3rd Jan 2006 07:01
Mercury Group PLC03 January 2006 For release: 7.00am, 3 January 2006 MERCURY GROUP PLC Preliminary Results for the year ended 30 September 2005 • Turnover of £3.9m (2004: £247,000) • Operating profit before goodwill amortisation and exceptional items of £100,000 (2004: loss of £574,000) • Cash balances of £1.44m as at 30 September 2005 • Three businesses acquired over year - forming the platform for future growth • Business pipeline strong and prospects encouraging Commenting on the results, David J. Williams, Chairman, said, "I am delighted to report on the significant progress we have made over the yearin our objective of building a group capable of providing a wide range ofprofessional services to the real estate industry. As our results reflect, wehave achieved much during the period. Over the course of the year, we acquiredthree businesses which now form the cornerstones of the Group. Our ongoing aim is to build all three subsidiaries and we see opportunities toenhance growth by developing our 'one-stop shop' approach and exploiting thenatural synergies that exist in the businesses. We are also actively consideringfurther acquisitions which would complement or add to our existing skills andservices." Enquiries Mercury Group PLC David J. Williams, Chairman T: 020 7422 6566 Biddicks Katie Tzouliadis T: 020 7448 1000 MERCURY GROUP PLC CHAIRMAN'S STATEMENT I am delighted to report on the significant progress we have made over the yearin our objective of building a group capable of providing a wide range ofprofessional services to the real estate industry. As our results reflect, wehave achieved much during the period. Over the course of the year, we acquired three businesses which now form thecornerstones of the Group: Navitas Hemway, which provides facilities managementservices, TelCo Solutions, the project managers, and Smith Melzack PepperAngliss, the commercial estate agency. The three acquisitions are bedding down well. Given the timing of the purchaseshowever, results reflect only nine months contribution from both TelCo Solutionsand Navitas Hemway and only seven months contribution from Smith Melzack PepperAngliss. For the year ended 30 September 2005, the group generated turnover of£3,915,807 (2004: £246,970) and operating profit before goodwill amortisationand exceptional items of £100,048. (2004: loss of £573,923). The loss before taxand exceptional items was £84,233 (2004: loss of £916,827). Exceptional chargesof £346,954 were incurred and reflect the write-off of costs relating to theproposed acquisition of Lee Baron Group Limited, with which, after carefulconsideration, we chose not to proceed. Cash balances at 30 September 2005 stoodat £1.44m. In August, we completed a Capital Reorganisation and Capital Reduction. Thisenabled the company to rebase the price of the Ordinary Shares and improvefuture dividend capacity by eliminating the retained deficit on Mercury's profitand loss reserve. While we do not propose to pay a dividend at this stage, wewill reconsider the dividend policy during the course of the present financialyear. In the last quarter of the year, we completed two placings, respectively in Julyand September, which together raised £2.2m before expenses. In the placing inJuly, we were delighted to welcome the Tchenguiz Family Trust as a majorshareholder. Via Pendana Limited, the Trust is now interested in approximately25% of the issued share capital. We have continued to strengthen the Board and in August, were pleased to welcomeStephen Russell as Non-Executive Director. Stephen is a consultant to theConsensus Business Group, which is managed by Vincent Tchenguiz as agent for theTchenguiz Family Trust. More recently, we appointed Simon Michaels as FinanceDirector. His appointment takes effect from 1st January 2006. Simon joinsMercury from Harvey Nash Group plc, the specialist recruitment servicesprovider, where he held senior financial positions, latterly as Finance Directorof the Group's UK & US Operations. He was also involved in the restructuring ofHarvey Nash and the acquisition and integration of new businesses. I am pleasedto say that Anthony McFarland, who had been acting as interim Finance Director,will remain on the Board as a Non-Executive Director. We have also strengthened our senior management team and in November appointedAndrew Hardy as Managing Director of Smith Melzack Pepper Angliss. Andrew, whohas 30 years experience of the commercial property sector, will concentrate onexpanding the facilities of Smith Melzack Pepper Angliss, including integratingand offering the services of sister Mercury companies, and widening the existingagency base, both in the UK and Europe. There have been a number of pleasing contract wins across the Group. Inparticular, Navitas Hemway has secured new contracts worth in excess of £1.7msince its acquisition was completed in December 2004. The business now managesfive sites and the pipeline of potential business looks encouraging. After theperiod end, TelCo Solutions secured a substantial contract with Harrell Hotels(Europe) Ltd to manage the roll-out of a major new hotels programme.Approximately £180m of capital investment will be expended in the initial threeyear phase of the programme with TelCo Solutions acting as strategic projectmanagers. TelCo will also utilise the services of Navitas and Smith MelzackPepper Angliss. This contract is a prestigious win and bears testimony to thequality of the Group's services and our ability to provide a comprehensiveoffering to our clients. In November, we also entered into a three year contractworth £1.8m with Vincos Limited to provide property services. This has been a year of consolidation for the group. The acquisitions andappointments which we have made have paved the way for the exciting phase ofdevelopment which we are now entering. With an encouraging pipeline of newcontracts, the company has laid the foundations upon which each subsidiary cangrow and the outlook for our three subsidiary businesses is encouraging. Our ongoing aim is to build all three subsidiaries and we see opportunities toenhance growth by developing our 'one-stop shop' approach and exploiting thenatural synergies that exist in the businesses. We are also actively consideringfurther acquisitions which would complement or add to our existing skills andservices. I would like to take this opportunity to thank all of our staff for theircontinuing hard work and support. David J. WilliamsChairman CONSOLIDATED PROFIT AND LOSS ACCOUNTYear ended 30 September 2005 Notes Unaudited Audited 2005 2004 Total Total £ £ TURNOVER - Acquisitions 3,873,179 - - Continuing 42,628 - - Discontinued - 246,970 COST OF SALES (987,181) (189,616) _________ _________GROSS PROFIT 2,928,626 57,354 Administrative expenses (3,391,168) (659,415) _________ _________OPERATING LOSS (462,542) (602,061)- Acquisitions 292,781 (28,138)- Continuing operations (408,369) (529,762)- Discontinued operations - (44,161)- Exceptional items (346,954) - Share of loss of associate (36,899) (149,024)Amounts written-back/(off) on investments 6 70,358 (214,839)Profit on disposal of subsidiary - 12,555Interest payable and similar charges (34,236) (3)Interest receivable and similar income 32,132 36,545 _________ _________LOSS ON ORDINARYACTIVITIES BEFORE TAXATION (431,187) (916,827) Tax on loss on ordinary activities 7 1,335 - _________ _________LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (429,852) (916,827) _________ ________ RETAINED LOSS FOR THE FINANCIAL YEAR (429,852) (916,827) =========== ========== Earnings per ordinary share 8 (0.58)p (208.4)p ========== ========== CONSOLIDATED BALANCE SHEET30 September 2005 Note Unaudited Audited 2005 2004 £ £FIXED ASSETSIntangible assets 6,406,593 -Tangible assets 115,794 -Investments in associates - 233,096Investments 70,358 1 ________ ________ 6,592,745 233,097 ________ ________CURRENT ASSETSWork in progress 80,000 -Debtors 11 1,835,289 492,920Cash at bank and in hand 1,439,464 951,894 ________ ________ 3,354,753 1,444,814CREDITORS: amounts falling due 12 (1,343,375) (253,293)within one year ________ ________NET CURRENT ASSETS 2,011,378 1,191,521 ________ ________ TOTAL ASSETS LESS CURRENT LIABILITIES 8,604,123 1,424,618 CREDITORS: amounts falling dueafter more than one year 13 (1,150) - ________ ________NET ASSETS 8,602,973 1,424,618 ========== ========== CAPITAL AND RESERVESCalled up share capital 16 1,064,946 8,446,493Share premium account 16 356,805 1,406,688Shares to be issued 2,938,262 -Distributable reserve 4,711,109 -Other reserve 16 156,953 156,953Profit and loss account 16 (625,102) (8,585,516) ________ ________EQUITY SHAREHOLDERS' FUNDS 8,602,973 1,424,618 ========== ========== CONSOLIDATED CASH FLOW STATEMENTYear ended 30 September 2005 Note Unaudited Audited 2005 2004 £ £ Net cash outflow from operating 1 (2,399,148) (309,194)activities Returns on investments and servicing offinanceInterest received 32,132 36,545Interest paid (27,031) (3) ________ ________Net cash inflow from returns on 5,101 36,542investments and servicing offinance ________ ________ Taxation Paid (84,359) (40,194) ________ ________ Capital expenditure and financialInvestmentPayments to acquire tangible (80,071) -fixed assetsReceipts from sales of - 47,135investments _________ _________Net cash (outflow)/inflow from investing (80,071) 47,135activities _________ _________ Acquisitions and disposalsPurchase of subsidiary (411,198) -undertakingsPurchase of associate - (147,592)Proceeds of part disposal of - 172,028subsidiaryNet cash acquired with (130,035) (116,654)subsidiary _________ _________Net cash (outflow)/inflow from (541,233) (92,218)acquisitions and disposals _________ _________ Net cash (outflow)/inflow before (3,099,710) (357,929)financing _________ _________FinancingNet cash proceeds from share 3,284,642 1,254,759issueCapital element of finance (3,642) (42,656)lease _________ _________Net cash inflow/(outflow) from 3,281,000 1,212,103financing _________ _________Increase in cash in the year 181,290 854,170 _________ _________ RECONCILIATION OF MOVEMENT IN CONSOLIDATED SHAREHOLDERS' FUNDS 30 September 2005 30 September 2004 £ £ Loss for the financial year (431,187) (916,827) Costs of cancellation of share (4,496,660) -premium written off to otherreserve Shares to be issued 2,938,262 - Increase in distributable 4,711,109 -reserves Decrease in share capital (7,381,547) 584,107 Capital reconstruction write-back 8,408,512 -of losses Pre-acquisition adjustment (16,911) - Premium on shares issued 3,446,777 1,406,688 _________ _________Net movement in shareholders' 7,178,355 1,073,968funds Opening shareholders' funds 1,424,618 350,650 _________ _________Closing shareholders' funds 8,602,973 1,424,618 _________ _________ NOTES TO THE PRELIMINARY RESULTSYear ended 30 September 2005 1. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2005 2004 £ £Operating loss (462,542) (602,061)Depreciation charge 56,767 362Goodwill 215,636 28,138(Increase) in debtors (693,832) (87,194)Increase/(Decrease) in creditors (1,515,177) 351,501 ________ ________Net cash outflow from operating (2,399,148) (309,254)activities ________ ________ 2. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS £ £Increase in cash in the year 181,290 854,170Decrease in debt in the year - 42,656 ________ ________Movement in net funds in the year 181,290 896,826 Opening net funds/(debt) 951,894 55,068 ________ ________Closing net funds 1,133,184 951,894 ________ ________ 3. ANALYSIS OF CHANGES IN NET FUNDS 30 September Cashflows 30 September 2004 2005 £ £ £Cash at bank and in hand 951,894 487,570 1,439,464Bank overdraft - (306,280) (306,280) ________ ________ ________ 951,894 181,290 1,133,184 ________ ________ ________ 4. PURCHASE OF NET SUBSIDIARY UNDERTAKINGS Net assets acquired £Tangible fixed assets 60,545Debtors 728,638Net overdraft (130,035)Taxation (118,695)Creditors (2,301,401)Loans and Hire Purchase (57,861) _________ (1,818,809) Goodwill 6,396,418 _________ 4,577,609 _________Satisfied by : Shares allotted 1,228,149Deferred shares 2,938,262Cash 411,198 _________ 4,577,609 _________ 5. MAJOR NON-CASH TRANSACTIONS During the year the following shares were issued in a share for share exchangeto acquire the net assets of Navitas Hemway Limited (remaining 60%), SmithMelzack Pepper Angliss Limited and Telco Solutions Limited. No. of shares Issue value per Total value of issued share shares issued £Navitas Hemway 78,800,000 0.50p 394,000Smith Melzack Pepper 40,000,000 0.50p 200,000Angliss LtdTelco Solutions Limited 106,909,800 0.50p 534,549 ________ 1,128,549 _________ During the year a pre-consolidation equivalent of 55,000,000 ordinary 0.1pshares with a fair value of £275,000 were issued to certain individuals insatisfaction of amounts owed to them by the company in respect of servicesprovided to the company. 6. PROFIT ON FIXED ASSET INVESTMENTS 2005 2004 £ £Amounts written back/(off) on investments 70,358 (247,038)Profit/(loss) on disposal of investments - 32,199 _______ _______ 70,358 (214,839) _______ _______ 7. TAX ON LOSS ON ORDINARY ACTIVITIES 2005 2004 £ £UK Corporation tax 1,335 - _______ _______ 8. EARNINGS PER ORDINARY SHARE The figures for earnings per share are calculated on a loss of £429,852 (2004:£916,827). The basic earnings per share calculation is based on a weightedaverage number of ordinary shares of 1p each of 73,594,097 (2004: 1,099,620,129pre-consolidation). 9. INVESTMENTS IN ASSOCIATES Mercury Group plc acquired the remaining 60% shareholding in Navitas HemwayLimited in December 2004. The company has no associated companies at 30September 2005. 10. STOCK Group 2005 2004 £ £Work in progress 80,000 - _______ _______ 80,000 - _______ _______ 11. DEBTORS Group 2005 2004 £ £Trade debtors 1,669,877 -Amounts owed by associate - 296,055Amounts owed by - -subsidiariesOther debtors 122,391 14,529Prepayments 43,021 182,336 _______ _______ 1,835,289 492,920 _______ _______ Other debtors includes £23,088 owed by David Williams, director. This loan willbe repaid in the near future. 12. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Group 2005 2004 £ £Bank overdraft 306,280 -Hire Purchase 3,167 -Trade creditors 661,718 105,530Corporation tax 34,336 -Other taxation and social 188,292 35,027securityOther loans 57,107 -Accruals and deferred 92,475 112,736income ________ ________ 1,343,375 253,293 ________ ________ 13. CREDITORS: AMOUNTS FALLING DUE MORE THAN ONE YEAR Group 2005 2004 £ £ Hire Purchase 1,150 - ________ ________ 14. OPERATING LEASE COMMITMENTS At 30 September 2005 the Group had annual commitments under operating leases asset out below: Group Land & Land & Buildings Buildings 2005 2004 £ £Lease expires:Within two to five years 62,586 - ________ ________ 62,586 - ________ ________ Equipment Equipment 2005 2004Lease expires:Within two to five years 2,254 - ________ ________ 2,254 - ________ ________ 15. FINANCE LEASE COMMITMENTS At 30 September 2005 the Group had annual commitments under finance leases asset out below: Group Equipment Equipment 2005 2004 £ £ Lease expires:Within one year 3,167 -Within two to five years 1,150 ________ ________ 4,317 - ________ ________ 16. MOVEMENT ON CAPITAL AND RESERVES Group Called Up Share Other Profit and Share Premium Reserve Loss Capital Account Account £ £ £ £As at 1 October 2004 8,446,493 1,406,688 156,953 (8,585,516)Capital reconstruction (8,622,961) (4,496,660) - 8,408,512 Share Issues 1,241,414 3,446,777 - -Loss for the year - - - (431,187)Pre-acquisition adjustment - - - (16,911) _________ _________ ________ __________ 1,064,946 356,805 156,953 (625,102) _________ _________ ________ _________ 17. GENERAL The figures for 2005 are unaudited. This statement does not constitute statutoryaccounts within the meaning of S240 of the Companies Act 1985. Audited financial statements will be posted on the company's websitewww.mgplc.co.uk and sent to shareholders in due course. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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