Final Results

Mercury Group PLC 03 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 year in our objective of building a group capable of providing a wide range of professional services to the real estate industry. As our results reflect, we have achieved much during the period. Over the course of the year, we acquired three businesses which now form the cornerstones of the Group. Our ongoing aim is to build all three subsidiaries and we see opportunities to enhance growth by developing our 'one-stop shop' approach and exploiting the natural synergies that exist in the businesses. We are also actively considering further acquisitions which would complement or add to our existing skills and services.' 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 year in our objective of building a group capable of providing a wide range of professional services to the real estate industry. As our results reflect, we have achieved much during the period. Over the course of the year, we acquired three businesses which now form the cornerstones of the Group: Navitas Hemway, which provides facilities management services, TelCo Solutions, the project managers, and Smith Melzack Pepper Angliss, the commercial estate agency. The three acquisitions are bedding down well. Given the timing of the purchases however, results reflect only nine months contribution from both TelCo Solutions and Navitas Hemway and only seven months contribution from Smith Melzack Pepper Angliss. For the year ended 30 September 2005, the group generated turnover of £3,915,807 (2004: £246,970) and operating profit before goodwill amortisation and exceptional items of £100,048. (2004: loss of £573,923). The loss before tax and exceptional items was £84,233 (2004: loss of £916,827). Exceptional charges of £346,954 were incurred and reflect the write-off of costs relating to the proposed acquisition of Lee Baron Group Limited, with which, after careful consideration, we chose not to proceed. Cash balances at 30 September 2005 stood at £1.44m. In August, we completed a Capital Reorganisation and Capital Reduction. This enabled the company to rebase the price of the Ordinary Shares and improve future dividend capacity by eliminating the retained deficit on Mercury's profit and loss reserve. While we do not propose to pay a dividend at this stage, we will reconsider the dividend policy during the course of the present financial year. In the last quarter of the year, we completed two placings, respectively in July and September, which together raised £2.2m before expenses. In the placing in July, we were delighted to welcome the Tchenguiz Family Trust as a major shareholder. Via Pendana Limited, the Trust is now interested in approximately 25% of the issued share capital. We have continued to strengthen the Board and in August, were pleased to welcome Stephen Russell as Non-Executive Director. Stephen is a consultant to the Consensus Business Group, which is managed by Vincent Tchenguiz as agent for the Tchenguiz Family Trust. More recently, we appointed Simon Michaels as Finance Director. His appointment takes effect from 1st January 2006. Simon joins Mercury from Harvey Nash Group plc, the specialist recruitment services provider, where he held senior financial positions, latterly as Finance Director of the Group's UK & US Operations. He was also involved in the restructuring of Harvey Nash and the acquisition and integration of new businesses. I am pleased to 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 appointed Andrew Hardy as Managing Director of Smith Melzack Pepper Angliss. Andrew, who has 30 years experience of the commercial property sector, will concentrate on expanding the facilities of Smith Melzack Pepper Angliss, including integrating and offering the services of sister Mercury companies, and widening the existing agency base, both in the UK and Europe. There have been a number of pleasing contract wins across the Group. In particular, Navitas Hemway has secured new contracts worth in excess of £1.7m since its acquisition was completed in December 2004. The business now manages five sites and the pipeline of potential business looks encouraging. After the period 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 three year phase of the programme with TelCo Solutions acting as strategic project managers. TelCo will also utilise the services of Navitas and Smith Melzack Pepper Angliss. This contract is a prestigious win and bears testimony to the quality of the Group's services and our ability to provide a comprehensive offering to our clients. In November, we also entered into a three year contract worth £1.8m with Vincos Limited to provide property services. This has been a year of consolidation for the group. The acquisitions and appointments which we have made have paved the way for the exciting phase of development which we are now entering. With an encouraging pipeline of new contracts, the company has laid the foundations upon which each subsidiary can grow and the outlook for our three subsidiary businesses is encouraging. Our ongoing aim is to build all three subsidiaries and we see opportunities to enhance growth by developing our 'one-stop shop' approach and exploiting the natural synergies that exist in the businesses. We are also actively considering further acquisitions which would complement or add to our existing skills and services. I would like to take this opportunity to thank all of our staff for their continuing hard work and support. David J. Williams Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT Year 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 - 12,555 Interest payable and similar charges (34,236) (3) Interest receivable and similar income 32,132 36,545 _________ _________ LOSS ON ORDINARY ACTIVITIES 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 SHEET 30 September 2005 Note Unaudited Audited 2005 2004 £ £ FIXED ASSETS Intangible assets 6,406,593 - Tangible assets 115,794 - Investments in associates - 233,096 Investments 70,358 1 ________ ________ 6,592,745 233,097 ________ ________ CURRENT ASSETS Work in progress 80,000 - Debtors 11 1,835,289 492,920 Cash at bank and in hand 1,439,464 951,894 ________ ________ 3,354,753 1,444,814 CREDITORS: 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 due after more than one year 13 (1,150) - ________ ________ NET ASSETS 8,602,973 1,424,618 ========== ========== CAPITAL AND RESERVES Called up share capital 16 1,064,946 8,446,493 Share premium account 16 356,805 1,406,688 Shares to be issued 2,938,262 - Distributable reserve 4,711,109 - Other reserve 16 156,953 156,953 Profit and loss account 16 (625,102) (8,585,516) ________ ________ EQUITY SHAREHOLDERS' FUNDS 8,602,973 1,424,618 ========== ========== CONSOLIDATED CASH FLOW STATEMENT Year 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 of finance Interest received 32,132 36,545 Interest paid (27,031) (3) ________ ________ Net cash inflow from returns on 5,101 36,542 investments and servicing of finance ________ ________ Taxation Paid (84,359) (40,194) ________ ________ Capital expenditure and financial Investment Payments to acquire tangible (80,071) - fixed assets Receipts from sales of - 47,135 investments _________ _________ Net cash (outflow)/inflow from investing (80,071) 47,135 activities _________ _________ Acquisitions and disposals Purchase of subsidiary (411,198) - undertakings Purchase of associate - (147,592) Proceeds of part disposal of - 172,028 subsidiary Net 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 _________ _________ Financing Net cash proceeds from share 3,284,642 1,254,759 issue Capital element of finance (3,642) (42,656) lease _________ _________ Net cash inflow/(outflow) from 3,281,000 1,212,103 financing _________ _________ 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 other reserve 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 1,073,968 funds Opening shareholders' funds 1,424,618 350,650 _________ _________ Closing shareholders' funds 8,602,973 1,424,618 _________ _________ NOTES TO THE PRELIMINARY RESULTS Year 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 56,767 362 Goodwill 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 181,290 854,170 Decrease 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 1,439,464 Bank overdraft - (306,280) (306,280) ________ ________ ________ 951,894 181,290 1,133,184 ________ ________ ________ 4. PURCHASE OF NET SUBSIDIARY UNDERTAKINGS Net assets acquired £ Tangible fixed assets 60,545 Debtors 728,638 Net 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 1,228,149 Deferred shares 2,938,262 Cash 411,198 _________ 4,577,609 _________ 5. MAJOR NON-CASH TRANSACTIONS During the year the following shares were issued in a share for share exchange to acquire the net assets of Navitas Hemway Limited (remaining 60%), Smith Melzack 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 394,000 Smith Melzack Pepper 40,000,000 0.50p 200,000 Angliss Ltd Telco Solutions Limited 106,909,800 0.50p 534,549 ________ 1,128,549 _________ During the year a pre-consolidation equivalent of 55,000,000 ordinary 0.1p shares with a fair value of £275,000 were issued to certain individuals in satisfaction of amounts owed to them by the company in respect of services provided 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 weighted average number of ordinary shares of 1p each of 73,594,097 (2004: 1,099,620,129 pre-consolidation). 9. INVESTMENTS IN ASSOCIATES Mercury Group plc acquired the remaining 60% shareholding in Navitas Hemway Limited in December 2004. The company has no associated companies at 30 September 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 - 296,055 Amounts owed by - - subsidiaries Other debtors 122,391 14,529 Prepayments 43,021 182,336 _______ _______ 1,835,289 492,920 _______ _______ Other debtors includes £23,088 owed by David Williams, director. This loan will be 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 661,718 105,530 Corporation tax 34,336 - Other taxation and social 188,292 35,027 security Other loans 57,107 - Accruals and deferred 92,475 112,736 income ________ ________ 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 as set out below: Group Land & Land & Buildings Buildings 2005 2004 £ £ Lease expires: Within two to five years 62,586 - ________ ________ 62,586 - ________ ________ Equipment Equipment 2005 2004 Lease 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 as set 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 statutory accounts within the meaning of S240 of the Companies Act 1985. Audited financial statements will be posted on the company's website www.mgplc.co.uk and sent to shareholders in due course. This information is provided by RNS The company news service from the London Stock Exchange

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