28th Mar 2007 12:52
Mercury Group PLC28 March 2007 28 March, 2007 Mercury Group Plc ("Mercury" or "the Company") Results for the year ended 30th September 2006 Chairman's Statement Introduction This is my first report for Mercury Group Plc, having joined the Board asChairman on the 13 February 2007. As you may know the Group suffered a period of instability consequent upon therecently announced refinancing of the business. However, I am pleased to reportthat all contentious issues have been resolved with the result that your companyhas a newly invigorated Board that is working in harmony and is committed totaking the Company forward. Moreover, the recent refinancing, referred to later in this statement, hasachieved support from a number of significant players in the UK and Europeanproperty markets; all of which augurs well for the future of the business. Against the background of the now resolved uncertainty and the reorganisationactivity that needed to be undertaken, the group incurred significant losses inthe year ended 30 September 2006. Your Directors have been focussed over the last few months on making significantreductions in the Group's high historic cost base. Marked progress has been madein this area and the Group is now well positioned to concentrate on its corebusiness of commercial agency. Group financial performance The Group's turnover for the year ended 30 September 2006 was £5.6 millioncompared to £3.9 million in 2005, with gross profit of £3.9 million (2005 - £2.9million). Approximately 93 per cent. of the gross profit is attributable tocontinuing activities. Although the Group achieved year on year growth of over 41 per cent. inturnover, the high administrative costs outweighed any benefits gained. Thesehigh operating costs coupled with the loss on sale of Navitas Hemway resulted ina Group loss before tax of £4.8 million. Discontinued activities accounted for£2.7 million of this loss with a further £0.6 million attributable to operatingexceptional items. Continuing activities The SMPA Group continues to be the Group's core business offering a range ofproperty services to corporate clients. SMPA is a commercial propertyconsultancy and estate agency with over 50 years' experience providing apersonal service to UK and international clients. With offices in the West Endand City of London, it offers a wide range of professional services includinginvestment, development, valuation, management and all aspects of occupancy.Although based in London, it is able to service clients throughout the UK. Investment continues to be the largest revenue generator followed by propertymanagement, accounting for 24 per cent. and 23 per cent. respectively of theGroup's turnover on continuing activities. Although the timing of sales isdifficult to predict due to a large proportion of transactional work, the levelof turnover was consistent throughout the year with 51 per cent. of turnovergenerated in the first half. The SMPA Group generated an operating profit of £161,000 before group managementcharges. Discontinued activities Navitas Hemway Limited was sold in September 2006 having provided facilitiesmanagement services to a number of corporate clients. In the main its focus wason providing cleaning and security services to shopping centres. The company hadgenerated losses of over £0.5million in the period to the date of disposal. Dividends The Board does not recommend the payment of a dividend (2005: £nil). Funding I am pleased to say that since the year end the Board have secured additionalfunding by issuing a loan note instrument constituting £1,000,000 of UnsecuredLoan Stock ("ULS") of which £500,000 has been issued. The Group has alsoreceived binding commitments to subscribe for up to a further £500,000 of ULS atthe Company's option up until 31 July 2007. Directors Following the year end, a number of changes were made to the Board. Aspreviously stated I joined the Board as Chairman in February and I am delightedto welcome Brian Basham and Andrew Lovelady who were appointed directors at thesame time. I am also pleased that both Walter Goldsmith and James Lugg remain onthe Board as non-executive directors and Ronnie Franks as Chief ExecutiveOfficer. Simon Michaels resigned from the Board as Finance Director on 13 February 2007and I would like to thank him for his commitment and support over recent months.Andrew Lovelady has become part-time Finance Director in his place. Management and employees I would like to thank the Group's employees who have continued to worktirelessly in spite of the Group's difficult trading conditions. Current trading and prospects Your Directors believe there are good growth opportunities in the marketplaceand therefore remain focused on building your business, both organically and viaacquisition. The first quarter of the current year is in line with expectationsand turnover is 20 per cent. ahead of the first quarter of last year. On 18 January 2007 The SMPA Group acquired the business and assets of CalderRussell Conway Limited, a niche commercial property consultancy focussedprimarily in retail and leisure for a total cash consideration of £100,000, ofwhich £50,000 is deferred for one year and conditional on the vendors remainingwithin the employment of The SMPA Group. The initial consideration of £50,000was payable in monthly instalments, the first being £12,500 on the 31 January2007, followed by 5 monthly instalments of £7,500. The directors will be lookingfor further acquisitions which they consider will strengthen the Group's serviceto clients and add shareholder value. The Board is confident that with the benefits of the cost savings now comingthrough along with a focus on business development, the Group will continue tosee improved results. George KynochChairman28 March 2007 Consolidated Profit and Loss Accountfor the year ended 30 September 2006 Note Continuing Discontinued Total Operations Operations 2006 2006 2006 2005 £'000 £'000 £'000 £'000 TURNOVER 3,852 1,705 5,557 3,915 COST OF SALES (189) (1,426) (1,615) (987) --------- --------- -------- -------- GROSS PROFIT 3,663 279 3,942 2,928 Administrativeexpenses (5,837) (759) (6,596) (3,390) OPERATING LOSS-------------------- ------ --------- --------- -------- --------Before exceptionalitems (1,612) (480) (2,092) (116)Exceptional items 2 (562) - (562) (346)-------------------- ------ --------- --------- -------- -------- (2,174) (480) (2,654) (462)Sale of subsidiaryundertaking - (2,133) (2,133) -Share of loss ofassociate - - - (36)Amounts written(off)/back oninvestments (70) - (70) 70Interest payable andsimilar charges (17) - (17) (34)Interest receivableand similar income 95 - 95 32 --------- --------- -------- -------- LOSS ON ORDINARYACTIVITIES BEFORE TAXATION (2,166) (2,613) (4,779) (430) ===Tax on loss onordinary activities - - - 1 --------- --------- -------- -------- LOSS ON ORDINARYACTIVITIES AFTERTAXATION (2,166) (2,613) (4,779) (429) --------- --------- -------- -------- Retained LOSS for thefinancial YEAR (2,166) (2,613) (4,779) (429) ========= ========= ======== ======== === ===Loss per ordinaryshare 3 (1.99)p (2.40)p (4.39)p (0.58)p ========= ========= ======== ======== Consolidated Balance Sheetas at 30 September 2006 2006 2005 £'000 £'000FIXED ASSETS Intangible assets 1,360 6,406Tangible assets 97 116Investments 50 70 -------- ------- 1,507 6,592 -------- ------- CURRENT ASSETS Work in Progress - 80 Debtors 1,222 1,835Cash at bank and in hand 86 1,439 -------- ------- 1,308 3,354CREDITORS: amounts falling due within one year (1,003) (1,342) -------- ------- NET CURRENT ASSETS 305 2,012 -------- ------- TOTAL ASSETS LESS CURRENT LIABILITIES 1,812 8,604CREDITORS: amounts falling due after more than one year - (1) -------- ------- NET ASSETS 1,812 8,603 ======== ======= === ===CAPITAL AND RESERVES Called up share capital 1,130 1,065Share premium account 847 356Shares to be issued 370 2,938Distributable reserve 4,711 4,711Other reserve 156 156Profit and loss account (5,402) (623) -------- ------- EQUITY SHAREHOLDERS' FUNDS 1,812 8,603 ======== ======= Consolidated Cash Flow Statementfor the year ended 30 September 2006 Notes 2006 2005 £'000 £'000 Net cash outflow from operating activities (a) (1,334) (2,399) Returns on investments and servicing of financeInterest received 95 32Interest paid (17) (27) -------- -------Net cash inflow from returns on investments andservicing of finance 78 5 -------- ------- Taxation Paid (33) (84) -------- ------- Capital expenditure and financial InvestmentPayments to acquire tangible fixed assets (60) (80)Purchase of investments (50) - ======== ======= Net cash outflow from investing (110) (80)activities ======== ======= Acquisitions and disposals Purchase of subsidiary undertakings (99) (411)Proceeds of disposal of subsidiary 100 -Net cash acquired with subsidiary - (130)Net overdraft disposed of with subsidiary 291 - -------- ------- Net cash inflow/(outflow) from acquisitions anddisposals 292 (541) -------- ------- Net cash outflow before financing (1,107) (3,099) -------- ------- Financing Net cash proceeds from share issue (38) 3,284Capital element of finance lease (4) (3) -------- ------- Net cash (outflow)/inflow from financing (42) 3,281 -------- ------- (Decrease)/increase in cash in the year (b),(c) (1,149) 182 ======== ======= (a) Reconciliation of operating loss to net cash inflow from operatingactivities 2006 2005 £'000 £'000 Operating loss (2,654) (462)Depreciation charge 47 56Loss on sale of assets 5 -Goodwill and impairment of goodwill 869 215Decrease in work in progress 80 -Decrease in debtors (56) (693)Increase/(decrease) in creditors 375 (1,515) -------- ------- Net cash outflow from operating activities (1,334) (2,399) ======== ======= (b) Reconciliation of net cash flow to movement in net funds 2006 2005 £'000 £'000 (Decrease)/increase in cash in the year (1,353) 182Decrease in debt in the year 204 - -------- ------- Movement in net funds in the year (1,149) 182Opening net funds/(debt) 1,133 951 -------- ------- Closing net funds (16) 1,133 ======== ======= (c) Analysis of changes in net funds 30 September Cash flows 30 September 2005 2006 £'000 £'000 £'000 Cash at bank and in hand 1,439 (1,353) 86Bank overdraft (306) (204) (102) -------- ------- ------- 1,133 (1,149) (16) ======== ======= ======= Notes to the financial statements 1. The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The financial information for the year ended 30 September 2005 is extracted fromthe Group's financial statements to that date which received an unqualifiedauditor's report and have been filed with the Registrar of Companies. Thefinancial information for the year ended 30 September 2006 is extracted from theGroup's financial statements to that date which received an unqualifiedauditor's report and will be filed with the Registrar of Companies in duecourse. 2. Exceptional items 2006 2005 £'000 £'000Operating itemsRedundancies and employee termination costs 242 -Relocation costs 31 -Deal abort costs 289 346 ------------ ----------- 562 346 ============ ========== Non-operating items ---------------- -------------- Sale of subsidiary undertaking 2,133 - ================ ============== There will be no tax impact related to this exceptional item due to the lossesfor tax purposes. 3. Earnings per Ordinary share The figures for earnings per share are calculated on a loss of £4,779,000 (2005- £429,000). The basic earnings per share calculation is based on a weightedaverage number of ordinary shares of 1p each of 108,927,248 (2005: 73,594,097). 4. Dividends No dividends have been declared for the year ended 30 September 2006. 5. Copies of the Report and Accounts will be sent to shareholders shortly andwill be available from the registered office of the Company, Devonshire House,60 Goswell Road, London, EC1M 7AD. Further Enquiries: Mercury Group Plc Andrew Lovelady Tel: 020 7393 4000 John East & Partners Limited Tel: 020 7628 2200 David Worlidge/Virginia Bull [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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