28 September 07
Turnover increased to £387,922 for the six months to 30 June 2007 from £134,353 in the comparative period and operating loss was £194,082 compared to a restated operating loss of £309,472 in 2006. The 2006 results have been restated to comply with the new accounting standard, IAS 39 on the carrying value of investments. Before taking account of the new accounting standard there would have been an operating loss of £212,775 in the first six months of 2007 compared to a loss of £157,973 in the same period in 2006. Shareholders funds at 30 June 2007 were £138,281 although if convertible loan notes were converted, this would increase to £606,281.
In my previous statement I reported a better start to 2007 than had been the case in 2006 but this progress has not been maintained and therefore, following these results, the Board has undertaken a comprehensive review of the business areas in which the group is engaged with a view to reducing costs, increasing profitability and thereby enhancing shareholder value. Shareholders will already know that, since we published our results for 2006, Peter Redmond resigned for family reasons on 13 July. However, he has remained with the Company as a consultant.
Following this review, the Board resolved to restructure the current corporate finance activities which have continued to incur significant losses. Accordingly, Dan Edelman resigned as a director of Merchant House Group and its subsidiary, Merchant Capital Limited, on 28 September. The Board wishes him
well.
The Board now intends to focus on the following activities which have proved more successful and profitable for the Group in the last two years.
• To identify under priced public situations in which to make strategic investments along with our appointment as financial adviser and/or brokers in order to assist management in improving their share performance in line with underlying value and performance.
• To provide corporate advice to pre IPO situations requiring funding and advice preparatory to their listing.
• To continue the investment strategy which has yielded a total gain of £201,919 in the 6 months period to 30 June 2007.
• To expand the previously announced proprietary trading in shares.
As previously reported, Merchant Capital is a broking member of the Stock Exchange and a PLUS market adviser. This, together with our in house access to debt funding through Merchant House Finance Limited for leasing and our banking relationships means we can bring a comprehensive funding package together for a
client or investee.
I am also pleased to report that Merchant House Finance, in which we currently hold 49% has made a good start with sales of £116,737 (2006: nil). Shareholders will know that the Company has an option to acquire a further 26%.
The Board are now in the process of recruiting professionals to support the execution of this strategy, including staff with executive director responsibilities. Announcements will follow in due course.
In conclusion, the Board believes that the focusing on its core strengths in the areas of advisory services, investment and proprietary share trading with our recruitment programme will generate increasing value for our shareholders.
Martin Eberhardt
Chairman
27th September 2007