Delays to regulatory approval for 120 Clarkson Hill advisers saw Merchant House’s IFA arm report a loss of £2.4m for 2011.
The group’s results for the year, published this afternoon, reveal a loss for Merchant House Financial Services of £2.4m for the year. Overall, Merchant House Group incurred a £5.6m pre-tax loss.
Merchant House Group bought Clarkson Hill Group from administration in December 2011 with issues surrounding the authorisation of new advisers lasting until June 2011.
The advisers were unable to operate and write business and MHFS needed a subsidy from its parent Merchant House Group to cover the costs.
In total the Merchant House Group saw a pre-tax loss of £5.6m in 2011, compared to a profit of £1.7m in 2010.
Its results state: “There was also a considerable one-off investment in training, compliance and additional support required at the time.
“Had the business operated during that period, much of the loss could have been mitigated. For example, during the first three months of 2011, the average gross income for MHFS was £20,000 while in June 2011, after all advisers had been authorised, income was £740,000.”
Revenues for the group increased 258 per cent to £7.7m, compared to £2.1m in 2010, but its net debt jumped to £1,291,000 compared to £419,000 at December 2010.
In August FSA approval was given to a £400,000 interest-free loan from Beia Capital, agreed in June, that saw it take a 17.6 per cent stake in the group.
The company’s shares were suspended from AIM in April and remain so pending the publication of it half-year results next month.
The board says it has secured the support of a number of new investors in 2012.