PMR.L Regulatory News (PMR)

24 Mar 2005 12:49

Durlacher Corporation PLC24 March 2005 Not for release, publication or distribution in or into the United States,Canada, Australia or Japan PRESS ANNOUNCEMENT FOR IMMEDIATE RELEASE 24 March 2005 DURLACHER CORPORATION PLC PROPOSED ACQUISITION OF PANMURE GORDON & CO., LIMITED The Board of Durlacher is pleased to announce that final agreement has beenreached between Durlacher and Lazard regarding the acquisition of the entireissued share capital of Panmure Gordon & Co. by Durlacher. The Acquisition willcreate a leading independent institutional and corporate broker providing abroad range of securities services for Official List and AIM companies andinvestors. Highlights - The Acquisition has met with strong support from a number of Durlacher's largest Shareholders. Independent Shareholders representing approximately 23.5 per cent. of the existing issued share capital of the Company have given irrevocable commitments to vote in favour of the resolutions to be proposed at the Extraordinary General Meeting. In addition, Independent Shareholders representing approximately 11.3 per cent. of the existing issued share capital have indicated their current intention to vote in favour of the resolutions to be proposed at the Extraordinary General Meeting. - The major benefits of the Acquisition are expected to be: - increased scale and improved competitive position; - ability to grow corporate client list; - complementary sources of revenue; - lower combined cost base; - improved competitive position in a consolidating market; and - continuing relationship with Lazard. - Under the Acquisition Agreement, Durlacher will issue 18,521,295 Consideration Shares, representing approximately 32.8 per cent. of the Enlarged Share Capital. In addition, a New Employee Benefit Trust will be established, the trustees of which will subscribe for 18,521,295 new Ordinary Shares, representing approximately 32.8 per cent. of the Enlarged Share Capital. The subscription for new Ordinary Shares by the New Employee Benefit Trust reflects an understanding reached between Lazard and the management of Panmure Gordon whereby one half of the equity in Panmure Gordon would be transferred to existing and future employees. - Following completion of the Acquisition, Richard Wyatt, currently Chairman of Panmure Gordon, will become Executive Chairman of the Enlarged Group and Tim Linacre, currently Chief Executive of Panmure Gordon, will become Chief Executive Officer of the Enlarged Group. Simon Hirst, currently Chief Executive of Durlacher, will become Executive Vice Chairman of the Enlarged Group. The other Executive Directors of the Enlarged Group will be David Liddell, Finance Director, and Julian Hirst, while the Non-executive Directors will be Tony Caplin, Howard Flight and Jon Hack, who is a Managing Director of Lazard. - Durlacher will apply for admission of its Enlarged Share Capital to trading on AIM and, subject, inter alia, to completion of the Acquisition, its listing on the Official List will be cancelled. - Subject to Shareholder approval and following completion of the Acquisition, the Company will change its name to Panmure Gordon & Co. plc. - The Acquisition is conditional, inter alia, upon the approval by Shareholders of the resolutions necessary to implement the transaction. A circular providing further information on the Acquisition and related proposals and details of an extraordinary general meeting being called to approve the Acquisition will be posted to Shareholders during the week commencing 28 March 2005. The Board of Durlacher expects that the suspension from trading on the Official List of Durlacher's Ordinary Shares will cease following posting of the Circular. Simon Hirst, Chief Executive of Durlacher, commented:"The combination of Durlacher and Panmure Gordon represents an excitingopportunity to create a leading independent small-cap and mid-cap stockbrokerfocussed on the UK market. The Enlarged Group will have increased scale, and bebetter positioned to win new brokerships, win new equity capital marketmandates, and have greater placing power with institutional investors." Richard Wyatt, Chairman of Panmure Gordon and Tim Linacre, Chief Executive ofPanmure Gordon, commented:"We are particularly pleased at the level of support we have received fromDurlacher's shareholders and the clients of both firms. This is a valueenhancing combination which creates a leading UK corporate and institutionalsecurities business with strengths and growth opportunities across the marketcapitalisation spectrum." Enquiries Durlacher Corporation Plc Tel: 020 7459 3600Simon Hirst Panmure Gordon & Co., Limited Tel: 020 7187 2000Richard WyattTim Linacre Lazard & Co., Limited Tel: 020 7187 2000Jon HackRichard Creswell Hawkpoint Partners Limited (financial advisers to Tel: 020 7665 4500Durlacher)Ben MingayGraham Paton Bell Pottinger Corporate & Financial (public relations Tel: 020 7861 3232advisers to Durlacher)David RydellCharlotte Kirkham This announcement, for which the directors of Durlacher Corporation Plc areresponsible, has been issued by Durlacher Corporation Plc and has beenapproved solely for the purposes of Section 21 of the Financial Services andMarkets Act 2000 by Hawkpoint Partners Limited. This announcement should not be forwarded or transmitted in or into the UnitedStates, Canada, Australia, Japan or the Republic of Ireland or into any otherjurisdiction if to do so would constitute a violation of the relevant laws insuch other jurisdiction Hawkpoint Partners Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively forDurlacher Corporation Plc and for no one else in connection with this matter.Hawkpoint Partners Limited will not be responsible to anyone other thanDurlacher Corporation Plc for providing the protections afforded to thecustomers of Hawkpoint Partners Limited, nor for providing advice in relationto the contents of this announcement or any matter referred to herein This press release contains forward-looking statements. Statements that arenot historical or current facts, including statements about beliefs andexpectations, are forward-looking statements. These forward-looking statementsare subject to risks and uncertainties relating to the proposed separation andacquisition of Panmure Gordon & Co., Limited, including the impact of theproposed separation and acquisition on the enlarged group's results ofoperations, the financial accounting consequences of the proposed transaction,the impact of the acquisition on the enlarged group's share price and on itsrelationships with its customers and employees, the tax consequences of thetransactions, changes in business climate or market conditions or otherfactors which could make the proposed separation or acquisition unadvisable.These forward-looking statements involve other inherent risks anduncertainties, and other important factors could cause actual results todiffer materially from those anticipated. Forward-looking statements speakonly as of the date that they are made and none of Lazard, the Company norPanmure Gordon & Co., Limited undertakes any obligation to update them in thelight of new information or future events Not for release, publication or distribution in or into the United States,Canada, Australia or Japan PRESS ANNOUNCEMENT FOR IMMEDIATE RELEASE 24 March 2005 DURLACHER CORPORATION PLC PROPOSED ACQUISITION OF PANMURE GORDON & CO., LIMITED 1. Introduction Following the suspension of the listing of the Company's shares from theOfficial List on 13 January 2005, Durlacher announced on 1 February 2005 that it was in exclusive negotiations and had signed a legally non-binding memorandumof understanding with Lazard to combine the Panmure Gordon Business withDurlacher. The Board of Durlacher is pleased to announce that finalagreement to acquire Panmure Gordon & Co. has now been reached. In view of the size of the Acquisition relative to the Company, theAcquisition is conditional, inter alia, upon the approval of Shareholders. Acircular providing further information on the Acquisition and details of theextraordinary general meeting being called to approve the Resolutions willbe posted to Shareholders during the week commencing 28 March 2005. TheBoard of Durlacher expects that the suspension from trading on the OfficialList of Durlacher's Ordinary Shares will cease following posting of theCircular. The Acquisition has met with strong support from a number of Durlacher'slargest Shareholders. Independent Shareholders representing approximately23.5 per cent. of the Existing Ordinary Shares have given irrevocablecommitments to vote in favour of the Resolutions. In addition, IndependentShareholders representing approximately 11.3 per cent. have entered intonon-binding letters of intent to vote in favour of the Resolutions. The Proposals to be put to Shareholders comprise: - the acquisition of Panmure Gordon & Co. to be satisfied by the issue of the Consideration Shares; - the establishment of the New Employee Benefit Trust, the proposed subscription by the trustees of the New Employee Benefit Trust for 18,521,295 new Ordinary Shares at par and the related adoption of the ESOP and the grant of options pursuant to the ESOP broadly reflecting a prior understanding reached by Lazard with Tim Linacre and Richard Wyatt as described below; - amendments to the Existing Share Option Plans and the grant of further options pursuant to the Unapproved Share Option Plan; - the adoption of the Performance Share Option Plan and the grant of the Performance Options and the UKPG Option; - the proposed Rule 9 Waivers, being the waivers by the Panel of the obligations of the members of the EBT Concert Party and UKPG Holdings or parties acting in concert with them to make mandatory offers for the Company under Rule 9 of the City Code; - the entering into of the Relationship Agreement with UKPG Holdings and Lazard; - the authority to cancel the entire share premium account of Durlacher existing on Admission, as well as cancel and extinguish all of the Deferred Shares; - changes to the roles of certain of the Directors and the appointment of the Proposed Directors; and - the change of name of the Company to Panmure Gordon & Co. plc. 2. Background to and reasons for the Proposals BackgroundPrior to becoming an investment bank, Durlacher had established a reputationfor advising, raising capital for, and investing in early stage technologycompanies. From 2000 until mid 2003, equity market conditions deteriorateddramatically, having a serious effect on the Group's ability to generateacceptable levels of revenue and profitability from this business model. Since early 2002, the Company has repositioned its business as that of aninvestment bank offering corporate finance, institutional sales, equityresearch and market making services aimed at corporate clients andinstitutional investors in the UK small-cap market. The Directors considerthat Durlacher's repositioning of its business has been successful asevidenced by the growth in the Company's corporate client base from 3 clientsin March 2002 to 46 clients as at 11 March 2005. The Company has benefitedfrom the general revival in market activity during 2004 and early 2005 and, inparticular, the increased number of IPOs and secondary fundraisings in the UKsmall-cap market. Reasons for the ProposalsThe Directors believe that the opportunities available to companiesspecialising in corporate finance and equity capital markets in the UKsmall-cap market are significant, but that such specialisation can entail ahigher degree of volatility of revenues than would ordinarily be the case fora more broadly based stockbroker. In addition, the minimum fixed cost ofproviding an efficient infrastructure for equities trading means thatmeaningful secondary market activity is required in order to generatesatisfactory returns. The Directors also recognise that as the Company'scorporate clients grow in size they may require exposure to a broader range ofinstitutional investors. Further, Durlacher's existing business is heavilydependent on fees and commissions generated from successful IPOs and secondaryfundraisings. The Directors believe that while Durlacher has demonstrated the validity ofits business model as an independent stockbroker in the UK small-cap market,the combination of Durlacher and Panmure Gordon provides an opportunity totransform the business and has the potential to create significant value forShareholders. The Directors and the Proposed Directors believe that the Enlarged Group willbe well positioned to attract new brokerships, win new equity capital marketsmandates and have improved placing power with institutional investors. TheDirectors and the Proposed Directors also believe that the Enlarged Group willhave an attractive balance of corporate and institutional equity activity,well established relationships with the UK investment community and theability to provide its customers with a broad and deep range of products underthe recognised ''Panmure Gordon'' brand name. The principal benefits of thecombination of the existing businesses of Durlacher and Panmure Gordon aredescribed below. Shareholders should be aware that, in addition to the expected benefitsdescribed below, as with any stockbroking business, the Enlarged Group will bevulnerable to possible losses of key clients and key staff and to a largedegree will be dependent on favourable market and economic conditions. Increased scale and improved competitive positionThe combination of Panmure Gordon's business with Durlacher will increase thebreadth and depth of research coverage, improve equity distribution capabilityand strengthen Durlacher's existing corporate finance team. The Directors andthe Proposed Directors believe that this combination will create one of theleading independent small-cap and mid-cap stockbrokers focused on the UnitedKingdom. As a consequence, the Directors and the Proposed Directors believe that theEnlarged Group will be in a strong position to compete for larger fundraisingmandates, particularly larger flotations on the Official List. Panmure Gordonhas a stronger recent track record of lead managing larger corporatefundraisings than Durlacher. While Durlacher raised approximately £124millionof funds for its clients in 2004, Panmure Gordon raised approximately £307million on a lead-managed basis (source: Autex 1 January 2004 to 31 December2004). In addition, the Directors and the Proposed Directors believe that the scaleof the combined business, together with the staff incentivisation plans to beput in place as part of the Proposals, will assist the Company in attractingand retaining the high quality staff required to further develop thebusiness. Ability to grow corporate client listDurlacher serves primarily the fast-growing AIM market where it has beensuccessful in winning new corporate clients over the past two years. However,as its clients grow in size and market capitalisation, Durlacher is vulnerableto such clients being attracted away to other broking houses that can offer abroader and deeper range of products and services. By contrast, the majority of Panmure Gordon clients are listed on the OfficialList and the average market capitalisation of Panmure Gordon's clients isapproximately eight times that of Durlacher's. Larger clients typically havemore liquid stocks and attract more trading volume, generating greatersecondary trading commission for their stockbrokers. Furthermore, thesecondary fundraisings and mergers and acquisitions transactions of theseclients tend to be more substantial and generate higher fees. The business of the Enlarged Group is expected to have approximately 100corporate clients ranging from small capitalisation AIM quoted companies tolarger capitalisation companies listed on the Official List. As a result of the strengthening of the Company's existing business in areassuch as research coverage, institutional sales and its ability to participatein corporate fundraisings, the Directors and the Proposed Directors believethat the Enlarged Group will be well placed to provide the appropriate supportto existing clients as they grow in size and market capitalisation and toprovide the breadth and depth of services that are required to attract andretain new corporate clients going forward. Complementary sources of revenuePanmure Gordon, because of its broader institutional sales coverage and themore comprehensive scope of its research product, typically has a significantmarket share in the trading of its corporate clients' shares. Not only doesthis trading generate a substantial part of Panmure Gordon's revenue, but italso enables Panmure Gordon to provide its corporate clients with morecomplete information on institutional views on their shares and to assist themwith their institutional relationships. The Directors and Proposed Directorsbelieve that the combination of the businesses will enable the Enlarged Groupto grow its market share in the trading of existing Durlacher corporateclients' shares, both adding to revenue and providing a more complete serviceto those clients. In addition, the combination of Panmure Gordon and Durlacher is expected toresult in a more balanced enlarged business with income from both corporatefinance fees and equity sales and trading. Durlacher's existing business isheavily weighted towards fee income from corporate finance advice andtherefore can be unpredictable, being dependent on both transactionscompleting and the timing of their completion. By contrast, Panmure Gordonearns more than half of its revenue from sales commission and trading incomein UK equities, which provides a more stable and recurrent revenue stream. Lower combined cost baseThe Directors and Proposed Directors are targeting an annualised cost base forthe administrative expenses of the Enlarged Group of approximately £21 millionper annum, before bonuses and exceptional items, to be achieved before the endof 2005. The expected cost base has been calculated on the basis of the existing costand operating structures of Durlacher and Panmure Gordon, as adjusted for therelocation of Panmure Gordon to the existing Durlacher premises and forcertain Lazard cost allocations (that will no longer be relevant) and byreference to current prices and the current regulatory environment. Thisestimated cost base for the Enlarged Group and any one-off costs for achievingit relates to future actions and circumstances which, by their nature, involverisks, uncertainties and other factors. Because of this, the cost basereferred to may not be achieved, or could be materially different from thisestimate. This statement should not be interpreted to mean that the earningsper share of Durlacher (on an enlarged basis) in 2006, or in any subsequentperiod, would necessarily match or be greater than those for the relevantpreceding financial period. Improved competitive position in a consolidating marketWhile most larger investment banks have withdrawn from servicing smallcompanies over the last few years, a number of new competitors have emerged inthe small-cap and mid-cap market. The Directors and the Proposed Directorsbelieve that a degree of industry consolidation amongst these new competitorsand others is inevitable. In order to retain and win clients and to compete effectively with new marketentrants, Durlacher must provide a more complete service to clients includingboth a corporate finance and a sales and trading capability. The Directors andthe Proposed Directors believe that Durlacher will gain the ability to offerthis more complete service to its clients through its combination with PanmureGordon and that consequently the Enlarged Group will be better placed in thisperiod of consolidation than those of its competitors that rely predominantlyon equity capital markets and mergers and acquisitions success fees to coveroperational costs. Continuing relationship with LazardThe Enlarged Group intends to continue to maintain a close relationship withLazard, with the intention to co-operate as independent advisers and, onappropriate occasions, to work together to provide complementary services totheir respective clients. 3. Description of the Proposals The AcquisitionOn 11 March 2005, the Panmure Gordon Business was transferred by Lazard andLazard & Co., Services Limited to Panmure Gordon & Co., a subsidiary of UKPGHoldings, pursuant to the terms of a sale of business agreement. On 24 March 2005, Durlacher entered into the Acquisition Agreement pursuant towhich it agreed to acquire Panmure Gordon & Co. from UKPG Holdings for aconsideration to be satisfied by the issue of the Consideration Shares. The Consideration Shares comprise 9,260,647 new Ordinary Shares, which willrank in all respects pari passu with the Existing Ordinary Shares, and9,260,648 Restricted Voting Ordinary Shares, which will rank in all respectspari passu with the Existing Ordinary Shares save that suchshares will not have the right to vote in general meetings of the Company. As a result, on Admission, UKPG Holdings will own approximately 32.8 per cent.of the Enlarged Share Capital of which it will have the right to vote half innumber (16.4 per cent.) representing 19.6 per cent. of the voting rightsexercisable in general meetings of the Company. The right to vote theremaining 16.4 per cent. of the Enlarged Share Capital held by UKPG Holdings,which relates to the 9,260,648 Restricted Voting Ordinary Shares, will berestored upon satisfaction of one of a number of specified conditions. The Acquisition Agreement contains an obligation on UKPG Holdings to deliverPanmure Gordon & Co. to Durlacher with at least £8.0 million of net assets atthe close of business on the second business day prior to Admission and ifthis is not the case then Durlacher has the right to terminate the AcquisitionAgreement. Completion of the Acquisition is conditional on a number of matters, includingthe passing of the Resolutions and admission of the Enlarged Share Capital totrading on AIM becoming effective in accordance with the AIM Rules. The New Employee Benefit Trust and the ESOPIn the summer of 2004, Lazard reached an understanding with Richard Wyatt andTim Linacre to create a scheme whereby one half of the equity of PanmureGordon would be transferred to existing and future employees. In the opinionof Richard Wyatt and Tim Linacre, this understanding was fundamental to theirability to attract, recruit and retain staff who have helped bring about animprovement in the performance of the business. The creation of the New Employee Benefit Trust for the benefit of employees,Directors and the Proposed Directors of the Enlarged Group broadly reflectsboth this understanding and the informal equity commitments given to certainemployees of the Panmure Gordon Business, which were expressed to beconditional on a sale or flotation of the Panmure Gordon Business. The trustees of the New Employee Benefit Trust will therefore subscribe,conditional on Admission, for 18,521,295 new Ordinary Shares at par value. Onand following Admission, it is intended that options over such shares will begranted by the trustees of the New Employee Benefit Trust to various employeesof the Enlarged Group pursuant to the terms of the ESOP. The Circular to be sent to Shareholders will set out full details of optionsto be granted to the Directors and Proposed Directors under the terms of theESOP. Performance Options and UKPG OptionOptions (the Performance Options and the UKPG Option) to subscribe for, inaggregate, 1,745,462 new Ordinary Shares are proposed to be granted by theCompany to Richard Wyatt and Tim Linacre and also to UKPG Holdings as part ofthe Proposals, in addition to the options referred to above and grantedpursuant to the terms of the ESOP. Under the Performance Options, up to 436,365 new Ordinary Shares may besubscribed for by each of Richard Wyatt and Tim Linacre if the Companyachieves a market capitalisation of at least £60million over five consecutiveAIM trading days. A further 436,366 new Ordinary Shares may be subscribed forby each of them if a market capitalisation of at least £90 million is achievedover five consecutive AIM trading days. These options will lapse if thesetargets are not met within a period of five years from Admission or if eitherRichard Wyatt or Tim Linacre leave the Company's employment (other than incertain cases). Under the UKPG Option, UKPG Holdings is able to subscribe for any of the newOrdinary Shares over which Richard Wyatt and/or Tim Linacre are unable toexercise their Performance Options because either the relevant performancetargets have not been met or because their Performance Options have lapsed. The effect of the exercise of the Performance Options and/or the UKPG Optionwould be to dilute the approximately 34.4 per cent. of the Enlarged ShareCapital to be held by Shareholders on Admission (representing approximately41.1 per cent. of the voting rights exercisable in general meetings of theCompany on Admission), to approximately 33.3 per cent. (representingapproximately 39.6 per cent. of the voting rights exercisable in generalmeetings of the Company on Admission, assuming no exercise of the Warrants andno exercise of other options). Other employee incentivisation arrangementsDurlacher currently operates two share option plans, namely the Approved ShareOption Plan and the Unapproved Share Option Plan. On 7 December 2004,Durlacher granted options to subscribe for 1,150,000 Ordinary Shares at aprice of 64p per share pursuant to the terms of the Unapproved Share OptionPlan to the trustees of the Existing Employee Benefit Trust. Followingcompletion of the Acquisition, these options will be allocated for thepotential benefit of certain existing Group employees, including some of theDirectors In addition, with effect from Admission the Company will grant optionspursuant to the Unapproved Share Option Plan to each of Simon Hirst, DavidLiddell and Julian Hirst to subscribe for 500,000 Ordinary Shares at anexercise price of 120p per share. Shareholder approval for the grant of theseoptions will be sought at the EGM. Pursuant to the Proposals, the rules of the Existing Share Option Plans willbe amended so as to decrease the overall limit of issued share capitalavailable for the purposes of the Existing Share Option Plans from 20 percent. to 12.5 per cent. in order to reflect the Enlarged Share Capital. Inaddition, the terms of the Existing Share Option Plans relating to theentitlements of leavers to retain options will be amended (where appropriate)to conform with the corresponding provisions of the ESOP. Shareholder approvalfor these amendments will also be sought at the EGM. Other ProposalsIn addition, following completion of the Acquisition, the Proposed Directors,comprising Richard Wyatt (currently Chairman of Panmure Gordon), Tim Linacre(currently Chief Executive of Panmure Gordon), Julian Hirst (currently Head ofCorporate Finance of Durlacher) and Jon Hack (to be appointed by UKPG Holdingsunder the terms of the Relationship Agreement) will join the board of theCompany as Executive Chairman, Chief Executive Officer, Executive Director anda Non-Executive Director respectively. Tony Caplin will step down asNon-Executive Chairman but will remain a Non-Executive Director. JackWigglesworth (currently a Non-Executive Director) has indicated that he willstep down from the Board of Durlacher following completion of theAcquisition. Consequently, following completion of the Proposals, it is expected that theBoard of Panmure Gordon & Co. plc will comprise: Executive Chairman, Richard Wyatt - currently Chairman of Panmure Gordon;Executive Vice Chairman, Simon Hirst - currently Chief Executive of Durlacher;Chief Executive, Tim Linacre - currently Chief Executive of Panmure Gordon;Executive Director, Julian Hirst - currently Head of Corporate Finance atDurlacher;Finance Director, David Liddell - currently Finance Director of Durlacher;Senior Non-executive Director, Howard Flight - currently a Non-executiveDirector of Durlacher;Non-executive Director, Tony Caplin - currently a Non-executive Director ofDurlacher; andNon-executive Director, Jon Hack - who is also a Managing Director ofLazard. It is proposed to change the name of the Company to Panmure Gordon & Co. plc.However, the Company will, where appropriate, service its AIM quoted corporatebroking clients under the name of Panmure Gordon Durlacher. Finally, it is proposed to give the Company the ability (subject to Courtapproval) to cancel its entire share premium account existing on Admission, aswell as to cancel and extinguish all of the Deferred Shares, to assist in theprocess of addressing the current deficit in its profit and loss account inorder to put it in a position (subject to its future profitability) to paydividends. 4. Information on Durlacher Durlacher's business is that of investment banking focused on servingcorporate and institutional investors in the small-cap and mid-cap stockmarket. The three key operational areas of the Group are summarised asfollows: - corporate finance and corporate broking - as at 11 March 2005, Durlacher was the retained corporate finance adviser and/or corporate broker to 46 companies. In addition to its role as nominated adviser, sponsor or broker, Durlacher advises on initial public offerings and secondary equity offerings and provides advice on mergers, acquisitions and disposals to both retained clients and other parties; - institutional sales and research - Durlacher provides comprehensive sales coverage to a broad range of institutions and publishes research on 64 companies as at 11 March 2005, which include Durlacher's corporate clients and other companies selected for their position within Durlacher's chosen sectors; and - market making - as at 11 March 2005, Durlacher was a registered market maker in 97 UK securities. On 17 March 2005 Durlacher announced its preliminary results for the 18month period ended 31 December 2004 and reported turnover of £15.6 million(compared with £6.6 million for the year ended 30 June 2003) and a loss onordinary activities before taxation of £5.4 million (compared with£1.5 million for the year ended 30 June 2003). The figures for the 18 monthsended 31 December 2004 include the results of the discontinued private clientstockbroking business (approximately 3 months), which was sold to CharlesStanley in September 2003. The loss on ordinary activities before taxationfor the 18 months ended 31 December 2004 is stated after charging significantexceptional and restructuring costs. 5. Information on Panmure Gordon Panmure Gordon is a corporate and institutional stockbroker which providescorporate finance advice, distributes securities and produces research onbehalf of a wide range of clients. The two key operational areas of PanmureGordon's business are: - Corporate Finance: - Panmure Gordon provides advice to companies on their financing requirements through equity capital markets, including flotations, private placements, secondary issues and follow-on offerings, and provision of corporate finance services; and - as at 11 March 2005, Panmure Gordon acted as corporate broker to 57 companies and investment trusts; and - Institutional Equities: - Panmure Gordon provides research and sales and trading services to institutional investors; - as at 11 March 2005, Panmure Gordon provided research on over 200 companies and 300 investment trusts listed in London on the Official List of the UK Listing Authority or quoted on AIM; and - as at 11 March 2005, Panmure Gordon acted as market maker in over 650 stocks and investment trusts. The Panmure Gordon Business commenced trading as a division of Lazard witheffect from 12 January 2004. On 11 March 2005, the Panmure Gordon Business wastransferred within the Wider Lazard Group to Panmure Gordon & Co., a whollyowned subsidiary of UKPG Holdings. For the period 12 January 2004 to 31 December 2004, the Panmure GordonBusiness reported a loss on ordinary activities after taxation of £10.0million on turnover of £23.1 million. This loss on ordinary activities aftertaxation was after costs of £1.5 million for premises, £24.8 million by wayof a recharge from Lazard & Co. Services Limited of employment and certainother operational costs incurred by the Lazard Group in relation to thePanmure Gordon Business, and £7.3 million of other administrative expenses.In the opinion of the Directors and the Proposed Directors, these costs arenot representative of the on-going cost base of the Panmure Gordon Businessas part of the Enlarged Group as they include a number of special andnon-recurring items, including a portion of the legal costs for the purchaseof Panmure Gordon by Lazard and costs of restructuring the business andhiring new staff. It also includes bonuses accrued in 2004. 6. Current trading and prospects for the Enlarged Group for the currentfinancial year Durlacher current tradingOn 17 March 2005, Durlacher published its preliminary results for the 18months ended 31 December 2004. In these results, the following statement was made regarding the period to 31 December 2004 and the Group's current tradingperformance: ''In recent months, particularly January and February 2005, significantrevenue has been generated by Durlacher's market making and our secondaryequity commission business has performed well. Since the beginning of theyear, the corporate finance team has closed two transactions ofsignificance. It acted as financial adviser to Personal Group plc on its£12.3 million recommended offer for Berkeley Morgan Group plc and also actedas Nominated Adviser and broker to Straight plc on its simultaneous £5million placing and £6 million acquisition. We expect that future corporatefinance activity will be biased towards the second half of the year.'' Panmure Gordon current tradingInstitutional equities has had a strong start to 2005 with revenues abovethose for the same period in the previous year. This improvement continued atrend seen in the second half of 2004 compared with the first half of 2004and coincided with the recruitment of a number of new members of staff inequity sales and equity research. While the corporate finance pipeline is biased towards the second half ofthe year, the current workload is encouraging, and a number of mandates onIPOs, secondary fundraisings and private placements have been won. In theyear to date Panmure Gordon has acted as book runner to an £8.0 millionplacing for CES Software plc (now renamed FUN Technologies plc), book runnerand global co-ordinator to a £29.0 million placing for Countrywide plc andjoint book runner to a £22.5 million placing for RPC Group plc. Prospects for the Enlarged Group for the current financial yearThe Directors and the Proposed Directors are of the opinion that market andeconomic sentiment in the small and mid-cap markets is currently favourabletowards the generation of transaction related fees and commissions and, ifthese conditions continue to hold or improve, they believe that the EnlargedGroup should be able to continue to grow its business in the year to 31December 2005. However, there can be no guarantee that these favourablemarket conditions will continue to prevail or that the growth of theEnlarged Group will not be interrupted or reversed. 7. De-listing from the Official List and admission to trading on AIM In order to take advantage of the more flexible rules applicable to aquotation on AIM, the Company will, conditional upon Shareholder approval ofthe Acquisition at the EGM, request the UK Listing Authority to cancel itslisting on the Official List and apply to the London Stock Exchange foradmission to trading on AIM of both the Existing Ordinary Shares and NewOrdinary Shares. Following the expected lifting of the suspension from the Official List ofthe Ordinary Shares following posting of the circular during the weekcommencing 28 March 2005, the Existing Ordinary Shares will continue to belisted on the Official List pending Admission. In the event that theresolutions necessary to implement the Acquisition are not approved byShareholders at the EGM, the Company's application for admission to AIM willlapse and its listing on the Official List will remain. 8. Voting commitments Irrevocable undertakings to vote in favour of the Resolutions have beenreceived from Independent Shareholders in respect of an aggregate of4,564,049 Existing Ordinary Shares representing approximately 23.5 per cent.of Durlacher's existing issued share capital. These undertakings shall lapsein the event, inter alia, that the convening of the EGM is delayed beyond 30April 2005 or if the Directors are in receipt of a firm intention to make anoffer for the Company in accordance with Rule 2.5 of the City Code. Non-binding letters of intent to vote in favour of the Resolutions have beenreceived in respect of in aggregate 2,186,725 Ordinary Shares representingapproximately 11.3 per cent. of Durlacher's existing issued share capital. 9. Proposed Directors' service contracts Tim Linacre will enter into a service contract conditional on Admissionpursuant to which he will be appointed Chief Executive Officer on a salaryof £175,000 per annum. In addition, he will be entitled to private medicalcover for himself, his spouse and any unmarried children below the age of21, to participate in the money purchase pension scheme operated byDurlacher and to pension contributions of 10 per cent. of his basic salary,or 12.5 per cent. if he contributes a sum equal to at least 5 per cent.himself. He will also be entitled to permanent health insurance, 25 daysholiday per annum, life insurance of four times his salary and directors'and officers' liability and regulatory insurance of up to £1,000,000. Thecontract will be terminable by the Company on not less than 12 months'written notice and by Tim Linacre himself on not less than 6 months' writtennotice. Tim Linacre will be eligible for an annual bonus to be determined atthe discretion of the Board. Richard Wyatt will enter into a service contract conditional on Admissionpursuant to which he will be appointed Executive Chairman on a salary of£150,000 per annum. In addition, he will be entitled to private medicalcover for himself, his spouse and any unmarried children below the age of21, to participate in the money purchase pension scheme operated byDurlacher and to pension contributions of 10 per cent. of his basic salary,or 12.5 per cent. if he contributes a sum equal to at least 5 per cent.himself. He will also be entitled to permanent health insurance, 25 daysholiday per annum, life insurance of four times his salary and directors'and officers' liability and regulatory insurance of up to £1,000,000. Thecontract will be terminable by the Company on not less than 12 months'written notice and by Richard Wyatt himself on not less than 6 months'written notice. Richard Wyatt will be eligible for an annual bonus to bedetermined at the discretion of the Board. Julian Hirst will enter into a service contract conditional on Admissionpursuant to which he will be appointed to the Board as an Executive Directorand head of Corporate Finance and will receive a salary of £150,000 perannum. In addition, he will be entitled to private medical cover forhimself, his spouse and any unmarried children below the age of 21, toparticipate in the money purchase pension scheme operated by Durlacher andto pension contributions of 10 per cent. of his basic salary, or 12.5 percent. if he contributes a sum equal to at least 5 per cent. himself. He willalso be entitled to permanent health insurance, 25 days holiday per annum,life insurance of four times his salary and directors' and officers'liability and regulatory insurance of up to £1,000,000. The contract will beterminable by the Company on not less than 12 months' written notice and byJulian Hirst himself on not less than 6 months' written notice. Julian Hirstwill also be eligible for an annual bonus to be determined at the discretionof the Board. Jon Hack will enter into a letter of appointment, conditional on Admissionpursuant to the terms of the Relationship Agreement. Jon Hack will not beeligible to receive a fee under the terms of the letter of appointment. 10. Further information A circular to Shareholders providing further information on the Proposalsand details of the Extraordinary General Meeting being convened to approvethe Proposals is expected to be posted to Shareholders shortly. Enquiries Durlacher Corporation Plc Tel: 020 7459 3600Simon Hirst Panmure Gordon & Co., Limited Tel: 020 7187 2000Richard WyattTim Linacre Lazard & Co., Limited Tel: 020 7187 2000Jon HackRichard Creswell Hawkpoint Partners Limited (financial advisers to Tel: 020 7665 4500Durlacher)Ben MingayGraham Paton Bell Pottinger Corporate & Financial (public relations Tel: 020 7861 3232advisers to Durlacher)David RydellCharlotte Kirkham This announcement, for which the directors of Durlacher Corporation Plc areresponsible, has been issued by Durlacher Corporation Plc and has beenapproved solely for the purposes of Section 21 of the Financial Services andMarkets Act 2000 by Hawkpoint Partners Limited. This announcement should not be forwarded or transmitted in or into the UnitedStates, Canada, Australia, Japan or the Republic of Ireland or into any otherjurisdiction if to do so would constitute a violation of the relevant laws insuch other jurisdiction Hawkpoint Partners Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively forDurlacher Corporation Plc and for no one else in connection with this matter.Hawkpoint Partners Limited will not be responsible to anyone other thanDurlacher Corporation Plc for providing the protections afforded to thecustomers of Hawkpoint Partners Limited, nor for providing advice in relationto the contents of this announcement or any matter referred to herein This press release contains forward-looking statements. Statements that arenot historical or current facts, including statements about beliefs andexpectations, are forward-looking statements. These forward-looking statementsare subject to risks and uncertainties relating to the proposed separation andacquisition of Panmure Gordon & Co., Limited, including the impact of theproposed separation and acquisition on the enlarged group's results ofoperations, the financial accounting consequences of the proposed transaction,the impact of the acquisition on the enlarged group's share price and on itsrelationships with its customers and employees, the tax consequences of thetransactions, changes in business climate or market conditions or otherfactors which could make the proposed separation or acquisition unadvisable.These forward-looking statements involve other inherent risks anduncertainties, and other important factors could cause actual results todiffer materially from those anticipated. Forward-looking statements speakonly as of the date that they are made and none of Lazard, the Company norPanmure Gordon & Co., Limited undertakes any obligation to update them in thelight of new information or future events APPENDIXThe following principal definitions apply throughout this announcement unlessthe context requires otherwise: "Act" the Companies Act 1985 (as amended) "Acquisition" the proposed acquisition by the Company of Panmure Gordon & Co. pursuant to the Acquisition Agreement "Acquisition the conditional agreement dated 24 March 2005 relating to theAgreement" Acquisition "Admission" the admission of the Enlarged Share Capital to trading on AIM becoming effective in accordance with the AIM Rules "AIM" the AIM, a market operated by the London Stock Exchange "AIM Rules" the rules of the London Stock Exchange governing admission to, and the operation of, AIM "Approved Share the Durlacher Corporation Plc 2002 Approved Share Option PlanOption Plan" adopted by the Company on 25 October 2002, the rules of which are to be amended pursuant to the Proposals "Board" or the directors of the Company at the date of this document"Directors" "City Code" The City Code on Takeovers and Mergers "Consideration the Ordinary Consideration Shares and the Restricted VotingShares" Ordinary Consideration Shares "Court" the High Court of Justice in England and Wales "Deferred the deferred shares of 4p each in the capital of the CompanyShares" "Durlacher" or Durlacher Corporation Plc"the Company" "EBT Concert the New Employee Benefit Trust, Richard Wyatt, Howard Flight,Party" Tony Caplin and Jon Hack "Enlarged the Group as enlarged by the AcquisitionGroup" "Enlarged Share the issued ordinary share capital of the Company on AdmissionCapital" as enlarged by the issue of the New Ordinary Shares (assuming no exercise of the Warrants, any exercise of options granted pursuant to the Existing Share Option Plans or any exercise of the Performance Options of UKPG Option) "ESOP" the Durlacher Corporation Plc 2005 Employee Share Option Plan "ESOP Shares" the 18,521,295 new Ordinary Shares to be subscribed for at par by the New Employee Benefit Trust pursuant to the Proposals "Existing the Durlacher Corporation Plc Employee Benefit TrustEmployee established on 5 June 2003Benefit Trust" "Existing the Ordinary Shares in issue at the date of this announcementOrdinaryShares" "Existing Share the Approved Share Option Plan and the Unapproved Share OptionOption Plans" Plan "Extraordinary the Company's extraordinary general meeting (or any adjournmentGeneral thereof) convened for the purpose of considering theMeeting" or Resolutions"EGM" "Group" Durlacher and its subsidiary undertakings at the date of this document "Independent all of the shareholders, other than those that are DirectorsShareholders" and/or employees of the Group, directors and/or employees of the Wider Lazard Group and any person connected with any of them "Lazard" Lazard & Co., Limited "Lazard Group" Lazard and each of its parent undertakings and subsidiary undertakings and each subsidiary undertaking of its parent undertaking (as defined in the Act) "LFCM LFCM Holdings LLCHoldings" "LFCM Group" UKPG Holdings and each of its parent undertakings and subsidiary undertakings and each subsidiary undertaking of its parent undertaking (as defined in the Act) "London Stock London Stock Exchange plcExchange" "New Employee the Durlacher Corporation Plc No. 2 Employee Benefit TrustBenefitTrust" "New Ordinary the Consideration Shares and the ESOP SharesShares" "Official the Official List of the UK Listing AuthorityList" "Ordinary the 9,260,647 new Ordinary Shares to be issued to UKPG HoldingsConsideration as part consideration for the AcquisitionShares" "Ordinary ordinary shares of 4p each in the capital of the CompanyShares" "Panmure the Panmure Gordon Business and Panmure Gordon & Co. asGordon" appropriate "Panmure Gordon Panmure Gordon & Co., Limited regulated by the FSA and& Co." registered in England and Wales with number 4915201 "Panmure Gordon the business that has been carried on by Panmure Gordon & Co.Business" since 11 March 2005 and prior to that date by Lazard "Panel" the Panel on Takeovers and Mergers "Performance the options to subscribe for 872,731 new Ordinary Shares, to beOptions" granted on Admission by the Company to each of Richard Wyatt and Tim Linacre under the Performance Share Option Plan "Performance the Durlacher Corporation plc Performance Share Option PlanShare OptionPlan" "Proposed the proposed directors of DurlacherDirectors" "Relationship the agreement to be entered into between the Compay, UKPGAgreement" Holdings and Lazard immediately prior to Admission "Resolutions" the resolutions to be set out in the notice of Extraordinary General Meeting to be contained in the circular to be sent to shareholders "Restricted the 9,260,648 Ordinary Shares to be issued to UKPG Holdings asVoting Ordinary part consideration for the Acquisition and in respect of whichShares" the right to vote has been suspended pending satisfaction of one of a number of conditions "Rule 9 The EBT Concert Party Waiver and the UKPG Holdings WaiverWaivers" "Shareholders" holders of Ordinary Shares "UK Listing the Financial Services Authority acting in its capacity as theAuthority" competent authority for the purposes of Part V of FSMA "UKPG UKPG Holdings LLC, a wholly-owned subsidiary of LFCM HoldingsHoldings" "UKPG Option" the option, subject to the terms of the Performance Options, to subscribe for 1,745,462 new Ordinary Shares to be granted on Admission by the Company to UKPG "Unapproved the Durlacher Corporation Plc 2002 Unapproved Share Option PlanShare Option adopted by the Company on 25 October 2002, the rules of whichPlan" are to be amended pursuant to the Proposals "United Kingdom" the United Kingdom of Great Britain and Northern Irelandor "UK" "US" or "United the United States of America, its territories or possessions,States" any state of the United States of America and the District ofor "USA" Columbia or area subject to its jurisdictions or any political subdivisions thereof "Wider Lazard the Lazard Group and the LFCM GroupGroup" This information is provided by RNS The company news service from the London Stock Exchange