 

 

 

 

 

Consolidated statement of changes in equity for the year ended 31 December 2016

 

£‘000

Issued share capital

Share premium

Merger reserve

Other reserve

Treasury shares

Retained earnings

Non-controlling interest

Total

equity

 

 

 

 

 

 

 

 

 

At 1 January 2016

622

21,810

(8,112)

1,914

16,234

 

 

 

 

 

 

 

 

 

Total comprehensive income

   for the period

 

 

 

 

 

 

 

 

Profit / (loss) for the year

1,282

(199)

1,083

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other items recorded

   directly in equity

 

 

 

 

 

 

Dividend payment

Issue of shares (PrimeXtend)

 

 

 

 

1,020

1,020

Share-based payments

642

642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of own shares for

   EBT

(134)

(134)

 

 

 

 

 

 

 

 

 

Decrease in shares held by

   EBT

4

4

At 31 December 2016

622

21,810

(8,242)

 

3,838

821

18,849

Consolidated statement of changes in equity for the year ended 31 December 2015

 

£‘000

Issued share capital

Share premium

Merger reserve

Other reserve

Treasury shares

Retained earnings

Non-controlling interest

Total

equity

 

 

 

 

 

 

 

 

 

At 1 January 2015

622

21,810

(7,790)

18,485

33,127

 

 

 

 

 

 

 

 

 

Total comprehensive loss   for the period

 

 

 

 

 

 

 

 

Loss for the year

 

(16,675)

(16,675)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other items recorded    directly in equity

Dividend payment

(366)

(366)

Share-based payments

470

470

 

 

 

 

 

 

 

 

 

Purchase of own shares for    EBT

(326)

(326)

 

 

 

 

 

 

 

 

 

Decrease in shares held by    EBT

4

4

At 31 December 2015

622

21,810

(8,112)

1,914

16,234

 

Basis of preparation

The financial information set out in the financial statements contained within this announcement does not constitute the groups statutory accounts for the years ended 31 December 2016 and 2015. Statutory accounts for 2015 have been delivered to the Registrar of Companies, and those for 2016 will be delivered in due course. The auditor has reported on both sets of accounts; their reports were (i) unqualified, (ii) did not include any reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

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 the segmental table below, the principal operating segments have been identified as the Institutional Equities and the Corporate Broking divisions supported by a central group managing the administrative functions of the Group. In previous years, this table has been presented on a geographic basis. However, since the closure of the Swiss office in January 2016, this is no longer meaningful. The results of the Swiss office are included with those of the Institutional Equities’ segment.

Segmental analysis for the year ended 31 December 2016 and reconciliation to the statutory income statement is set out below:

 

Institutional Equities

 

Corporate Broking

 

Central

Total

 

2016

 

2015

 

2016

 

2015

 

2016

 

2015

2016

 

2015

 

£‘000

 

£‘000

 

£‘000

 

£‘000

 

£‘000

 

£‘000

£‘000

 

£‘000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net commission and trading   income

9,462

 

10,508

 

 

 

 

 

 

 

 

9,462

 

10,508

Corporate finance fee income

 

 

 

 

18,586

 

12,517

 

 

 

 

18,586

 

12,517

Total net revenue by segment

9,462

 

10,508

 

18,586

 

12,518

 

 

 

 

28,048

 

23,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Directly attributable administrative expenses

(9,558)

 

(10,954)

 

(7,874)

 

(8,511)

 

 

 

 

(17,432)

 

(19,465)

Central administered expenses

 

 

 

 

 

 

 

 

(7,015)

 

(7,028)

(7,015)

 

(7,028)

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

(13,201)

 

 

(13,201)

Share based payments

 

 

 

 

 

 

 

 

(642)

 

(470)

(642)

 

(470)

Redundancy and restructuring charges

 

 

 

 

 

 

 

 

(1,378)

 

(1,730)

(1,378)

 

(1,730)

 

Total costs

(9,558)

 

(10,954)

 

(7,874)

 

(8,511)

 

(9,035)

 

(22,429)

(26,467)

 

(41,894)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment profit/(loss)

(96)

 

(446)

 

10,712

 

4,007

 

(9,035)

 

(22,429)

1,581

 

(18,869)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net financial income/(expense)

 

 

 

 

(115)

 

(16)

(115)

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax

(96)

 

(446)

 

10,712

 

4,006

 

(9,150)

 

(22,445)

1,466

 

(18,885)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

 

(383)

 

2,210

(383)

 

2,210

Profit/(loss) after tax

(96)

 

(446)

 

10,712

 

4,006

 

(9,533)

 

(20,235)

1,083

 

(16,675)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of the Company

 

 

 

 

 

 

 

 

 

 

 

1,282

 

(16,675)

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

(199)

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

1,083

 

(16,675)

 

All revenue is from external customers.  There are no regular major customers that account for more than 10% of revenue.   

PrimeXtend

The contribution of PrimeXtend’s business for the period ended December 2016 has been included within the Central segment. As the business develops in 2017 it will become a more significant contributor to the Group and the intention is that it will be run as a separate operating segment and disclosed as such in the financial statements for the period ended December 2017. 

Switzerland

The business previously conducted by the representative office of Quaker Securities related entirely to institutional equities and has been incorporated into the Institutional Equities principal operating segment. Switzerland, which was a separate geographic segment in 2015, recorded the following results in the year ended December 2016 (£’000): Net revenue of £78, directly attributable costs of £292, tax of £6 resulting in a post-tax loss for the year of £220. For 2015 in £000 the net revenue was £1,264, direct costs were £1,314, tax was £24 resulting in a post-tax loss for the year of £74. 

 

 

UK

 

 

Other1

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

2015

 

2016

 

2015

 

2016

 

2015

 

£‘000

 

£‘000

 

£‘000

 

£‘000

 

£‘000

 

£‘000

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets (inc. goodwill)

6,009

 

5,981

 

 

 

6,009

 

5,981

Current assets

28,875

 

31,028

 

 

 

28,875

 

31,028

Current liabilities

(16,064)

 

(20,438)

 

 

 

(16,064)

 

(20,438)

Non-current liabilities

 

(338)

 

 

 

 

(338)

Capital expenditure

(64)

 

(288)

 

 

 

(64)

 

(288)

                             
  • The Swiss business operated as a representative office of the UK business until 31 January 2016 when it ceased regulated business in Switzerland.

3   Staff costs

Group

Year ended

31 December 2016

 

Year ended

31 December 2015

 

 

 

Restated

 

£‘000

 

£‘000

Staff costs including Directors’ emoluments

 

 

 

Wages and salaries

12,994

 

14,447

Social security costs

1,638

 

1,685

Pensions (defined contribution scheme)

1,049

 

1,077

Total

15,681

 

17,209

The 2015 staff costs comparative has been restated to correct an error in the prior year reported balance.

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 2016 was £0.8m (2015: £1.1m).

Actual number of persons, including Directors, employed by the Group as at 31 December 2016:

 

Group total 2016

 

UK 2016

 

Swiss 2016

 

Group total 2015

 

 

 

 

 

 

 

 

Institutional Equities

41

 

41

 

 

61

Corporate Broking

34

 

34

 

 

37

Other

34

 

34

 

 

24

Total

109

 

109

 

 

122

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

 

Group total 2016

 

UK 2016*

 

Swiss 2016

 

Group total 2015

 

 

 

 

 

 

 

 

Institutional Equities

46

 

45

 

1

 

64

Corporate Broking

35

 

35

 

 

38

Other

30

 

29

 

1

 

28

Total

111

 

109

 

2

 

130

 

* The UK total included 1 headcount in Singapore until 31 May 2016

Directors’ emoluments

Emoluments paid to Directors were as follows:

 

 

Emoluments

Pension

Share option gain

Emoluments

Pension

Share option gain

 

2016

2016

2016

2015

2015

2015

 

£’000

£’000

£’000

£’000

£’000

£’000

 

 

 

 

 

 

 

Aggregate

1,239

39

5

1,075

42

11

Highest paid      Director

414

22

 

353

13

 

 

Three Directors accrued benefits during the year under the Group’s defined contribution pension scheme.

The Directors are reimbursed all reasonable expenses incurred solely in relation to their duties as a Director.

4     Income tax expense

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

 

 

Year ended

31 December

2016

 

Year ended

31 December

2015

 

£‘000

 

£‘000

Analysis of tax (charge) / credit in period:

 

 

 

      UK corporation tax at 20.00% (2015: 20.25%)

 

 

 

      Current year tax (charge) / credit

(75)

 

      Prior year adjustment

137

 

30

      Other prior year adjustments

 

(28)

 

62

 

2

Deferred tax

 

 

 

      Prior year adjustments to deferred tax (charge) / credit

(383)

 

338

      Current year deferred tax (charge) / credit

(62)

 

1,870

 

(445)

 

2,208

 

 

 

 

Tax (charge) / credit on profits on ordinary activities

(383)

 

2,210

 

 

 

 

Effective tax rate charge

(26.16)%

 

(11.7)%

 

 

 

 

Factors affecting tax charge:

 

 

 

 

 

 

 

Profit / (Loss) on ordinary activities after tax

1,083

 

(16,675)

 

 

 

 

Tax on operations

383

 

(2,210)

 

 

 

 

Profit / (Loss) on ordinary activities before tax

1,466

 

(18,885)

 

 

 

 

Profit / (Loss) on ordinary activities multiplied

 

 

 

      by rate of UK corporation tax at 20.00% (2015: 20.25%)

(293)

 

3,824

 

 

 

 

Effects of:

 

 

 

      Expenses not deductible for tax purposes

24

 

(24)

     Impairment of consolidated goodwill not deductible for  tax purposes

 

(2,673)

      Differences relating to share schemes

(108)

 

(105)

      Effects of foreign tax

 

(22)

      Change in corporation tax rate

29

 

(216)

      Deemed goodwill on amortisation

 

      Impairment of consolidated goodwill-write off of deferred tax liability

 

1,058

     Previously unrecognised deferred tax asset

211

 

      Adjustment to tax charge in respect of previous periods

(246)

 

368

Total tax (charge) / credit on profits / (losses) on ordinary activities

(383)

 

2,210

 

The UK corporation tax rate reduced from 20% to 19% on 1 April 2017. It has also been announced that the corporation tax rate will reduce to 17% from April 2019. Deferred tax has been recognised at the blended rate of 18%.

5   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

 

 

 

2016

 

2015

 

 

 

£‘000

 

£‘000

 

 

 

 

 

 

Profit / (Loss) on ordinary activities after taxation attributable to the owners of the Company

 

1,282

 

(16,675)

 

 

 

 

 

 

 

Weighted average number of shares in issue

 

15,545,473

 

15,545,473

 

Fully diluted weighted average number of shares in issue

 

16,528,370

 

15,682,490

 

 

 

 

 

 

 

Basic earnings / (loss) per share (based on profit/(loss) on ordinary activities after taxation)

 

8.25p

 

(107.3)p

 

 

 

 

 

 

 

Diluted earnings/(loss) per share (based on profit/(loss) on ordinary activities after taxation)

 

                 7.75p

 

                 (107.3)p

 

             

6          Acquisition of PrimeXtend

 On 21 September 2016 the Group committed to a strategic investment in a newly incorporated company, PrimeXtend Limited (“PrimeXtend”), a business focussed on the evolution of agency broker services. The Group will make an all-cash investment of up to a maximum of £2m over a period of ten months, subject to the satisfaction of certain performance milestones, for an initial 49% shareholding with the balance retained by Xtend Group Limited. PrimeXtend will operate under an appointed representative agreement with Panmure Gordon (UK) Limited. As at 31 December 2016, consideration of £1.144m had been paid, and £0.856m remained payable subject to the satisfaction of those conditions. A further £0.623m was paid subsequent to year-end.

The Group results consolidate the results of PrimeXtend, reflecting the control, rights and influence the Group holds.   

PrimeXtend is a start-up and the fair value of assets and liabilities at the time of acquisition were Nil. Nor were any intangible assets acquired on acquisition. The goodwill arising on acquisition is £1.020m which equates to the non-controlling interest established on acquisition. The goodwill essentially represents intangibles such as know-how and client contacts which are not capable of being recognised under IAS 38.

PrimeXtend made a loss in the period of £0.390m of which the group’s share was £0.191m. Given PrimeXtend is a start-up, the result of PrimeXtend had it been acquired on 1 January 2016 is not meaningful. Transaction costs of £0.1m have been included in operating expenses for the year ended 31 December 2016.

The investment value represents the goodwill created on acquisition of the investment by the Group in 2016 including future committed and contingent remaining tranches of cash injections.