In its interim results, Merchant Securities reported a loss before taxation of £1,349,841, but said that when non-cash and non-recurring items were extracted, its underlying loss before tax amounted to £581,575.

Merchant Securities, which acquired investment banking firm John East & Partners in October 2007, has been engaged in restructuring and streamlining since August this year.

“The one-off losses of £768,266 relate to the costs of implementing the reorganisation…and the non cash items arise from the accounting impact of share-based payments, continuing amortisation of the intangible asset and goodwill created following the acquisition of John East & Partners Limited and a decision to write down all the group’s investments to nil,” said chairman John Green.

After taking what it describes as “decisive action” to improve efficiency, the firm is optimistic for the future.  Patrick Claridge, Merchant Securities chief executive, said:  “We have seen more activity across all areas of the business and the group has shown significant improvement since September 2008. The actions we have taken have improved the profitability of the group as a whole and the board is confident of an improved performance in the second half.”

The group also said it had strengthened its balance sheet, reporting net cash balances of £2.3 million at the end of September, rising from £1.8 million at 31 March.

Merchant Securities was founded in 1987 and began providing UK high net worth clients with advisory dealing and execution services.  In later years the group’s activities have expanded to include investment management, institutional and private client stockbroking, corporate finance and private equity services.