Panmure Gordon & Co. Plc (LON:PMR) expects the next two years will be challenging during Brexit negotiations but believes its takeover by Ellsworthy Limited has opened an “exciting chapter”.
Ellsworthy - a joint venture between former Barclays plc (LON:BARC) chief executive Bob Diamond’s New York private equity firm, Atlas Merchant Capital, and Qatari investment bank, QInvest - offered to buy Panmure last month in a deal valued at £15.5mln.
Atlas will control a majority stake and QInvest will maintain its existing 43% shareholding.
The proposed 100p-per-share offer is subject to approval by shareholders and the Financial Conduct Authority.
Chairman Andrew Adcock today said the deal “opens an exciting chapter for the company, that subject to the court-sanctioned scheme being approved, will provide a stronger framework with better access to additional capital on which to continue to grow the business, enabling us to better support our client needs, both corporate and institutional”.
His remarks were posted alongside the company’s full year results, which showed the stockbroker returned to a profit.
Panmure reported profit before tax of £1.0mln for the year to 31 December 2016, compared to a loss before tax of £16.6mln a year earlier.
The company said UK equities returned 17% in local currency terms in 2016, the best year since 2010, supported by a recovery in commodity prices, a pick-up in global growth, rising inflation and higher US interest rates.
However, results were held back by the devaluation of the pound against the dollar following the UK’s vote to leave the European Union last June.
Patric Johnson, who was appointed chief executive in February 2016, said: “With a challenging macro-economic environment following the UK referendum and the US presidential elections, 2016 was a year of consolidation and focus for the core business as we continued implementing our sector based corporate driven model accompanied by our unwavering commitment to quality in everything that we do.”
He said while 2017 has started positively for the firm, the coming two years will remain challenging as the UK formally exits the EU.
The return to profit in 2016 was boosted by a 41% jump in corporate finance and other income to £18mln on the back of five initial public offerings, 12 merger and acquisition (M&A) transactions and 44 fee-generating deals and advisory engagements.
Net commission and trading income fell 10% to £9.5mln, reflecting the closure of Panmure’s Swiss representative office. The company closed the office in January 2016, which resulted in a net loss impact of £0.2mln.
The Singapore office was also closed in May, with a net loss impact of £0,1mln.
Panmure said it trimmed its costs to focus on key business lines. Administrative costs fell 7.9% to £24.4mln.
Post-period, the company has executed nine transactions in the first quarter, including advising on two M&A mandates. Johnson said commission and trading income continues to perform in line with expectations and the pipeline is progressing well.
“As such we remain confident for the year ahead.”
A dividend was not recommended.