30th Jun 2009 10:44
Merchant House Group PLC (the 'Company')
30 June 2009
Final results for the year ended 31 December 2008
CHAIRMAN'S STATEMENT
for the year ended 31 December 2008
Revenues of £41,668 (2007: £535,559) reflect the very challenging market place we faced in 2008. The loss for the year of £1,113,872 (2007: loss of £916,765) reflects this lower level of activity together with the costs of restructuring and re-positioning the business. Furthermore, as a result of the market conditions at the time, the Company's investment portfolio has decreased substantially in value and under the accounting rules, and this decrease is reflected in the losses.
Net debt at 31 December 2008 was £381,278 (2007: £333,174) reflecting the Group's actions in conserving cash by reducing overheads, selling investments and procuring additional investment.
As a result, Total Equity at 31 December 2008 amounted to £(618,380) (2007: £286,792). As previously reported the Group received an investment in October 2008 in order to develop the broking and fundraising capacity of the wholly owned subsidiary, Merchant Capital as previously outlined. The Group has developed an Institutional broking and fundraising capacity and is currently working on several fundraisings. Where possible, retainers are charged. In addition, Merchant Capital has been appointed as Corporate broker to two new AIM clients which brings retainer income. There is a strong pipeline of potential opportunities but fundraising remains challenging in the current environment.
At the end of 2008, Merchant Capital recruited a small private client broking team who have built a client database and have recently raised funds for Merchant Corporate Recovery plc financed through the issue of a corporate bond with an equity kicker; the funds raised will be used to make advances and take an equity interest in carefully selected turnaround situations which have a solid debtor or asset base, well in excess of the amount to be advanced, with a charge being taken over the assets of the companies concerned. Such companies will have established management, a successful product or service and clearly defined reasons for needing additional resources as well as an agreed implementation plan. I am pleased to report that, to date, we have already raised and banked an amount in excess of the minimum set of £500,000 and that the first prospective transaction has been identified. Due Diligence is currently being undertaken. Merchant House Group itself will be a minority shareholder in Merchant Corporate Recovery Plc and further details of this will be announced in due course. A number of other opportunities of similar or larger size are being considered as well as the launch of a second capital protected bond to the same and wider client base. The Directors are of the view that, given the state of the market, this is a sensible area in which to position the Group, alongside its more traditional work. In order to pursue the strategy, a number of turnaround specialists have been brought in as Consultants to assist Merchant Corporate Recovery plc.
In addition, we are reviewing a number of specific opportunities inter alia in stockbroking and derivatives, fund management/administration and foreign exchange and would hope to make a further announcement in the relatively near future Shareholders will be updated on these opportunities in due course.
There has been a lot of work undertaken both during the period under review and subsequently to position the Group for growth and increase shareholder value. Clearly market conditions remain difficult and whilst real progress has been made particularly since December 2008, the directors recognise that the company is growing from a low base of historic losses. The board will need to keep cashflow and overheads under constant review whilst seeking to continue the ongoing growth in the business. I would like to thank the staff for the enormous efforts made in achieving the progress identified both during the year and subsequently.
The re positioning of the Group and recruitment of new team members together with the recovering revenue for Merchant Capital in the first five months of the current year are positive developments. The Directors will continue to seek suitable acquisitions using the company's listed shares as well as joint venture partners and teams looking for a base from which to operate and retain a larger share of the revenue they generate than may be possible in larger firms
Finally, I should like to notify shareholders that we will shortly be calling an EGM to reduce the par value of the shares and to propose a name change for the Group.
Martin Eberhardt
Chairman
29 June 2009
Enquiries:
Merchant House Group Plc
Martin Eberhardt
Tel: 020 7332 2200
Shore Capital and Corporate LimitedPascal Keane
Tel: 020 7408 4090
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2008
|
Note |
Year to 31 December 2008 £ |
Year to 31 December 2007 £ |
||
|
Revenue |
2 |
41,668 |
535,559 |
|
|
Cost of sales |
(42,143) |
(168,261) |
||
|
________ |
________ |
|||
|
Gross (loss)/profit |
(475) |
367,298 |
||
|
Administrative expenses |
(671,814) |
(1,084,533) |
||
|
Loss on disposal of associate |
(137,822) |
- |
||
|
Exceptional expenses |
3 |
- |
(414,338) |
|
|
Impairment of associate |
(67,492) |
- |
||
|
Impairment of intangible assets |
(88,496) |
- |
||
|
Other operating income |
27,770 |
33,804 |
||
|
Realised (losses)/ gains on current asset investments |
(11,287) |
295,458 |
||
|
Unrealised loss on current asset investments |
(41,040) |
(29,483) |
||
|
________ |
________ |
|||
|
(Loss) from operations |
4 |
(990,656) |
(831,794) |
|
|
Share of operating loss in associate undertakings |
(107,222) |
(65,161) |
||
|
Finance expense |
(27,170) |
(30,964) |
||
|
Investment income |
11,176 |
11,154 |
||
|
________ |
________ |
|||
|
(Loss) Before Taxation |
(1,113,872) |
(916,765) |
||
|
Income tax expense |
7 |
- |
- |
|
|
________ |
________ |
|||
|
(Loss) for the financial period |
(1,113,872) |
(916,765) |
||
|
====== |
====== |
|||
|
(Loss) per share (pence) |
9 |
(1.28p) |
(2.12p) |
|
|
Diluted loss per share (pence) |
9 |
(0.39p) |
(1.27p) |
The Group has no recognised gains or losses other than the results for the year as set out above. The Company has taken advantage of Section 230 of the Companies Act 1985 not to publish its income statement.
CONSOLIDATED BALANCE SHEET
31 December 2008
|
Note |
2008 £ |
2007 £ |
||
|
ASSETS |
||||
|
Non Current Assets |
||||
|
Intangible assets |
11 |
- |
- |
|
|
Property, plant and equipment |
12 |
3,461 |
8,484 |
|
|
Investment in associate undertakings |
10 |
- |
17,112 |
|
|
________ |
________ |
|||
|
3,461 |
25,596 |
|||
|
Receivables falling due after one year |
13 |
- |
50,000 |
|
|
________ |
________ |
|||
|
Current Assets |
||||
|
Trade and other receivables |
14 |
89,517 |
191,959 |
|
|
Cash and cash equivalents |
15 |
97,783 |
134,826 |
|
|
Investments |
16 |
10,100 |
36,625 |
|
|
________ |
________ |
|||
|
Total current assets |
197,400 |
363,410 |
||
|
________ |
________ |
|||
|
TOTAL ASSETS |
200,861 |
439,006 |
||
|
====== |
====== |
|||
|
EQUITY AND LIABILITIES |
||||
|
Current Liabilities: Trade and other payables |
17 |
399,587 |
296,012 |
|
|
Non current liabilities: Convertible loans |
18 |
419,654 |
429,786 |
|
|
________ |
________ |
|||
|
819,241 |
725,798 |
|||
|
Equity and Reserves |
||||
|
Called up share capital |
19 |
539,350 |
271,733 |
|
|
Convertible loan notes |
18 |
48,346 |
38,214 |
|
|
Share premium |
1,005,924 |
501,389 |
||
|
Retained Earnings |
(2,212,000) |
(1,098,128) |
||
|
________ |
________ |
|||
|
Total Equity |
(618,380) |
(286,792) |
||
|
________ |
________ |
|||
|
TOTAL LIABILITIES |
200,861 |
439,006 |
||
|
====== |
====== |
These financial statements were approved by the Directors on 29 June 2009 and are signed on their behalf by:
J Holmes
Director
COMPANY BALANCE SHEET
31 December 2008
|
Note |
2008 £ |
2007 £ |
||
|
ASSETS |
||||
|
Non Current Assets |
||||
|
Intangible assets |
11 |
- |
- |
|
|
Property, plant and equipment |
12 |
3,461 |
8,484 |
|
|
Investment in group undertakings |
10 |
115,001 |
89,252 |
|
|
________ |
________ |
|||
|
118,462 |
97,736 |
|||
|
Receivables falling due after one year |
13 |
- |
50,000 |
|
|
________ |
________ |
|||
|
Current Assets |
||||
|
Trade and other receivables |
14 |
38,156 |
150,347 |
|
|
Cash and cash equivalents |
15 |
2,036 |
73,546 |
|
|
Investments |
16 |
10,100 |
36,625 |
|
|
________ |
________ |
|||
|
Total current assets |
50,292 |
260,518 |
||
|
________ |
________ |
|||
|
TOTAL ASSETS |
168,754 |
408,254 |
||
|
====== |
====== |
|||
|
EQUITY AND LIABILITIES |
||||
|
Current Liabilities: Trade and other payables |
17 |
375,837 |
333,573 |
|
|
Non current liabilities: Convertible loans |
18 |
419,654 |
429,786 |
|
|
________ |
________ |
|||
|
795,491 |
763,359 |
|||
|
Equity and Reserves |
||||
|
Called up share capital |
19 |
539,350 |
271,733 |
|
|
Convertible loan notes |
18 |
48,346 |
38,214 |
|
|
Share premium |
1,005,924 |
501,389 |
||
|
Retained Earnings |
(2,220,357) |
(1,166,441) |
||
|
________ |
________ |
|||
|
Total Equity |
(626,737) |
(355,105) |
||
|
________ |
________ |
|||
|
TOTAL LIABILITIES |
168,754 |
408,254 |
||
|
====== |
====== |
These financial statements were approved by the Directors on 29 June 2009 and are signed on their behalf by:
J Holmes
Director
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2008
Group
|
Convertible Loan Note £ |
Share Capital £ |
Share Premium £ |
Retained Earnings £ |
Total £ |
|
|
Balance at 1 January 2008 |
38,214 |
271,733 |
501,389 |
(1,098,128) |
(286,792) |
|
________ |
________ |
________ |
________ |
________ |
|
|
Share issue |
- |
267,617 |
504,535 |
- |
772,152 |
|
Movement in equity component |
10,132 |
- |
- |
- |
10,132 |
|
Loss for the period |
- |
- |
- |
(1,113,872) |
(1,113,872) |
|
________ |
________ |
________ |
________ |
________ |
|
|
Balance at 31 December 2008 |
48,346 |
539,350 |
1,005,924 |
(2,212,000) |
(618,380) |
|
====== |
====== |
====== |
====== |
====== |
Company
|
Convertible Loan Note £ |
Share Capital £ |
Share Premium £ |
Retained Earnings £ |
Total £ |
|
|
Balance at 1 January 2008 |
38,214 |
271,733 |
501,389 |
(1,166,441) |
(355,105) |
|
________ |
________ |
________ |
________ |
________ |
|
|
Share issue |
- |
267,617 |
504,535 |
- |
772,152 |
|
Movement in equity component |
10,132 |
- |
- |
- |
10,132 |
|
Loss for the period |
- |
- |
- |
(1,053,916) |
(1,053,916) |
|
________ |
________ |
________ |
________ |
________ |
|
|
Balance at 31 December 2008 |
48,346 |
539,350 |
1,005,924 |
(2,220,357) |
(626,737) |
|
====== |
====== |
====== |
====== |
====== |
Group
|
Convertible Loan Note £ |
Share Capital £ |
Share Premium £ |
Special Reserve £ |
Retained Earnings £ |
Total £ |
|
|
Balance at 1 January 2007 |
62,215 |
194,233 |
280,500 |
52,742 |
(234,105) |
355,585 |
|
Conversion loan notes |
- |
8,000 |
24,000 |
- |
- |
32,000 |
|
Exercise of warrants |
- |
17,000 |
51,000 |
68,000 |
||
|
Share issue |
- |
52,500 |
145,889 |
- |
- |
198,389 |
|
Transfer |
- |
- |
- |
(52,742) |
52,742 |
- |
|
Movement in equity component |
(24,001) |
- |
- |
- |
- |
(24,001) |
|
Loss for the period |
- |
- |
- |
- |
(916,765) |
(916,765) |
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Balance at 31 December 2007 |
38,214 |
271,733 |
501,389 |
- |
(1,098,128) |
(286,792) |
|
===== |
===== |
===== |
===== |
===== |
===== |
Company
|
Convertible Loan Note £ |
Share Capital £ |
Share Premium £ |
Special Reserve £ |
Retained Earnings £ |
Total £ |
|
|
Balance at 1 January 2007 |
62,215 |
194,233 |
280,500 |
52,742 |
(542,253) |
47,437 |
|
Conversion loan notes |
- |
8,000 |
24,000 |
- |
- |
32,000 |
|
Exercise of warrants |
- |
17,000 |
51,000 |
68,000 |
||
|
Share issue |
- |
52,500 |
145,889 |
- |
- |
198,389 |
|
Transfer |
- |
- |
- |
(52,742) |
52,742 |
- |
|
Movement in equity component |
(24,001) |
- |
- |
- |
- |
(24,001) |
|
Dividend |
- |
111,000 |
111,000 |
|||
|
Loss for the period |
- |
- |
- |
- |
(787,930) |
(787,930) |
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Balance at 31 December 2007 |
38,214 |
271,733 |
501,389 |
- |
(1,166,441) |
(355,105) |
|
===== |
===== |
===== |
===== |
===== |
===== |
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2008
|
Note |
2008 £ |
2007 £ |
||
|
Reconciliation of operating loss to net cash (outflow) from operating activities |
||||
|
Operating loss |
(990,656) |
(831,794) |
||
|
Loan written off |
- |
107,020 |
||
|
Investment transfer |
- |
30,060 |
||
|
Associated company losses written off |
(139,666) |
- |
||
|
Decrease in trade & other receivables rerereceivablereceivables |
152,442 |
155,128 |
||
|
Increase in trade & other payables |
92,514 |
6,288 |
||
|
Depreciation |
6,589 |
9,783 |
||
|
Impairment of associate |
49,505 |
- |
||
|
Impairment of intangible assets |
88,496 |
- |
||
|
Loss on disposal |
- |
184 |
||
|
Realised loss/(gain) on current asset investments |
11,287 |
(295,458) |
||
|
Unrealised Loss on current asset investments |
41,040 |
29,483 |
||
|
_______ |
_______ |
|||
|
Net cash outflow from operating activities |
(688,449) |
(789,306) |
||
|
_______ |
_______ |
|||
|
Investing Activities |
||||
|
Interest received |
11,176 |
11,154 |
||
|
Purchase of investments |
(260,400) |
(389,291) |
||
|
Sales of investments |
234,598 |
753,438 |
||
|
Purchase of plant & equipment |
(1,566) |
(1,761) |
||
|
Sale of plant & equipment |
- |
1,053 |
||
|
Investment in associate |
51 |
(51) |
||
|
_______ |
_______ |
|||
|
Net cashflow from investing activities |
(16,141) |
374,542 |
||
|
_______ |
_______ |
|||
|
Financing activities |
||||
|
Proceeds from share issue |
683,656 |
266,389 |
||
|
Interest paid |
(27,170) |
(30,964) |
||
|
Net cash inflow from financing activities |
656,486 |
235,425 |
||
|
_______ |
_______ |
|||
|
(Decrease) in cash & cash equivalents |
(48,104) |
(179,339) |
||
|
_______ |
_______ |
|||
|
Reconciliation of net cash flow to movement in net debt |
||||
|
(Decrease) in cash in the period |
(48,104) |
(179,339) |
||
|
Conversion loan note into ordinary shares |
- |
32,000 |
||
|
_______ |
_______ |
|||
|
Movement in year |
(48,104) |
(147,339) |
||
|
Net (debt) brought forward |
(333,174) |
(185,835) |
||
|
_______ |
_______ |
|||
|
Net (debt) carried forward |
(381,278) |
(333,174) |
||
|
_______ |
_______ |
|
Reconciliation of net cash flow to movement in net (debt)/funds |
Year to 31 December 2008 £ |
Year to 31 December 2007 £ |
|
|
(Decrease) in cash in the period |
(48,104) |
(179,339) |
|
|
Conversion loan note into ordinary shares |
- |
32,000 |
|
|
_______ |
_______ |
||
|
Movement in year |
(48,104) |
(147,339) |
|
|
Net (debt)/funds at 1 January |
(333,174) |
(185,835) |
|
|
_______ |
_______ |
||
|
Net (debt) at 31 December |
(381,278) |
(333,174) |
|
|
_______ |
_______ |
||
|
Analysis of changes in net (debt) |
At 1 January 2008 £ |
Cashflows £ |
Other non cash changes £ |
At 31 December 2008 £ |
|||
|
Cash at bank and in hand |
132,808 |
(35,025) |
- |
97,783 |
|||
|
Bank overdraft |
- |
(10,816) |
- |
(10,816) |
|||
|
Cash held in stockbroker's client accounts |
2,018 |
(2,263) |
- |
(245) |
|||
|
_______ |
_______ |
_______ |
_______ |
||||
|
Cash and cash equivalents |
134,826 |
(48,104) |
- |
86,722 |
|||
|
Debt due after one year: |
|||||||
|
Secured loan notes |
(408,000) |
- |
- |
(408,000) |
|||
|
Unsecured loan notes |
(60,000) |
- |
- |
(60,000) |
|||
|
_______ |
_______ |
_______ |
_______ |
||||
|
(333,174) |
(48,104) |
- |
(381,278) |
||||
|
===== |
===== |
===== |
===== |
Other non cash changes
During the year the company incurred development expenditure cost amounting to £88,496 and the consideration was paid in shares.
COMPANY CASH FLOW STATEMENT
for the year ended 31 December 2008
|
2008 £ |
2007 £ |
|||
|
Reconciliation of operating loss to net cash (outflow) from operating activities |
||||
|
Operating loss |
(1,035,483) |
(764,180) |
||
|
Loan written off |
- |
107,020 |
||
|
Decrease in trade & other receivables rerereceivablereceivables |
162,191 |
199,239 |
||
|
Increase in trade & other payables |
31,203 |
39,882 |
||
|
Depreciation |
6,589 |
9,783 |
||
|
Investment transfer |
- |
30,061 |
||
|
Impairment of associate |
57,188 |
- |
||
|
Impairment of intangible assets |
88,496 |
- |
||
|
Loss on disposal |
- |
184 |
||
|
Realised loss/(gain) on current asset investments |
11,287 |
(295,459) |
||
|
Unrealised Loss on current asset investments |
41,040 |
29,483 |
||
|
_______ |
_______ |
|||
|
Net cash outflow from operating activities |
(637,489) |
(643,987) |
||
|
_______ |
_______ |
|||
|
Investing Activities |
||||
|
Interest received |
8,737 |
7,213 |
||
|
Purchase of investments |
(260,400) |
(389,291) |
||
|
Sales of investments |
234,598 |
753,438 |
||
|
Purchase of plant & equipment |
(1,566) |
(1,761) |
||
|
Sale of plant & equipment |
- |
1,053 |
||
|
Investment in subsidiary/associate |
(82,937) |
(51) |
||
|
_______ |
_______ |
|||
|
Net cashflow from investing activities |
(101,568) |
370,601 |
||
|
_______ |
_______ |
|||
|
Financing activities |
||||
|
Proceeds from share issue |
683,656 |
266,389 |
||
|
Dividend received |
- |
111,000 |
||
|
Interest paid |
(27,170) |
(30,964) |
||
|
_______ |
_______ |
|||
|
Net cash inflow from financing activities |
656,486 |
346,425 |
||
|
_______ |
_______ |
|||
|
(Decrease)/increase in cash & cash equivalents |
(82,571) |
73,039 |
||
|
_______ |
_______ |
|
At 1 January 2008 £ |
Cashflows
|
At 31 December 2008 £ |
|||
|
Cash at bank and in hand |
71,528 |
(69,492) |
2,036 |
||
|
Bank overdraft |
- |
(10,816) |
(10,816) |
||
|
Cash held in stockbroker's client accounts |
2,018 |
(2,263) |
(245) |
||
|
_______ |
_______ |
_______ |
|||
|
Cash and cash equivalents |
73,546 |
(82,571) |
(9,025) |
||
|
===== |
===== |
===== |
Other non cash changes
During the year the company incurred development expenditure cost amounting to £88,496 and the consideration was paid in shares.
1. The financial information set out in this announcement does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 for the years ended 31 December 2008 and 2007. The financial information for the year ended 31 December 2007 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 31 December 2008 will be delivered to the Registrar of Companies in due course.
2. Exceptional expenses
During the year exceptional expenses totalling £Nil (2007:£414,338) were incurred. In 2007, exceptional expenses totalling £162,550 were incurred in writing off trade debts in connection with Merchant Capital Ltd clients, writing off a loan amounting to £107,020 made in the year a third party and providing against a loan amounting to £144,768 made in the year to an associate.
3. Loss per share
|
2008 |
2007 |
||
|
Loss per ordinary share (pence) |
(1.28p) |
(2.12p) |
|
|
===== |
===== |
||
|
Diluted loss per ordinary share (pence) |
(0.39p) |
(1.27p) |
|
|
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The loss per share has been calculated on the net basis on the group deficit excluding associate for the financial year, after taxation, of £(1,113,872) (2007: £(916,765)) using the weighted average number of ordinary shares in issue of 86,870,886 (2007: 43,196,600).
Diluted earnings per share have been calculated using the weighted average number of ordinary shares in issue, diluted for the effect of loan conversion rights, convertible preference shares and warrants. There were unexercised loan conversion rights, convertible preference shares and warrants on 200,066,667 shares in existence at the year end (2007: 33,900,000).
4. The annual report is being posted to shareholders today and is also available on the Company's website: www.merchanthousegroup.com
Related Shares:
MHG.L