Notice of Final Results

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Notice of Final Results

Panmure Gordon & Co. plc

(“Panmure Gordon” or the “Company”)

 Notice of Final Results

Panmure Gordon announces that, further to the Company’s announcement on 9 January 2017, full financial statements for the year ended 2016 are now expected to be notified on 4 April 2017.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code applies must be made by no later than 3:30 p.m. (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3:30 p.m. (London time) on the 10th Business Day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3:30 p.m. (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3 of the Code.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the Code). Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel’s website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Enquiries 
Panmure Gordon020 7886 2500
Patric Johnson, Chief Executive Officer
Buchanan (Financial PR)020 7466 5000
Bobby Morse/Stephanie Watson panmure@buchanan.uk.com
Grant Thornton Corporate Finance (Nominated Adviser)020 7383 5100
Philip Secrett/Salmaan Khawaja/Jamie Barklem

London

Panmure Gordon & Co
One New Change
(Entrance on Watling Street)
London
EC4M 9AF
UK
+44 (0)20 7886 2500

Leeds

Panmure Gordon & Co
Park House,
Park Square West
Leeds
LS1 2PW
UK
+44 (0)113 357 1150

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Panmure Gordon & Co. Plc – Final Results

Panmure Gordon & Co. plc

(“Panmure Gordon”, the “Group” or the “Company”)

Preliminary results for the year ended 31 December 2015

Panmure Gordon & Co. plc, a leading independent institutional stockbroker and investment bank, today announces preliminary results for the year ended 31 December 2015.

 

Key Points

  • As previously advised, the loss after tax from normal operations for the year is £(4.1m) (2014 profit of £2.0m)
  • The operational loss total of £(4.1)m comprises the total statutory loss of £(16.7m) less the impact of goodwill impairment of £(13.2m) and the write-back of its associated accumulated deferred tax credit of £1.1m and, share based payments charge of £(0.5m)
  • International accounting standard IAS36 review of the carrying value of goodwill resulted in a non-cash impairment charge of £13.2m (2014: £nil) and an accompanying reversal of historic accrued deferred tax liabilities of £1.1m (2014: nil)
  • Revenue from corporate finance and other fee income down 38% to £12.8m (2014: £20.7m)
  • 11.3% increase in net commission and trading income to £10.5m (2014: £9.4m)
  • Assisted clients in raising more than £500m in the year
  • Successful acquisition and integration of Charles Stanley Securities
  • Client numbers at an all-time high of 152 at 31 December 2015 (2014: 123)
  • Appointed new Chief Executive, Patric Johnson in February 2016
  • Cash at 31 December 2015 was £5.0m (2014: £12.4m)
  • £5.0m financing facility made available by QInvest in February 2016

 

Chief Executive Patric Johnson commented:

“2015 was a disappointing year with regards to our primary markets activities. However, our institutional securities business performed well, we successfully completed the acquisition of Charles Stanley Securities in July 2015, increased our corporate client base to 152 from 123 and we remodelled the business with our corporate-led, sector-driven approach and this strategy is already yielding results. We took the decision to write off the outstanding historic accounting goodwill of £13.2m on the balance sheet, which dates back to 2005, and start 2016 with a clean slate. This results in a statutory loss of £16.7m and a clean and transparent balance sheet going forward. I should make it clear that the relevant impairment charge of £13.2m is non-cash accounting item and has no impact on regulatory capital or on the ongoing operations of the business.

2016 has started positively: In the first three months of the year we have made operational efficiencies and executed 14 deals, and will record a profit. Despite this, we are under no illusion as to the potency of the dangers that lie ahead of us this year and the external factors that will weigh heavily on the fund raising opportunities in our market. Encouragingly, we have an extremely talented team of people and a very supportive shareholder in QInvest – an excellent platform on which to build for the future.”

Panmure Gordon 
Ed Warner, Chairman020 7886 2500
Patric Johnson, Chief Executive020 7886 2500
Buchanan
Mark Edwards/Helen Chan/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

2015 was a challenging year in financial markets. Extreme volatility, in large part caused by concerns about Chinese economic growth and attendant collapses in commodity markets, severely constrained the equity capital markets. While it gives the Board no pleasure to report a loss for Panmure Gordon for the year, this should be viewed against this backdrop of constraints to primary equity issuance rather than as a reflection of the underlying strengths of the Company.

In July 2015 the Company completed the acquisition of Charles Stanley Securities, an institutional broking and corporate finance business with highly complementary operations to the core Panmure Gordon activities. We are pleased to welcome the staff and clients of Charles Stanley Securities and believe that the enhanced client list of the enlarged firm provides a solid foundation for future growth.

Secondary market revenues, comprising brokerage commissions and market making profits, held steady year-on-year, although there was a change in the revenue mix. Commission rates have been under steady downward pressure for many years, and 2015 was no exception, encouraged in part by regulatory change. This was reflected in our own commission revenues. However, this was offset by a rise in trading profits, a function of management and other changes in recent times.

The Company’s primary market revenues declined year-on-year, reflecting the difficult market environment. Nevertheless, Panmure Gordon still raised over £500m in equity finance for our clients, underlining the Company’s continuing reputation and capabilities. Our corporate client list has grown to 152, boosted by the Charles Stanley Securities acquisition, and providing a firm foundation of retainer income and the prospect of primary revenues in years to come.

Since the year end, management has taken action to ensure that the core Panmure Gordon institutional and corporate business is fit for the continuing challenging market conditions. Costs have been removed from these operations and management responsibilities realigned. In addition, the Company has withdrawn from non-core activities, including the closure of the loss-making office in Nyon, Switzerland.

Also in 2016, Phillip Wale stepped down and was replaced as Chief Executive by Patric Johnson, who had been promoted to the Board in March 2015. Phillip leaves Panmure Gordon with the Board’s very best wishes, having been instrumental through his leadership in reshaping the business over the past four years.

Patric’s appointment in February was accompanied by the securing of a £5m funding facility from our largest shareholder, QInvest. This facility underlines QInvest’s continuing commitment to Panmure Gordon and will provide management with increased flexibility in pursuing their growth plans in the coming years.

I also am pleased to welcome Steven Baldwin who was appointed as a non-executive director on 1 February 2016. Steve brings a wealth of financial services experience with him and we are pleased to have him on board.

Finally, I will be retiring as Chairman at the Company’s Annual General Meeting in May. I leave a business well placed to capitalise on its long heritage in the UK stock market and its enduring reputation for integrity in the conduct of business for its clients.

Ed Warner, OBE

Chairman

 

30 March 2016

Chief Executive’s review

Macro review

UK equity valuations remained subdued during 2015 and into the first part of 2016. Earnings growth failed to materialise for the fourth consecutive year and an overweight commodities sector weighed on headline UK indices. The expected tailwind to global growth from lower energy costs has been uneven and sporadic.

 

Comparing 2015 against 2014, the UK main market and AIM raised in 2015 a combined total in IPOs of £8.0bn versus £12.0bn in 2014.

Overview

2015 was a disappointing year with regards to our primary markets activities. However, our institutional securities business performed well with the continued success of our distribution & trading activities. We successfully completed the acquisition of Charles Stanley Securities in July 2015 and increased our corporate client base to152 from 123.

The Group experienced a number of pressures and as a result has entered into a post-tax operating loss from operations before the impact of goodwill impairment of £13.2m, the associated write-back of deferred tax liability of £1.1m and share based payments charge of £0.5m led to a post-tax loss from normal operations of £(4.1)m (equivalent for 2014: profit of £2.0m). This loss was due to a reduction in Corporate finance and other fee income by £7.9m to £12.8m. This decline in corporate revenue was driven by a combination of smaller deal size and lower corporate activity. Additionally, administrative costs, relating primarily to the Charles Stanley Securities acquisition, increased by £1.0m to £26.5m. Conversely, the institutional securities side of the business saw an increase in net commission and trading income of £1.1m to £10.5m showing a year-on-year growth  of 11.3%.  This increase is consistent with our longer term strategy to prepare the business for the incoming regulatory changes represented by MiFID II and a rigorous focus on servicing our institutional client base with high value and substantive research, access to capital and the provision of excellent trading and sales capabilities.

 

We have remodelled the business with our corporate-led, sector-driven approach with teams of sector experts to support clients and  this strategy is already yielding results with the No 1 position by number of clients in Healthcare (ARL Corporate Advisers Ranging Guide Feb 2016), the No1 slot in Consumer goods and 2nd overall position in the number of AIM clients, up from 3rd in 2014.

 

Key Transactions

Panmure Gordon helped to raise over £500m for corporate clients in over 20 separate transactions throughout the course of the year. Significant corporate financing deals won in 2015 include; the £233m rights issue for RPC Group; a secondary placing on behalf of GLI Finance, the IPO of Gear4Music, the York based musical equipment retailer; a secondary placing for Allergy Therapeutics and, the IPO of Orchard Funding Group.

The new clients obtained from the acquisition of Charles Stanley Securities and the additional expertise obtained provides a good platform from which to move forward in 2016. Our focus on ensuring that the level of service and advice we provide to our client base continues to be of the highest quality, reflecting the values of Panmure Gordon, should continue to generate opportunities for growth.

Dividend

The Board is not recommending the payment of a dividend (2014: 2.5p per ordinary share).

Goodwill

Management has to make a number of subjective assumptions in respect of goodwill and this year has reflected on the recent losses incurred, the extreme market volatilities being experienced and the appropriateness of the interest rate used to discount the future expected cash flows of the business which it has increased significantly and, as a result, an impairment charge of £13.2m has been taken through the income statement for the year ended 31 December 2015. Whilst the resulting number is significant it is important to note that this has no effect on the day-to-day business but the cleaning up of an historic 2005 pre-financial crisis era accounting entry that was generated by the acquisition of Panmure Gordon (UK) Limited by the Group. This has no impact on cash or the levels of regulatory capital which both remain comfortable.

QInvest

Panmure Gordon enjoys an excellent relationship with its major shareholder, QInvest, and in February 2016 agreed to enter into a £5m financing arrangement that will further assist growth plans for the future whilst providing further liquidity for ongoing business.

2016 Outlook

2016 will benefit from the operational efficiencies made including the closure of our office in Nyon, Switzerland, effective January 2016, and the reduction in overall headcount numbers from a peak of 137 in July 2015 to approximately 100 at the current date. Right-sizing the business is crucial to create a solid platform for growth and we have had to make some tough decisions in our ongoing effort to make this right. However, in order to remain a client centric business, we will continue to invest in individuals and teams that reflect the values of the Company and drive the business forward. We have concentrated our resources around key specialist sector teams and we have continued to move the revenue model to better reflect the future regulatory environment. We will also look to expand our distribution capabilities, particularly in the US.

We are fortunate to have as a key shareholder, QInvest, who is supportive of our business and strategy. Their granting of financing to enhance our financial strength and liquidity will allow us to accelerate our plans for the near future. We look forward to exploring further opportunities for working together.

The start to 2016 has proved to be extremely challenging in all areas of the financial services industry. We have seen volatility spike and a continued decline in trading volumes, all within a macro backdrop of uncertainty regarding Europe and the United Kingdom’s continued participation in the EU as well as the US elections and China’s economic slowdown.  I am pleased to report, however, that we have started the year profitably with 14 transactions by the end of March 2016, compared with six transactions in the first Quarter of 2015, and we continue to see modest, though steady, growth in our secondary business.

Phillip Wale, who served as Chief Executive from 2012 left the business in February 2016. Phillip’s direction and leadership allowed us to move with the changing environment and he was instrumental in defining the blueprint of the business going forward. I want to take this opportunity to express our gratitude for his valuable contribution over the past four years.

2015 saw a number of changes culemating in

Finally, although he is with us until the AGM in May, I would like to take this opportunity to thank Ed Warner for his efforts and dedication to the firm over the past seven years, six as Non-Executive Chairman.  His presence of mind, advice and general guidance and oversight for the board will be missed by both the executive team and non-executives directors. His contribution has been greatly appreciated, and we wish him all the best for the future.

 

Patric Johnson

Chief Executive

30 March 2016

 

Key performance indicators

 

Financial

KPI Objective Performance Trend
Corporate finance and other fee income To add high quality corporate clients to our list which will in turn generate retainer and fee income.

2015: £12.79m

2014: £20.70m

2013: £18.10m

 

Significant growth over the 3 years 2012-2014 was disrupted by difficult markets in 2015.
Net commission and trading income To maintain a steady level of commission and trading income.

2015: £10.51m

2014: £9.44m

2013: £9.80m

 

Despite difficult markets, 2015 saw a healthy increase on the prior year as a result of better management of resources.
Basic earnings/(loss) per share To grow earnings per share for shareholders.

      2015: (107.3)p

2014: 9.64p

2013: 5.36p

 

The action taken on Goodwill combined with the impact that the difficult markets of 2015 had have resulted in losses though with action on costs and attention to revenue opportunities this is being addressed in 2016
(Loss)  / Profit To increase profit from operations by increasing income while managing operating costs.

2015: £(16.68m)

2014: £1.50m

2013: £0.83m

 

A challenging year reversed the trend of the recent 3 years.

 

Operational

KPI Objective Performance Trend
Revenue per employee (£’000) To increase the level of revenue per employee, whilst keeping a stable number of employees.

2015: 181

2014: 263

2013: 237

 

The recent positive trend has been impacted by the difficult markets of 2015. The early signs of 2016 are however encouraging.
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.

2015: 80%

2014: 59%

2013: 62%

 

With high fixed costs the ratio that has been decreasing over the recent years was impacted by the reduced revenue of 2015. Cost reductions in 2016 will however help to reverse this setback.
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.

2015: 152

2014: 123

2013: 130

 

The client list has grown since 2012 and increased further in 2015 with the acquisition of Charles Stanley Securities.

 

Consolidated income statement

 

For the year ended 31 December 2015

 

Notes   2015 2014
£‘000   £‘000
Continuing operations
Commission and trading income   11,687   10,916
Commission and trading expense   (1,180)   (1,474)
   
Net commission and trading income   10,507   9,442
   
Corporate finance and other fee income   12,788   20,704
Loss on corporate investments 3 (270)   (755)
   
Net commission and fee income   23,025   29,391
   
Net loss on available for sale investments     (7)
   
Administrative costs1   (26,493)   (25,507)
   
Redundancy, restructuring and other non-recurring charges1 4 (1,730)   (1,216)
   
Operating (loss)/profit before share-based payments and goodwill impairment   (5,198)   2,661
     
Share-based payments1 5 (470)   (500)
Goodwill impairment 12 (13,201)  
     
Operating (loss)/profit   (18,869)   2,161
     
Financial income 7 1   1
Financial expense 7 (17)   (17)
   
Net financial expense 7 (16)   (16)
     
(loss)/profit before tax from operations   (18,885)   2,145
   
Taxation 9 2,210   (646)
   

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

       the Company

  (16,675)   1,499
   
   
Basic (loss)/earnings per share 11 (107.3)p   9.64p
   
Diluted (loss)/earnings per share 11 (106.3)p   9.39p

 

1   Administrative expenses which total £41.9m (2014: £27.2m) have been presented separately here owing to their individual nature and size

Consolidated statement of comprehensive income & expense

For the year ended 31 December 2015

 

  Notes 2015 2014
      £‘000   £‘000

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

       the Company

    (16,675)   1,499

Total comprehensive (loss)/income for the period

       attributable to the owners of the Company

    (16,675)   1,499

 

The notes on pages 32 to 57 form part of these financial statements.

 

Consolidated statement of financial position

As at 31 December 2015

  Notes 2015 2014
    £‘000   £‘000
Assets
Intangibles 12 2,012 13,201
Plant and equipment 13 1,913 2,060
Available for sale investments 14 100
Deferred tax asset 17 1,547 396
Other receivables 15 409 645
 
Total non-current assets   5,981   16,302
Securities held for trading   5,804 4,507
Trade and other receivables 15 20,239 20,808
Corporation tax debtor  
Cash and cash equivalents   4,985 12,386
 
Total current assets   31,028   37,701
 
Current liabilities  
Trade payables 16 (14,115) (14,804)
Tax and social security   (601) (857)
Corporation tax liabilities   (194)
Other payables 16 (4,126) (2,688)
Securities held for trading   (1,595) (1,275)
 
Total current liabilities   (20,437)   (19,818)
 
Net current assets   10,591   17,883
Deferred tax liability 17 (338) (1,058)
 
Total non-current liabilities   (338)   (1,058)
 
Net assets   16,234   33,127
 
Equity  
 
Issued share capital 22 622 622
Merger reserve 23 21,810 21,810
Other reserve 23 (8,112) (7,790)
Retained earnings 1,914 18,485
         
Total equity   16,234   33,127

 

Approved by the board on 30 March 2016 and signed on its behalf by:

Philip Tansey

Chief Financial Officer

Consolidated statement of cash flow

 

Year ended

31 December 2015

Year ended

31 December 2014

    £‘000   £‘000
Cash flows from operating activities
(Loss) / Profit after tax (16,675) 1,499
Net financial expense 16 16
Depreciation and amortisation 421 353
Intangibles impairment and amortisation 13,404
Net loss on available for sale investments 7
Movement in securities held for trading (976) 3,099
(Increase)/decrease in net amounts owed by market             counterparties (449) 3,496
(Increase) in trade and other receivables (119) (346)
Increase/(decrease) in trade payables and provisions 1,686 (2,176)
IFRS 2 share-based payment charges 470 500
Income tax expense (2,210) 646
Net cash from operating activities   (4,432) (7,094)
Cash flows from investing activities
Financial income received 1 1
Acquisition of plant and equipment (288) (402)
Acquisition of Intangible assets (1,877)
Acquisition of available for sale investments (100)
Proceeds from disposal of investments 1
Net cash from investing activities   (2,264) (400)
Cash flows from financing activities
Purchase of own shares for EBT (326) (372)
Financial expense (17) (17)
Dividend paid (366)
Repayment of EBT loan 4 23
Net cash from financing activities   (705) (366)
Net (decrease)/increase in cash and cash equivalents (7,401) 6,328
Cash and cash equivalents at 1 January 12,386 6,058
Cash and cash equivalents at 31 December   4,985 12,386

 

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

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 capital reduction
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

Consolidated statement of changes in equity for the year ended 31 December 2014

£‘000 Issued share capital Share premium Merger reserve Other reserve Treasury shares Retained earnings

Total

equity

At 1 January 2014 6,187 36,740 21,810 (7,441) (25,819) 31,477
 
Total comprehensive income    for the period              
Profit for the year 1,499 1,499
 
Other items recorded    directly in equity
Share capital reduction (5,565) (36,740) 42,305
Share-based payments 500 500
Purchase of own shares for    EBT (372) (372)
Decrease in shares held by    EBT 23 23
At 31 December 2014 622 21,810 (7,790) 18,485

33,127

 

 

 

  • 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 results of the Swiss office appear in the ‘Other’ column. In January 2016 a decision was taken to cease regulated activity from the Swiss office and it has subsequently been closed.

 

Segmental analysis for the year ended 31 December 2015 and reconciliation to the statutory income statement is set out below:

 

  UK   Other   Total
                       
  2015   2014   2015   2014   2015   2014
  £‘000   £‘000   £‘000   £‘000   £‘000   £‘000
Net commission and trading   income 9,280 8,061 1,227 1,381 10,507 9,442
Corporate finance fee income 11,896 20,147 37 38 11,933 20,185

Loss on corporate

investments

(270) (755) (270) (755)
Wealth management and      other income 855 519 855 519
Net loss on AFS      investments (7) (7)
Foreign exchange (loss)/gain 73 (106) (2) (6) 71 (112)
On-going administration costs (38,453) (24,036) (1,312) (1,359) (39,765) (25,395)
Segmental operating profit/      (loss) (16,619)   3,823   (50)   54   (16,669)   3,877
                 
Redundancy and restructuring      charges (1,730) (1,216) (1,730) (1,216)
Share-based payment      charges (470) (500) (470) (500)
Operating profit/(loss) (18,819)   2,107   (50)   54   (18,869)   2,161
                 
Net financial income/(expense) (16) (16) (16) (16)
                 
Profit/(loss) before tax (18,835)   2,091   (50)   54   (18,885)   2,145
                 
Income tax on continuing      operations 2,234 (631) (24) (15) 2,210 (646)
                 
Profit/(loss) for period    attributable to the owners      of the Company (16,601)   1,460   (74)   39   (16,675)   1,499

 

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

 

 

 

 

 

 

UK

 

 

 

 

 

Other1

 

 

 

 

 

Total

                       
  2015   2014   2015   2014   2015   2014
  £‘000   £‘000   £‘000   £‘000   £‘000   £‘000
     
Non-current assets (inc. goodwill) 5,981 16,302 5,981 16,302
Current assets 31,028 37,701 31,028 37,701
Current liabilities (20,438) (19,818) (20,438) (19,818)
Non-current liabilities (338) (1,058) (338) (1,058)
Capital expenditure (288) (402) (288) (402)
  • The Swiss business operates as a representative office of the UK business and therefore shares assets with the UK business.

 

Country-by Country Reporting

 

The Capital Requirements Regulations 2013 came into effect on 1 January 2014, and have been transposed into UK law to impose certain reporting obligations on institutions, defined as credit institutions and investment firms, within the United Kingdom and within the scope of EU Capital Requirements Directive IV (CRD IV).

Disclosure requirements under article 89 in the Capital Requirements Directive comprise details on the registered office, nature of activities, turnover, profit or loss before tax, tax paid, public subsidies received and the average number of employees of the firm on a country by country basis.  This is known as Country-by Country Reporting (“CBCR”).

The information contained in this disclosure is based on the scope of consolidation in the financial statements and reflects the data as at the reporting date 31 December 2015.

The table below shows that the vast majority of Group losses or profits are generated in the UK and therefore, a resulting higher amount of corporation tax is incurred in the UK. The Group had a calculated global tax credit of £2.2m (2014 charge: £0.7m). Due to prior and current years’ trade losses and double taxation relief effectively no tax payment was required. Panmure Gordon & Co plc. paid in total £23,000 (2014: £16,000) of corporation tax in Switzerland. With a global tax credit of £2.2m and losses before tax of £(18.9)m the effective calculated tax rate charge for 2015 is (11.7)%.

 

UK Switzerland Singapore
Nature of activities The principal activity of the Group is to provide corporate and institutional investment banking and stockbroking services.  The Group’s UK business is conducted through one regulated operating subsidiary, Panmure Gordon (UK) Ltd, which is authorised and regulated by the FCA and is a member of the London Stock Exchange. Panmure Gordon (UK) Ltd has a representative office in Nyon, Switzerland, which trades under the name of Quaker Securities and  provides sales and trading services to institutional investors with specialisation in US and European stocks. Panmure Gordon (UK) Ltd also has a fellow subsidiary Company in Singapore which introduces companies from that region wishing to access the London markets to the London offices of Panmure Gordon (UK) Ltd.
     
2015 2014 2015 2014 2015 2014
  £’000 £’000 £’000 £’000 £’000 £’000
Income 21,461 27,657 1,264 1,417 300 317
(Loss)/Profit before tax (18,862) 2,063 (50) 53 27 29
Corporation tax paid/(received) 23 16
Subsidies received
 
Headcount 123 118 6 6 1 1

 

 

 

 

  • Staff costs

 

Group

Year ended

31 December 2015

 

Year ended

31 December 2014

  £‘000   £‘000
Staff costs including Directors’ emoluments      
Wages and salaries 12,525 14,322
Social security costs 2,528 2,189
Pensions (defined contribution scheme) 1,077 952

Total

16,130   17,463

 

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 2015 was £1.1m (2014: £1.0m).

 

Actual number of persons, including Directors, employed by the Group as at 31 December 2015:

 

Group total 2015   UK 2015*   Swiss 2015   Group total 2014
           
Institutional equities 55 53 2 54
Corporate finance 32 32 28
Investment funds 11 11 11
Other 24 21 3 37

Total

122   117   5   130

 

* The UK total includes 1 headcount in Singapore

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

 

Group total 2015   UK 2015*   Swiss 2015   Group total 2014
         
Institutional equities 58 55 3 49
Corporate finance 33 33 28
Investment funds 11 11 11
Other 28 25 3 37

Total

130   124   6   125

 

* The UK total includes 1 headcount in Singapore

Directors’ emoluments

Emoluments paid to Directors were as follows:

 

  Emoluments Pension Share option gain Emoluments Pension Share option gain
  2015 2015 2015 2014 2014 2014
  £’000 £’000 £’000 £’000 £’000 £’000
Aggregate 1,117 42 11 771 26 12
Highest paid      Director 353 13

 

362 13

 

 

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

 

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

 

  • Income tax expense

 

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

 

Year ended

31 December

2015

 

Year ended

31 December

2014

  £‘000   £‘000
Analysis of tax credit/(charge) in period:      
      UK corporation tax at 20.25% (2014: 21.5%)
      Current year tax credit/(charge) (31)
      Prior year adjustment 30
      Other prior year adjustments (28) (20)
  2 (51)
Deferred tax      
      Prior year adjustments to deferred tax credit 338 67
      Current year deferred tax credit / (charge) 1,870 (662)
2,208 (595)

Tax credit / (charge) on profits on ordinary activities

 

2,210

 

(646)

Effective tax rate charge

(11.7)% 30.1%

Factors affecting tax charge:

   
(Loss) / profit on ordinary activities after tax (16,675) 1,499
Tax on operations (2,210) 646
Loss on ordinary activities before tax (18,885)   2,145
Loss / profit on ordinary activities multiplied
      by rate of UK corporation tax at 20.25% (2014:21.5%) 3,824 (462)
   
Effects of:    
      Expenses not deductible for tax purposes (24) (90)
     Impairment of consolidated goodwill not deductible for  tax purposes (2,673)
      Differences relating to share schemes (105) (160)
      Effects of foreign tax (22) (15)
      Change in corporation tax rate (216) 14
      Deemed goodwill on amortisation 106
      Impairment of consolidated goodwill-write off of deferred tax liability 1,058 (106)
      Adjustment to tax charge in respect of previous periods 368 67

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

 

2,210

 

(646)

 

 

  • 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
  2015 2014
  £‘000   £‘000
   
(Loss) / Profit on ordinary activities after taxation   (16,675) 1,499
     
Weighted average number of shares in issue   15,545,473 15,545,473
Fully diluted weighted average number of shares in issue   15,682,490 15,969,945
 
Basic (loss) / earnings per share (based on (loss)/profit on ordinary activities after taxation)   (107.3)p                                             9.64p
 
Diluted earnings per share (based on (loss)/profit on ordinary activities after taxation)                    (106.3)p 9.39p

 

  • Goodwill and other intangibles

 

On 15 July 2015 the Group successfully completed the acquisition of Charles Stanley Securities (“CSS”), the investment banking division of Charles Stanley Group Plc. The consideration for the acquisition comprises a cash payment on completion of up to £1.5m in cash and deferred consideration comprising an equal split between the Group and Charles Stanley of retainer and corporate transaction fees which emanate from the transferred business and are earned in the twelve month period following completion, to a maximum of £5m.

 

The fair value of the intangible has been estimated to be £1.9m which, after grossing up for the impact of deferred tax liabilities at 18% of £0.3m, results in a total value of £2.2m.  This has been treated as an intangible asset with no goodwill arising and is shown separately in the table below. Acquisition related costs of £0.1m were incurred and taken as expenses in the year. No other assets or liabilities were recognised as part of the acquisition. The intangible represents customer relationships that were transferred to the Group as part of the CSS acquisition. Intangible assets are amortised over a useful life of five years and the charge for the part-year in 2015 is £0.2m.

 

Goodwill represents the excess of purchase price paid over net assets acquired, being in respect of the acquisition of Panmure Gordon (UK) Limited in April 2005, which represents the UK cash-generating unit (“CGU”). A charge for goodwill impairment of £13.2m has been taken as explained under Goodwill Impairment below.

 

 

PGUK

CGU

CSS Total
  £‘000 £‘000 £‘000
Cost      
At 1 January 2015 13,201 13,201
Acquisition in the year   2,215 2,215
At 31 December 2015 13,201 2,215 15,416
     
Accumulated impairment and amortisation      
At 1 January 2015
Charge for the year (13,201) (203) (13,404)
At 31 December 2015 (13,201) (203) (13,404)
     
Net at 31 December 2015 2,012 2,012

 

 

        Total  
      £‘000  
Cost        
At 1 January 2014     13,201  
Exchange differences      
At 31 December 2014     13,201  
       
Accumulated impairment and amortisation        
At 1 January 2014      
Charge for the year      
Exchange differences      
At 31 December 2014      
       
Net at 31 December 2014     13,201  

 

 

Goodwill impairment

 

Approach to goodwill impairment testing

 

The process of identifying and evaluating goodwill impairment requires significant management judgment in making a series of estimations, the results of which are highly sensitive to the assumptions used.

 

If the results of the impairment testing demonstrate that the estimated recoverable amount is lower than the carrying value of the CGU, a charge for impairment of goodwill will be considered for recognition in the Group’s income statement for the year.

 

Goodwill following the acquisition of Panmure Gordon (UK) Limited (“UK CGU”)

 

The recoverable amount of the UK CGU was measured based on value in use.  The key assumptions and approach to determine value in use calculations are solely estimates for the purpose of assessing impairment on acquired goodwill. The calculation uses cash flow projections based on budgets and forecasts approved by management covering three years. These projections are then extrapolated using a nominal long-term growth rate appropriate for the CGU.

 

The review of goodwill impairment represents management’s best estimate of the factors below:

  • The future expected cash flows of the CGU are sensitive to the cash flows projected for the periods for which detailed forecasts are available and to assumptions regarding the average long-term sustainable cash flows thereafter. Forecasts take into account previous actual performance and externally verifiable economic and market data and expectations both in past and future periods.  However, the cash flow forecasts also necessarily and appropriately reflect management’s view of future business prospects at the time of the assessment taking into account recent trading performance.The rate used to discount the future expected cash flows is based on the cost of capital assigned to the CGU and has a significant effect on the CGU’s valuation.  The cost of capital is generally derived from a Capital Asset Pricing Model, which incorporates inputs reflecting a number of financial and economic variables, including the risk-free interest rate in the country concerned and an equity risk premium.  The cost of capital is then adjusted to reflect the inherent and specific risks of the business being evaluated, to obtain the discount rates.These variables are subject to fluctuations in external market factors and economic conditions outside of management’s control and are therefore established on the basis of management judgment and subject to uncertainty.  When the CGU’s cost of capital increases, the effect is to reduce the estimated recoverable amount of the CGU.

 

 

Key assumptions

The three key assumptions upon which management has based its determination of the recoverable amount of the CGU are: three-year cash flow forecasts, in addition to long-term sustainable cash flows (discussed above); the discount rate (discussed above); and the long-term growth rate, which is based on expected long-term GDP growth for the UK.  Further detail regarding the assumptions used and the results of sensitivity analyses performed are outlined below.

 

Results of impairment review

Management considers that the business and cash flows from Panmure Gordon (UK) Limited are integral to the operations of the Group in the UK.  Management has reflected on the recent significant losses incurred in the year ended 31 December 2015 and also the appropriateness of the discount rate used to discount the future expected cash flows of the business and concluded that it should be increased to 12.5%. The resulting present value of these cash flows at this significantly increased discount rate is considerably lower than the carrying value of the CGU and as a result an impairment charge of £13.2m has been taken through the income statement for the year ended 31 December 2015.

 

2015

2014

 

Long-term growth rate 1.9% 1.9%
Discount rate 12.5% 9.6%

 

**************************************************************************************

The financial information set out above does not constitute the Company’s statutory accounts for the year ended 31 December 2015, 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.

Panmure Gordon & Co.Plc

Source: Panmure Gordon & Co.Plc

Final results: 27 March 2015

Further to the Final Results announcement released on 24 March 2015 at 07:00 hrs the Company advises that the full, audited Report and financial statements for the year ended 31 December 2014 are now available on the Company website at www.panmure.com

Panmure Gordon & Co. plc

(“Panmure Gordon” or “the Company”)

Report and financial statements for the year ended 31 December 2014

Further to the Final Results announcement released on 24 March 2015 at 07:00 hrs the Company advises that the full, audited Report and financial statements for the year ended 31 December 2014 are now available on the Company website at www.panmure.com

Enquiries:

Panmure Gordon 020 7886 2500
Phillip Wale, CEO
Buchanan (Financial PR) 020 7466 5000
Mark Edwards/Helen Chan/Stephanie Watson panmure@buchanan.uk.com
Grant Thornton Corporate Finance
(Nominated Adviser)
Philip Secrett/Salmaan Khawaja/Jen Clarke 020 7383 5100

Final Results: 2014

Panmure Gordon & Co. plc, a leading independent institutional stockbroker and investment bank, today announces preliminary results for the year ended 31 December 2014.

24 March 224

PANMURE GORDON & CO. PLC

 

(“Panmure Gordon”, the “Group” or the “Company”)

 

Preliminary results for the year ended 31 December 2014

Panmure Gordon & Co. plc, a leading independent institutional stockbroker and investment bank, today announces preliminary results for the year ended 31 December 2014.

Financial highlights

  • 84% increase in profit before tax to £2.15m (2013: £1.17m)
  • 7.6% increase in net commission and fee income to £29.39m (2013: £27.32m)
  • 630% increase in basic earnings per share to 9.64p (2013: 1.32p)
  • Full year dividend of 2.5p per ordinary share (2013: nil)
  • Debt-free balance sheet

Operational highlights

  • Return to payment of dividends for first time since 2007 reflecting the Board’s confidence for the future
  • Helped to raise more than £0.8bn for our corporate clients
  • Continued investment in key people/teams to drive future profitability

Chief Executive Phillip Wale commented:

“We are delighted that the business is consolidating its strong position for growth following a successful turnaround period. Despite difficult markets in the second half of the year revenue growth has been encouraging. The return to paying a dividend for the first time since 2007, the onset of the financial crisis, is a clear sign that the strategy executed over the recent years is successful. We remain firmly focused on serving our corporate and institutional clients and aligning our resources to profitable opportunities.

“Since the start of 2015, we have gained further corporate client appointments, won further transaction mandates and executed four significant fund raises already. We are optimistic that recent improved activity will continue and are pleased to be working on a healthy pipeline of engagements.  Whilst difficult to forecast, equity capital markets are expected to remain receptive to high quality, sensibly priced transactions.  With the support of our major shareholder, QInvest, Panmure Gordon is well-positioned to build on the achievements of 2014 and create meaningful upside for shareholders.”

Enquiries:

Panmure Gordon
Ed Warner, Chairman 020 7886 2500
Phillip Wale, Chief Executive 020 7886 2500
Buchanan panmure@buchanan.uk.com
Mark Edwards/Helen Chan/Stephanie Watson 020 7466 5000
Grant Thornton Corporate Finance (Nominated Adviser)
Philip Secrett/Salmaan Khawaja/Jen Clarke 020 7383 5100

CHAIRMAN’S STATEMENT

 

I am very pleased to report a robust operating performance in 2014 delivering an 86% increase in operating profit for the Panmure Gordon business of £2.16m (2013: £1.16m), and a return to dividend payments to shareholders after a seven year hiatus following the global financial crisis. The Board is encouraged that despite continued challenging markets, the successful reinvigoration of the Company under new leadership in recent years has established a solid foundation for the future.

 

Panmure Gordon is focused on its principal business of providing both outstanding, independent advice to our UK-listed corporate clients and those seeking a listing on the London markets, and excellent execution services to our institutional clients founded on insightful, actionable, independent research.

 

The decision in 2012 to withdraw from the Group’s unsuccessful expansion into US investment banking is reflected in the absence of a discontinued business/operations charge for the first time in three years. More importantly, it has allowed management and staff to focus on building our core UK investment banking and stockbroking business.

 

At last year’s Annual General Meeting, shareholders voted in favour of a share capital reduction which was duly approved by the High Court. This, combined with operating profits for the year, has enabled the Company to resume the payment of dividends and the Board is now pleased to recommend a 2.5p dividend per ordinary share for the year, subject to shareholder approval. In future, it is our intention to pay a progressive dividend, subject to maintaining a prudent level of cover from profits.

 

Panmure Gordon’s reputation for integrity is built on its exceptional client-centric culture and its skill in connecting businesses with the capital that they need to thrive.  This culture is embodied in Panmure Gordon’s employees and on behalf of the Board I thank them for all their efforts in 2014, especially in supporting our clients in both good and challenging times.  Our improved results in 2014 are a testament to their success.

 

 

Ed Warner, OBE

Chairman

23 March 2015

 

 

 

Chief Executive’s review

 

I am happy to report the strong progress made in 2014 with significantly; increased operating profit from continuing operations of £2.16m (2013: £1.16m), driven by a 8% increase in net commission and fee income to £29.39m (2013: £27.32m), a much improved statutory profit after tax of £1.50m (2013:  £0.21m), a strong corporate client list with 123 clients at the year-end (2013: 130), and appropriately aligned costs.

 

The executive team is focused on further strengthening, broadening and growing the business and while financial and political shocks continue to challenge financial markets, we take a long-term view and are committed to building a more resilient business to withstand those shocks.

 

Panmure Gordon’s reputation for integrity, as spelt out in our statement of Values on page 4 of this report, helps us win and retain corporate clients – the lifeblood of our firm – and to attract talented people.  We have hired selectively in all departments to support growth, diversify earnings and drive profitability.  It is early stages for many of these new hires but we are excited by the progress achieved and the prospects for the future.

 

The firm and our clients benefited from markets which were more receptive to high quality transactions. This is reflected in a 14.4% uplift in corporate finance fee income to £20.70m (2013: £18.10m) from helping our clients raise in excess of £0.8bn (2013: £1.46bn) across 7 IPOs and 11 fundraisings. Achieving this result, despite the challenging markets that were faced in the second half of the year, is a testament to the stronger, more diverse and resilient business that is being built.

 

Panmure Gordon’s securities business, comprising institutional equity sales and trading and market making, as well as thought-leading independent research, is essential to our client service offering.  With an ever increasing, challenging regulatory environment, the commission paying market is being radically upset and a number of competitors have already experienced significant discomfort, some exiting completely. Panmure Gordon remains a full service integrated broker backed by independent research across a wide range of sectors and we are seeing institutions pay increasing attention to this as they face up to their own regulatory challenges.

 

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 resulted in a slight 4% decrease in net commission and trading income to £9.44m (2013: £9.80m).

 

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

 

 

 

Dividend

 

The Board is recommending a dividend of 2.5p per ordinary share (2013: nil). The dividend will be payable on 29May 2015 to all shareholders on the register at 4 May 2015, subject to shareholder approval.

 

Outlook

 

The hard work put in over the recent years has led to the stronger, broader based and more resilient business that we see today. Panmure Gordon is positioned to grow and we remain, as ever, firmly focused on serving our corporate and institutional clients and aligning our resources to profitable opportunities.

 

The return to paying dividends for the first time since 2007, the onset of the financial crisis, is a clear sign that the strategy executed over the recent years is successful and reflects our confidence in the future prospects for the business.

 

In 2015, we have gained further corporate client appointments, won further transaction mandates with four further significant fund raises executed already in the first quarter. We are pleased to be working on a healthy pipeline of engagements.  Whilst difficult to forecast, equity capital markets are expected to remain receptive to high quality, sensibly priced transactions.  With the support of our major shareholder, QInvest, Panmure Gordon is well positioned to build on the solid achievements of 2014.

 

 

 

Phillip Wale

Chief Executive

 

 

 

 

 

Key performance indicators

 

Financial

KPI Objective

Performance

Trend
Corporate finance and other fee income To add high quality corporate clients to our list which in turn generates retainer and fee income.

2014: £20.70m

2013: £18.10m

2012: £12.16m

2011: £9.77m

Significant growth over the 4 year period with a 24% uplift from 2011 to 2012, a 49% uplift from 2012 to 2013 and a 14% uplift from 2013 to 2014.
Net commission and trading income To maintain a steady level of commission and trading income.

2014: £9.44m

2013: £9.80m

2012: £9.07m

2011: £7.94m

A steady growth over the 3 year period from 2011 to 2013 with a 14% uplift from 2011 to 2012 and a 8% uplift from 2012 to 2013. The period from 2013 to 2014 saw a decline of 4% in difficult markets.
Basic earnings/(loss) per share on continuing operations To grow earnings per share for shareholders.

      2014:  9.64p

2013: 5.36p

2012: 0.21p

2011: (39.2)p

This has moved from a loss per share in 2011 to increasing annual earnings per share from 2012 to 2014.
Profit/(loss) on continuing operations To increase profit from continuing operations by increasing income while managing operating costs.

2014: £1.50m

2013: £0.83m

2012: £0.03m

2011: (£5.82m)

Over the 4 year period this has changed from a significant loss to an increasingly stable level of profit.

 

Operational

KPI Objective

Performance

Trend
Revenue per employee (£’000) To increase the level of revenue per employee, whilst keeping a stable number of employees.

2014: 263

2013: 237

2012: 210

2011: 168

This has grown over the period with a 24% increase from 2011 to 2012, a 14% increase from 2012 to 2013 and a 11% increase from 2013 to 2014.
Ratio of employee compensation to turnover To retain a high calibre and fairly rewarded team who generate increasing numbers revenue.  As the fee income grows this ratio should maintain a reducing trend.

2014: 59%

2013: 62%

2012: 67%

2011: 87%

There was a large reduction in the ratio of compensation to turnover from 2011 to 2012, followed by a more stable decrease from 2012 to 2013 and 2013 to 2014.

 

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.

2014: 123

2013: 130

2012: 96

2011: 76

We consistently built our client list over recent years with a 26% increase from 2011 to 2012 and a 35% increase from 2012 to 2013. There has been a slight decline of 5% from 2013 to 2014 due to some companies exiting the market, some other corporate consolidations and a few losses to competitors.

 

 

Consolidated income statement

For the year ended 31 December 2014

 

2014

 

2013
£‘000

 

£‘000
Continuing operations
Commission and trading income

10,916

 

11,264

Commission and trading expense

(1,474)

 

(1,469)

 

Net commission and trading income

9,442

 

9,795

 

Corporate finance and other fee income

20,704

 

18,103

Loss on corporate investments

(755)

 

(580)

 

Net commission and fee income

29,391

 

27,318

 

Net loss on available for sale investments

(7)

 

(39)

 

Administrative costs1

(25,507)

 

(24,569)

 

Redundancy, restructuring and other non-recurring charges1

(1,216)

 

(1,209)

 

Operating profit before share-based payments

2,661

 

1,501

 

 

Share-based payments1

(500)

 

(349)

 

 

Operating profit

2,161

 

1,152

 

 

Financial income

1

 

34

Financial expense

(17)

 

(19)

 

Net financial (expense)/income

(16)

 

15

 

 

Profit before tax from continuing operations

2,145

 

1,167

 

Taxation

(646)

 

(335)

 

Profit from continuing operations

1,499

 

832

 

Discontinued operation

 

Loss on discontinued operation (net of tax)

 

(627)

 

Profit for the period attributable to the owners of

       the Company

1,499

 

205

 

Basic earnings per share from continuing operations

9.64p

 

5.36p

 

Diluted earnings per share from continuing operations

9.39p

 

5.28p

 

Basic earnings per share

9.64p

 

1.32p

 

Diluted earnings per share

9.39p

 

1.30p

 

1   Administrative expenses which total £27.2m (2013: £26.1m) have been presented separately here owing to their individual nature and size
Consolidated statement of comprehensive income & expense

For the year ended 31 December 2014

 

 

 

2014

 

2013

 

 

£‘000   £‘000

Profit for the period attributable to the owners of

       the Company

 

1,499

 

205

Total comprehensive income for the period

       attributable to the owners of the Company

 

1,499

 

205


Consolidated statement of financial position

As at 31 December 2014

 

2014

 

2013
 

 

£‘000

 

£‘000
Assets
Intangibles

 

13,201

13,201

Plant and equipment

 

2,047

2,011

Available for sale investments

 

8

Deferred tax asset

 

396

857

Other receivables

 

645

1,311

 

Total non-current assets

 

16,289

 

17,388

Securities held for trading

 

4,507

11,224

Trade and other receivables

 

20,821

29,894

Cash and cash equivalents

 

12,386

6,058

 

Total current assets

 

37,714

 

47,176

 

Current liabilities

 

Trade payables

 

(14,804)

(21,832)

Tax and social security

 

(857)

(823)

Corporation tax liabilities

 

(194)

(7)

Other payables

 

(2,688)

(4,582)

Securities held for trading

 

(1,275)

(4,891)

 

Total current liabilities

 

(19,818)

 

(32,135)

 

Net current assets

 

17,896

 

15,041

Deferred tax liability

 

(1,058)

(952)

 

Total non-current liabilities

 

(1,058)

 

(952)

 

Net assets

 

33,127

 

31,477

 

Equity

 

 

Issued share capital

 

622

6,187

Share premium account

 

36,740

Merger reserve

 

21,810

21,810

Other reserve

 

(7,790)

(7,441)

Retained earnings

18,485

(25,819)

 

 

 

 

 

Total equity

 

33,127

 

31,477

 

Approved by the board on 23 March 2015 and signed on its behalf by:

 

Philip Tansey

Chief Financial Officer

 

Consolidated statement of cash flow

 

 

 

 

 

 

Year ended

31 December 2014

 

Year ended

31 December 2013

   

£‘000

 

£‘000

Cash flows from operating activities
Profit after tax 1,499 205
Net financial expense/(income) 16 (15)
Depreciation and amortisation 353 295
Net loss on available for sale investments 7 39
Movement in securities held for trading 3,099 (3,527)
Decrease/(increase) in net amounts owed by market     counterparties 3,496 (3,286)
(Increase) in trade and other receivables (359) (408)
Decrease in trade payables and provisions (2,163) (668)
IFRS 2 share-based payment charges 500 349
Income tax expense 646 335
Net cash from operating activities   7,094 (6,681)
Cash flows from investing activities
Financial income received 1 34
Acquisition of plant and equipment (402) (623)
Proceeds from disposal of investments 1 125
Net cash from investing activities   (400) (464)
Cash flows from financing activities
Proceeds from the issue of share capital 35
Purchase of own shares for EBT (372) (532)
Financial expense (17) (19)
Repayment of EBT loan

23

128

Net cash from financing activities   (366) (388)
Net increase/(decrease) in cash and cash equivalents 6,328 (7,533)
Cash and cash equivalents at 1 January 6,058 13,591
Cash and cash equivalents at 31 December   12,386 6,058

 

 

Consolidated statement of changes in equity for the year ended 31 December 2014

 

£‘000

Issued share capital

Share premium

Merger reserve

Special reserve

Other reserve

Treasury shares

Retained earnings

Total

equity

At 1 January 2014 6,187 36,740 21,810 (7,441) (25,819) 31,477
 

Total comprehensive income

   for the period

               
Profit for the year

 

1,499

1,499
 

Other items recorded

   directly in equity

Share capital reduction (5,565) (36,740) 42,305
Share-based payments 500 500
Shares issued under employee    share plans
Shares transferred under employee share plans

Transfer of special reserve to

retained earnings

Purchase of own shares for

EBT

(372) (372)

Decrease in shares held by

EBT

23 23
At 31 December 2014 622 21,810 (7,790) 18,485 33,127

 

 

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 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

 

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.

 

Segmental analysis for the year ended 31 December 2014 and reconciliation to the statutory income statement is set out below:

 

 

UK

 

Other

 

Total

                       
 

2014

 

2013

 

2014

 

2013

 

2014

 

2013

  £‘000   £‘000   £‘000   £‘000   £‘000   £‘000
Net commission and trading   income 8,061 8,672 1,381 1,123 9,442 9,795
Corporate finance fee income 20,147 17,635 38 38 20,185 17,673

Loss on corporate

investments

(755) (580) (755) (580)
Wealth management and      other income 519 430 519 430
Net (loss)/gain on AFS        investments (7) (39) (7) (39)
Foreign exchange (loss)/gain (106) (17) (6) 6 (112) (11)
On-going administration costs (24,036) (23,200) (1,359) (1,358) (25,395) (24,558)
Segmental operating profit/      (loss) 3,823   2,901   54   (191)   3,877   2,710
                 
Redundancy and restructuring      charges (1,216) (1,209) (1,216) (1,209)
Share-based payment      charges (500) (349) (500) (349)
Operating profit/(loss) 2,107   1,343   54   (191)   2,161   1,152
                 
Net financial income/(expense) (16) 15 (16) 15
                 
Profit/(loss) before tax 2,091   1,358   54   (191)   2,145   1,167
                 
Income tax on continuing      operations (631) (335) (15) (646) (335)

Profit/(loss) on disposal of

discontinued operation

(627) (627)
                 
Profit/(loss) for period    attributable to the owners      of the Company 1,460   1,023   39   (818)   1,499   205

 

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

 

 

 

 

UK

 

Other1

 

Total

                       
 

2014

 

2013

 

2014

 

2013

 

2014

 

2013

  £‘000   £‘000   £‘000   £‘000   £‘000   £‘000
     
Non-current assets (inc. goodwill) 16,289 17,388 16,289 17,388
Current assets 37,714 47,176 37,714 47,176
Current liabilities (19,804) (32,135) (19,804) (32,135)
Non-current liabilities (1,072) (952) (1,072) (952)
Capital expenditure (402) (623) (402) (623)

 

 

 

 

 

 

                       

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 2014

 

Year ended

31 December 2013

 

£‘000

 

£‘000

Staff costs including Directors’ emoluments      
Wages and salaries

14,322

14,066

Social security costs

2,189

1,548

Pensions (defined contribution scheme)

952

955

Total

17,463

 

16,569

 

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 2014 was £0.96m (2013: £0.96m).

 

Actual number of persons, including Directors, employed by the Group as at 31 December 2014:

 

Group total 2014

 

UK 2014

 

Swiss 2014

 

Group total 2013

 

 

 

 

 

 

Institutional equities

54

51

3

43

Corporate finance

28

28

28

Investment funds

11

11

11

Other

37

34

3

42

Total

130

 

124

 

6

 

124

 

 

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

 

Group total 2014

 

UK 2014

 

Swiss 2014

 

Group total 2013

 

 

 

 

 

Institutional equities

49

46

3

48

Corporate finance

28

28

28

Investment funds

11

11

11

Other

37

34

3

41

Total

125

 

119

 

6

 

128

 

 

 

 

 

 

 

3       Income tax expense

 

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

 

Year ended

31 December

2014

 

Year ended

31 December

2013

 

£‘000

 

£‘000

Analysis of tax credit/(charge) in period:

 

 

 

UK corporation tax at 21.5% (2013: 23.3%)
Current year tax credit/(charge)

(31)

Prior year adjustment

(6)

Other prior year adjustments

(20)

(28)

 

(51)

(34)

Deferred tax

 

 

 

      Prior year adjustments to deferred tax credit

67

8

      Current year deferred tax charge

(662)

(309)

(595)

(301)

 

 

Tax charge on profits on ordinary activities

(646)

(335)

 

 

Effective tax rate charge

30.1%

62.0%

 

 

Factors affecting tax charge:

 

 

 

 

Profit on ordinary activities after tax

1,499

205

Tax on continuing operations

646

358

Tax on discontinued operation

(23)

Profit on ordinary activities before tax

2,145

 

540

Profit on ordinary activities multiplied
      by rate of UK corporation tax at 21.5% (2013:23.3%)

(462)

(125)

 

 

Effects of:

 

 

      Expenses not deductible for tax purposes

(90)

(89)

      Tax losses not recognised from discontinued operation

(119)

      Differences relating to share schemes

(160)

(16)

      Effects of foreign tax

(15)

(21)

      Change in corporation tax rate

14

34

      Deemed goodwill on amortisation

106

106

      Goodwill on consolidation

(106)

(106)

      Adjustment to tax charge in respect of previous periods

67

1

Total tax charge on profits on ordinary activities

(646)

(335)

 

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

 

2014

2013

 

£‘000

 

£‘000

 

 

Profit from continuing operations after taxation (PAT)

 

1,499

832

 

 

 

Weighted average number of shares in issue

 

15,545,473

15,538,145

Fully diluted weighted average number of shares in issue

 

15,969,945

15,766,145

 

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

 

9.64p

5.36p

 

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

 

                                                  9.39p

5.28p

 

 

 

 

 

Year ended

Year ended

 

31 December

31 December

 

2014

2013

 

£‘000

 

£‘000

 

 

Profit on ordinary activities after taxation

 

1,499

205

 

 

 

Weighted average number of shares in issue

 

15,545,473

15,538,145

Fully diluted weighted average number of shares in issue

 

15,969,945

15,766,145

 

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

 

9.64p

1.32p

 

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

 

                 9.39p

1.30p

 

 

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 and charges were taken in both 2012 and 2013 and which have now been fully covered.  The Trustee of the bankrupt estate is now in the final stages of concluding the administration. It is not anticipated that any further claims or costs associated with ThinkEquity of any significance will develop in the future.

 

 

 

 

Results from discontinued operation  

As at

As at

 

31 December

31 December

 

2014

2013

Trading activities

 

£‘000

£’000

Revenue

 

Expenses

 

Results from operating activities

 

 

 

Results of trading activities

Discontinued operation

Fair value of net assets disposed of

Foreign currency translation reserve recycled to other comprehensive income

Other costs

(627)

Loss on disposal of discontinued operation

 

 

(627)

Loss for the year on discontinued operation

 

 

(627)

 

 

Cash flow from discontinued operation  

As at

As at

 

31 December

31 December

 

2014

2013

 

£‘000

£’000

Net cash from operating activities

 

Cash flows from investing activities

 

(1,367)

Net cash from financing activities

 

Net cash flow for the year

 

(1,367)

 

 

The financial information set out above does not constitute the Company’s statutory accounts for the year ended 31 December 2014, 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.

 

Trading Update: 10 July 2014

The Board of Panmure Gordon is pleased to provide the following pre-close trading update ahead of the release of its interim unaudited report for the six months ended 30 June 2014.

The Company’s revenues for the six months ended 30 June 2014 willshow significant growth over the same period of 2013, driven by improved performance and increased investment across all of Panmure Gordon’s business lines. Profit before tax from continuing operations is expected to be approximately£1.8 million (six months to 30 June 2013: £0.3 million).

The interim unaudited report for the six months ended 30 June 2014 will be released in the week commencing 22 September 2014

Final Results: 2013

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.

Half-yearly Report: 18 October 2013

Panmure Gordon & Co. plc (the “Company”) announces that copies of the Company’s interim financial statements for the six months ended 30 June 2013 were despatched to shareholders yesterday and may be viewed on the Company’s website: www.panmure.com/reportsandaccounts.php.

Trading Update: 17 January 2013

Panmure Gordon & Co. plc (“Panmure Gordon”), the independent institutional stock broker and investment bank, is pleased to issue a trading update for the year ended 31 December 2012.

As in the first half, Panmure Gordon’s continuing business was profitable in each month of the second half in spite of continued low market-wide trading volumes. Final full year profitability in our continuing business will have been primarily driven by much improved corporate transaction revenue. Costs remain carefully controlled. This, together with the recovery in corporate transaction revenues, has enabled the firm to develop new revenue generating business lines and to make a provision for bonus payments to key staff.

Panmure Gordon chief executive, Phillip Wale, commented:

“In a consolidating market, we have capitalised on our position of strength to expand our services and client base. We were delighted to hire a leading investment funds team, which has steadily helped us to gain a significant number of new listed clients, rising from 72 at the half year to 98 today. Despite challenging market conditions, we helped our clients to raise more than £340 million. We completed four IPOs and a number of other client mandates including two cross-border M&A transactions.”

“With no debt, a strong capital base, and the continued support of our major investor QInvest, we have a sound platform from which to seize opportunities to further strengthen and develop our business.”

Panmure Gordon will be announcing its preliminary results for 2012 in the week commencing 18 March 2013.

Half-yearly Report: 31 October 2012

Panmure Gordon & Co. plc (the “Company”) announces that copies of the Company’s interim financial statements for the six months ended 30 June 2012 were despatched to shareholders yesterday and may be viewed on the Company’s website: www.panmure.com/reportsandaccounts.php.

Half-yearly Report: 26 September 2012

London, 26 September 2012 – Panmure Gordon & Co. plc (“Panmure Gordon” or “the Group”) today announces its unaudited results for the first half ended 30 June 2012.

Continuing business

Financial highlights

  • Profit from continuing operations of £1.2m (H1 2011: loss of £2.7m)
  • Profitable in every month of H1 2012, and in each month since period end
  • 18% increase in net commission and fee income to £11.2m (H1 2011: £9.5m) driven by 41% increase in corporate transaction revenues
  • Debt free balance sheet

Operational highlights

  • Phillip Wale appointed as CEO
  • 24% reduction in administrative expenses to £8.7m (H1 2011: £11.4m) reflecting actions taken in 2011
  • Strong growth in investment banking revenues.  Three IPOs completed in first half
  • London operation moved to new premises at One New Change since period end
  • Focus now on broadening the continuing business

 Divestment of US business

  • Divestment ofUSbusiness completed in June 2012
  • These interim results include a loss on the discontinued operation of £2.0m (H1 2011: loss of £1.3m) and which results in a statutory loss of £0.8m (H1 2011: loss of £4.0m)

 

Phillip Wale, Chief Executive, commented:

“Being profitable every month so far this year reflects the impact of actions taken to reduce costs in 2011 and the inherent strength of Panmure Gordon’s business.  Following the divestment of our US business, we are now resolutely focused on building upon the Group’s traditional core business.

“I am delighted that, in subdued markets, we are a broker-of-choice for dynamic companies seeking a successful flotation in London and we have an encouraging pipeline of investment banking mandates.  Market conditions remain challenging, but with the full support of our major shareholder, QInvest, our simplified structure and improving quality of earnings, we look to the second half with confidence.”

 

Enquiries:

Panmure Gordon

Phillip Wale, Chief Executive

Philip Tansey, CFO                                                                                                              020 7886 2500

Nathaniel Webb, Communications Director                                                               020 7886 2886

FTI Consulting

Billy Clegg                                                                                                  020 7831 3113/07977 578153

Ed Gascoigne-Pees                                                                                  020 7831 3113/07884 001949

Grant Thornton Corporate Finance (NOMAD)

Gerry Beaney/Salmaan Khawaja/Jen Clarke                                                               020 7383 5100

  

Chief Executive’s review

It is my pleasure to present my first interim report since I joined Panmure Gordon.

Since the full year 2011 results, the most notable change to the firm is the successful divestment of ThinkEquity to local management, to whom we wish every success.

The profit from continuing operations, after excluding the impact of ThinkEquity, was £1.2m compared to a loss for the comparative period in 2011 of £2.7m.  This was on account of an overall 18% rise in net commission and fee income to £11.2m (H1 2011: £9.5m) driven by a 41% increase in corporate transaction revenues and a 24% reduction in administrative expenses to £8.7m (H1 2011: £11.4m).

I am particularly pleased to report that the continuing business was profitable in every month of the first half and we are now resolutely focused on building upon the Group’s traditional core business.

In challenging markets, Panmure Gordon has successfully floated three exceptionally innovative UK-based companies, all of which will use the funds raised at their IPOs to grow their businesses.

In our equities division, we were once again ranked a Top 5 brokerage in the prestigious Thomson Reuters Extel Mid & Small-Cap survey 2012.  The volume of shares traded on the London Stock Exchange has continued significant year-on-year declines, but despite this total institutional equities income has held up creditably.

Our international presence in Switzerland and Singapore continues to help us to facilitate transactions for our clients and, in particular, to win new business.  We continue to have outstanding partnerships with QInvest in the Middle East, Ambit Capital in India and with Auerbach Grayson, our distribution partner in North America.

It has been my pleasure to get to know the firm’s employees and move our London office to new client-focused premises at One New Change.  The move crystallised a one-off benefit of £0.5m due to the release of certain accrued rental incentives on the exit from our former premises.

I look forward to welcoming new team players who will work hard on behalf of our corporate and institutional clients.

Outlook

With the continued support of QInvest, our simplified structure and the improving quality of our earnings, we look to the second half with confidence.  In spite of market fragility, the UK business has continued to be profitable every month since the period end.  We see opportunities to broaden our business, further develop our encouraging investment banking pipeline and take advantage of current markets to hire selectively while maintaining vigilant cost controls.

Phillip Wale

Chief Executive

 To view the interim report in full, go to: www.panmure.com/reportsandaccounts.php