30th Sep 2011 07:00
Panmure Gordon & Co. plc
Panmure Gordon reports 2011 first half results
London, 30 September, 2011 - Panmure Gordon & Co. plc ("Panmure Gordon" or "the Group") today announces its unaudited results for the first half ended 30 June, 2011.
Financial highlights:
Total Group net income increased by 22% to £20.9m (H1 2010: £17.1m) Statutory loss reduced by 33% to £4.0m (H1 2010 loss: £6.0m) EPS loss reduced by 34% to -2.69p (H1 2010 loss: -4.10p) 55% of Group net income in the first half derived from ThinkEquity Investment banking revenue expected to be second-half weighted, despite continuing macroeconomic pressuresOperational highlights:
5 new UK corporate clients gained in the first half, and a further 9 since period end, taking overall number of listed clients to 77 Top 5 UK Mid & Small Cap broker in 2011 Thomson Reuters Extel Survey Top 3 Broker, UK & Ireland, StarMine 2011 UK investment banking completed 8 transactions in the half, with successful completion of a $25million IPO since period-end US investment banking completed 16 transactions in the first half Opened Singapore officeTim Linacre, Group Chief Executive, commented:
"Despite very challenging market conditions we have reported improved first half results with the US business generating over half the Group's revenue.
"In the UK, Panmure Gordon has gained 14 new corporate clients so far this year. In the US, a sharp improvement in investor appetite for technology-related stocks saw ThinkEquity post a very significant first half revenue improvement - investment banking revenue was almost four times that of the corresponding period in 2010. ThinkEquity's investment banking pipeline is the strongest it has been since acquisition.
"We continue to expect investment banking revenue in 2011 to be second half weighted, although the effect of very recent extreme market volatility is unclear. The combination of improved US business performance, our growing UK corporate client list and our strengthening pipeline give us confidence for the future.
"With the full support of our major shareholder, QInvest, we are well positioned to capitalise on the rapidly changing landscape in our sectors. We see the opportunity to cement Panmure Gordon as one of the UK's pre-eminent institutional stockbrokers and ThinkEquity as one of the leading US technology investment banking firms."
Enquiries:
| Panmure Gordon | |||||
| Nathaniel Webb, Group Communications & | |||||
| Investor Relations Director | 020 7614 8333 | ||||
| FTI Consulting | |||||
| Billy Clegg | 020 7831 3113/07977 578153 | ||||
| Ed Gascoigne-Pees | 020 7831 3113/07884 001949 | ||||
| Grant Thornton Corporate Finance (NOMAD) | |||||
| Jen Hatter | 020 7383 5100 | ||||
| Gerry Beaney | 020 7383 5100 |
Chief Executive's review
The market turmoil in which all stockbrokers and investment banks are operating is unprecedented in recent decades. Indeed this may be the worst operating climate for almost a century.
In recent weeks, we have seen a worsening of already hostile market conditions. While the causes of this include weak economic activity and sovereign debt concerns, some of the symptoms are low equity commission levels and a poor climate for investment banking transactions.
Against this background, there have been encouraging areas of progress within our businesses. We are positioning the firm to be able to take advantage of opportunities as they arise.
UK business
In the UK, we have two inter-linked areas of business: institutional equities and investment banking.
We are recognised as a leading corporate stockbroker and independent adviser and we have seen a continuing growth in our corporate client list. Having been appointed to 14 new clients this year so far, a net gain of seven, we now have 77 clients up from 65 at the end of the first half of last year. We see considerable opportunities to further grow our corporate client list over the remainder of the year.
The UK has continued to see very much reduced trading volumes. It has therefore been encouraging to see our institutional equities trading business in the UK produce an improved performance over the comparable period last year.
In research, we were pleased to be recognised once again as one of the Top 5 UK Small & Mid Cap brokers in the 2011 Thomson Reuters Extel Survey, and by StarMine as a Top 3 broker in the UK & Ireland.
Despite very difficult markets for investment banking, we completed 8 transactions for clients. We were pleased to lead the successful IPO of Escher Group at the start of the second half despite particularly volatile markets. Our investment banking pipeline remains encouraging and although it is dependent on market conditions for execution, we expect it to be second half weighted.
US business
In the first half, ThinkEquity accounted for more than half the Group's revenue. ThinkEquity has three business areas: investment banking, institutional equities and wealth management.
The main growth driver in the reporting period was investment banking. After several years of low activity levels, technology investment banking saw a rebound in the US in 2011. ThinkEquity has positioned itself as a leading independent technology investment bank and has been a beneficiary of this improved sentiment. ThinkEquity completed 16 transactions in the first half, including M&A deals, private placements, registered directs and IPOs.
As in the UK, institutional equities has suffered from industry-wide low trading volumes. While markets remain challenging, we have continued to strengthen the equities team and have seen an improvement in commission levels in recent weeks.
Since the period-end we have appointed a new and experienced president to lead the ThinkWealth Management team. We see opportunities to grow this business, leveraging the Group's relationships and expertise.
Management
During the period, the management of the Group was strengthened considerably by the appointment of Philip Tansey to the Board as Chief Financial Officer.
Outlook
Since the end of the first half, market turmoil has increased further. We are working in unprecedented markets. Turmoil is likely to continue for some time, at least until there is some resolution to the sovereign debt crises.
US technology investment banking is one of the few sectors globally where there has been investor appetite and we are fortunate that ThinkEquity is now one of the leading firms in this sector. ThinkEquity's investment banking pipeline is the strongest it has been since acquisition, though again execution of the pipeline is dependent on market conditions.
We continue to expect investment banking revenue in 2011 to be second half weighted, although the effect of very recent extreme market volatility is unclear. The combination of improved US business performance, our growing UK corporate client list and our strengthening pipeline give us confidence for the future.
With the full support of our major shareholder, QInvest, we are well positioned to capitalise on the rapidly changing landscape in our sectors. We see the opportunity to cement Panmure Gordon as one of the UK's pre-eminent institutional stockbrokers and ThinkEquity as one of the leading US technology investment banking firms.
Business review
Institutional equities
Stubbornly low commission levels reflect the precipitous year-on-year declines in the number of shares traded on major stock exchanges in the UK and the US since the commencement of the global financial crisis.
| UK | US | Swiss | ||||||||||||||||||||||||||||
| 6 months | 6 months | 6 months | 6 months | 6 months | 6 months | |||||||||||||||||||||||||
| to Jun 11 | to Jun 10 | to Jun 11 | to Jun 10 | to Jun 11 | to Jun 10 | |||||||||||||||||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||||||||||||||||||
| Commission | 3,870 | 4,415 | 4,946 | 5,971 | 782 | 1,147 | ||||||||||||||||||||||||
| Trading | 800 | (447 | ) | (237 | ) | (368 | ) | - | - | |||||||||||||||||||||
| Settlement costs | (521 | ) | (719 | ) | (770 | ) | (1,000 | ) | (116 | ) | (170 | ) | ||||||||||||||||||
| 4,149 | 3,249 | 3,939 | 4,603 | 666 | 977 | |||||||||||||||||||||||||
Lower commission levels in the UK were offset by a significant improvement in trading performance, partly reflecting the decision to increase the average client facilitation net trading book. The overall result for UK institutional equities was a creditable 28% improvement on the same period last year.
Continued low volumes on major US markets impacted commission revenue in the US and resulted in a 14% decline compared to the first half of 2010. In response, we have further strengthened the US institutional equities management team and refocused on servicing significant accounts.
Our Swiss office suffered from declining trading volumes and also short-term institutional client changes, resulting in a 32% decline in revenues. A strategy is now in place to address revenue shortfall in the second half.
Investment banking
Group investment banking revenues increased by 49% to £10.8m in the reporting period (June 2010: £7.2m). This is a creditable achievement in difficult markets and best represents the growing importance to the business of the US franchise.
| UK | US | |||||||||||||||||||
| 6 months | 6 months | 6 months | 6 months | |||||||||||||||||
| to Jun 11 | to Jun 10 | to Jun 11 | to Jun 10 | |||||||||||||||||
| £'000 | £'000 | £'000 | £'000 | |||||||||||||||||
| Retainers | 1,435 | 1,237 | - | - | ||||||||||||||||
| Transaction related income | 2,827 | 4,331 | 6,469 | 1,655 | ||||||||||||||||
| 4,262 | 5,568 | 6,469 | 1,655 | |||||||||||||||||
Reflecting both ThinkEquity's management strength and the strongly improved sentiment toward technology-related issuance in the US, first half revenue for the business was nearly four times that of the corresponding period in 2010. ThinkEquity was active on three IPOs, and several more follow-on and registered direct fund raisings, as well as some excellent M&A mandates.
Over the past three years, ThinkEquity has been extensively restructured and refocused. The first half performance is a pleasing realisation of the business' repositioning. Since the period-end, ThinkEquity's pipeline has increased further although execution will be subject to market conditions.
In spite of the difficult markets in the UK, we executed a number of secondary offerings across a range of sectors, including for The Capital Pub Company, Horizonte Minerals, e-Therapeutics, Lonrho and Mood Media. Since the period end and in exceptionally difficult markets, we successfully concluded a technology IPO for Escher Group plc. We also acted for our client, The Capital Pub Company, on its acquisition by Greene King.
In the first half, Panmure Gordon gained 5 new clients and, since the period end, a further 9, taking the number of listed corporate clients to 77. The strength of our growing corporate client list is reflected in the improved revenue derived from retainers when compared to the first half of 2010.
US wealth advisory
| 6 months | 6 months | ||||||||||||||||
| to Jun 11 | to Jun 10 | ||||||||||||||||
| £'000 | £'000 | ||||||||||||||||
| Fee and commission income | 993 | 1,001 |
Since the period end, we have been pleased to welcome a new president for the business and look forward to growing the franchise.
Expenditure
In difficult markets, we recognise the need to retain key staff and as set out in the pre-close trading statement, certain retention payments were made to key employees. Excluding these payments, expenditure continues to be well managed and costs reduced from the comparable prior period.
| UK | US | Swiss | ||||||||||||||||||||||||||||
| 6 months | 6 months | 6 months | 6 months | 6 months | 6 months | |||||||||||||||||||||||||
| to Jun 11 | to Jun 10 | to Jun 11 | to Jun 10 | to Jun 11 | to Jun 10 | |||||||||||||||||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||||||||||||||||||
| Employment | 6,172 | 6,787 | 7,711 | 6,960 | 295 | 586 | ||||||||||||||||||||||||
| Other | 3,387 | 3,493 | 4,225 | 4,320 | 608 | 369 | ||||||||||||||||||||||||
| 9,559 | 10,280 | 11,936 | 11,280 | 903 | 955 | |||||||||||||||||||||||||
Condensed consolidated interim income statement (unaudited)
For the half year to 30 June 2011
|
£'000 |
Notes |
| 6 months 30 June 2011 | 6 months 30 June 2010 | 12 months 31 December 2010 | |||||||||||||
| Commission and trading income | 10,160 | 10,718 | 21,929 | |||||||||||||||
| Commission and trading expense | (1,406 | ) | (1,889 | ) | (3,568 | ) | ||||||||||||
| Net commission and trading income | 8,754 | 8,829 | 18,361 | |||||||||||||||
| Corporate finance and other income | 12,150 | 8,290 | 22,094 | |||||||||||||||
| Net commission and fee income | 20,904 | 17,119 | 40,455 | |||||||||||||||
| Net (loss)/gain on available for sale investments | (791 | ) | 269 | 446 | ||||||||||||||
| Administrative expenses1 | (23,880 | ) | (22,246 | ) | (46,254 | ) | ||||||||||||
| Redundancy, restructuring and other non-recurring charges1 | 7 | 101 | (663 | ) | (1,252 | ) | ||||||||||||
| Operating loss before share-based payments | (3,666 | ) | (5,521 | ) | (6,605 | ) | ||||||||||||
| Share-based payments1 | 3 | (484 | ) | (491 | ) | (437 | ) | |||||||||||
| Operating loss | (4,150 | ) | (6,012 | ) | (7,042 | ) | ||||||||||||
| Financial income | 33 | 60 | 111 | |||||||||||||||
| Financial expense | (38 | ) | (101 | ) | (202 | ) | ||||||||||||
| Net financial expense | (5 | ) | (41 | ) | (91 | ) | ||||||||||||
| Loss before tax | (4,155 | ) | (6,053 | ) | (7,133 | ) | ||||||||||||
| Tax | 4 | 188 | 92 | (298 | ) | |||||||||||||
| Loss for the period attributable to the owners of the Company | (3,967 | ) | (5,961 | ) | (7,431 | ) | ||||||||||||
| Basic loss per share | 5 | (2.69 | )p | (4.10 | )p | (5.10 | )p | |||||||||||
| Diluted loss per share | 5 | (2.69 | )p | (4.10 | )p | (5.10 | )p | |||||||||||
The notes below form part of these financial statements.
1 Administrative expenses which total £24.3m (6 months 30 June 2010: £23.4m, 12 months 31 December 2010: £47.9m) which have been presented separately owing to their nature and size
Condensed consolidated interim statement of comprehensive income (unaudited)
For the half year to 30 June 2011
| £'000 | 6 months 30 June 2011 | 6 months 30 June 2010 | 12 months 31 December 2010 | |||||||||||||
| Loss for the period attributable to the owners of the Company | (3,967 | ) | (5,961 | ) | (7,431 | ) | ||||||||||
| Other comprehensive (loss)/income | ||||||||||||||||
| Foreign exchange translation differences | (596 | ) | 581 | 369 | ||||||||||||
| Available for sale gain transferred to the incomestatement | - | (569 | ) | (569 | ) | |||||||||||
| Total other comprehensive (loss)/income for the period net of tax | (596 | ) | 12 | (200 | ) | |||||||||||
| Total comprehensive loss for the period attributable to the owners of the Company | (4,563 | ) | (5,949 | ) | (7,631 | ) | ||||||||||
Condensed consolidated interim statement of financial position (unaudited)
At 30 June 2011
| £'000 |
Notes | As at 30 June 2011 | Restated 1 As at 30 June 2010 | As at 31 December 2010 | ||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||
| Intangibles | 29,567 | 31,025 | 30,168 | |||||||||||||||||||||||||||||||||
| Plant and equipment | 1,659 | 2,336 | 1,999 | |||||||||||||||||||||||||||||||||
| Available for sale investments | 1,801 | 2,815 | 2,640 | |||||||||||||||||||||||||||||||||
| Deferred tax asset | 4,963 | 4,449 | 4,490 | |||||||||||||||||||||||||||||||||
| Other receivables | 8 | 2,372 | 2,149 | 2,458 | ||||||||||||||||||||||||||||||||
| Total non-current assets | 40,362 | 42,774 | 41,755 | |||||||||||||||||||||||||||||||||
| Securities held for trading | 6,460 | 6,116 | 5,082 | |||||||||||||||||||||||||||||||||
| Trade and other receivables | 8 | 84,532 | 40,405 | 29,172 | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | 17,809 | 25,651 | 26,166 | |||||||||||||||||||||||||||||||||
| Total current assets | 108,801 | 72,172 | 60,420 | |||||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||||||||
| Trade payables | 9 | (72,014 | ) | (31,186 | ) | (21,252 | ) | |||||||||||||||||||||||||||||
| Tax and social security | (768 | ) | (725 | ) | (663 | ) | ||||||||||||||||||||||||||||||
| Other payables | 9 | (9,359 | ) | (9,743 | ) | (8,808 | ) | |||||||||||||||||||||||||||||
| Held for trading liabilities | (2,749 | ) | (781 | ) | (693 | ) | ||||||||||||||||||||||||||||||
| Interest bearing loans and borrowings 1 | - | (3,000 | ) | (3,000 | ) | |||||||||||||||||||||||||||||||
| Total current liabilities | (84,890 | ) | (42,435 | ) | (34,416 | ) | ||||||||||||||||||||||||||||||
| Net current assets | 23,911 | 29,737 | 26,004 | |||||||||||||||||||||||||||||||||
| Deferred tax liability | (896 | ) | (814 | ) | (856 | ) | ||||||||||||||||||||||||||||||
| Total non-current liabilities | (896 | ) | (3,814 | ) | (856 | ) | ||||||||||||||||||||||||||||||
| Net assets | 63,377 | 68,697 | 66,903 | |||||||||||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||||||||||||
| Issued share capital | 6,009 | 5,914 | 5,914 | |||||||||||||||||||||||||||||||||
| Shares to be issued (including share premium) | 86 | 129 | 129 | |||||||||||||||||||||||||||||||||
| Share premium account | 36,620 | 36,084 | 36,084 | |||||||||||||||||||||||||||||||||
| Merger reserve | 21,810 | 21,810 | 21,810 | |||||||||||||||||||||||||||||||||
| Special reserve | 9,595 | 9,595 | 9,595 | |||||||||||||||||||||||||||||||||
| Other reserve | (3,586 | ) | (1,969 | ) | (2,725 | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation reserve | 2,744 | 3,552 | 3,340 | |||||||||||||||||||||||||||||||||
| Treasury shares | (2,733 | ) | (4,047 | ) | (3,454 | ) | ||||||||||||||||||||||||||||||
| Retained earnings | (7,168 | ) | (2,371 | ) | (3,790 | ) | ||||||||||||||||||||||||||||||
| Total equity | 63,377 | 68,697 | 66,903 | |||||||||||||||||||||||||||||||||
1 The subordinated loan which was repaid during the period (2010: £3.0m) has been restated from non-current liabilities to current liabilities
The notes below form part of these financial statements.
Condensed consolidated interim statement of cash flows (unaudited)
| £'000 | 6 months 30 June 2011 | 6 months 30 June 2010 | 12 months 31 December 2010 | |||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Loss before tax | (4,155 | ) | (6,053 | ) | (7,133 | ) | ||||||||||
| Net financial expense | 5 | 41 | 91 | |||||||||||||
| Depreciation and amortisation | 402 | 482 | 956 | |||||||||||||
| Net loss/(gain) on available for sale investments | 840 | (269 | ) | (367 | ) | |||||||||||
| Loss on disposal of fixed assets | - | - | 9 | |||||||||||||
| Movement in securities held for trading | 677 | (1,989 | ) | (1,043 | ) | |||||||||||
| (Increase)/decrease in amounts owed by market counterparties | (2,952 | ) | (1,596 | ) | 1,559 | |||||||||||
| (Increase)/decrease in trade and other receivables | (2,058 | ) | 1,744 | (295 | ) | |||||||||||
| Increase/(decrease) in trade payables and provisions | 721 | (6,467 | ) | (7,154 | ) | |||||||||||
| IFRS 2 share-based payments and related charges | 589 | 669 | 720 | |||||||||||||
| Net cash flow from operating activities | (5,932 | ) | (13,438 | ) | (12,657 | ) | ||||||||||
| Taxes received/(paid) | - | 19 | (201 | ) | ||||||||||||
| Net cash from operating activities | (5,932 | ) | (13,419 | ) | (12,858 | ) | ||||||||||
| Cash flows from investing activities | ||||||||||||||||
| Financial income received | 33 | 60 | 111 | |||||||||||||
| Acquisition of plant and equipment | (26 | ) | (283 | ) | (190 | ) | ||||||||||
| Proceeds from disposal of investments | 247 | 911 | 1,030 | |||||||||||||
| Net cash from investing activities | 254 | 688 | 951 | |||||||||||||
| Cash flows from financing activities | ||||||||||||||||
| Proceeds from the issue of share capital | 588 | 76 | 76 | |||||||||||||
| Purchase of own shares for treasury | - | (148 | ) | (148 | ) | |||||||||||
| Financial expense | (38 | ) | (101 | ) | (202 | ) | ||||||||||
| Repayment of EBT loan | 20 | 131 | 143 | |||||||||||||
| Repayment of subordinate loan | (3,000 | ) | - | - | ||||||||||||
| Purchase of own shares for EBT | (160 | ) | (210 | ) | (385 | ) | ||||||||||
| Net cash from financing activities | (2,590 | ) | (252 | ) | (516 | ) | ||||||||||
| Net decrease in cash and cash equivalents | (8,268 | ) | (12,983 | ) | (12,423 | ) | ||||||||||
| Cash and cash equivalents at 1 January | 26,166 | 38,903 | 38,903 | |||||||||||||
| Effect of exchange rate fluctuations | (89 | ) | (269 | ) | (314 | ) | ||||||||||
| Cash and cash equivalents at 30 June / 31 December | 17,809 | 25,651 | 26,166 | |||||||||||||
Condensed consolidated interim statement of changes in equity for the half year to 30 June 2011
| £'000 | Issued share capital | Shares to be issued | Share premium | Merger reserve | Special reserve | Fair value reserve | Other reserve | Foreign currency translation reserve | Treasury shares | Retained earnings | Total equity | |||||||
| At 1 January 2011 | 5,914 | 129 | 36,084 | 21,810 | 9,595 | - | (2,725 | ) | 3,340 | (3,454 | ) | (3,790 | ) | 66,903 | ||||
| Total comprehensive income for the period | ||||||||||||||||||
| Loss for the period | - | - | - | - | - | - | - | - | - | (3,967 | ) | (3,967 | ) | |||||
| Other comprehensive income | ||||||||||||||||||
| Foreign currency translation differences | - | - | - | - | - | - | - | (596 | ) | - | - | (596 | ) | |||||
| Other items recorded directly in equity | ||||||||||||||||||
| Share-based payments | - | - | - | - | - | - | - | - | - | 589 | 589 | |||||||
| Shares issued under employee share plans | 95 | (43 | ) | 536 | - | - | - | - | - | - | - | 588 | ||||||
| Shares transferred under employee share plans | - | - | - | - | - | - | (721 | ) | - | 721 | - | - | ||||||
| Purchase of own shares for EBT | - | - | - | - | - | - | (160 | ) | - | - | - | (160 | ) | |||||
| Decrease in shares held by EBT | - | - | - | - | - | - | 20 | - | - | - | 20 | |||||||
|
| ||||||||||||||||||
| At 30 June 2011 | 6,009 | 86 | 36,620 | 21,810 | 9,595 | - | (3,586 | ) | 2,744 | (2,733 | ) | (7,168 | ) | 63,377 | ||||
| Condensed consolidated interim statement of changes in equity for the half year to 30 June 2010 | ||||||||||||||||||
| £'000 | Issued share capital | Shares to be issued | Share premium | Merger reserve | Special reserve | Fair value reserve | Other reserve | Foreign currency translation reserve | Treasury shares | Retained earnings | Total equity | |||||||
| At 1 January 2010 | 5,874 | 298 | 35,879 | 21,810 | 9,595 | 569 | (776 | ) | 2,971 | (5,013 | ) | 2,921 | 74,128 | |||||
| Total comprehensive income for the period | ||||||||||||||||||
| Loss for the period | - | - | - | - | - | - | - | - | - | (5,961 | ) | (5,961 | ) | |||||
| Other comprehensive income | ||||||||||||||||||
| Foreign currency translation differences | - | - | - | - | - | - | - | 581 | - | - | 581 | |||||||
| Available for sale gain recycled | - | - | - | - | - | (569 | ) | - | - | - | - | (569 | ) | |||||
| Other items recorded directly in equity | ||||||||||||||||||
| Share-based payments | - | - | - | - | - | - | - | - | - | 669 | 669 | |||||||
| Shares issued under employee share plans | 40 | (169 | ) | 205 | - | - | - | - | - | - | - | 76 | ||||||
| Shares transferred under employee share plans | - | - | - | - | - | - | (1,114 | ) | - | 1,114 | - | - | ||||||
| Purchase of own shares for EBT | - | - | - | - | - | - | (210 | ) | - | - | - | (210 | ) | |||||
| Decrease in shares held by EBT | - | - | - | - | - | - | 131 | - | - | - | 131 | |||||||
| Purchase of shares for treasury | - | - | - | - | - | - | - | - | (148 | ) | - | (148 | ) | |||||
| At 30 June 2010 | 5,914 | 129 | 36,084 | 21,810 | 9,595 | - | (1,969 | ) | 3,552 | (4,047 | ) | (2,371 | ) | 68,697 | ||||
| Condensed consolidated statement of changes in equity for the year ended 31 December 2010 | ||||||||||||||||||
| £'000 | Issued share capital | Shares to be issued | Share premium | Merger reserve | Special reserve | Fair value reserve | Other reserve | Foreign currency translation reserve | Treasury shares | Retained earnings | Total equity | |||||||
| At 1 January 2010 | 5,874 | 298 | 35,879 | 21,810 | 9,595 | 569 | (776 | ) | 2,971 | (5,013 | ) | 2,921 | 74,128 | |||||
| Total comprehensive income for the period | ||||||||||||||||||
| Loss for the year | - | - | - | - | - | - | - | - | - | (7,431 | ) | (7,431 | ) | |||||
| Other comprehensive income | ||||||||||||||||||
| Foreign currency translation differences | - | - | - | - | - | - | - | 369 | - | - | 369 | |||||||
| Available for sale gain recycled | - | - | - | - | - | (569 | ) | - | - | - | - | (569 | ) | |||||
| Other items recorded directly in equity | ||||||||||||||||||
| Share-based payments | - | - | - | - | - | - | - | - | - | 720 | 720 | |||||||
| Shares issued under employee share plans | 40 | (169 | ) | 205 | - | - | - | - | - | - | - | 76 | ||||||
| Shares transferred under employee share plans | - | - | - | - | - | - | (1,707 | ) | - | 1,707 | - | - | ||||||
| Purchase of own shares for EBT | - | - | - | - | - | - | (385 | ) | - | - | - | (385 | ) | |||||
| Decrease in shares held by EBT | - | - | - | - | - | - | 143 | - | - | - | 143 | |||||||
| Purchase of shares for treasury | - | - | - | - | - | - | - | - | (148 | ) | - | (148 | ) | |||||
| At 31 December 2010 | 5,914 | 129 | 36,084 | 21,810 | 9,595 | - | (2,725 | ) | 3,340 | (3,454 | ) | (3,790 | ) | 66,903 | ||||
Notes to the condensed consolidated interim financial statements (unaudited)
1 Legal status and basis of preparation
1.1 Legal status
Panmure Gordon & Co. plc (the "Company") is a company domiciled in the United Kingdom. The address of the Company's registered office is Moorgate Hall, 155 Moorgate, London, EC2M 6XB. The interim financial statements of the Company for the 6 months ended 30 June 2011 comprise the Company and its subsidiaries (together referred to as the "Group").
1.2 Basis of preparation and statement of compliance with International Financial Reporting Standards
The interim consolidated financial statements of the Group have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board ('IASB') and as endorsed by the EU. They do not include all of the information required for full annual financial statements and should be read in conjunction with the Group's consolidated financial statements for the year ended 31 December 2010, which were prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the IASB and as endorsed by the EU. EU-endorsed IFRSs may differ from IFRSs as issued by the IASB if, at any point in time, new or amended IFRSs have not been endorsed by the EU.
The accounting policies are consistent with those applied by the Group in its 2010 annual financial statements. During the period ended 30 June 2011, the Group adopted a number of amendments to standards and interpretations which did not have a significant effect on the consolidated financial statements of the Group.
The Group incurred a loss during the period ended 30 June 2011 and has a negative retained earnings position. However, the directors note that the Group had cash resources of £17.8m at 30 June 2011 (2010: £25.7m) and no short term borrowings (2010: £3.0m subordinated loan). Consequently the directors believe that the Group has adequate resources, both in terms of liquidity and regulatory capital, to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing these interim results.
1.3 Comparative information
These interim consolidated financial statements include comparative information as required by IAS 34 and the AIM rules for Companies.
The comparative figures for the financial year ended 31 December 2010 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
1.4 Use of estimates and assumptions
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. Judgements made by management in the application of adopted IFRSs that have a significant effect on the financial statements and estimates with a significant risk of material adjustment are discussed in pages 32 to 37 and in note 27 within the Report and Financial Statements 2010. The areas highlighted in the year end financial statements include:
i) Goodwill and investment in subsidiaries
ii) Deferred tax
iii) Provisions
iv) Share-based payments
Management monitors the performance of the business and the prevailing market conditions to ensure that carried goodwill is in their view correctly stated. Given the recent market turbulence management conducted such a review taking into account the performance of the business in the first half of 2011 and concluded that no change is required at this point in time. However, a full impairment review of goodwill will be conducted at year end.
2 Segmental analysis
The Group has reported 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. The CODM allocates resources across the Group based on results and performance in each geographic area of operation. This is consistent with the basis of segmentation in the Report and Financial Statements 2010.
The Group compromises the following operating segments:
UK business US business Swiss businessSegmental analysis for the 6 months to 30 June 2011 and the 6 months to 30 June 2010, reconciled to the income statement
| UK | US | Swiss | Consolidated | |||||||||||||||||||||
| 6 months 30 June 2011 | 6 months 30 June 2010 | 6 months 30 June 2011 | 6 months 30 June 2010 | 6 months 30 June 2011 | 6 months 30 June 2010 | 6 months 30 June 2011 | 6 months 30 June 2010 | |||||||||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||||||||||
| Net commission and trading income | 4,149 | 3,249 | 3,939 | 4,603 | 666 | 977 | 8,754 | 8,829 | ||||||||||||||||
| Corporate finance fee income | 4,262 | 5,568 | 6,469 | 1,655 | 35 | - | 10,766 | 7,223 | ||||||||||||||||
| Wealth management and other income | 391 | 66 | 993 | 1,001 | - | - | 1,384 | 1,067 | ||||||||||||||||
| Net (loss)/gain on AFS investments | (685 | ) | 296 | (106 | ) | (27 | ) | - | - | (791 | ) | 269 | ||||||||||||
| Foreign exchange gain | - | - | 79 | 269 | 10 | - | 89 | 269 | ||||||||||||||||
| Ongoing administration costs | (10,528 | ) | (10,280 | ) | (12,538 | ) | (11,280 | ) | (903 | ) | (955 | ) | (23,969 | ) | (22,515 | ) | ||||||||
| Segmental operating (loss)/profit | (2,411 | ) | (1,101 | ) | (1,164 | ) | (3,779 | ) | (192 | ) | 22 | (3,767 | ) | (4,858 | ) | |||||||||
| Redundancy and restructuring charges | (118 | ) | (172 | ) | 219 | (491 | ) | - | - | 101 | (663 | ) | ||||||||||||
| Share-based payment charges | (149 | ) | (491 | ) | (335 | ) | - | - | - | (484 | ) | (491 | ) | |||||||||||
| Operating (loss)/profit | (2,678 | ) | (1,764 | ) | (1,280 | ) | (4,270 | ) | (192 | ) | 22 | (4,150 | ) | (6,012 | ) | |||||||||
| Net financial income/(expense) | 580 | 461 | (585 | ) | (502 | ) | - | - | (5 | ) | (41 | ) | ||||||||||||
| (Loss)/profit before tax | (2,098 | ) | (1,303 | ) | (1,865 | ) | (4,772 | ) | (192 | ) | 22 | (4,155 | ) | (6,053 | ) | |||||||||
| Tax | 188 | 92 | - | - | - | - | 188 | 92 | ||||||||||||||||
| (Loss)/profit for period attributable to the owners of the Company | (1,910 | ) | (1,211 | ) | (1,865 | ) | (4,772 | ) | (192 | ) | 22 | (3,967 | ) | (5,961 | ) | |||||||||
| All revenue is from external customers. The segmental operating profit reconciles to the statutory profit above, | ||||||||||||||||||||||||
| which was the basis for segmental disclosure in the Report and Financial Statements 2010. There are no | ||||||||||||||||||||||||
| discontinued activities. | ||||||||||||||||||||||||
| In respect of assets and non-current assets, the basis of segmentation is the same as in the Report and | ||||||||||||||||||||||||
| Financial Statements 2010. There are no regular major customers that account for more than 10% of revenue. | ||||||||||||||||||||||||
| UK | US | Swiss | Consolidated | |||||||||||||||||||||
| As at 30 June 2011
| As at30 June 2010
| As at30 June 2011
| As at30 June 2010
| As at30 June 2011
| As at30 June 2010
| As at30 June 2011
| As at30 June 2010
| |||||||||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||||||||||
| Non-current assets (inc goodwill) | 19,134 | 15,471 | 21,228 | 27,303 | - | - | 40,362 | 42,774 | ||||||||||||||||
| Current assets | 96,641 | 61,588 | 12,160 | 10,584 | - | - | 108,801 | 72,172 | ||||||||||||||||
| Current liabilities1 | (77,494 | ) | (35,739 | ) | (7,396 | ) | (6,696 | ) | - | - | (84,890 | ) | (42,435 | ) | ||||||||||
| Non-current liabilities | (894 | ) | (3,814 | ) | (2 | ) | - | - | - | (896 | ) | (3,814 | ) | |||||||||||
| Capital expenditure | (26 | ) | (60 | ) | - | (75 | ) | - | - | (26 | ) | (135 | ) | |||||||||||
| 1 The amounts disclosed as non-current excludes intra-group balances payable to the UK business. | ||||||||||||||||||||||||
| Segmental analysis for the 6 months to 30 June 2011 and 12 months to 31 December 2010, reconciled to the income statement | ||||||||||||||||||||||||
| UK | US | Swiss | Consolidated | |||||||||||||||||||||
| 6 months30 June2011
| 12 months31 Dec2010
| 6 months30 June2011
| 12 months31 Dec2010
| 6 months30 June2011
| 12 months31 Dec2010
| 6 months30 June2011
| 12 months31 Dec2010
| |||||||||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||||||||||
| Net commission and trading income | 4,149 | 7,417 | 3,939 | 9,174 | 666 | 1,770 | 8,754 | 18,361 | ||||||||||||||||
| Corporate finance fee income | 4,262 | 11,828 | 6,469 | 8,067 | 35 | - | 10,766 | 19,895 | ||||||||||||||||
| Wealth management and other income | 391 | 112 | 993 | 2,087 | - | - | 1,384 | 2,199 | ||||||||||||||||
| Net (loss)/gain on AFS investments | (685 | ) | 471 | (106 | ) | (25 | ) | - | - | (791 | ) | 446 | ||||||||||||
| Foreign exchange gain/(loss) | - | - | 79 | 314 | 10 | (19 | ) | 89 | 295 | |||||||||||||||
| Ongoing administration costs | (10,528 | ) | (20,303 | ) | (12,538 | ) | (24,220 | ) | (903 | ) | (1,885 | ) | (23,969 | ) | (46,408 | ) | ||||||||
| Segmental operating (loss)/profit | (2,411 | ) | (475 | ) | (1,164 | ) | (4,603 | ) | (192 | ) | (134 | ) | (3,767 | ) | (5,212 | ) | ||||||||
| Redundancy and restructuring charges | (118 | ) | (561 | ) | 219 | (691 | ) | - | - | 101 | (1,252 | ) | ||||||||||||
| Share-based payment charges | (149 | ) | (58 | ) | (335 | ) | (379 | ) | - | - | (484 | ) | (437 | ) | ||||||||||
| Operating loss | (2,678 | ) | (1,094 | ) | (1,280 | ) | (5,814 | ) | (192 | ) | (134 | ) | (4,150 | ) | (7,042 | ) | ||||||||
| Net financial income/(expense) | 580 | 994 | (585 | ) | (1,085 | ) | - | - | (5 | ) | (91 | ) | ||||||||||||
| Loss before tax | (2,098 | ) | (100 | ) | (1,865 | ) | (6,899 | ) | (192 | ) | (134 | ) | (4,155 | ) | (7,133 | ) | ||||||||
| Income tax | 188 | (298 | ) | - | - | - | - | 188 | (298 | ) | ||||||||||||||
| Loss for period attributable to the owners of the Company | (1,910 | ) | (398 | ) | (1,865 | ) | (6,899 | ) | (192 | ) | (134 | ) | (3,967 | ) | (7,431 | ) | ||||||||
| In respect of assets and non-current assets, the basis of segmentation is the same as in the Report and Financial Statements 2010. There are no regular major customers that account for more than 10% of revenue. | ||||||||||||||||||||||||
| UK | US | Swiss | Consolidated | |||||||||||||||||||||
| As at30 June2011
| As at31 Dec2010
| As at30 June2011
| As at31 Dec2010
| As at30 June2011
| As at31 Dec2010
| As at30 June2011
| As at31 Dec2010
| |||||||||||||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||||||||||
| Non-current assets (inc goodwill) | 19,134 | 19,610 | 21,228 | 22,145 | - | - | 40,362 | 41,755 | ||||||||||||||||
| Current assets | 96,641 | 51,668 | 12,160 | 8,752 | - | - | 108,801 | 60,420 | ||||||||||||||||
| Current liabilities1 | (77,494 | ) | (29,315 | ) | (7,396 | ) | (5,101 | ) | - | - | (84,890 | ) | (34,416 | ) | ||||||||||
| Non-current liabilities | (894 | ) | (897 | ) | (2 | ) | 41 | - | - | (896 | ) | (856 | ) | |||||||||||
| Capital expenditure | (26 | ) | (95 | ) | - | (95 | ) | - | - | (26 | ) | (190 | ) | |||||||||||
| 1 The amounts disclosed as non-current excludes intra-group balances payable to the UK business. | ||||||||||||||||||||||||
3 Share-based payments
The Group's share based payment plans are described in full within the Group's consolidated financial statements for the year ended December 2010.
During the period, certain participants in the Performance Share Plan were invited to surrender previously granted awards having a three year vesting schedule and which were subject to the attainment of performance conditions. Subsequently new awards were made to these participants on a five year vesting schedule.
The fair value of options granted during the period have been estimated using a Black-Scholes valuation model and a Monte Carlo simulation. Where options have been granted with an exercise price of 4p or less, the fair value of options on the date of grant has been estimated at their intrinsic value as this does not give a materially different result to the Black-Scholes model. The significant inputs to the model were:
(a) Share price on the date of grant;
(b) Exercise price;
(c) Expected volatility (56% based on historic volatility) (2010: 40%);
(d) Risk free rate on the date of grant; and
(e) Expected dividend yield (nil).
The weighted average fair value of share-based payments granted during the period was 23.6p.
| 6 months 30 June 2011 | 6 months 30 June 2010 | 12 months 31 December 2010 | ||||||||||||||
| £'000 | £'000 | £'000 | ||||||||||||||
| IFRS 2 share-based payment charges | 589 | 669 | 720 | |||||||||||||
| Other related IFRS 2 share-based payment charges | (105 | ) | (178 | ) | (283 | ) | ||||||||||
| 484 | 491 | 437 | ||||||||||||||
| 4 Taxation | ||||||||||||||||
| The current tax charge for the period is different to the standard rate of corporation tax in the UK of 26.5% (2010: 28%). | ||||||||||||||||
| Tax on profit on ordinary activities: | 6 months 30 June 2011 | 6 months 30 June 2010 | 12 months 31 December 2010 | |||||||||||||
| £'000 | £'000 | £'000 | ||||||||||||||
| Analysis of tax credit/(charge) in period: | ||||||||||||||||
| UK corporation tax at 26.5% (2010: 28%) | ||||||||||||||||
| Prior year adjustments - loss carry back claim | - | (92 | ) | 466 | ||||||||||||
| Current year tax (charge)/credit | (23 | ) | 665 | 217 | ||||||||||||
| Other prior year adjustments | (44 | ) | - | (254 | ) | |||||||||||
| (67 | ) | 573 | 429 | |||||||||||||
| Deferred tax | ||||||||||||||||
| Prior year adjustments to deferred tax credit | 4 | 43 | 43 | |||||||||||||
| Current year deferred tax credit/(charge) | 251 | (524 | ) | (770 | ) | |||||||||||
| 255 | (481 | ) | (727 | ) | ||||||||||||
| Tax credit/(charge) on profits on ordinary activities | 188 | 92 | (298 | ) | ||||||||||||
| Effective tax rate credit/(charge) | 4.50 | % | 1.52 | % | (4.2 | )% | ||||||||||
| Factors affecting tax credit/(charge): | ||||||||||||||||
| Loss on ordinary activities before tax | (4,155 | ) | (6,053 | ) | (7,133 | ) | ||||||||||
| Profit on ordinary activities multiplied by rate of UK corporation tax at 26.5% (2010: 28%) | 1,101 | 1,695 | 1,997 | |||||||||||||
| Effects of: | ||||||||||||||||
| Expenses not deductible for tax purposes | 17 | 3 | (117 | ) | ||||||||||||
| Tax losses not recognised | (494 | ) | (1,452 | ) | (1,854 | ) | ||||||||||
| Differences relating to share schemes | (259 | ) | (31 | ) | (266 | ) | ||||||||||
| Foreign tax | (23 | ) | - | - | ||||||||||||
| Change in corporation tax rate | (47 | ) | - | (9 | ) | |||||||||||
| Deemed goodwill amortisation | - | - | 148 | |||||||||||||
| Goodwill on consolidation | (69 | ) | (74 | ) | (148 | ) | ||||||||||
| Adjustment to tax charge in respect of previous periods | (38 | ) | (49 | ) | (49 | ) | ||||||||||
| Total tax credit/(charge) on profits on ordinary activities | 188 | 92 | (298 | ) | ||||||||||||
| At 30 June 2011, the Group had potential deferred tax assets relating to US trading losses and the US goodwill impairment charge respectively. These assets have not been recognised in the balance sheet due to the uncertainty over timing and extent of future taxable profits beyond the levels that would support the value of the deferred tax asset already recognised. | ||||||||||||||||
| The Group also had a potential deferred tax asset relating to UK losses brought forward. These assets have also not been recognised in the balance sheet due to the uncertainty over the extent and timing of their recoverability. | ||||||||||||||||
| 5 Earnings per share | ||||||||||||||||
| Earnings per share (EPS) are calculated on a net basis using the profit on ordinary activities after taxation divided by the weighted average number of shares detailed below. | ||||||||||||||||
| 6 months | 6 months | 12 months | ||||||||||||||
| 30 June | 30 June | 31 December | ||||||||||||||
| 2011 | 2010 | 2010 | ||||||||||||||
| £'000 | £'000 | £'000 | ||||||||||||||
| Weighted average number of shares in issue | 147,675,578 | 145,504,837 | 145,759,376 | |||||||||||||
| Fully diluted weighted average number of shares in issue | 152,869,324 | 147,372,739 | 147,971,186 | |||||||||||||
| Basic loss per share | (2.69 | )p | (4.10 | )p | (5.10 | )p | ||||||||||
| Diluted loss per share | (2.69 | )p | (4.10 | )p | (5.10 | )p | ||||||||||
| 6 Reserves | ||||||||||||||||
| During the six months to 30 June 2011, 2,363,049 shares were allotted for cash at price of 25p per share as part | ||||||||||||||||
| of the Company's staff retention programme. 22,467 shares were allotted to satisfy the vesting of share awards | ||||||||||||||||
| under the Company's Accrued Bonus Plan. Consequently the 'shares to be issued' in the condensed consolidated | ||||||||||||||||
| statement of changes in equity represents the resulting reduction in the number of unvested shares within the | ||||||||||||||||
| Accrued Bonus Plan. In addition, 523,498 shares were transferred out of treasury during the period to satisfy | ||||||||||||||||
| the vesting of share awards under the Company's Performance Share Plan. | ||||||||||||||||
| The Company has not purchased any of its own shares during the period. As at 30 June 2011, the number of shares in issue was 150,228,905 (31 December 2010: 147,843,389), of which 1,984,810 (31 December 2010: 2,508,308) were held in treasury. The fully diluted share capital was 154,310,571 (31 December 2010: 148,419,622). | ||||||||||||||||
| The 'other reserve' includes the nominal value of share capital owned by the Panmure Gordon & Co. plc No. 2 | ||||||||||||||||
| Employee Benefit Trust in respect of the 2005 Employee Share Option Plan and the cost of shares purchased in | ||||||||||||||||
| the market. At 30 June 2011 the Trust held 9,871,564 shares (December 2010: 9,746,421 shares). | ||||||||||||||||
| 7 Redundancy, restructuring and other non-recurring charges | ||||||||||||||||
| 6 months | 6 months | 12 months | ||||||||||||||
| 30 June | 30 June | 31 December | ||||||||||||||
| 2011 | 2010 | 2010 | ||||||||||||||
| £'000 | £'000 | £'000 | ||||||||||||||
| Redundancy charges | 173 | 172 | 374 | |||||||||||||
| Litigation (reimbursement) / costs | (274 | ) | 491 | 878 | ||||||||||||
| Total | (101 | ) | 663 | 1,252 | ||||||||||||
| 8 Trade and other receivables | ||||||||||||||||
| As at | As at | As at | ||||||||||||||
| 30 June | 30 June | 31 December | ||||||||||||||
| 2011 | 2010 | 2010 | ||||||||||||||
| £'000 | £'000 | £'000 | ||||||||||||||
| Non-current assets | ||||||||||||||||
| Other receivables | 2,372 | 2,149 | 2,458 | |||||||||||||
| Total | 2,372 | 2,149 | 2,458 | |||||||||||||
| Due within one year: | ||||||||||||||||
| Current assets | ||||||||||||||||
| Trade receivables | 4,935 | 770 | 3,400 | |||||||||||||
| Stock borrow1 | - | 178 | - | |||||||||||||
| Market receivables | 75,930 | 35,495 | 22,240 | |||||||||||||
| Corporation tax receivable | 422 | 54 | 466 | |||||||||||||
| Other receivables | 1,839 | 2,691 | 1,834 | |||||||||||||
| Prepayments and accrued income | 1,406 | 1,217 | 1,232 | |||||||||||||
| Total | 84,532 | 40,405 | 29,172 | |||||||||||||
| 1 Stock borrow reflects collateral placed against the value of stock borrowed. | ||||||||||||||||
| The level of market receivables at a period end is dependent on the level of agency and trading activity in the | ||||||||||||||||
| preceding days. The majority of market receivables reside within the UK business segment. | ||||||||||||||||
| Within non-current assets, other receivables represent loans made to employees under the Group's Matching Share | ||||||||||||||||
| Plan. These loans were included within current assets in prior periods. However, the directors have agreed to | ||||||||||||||||
| extend these loans for a further period of three years and therefore, these loans have been classified as non- | ||||||||||||||||
| current assets as at 30 June 2011. | ||||||||||||||||
| 9 Trade and other payables | ||||||||||||||||
| As at | As at | As at | ||||||||||||||
| 30 June | 30 June | 31 December | ||||||||||||||
| 2011 | 2010 | 2010 | ||||||||||||||
| £'000 | £'000 | £'000 | ||||||||||||||
| Market payables | 71,418 | 30,780 | 20,680 | |||||||||||||
| Trade payables | 596 | 406 | 572 | |||||||||||||
| Total trade payables | 72,014 | 31,186 | 21,252 | |||||||||||||
| Other payables | 1,186 | 1,523 | 1,655 | |||||||||||||
| Provisions | 334 | 2,891 | 393 | |||||||||||||
| Accruals and deferred income | 7,839 | 5,329 | 6,760 | |||||||||||||
| Total other payables | 9,359 | 9,743 | 8,808 | |||||||||||||
The level of market payables at a period end is dependent on the level of agency and trading activity in the preceding days.
Provisions
| Litigation | Onerous leases | Total | ||||||||||||
| £'000 | £'000 | £'000 | ||||||||||||
| At 1 January 2011 | - | 393 | 393 | |||||||||||
| Utilised during the period | - | (66) | (66) | |||||||||||
| Foreign exchange | - | 7 | 7 | |||||||||||
| At 30 June 2011 | - | 334 | 334 | |||||||||||
| Litigation | Onerous leases | Total | ||||||||||||
| £'000 | £'000 | £'000 | ||||||||||||
| At 1 January 2010 | 1,758 | 730 | 2,488 | |||||||||||
| Utilised during the period | - | (222) | (222) | |||||||||||
| Charged | 491 | - | 491 | |||||||||||
| Foreign exchange | 104 | 30 | 134 | |||||||||||
| At 30 June 2010 | 2,353 | 538 | 2,891 | |||||||||||
| Litigation | Onerous leases | Total | ||||||||||||
| £'000 | £'000 | £'000 | ||||||||||||
| At 1 January 2010 | 1,758 | 730 | 2,488 | |||||||||||
| Charged | 878 | - | 878 | |||||||||||
| Foreign exchange | 396 | 4 | 400 | |||||||||||
| Released | (3,032) | (341) | (3,373) | |||||||||||
| At 31 December 2010 | - | 393 | 393 | |||||||||||
Litigation
In the normal course of business there may be various litigation claims and contingencies pending against the Group which, in the opinion of management, will be resolved with no material impact on the Group's financial position or results of operations.
ThinkEquity LLC is the subject of an arbitration claim filed with FINRA by a former client of its wealth management business in regards to auction rate securities owned by the client. The Group is defending itself vigorously against the claim and has not established a reserve.
10 General
The interim report was approved by the board of directors on 29 September, 2011.
This report will be sent to shareholders and will be made available to the public, upon request, at the registered office of Panmure Gordon & Co. plc, Moorgate Hall, 155 Moorgate, London EC2M 6XB or from the Company's website www.panmure.com.
INDEPENDENT REVIEW REPORT TO PANMURE GORDON & CO. PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly report for the six months ended 30 June 2011 which comprises the condensed consolidated interim income statement, condensed consolidated interim statement of comprehensive income, condensed consolidated interim statement of financial position, condensed consolidated interim statement of cash flows, condensed consolidated interim statement of changes in equity and the related explanatory notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the AIM Rules.
As disclosed in note 1.2 the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the AIM Rules.
R. Faulknerfor and on behalf of KPMG Audit Plc Chartered Accountants
8 Salisbury SquareLondon
29 September, 2011
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