Independent corporate finance and investment advisory firm, specialising in smaller quoted and larger unquoted companies
29 September 2005
Merchant House Group plc, the AIM-quoted corporate finance and financial services group, today announced results for a half-year of considerable advance, with sales increasing more than seven-fold to over £427,000. Chairman Peter Redmond said a number of significant transactions were closed during the period. This has left the group well-positioned to capitalise on significant opportunities in the year ahead.
After costs incurred partly as a result of capital re-organisation and refinancing, the company showed a pre-tax loss of £144,960 for the six-month period to June 30, 2005, again representing a significant improvement on losses of £589,398 for the previous year. Sales rose to £427,044, from £55,570.
Mr Redmond added: “Our strategy is to provide corporate advice on a continuing basis for clients, while at the same time taking a stake in their future. We believe this stake-holding policy ensures that we continue to provide our clients with close attention and helps maintain long-term relationships, while giving us a direct interest in their profitable future.”
Merchant House has secured warrants or investments in a number of the companies with which it is involved.
During the course of the year, Merchant House acted as financial adviser to raise funds for successful AIM floats including the interactive broadcaster TV Commerce plc and the biocide coatings group Byotrol plc. It also advised and raised funds for Cellcast plc, which arrived on AIM after Merchant House’s year.
Mr Redmond added that projects already in hand gave confidence that the improved level of activity will be maintained.
For the six month period ended 30 June 2005
The results for the six months ended 30 June 2005 represent a considerable advance for the Group, reflecting a marked increase in corporate finance activity. A number of significant transactions were closed during the period.
The Group’s corporate finance subsidiary, Merchant Capital, has acted as financial adviser and has been instrumental in raising funds for a number of successful AIM IPO’s including TV Commerce Holdings plc, an interactive TV broadcaster, Byotrol plc, a speciality chemicals business which has developed an innovative range of biocides, and Cellcast plc, which came to the market after the end of the period under review.
Our strategy is to provide corporate advice on a continuing basis for clients while at the same time taking a stake in their future. We believe this stakeholding policy ensures that we will continue to provide our clients with close attention and helps maintain long-term relationships, while giving us a direct interest in their future. In this connection the Group has secured warrants or investments in a number of the companies with which it is involved.
The Directors believe that the experience which the corporate team brings to bear enables the Company to offer detailed and specialist corporate advice on a basis tailored to the needs of corporate clients both on and after flotation and at the pre-IPO stage. In addition, the Company is now able to provide significant assistance in relation to small cap fundraisings, and has assisted in a number of such fundraisings in recent months.
With a number of mandates continuing into the second half, the Directors have confidence that the improved level of activity will be at least maintained. Turnover for the period was £427,044 compared to £142,625 for the whole of 2004. Administrative costs were significantly reduced but the Group again incurred some exceptional costs related to the capital reorganisation and refinancing which was completed after the end of the period. The loss before taxation of £144,960, after exceptional costs of £57,100, was substantially lower than in the previous year, when we reported a pre-tax loss of £589,398.
The Board is mindful of the need further to improve the Group’s operating performance and, to that end, is taking steps to strengthen the team and to broaden the range of services offered to corporate clients.
In my statement with the full year results to 31 December 2004, I explained that Merchant House needed to raise additional capital to support its business plan and that a reorganisation of its share capital was necessary to reduce the par value of its ordinary shares and thus facilitate a fundraising at or around its then share price.
I am pleased to tell you that at the Extraordinary General Meeting of the Company held on 25 August resolutions were passed to reduce the capital of the Company from £11,250,000 to £10,436,238. This followed the approval by the meeting of the splitting of the Company’s ordinary share capital of 5p shares into deferred shares of 4.5p each and ordinary shares of 0.5p. The consent of the High Court to the capital reduction, effected by the cancellation of the deferred shares and the Company’s share premium account, is expected to be obtained in October 2005.
Following the EGM, the Company was also able to complete the required fundraising, by raising £860,000 through the issue of convertible loan notes (£500,000 of which are secured by a debenture on the Company) and £41,260 through the issue of new ordinary shares at 2p per share. Fuller details of the convertible loan notes will be found in the circular sent to shareholders on 1 August 2005. In addition, the Company issued warrants over 7,675,871 new ordinary shares in connection with the fundraising.
With the additional resources available to it and the increased level of activity already achieved, the Directors are confident that the Company is well-positioned to continue to build its business and increase shareholder value.
Peter Redmond
Chairman
29 September 2005
Merchant Capital Limited
Aldermary House
10-15 Queen Street
London EC4N 1TX
United Kingdom
Tel: +44 (0)20 7332 2200