Meriden Group - Time to get noticed.

The illiquidity of this stock is a real put off, although there are a number of further concerns I now have since looking back at the last set of final and interim annual reports.

According to the last set of final results there were related party sales of over £1million to companies in which R Stevens has an interest. It is the fact that such revenue could soon disappear if RS decided he no longer wished to be involved with MRD due to his other numerous business interests, and also we are not informed as to the basis that these transactions occurred (i.e. were they all transacted at a fair market rate?).

The investment in Bidtimes plc is also concerning, although R Stevens has personally underwritten any loss on the subsequent sale of these shares it is only until Sept 2007 – as from this date any loss would be borne by the company (at present circa £113k).

At the last interim stage (results to 31 Jan 2005) there were fixed asset purchases of over £1million and gearing significantly increased (I guess principally as a result of the fixed asset purchases – what are these? And what are they for?).

Debt at 31 Jan 2005 stood close to c. £1.5million. Since the interim stage there was a share placing of 55million shares at 1.1p raising c. £605k before issue costs and at the same time R Stevens has continued to sell down his holding and now controls less than 25% of the company. There is a significant amount of uncertainty re: the Employee Benefits Division – particularly the lack of newsflow of contract wins, which is worrying given the significant investment the company has put into this division.

Note yet another sale (175k @ 0.4p) at well below the current bid of 0.45p. It is really difficult to say what a decent entry point would be, but imo until the latest set of results are published (to 31 July 2005) and we are given an update about future expectations the downward trend will continue.

BTG