MHG.L Regulatory News (MHG)

29 Sep 2005 07:03

Merchant House Group PLC29 September 2005 MERCHANT HOUSE GROUP PLC INTERIM RESULTSFOR THE SIX MONTH PERIOD ENDED 30 JUNE 2005 CHAIRMAN'S STATEMENT The results for the six months ended 30 June 2005 represent a considerableadvance for the Group, reflecting a marked increase in corporate financeactivity. A number of significant transactions were closed during the period. The Group's corporate finance subsidiary, Merchant Capital, has acted asfinancial adviser and has been instrumental in raising funds for a number ofsuccessful AIM IPO's including TV Commerce Holdings plc, an interactive TVbroadcaster, Byotrol plc, a speciality chemicals business which has developed aninnovative range of biocides and Cellcast plc, which came to the market afterthe end of the period under review. Our strategy is to provide corporate advice on a continuing basis for clientswhile at the same time taking a stake in their future. We believe thisstakeholding policy ensures that we will continue to provide our clients withclose attention and helps maintain long-term relationships, while giving us adirect interest in their future. In this connection the Group has securedwarrants or investments in a number of the companies with which it is involved. The Directors believe that the experience which the corporate team brings tobear enables the Company to offer detailed and specialist corporate advice on abasis tailored to the needs of corporate clients both on and after flotation andat the pre-IPO stage. In addition, the Company is now able to providesignificant assistance in relation to small cap fundraisings, and has assistedin a number of such fundraisings in recent months. With a number of mandates continuing into the second half, the Directors haveconfidence that the improved level of activity will be at least maintained. Turnover for the period was £427,044 compared to £142,625 for the whole of 2004.Administrative costs were significantly reduced but the Group again incurredsome exceptional costs related to the capital reorganisation and refinancingwhich was completed after the end of the period. The loss before taxation of£144,960, after exceptional costs of £57,100, was substantially lower than inthe previous year, when we reported a pre-tax loss of £589,398. The Board is mindful of the need further to improve the Group's operatingperformance and, to that end, is taking steps to strengthen the team and tobroaden the range of services offered to corporate clients. In my statement with the full year results to 31 December 2004, I explained thatMerchant House needed to raise additional capital to support its business planand that a reorganisation of its share capital was necessary to reduce the parvalue of its ordinary shares and thus facilitate a fundraising at or around itsthen share price. I am pleased to tell you that at the Extraordinary General Meeting of theCompany held on 25 August resolutions were passed to reduce the capital of theCompany from £11,250,000 to £10,436,238. This followed the approval by themeeting of the splitting of the Company's ordinary share capital of 5p sharesinto deferred shares of 4.5p each and ordinary shares of 0.5p. The consent ofthe High Court to the capital reduction, effected by the cancellation of thedeferred shares and the Company's share premium account, is expected to beobtained in October 2005. Following the EGM, the Company was also able to complete the requiredfund-raising, by raising £860,000 through the issue of convertible loan notes(£500,000 of which are secured by a debenture on the Company) and £41,260through the issue of new ordinary shares at 2p per share. Fuller details of theconvertible loan notes will be found in the circular sent to shareholders on 1August 2005. In addition, the Company issued warrants over 7,675,871 newordinary shares in connection with the fundraising. With the additional resources available to it and the increased level ofactivity already achieved, the Directors are confident that the Company iswell-positioned to continue to build its business and increase shareholdervalue. Press enquiries: Peter Redmond, ChairmanMerchant House Group plc 020 7332 2200 MERCHANT HOUSE GROUP PLC UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six month period ended 30 June 2005 Six month period ended 30 Six month period ended 30 Year ended 31 December June 2005 (Unaudited) June 2004 (Unaudited) 2004 (Audited) £ £ £Turnover 427,044 55,570 142,625 Cost of sales (259,661) (12,437) (58,978) Gross Profit 167,383 43,133 83,647 Administrative costs (274,841) (337,189) (672,077)Exceptional costs (57,100) (323,966) (303,549) Other operating income 11,656 12,480 42,321Realised gains on current - 4,005 4,005asset investments Unrealised loss on - - (102,375)current asset investmentsGroup Operating Loss (152,902) (601,537) (948,028)Interest receivable 7,942 12,139 21,383 Loss on Ordinary (144,960) (589,398) (926,645)Activities BeforeTaxationTax on loss on ordinary - - -activitiesLoss on Ordinary (144,960) (589,398) (926,645)Activities After TaxationLoss per share (pence) 0.81p 4.76p 6.32p The Group has no recognised gains or losses other than the results for theperiod as set out above. MERCHANT HOUSE GROUP PLC UNAUDITED CONSOLIDATED BALANCE SHEET 30 June 2005 As at 30 June 2005 As at 30 June 2004 As at 31 December 2004 (Unaudited) (Unaudited) (Audited) £ £ £Fixed Assets Tangible Fixed Assets 7,999 15,295 11,929Debtors falling: due after 50,000 50,000 50,000one yearCurrent Assets Debtors 379,317 184,602 119,907Cash at bank & in hand 9,505 447,914 333,012Investments 80,125 182,500 80,125 468,947 815,016 533,044 Creditors: Amounts falling (287,779) (398,120) (237,526)due within one year Net Current Assets 181,168 416,896 295,518 Total assets less current 239,167 482,191 357,447liabilities Capital and ReservesCalled-up equity share 904,180 665,000 877,500capitalShare premium account 1,333,940 1,333,937 1,333,940Profit & loss account (1,998,953) (1,516,746) (1,853,993) Equity Shareholders' Funds 239,167 482,191 357,447 MERCHANT HOUSE GROUP PLC UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the six month period 30 June 2005 Six month period ended 30 Six month period ended 30 Year ended 31 December June 2005 (Unaudited) June 2004 (Unaudited) 2004 (Audited) £ £ £Reconciliation ofoperating loss to net cash(Outflow) from operatingactivitiesOperating loss (152,902) (601,537) (948,028)Increase in debtors (259,410) (94,574) (29,879)Increase in creditors 50,253 226,853 66,259Depreciation 4,107 3,751 7,802Realised gain - (4,005) (4,005)Unrealised loss - - 102,375Net cash outflow from (357,952) (469,512) (805,476)operating activities CASH FLOW STATEMENTNet cash outflow from (357,952) (469,512) (805,476)operating activities Returns on investments &servicing of financeInterest received 7,942 12,139 21,383Capital Expenditure andFinancial InvestmentPurchase of investments - (120,000) (120,000)Sales of investments - 15,130 15,130Purchase of tangible fixed (177) (2,251) (2,936)assetsSale of tangible fixed - 700 700assets Net cash outflow for (177) (106,421) (107,106)capital expenditure &financial investmentFinancing Proceeds from share issue 26,680 619,497 832,000 (Decrease)/Increase in (323,507) 55,703 (59,199)Cash Reconciliation of net cashflow to movement in netdebtDecrease in cash in thisperiodChange in net debt/funds (323,507) 55,703 (59,199)Net funds brought forward 333,012 392,211 392,211Net funds carried forward 9,505 447,914 333,012 MERCHANT HOUSE GROUP PLC NOTES TO THE UNAUDITED FINANCIAL STATEMENTS For the six month period ended 30 June 2005 1. Accounting Policies Basis of Preparation The interim results for the six months to June 2005 and June 2004have been prepared under the historical cost convention, are unaudited and donot constitute statutory accounts in accordance with Section 240 of theCompanies Act 1985. Depreciation Depreciation has been provided for so as to write off the cost of anasset, less its estimated residual value, over its useful economic life asfollows: Office equipment and fixtures 3 years' straight line 2. Exceptional Costs Exceptional professional costs totalling £57,100 were incurred partly inrelation to a proposed corporate transaction which did not proceed and partly inrelation to a planned capital reorganisation that took place after the periodend. 3. Taxation No provision for corporation tax has been provided for, due tolosses incurred in the current and previous periods. 4. Loss per Share The loss per share has been calculated by dividing the loss aftertaxation of £144,960 (2004: £589,398) by the weighted average number of Ordinaryshares in issue of 17,861,267 (2004: 12,371,429). 5. Debtors falling due after one year Six month period ended 30 Six month period ended 30 Year ended 31 December June 2005 (Unaudited) June 2004 (Unaudited) 2004 (Audited) £ £ £Rent Deposit 50,000 50,000 50,000 6. Debtors Six month period ended 30 Six month period ended 30 Year ended 31 December June 2005 (Unaudited) June 2004 (Unaudited) 2004 (Audited) £ £ £Trade debtors 50,884 31,846 56,611Prepayments & Accrued 288,855 101,396 40,990incomeOther debtors 39,578 51,360 22,306 379,317 184,602 119,907 7. Current Investments Investments held as current assets are carried in the balance sheetat cost. Their value as quoted on AIM at 30th June 2005 was £96,917 (cost:£182,500). 8. Reconciliation of movement in shareholders' funds Six month period ended 30 Six month period ended 30 Year ended 31 December June 2005 (Unaudited) June 2004 (Unaudited) 2004 (Audited) £ £ £Loss for the period/year (144,960) (589,398) (926,645)Net deficit (144,960) (589,398) (926,645)Issue of shares 26,680 619,497 832,000Opening shareholders' 357,447 452,092 452,092equity fundsClosing shareholders' 239,167 482,191 357,447equity funds On 1st June 2005 533,600 Ordinary shares were issued at par insettlement of professional services rendered to the company. 9. Post Balance Sheet date events On 25th August 2005 the company held an Extraordinary GeneralMeeting at which the following resolutions were passed: 1. Each existing Ordinary share of 5p was subdivided into 1new Ordinary share of 0.5p and 1 deferred share of 4.5p. 2. Each unissued Ordinary share of 5p was subdivided into 10new Ordinary shares of 0.5p. 3. The authorised capital of the company was reduced from £11,250,000 to£10,436,238 by cancelling and extinguishing all the 18,083,600 issued deferredshares of 4.5p each. The share premium account of the company was alsocancelled, subject to Court approval. Directors were authorised to issue up to a maximum nominal amount of £2 Millionand such authorisation to expire at the following AGM. Upon passing the above resolutions, the Company issued £500,000 2010 SecuredConvertible Loan Notes (SCLN's), convertible into new Ordinary shares at 2p pershare and bearing interest at 1% above the Barclays base rate. The SCLN's were paid half immediately on the passing of the resolutions with thebalance payable 65 days after issue. The SCLN's are convertible at any time upto the redemption date being five years from the date of their issue. The SCLN's are secured by a first debenture over all the assets and undertakingsof the Company other than the charges given by the Company over the rent depositand the credit card facility. Following receipt of the first £250,000 of the SCLN's, the Company issuedwarrants for 7,675,871 new Ordinary shares at 2p per share. The warrants areexercisable within three years of their date of issue and are fullytransferable. Further, the Company issued £360,000 Unsecured Convertible Loan Notes (UCLN's),convertible into new Ordinary shares at 2p per share and bearing interest at 1%above Barclay's base rate. The UCLN's were paid half immediately on the passing of the resolutions with thebalance payable 65 days after issue. The UCLN's are convertible at any time upto the redemption date being five years from the date of their issue. On 26th August 2005 the Company issued 2,063,000 Ordinary 0.5p shares at 2p pershare, raising £41,260 for working capital. Note: Copies of this interim report are available from the registered office ofthe Company at 7th Floor, Aldermary House, 15 Queen Street, London EC4N 1TX. This information is provided by RNS The company news service from the London Stock Exchange