MGP.L Regulatory News (MGP)

29 Jun 2005 07:00

Mercury Group PLC29 June 2005 MERCURY GROUP PLC ("Mercury" or "the Group") INTERIM RESULTS For the six months ended 31 March 2005 CHAIRMAN'S STATEMENT I am pleased to announce the interim results for the six months ended 31 March2005. The period has seen considerable progress in achieving our objective ofbuilding a group of companies capable of providing a wide range of professionalservices to the real estate industry. Over the period, we completed the acquisitions of three businesses which nowform the building blocks of the Group. All the businesses are bedding down verywell but given the timing of the acquisitions, our results for the period do notproperly reflect their on-going contribution to turnover and profit. Results forthe six months ended 31 March 2005 reflect only three months' contribution fromTelco Solutions our project management company, three months' contribution fromNavitas Hemway, our facilities management company and only one month'scontribution from Smith Melzack Pepper Angliss, our commercial propertyconsultancy and estate agency business. Turnover for the period was £782,000 andthe operating loss was £297,000. The loss before tax was £316,000. The Groupretains a legacy investment in Dialog Inc. This has been fully provided for and,for the time being, we have chosen not to dispose of it given the unsatisfactorymarket conditions. However, we are keeping this situation under review. In December 2004, we acquired the remaining 60 per cent. of shares in NavitasHemway ("Navitas"), the facilities management company based in Crewe. To date,the Group has paid £0.6 million for the entire issued share capital of Navitas,with further deferred consideration to be payable following the 12 month periodending 30 September 2005. Since its acquisition, Navitas has performed well andNavitas is currently engaged on contracts at five shopping centres. The businessis currently tendering for a number of major shopping centres as well as otherlarge sites. At the same time as acquiring full ownership of Navitas, the Group acquiredTelco Solutions ("Telco"), the project management company for the data centresector. We have paid a total of £0.5 million for the entire issued share capitalof Telco to date, with further deferred consideration payable dependent oncertain performance targets being met, during the years ending 30 September 2005and 2006. In March 2005, we completed the acquisition of Smith Melzack Pepper Angliss("SMPA"), the commercial property consultancy and estate agency business, for aconsideration of up to £1.3 million. In March, we also acquired an option over Lee Baron Group Limited, anothercommercial property agency. While we allowed the option on Lee Baron GroupLimited to lapse, we are working closely together on a number of projects andour discussions remain ongoing. We do not propose a dividend at this stage. The Directors are expecting topropose a capital reduction, which will require shareholder and Court approval.Subject to such approvals, we will reconsider the dividend policy during theyear to 30 September 2006. With our three acquisitions, the Group's transformation into an integratedproperty services group is well underway. The outlook for all the businessunits, especially for our facilities management operation, Navitas, isencouraging. In addition, we are particularly pleased to note that thecross-selling opportunities we envisaged across our operations are now beginningto bear fruit. While we intend to concentrate on organic growth, we will alsocontinue to examine other acquisition opportunities which offer us complementaryskills and services. The board remains confident of prospects for future growth and I look forward toupdating shareholders in due course. David WilliamsChairman Enquiries Mercury Group Plc David Williams, Chairman T: 020 7422 6566 Biddicks Katie Tzouliadis T: 020 7448 1000 Mercury Group Plc Consolidated Profit and Loss AccountFor the six months ended 31 March 2005 6 Months ended Year ended 31 March 30 September 2005 2004 Unaudited Audited £ £Turnover- Continuing 782,082 -- Discontinued - 246,970Cost of sales (292,386) (189,616) ------------ ------------ Gross profit 489,696 57,354Administrative expenses (786,949) (631,277) ------------ ------------Operating loss (297,253) (573,923)- Continuing operations (297,253) (529,762)- Discontinued operations - (44,161)Share of loss of associate (35,152) (149,024)Amortisation of goodwill arising on acquisitionof associate (8,441) (28,138)Loss on fixed asset investments - (214,839)Profit on disposal of subsidiary - 12,555Interest payable and similar charges (1,362) (3)Interest receivable and similar charges 26,091 36,545 ------------ ------------Loss on ordinary activities before taxation (316,117) (916,827)Tax on loss on ordinary activities - - ------------ ------------Loss on ordinary activities after taxation (316,117) (916,827) ============ ============Earnings/(loss) per ordinary share (0.02)p (0.08)p ============ ============ Mercury Group Plc Consolidated Balance SheetAt 31 March 2005 31 March 2005 30 September 2004 Unaudited Audited Notes £ £ £ £Fixed assetsIntangible assets 5,873,445 -Tangible assets 100,443 -Investments in associates - 233,096Investments 1 1 ----------- ----------- 5,973,889 233,097Current assetsDebtors 1,607,044 492,920Cash at bank and in hand 292,129 951,894 ------------ ----------- 1,899,173 1,444,814Creditors: amounts fallingdue within one year (2,057,583) (253,293) ------------ -----------Net current (liabilities)/ assets (158,410) 1,191,521 ----------- ------------ Total assets less current liabilities 5,815,479 1,424,618Creditors: amounts fallingdue after one year (260,980) - ----------- ------------Net assets 5,554,499 1,424,618 =========== ============ Capital and reservesCalled up share capital 8,900,003 8,446,493Share premium account 3,167,827 1,406,688Shares to be issued 2,231,349 -Other reserves 156,953 156,953Profit and loss account (8,901,633) (8,585,516) ------------ ------------ Shareholders' funds 5,554,499 1,424,618 ============ ============ Mercury Group Plc Consolidated Cash Flow StatementFor the six months ended 31 March 2005 6 Months ended Year ended 31 March 2005 30 September 2004 Unaudited Audited Note £ £ £ £Net cash (outflow) fromoperating activities (a) (1,120,575) (309,194) Returns on investmentsand servicing of financeInterest received 26,091 36,545Interest paid (1,362) (3) --------- --------- Net cash inflow forreturns on investments andservicing of finance 24,729 36,542Taxation (82,981) (40,194)Capital expenditure andfinancial investmentPayments to acquiretangible fixed assets (7,379) -Receipts from sales of investments - 47,135 --------- ---------Net cash (outflow)/inflow from investing activities (7,379) 47,135 Acquisitions anddisposalsPurchase of associate - (147,592)Proceeds of partdisposal of subsidiary - 172,028Cash disposed of withsubsidiary undertaking - (116,654)Purchase of subsidiary undertakings (411,198) -Cash deficit acquiredwith subsidiaries (130,035) - --------- --------- --------- ----------- ---------Net cash outflow fromacquisitions and disposals (541,233) (92,218) -----------Net cash (outflow) before financing (1,727,439) (357,929) FinancingIssue of ordinary share capital 1,105,500 1,254,759Debt finance repaid (600,000) (42,656)Capital element offinance lease repaid (792) - --------- --------- --------- ----------- --------- -----------Net cash inflow from financing 504,708 1,212,099 ----------- ----------- (Decrease)/Increase incash in the year (b) & (c) (1,222,731) 854,170 =========== =========== Mercury Group Plc Notes to the Consolidated Cash Flow StatementFor the six months ended 31 March 2005 (a) Reconciliation of operating loss to net cash flow from operating activities 6 Months ended Year ended 31 March 2005 30 September 2004 Unaudited Audited £ £Operating loss (297,253) (573,923)Depreciation chargeAmortisation charge 11,026 362 52,485 -Increase in debtors (939,825) (87,194)Increase in creditors 52,992 351,501 ------------ ---------- Net cash outflow from operating activities (1,120,575) (309,194) ============ ========== (b) Reconciliation of net cash flow to movement in net funds (Decrease)/Increase in cash (1,222,731) 854,170Decrease in debt - 42,656 ------------ ---------- Movement in net funds (1,222,731) 896,826Opening net funds 951,894 55,068 ------------ ---------- Closing net (debt)/funds (270,837) 951,894 ============ ========== (c) Analysis of changes in net debt At Cash Flow At 31 March 30 September 2005 2004 £ £ £Cash at bank and in hand 951,894 (659,765) 292,129Bank overdraft - (562,966) (562,966) ---------- ---------- ---------- 951,894 (1,222,731) (270,837)Debt due after one year - - - ---------- ---------- ---------- Total 951,894 (1,222,731) (270,837) ========== ========== ========== (d) Major non cash transactionsDuring the period, the company issued 225,709,800 ordinary shares with a fairvalue of £1,089,149 as part of the consideration for subsidiary undertakings. Mercury Group Plc Notes to the Interim ReportFor the six months ended 31 March 2005 1. Status of the Interim Report The financial information contained in the Interim Report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thecomparative financial information for the year ended 30 September 2004 is anabridged version of the group's published financial statements for that year,which contained an unqualified audit report and which have been filed with theRegistrar of Companies. 2. Accounting Policies The financial statements are prepared in accordance with applicable accountingstandards. The principal accounting policies adopted in the preparation of thefinancial statements are described below and have remained unchanged. Accounting conventionThe financial statements have been prepared under the historical cost conventionmodified to include the revaluation of certain investments and in accordancewith applicable accounting standards. Basis of consolidationThe group profit and loss account and balance sheet consist of the financialstatements of the parent company and its subsidiary undertakings. The group'sshare of associated undertakings' profits or losses is included in the groupprofit and loss account, and added to the cost of investments in the balancesheet. The results of businesses acquired or disposed of during the year havebeen included from the effective date of acquisition or up until the date ofdisposal. Profits or losses on intra-group transactions are eliminated in full. TurnoverTurnover represents fees invoiced, excluding discounts, other sales taxes andVAT. Tangible Fixed AssetsDepreciation is provided on the cost of tangible fixed assets in equal annualinstalments over the estimated useful lives of the assets. The rates ofdepreciation are as follows: Office equipment 25% on costMotor vehicles 25% reducing balanceComputer equipment 33% reducing balance TaxationThe charge for taxation is based on the results for the year and takes intoaccount deferred taxation. Provision is made for material deferred taxation, inrespect of all timing differences that have originated but not reversed at thebalance sheet date. Deferred tax assets are recognised only to the extent thatthe Directors consider that it is more likely than not that there will besuitable taxable profits from which the future reversal of the underlying timingdifferences can be deducted. LeasesOperating lease rentals are charged to the profit and loss account in equalannual amounts over the lease term. InvestmentsInvestments are included at valuation on the following basis: (a) Listed investments are valued at Directors' estimate of market values giventhe size of the holding. (b) Unquoted investments are valued by the Directors at the cost of theinvestment, subject to any impairment in value. GoodwillGoodwill arising from the purchase of subsidiary and associated undertakings,represents the excess of the fair value of the purchase consideration over thefair value of the net assets, or share of net assets acquired. The goodwillarising on acquisitions is capitalised as an intangible asset and amortised overa period of 20 years. 3. Earnings per share The basic earnings per share calculation is based on a weighted average numberof ordinary shares of 0.1 pence each in issue during the period of 1,537,327,773(Year ended 30 September 2004: 1,146,033,75). 4. Reconciliation of movements in shareholders' funds The reconciliation of movements in shareholders' funds is as follows: £Shareholders' funds at 1 October 2004 1,424,618Loss for the period (316,117)Shares issued in period 2,214,649Shares to be issued (Note 5) 2,231,349 ----------- Shareholders' funds at 31 March 2005 5,554,499 =========== 5. Shares to be issued The balance included within shareholders funds as shares to be issued representsthe directors best estimate of the fair value of ordinary shares to be issued asdeferred consideration on the acquisitions made in the year representing367,975,800 ordinary shares. This information is provided by RNS The company news service from the London Stock Exchange