29th Jun 2006 09:30
Mercury Group PLC29 June 2006 MERCURY GROUP PLCMGP.L MERCURY GROUP PLC ("Mercury" or "the Group") Interim Results for the six months ended 31 March 2006 CHAIRMAN'S STATEMENT Having joined Mercury in May 2006, this is my first report for the Group. As Mercury acquired its three subsidiaries, Navitas Hemway (facilitiesmanagement), TelCo Solutions (project management) and Smith Melzack PepperAngliss (commercial estate agency) during the first half of the year ended 30September 2005, results for the period under review have been compared withresults for the second half of the last financial year rather than the firsthalf in order to provide a better comparison. For the six months ended 31 March 2006, turnover was unchanged at £3.13mcompared to the second half of last year. Operating loss before goodwillamortisation and exceptional items was £188,750 (2005: operating profit of£336,375 for the six months to 30 September). The loss before tax andexceptional items was £325,775 (2005: profit of £181,665 for the six months to30 September). Net assets stood at £8.2m on 31 March 2006 (2005: £8.6m at 30September). Cash balances at 31 March 2006 stood at £805,577 (2005: £1.44m at 30September). Following the period end, the Group issued a total of 6,481,049 new OrdinaryShares of 1.0p each at 9.166p per share in the share capital of the Group to thevendors of Navitas Hemway, including certain directors of Mercury. Thisrepresented the final payment of the deferred purchase price as agreed at thetime of acquisition in December 2004. Trading over the first half has been disappointing. While there have been somegood contract wins, with TelCo securing two new contracts to provide projectmonitoring services to HBOS and Cheshire Building Society, there has also beenslippage in the timing of some key contracts throughout the business. This willadversely affect results for the full year. Full year results will also reflectnon-recurring costs totalling £450,000. These non-recurring items relate to anaborted acquisition and our restructuring programme. The integration of our subsidiaries within the Group is underway and we are inthe process of making organisational changes aimed at setting an appropriatecost base for the Group going forward. We anticipate annualised savings ofapproximately £350,000 as a result. Looking ahead, we remain focused on developing our existing businesses, bothorganically and via acquisition. With clients looking for continued drivetowards greater efficiencies without being distracted from their own corebusiness activities, we believe there are good growth opportunities in themarketplace. Walter GoldsmithChairman Enquiries: Simon Michaels, Finance Director Mercury Group Plc 020 7422 6585 Katie Tzouliadis Biddicks 020 7448 1000 MERCURY GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the six months ended 31 March 2006 6 Months 6 Months Year Ended Ended Ended 31.3.06 31.3.05 30.9.05 Unaudited Unaudited Audited £ £ £ Turnover 3,131,668 782,082 3,915,807 Cost of sales (870,401) (292,386) (987,181) Gross Profit 2,261,267 489,696 2,928,626 Administrative expenses (2,620,435) (786,949) (3,391,168) Operating Loss (359,168) (297,253) (462,542) Amortisation of goodwill arising onacquisition of associate - (8441) - Share of loss of associate - (35,152) (36,899) Amounts written back on investments - - 70,358 Interest receivable and similar income 25,073 26,091 32,132 Interest payable and similar charges (16,680) (1,362) (34,236) Profit before Taxation (350,775) (316,117) (431,187) Taxation (19,458) - 1,335 Profit after Taxation (370,233) (316,117) (429,852) Dividends - - - Retained Profit (370,233) (316,117) (429,852) Basic earnings per share (see note 3) (0.35p) (0.02p) (0.58p) Diluted earnings per share (see note 3) (0.34p) - - MERCURY GROUP PLC CONSOLIDATED BALANCE SHEETAs at 31 March 2006 31 March 31 March 30 September 2006 2005 2005 Unaudited Unaudited Audited £ £ £Fixed AssetsTangible assets 144,424 100,444 115,794Investments 120,710 - 70,359Intangible assets 6,241,577 5,873,445 6,406,592 6,506,711 5,973,889 6,592,745Current AssetsStocks - 80,000Debtors 2,253,219 1,607,044 1,835,289Cash at bank and in hand 805,577 292,129 1,439,464 3,058,796 1,899,173 3,354,753 Creditors: Amounts fallingdue within one year (1,369,030) (2,057,583) (1,342,040) Net Current Assets/ (Liabilities) 1,689,766 (158,410) 2,012,713 Total Assets less CurrentLiabilities 8,196,477 5,815,479 8,605,458 Creditors: Amounts fallingdue after more that oneyear - (260,980) (1,150) Net Assets 8,196,477 5,554,499 8,604,308 Capital and ReservesCalled up share capital 1,064,964 8,900,003 1,064,946Share premium account 319,188 3,167,827 356,805Shares to be issued 2,938,262 2,231,349 2,938,262Distributable reserve 4,711,109 - 4,711,109Other reserve 156,954 156,953 156,953Profit and loss account (994,000) (8,901,633) (623,767) Shareholders' Funds 8,196,477 5,554,499 8,604,308 MERCURY GROUP PLC CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 31 March 2006 6 Months 6 Months Year Ended Ended Ended 31 March 31 March 30 September 2006 2005 2005 Unaudited Unaudited Audited £ £ £ Net cash outflow from operating (497,369) (1,120,575) (2,399,148) activities Returns on Investments andServicing of FinanceInterest received 25,073 26,091 32,132 Interest paid (16,680) (1,362) (27,031) Net cash outflow for returns oninvestments and servicing offinance 8,393 24,729 5,101 Taxation (33,001) (82,981) (84,359) Capital Expenditure and FinancialInvestmentPurchase of tangible fixed assets (71,426) (7,379) (80,071)Purchase of investments (50,351) - - Net cash outflow for capitalexpenditure and financialinvestment (121,777) (7,379) (80,071) AcquisitionsCash acquired with subsidiary - (130,035) (130,035)Purchase of subsidiary undertakings (1,500) (411,198) (411,198) Net Cash Outflow for Acquisitions (1,500) (541,233) (541,233) Equity Dividends Paid - - - Net cash outflow before financing (645,254) (1,727,439) (3,099,710) FinancingCost of capital reconstruction (37,617) - -Net cash proceeds from share issue - 505,500 3,284,642Capital element of finance lease payments (1,319) (792) (3,642) Net cash (outflow)/ inflow from financing (38,936) 504,708 3,281,000 (Decrease)/Increase in Cash (684,190) (1,222,731) 181,290 MERCURY GROUP PLC NOTES TO THE CONSOLIDATED CASHFLOW STATEMENTFor the six months ended 31 March 2006 6 Months 6 Months Year Ended Ended Ended 31.3.06 31.3.05 30.9.05 Unaudited Unaudited Audited(a) Reconciliation of operating loss to net cash £ £ £ outflow from operating activities Operating loss (359,168) (297,253) (462,542) Depreciation 42,796 11,026 56,767 Amortisation of goodwill 166,515 52,485 215,636 Decrease/(increase) in work in progress 80,000 - - Decrease/(increase) in debtors (437,388) (939,825) (693,832) (Decrease)/increase in creditors 9,876 52,992 (1,515,177) Net cash outflow from operating (497,369) (1,120,575) (2,399,148) activities (b) Reconciliation of net cash flow to movement in net funds (Decrease) /Increase in cash in the period (684,190) (1,222,731) 181,290 Increase in debt in period - - - Movement in net funds in the period (684,190) (1,222,731) 181,290 Net funds at 30 September 2005 1,133,184 951,894 951,894 Net funds at 31 March 2006 448,994 (270,837) 1,133,184 (c) Analysis of changes in net funds At At 1 October Cash Other 31 March 2005 Flow Changes 2006 £ £ £ £ Cash at bank and in 1,439,464 (633,886) - 805,578 hand Overdrafts (306,280) (50,304) - (356,584) Total 1,133,184 (684,190) - 448,994 MERCURY GROUP PLC NOTES TO THE INTERIM STATEMENT For the six months ended 31 March 2006 1. The financial information contained in the Interim Report does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The comparative financial information for the year ended 30 September 2005is an abridged version of the group's published financial statements for thatyear, which contained an unqualified audit report and which have been filed withthe Registrar 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 are 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 have beenincluded 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 costComputer equipment 33% on cost 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 course of the lease. InvestmentsInvestments are included at valuation on the following basis: (a) Listed investments are valued at directors' estimate of market valuesgiven the 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 goodwill arising on acquisitions is capitalised as an intangible asset andamortised over a period of 20 years. Hire Purchase ContractsAssets obtained under hire purchase contracts, which transfer to the groupsubstantially all the risks and rewards of ownership of the assets, arecapitalised as tangible fixed assets and depreciated over their estimated usefullife. Obligations under such contracts are included in creditors net of financecharges allocated to future periods. The finance element of the payment ischarged in the profit and loss account so as to produce a constant periodic rateof charge on the net obligations outstanding in each period. PensionsCertain subsidiaries of the company operate defined contribution pension schemesfor their employees and directors. The assets of the schemes are held separatelyfrom those of the group. The annual contributions payable are charged to theprofit and loss account. The company provides no other post-retirement benefitsto its employees and directors. Financial InstrumentsThe group's financing strategy, which is approved at board level is to raisecash to finance the group's operations and acquisitions. The debt is currently at floating rates and the resulting interest rate exposureis kept under review by the board. StocksStock is valued at the lower of cost and net realisable value. Provisions aremade for obsolete, slow moving and defective stock where appropriate. 3. Earnings per Share The calculation of basic earnings per share is based on the earnings for theyear of (£370,233) (year ended 31 September 2005 - (£429,852) and six monthsended 31 March 2005 - (£316,117)) and on a weighted average number of shares of0.1p each in issue during the period of 106,494,600 (year ended 30 September -73,594,097, six months ended 31 March 2005 - 1,537,327,773 (pre consolidation)).The calculation of diluted earnings per share is based on the earnings for theyear of £(370,233) and on a weighted average number of shares of 0.1p during theperiod of 109,315,773. 4. Reconciliation of Movement in Shareholders' Funds is as follows: £Shareholders' funds at 1 October 2005 8,604,308Loss for the period (370,213)Cost of capital reduction scheme (37,617) Shareholders' funds at 31 March 2006 8,191,478 5. Interim Statement Copies are available free of charge for a period of one month from the date ofthis announcement on request from the Group's registered office: DevonshireHouse, 146 Bishopsgate, London EC2M 4JX INDEPENDENT REVIEW REPORT TO MERCURY GROUP PLC Introduction We have been instructed by the company to review the financial information setout on pages 2 to 7 and we have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Directors' Responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and based thereon, assessingwhether the accounting policies and presentation have been consistently appliedunless otherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 March 2006. Kingston Smith LLPChartered Accountants Devonshire House60 Goswell RoadLondonEC1M 7AD This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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