Final Results

Mercury Group PLC 30 March 2005 Mercury Group Plc Preliminary statement of final results for the year ended 30 September 2004 CHAIRMAN'S STATEMENT I am delighted to be able to announce the results for the Group for the year ended 30 September 2004. The last twelve months has seen significant progress in achieving our stated objectives, although the results for the period ended 30 September 2004 do not reflect the impact of the new strategy and are not therefore representative of the Group in the future. In the year ended 30 September 2004, turnover fell to Â£246,970 (2003:Â£944,263). Administrative costs have reduced to Â£631,277 (2003:Â£1,032,028). Loss before taxation has reduced significantly to Â£916,827 (2003:Â£6,926,244) and loss per share amounted to 0.08p (2003:0.87p) Shareholders funds increased to Â£1,424,618 (2003:Â£350,650). This increase has resulted from the issue of new shares during the year to fund the acquisitive initiatives of your Group. Since I was appointed Chairman on 17 February 2004 to lead the movement into the property services sector, there has been a strengthening of the Board. Anthony McFarland was appointed Director with interim responsibility for the Group's finance functions on 6 May 2004, Alex Moss was appointed a non-Executive Director on 27 September 2004 and Ronald Franks joined the Board as an Executive Director on 1st March 2005, following the acquisition of Smith Melzack Pepper Angliss. Over the last year there have been a number of positive corporate developments. In November 2003 the Board of Mercury Group Plc agreed to acquire a 40 per cent shareholding in Navitas Hemway Limited, a company which provides facilities management and maintenance services across a range of business sectors, with an option to acquire the balance of 60%. In May 2004 the Company announced that it had been granted an option to acquire 100% of Telco Solutions Limited, a company which provides specialist project management services to the commercial property sector. Since the year end both of these options have been exercised and the companies have been fully integrated into the Mercury Group. The initial consideration for Telco Solutions was subject to finalisation of completion accounts. This has now occurred, and the initial consideration determined to be Â£534,549 to be satisfied by the issue of 106,909,800 ordinary shares to the vendors. Application will shortly be made for the shares to be allotted to be admitted for dealing on AIM, and trading is expected to commence on 6th April 2005. In addition, on 1st March 2005, the company completed the acquisition of Smith Melzack Pepper Angliss, a commercial property agency, and announced that it had been granted an option to acquire Lee Baron, also a commercial property agency, which expires on 31st May 2005. These three acquisitions represent significant progress towards achieving our strategy of building a group providing a wide range of professional services to the real estate industry in the UK and Continental Europe. Your Board continues to actively pursue a number of other significant acquisition targets in the real estate industry. The Board is excited about the opportunities to develop the Group both by organic growth and acquisition and on behalf of the Board I wish to thank the staff and the Group's advisors for their continued support and advice. David Williams Chairman 30th March 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 30 September 2004 Notes 2004 2003 Total (Restated) Â£ Â£ TURNOVER - Continuing - 336,910 - Discontinued 246,970 607,353 COST OF SALES (189,616) (120,344) -------- -------- GROSS PROFIT 57,354 823,919 Administrative expenses (631,277) (1,032,028) -------- -------- OPERATING LOSS (573,923) (208,109) - Continuing operations (529,762) (249,683) - Discontinued operations (44,161) 41,574 Share of loss of associate (149,024) - Amortisation of goodwill arising on acquisition of associate 9 (28,138) Loss on fixed asset investments 5 (214,839) (6,718,737) Profit on disposal of subsidiary 6 12,555 Interest payable and similar (3) (24,349) charges Interest receivable and similar 36,545 24,951 income -------- -------- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (916,827) (6,926,244) Tax on loss on ordinary activities 7 - - -------- -------- LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (916,827) (6,926,244) Minority interest - 39,128 -------- -------- Retained LOSS for the financial YEAR (916,827) (6,887,116) ======== ======== Earnings per ordinary share 8 (0.08)p (0.87p) ======== ======== CONSOLIDATED BALANCE SHEET 30 September 2004 Note 2004 2003 (Restated) Â£ Â£ FIXED ASSETS Tangible assets - 11,183 Investments in associates 9 233,096 - Investments 1 261,975 ------------- ------------- 233,097 273,158 ------------- ------------- CURRENT ASSETS Trade investments - 365,245 Debtors 10 492,920 418,001 Cash at bank and in hand 951,894 101,175 ------------- ------------- 1,444,814 884,421 CREDITORS: amounts falling due within one 11 (253,293) (686,143) ear ------------- ------------- NET CURRENT ASSETS 1,191,521 198,278 ------------- ------------- TOTAL ASSETS LESS CURRENT LIABILITIES 1,424,618 471,436 CREDITORS: amounts falling due after more 12 - (42,656) than one year Equity minority interest - (78,130) ------------- ------------- NET ASSETS 1,424,618 350,650 ============= ============= CAPITAL AND RESERVES Called up share capital 8,446,493 7,862,386 Share premium account 14 1,406,688 - Other reserve 14 156,953 156,953 Profit and loss account 14 (8,585,516) (7,668,689) ------------- ------------- EQUITY SHAREHOLDERS' FUNDS 1,424,618 350,650 ============= ============= CONSOLIDATED CASH FLOW STATEMENT Year ended 30 September 2004 2004 2003 (Restated) Â£ Â£ Net cash outflow from operating (309,194) (654,720) activities Returns on investments and servicing of finance Interest received 36,545 24,951 Interest paid (3) (24,349) ------------- ------------- ------------- ------------- Net cash inflow from returns on 36,542 602 investments and servicing of finance ------------- ------------- Taxation Paid (40,194) - ------------- ------------- Capital expenditure and financial Investment Payments to acquire tangible - (2,209) fixed assets Receipts from sales of tangible - 31,420 fixed assets Payments to acquire investments - (1,857,826) Receipts from sales of 47,135 3,077,826 investments ------------- ------------- Net cash inflow/(outflow) from investing 47,135 1,249,211 activities ------------- ------------- Acquisitions and disposals Purchase of subsidiary - (185,806) undertakings Purchase of associate (147,592) - Proceeds of part disposal of 172,028 280,000 subsidiary Cash disposed of with subsidiary (116,654) - undertaking ------------- ------------- ------------- ------------- Net cash (outflow)/inflow from (92,218) 94,194 acquisitions and disposals ------------- ------------- Net cash (outflow)/inflow before (357,929) 689,287 financing ------------- ------------- Financing Issue/(cancellation) of ordinary 1,254,759 (9,903) share capital Debt finance (repaid) (42,656) (96,859) ------------- ------------- Net cash inflow/(outflow) from 1,212,099 (106,762) financing ------------- ------------- Increase in cash in the year 854,170 582,525 ============= ============= CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 30 September 30 September 2004 2003 Â£ (Restated) Â£ Loss for the financial year (916,827) (6,835,854) Prior year adjustment (see note 23) - (51,262) ------------- ------------- Total recognised gains and losses relating to the year (916,827) (6,887,116) ============= ============= RECONCILIATION OF MOVEMENT IN CONSOLIDATED SHAREHOLDERS' FUNDS 30 September 30 September 2004 2003 (Restated) Â£ Â£ Loss for the financial year (916,827) (6,887,116) Costs of cancellation of share premium written off to other reserve - (9,903) Increase in share capital 584,107 - Premium on shares issued 1,406,688 - ------------- ------------- Net movement in shareholders' funds 1,073,968 (6,897,019) ------------- ------------- Opening shareholders' funds 350,650 7,247,669 (originally Â£401,912 before deducting prior year adjustment of Â£51,262 - see note 23) ------------- ------------- Closing shareholders' funds 1,424,618 350,650 ============= ============= Notes to the preliminary results 1. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2004 2003 (Restated) Â£ Â£ Operating loss (573,923) (208,109) Depreciation charge 362 2,865 Goodwill impairment - 19,600 Profit on disposal of fixed assets - (8,240) (Increase) in debtors (87,194) (53,095) Increase/(Decrease) in creditors 351,501 (407,741) ------------- ------------- Net cash outflow from operating activities (309,194) (654,720) ============= ============= 2. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Â£ Â£ Increase in cash in the year 854,170 582,525 Decrease in debt in the year 42,656 96,859 ------------- ------------- Movement in net funds in the year 896,826 679,384 Opening net funds/(debt) 55,068 (624,316) ------------- ------------- Closing net funds 951,894 55,068 ============= ============= 3. ANALYSIS OF CHANGES IN NET FUNDS 30 September Cashflows 30 September 2003 2004 Â£ Â£ Â£ Cash at bank and in hand 101,175 850,719 951,894 Bank overdraft (3,451) 3,451 - ----------- ----------- ----------- 97,724 854,170 951,894 Debt due after one year (42,656) 42,656 - ----------- ----------- ----------- 55,068 896,826 951,894 =========== =========== =========== 4. PURCHASE OF ASSOCIATED UNDERTAKING Â£ Cost of investment in associated undertaking 410,258 =========== =========== Satisfied by: Shares Allotted 262,666 Cash 147,592 ----------- 410,258 =========== 5. LOSS ON FIXED ASSET INVESTMENTS 2004 2003 Â£ Â£ Provision against cost of investments (247,038) (3,836,671) Profit/(loss) on disposal of investments 32,199 (2,882,066) ----------- ----------- (214,839) (6,718,737) =========== =========== 6. PROFIT ON DISPOSAL OF SUBSIDIARY On 5 December 2003, the company disposed of its entire shareholding in Cater Barnard (USA) plc. The loss before tax for the period to the date of disposal, included in Cater Barnard's Profit and Loss Account was Â£44,152. The disposal is analysed as follows: Net assets disposed of: Â£ Fixed assets 10,857 Current asset investments 365,245 Debtors 12,275 Bank 116,654 Creditors (267,428) Equity minority interest (78,130) ----------- 159,473 Profit on disposal 12,555 ----------- Net disposal proceeds 172,028 =========== Satisfied by: Cash 172,028 =========== 7. TAX ON LOSS ON ORDINARY ACTIVITIES 2004 2003 Â£ Â£ UK Corporation tax - - =========== =========== Factors affecting the tax charge The tax assessed for the year is lower than the standard rate of Corporation tax in the UK. The difference is explained below: 2004 2003 (Restated) Â£ Â£ Loss on ordinary activities before tax (916,827) (6,926,244) ========== ========== Loss on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% (2003: 30%). 275,048 2,077,873 Effects of: Expenses not deductible for tax purposes (primarily provisions against shares still held and entertainment) (78,754) (1,165,292) Tax losses carried forward for future utilisation (196,294) (912,581) ---------- ---------- Current tax charge - - ========== ========== 8. EARNINGS PER ORDINARY SHARE The figures for earnings per share are calculated on a loss of Â£916,827 (2003 - Â£6,887,116). The basic earnings per share calculation is based on a weighted average number of ordinary shares of 0.1p each of 1,099,620,129 (2003: 786,238,648). 9. INVESTMENTS IN ASSOCIATES Â£ Share of net liabilities of associate (414,084) Goodwill arising on acquisition of associate (a) 647,180 ---------- 233,096 ========== (a) Goodwill arising on acquisition of associate Addition 675,318 Amortisation (28,138) ---------- 647,180 ========== The addition represents: Name Country of Business activity Class of Proportion held incorporation shares held Navitas Hemway England Facilities maintenance Ordinary 40% Limited Since the year end the Company has acquired the remaining 60% shareholding in Navitas Hemway Limited. 10. DEBTORS Group 2004 2003 (Restated) Â£ Â£ Trade debtors - 195,280 Amounts owed by associate 296,055 - Amounts owed by subsidiary - - Other debtors 14,529 215,713 Prepayments 182,336 7,008 --------- --------- 492,920 418,001 ========= ========= Amounts owed by associate relate to a loan advanced to Navitas Hemway Limited which is receivable after more than one year. The loan attracts interest at a rate of 7.8% per annum. Other debtors represents an amount owed by David Williams, director. This loan will be repaid in the near future. 11. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2004 2003 (Restated) Â£ Â£ Bank overdraft - 3,451 Trade creditors 105,530 27,078 Corporation tax - 40,194 Other taxation and social security 35,027 57,082 Accruals and deferred income 112,736 85,000 Other loans 473,338 --------- --------- 253,293 686,143 ========= ========= 12. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 2004 2003 Â£ Â£ Director's loan account - 42,656 --------- --------- - 42,656 ========= ========= This relates to amounts due to Adrian Stecyk, who retired as a Director of Mercury Group Plc on 21 November 2003. 13. OPERATING LEASE COMMITMENTS At 30 September 2004 the Group had annual commitments under operating leases as set out below: Land & Land & Buildings Buildings 2004 2003 Â£ Â£ Lease expires: Within two to five years - 80,850 ---------- ---------- - 80,850 ========== ========== 14. MOVEMENT ON CAPITAL AND RESERVES Called Up Share Share Premium Other Reserve Profit and Loss Capital Account Account (Restated) Â£ Â£ Â£ Â£ As at 1 October 2003 7,862,386 - 156,953 (7,617,427) Prior year adjustment - - - (51,262) Share Issues 584,107 1,406,688 - - Loss for the year - - (916,827) --------- --------- --------- --------- 8,446,493 1,406,688 156,953 (8,585,516) ========= ========= ========= ========= The prior year adjustment was made as a result of an error in accounting for VAT resulting in the understatement of the VAT creditor by Â£51,262 at 30 September 2003. 15. General The figures for 2004 are extracted from those shown in the statutory financial statements on which the auditors will issue an unqualified report today and which will not contain a statement under s237(2) or (3) of the Companies Act 1985. A copy of the full financial statements for 2003 on which the auditors have issued an unqualified report, has been filed with the Registrar of Companies. Audited financial statements will be posted on the company's website www.mgplc.co.uk. on 31st March 2005, sent to shareholders on 5th April 2005 and will be available to members of the public at the Company's Registered Office, Hilden Park House, 79 Tonbridge Road, Hildenborough, Kent TN11 9BH for a period of 30 days from today's date.. The Annual General Meeting will be held at the offices of Jones Day, 21 Tudor Street, London EC4Y ODJ at 10.00am on 14th June 2005. This information is provided by RNS The company news service from the London Stock Exchange

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