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Categorized | Financial

Panmure Gordon swings to full-year loss


Posted on March 31, 2016

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Panmure Gordon confirmed on Thursday that it swung to a statutory loss of £16.7m during a “disappointing” 2015, in the first set of results unveiled by new chief executive Patric Johnson, who is trying to turn round the fortunes of the City stockbroker.

The overall loss was driven by a decision to write off outstanding historic accounting goodwill of £13.2m on the balance sheet, which dates back to 2005, and start 2016 with a clean slate.

    Panmure reported a loss after tax from normal operations of £4.1m for 2015, compared with a profit in 2014. This is in line with the company’s warning in December that it expected to suffer a pre-tax loss of £4m–£4.5m in 2015 after a decline in capital markets transactions.

    Mr Johnson said: “The problem is that last year we didn’t do as many transactions as we should have done. We didn’t focus enough on origination.”

    Panmure, whose name dates back 140 years, and its stockbroker peers are suffering from structural challenges to their business model coming from more regulation, which is compounded by fewer deals and lower corporate retainers.

    Revenue from corporate finance and other fee income was down 38 per cent to £12.8m during 2015, while net commission and trading income increased 11.3 per cent to £10.5m.

    Mr Johnson was promoted to chief executive in February after his predecessor Phillip Wale quit abruptly, a week after chairman Ed Warner announced his decision to leave the group. The same month Panmure announced it had agreed a £5m loan facility from its Qatari backers QInvest to bolster its balance sheet.

    Panmure’s headcount has reduced roughly from 140 people last year to just over 100 today. Since he took the helm, Mr Johnson has cut costs by shutting non-core desks such as the five-person Swiss office and a fixed-income desk that was part of Panmure’s acquisition of Charles Stanley Securities in 2015.

    The company has moved from a generalist approach to being sector-driven to position itself for Mifid 2, the EU directive that is reshaping Europe’s financial services industry and putting pressure on asset managers’ research budgets.

    Mr Johnson said: “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 fundraising opportunities in our market [ . . .] My key focus now is to swing the business back into the black.”

    Separately, on Thursday Panmure’s rival Numis Corporation issued a trading update for the six months to the end of March. It said it expects to report revenue and profits above the first half of last year, on the back of 27 equity transactions and 10 initial public offerings so far this financial year. In the first half of its 2015 financial year, Numis recorded revenues of £45.7m and £14.3m in adjusted pre-tax profits.