Despite revenue growth of 258 per cent, with income rising to £7.7m in 2011 from £2.2m in the previous year, Merchant House incurred the overall loss as a result of several “significant” one-off charges.
Among these was a £2.4m loss incurred by Merchant House Financial Services, the company’s IFA business, after its purchase of the assets of Clarkson Hill Group in December 2010 when the latter was put into administration.
James Holmes, chairman of the Group, said: “This loss is largely the result of the costs related to the complex process of arranging for the authorisation of the new advisors, during which they were unable to operate and write business.”
He added that for most advisers this lasted until March or April 2011, with some not being fully authorised until May or June of last year.
Cost of sales skyrocketed from £610,867 in 2010 to £7.5m in 2011, while administrative expenses meant another high cost of £4.3m, up from £2.6m the previous year. Another half million was lost due to an impairment loss on investments.