RNS Number:1520R
MG Capital PLC
31 March 2008
31 March 2008
MG CAPITAL PLC
Interim Results
For the six months ended 31 December 2007
Statement by Chairman
The six months to 31 December 2007 saw further progress made towards the launch
of new private equity products in two core areas of our business, agriculture
and China. These are areas which are currently of considerable interest to
investors and where we believe we can offer considerable breadth and depth of
experience but where, to date, we have not had suitable investment vehicles to
offer to institutional investors. We have therefore generally had to seek funds
for new investments on a case by case basis, which is very time consuming. Our
objective is to establish new investment vehicles over the coming months which
will provide the Company with platforms upon which we can steadily expand our
business over the next few years.
Meanwhile, our flow of new deals has remained good, despite the negative effect
of worries about the health of the global financial system upon some investors'
appetite to do deals. The farming sector is now seen by many investors, rightly
in our view, as a refuge from top-heavy property and equity markets and as a
potential hedge against the re-emerging spectre of inflation. In China, though
small businesses may be suffering from tighter credit conditions and exporters
may be nervous about the dangers of slowing demand for their goods, we believe
that domestic demand remains robust and continues to underpin the prospects of
the well- managed, small to medium sized growth companies that we seek out. In
Russia, we are currently working on deals in the agricultural sector and are
involved in the aviation sector through our holding in Sky Express, the domestic
low cost airline.
Family Investments Limited, the Bahamas based fund advised by MG Global
Investments, our FSA authorised and regulated subsidiary, has disposed of its
listed holdings almost in their entirety, following the takeover bid for its
main remaining quoted holding, Celtic Resources Holdings plc. The portfolio now
comprises unlisted equities and convertibles and is essentially a private equity
portfolio. Several of the investee companies are being prepared for sale or an
initial public offering on a timescale stretching from a few months to a couple
of years and, given the considerable potential upside in these investments,
there is a desire not to exit from these investments prematurely. However Family
Investments is open-ended and the illiquidity of the portfolio now makes it
difficult to accommodate redemptions; these have therefore been suspended for
the time being with the intention of optimising the exits from the portfolio
over the next two years and returning the proceeds to the funds investors as
they are received.
Accrued performance fees from Jade Absolute Fund Managers became payable at the
end of the period and these contributed to the total revenues for the period of
�531,530. These were substantially lower than for the same period in the
previous year due to the winding down of Jade Absolute and the non-recurrence of
the one-off earnings from the Sky Express transaction. This translated to a loss
of �123,372 for the period compared to a profit of �37,469 for the same period
in the previous year. Looking ahead to the remainder of the current financial
year, we would hope to see new revenue streams from the proposed private equity
products referred to above begin to kick in towards the end of the year.
Finally, I am very sad to have to report that only a few days ago my fellow
director Peter Robertson died after a brave struggle against illness. He had
served this company since its inception with great dedication and we deeply
mourn his loss.
Peter Hannen 31 March 2008
Chairman
Unaudited Income Statement
For the six months ended 31 December 2007
Unaudited Unaudited Audited
Notes 6 months 6 months 12 months
to 31 Dec to 31 Dec to 30 Jun
2007 2006 2007
� � �
Turnover 2 531,530 1,153,726 1,527,032
531,530 1,153,726 1,527,032
Administrative expenses (651,991) (1,053,862) (1,933,700)
Operating (loss) /profit (120,461) 99,864 (406,668)
Exceptional write off of investment - - (320,561)
Interest receivable and similar items 5,527 5,153 15,020
Interest payable and similar charges (5,619) (9,525)
(3,997)
(Loss)/profit on ordinary activities (120,553) 101,020 (721,734)
before taxation
Tax on loss / (profit) on ordinary (4,868) (2,146) (5,124)
activities
(Loss)/profit on ordinary activities after (291,443) (235,660) (1,054,336)
taxation - continuing operations
(Loss) / profit on ordinary activities 3 166,022 334,534 327,478
after taxation - discontinued operations
Equity minority interest 2,049 (61,405) (59,252)
Retained (loss)/profit for the period (123,372) 37,469 (786,110)
Earnings per ordinary share - basic and 4 (0.03p) 0.78p (1.16p)
diluted
Consolidated Unaudited Balance Sheet
As at 31 December 2007
Unaudited Unaudited Audited
Notes As at As at As at
31 Dec 31 Dec 30 Jun
2007 2006 2007
� � �
NON-CURRENT ASSETS
Tangible 12,679 17,581 15,077
Investments 195,918 1,034,602 195,918
Purchased Goodwill less impairment 115,585 196,315 115,585
324,182 1,248,498 326,580
CURRENT ASSETS
Debtors 691,589 909,173 308,527
Cash at bank and in hand 113,231 142,418 324,177
804,820 1,051,591 632,704
NON-CURRENT ASSETS HELD FOR SALE - - 188,578
TOTAL ASSETS 1,129,002 2,300,089 1,147,862
LIABILITIES:
Current liabilities (521,126) (632,188) (342,737)
Non-current liabilities - - -
(521,126) (632,188) (342,737)
NET ASSETS 607,876 1,667,901 805,125
EQUITY
Called up share capital 6, 7 2,402,255 2,402,255 2,402,255
Share premium account 6, 7 - - -
Retained Earnings 6, 7 (1,794,379) (843,459) (1,671,007)
Shareholders' funds (including non-equity 607,876 1,558,796 731,248
interests)
Minority Interest - equity - 109,105 73,877
TOTAL EQUITY 607,876 1,667,901 805,125
Consolidated Unaudited Cash flow Statement
For the six months ended 31 December 2007
Unaudited Unaudited Audited
Notes 6 months 6 months 12 months
to 31 Dec to 31 Dec to 30 Jun
2007 2006 2007
� � �
Net cash (outflow) from operating activities 5 (420,286) (233,903) (429,100)
Returns of investments and servicing of finance
Interest paid (5,619) (3,997) (9,525)
Interest received 5,527 5,153 15,020
Net cash (outflow) / inflow from returns on investments (3,729) (1,691) (6,041)
and servicing of finance - continuing operations
Net cash (outflow) / inflow from returns on investments 3,637 2,847 11,536
and servicing of finance - discontinued operations
Taxation (4,868) (2,146) (5,124)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (1,499) (6,039) (2,083)
Payments to acquire investments (64,000) (40,688) -
Receipts from sale of investments 281,205 235,965 565,510
215,706 189,238 563,427
Net cash inflow from capital expenditure and
financial investment - continuing operations
Net cash inflow from capital expenditure and - - -
financial investment - discontinued operations
Financing
Net cash inflow from financing activities - - - -
continuing operations
Net cash inflow from financing activities - - - -
discontinued operations
(Decrease) / increase in cash (209,540) (45,655) 134,698
Statement of Recognised Income and Expense
For the six months ended 31 December 2007
Unaudited Unaudited Audited
Notes 6 months 6 months 12 months
to 31 Dec to 31 Dec to 30 Jun
2007 2006 2007
� � �
(Loss) / Profit for the period (123,372) 37,469 (786,110)
Notes to Financial Statements
For the six months ended 31 December 2007
1. Basis of preparation
This Interim Statement, which has not been audited and does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985,
was approved by the Board on the 31st March 2008. It has been prepared on the
basis of the accounting policies set out in the Group's 2007 statutory accounts.
This financial information has been prepared in accordance with the
recognition and measurement principles of International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU) and IFRIC interpretations
that are relevant to its operations as required by the AIM Rules. The financial
information has been prepared under the historical cost convention.
The Group's Interim Statement consolidates the financial statements of MG
Capital plc and its subsidiaries MG Global Investment Limited, MG Research
Limited, Hannen & Company Limited, Jade Absolute Fund Managers Limited and MG
Maple Capital Partners Inc all of which have been made up to 31 December 2007.
The results for the year ended 30 June 2007 have been extracted from the
Group's published accounts for that period which have been filed with the
Registrar of Companies. The auditors' report on the full statutory accounts of
the Group for the year ended 30 June 2007 was unqualified.
2. Turnover - Geographical Analysis
Unaudited Unaudited Audited
6 months 6 months 12 months
to 31 Dec to 31 Dec to 30 Jun
2007 2006 2007
� � �
United Kingdom 344,975 754,411 700,707
United States of America 158,699 133,058 410,195
Far East / Australasia 1,856 70,339 89,600
Other European 26,000 195,918 326,530
531,530 1,153,726 1,527,032
3. Discontinued operations - (Loss) / profit on ordinary activities after
taxation
Unaudited Unaudited Audited
6 months 6 months 12 months
to 31 Dec to 31 Dec to 30 Jun
2007 2006 2007
� � �
Turnover 417,346 719,008 821,301
Expenditure 251,324 384,474 495,823
Profit on ordinary activities before 166,022 334,534 327,478
taxation
Tax on profit on ordinary activities - - -
Profit on ordinary activities after 166,022 334,534 327,478
taxation
4. Earnings per share
The basic earnings per share for the six months to 31 December 2007 is
calculated by dividing the Group's (loss) / profit after taxation of (�123,372)
(six months to 31 December 2006: �37,469, year to 30 June 2007: (�786,110)) by
the weighted average number of shares in issue during the period of 4,804,510
(six months to 31 December 2006:4,804,510, year to 30 June 2007: 67,880,102).
5. Reconciliation of operating (loss) / profit to net cash inflow from
operating activities
Unaudited Unaudited Audited
6 months 6 months 12 months
to 31 Dec to 31 Dec to 30 Jun
2007 2006 2007
� � �
(Loss) / profit on ordinary activities (120,553) 101,020 (721,734)
before taxation
Interest received (5,527) (5,153) (15,020)
Interest paid 5,619 3,997 9,525
Depreciation and impairment 3,897 16,475 101,049
Investments received in consideration - (195,918) (195,918)
for consultancy services provided
(Profit)/Loss on disposal of (92,627) 13,915 -
investments
(Increase) / decrease in debtors (383,062) (593,080) 7,566
Increase in creditors 179,795 437,816 146,959
Write off of fixed asset investment - - 325,211
Minority interest movement (7,828) (12,975) (86,738)
Net cash (outflow) from Operating (420,286) (233,903) (429,100)
Activities
6. Capital and reserves
Following court approval on 11 October 2006, 223,520,300 deferred ordinary
shares of 0.1p each were cancelled and the deferred shares and the share premium
account were both written back to reserves.
7. Changes in Equity
Share Capital Share Premium Retained Minority Total
Earnings Interest
� � � � �
As at 30/06/06 4,637,458 5,101,552 (8,221,652) 101,363 1,618,721
Cancellation of share - (5,101,552) 5,101,552 - -
premium
Cancellation of deferred (2,235,203) - 2,235,203 - -
ordinary shares
Profit in period - - 41,438 7,742 49,180
As at 31/12/06 2,402,255 - (843,459) 109,105 1,667,901
Loss in period - - (827,548) (35,228) (862,776)
As at 30/06/07 2,402,255 - (1,671,007) 73,877 805,125
Loss in period - - (123,372) - (123,372)
Acquisition of minority - - - (73,877) (73,877)
interest
As at 31/12/07 2,402,255 - (1,794,379) - 607,876
8. Transition to IFRS
Unaudited Unaudited Audited
6 months 6 months 12 months
to 31 Dec to 31 Dec to 30 Jun
2007 2006 2007
� � �
(Loss) / profit before tax as reported under (120,553) 101,020 (721,734)
UK GAAP
IFRS Adjustments:
Reversal of goodwill amortisation - 12,606 29,346
Impairment of goodwill - (12,606) (29,346)
(Loss) / profit before tax as reported under (120,553) 101,020 (721,734)
IFRS
INDEPENDENT REVIEW REPORT TO MG CAPITAL PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 December 2007 which comprises the income statement, the
balance sheet, the statement of changes in equity and the cash flow statement
and the related notes to the accounts and we have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report, including the conclusion, has been prepared for and only for the
Company for the purpose of the AIM Rules of the London Stock Exchange and for no
other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Directors' Responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors. The Directors are
responsible for preparing the interim report in accordance with the AIM Rules of
the London Stock Exchange which require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the annual accounts except where any changes, and the
reasons for them, are disclosed.
Review Work Performed
We conducted our review in accordance with International Standard on Review
Engagements 2410 "Review of interim financial information performed by the
independent auditor of the entity" issued by the Auditing Practices Board for
use in the United Kingdom. A review consists principally of making enquiries of
management and applying analytical procedures to the financial information and
underlying financial data and, based thereon, assessing whether the accounting
policies and presentation have been consistently applied unless otherwise
disclosed. A review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is substantially less
in scope than an audit performed in accordance with International Standards on
Auditing (UK and Ireland) and therefore provides a lower level of assurance than
an audit. Accordingly, we do not express an audit opinion on the financial
information.
Review Conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2007.
CLB Littlejohn Frazer
Chartered Accountants
1 Park Place
Canary Wharf
London E14 4HJ
31 March 2008
-Ends-
For further information:
Charles Fowler, Managing Director, MG Capital plc Tel: +44 20 7332 2040
Hugh Oram, Nominated Adviser, Nabarro Wells & Co. Limited Tel: +44 20 7710 7400
This information is provided by RNS
The company news service from the London Stock Exchange
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