RNS Number : 9339F
MG Capital PLC
15 October 2008
15 October 2008
MG CAPITAL plc ("the Company")
Correction: Final Results
The Board of the Company would like to advise of amendments to the "Final Results" announcement issued on 14th October at 18:27 under
RNS No 8575F.
The Report of the Directors incorrectly stated that the Board approved the Report on 13th October 2008, the Report was actually approved
by the Board on 14th October 2008.
The Notice of Annual General Meeting was incorrectly dated as 13th October 2008, it should have been dated 14th October 2008.
Below is the correct announcement in full.
MG CAPITAL PLC
RESULTS FOR THE YEAR ENDED 30 JUNE 2008
CHAIRMAN*S STATEMENT
Against an increasingly gloomy global financial background there have been few areas of relative brightness over the past year. One of these
brighter areas has been agricultural sector where we have been active on behalf of our client Family Investments Limited. Prices of
agricultural land performed strongly over the period driven up by a sharp rise in the prices of most soft commodities. This greatly
benefited the valuations of the fund*s farming holdings in South America and Australia. We believe that this upturn represents the first
stage of a long term bull market in soft commodities, but even so we felt that prices and values had risen too far too fast and that it
would be sensible for the fund to take advantage of some very strong buyer demand for its particular assets and use this as a selling
opportunity. As a result the fund made some well timed sales, completed after the June year end, at excellent prices which have
significantly advanced the fund towards its aim of liquidating all its assets over a two year time frame.
Since the timing of those sales there has been a material pull back in soft commodity prices and in some farm valuations. We see this very
much as a buying opportunity and are therefore moving ahead with plans to establish an investment vehicle specializing in this sector. While
current conditions in financial markets are not favourable for new funds of any sort, we think that as investors become more familiar with
this asset class they will realise that it has many qualities that make it attractive in the current climate of financial uncertainty. We
are also continuing to work on a new fund for private equity investment in China, which in our view will be one of the few countries in the
world where growth prospects will remain relatively robust over the next few years and where opportunities to invest at reasonable
valuations are likely to increase.
Turning to our corporate advisory and consultancy activities, we have continued to work on transactions in Russia and China in various
sectors. The most notable of these, a US$20 million capital raising for Sinotel Limited, an Australian Company involved in fibre optic
telecommunications in China, was in fact not completed until after the year end and is still subject to shareholders* approval, which is
expected later this month. Provided that this approval is received, MG Global Investments Limited (our FSA authorised and regulated
subsidiary) will receive a fee of 5% of the amount raised for its services. It is already entitled to a warrant over 1% of the enlarged
share capital of the Company. However, no fees from this work or any other of our main projects were accrued in the year under review and as
a consequence there was a loss attributable to the equity holders of the Company of �576,057 compared to a loss of �667,606 on the same
basis for the previous year.
As you will recall, we have a stake of around 4% in Sky Express, Russia*s only low cost airline. Sky Express is still growing fast with ten
Boeing 737s now in operation. It has reported that it is on track to achieve an 85% year on year growth in passenger numbers in 2008 with
growth in passenger numbers of over 40% on routes that were in operation for the second year. However due to the rise in fuel prices,
conditions in this market are tough and the airline has announced that it is the process of raising necessary additional capital.
This year*s Annual General Meeting will be held at 10.30am on 11th December 2008. From 1 October 2008, under the Companies Act 2006, a
director has a statutory duty to avoid a situation where there is or may be a conflict of interest with their Company. However in the event
that a conflict does arise there needs to be a practical way of dealing with it. The Act provides for this by allowing directors of public
companies to authorise conflicts or potential conflicts where the articles of association contain a provision allowing this authorisation,
and a resolution will be proposed that the Company*s Articles of Association be amended to include such a provision. For details of the
meeting and resolutions please refer to the Notice at the end of this Report.
Peter Hannen 14 October 2008
Chairman
REPORT OF THE DIRECTORS
The Directors present their Report, together with the Group Financial Statements and Auditors* Report, for the year ended 30 June 2008.
Principal Activities and Business Review
The principal activity of the Group continued to be the provision of fund management and advisory services, corporate advisory, research and
consultancy services, and other investment and financial services.
The Parent Company is a limited liability company, incorporated and domiciled in the UK.
The results for the Group show a pre-tax loss on continuing operations of �781,888 (2007: �982,377) for the year and sales on the continuing
trade of �186,667 (2007: �741,456). There is also a profit within the Group on discontinued trade of �214,329 (2007: �260,643) for the year
with related sales of �417,346 (2007: �785,576).
Business Environment
The business environment has been a challenging one throughout the year, particularly as the effects of the credit crunch emanating from the
United States began to be felt around the world.
Strategy
The principal objective is for the Group to become a strong and independent investment house offering a number of distinctive
specialisations.
There are several key elements to the Group*s strategy for achieving this objective:
� Growth of existing funds under management/advice by continued active marketing;
� Development of new funds and other products and services in the Group*s specialist areas;
� Continued development of the Group*s ability to identify, assess and process individual investment opportunities in the Group*s
specialist areas;
� Continued development of the Group*s ability to distribute its products and services by extending the breadth and depth of its
institutional relationships in the UK, the rest of Europe and in Asia;
� Continuing to build up the Group*s interests in emerging companies with high growth potential by way of equity fees paid by client
companies, warrants and earned interests;
� Targeted investment in the resources required to support these strategies.
Business Review
The Group has made progress during the year on some but not all of these key elements to its strategy. Following the decision taken in the
previous year to wind down Jade Absolute Fund Managers and to terminate the advisory agreement with the Close Far East Equity fund, the
agreement with the Jade Asia Pacific Fund was terminated at the end of July 2007, which further reduced the funds under management or advice
over the period to $23 million. Performance fees amounting to �401,125 which related to calendar year 2007 were received by Jade Absolute
during the year. Much of the Group*s efforts during the year have been devoted to marketing new products, principally a global farming
product and a China private equity product, that it is hoped will more than replace the Jade funds as core assets under management/advice
for the Group. Corporate advisory, research and consultancy work continued, but as the main project in this category did not come to
fruition until after the year end, no such fees were earned during the year. During the year the Group continued to invest in the resources required to support its strategies, including a continuing
albeit reduced investment in the Beijing operations of its subsidiary MG Maple Capital Limited.
Future Outlook and Future Developments
It is anticipated that the corporate advisory and consultancy business will continue to produce significant but sporadic fee revenues
derived mainly from transactions in China and other emerging economies. However the main focus will continue to be on efforts to redeploy
the Group*s resources towards securing a higher proportion of recurrent income from asset management and advisory activities.
Key Performance Indicators (*KPIs*)
Progress on the key elements of its strategy is also monitored by the Directors by reference to the following key performance indicators
(KPIs) applied on a group wide basis. Performance for the year to 30 June 2008 is set out in the table below together with prior year
comparison.
2008 2007
Assets under management or advice $23m $25m
Corporate advisory, research and consultancy fees $Nil $611,706
Principal Risks and Uncertainties
The Group*s principal financial assets are cash, receivables and an investment in the shares of Fin-First Limited (the parent company of Sky
Express). A major part of its revenues are currently derived from fund management/advisory fees. The key risks to which the Group is exposed
are credit risks, currency risks, and operational risks. The Group*s investment in Fin-First Limited should be regarded as relatively high
risk in that Sky Express is a recently launched low cost airline operation in Russia which has yet to achieve positive cash flow and has
been adversely affected during the year by a sharp rise in fuel costs which means it has a requirement for new capital which there is no
certainty that it will secure.
Credit Risk
The Group*s credit risk is mainly attributable to its debtors including trade and other debtors; this is the risk that a client or other
debtor will fail to pay amounts when they fall due. The credit risk on liquid funds is limited as any cash is deposited with banks with high
credit-ratings assigned by international credit-rating agencies. Exposure to credit risk is spread over a number of clients.
Currency Risk
The Group*s currency exposure is mainly to the US Dollar in which its revenues at present are principally denominated. The Group is aware of
this currency exposure and would be prepared to take steps to hedge that exposure if considered appropriate and practical.
Market Risk
Following the winding down of Jade Absolute Fund Managers and the sale of its holding in Celtic Resources, the Group is no longer directly
exposed to any material stock market risk, nor is it indirectly exposed to stock market risk through funds under advice as these are not
currently invested in listed or quoted securities.
Operational Risk
Operational, reputational and legal risks are actively monitored by the Managing Director and the other executive directors. Wherever
practical, measures are taken to control or mitigate risks.
Results and Dividends
The Company*s loss for the year is �5,055,323 (2007: �1,122,162). No dividends were paid by the company during the year. Included in the
above loss is an impairment provision of �2,804,063 against investment in subsidiary companies and �2,070,527 against group debtors.
Directors
Mr C A Fowler and Mr P F Curtin retire in accordance with the Articles of Association and, being eligible, offer themselves for re-election.
Mr P D N Robertson regrettably passed away during the year.
Post Balance Sheet Events
Since the end of the period under review a client of the Group, Sinotel Limited, an Australian domiciled company engaged in activities in
the telecommunications field in the Peoples Republic of China, has completed a US$20 million capital raising. As the adviser to Sinotel on
this transaction and as the introducer of the global telecommunications company which is making the investment, the Group is due to receive
a fee of $1 million. It is also entitled to a warrant over 1% of Sinotel*s enlarged share capital.
The Environment
The Group is committed to a policy which recognises environmental issues in all aspects of its business. Responsibility for compliance with
environmental best practice is vested in the Directors, and environmentally sound options are integrated into the Group*s business at all
levels of operation, wherever practicable.
Corporate Social Responsibility
All Directors, management and staff are expected to consistently apply the highest ethical standards to their conduct to ensure that the
Company*s affairs and reputation are at all times maintained at the uppermost level.
Substantial Shareholdings
At 24 September 2008, the Directors were aware of the following shareholdings in excess of 3% of the company*s issued share capital.
Number ofOrdinary Percent of issuedordinary share capital
shares
Peter Hannen 1,621,096 33.7 %
Chase Nominees Limited 420,000 8.7 %
Ferlim Nominees Limited 350,000 7.3 %
Hero Nominees Limited 300,000 6.2 %
Giltspur Nominees Limited 250,000 5.2 %
Global Fiduciary (Canada) Inc 217,500 4.5 %
Prism Nominees Limited 184,500 3.8 %
W B Nominees Limited 155,032 3.2 %
Apple Tree Nominees Limited 145,000 3.0 %
Policy and Practice on Payment of Creditors
The Company and its subsidiary undertakings agree terms and conditions for their business transactions with suppliers. Payment is then made
in accordance with these terms, subject to the terms and conditions being met by the supplier. The creditor payment days outstanding for the
Group at 30 June 2008 was 33 days (2007: 26 days).
International Financial Reporting Standards
The Directors have implemented International Financial Reporting Standards for the first time this year, as required by the Alternative
Investment Market. The 2007 accounts have been restated to comply with these new standards.
The impact of the transition on the group*s results is set out in note 24.
Proposed change to Articles of Association
From 1 October 2008, under the Companies Act 2006, a director has a statutory duty to avoid a situation where he has, or can have, a direct
or indirect interest that conflicts, or possibly may conflict, with the Company*s interests. The Act allows directors of public companies to
authorise conflicts or potential conflicts where the articles of association contain a provision allowing this authorisation. A resolution
is to be proposed at the forthcoming Annual General Meeting that the Company*s Articles of Association be amended to include such a
provision.
Provision of Information to Auditors
So far as each of the Directors is aware at the time this report is approved:
1 there is no relevant audit information of which the company's auditors are unaware; and
2 the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to
establish that the auditors are aware of that information.
Auditors
Since the previous Annual General Meeting our auditors, CLB Littlejohn Frazer, have changed their name to Littlejohn. A resolution to
reappoint Littlejohn will be proposed at the next Annual General Meeting.
This report was approved by the board on 14 October 2008 and signed on its behalf.
R Chudasama
Company Secretary
GROUP BALANCE SHEET
At 30 June
Note 2008 2007
Non-Current Assets restated
Property, Plant and equipment 5 9,130 15,077
Goodwill 7 115,585 115,585
Investments 8 195,918 195,918
_______ _______
320,633 326,580
Current Assets
Trade receivables and other receivables 9 219,959 274,685
Other current assets 8 - 188,578
Cash and cash equivalents 10 84,008 5,194
_______ _______
303,967 468,457
_______ _______
Disposal Group Held for Sale 11 2,050 352,825
_______ _______
Total Assets �626,650 �1,147,862
_______ _______
Current Liabilities
Trade and other payables 13 351,459 299,155
_______ _______
351,459 299,155
Non-Current Liabilities
Long-term borrowings 14 120,000 -
Disposal Group Held for Sale 11 - 43,582
_______ _______
Total Liabilities �471,459 �342,737
_______ _______
Net Assets �155,191 �805,125
_______ _______
Equity
Called-up share capital 12 2,402,255 2,402,255
Retained earnings (2,247,064) (1,671,007)
_______ _______
Equity attributable to the shareholders
of the parent Company 155,191 731,248
Minority Interests - 73,877
_______ _______
Total Equity �155,191 �805,125
_______ _______
The Financial Statements were approved and authorised for issue by the Board of Directors on 14October 2008.
PARENT COMPANY BALANCE SHEET
At 30 June
Note 2008 2007
Non-Current Assets
Investments in group companies 6 2,790,508 5,489,312
_______ _______
2,790,508 5,489,312
Current Assets
Trade and other receivables 9 888,209 2,751,323
Other current assets 8 - 188,578
Cash and cash equivalents 10 1,019 389
________ _______
889,228 2,940,290
_______ _______
Total Assets �3,679,736 �8,429,602
_______ _______
Current Liabilities
Trade and other payables 13 1,435,449 1,260,616
Short-term borrowings 13 204,484 193,860
______ ______
1,639,933 1,454,476
Non-Current Liabilities
Long-term borrowings 14 120,000 -
_______ _______
Total Liabilities �1,759,933 �1,454,476
________ _______
Net Assets �1,919,803 �6,975,126
________ _______
Equity
Called up share capital 12 2,402,255 2,402,255
Retained earnings (482,452) 4,572,871
_______ _______
Total Equity �1,919,803 �6,975,126
________ _______
The Financial Statements were approved and authorised for issue by the board of Directors on 14 October 2008.
GROUP INCOME STATEMENT
Year Ended
30 June
Note 2008 2007
Continuing Operations:
Revenue 186,667 705,731
Administrative expenses 16 (1,053,905) (1,459,464)
Other net gains / (losses) 15 91,627 (346,692)
_______ _______
Operating Loss (775,611) (1,100,425)
Finance income 19 4,901 2,063
Finance costs 19 (11,178) (8,068)
_______ _______
Loss before taxation (781,888) (1,106,430)
Corporation tax expense 20 (8,498) (5,124)
_______ _______
Lossfor the Financial Year on �(790,386) �(1,111,554)
Continuing Operations
Profit for the Financial Year on 11 �214,329 �325,444
Discontinued Operations
_______ _______
Loss for the Financial Year �(576,057) �(786,110)
_______ _______
Attributable to:
Equity holders of the Company (576,057) (726,858)
Minority interests - (59,252)
_______ _______
�(576,057) � (786,110)
_______ _______
Loss per Share for Profit from
Continuing Operations
Attributable to the Equity
Holders of the Company
during the Year
Basic and diluted 21 (16.45p) (1.64p)
_______ _______
Earnings per Share for Profit
from Discontinuing Operations
Attributable to the Equity
Holders of the Company
during the Year
Basic and diluted 21 4.46p 0.48p
_______ _______
The Company has elected to take the exemption under Section 230 of the Companies Act 1985 from presenting the Parent Company Income
Statement.
STATEMENTS OF CHANGES IN EQUITY
Year Ended
30 June
GROUP Attributable to equity holders of the Company
Minority Share Share Retained
Interest Premium Capital Earnings Total
At 1 July 2006 101,363 5,101,552 4,637,458 (8,221,652) 1,618,721
Consolidated lossfor the year - - - (786,110) (786,110)
Cancellation of share premium - (5,101,552) - 5,101,552 -
Cancellation of 223,520,300
deferred
ordinary shares of 1p - - (2,235,203) 2,235,203 -
Minority share for the year (27,486) - - - (27,486)
_______ _______ _______ _______ _______
At 30 June 2007 �73,877 � - �2,402,255 �(1,671,007) �805,125
_______ _______ _______ _______ _______
At 1 July 2007 73,877 - 2,402,255 (1,671,007) 805,125
Consolidated lossfor the year - - - (576,057) (576,057)
Minority interest paid (73,877) - - (73,877)
_______ _______ _______ _______ _______
At 30 June 2008 � - � - �2,402,255 �(2,247,064) �155,191
_______ _______ _______ _______ _______
PARENT COMPANY Attributable to equity holders of the Company
Share Share Retained
Premium Capital Earnings Total
At 1 July 2006 5,085,311 4,637,458 (1,625,481) 8,097,288
Lossfor the year - - (1,122,162) (1,122,162)
Cancellation of share premium (5,085,311) - 5,085,311 -
Cancellation of 223,520,300
deferred
ordinary shares of 1p - (2,235,203) 2,235,203 -
_______ _______ _______ _______
At 30 June 2007 � - �2,402,255 �4,572,871 �6,975,126
_______ _______ _______ _______
At 1 July 2007 - 2,402,255 4,572,871 6,975,126
Lossfor the year - - (5,055,323) (5,055,323)
_______ _______ _______ _______
At 30 June 2008 � - �2,402,255 � (482,452) 1,919,803
�
_______ _______ _______ _______
GROUP CASH FLOW STATEMENT
Year Ended
30 June
2008 2007
Cash generated from Operations
Profit before taxation on discontinued 210,618 313,944
operations
(Loss)before taxation on continuing operations (775,611) (720,612)
Depreciation 7,446 7,713
Goodwill impairment charge 32,382 93,336
Write off of fixed asset investments - 4,650
Movement on minority interest (73,877) (86,738)
Non cash fixed asset investment addition 8 - (195,918)
________ ________
(599,042) (583,625)
Decreasein trade and other receivables 277,146 7,566
Increasein trade and other payables 10,128 146,959
________ ________
Cash used in Operations (311,768) (429,100)
Interest paid (11,178) (9,525)
Foreign corporation tax paid (8,498) (5,124)
________ ________
Net Cash used in Operating Activities (331,444) (443,749)
________ ________
Cash Flows from Investing Activities
Purchase of property, plant and equipment (1,499) (2,083)
Proceeds from sale of investments - 565,510
Purchase of intangible assets (32,382) -
Interest received 8,612 15,020
________ ________
Net Cash fromInvesting Activities (25,269) 578,447
________ ________
Cash Flows from Financing Activities
Proceeds from long-term borrowings 120,000 -
________ ________
Net Cash from Financing Activities 120,000 -
________ ________
Net (Decrease) / Increasein Cash and Cash (236,713) 134,698
Equivalents
Cash and Cash Equivalents at Beginning of Year 322,771 188,073
_______ ________
Cash and Cash Equivalents at End of Year �86,058 �322,771
________ ________
PARENT COMPANY CASH FLOW STATEMENT
Year Ended
30 June
2008 2007
Cash generated from Operations
(Loss)before taxation (5,044,240) (1,065,962)
Adjustments for:
(Profit) / Losson disposal of investments (92,627) 196,019
Impairment of investments 2,805,063 874,043
________ ________
(2,331,804) 4,100
Decrease / (Increase)in trade and other 1,863,114 (231,947)
receivables
Increase / (decrease)in trade payables 185,457 (39,136)
________ ________
Cash used in Operations (283,233) (266,983)
Interest paid (11,178) (8,082)
________ ________
Net Cash used in Operating Activities (294,411) (275,065)
________ ________
Cash Flows from Investing Activities
Proceeds from sale of investments 281,205 221,798
Purchase of investments - (45,850)
Purchase of minority interest in subsidiary (106,259) (50,688)
undertakings
Interest received 95 126
Dividends received - 147,775
________ ________
Net Cash fromInvesting Activities 175,041 273,161
________ ________
Cash Flows from Financing Activities
Proceeds from long-term borrowings 120,000 -
________ ________
Net Cash from Financing Activities 120,000 -
________ ________
Net Increase/ (Decrease)in Cash and Cash 630 (1,904)
Equivalents
Cash and Cash Equivalents at Beginning of 389 2,293
Year
________ ________
Cash and Cash Equivalents at End of Year 1,019 389
________ ________
ACCOUNTING POLICIES
Year Ended 30 June 2008
Summary of Significant Accounting Policies
The principal Accounting Policies applied in the preparation of these Financial Statements are set out below. These Policies have been
consistently applied to all the years presented, unless otherwise stated.
Basis of Preparation of Financial Statements
The Financial Statements have been prepared in accordance with EU-endorsed International Financial Reporting Standards (IFRS), IFRIC
interpretations and the parts of the Companies Act 1985 applicable to companies reporting under IFRS. The Financial Statements have also
been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group*s Accounting Policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 2.
First*Time Adoption of International Financial Reporting Standards (IFRS)
The Company and Group have adopted IFRS for the first time in their respective Financial Statements.
The Company and Group have applied IFRS 1 *First-time Adoption of International Financial Reporting Standards* to provide a starting point
for reporting under IFRS. The date of transition to IFRS was 1 July 2006, and all comparative information in these Financial Statements has
been restated to reflect the Company*s and Group*s adoption of IFRS.
The transition to IFRS reporting has resulted in a number of changes to the Financial Statements, the Notes thereto and the Accounting
Policies, compared with previous annual reports. These changes are set out in Note 24. The Accounting Policies that have been applied in the
opening Balance Sheet have also been applied throughout all periods presented in these Financial Statements.
Standards and Interpretations in Issue but not yet Effective or not yet Relevant
At the date of approval of these consolidated Financial Statements the following standards and interpretations were in issue but not yet
effective:
IFRS 8 Operating Segments
IAS 1 Presentation of Financial Statements (revised version)
IAS 23 Borrowing Costs (revised version)
IFRS 2 Share-based Payment (amended)
IFRS 1 First-time Adoption of International Financial Reporting Standards (amended)
IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements - Puttable Financial Instruments and Obligations
Arising on Liquidation (amended)
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programmes
Standards and Interpretations in Issue but not yet Effective or not yet Relevant (continued)
IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
IFRIC 15 Agreements for the Construction of Real Estate
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the
financial statements of the Group and have no impact on the current or previous reporting periods.
Basis of Consolidation
The Group Financial Statements consolidate the Financial Statements of MG Capital Plc and all its subsidiary undertakings made up to 30 June
2008.
Subsidiaries are entities over which the Group has control. Control is the power to govern the financial and operating policies of the
entity so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also
eliminated, unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the Financial Statements
of subsidiaries have been adjusted where necessary to ensure consistency with the Accounting Policies adopted by the Group.
The Group treats transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests
result in gains and losses for the Group that are recorded in the Income Statement. Purchases from minority interests result in goodwill,
being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets in the subsidiary.
Goodwill arises on acquisitions including the acquisitions of minority interests in subsidiaries. Goodwill is the difference between the
fair value of consideration and the fair value of the separable assets, liabilities and contingent liabilities acquired.
Segment Reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns
different from those of other business segments. A geographical segment is engaged in providing products or services within a particular
economic environment that are subject to risks and returns different from those of other geographical segments.
Foreign Currencies
Items included in the Financial Statements are measured using the currency of the primary economic environment in which the entity operates
(its *functional currency*). The Financial Statements are presented in Pounds Sterling (�), which is the Company's functional and
presentation currency.
Transactions in foreign currencies are translated into the functional currency at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities in foreign currencies are retranslated at the rates of exchange ruling at the Balance Sheet date. Foreign
exchange differences on retranslation and settlement are recognised in the Income Statement.
Property, Plant and Equipment
Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment. Cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset*s carrying amount only when it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Income
Statement in the period in which they are incurred.
Depreciation is provided on all property, plant and equipment, at rates calculated to write off the cost, less estimated residual value, of
each asset on a straight-line basis over its expected useful life, as follows:
Short leasehold property over term of lease
Computer equipment 3 - 5 years straight line
Fixtures and fittings 5 years straight line
Material residual value estimates are updated as required, but at least annually, whether or not the asset is revalued.
An asset is written down immediately to its recoverable amount if the asset*s carrying amount is greater than its estimated recoverable
amount.
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount, and are recognised in the Income Statement.
Leasing Commitments
An operating lease is one in which a significant portion of the risks and rewards of ownership are retained by the lessor. Rentals payable
under operating leases are charged to the Income Statement on a straight-line basis over the term of the lease.
Impairment of Non Current Assets
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.
Goodwill is allocated to those cash-generating units that are expected to benefit from the business combination on which the goodwill arose,
and represent the lowest level within the Group at which management monitors the related cash flows.
Goodwill is tested for impairment at least annually. All other non current assets are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use, based on an
internal discounted cash flow evaluation. With the exception of goodwill, all assets are subsequently reassessed for indications that an
impairment loss previously recognised may no longer exist. Impairment losses are charged to administrative expenses.
Financial Assets
Investments in unquoted subsidiaries are held at cost. Other financial assets are divided into the following categories: financial assets at
fair value through profit or loss, and loans and receivables. Financial assets are assigned to the different categories by management on
initial recognition, depending on the purpose for which they were acquired. The designation of financial assets is re-evaluated at every
reporting date at which a choice of classification or accounting treatment is available.
All financial assets are recognised when the group becomes a party to the contractual provisions of the instrument.
Financial assets other than those categorised as at fair value through profit or loss are recognised initially at fair value. Financial
assets categorised as at fair value through profit or loss are recognised initially at fair value with transaction costs expensed through
the Income Statement.
Financial assets at fair value through profit or loss are held for trading, i.e., acquired principally to be sold in the short term.
Financial assets at fair value through profit or loss are measured after initial recognition at fair value, with changes in fair value being
taken to the Income Statement in the period in which they occur.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans
and receivables are measured after initial recognition at amortised cost, using the effective interest method, less provision for
impairment. Any change in their value through impairment or reversal of impairment is recognised in the Income Statement.
Provision for impairment of trade receivables is made when there is objective evidence that the Group will not be able to collect all
amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is the difference between the
receivable's carrying amount and the present value of the estimated future cash flows.
An assessment for impairment is undertaken at least annually.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, demand deposits, bank overdrafts, and short-term, highly liquid investments that are
readily convertible into known amounts of cash, and are subject to an insignificant risk of changes in value.
Disposal Group Held for Sale
A disposal group is a group of assets and liabilities whose carrying amount will be recovered principally through a sale transaction, not
through continuing use. A disposal group held-for-sale is measured at the lower of its carrying amount immediately prior to its
classification as held-for-sale and its fair value less costs to sell.
Discontinued Operations
A discontinued operation is a group of cash-generating units, that is classified as held for sale, and represents a separate major line of
business;
The disclosures for prior periods have been re*presented to show the results of discontinued operations separately from continuing
operations.
Financial Liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities
are measured initially at fair value, net of direct issue costs.
All financial liabilities are recorded at amortised cost, using the effective interest method, with interest-related charges being
recognised as an expense under finance costs in the Income Statement. Finance charges, including premiums payable on settlement or
redemption and direct issue costs, are charged to the Income Statement on an accruals basis, using the effective interest method, and are
added to the carrying amount of the instrument, to the extent that they are not settled in the period in which they arise.
A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged, is cancelled, or
expires.
Taxation
Current tax is the tax currently payable based on the taxable profit for the year.
Tax losses available to be carried forward, and other tax credits to the group, are recognised as deferred tax assets, to the extent that it
is probable that there will be future taxable profits against which the temporary differences can be utilised.
Share Capital
Ordinary shares are classified as equity.
Employee Benefits
The Group supports various personal pension arrangements. The Group also operates a defined contribution stakeholder pension scheme. This is
a scheme under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligation to pay
further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to service in current and prior
years. Agreed contributions are charged to the Income Statement as they become payable.
Revenue Recognition
Revenue comprises the fair value of the consideration received or receivable by the Group for services provided in the ordinary course of
the Group*s activities, excluding VAT and trade discounts. Revenue is recognised upon the performance of services or the transfer of risk to
the customer.
Financial Risk Management * fair value estimation
The book values of financial assets and liabilities are not materially different to their fair values in the opinion of the Directors.
2. Critical Accounting Estimates and Judgments
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
Critical Accounting Estimates and Assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal
the related actual results.
Estimated impairment of goodwill: the Group conducts annual impairment tests of goodwill. The recoverable amounts of cash-generating
units have been determined based on value-in-use calculations. These calculations require the use of estimates.
Estimated impairment of investments in subsidiaries: the Company reviews the values of such investments on a regular basis. Any
impairments in value require the use of estimates.
3. Segmental Information
The group operates in a single business segment. The group operates in the UK and Hong Kong. However, in the Directors* opinion, both
segments have the same risks and returns, and therefore no segmental information is presented.
4. Auditors* Remuneration
2008 2007
� �
Fees payable to the Company*s auditor for the audit of the 12,150 9,900
annual Parent Company and consolidated accounts
_______ _______
Fees payable to the Company*s auditor and its associates for
other services provided to the Company and its subsidiaries:
The audit of the Company*s subsidiaries under legislative 12,476 12,494
requirements
Tax services 4,750 5,000
All other services 1,675 2,450
_______ _______
5. Property, Plant and Equipment
Short
leasehold Fixtures Computer
GROUP property and fittings equipment Total
Cost
At 1 July2006 51,380 45,945 302,746 400,071
Additions - 144 1,939 2,083
Write off - (11,002) 6,106 (4,896)
_______ ________ ________ ________
At 30 June 2007 51,380 35,087 310,791 397,258
Additions - - 1,499 1,499
_______ ________ ________ ________
At 30 June 2008 - 35,087 312,290 398,757
_______ ________ ________ ________
Depreciation
At 1 July 2006 51,380 33,860 289,474 374,714
Charge for the year - 333 7,380 7,713
Write off - (77) (169) (246)
_______ ________ ________ ________
At 30 June2007 51,380 34,116 296,685 382,181
Charge for the year - 329 7,117 7,446
_______ ________ ________ ________
At 30 June 2008 51,380 34,445 303,802 389,627
_______ ________ ________ ________
Net Book Value
At 30 June 2008 �- �642 �8,488 �9,130
_______ _______ _______ _______
At 30 June2007 �- �971 �14,106 �15,077
_______ _______ _______ _______
At 1 July2006 �- �12,085 �13,272 �25,357
_______ _______ _______ _______
Depreciation expenses of �7,446 (2007: �7,713) are included in administrative expenses in the Income Statement.
6. Investments in Subsidiary Undertakings
2008 2007
Company
Shares in group undertakings
At 1 July 5,489,312 6,882,050
Additions 106,259 50,688
Disposals (1,000) (561)
Impairment (2,804,063) (1,442,865)
______ ______
At 30 June �2,790,508 �5,489,312
______ ______
Investments in group undertakings are stated at cost less any impairment losses. Impairment losses have been included within
administration expenses within the Company Income Statement. All investments detailed below are consolidated into these financial
statements.
Country of incorporation Class of share % interest held
Name
2007
MG Global Investments Ltd UK Ordinary 100
MG Research Ltd UK Ordinary 100
MG Maple Capital Ltd Hong Kong Ordinary 100
Hannen & Company Ltd UK Ordinary 100
Jade Absolute Fund Managers UK Ordinary 75.5
Ltd
AIM pre-IPO Company Ltd Isle of Man Ordinary 100
2008
MG Global Investments Ltd UK Ordinary 100
MG Research Ltd UK Ordinary 100
MG Maple Capital Ltd Hong Kong Ordinary 100
Hannen & Company Ltd UK Ordinary 100
Jade Absolute Fund Managers UK Ordinary 100
Ltd
An impairment provision has been made against the investment in the wholly owned subsidiary MG Global Investment Limited as the cost
of the investment was considered significantly above a reasonable fair value in the current economic conditions. The value of the investment
has been impaired to a level representing its value in use based on the current estimated value of the company, taking into account the
present value of future economic inflows and subsequent growth.
7. Goodwill
8.
Group �
Cost
At 1 July 2006 208,921
Impairment (93,336)
______
At 30 June 2007 115,585
______
Addition 32,382
Impairment (32,382)
______
At 30 June 2008 115,585
______
The impairment losses have been included within administration expenses in the Group Income Statement. The impairment provision in 2008
relates to an impairment in the level of goodwill relating to Jade Absolute Fund Managers Limited. The impairment has reduced the value of
goodwill to that of fair value less costs to sell as the trade for the company is discontinued and it is intended that the company will be
struck off following the period end.
8. Non Current Investments
2008
�
Group
Cost
At 1 July 2006 99,566
Additions 195,918
Disposals (99,566)
______
At 30 June 2007 and 2008 195,918
______
All investments noted above as carried forward at 30 June 2007 and 30 June 2008 relate to unlisted investments. The addition noted above as
having been acquired during the year to 30 June 2007 was acquired for non-cash consideration.
Listed investments totalling �188,578 were included within current asset investments at 30 June 2007 and were all disposed of during the
year to 30 June 2008. The market value of the listed investments at 30 June 2008 was therefore �Nil (2007: �158,362).
9. Trade and Other Receivables
Group Company
2008 2007 2008 2007
Trade receivables 6,931 11,174 - -
Prepayments 56,731 48,393 3,564 3,401
Loans to related parties - - 884,645 2,677,173
Other receivables 156,297 215,118 - 70,749
______ ______ ______ ______
Current portion �219,959 �274,685 �888,209 �2,751,323
______ ______ ______ ______
All debts shown above are considered to be recoverable within twelve months. Debts which are past due have not been impaired as they are all
deemed fully recoverable by the Directors.
The intra group balance with a wholly owned subsidiary which has built up over a number of years, was considered to be impaired, as it
was unlikely that the subsidiary would generate sufficient cash in the immediate future to settle the amounts due.
Included within other receivables, a loan balance has been prudently provided against due to the time it has remained outstanding, whilst
every effort is being expended to recover the amount due.
10. Cash and Cash Equivalents
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
Group Company
2008 2007 2008 2007
Cash 40 - - -
Bank 86,018 324,177 1,019 389
______ ______ ______ ______
Total net cash �86,058 �324,177 �1,019 �389
______ ______ ______ ______
Included in the above total is an amount of �2,050 (2007: �318,983) relating to the disposal group (see note 11). These amounts are shown
within the disposal group held for sale figure on the face of the group balance sheet.
11. Disposal Group Held for Sale
The following assets and liabilities relating to the Group have been presented as held for sale following the approval of the Group*s
management and shareholders during 2007. The disposal group consists of the trade within Jade Absolute Fund Managers Limited and Hannen &
Company Limited. Hannen & Company is to be sold as it is a redundant shell and no longer of use to the group. Jade Absolute Fund Managers
Limited is to be struck off following the cessation of its trade.
2008 2007
Operating cash flows 197,854 218,557
Investing cash flows 3,711 39,088
Financing cash flows - -
______ ______
Total cash flows �201,565 �257,645
______ ______
Assets Classified as Held for Sale 2008 2007
Disposal group held for sale:
- cash 2,050 318,983
- debtors - 33,842
_______ _______
�2,050 �352,825
_______ _______
Liabilities Directly Associated with Assets Classified
as Held for Sale
2008 2007
Trade and other payables - 43,582
_______ _______
�- �43,582
_______ _______
Analysis of the Result of Discontinued Operations
2008 2007
Revenue 417,346 821,301
Administrative expenses (206,728) (533,488)
Other net gains / (losses) - 26,131
Finance income 3,711 12,957
Finance costs - (1,457)
_______ ________
Profit before tax of discontinued operations 214,329 325,444
Tax -
_______ _______
Profit after tax of discontinued operations �214,329 �325,444
_______ _______
12. Called-Up Share Capital
Authorised 2008 2007
10,000,000 Ordinary shares of �5,000,000 �5,000,000
50p each
________ ________
Group and Company Number of shares Ordinary shares Total
At 30 June 2007 and 30 June 4,804,510 �2,402,255 �2,402,255
2008 ordinary shares of 50p
_______ _______ _______
13. Trade and Other Payables
Group Company
2008 2007 2008 2007
Trade payables 75,311 43,489 - -
Bank overdraft - 1,406 - -
Loans and other payables 207,984 201,741 204,484 193,860
Amounts due to related parties - - 1,415,699 1,249,766
Social security and other taxes 8,400 (7,321) - -
Accrued expenses 59,764 59,840 19,750 10,850
______ ______ ______ ______
Total �351,459 �299,155 �1,639,933 �1,454,476
______ ______ ______ ______
14. Long term borrowings
Group Company
2008 2007 2008 2007
Loans and other payables 120,000 - 120,000 -
______ ______ ______ ______
Total �120,000 �- �120,000 �-
______ ______ ______ ______
The loan noted above relates to �120,000 of convertible loan notes. Interest is payable quarterly in arrears on these notes at a rate of
6.5% and the notes mature in 2011. The loan note has been classified wholly as a liability as the equity element is insignificant.
15. Other Net (Losses)/Gains
2008 2007
Other financial assets at fair value through profit or
loss:
- fair value losses (1,000) (346,692)
- fair value gains 92,627 -
_______ _______
�91,627 �(346,692)
_______ _______
These gains and losses relate to current asset investments disposed of during the year.
16. Expenses by Nature
2008 2007
Staff costs 311,848 444,690
Depreciation, amortisation and impairment 37,998 98,413
charges
Office costs 114,552 283,586
Operating lease payments 171,826 188,628
Financial costs 417,681 444,147
_______ _______
Total Administrative Expenses (continuing �1,053,905 �1,459,464
operations)
_______ ______
17. Employees
2008 2007
Staff Costs- continuing operations(including executive
Directors)
Wages and salaries 267,438 388,466
Social security costs 31,913 34,519
Pension costs 12,497 21,705
_______ _______
�311,848 �444,690
_______ _______
Average Number of Employees(including executive No. No.
Directors)
Accounts and administration 2 4
Technical and support 4 8
Sales staff 3 4
__ __
9 16
__ __
18. Directors' Remuneration
2008 2007
Emoluments 120,600 155,814
Company pension contributions to defined contribution 1,610 -
schemes
_____ ______
�122,210 �155,814
_____ ______
Retirement benefits are accruing to 1 (2007: Nil) Director under a defined contribution pension scheme.
19. Finance Income and Costs
2008 2007
Interest expense:
- bank and other borrowings 11,178 8,068
_______ _______
11,178 8,068
Finance income * interest income on short-term bank (4,901) (2,063)
deposits
_______ _______
Net Finance Costs (continuing operations) �6,277 � 6,005
_______ _______
20. Taxation
Analysis of Charge in Year 2008 2007
Current tax:
Foreign tax 8,498 5,124
_______ _______
Total current tax �8,498 �5,124
_______ _______
Factors affecting tax charge
for period
The tax assessed for the year is at the standard rate of corporation tax in the UK of 30% (2007: 30%). The
differences are explained below:
2008 2007
Loss on ordinary activities �(567,559) �(721,734)
before tax
______ ______
Loss on ordinary activities (170,268) (216,520)
multiplied by standard rate of
corporation tax in the UK of
30% (2007: 30% )
Effects of:
Capital allowances for period (2,424) (235)
in excess of depreciation
Expenses not deductible for 1,103 1,349
tax
Tax losses to carry forward 143,801 298,231
Profit/ (Loss) on sale of 27,788 (82,825)
fixed asset
Foreign tax 8,498 5,124
_______ _______
Total tax charge for period �8,498 �5,124
_______ _______
The Group has tax losses of approximately �6.5 million carried forward at 30 June 2008. A deferred tax asset has not been recognised in
respect of these tax losses carried forward.
21. (Loss) / earnings per Share
Basic and diluted (continuing operations)
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number
of ordinary shares in issue during the year.
2008 2007
Loss attributable to equity holders of the Company (790,386) (1,111,554)
_______ _______
Weighted average number of ordinary shares in issue 4,804,510 67,880,102
_______ _______
Basic loss per share (pence per share) on continuing (16.45) (1.64)
operations
_______ _______
Diluted LPS is the same as basic LPS as there are no dilutive potential ordinary shares.
Basic and diluted (discontinued operations)
2008 2007
Profit attributable to equity holders of the Company 214,329 325,444
_______ _______
Weighted average number of ordinary shares in issue 4,804,510 67,880,102
_______ _______
Basic earnings per share (pence per share) on 4.46 0.48
discontinued operations
_______ _______
Diluted LPS is the same as basic LPS as there are no dilutive potential ordinary shares.
22. Commitments
Operating lease commitments
The total minimum lease payments to which the Company is committed under non-cancellable operating leases in relation to land and
buildings are:
2008 2007
On leases expiring:
Within one year 26,655 -
Between one and two years - 133,275
_______ _______
�26,655 �133,275
_______ _______
There are no other commitments at the Balance Sheet date.
23. Parent Company loss
For the year ended 30 June 2008, the Parent Company suffered a loss after taxation of �5,055,323 (2007: �1,122,162).
24. Reconciliation of previous GAAP to IFRS
The only difference between the financial statements of the Group under UK GAAP and IFRS at the date of transition, 1 July 2006, the
end of the latest period presented under previous GAAP, 30 June 2007, and the end of the current period, 30 June 2008, is amortisation of
goodwill.
Under UK GAAP, goodwill was being amortised over 10 years on a straight line basis. Under IFRS goodwill is not amortised, but is
subject to annual impairment reviews.
It is the opinion of the Directors that the carrying value of previously amortised goodwill at 30 June 2007 is equal to its impaired
cost at 30 June 2008.
There are no differences between the financial statements of the Company under UK GAAP and IFRS at the date of transition, 1 July
2006, the end of the latest period presented under previous GAAP, 30 June 2007, or the end of the current period, 30 June 2008.
25. Related party transactions
The Company had the following transactions with related parties:
MG Capital Plc purchased 24.5% of the Ordinary shares in Jade Absolute Fund Managers Ltd, a company in which MG Capital held a
majority shareholding at 30 June 2007 and has shared Directors.
The total consideration paid was �106,259.
Included within trade and other receivables are the following amounts due to MG Capital Plc from wholly owned subsidiaries; �Nil
(2007: �2,081,581) MG Research Ltd and �764,645 (2007: �577,031) MG Maple Capital Ltd.
Also included within trade and other receivables is a loan to MG Global Investments Ltd for �120,000. The loan was signed on 30 June
2008 and is repayable on delivery of 60 days* notice. Interest is being charged at 6.5% and is payable on repayment of the principal.
Included within other payables are the following amounts due from MG Capital Plc to wholly owned subsidiaries; �448,539 (2007:
�787,321) MG Global Investments Ltd, �519,539 (2007: �Nil) Jade Absolute Fund Managers Ltd and �447,321 (2007: �462,445) Hannen & Company
Ltd.
P M L Hannen, a director and shareholder, lent the Company �186,000 (2007: �186,000) which is included within other payables. The loan
is unsecured and carries an interest rate of 6%, and is repayable on receipt of one month*s notice from the lender.
On 26 June 2008 P M L Hannen purchased convertible loan notes at par for �120,000. Interest is payable at a rate of 6.5%. The loan
notes are included within long term borrowings.
Details of the remuneration of key management personnel are shown within note 18.
MG CAPITAL PLC NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the annual general meeting of the Company will be held at the offices of MG Capital Plc, Ocean House, 10/12
Little Trinity Lane, London EC4V 2DH, at 10.30am on 11 December 2008.
Ordinary Business
1. To receive and adopt the Report of the Directors and the Financial Statements for the year ended 30 June 2008, together with the
Report of the Independent Auditors.
2. To re-elect the following Directors retiring by rotation who, being eligible, offer themselves for re-election.
C A Fowler
P F Curtin
3. To reappoint the auditors, Littlejohn, and to authorise the Directors to determine their remuneration.
The biographies of the Directors being elected in resolution 2 above will be distributed at the Annual General Meeting and will be available
on request beforehand.
Special Business
As special business, to consider and, if thought fit, to pass the following resolutions, of which resolution no. 4 will be proposed as an
ordinary resolution and resolution no. 5 will be proposed as a special resolution:
Ordinary Resolution
4. THAT the Directors be and are hereby generally and unconditionally authorised for the purposes of section 80 of the Companies Act 1985
(and in substitution for any existing authority to allot relevant securities) to exercise all the powers of the Company to allot relevant
securities (within the meaning of section 80(2) of that Act) up to an aggregate nominal amount of �2,597,745provided that this authority
shall expire on the conclusion of the next annual general meeting of the Company save that the Company may before such expiry make offers,
agreements or other arrangements which would or might require relevant securities to be allotted after such expiry and the directors may
allot relevant securities in pursuance of such offers, agreements or other arrangements as if the authority conferred hereby had not
expired.
Special Resolutions
5. THAT, subject to and conditionally upon the passing of resolution no. 4 above, the directors be and are hereby empowered pursuant to
section 95 of the Companies Act 1985 to allot equity securities (within the meaning of section 94 of that Act) pursuant to the authority
conferred by resolution no. 4 as if sub-section (1) of section 89 of that Act did not apply to any such allotment provided that this power
shall be limited to:
a. the allotment of equity securities in connection with a rights issue in favour of ordinary shareholders where the equity securities
respectively attributable to the interests of all such holders are proportionate (as nearly as may be) to the respective number of ordinary
shares held by them (but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to
fractional entitlements or legal or practical problems arising under the laws of, or the requirements of any regulatory body or any stock
exchange in, any territory or otherwise howsoever); and
b. the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal amount �2,597,745,
and shall expire at the conclusion of the next annual general meeting of the Company save that the Company may before such expiry make
offers, agreements or arrangements which would or might require equity securities to be allotted after such expiry and the Directors may
allot equity securities in pursuance of such offers, agreements or other arrangements as if the power conferred hereby had not expired.
6. THAT the Articles of Association of the Company be amended by the inclusion of the following articles:
*Directors* Interests
24 PERMITTED INTERESTS AND VOTING
(a) Subject to the provisions of the Companies Acts and of paragraph (j) of this article, no director or proposed or intending
director shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any office or place of
profit or as vendor, purchaser or in any other manner whatever, nor shall any contract in which any director is in any way interested be
liable to be avoided, nor shall any director who is so interested be liable to account to the Company or the members for any remuneration,
profit or other benefit realised by the contract by reason of the director holding that office or of the fiduciary relationship thereby
established.
(b) A director may hold any other office or place of profit with the Company (except that of auditor or auditor of any subsidiary of
the Company) in conjunction with his office of director for such period (subject to the provisions of the Companies Acts) and upon such
other terms as the board may decide, and may be paid such extra remuneration for so doing (whether by way of salary, commission,
participation in profits or otherwise) as the board or any committee authorised by the board may decide, and either in addition to or in
lieu of any remuneration provided for by or pursuant to any other article.
(c) A director of the Company may be or become a director or other officer of, or otherwise interested in, any company promoted by
the Company or in which the Company may be interested or as regards which it has any power of appointment, and shall not be liable to
account to the Company or the members for any remuneration, profit or other benefit received by him as a director or officer of or from his
interest in the other company. The board may also cause any voting power conferred by the shares in any other company held or owned by the
Company or any power of appointment to be exercised in such manner in all respects as it thinks fit, including the exercise of the voting
power or power of appointment in favour of the appointment of the directors or any of them as directors or officers of the other company, or
in favour of the payment of remuneration to the directors or officers of the other company.
(d) A director may act by himself or his firm in a professional capacity for the Company (otherwise than as an auditor or auditor of
any subsidiary of the Company) and he or his firm shall be entitled to remuneration for professional services as if he were not a director.
(e) A director shall not vote on or be counted in the quorum in relation to any resolution of the board concerning his own
appointment, or the settlement or variation of the terms or the termination of his own appointment, as the holder of any office or place of
profit with the Company or any other company in which the Company is interested but, where proposals are under consideration concerning the
appointment, or the settlement or variation of the terms or the termination of the appointment, of two or more directors to offices or
places of profit with the Company or any other company in which the Company is interested, a separate resolution may be put in relation to
each director and in that case each of the directors concerned shall be entitled to vote and be counted in the quorum in respect of each
resolution unless it concerns his own appointment or the settlement or variation of the terms or the termination of his own appointment or
the appointment of another director to an office or place of profit with a company in which the Company is interested and the director seeking to vote or be counted in the quorum owns one per cent. or
more of it
(f) Save as otherwise provided by these articles, a director shall not vote on, or be counted in the quorum in relation to, any
resolution of the board or any committee thereof in respect of any contract arrangement, transaction or proposal in which he has an interest
which (taken together with any interest of any person connected with him within the meaning of section 839 Income and Corporation Taxes Act
1988 (ICTA)) is to his knowledge a material interest and, if he shall do so, his vote shall not be counted, but this prohibition shall not
apply to any resolution where that material interest arises only from one or more of the following matters:
(i) the giving to him of any guarantee, indemnity or security in respect of money lent or obligations undertaken by him or by any
other person at the request of or for the benefit of the Company or any of its subsidiary undertakings;
(ii) the giving to a third party of any guarantee, indemnity or security in respect of a debt or obligation of the Company or any of
its subsidiary undertakings for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the
giving of security;
(iii) where the Company or any of its subsidiary undertakings is offering securities in which offer the director is or may be entitled
to participate as a holder of securities or in the underwriting or sub-underwriting of which the director is to participate;
(iv) any contract, arrangement, transaction or proposal in which he is interested by virtue of his interest in shares or debentures or
other securities of the Company or by reason of any other interest in or through the Company;
(v) any contract concerning any other company (not being a company in which the director owns one per cent. or more) in which he is
interested directly or indirectly whether as an officer, shareholder, creditor or otherwise howsoever;
(vi) any contract concerning the adoption, modification or operation of a pension fund or retirement, death or disability benefits
scheme which relates both to directors and employees of the Company or of any of its subsidiary undertakings and does not provide in respect
of any director as such any privilege or advantage not accorded to the employees to which the fund or scheme relates;
(vii) any contract for the benefit of employees of the Company or any of its subsidiary undertakings under which he benefits in a
similar manner to the employees and which does not accord to any director as such any privilege or advantage not accorded to the employees
to whom the contract relates,
(viii) any contract for the purchase or maintenance for any director or directors of insurance against any liability; and
(ix) the grant to any director or directors of an indemnity from the Company against any liability.
(g) A company shall be deemed to be one in which a director owns one per cent. or more if and so long as (but only if and so long as)
he, taken together with any person connected with him within the meaning of section 839 ICTA is, to his knowledge, (either directly or
indirectly) the holder of or beneficially interested in one per cent. or more of any class of the equity share capital of that company or of
the voting rights available to members of that company. For the purpose of this paragraph of this article there shall be disregarded any
shares held by the director or any such person as bare or custodian trustee and in which he has no beneficial interest, any shares comprised
in a trust in which his or any such person*s interest is in reversion or remainder if and so long as some other person is entitled to
receive the income of the trust and any shares comprised in an authorised unit trust scheme in which he or any such person is interested
only as a unit holder.
(h) Where a company in which a director owns one per cent. or more is materially interested in a contract, he also shall be deemed
materially interested in that contract.
(i) If any question shall arise at any meeting of the board as to the materiality of the interest of a director (other than the
chairman of the meeting) or as to the entitlement of any director (other than the chairman of the meeting) to vote or be counted in the
quorum and the question is not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum, the question
shall be referred to the chairman of the meeting and his ruling in relation to the director concerned shall be conclusive except in a case
where the nature or extent of his interest (so far as it is known to him) has not been fairly disclosed to the board. If any question shall
arise in respect of the chairman of the meeting, the question shall be decided by a resolution of the board (for which purpose the chairman
shall be counted in the quorum but shall not vote on the matter) and the resolution shall be conclusive except in a case where the nature or
extent of the interest of the chairman (so far as is known to him) has not been fairly disclosed to the board.
(j) A director who to his knowledge is in any way, whether directly or indirectly, interested in a contract with the Company shall
declare the nature of his interest at the meeting of the board at which the question of entering into the contract is first taken into
consideration, if he knows his interest then exists, or in any other case at the first meeting of the board after he knows that he is or has
become so interested. For the purposes of this article, a general notice to the board by a director to the effect that (a) he is a member of
a specified company or firm and is to be regarded as interested in any contract which may after the date of the notice be made with that
company or firm or (b) he is to be regarded as interested in any contract which may after the date of the notice be made with a specified
person who is connected with him, shall be deemed to be a sufficient declaration of interest under this article in relation to any such
contract, provided that no such notice shall be effective unless either it is given at a meeting of the board or the director takes reasonable steps to secure that it is brought up and read at the
next board meeting after it is given.
(k) References in this article to a contract include references to any proposed contract and to any transaction or arrangement
whether or not constituting a contract.
(l) A director shall not, by reason of permitted interest, office or employment as set out in this article, be in breach of his duty
to the Company to avoid a situation in which he has or can have a direct or indirect interest that conflicts, or may be possible to be
conflicted with the interests of the Company.
Authorisation of Conflicts
25 The directors may (subject to such terms and conditions, if any, as they may think fit to impose from time to time, and subject
always to their right to vary or terminate such authorisation) authorise, to the fullest extent permitted by law:
(a) any matter which would otherwise result in a director infringing his duty to avoid a situation in which he has, or can have, a direct or
indirect interest that conflicts, or possibly may conflict, with the interests of the Company and which may reasonably be regarded as likely
to give rise to a conflict of interest (including a conflict of interest and duty or conflict of duties); and
(b) a director to accept or continue in any office, employment or position in addition to his office as a director of the Company and
without prejudice to the generality of paragraph (a) of this article may authorise the manner in which a conflict of interest arising out of
such office, employment or position may be dealt with, either before or at the time that such a conflict of interest arises,
provided that for this purpose the authorisation is only effective if the director in question and any other interested director is not
counted in the quorum at any board meeting at which such matter, or such office, employment or position, is approved and it is agreed to
without their voting or would have been agreed to if their votes had not been counted.
(c) If a matter, or office, employment or position, has been authorised by the directors in accordance with this article then (subject to
such terms and conditions, if any, as the directors may think fit to impose from time to time, and subject always to their right to vary or
terminate such authorisation or the permissions set out below):
(i) the director shall not be required to disclose any confidential information relating to such matter, or such office, employment
or position, to the Company if to make such a disclosure would result in a breach of a duty or obligation of confidence owed by him in
relation to or in connection with that matter, or that office, employment or position; and
(ii) the director may absent himself from discussions, whether in meetings of the directors or otherwise, and exclude himself from
information which will or may relate to that matter, or that office, employment or position; and
(iii) a director shall not, by reason of his office as a director of the Company, be accountable to the Company for any benefit which
he derives from any such matter, or from such office, employment or position.*
such amendment to take effect from the conclusion of this Annual General Meeting.
By order of the Board
R Chudasama Ocean House
10-12 Little
Trinity Lane
Company Secretary London EC4V 2DH
Date 14 October 2008
Notes:
1 A member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and (on a
poll) vote instead of him. A proxy need not also be a member.
2 To be valid, a form of proxy and the power of attorney (if any) under which it is signed, or a notarially certified copy of such power
of attorney, must be deposited at the Company*s registrars, Capita IRG Plc, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU not
less than 48 hours before the time appointed for holding the meeting or, in the case of a poll taken otherwise than at or on the same day as
the meeting, not less than 24 hours before the time appointed for the taking of a poll.
3 The return of a form of proxy will not prevent a member from attending the meeting and voting in person.
Enquiries
MG Capital PlcCharles Fowler Tel: 020 7332 2040
Nabarro Wells & Co. LimitedHugh Oram Tel: 020 7634 4860
This information is provided by RNS
The company news service from the London Stock Exchange
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