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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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MG Capital | LSE:MAP | London | Ordinary Share | GB00B02S3576 | ORD 50P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 3.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:6443G MG Capital PLC 30 October 2007 Stock Exchange Announcement 30 October 2007 MG CAPITAL PLC ("MG Capital" or the "Company") FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007 THE CHAIRMAN'S STATEMENT During the twelve months to 30 June 2007 we have continued to make good progress on the corporate advisory side of our business. At the interim stage I reported on the successful launch of Sky Express, the first low cost Russian airline in which we received a 4% beneficial equity interest as a result of our work in putting together the parties and setting up the operation. The airline has grown fast since its first commercial flight at the end of January. It is now flying to six destinations within Russia from its base at Vnukovo Airport in Moscow. The fleet has grown to seven leased aircraft which are currently averaging 14 flights a day between them, producing steadily increasing passenger numbers and revenues each month. In terms of profits, the airline is targeting breakeven by around the middle of next year. The launch of the airline has resulted in a somewhat higher profile for us in this market and we are currently working on interesting new transactions in Russia in various sectors including the agricultural sector. In China most but not all of our deal flow is derived from the activities of MG Maple Capital and its team which is based principally in Beijing. Progress on transactions has been slow over the past year for a number of reasons including the need in some cases to wait for government approvals and authorizations, but at least two deals now appear quite close to fruition. For over almost three years we have owned a controlling shareholding in Jade Absolute Fund Managers, which during that time produced excellent investment performance for its funds. However, as I flagged in both last year's Annual Report and also at the interim stage, we realized that Jade needed to capitalize upon its good performance record and accelerate the rate of growth of its funds under management in order to achieve the requisite scale to sustain it through periods of less buoyant markets than we have enjoyed recently, given that its profits were largely dependent on achieving performance fees. Despite strenuous efforts on the marketing front this regrettably just did not happen, and we have taken the opportunity on the retirement of Jade's senior fund manager to close down this business and transfer the funds to other advisors. Our intention is to replace the Jade funds with new funds centred around two of our areas of core expertise, namely Chinese private equity and farming. I have reported on a number of previous occasions about our activities in China, but we have been no less active in agricultural investment, where Family Investments Limited, a fund advised by our FSA authorized and regulated subsidiary MG Global Investment, has been a long term and successful investor in farms in South America and Australia (where its 49% owned subsidiary currently farms over 600,000 acres with the majority of that acreage having been acquired over the past eighteen months). We are currently in advanced negotiations with distributors for both a China product and a farming product and hope to be ready to launch both of them in the next few months. Family Investments itself had another relatively quiet year with no material realisations and as a result its net asset value per share rose only slightly in US dollar terms. After a reasonably good first half, when the contribution from Jade's performance fees and the fee from the Sky Express transaction generated a small consolidated profit for the Group, the second half of the year saw far fewer fees booked as transactions were delayed, and as a result we recorded an attributable loss for the whole year of #786,110 compared to the previous year's attributable loss of #1,512,741. We are entirely focused on the task of building upon the platform painstakingly built up over the last two years to create a successful and profitable investment house offering distinctive specialisations, and believe we are on the cusp of doing just that. This year's Annual General Meeting will be held at 10.30am on 10th December 2007. For details of the meeting and resolutions please refer to the Notice at the end of this Report. Peter Hannen Chairman 30 October 2007 DIRECTORS' REPORT The directors have pleasure in presenting their report and the consolidated financial statements of the Group for the year ended 30 June 2007. Principal Activities and Business Review The principal activity of the Company during the year was to act as a holding company for the Group. The Group provides fund management and advisory services, corporate advisory, research and consultancy services, and other investment and financial services. Business Review The business review is dealt with within the Chairman's statement. Long Term Strategy and Business Objectives 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. The Group has made progress during the year on some but not all of these key elements to its strategy. Following the decision to wind down Jade Absolute Fund Managers the advisory agreement with the Close Far East Equity fund was terminated at the end of May 2007 and this had a significant impact on Group funds under management or advice which dropped to $30 million over the period. New products however have been developed during the year which it is hoped will more than replace the Jade funds as core assets under management for the Group. During the year the Group was involved in the launch of the Russian low cost airline Sky Express in which it received an equity stake illustrating its ability to identify and execute investment opportunities in the Group's specialist areas. The Group's officers and employees throughout the year made many visits and presentations to investment and other institutions in the UK and overseas to introduce its products and services, with the Middle East being an area of particular focus. The Group continued to invest in the resources required to support its strategies, notably through its continuing investment in the Beijing operations of its subsidiary MG Maple Capital Limited. 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 2007 is set out in the table below together with prior year comparison. 2007 2006 Assets under management or advice $30m $138m Corporate advisory, research and consultancy fees $611,706 $110,112 The table shows that while assets under management or advice have fallen, fees for corporate advisory, research and consultancy activities rose strongly. Results and Dividends The trading results for the year and the Group's financial position at the end of the year are shown in the attached financial statements. The Directors have not accrued for any dividends. Risks and Uncertainties The Group's principal financial assets are cash, receivables and an investment in the shares and warrants of Celtic Resources. 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, market risks and operational risks. The Group's investment in Fin-First Limited (the parent company of Sky Express) 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. 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 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 banks and 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. Market Risk The Group is exposed to market risk in two main ways. Funds under management or advice are mainly invested in equity markets in Asia and in the UK, and falls in the relevant stock markets are likely to be reflected in lower asset values for the funds and consequently lower fees. Sustained falls in stock markets also often result in redemptions of units in funds. The second way in which the Group is exposed to market risk is through its investment in Celtic Resources, a stock quoted on the AIM market, which has experienced recent share price volatility. 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. Substantial Shareholdings At 12 October 2007, the Directors were aware of the following shareholdings in excess of 3% of the company's issued share capital. Number of Percent of issued Ordinary shares ordinary share capital Peter Hannen 1,836,596 38.2 % 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 % The Directors and their Interests The Directors who served the Company during the year were: P M L Hannen C A Fowler M G C T Baines P D N Robertson P F Curtin J Scott-Barrett In accordance with the Company's Articles of Association at the forthcoming Annual General Meeting M G C T Baines and P D N Robertson will retire by rotation and offer themselves for re-election. The Directors interests in the share capital of the company are as follows:- 2007 2006 Ordinary shares Deferred Ordinary Deferred shares Shares Shares P M L Hannen 1,836,596 - 1,836,596 32,068,230 C A Fowler 162,677 - 75,677 - M G C T Baines 6,500 - 6,500 - P D N Robertson 10,100 - 5,100 - P J Curtin 115,212 - 115,212 95,726,035 J Scott-Barrett 115,212 - 115,212 95,726,035 On 26 May 2006 C A Fowler was granted the option to purchase 470,000 shares in the Company. The exercise price is 100 pence; the options are exercisable from 19 August 2008 and expire on 26 May 2016. The options are exercisable subject to various performance related conditions. Share Capital Details of the Company's share capital at 30 June 2007 and its movements during the year are shown in note 14 to the Financial Statements. Corporate Governance The Company intends to comply with the principles of best practice set out in the combined code on corporate governance published by the London Stock Exchange in so far as the Directors consider that they are appropriate to a company of the Company's size and structure. The Company currently has three Non-Executive Directors. The Company has established an audit and a remuneration committee whose members are the non-executive directors. The audit committee is responsible for ensuring that the Company's financial performance is properly monitored and reported and for reviewing reports from the auditors. The remuneration committee will make recommendations for the remuneration of the Directors. Note 5 of the financial statements details the Directors' remuneration received during the year. The full board acts as the nomination committee. Policy on the Payment of Creditors The Company last year did not follow any formal code or standard dealing with the payment of creditors. Since the restructure of the Company in September 2004 it has been the intention of the Company to agree terms of payment before business is transacted and to settle accounts in accordance with these terms. The creditor payment days outstanding for the Group at 30 June 2007 was 26 days (2006 - 22 days). Social, Environment and Community While it is recognised that the Group is a financial services organisation with a duty to its shareholders and to the discharge its contractual responsibilities to its clients, there are non-financial considerations which may affect the long term value of the companies in the Group and careful attention is paid to minimising the environmental impact of those companies Employment Policy It is the Group's policy to give appropriate consideration to applications for employment from disabled persons, having proper regard to their particular aptitudes. For the purposes of training, career development and promotion disabled employees, including any who become disabled during the course of their employment, are treated on equal terms with other employees. Health and Safety The Group has a policy of adopting procedures where appropriate to monitor and maintain health and safety standards as they affect the Group's employees. None of the Group's activities involve any significant health and safety risks. During the year there were no injuries, illnesses or dangerous occurrences which needed reporting under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995. Statement of Directors' Responsibilities Company law requires the Directors to prepare Financial Statements for each financial year which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that year. In preparing those Financial Statements the Directors are required to: * select suitable Accounting Policies (as described on pages 15 and 16) and then apply them consistently; * make judgements and estimates that are reasonable and prudent; * state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements; and * prepare the Financial Statements on the going concern basis unless it is i nappropriate to presume that the Company will continue in business. The Directors are responsible for maintaining proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the Financial Statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the Directors' report is prepared in accordance with company law in the United Kingdom. The maintenance and integrity of the website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the information contained in the Financial Statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements and other information included in annual reports may differ from legislation in other jurisdictions. So far as each of the Directors is aware at the time this report is approved: * there is no relevant audit information of which the Company's auditors are unaware, and * 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 (s. 234ZA (2)). Auditors A resolution to re-appoint CLB Littlejohn Frazer as auditors for the ensuing year will be proposed at the annual general meeting in accordance with section 385 of the Companies Act 1985. Signed by order of the directors C A Fowler Director 30 October 2007 INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF MG CAPITAL PLC We have audited the Group and Parent Company Financial Statements (the " Financial Statements") of MG Capital Plc for the year ended 30 June 2007 which comprise the Group Profit and Loss Account, the Group and Company Balance Sheets, the Group Cash Flow Statement and the related notes 1 to 25. These Financial Statements have been prepared under the accounting policies set out therein. This report is made solely to the Company's shareholders, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company's shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's shareholders as a body, for our audit work, for this report, or for the opinions we have formed. Respective Responsibilities of Directors and Auditors The Directors' responsibilities for preparing the Annual Report and the Financial Statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Directors' Responsibilities. Our responsibility is to audit the Financial Statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the Financial Statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors' Report is consistent with the Financial Statements. In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions is not disclosed. We read other information contained in the Annual Report and consider whether it is consistent with the audited Financial Statements. This other information comprises only the Directors' Report and the Chairman's Statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Financial Statements. Our responsibilities do not extend to any other information. Basis of Audit Opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Financial Statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the Financial Statements, and of whether the accounting policies are appropriate to the Group's and Company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Financial Statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the Financial Statements. Opinion In our opinion: * the Financial Statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the Group's and the Parent Company's affairs as at 30 June 2007 and of the Group's loss for the year then ended; * the Financial Statements have been properly prepared in accordance with the Companies Act 1985; and * the information given in the Directors' Report is consistent with the Financial Statements. CLB Littlejohn Frazer 1 Park Place Chartered Accountants Canary Wharf and Registered Auditors London E14 4HJ 30 October 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 30 June 2007 Note 2007 2006 Turnover 1a Continuing operations 705,731 349,357 Discontinued operations 821,301 341,017 ________ ________ 1,527,032 690,374 Net operating expenses 1b (1,933,700) (1,702,351) ________ ________ Operating Loss Continuing operations (720,612) (820,161) Discontinued operations 313,944 (191,816) ________ ________ 2 (406,668) (1,011,977) Exceptional write off/loss on sale of investment 3 (320,561) (534,120) Share of operating loss in associated company - (24,997) Interest payable and similar charges 4 (9,525) (868) Interest receivable 15,020 14,896 _______ _______ Loss on Ordinary Activities before Taxation (721,734) (1,557,066) Tax on loss on ordinary activities 6 (5,124) 5,772 _______ ________ Loss on Ordinary Activities after Taxation (726,858) (1,551,294) Equity minority interest (59,252) 34,259 Equity dividend received - 4,294 ________ ________ Loss Attributable to the Members of the Parent Company #(786,110) #(1,512,741) _______ ________ Basic and Diluted Loss per share 7 (1.16p) (0.66p) _______ ________ There were no recognised gains or losses other than the profit for the financial year as set out above. The Company has taken advantage of section 230 of the Companies Act 1985 not to publish its own profit and loss account. CONSOLIDATED BALANCE SHEET As at 30 June 2007 Note 2007 2006 Fixed Assets Intangible assets 8 115,585 208,921 Tangible assets 9 15,077 25,357 Investments 10 195,918 1,074,649 ___________ _____________ 326,580 1,308,927 Current Assets Debtors 11 308,527 316,093 Investments 188,578 - Cash at bank and in hand 324,177 200,287 _______ _______ 821,282 516,380 Creditors: amounts falling due within one year 12 (342,737) (206,586) _______ _______ Net Current Assets 478,545 309,794 _______ _______ Total Assets less Current Liabilities #805,125 #1,618,721 _______ ________ Capital and Reserves Called up share capital 14 2,402,255 4,637,458 Share premium account 15 - 5,101,552 Profit and loss account 16 (1,671,007) (8,221,652) ________ ________ Shareholders' Funds 17 731,248 1,517,358 ________ _______ Total Capital Employed 731,248 1,517,358 Minority Interest - Equity 73,877 101,363 _______ ________ #805,125 #1,618,721 _______ ________ These financial statements were approved by the Board of Directors on 30 October 2007 and were signed on its behalf by: C A Fowler ) ) ) Director ) M G C T Baines ) BALANCE SHEET As at 30 June 2007 Note 2007 2006 Fixed Assets Investments 10 5,489,312 7,069,231 Current Assets Debtors due within 1 year 11 92,711 90,247 Debtors due after 1 year 11 2,658,612 2,429,129 Investments 188,578 - Cash at Bank and in hand 389 2,293 _______ ________ 2,940,290 2,521,669 Creditors: amounts falling due within one year 12 (1,454,476) (1,493,612) ________ _________ Net Current Assets 1,485,814 1,028,057 ________ _________ Total Assets less Current Liabilities #6,975,126 #8,097,288 ________ _________ Capital and Reserves Called-up share capital 14 2,402,255 4,637,458 Share premium account 15 - 5,085,311 Profit and Loss account 16 4,572,871 (1,625,481) ________ _________ Shareholders' Funds 6,975,126 8,097,288 ________ _________ Total Capital Employed #6,975,126 #8,097,288 ________ ________ The financial statements were approved by the Board of Directors on 30 October 2007 and were signed on its behalf by: C A Fowler ) ) ) Director ) M G C T Baines ) CONSOLIDATED CASH FLOW STATEMENT Year ended 30 June 2007 Note 2007 2006 Net Cash (Outflow) from Operating Activities 19 (429,100) (1,053,052) Returns on Investments and Servicing of Finance Interest paid (9,525) (868) Interest received 15,020 14,896 Dividends received - 4,294 ______ ______ Net cash inflow from returns on investments and servicing of finance 5,495 18,322 Taxation (5,124) - Capital Expenditure and Financial Investment Payment to acquire tangible fixed assets (2,083) (15,565) Receipts from sale of investments 565,510 576,419 _______ _______ 563,427 560,854 Cash Inflow/(Outflow) before Financing #134,698 #(473,876) ______ _______ Increase/(Decrease) in Cash 20 #134,698 #(473,876) ________ _________ ACCOUNTING POLICIES Basis of Preparation of Financial Statements The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. The principal accounting policies of the Group are set out below. Basis of Consolidation The Group financial statements consolidate those of the Company and of its subsidiary undertakings drawn up to 30 June 2007. All intra-group transactions are eliminated on consolidation. Acquisitions are accounted for under the acquisition method and goodwill on consolidation is capitalised and written off over its estimated useful life. The results of companies acquired or disposed of are included in the Group profit and loss account after or up to the date that control passes respectively The parent Company has not presented its own profit and loss account as permitted by section 230 of the Companies Act 1985. Turnover Turnover is the total amount receivable by the Group from clients for services provided to them during the year, excluding Value Added Tax. Performance fees are not recognised in the accounts until their value has been determined. Amortisation Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Goodwill - over 10 years Depreciation Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Improvements to Leasehold Property - Over term of lease Fixtures & Fittings - 5 Years Straight Line Equipment - 3-5 Years Straight Line Operating Lease Agreements Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against the profit and loss account on a straight line basis over the period of the lease. Goodwill Positive purchased goodwill arising on acquisitions is capitalised, classified as an asset on the balance sheet and amortised over its estimated useful life up to a maximum of 10 years. This length of time is presumed to be the maximum useful life of purchased goodwill because it is difficult to make projections beyond this period. Goodwill is reviewed for impairment at the end of the first full financial year following each acquisition and subsequently as and when necessary if circumstances emerge that indicate that the carrying value may not be recoverable. Pension Costs The Company operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the Company. The annual contributions payable are charged to the profit and loss account. Deferred Taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the following exceptions: * Provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, and gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the asset concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold; * Provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries, associates and joint ventures only to the extent that, at the balance sheet date, dividends have been accrued as receivable; * Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Investments Investments are included at cost less amounts written off for permanent diminution in value. Foreign Currencies Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Exchange differences are dealt with through the profit and loss account. Group Relief Taxable losses acquired by a company from another company within the Group are charged / credited to the profit and loss account at a fair value reflecting the reduction in corporation tax liability of the Company. NOTES TO THE FINANCIAL STATEMENTS 1a. Turnover 2007 2006 United Kingdom 700,707 356,861 United States of America 410,195 239,245 Far East/Australasia 89,600 23,623 Other European 326,530 70,645 _______ _______ #1,527,032 #690,374 ________ _______ 1b. Net Operating Expenses Continuing Operations Cost of Sales (130,612) - Administration Expenses (1,299,453) (1,179,968) Other Operating income 3,722 10,450 ________ ________ #(1,426,343) #(1,169,518) ________ _________ Discontinued Operations Cost of Sales - - Administration Expenses (507,357) (532,833) Other Operating income - - ________ ________ #(507,357) #(532,833) _______ ________ Total operating expenses #(1,933,700) #(1,702,351) ________ ________ 2. Operating Loss The loss on ordinary activities is stated after charging: Auditors remuneration: Audit services #22,394 #21,521 Non audit services - tax services #5,000 #3,550 - other services pursuant to legislatio n #850 #750 - other #1,600 #1,250 Amortisation #93,386 #24,558 Depreciation #7,631 #15,091 Operating lease costs: Land and Buildings #188,628 #49,500 ________ ________ 3. Exceptional Items Loss on sale of investment During the year, the company disposed of some of its holdings in Celtic Resources Holdings Plc at a loss. This followed on from the decision as at 30 June 2006 by the Board of Directors that the investment held in this company should be written down to the market value as at that date as it was believed that there was a permanent diminution in value. As such the investment was written down in the Group to #975,083 at 30 June 2006. 4. Interest Payable and Similar Charges 2007 2006 Interest payable on bank loans and overdrafts 9,525 868 ______ ______ #9,525 #868 ______ ______ 5. Directors and Employees Staff costs were as follows: Wages and salaries 797,087 656,353 Social security costs 85,110 71,409 Other pension costs 25,039 35,582 ______ _______ #907,236 #763,344 _______ _______ The directors' remuneration for the year ended 30 June 2007 was as follows: Remuneration Pension Other 2007 2006 Contribution C A Fowler 86,205 - - 86,205 86,224 M G C T Baines 10,636 - - 10,636 10,653 P D N Robertson 10,636 - - 10,636 10,653 P M L Hannen 37,701 - - 37,701 41,121 P F Curtin 10,636 - - 10,636 10,653 J Scott-Barrett - - - - 52,170 ______ _____ _____ ______ ______ #155,814 #- #- #155,814 #211,474 ______ _____ ______ ______ _______ Retirement benefits are accruing to no directors (2006 - 1) under a money purchase scheme. Average number of employees during the year was as follows: 2007 2006 No No Accounts and administration 4 2 Technical and support 8 6 Research staff - - Sales staff 4 4 ___ ___ 16 12 ___ ___ 6. Tax Loss on Ordinary Activities 2007 2006 UK Corporation tax based on the results for the year at 30% (2006 - 30%) - - Over provision relating to prior year - (5,772) Overseas taxation 5,124 - _____ _____ #5,124 #(5,772) _____ _____ Analysis of Taxation Charge in the Year The tax charge for the year is at the standard rate of corporation tax in the UK of 30% (2006 - 30%). The differences are explained below. 2007 2006 Loss on ordinary activities before taxation #(721,734) #(1,557,066) _______ ________ Expected tax credit at standard rate of UK Corporation Tax of 30% (2006 - 30%) (216,520) (467,120) Effects of: Expenses not deductible for tax 1,349 167,444 Excess of capital allowance over depreciation (235) (3,803) Tax losses to carry forward 298,231 282,181 (Loss)/Profit on sale of fixed asset (82,825) 21,298 ______ ______ #- #- ______ ______ The Group has tax losses of approximately #7.1 million carried forward as at 30 June 2007. 7. Earnings per Share The calculation of earnings per share is based on the loss on ordinary activities after taxation for the financial year of #786,110 (2006 - loss #1,512,741) and on 67,880,102 (2006 - 228,324,810 (restated)) ordinary shares, being the weighted average number of ordinary and deferred ordinary shares in issue during the year. As the Company has made a loss for the year no option is potentially dilutive and hence both basic and diluted loss per share are the same. There were no options in place in the previous year. 8. Intangible Fixed Assets Goodwill Cost At 1 July 2006 252,107 Write off (94,570) _______ At 30 June 2007 157,537 _______ Amortisation At 1 July 2006 43,186 Charge for the year 93,336 Write off (94,570) ______ At 30 June 2007 41,952 ______ Net Book Value At 30 June 2007 #115,585 ______ At 30 June 2006 #208,921 ______ 9. Tangible Fixed Assets Short Fixtures and Computer leasehold fittings equipment Total property Group Cost At 1 July 2006 51,380 45,945 302,746 400,071 Addition - 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 ______ ______ ______ ______ Depreciation At 1 July 2006 51,380 33,860 289,474 374,714 Charge for year - 333 7,380 7,713 Write off - (77) (169) (246) ______ ______ _______ _______ 51,380 34,116 296,685 382,181 ______ ______ _______ _______ Net book Value At 30 June 2007 - #971 #14,106 #15,077 _____ ______ ______ ______ At 30 June 2006 - #12,085 #13,272 #25,357 _____ ______ ______ ______ 10. Fixed Asset Investments Listed Unlisted investments investments Total Cost 1 July 2006 1,510,194 99,566 1,609,760 Additions - 195,918 195,918 Disposals (1,321,616) (99,566) (1,421,182) Transfer to current asset investments (188,578) - (188,578) ________ ________ ________ At 30 June 2007 - 195,918 195,918 ________ ________ ________ Provision 1 July 2006 (535,111) (535,111) - Disposals 535,111 - 535,111 _______ ________ _______ At 30 June 2007 - - - _______ ________ _______ Net Book Value 30 June 2007 #- #195,918 #195,918 _______ ________ ________ 30 June 2006 #975,083 #99,566 #1,074,649 _______ _______ _______ The market value of the listed investments at 30 June 2007 was #158,362 (2006: #975,083). All listed investments held at 30 June 2007 have been included in current asset investments. Company Listed Subsidiaries investments Total Cost 1 July 2006 6,882,050 187,181 7,069,231 Additions 50,688 45,850 96,538 Disposals (561) (642,400) (642,961) Revaluations - 702,453 702,453 Transfer to current asset investments - (293,084) (293,084) ________ _______ ________ At 30 June 2007 6,932,177 - 6,932,177 ________ _______ ________ Provision 1 July 2006 - - - Additions (1,442,865) (104,506) (1,547,371) Transfer to current asset investments - 104,506 104,506 ________ _______ ________ At 30 June 2007 (1,442,865) - (1,442,865) ________ _______ _______ Net Book Value 30 June 2007 #5,489,312 #- #5,489,312 ________ _______ ________ 30 June 2006 #6,882,050 #187,181 #7,069,231 _______ _______ ________ The market value of the listed investments at 30 June 2007 was #158,362 (2006: #975,083). All listed investments held at 30 June 2007 have been included in current asset investments. The subsidiary undertakings are as stated below: Class of Shareholding Proportion of class Activity held and share of voting rights MG Global Investment Limited Ordinary shares 100% Portfolio investment advisory services MG Research Limited Ordinary shares 100% Investment research Resources Fund Management (Cayman Ordinary shares 100% Company wound up Limited) Hannen & Company Limited Ordinary shares 100% Investment administration Jade Absolute Fund Managers Ordinary shares 75.5% Fund Management advice Limited MG Maple Capital Limited Ordinary shares 100% Fund management and financial advisory Aztec Capital Limited* Ordinary shares 100% Fund marketing company AIM pre-IPO Company Limited Ordinary shares 100% Investment company On 5 June 2007 Aztec Capital Limited was dissolved. During the year, the Company acquired a further 24.5% of the issued share capital in Jade Absolute Fund Managers Limited, taking the total holding in the company to 75.5%. AIM Pre-IPO Company Limited was set up during the year as a 100% subsidiary of MG Capital Plc. This company is registered in the Isle of Man. All companies are incorporated in England and Wales, with the exception of Resources Fund Management (Cayman) Limited which is incorporated in the Cayman Islands and MG Maple Capital Limited which is incorporated in Hong Kong. 11. Debtors 2007 2006 Group Company Group Company Trade debtors 11,427 - 25,454 - Amounts owed by group undertakings - 2,658,612 - 2,429,129 Corporation tax recoverable - - 16,054 - VAT recoverable - - 4,611 - Other debtors 215,118 89,310 109,908 86,992 Prepayments and accrued income 81,982 3,401 160,066 3,255 ______ ________ _______ ________ #308,527 #2,571,323 #316,093 #2,519,376 _______ ________ _______ ________ Amounts in the Company falling due after one year of #2,658,612 (2006: #2,429,129) comprise the amounts due from subsidiary undertakings as these debts are not considered recoverable in less than one year. Included within other debtors is an amount totalling #70,749 (2006: #54,960) which represents a loan made by MG Capital Plc. The loan agreement includes an option to convert the loan value into shares in the debtor company. 12. Creditors: amounts falling due within one year 2007 2006 Group Company Group Company Bank overdraft 1,406 - 12,214 - Trade creditors 55,197 - 60,627 - Amounts owed to group undertakings - 1,249,766 - 1,484,062 Amounts owed to participating interest - - - - Corporation tax - - 44,834 - PAYE and social security 15,664 - 16,400 - Other creditors 201,741 193,860 333 - Accruals & deferred income 68,729 10,850 72,178 9,550 ______ ________ _______ ________ #342,737 #1,454,476 #206,586 #1,493,612 _______ ________ _______ ________ 13. Deferred Tax The Group has significant accumulated tax losses but no deferred tax asset has been recognised as it is unlikely that significant profits will arise in the short term. 14. Share Capital 2007 2006 Authorised: 10,000,000 ordinary shares of 50p 5,000,000 5,000,000 245,224,000 deferred shares of 1p - 2,452,240 ________ ________ #5,000,000 #7,452,240 ________ ________ Allotted, issued and paid up 4,805,510 new ordinary shares of 50p each 2,402,255 2,402,255 223,520,300 deferred ordinary shares of 1p each - 2,235,203 ________ ________ #2,402,255 #4,637,458 ________ ________ On 11 October 2006 223,520,300 deferred ordinary shares of 1p each were cancelled after the Company obtained court approval. On 24 October 2006 the Company granted share options to two members of staff totalling 60,000 ordinary shares in the Company. The exercise price of the shares is 70 pence and the options may be exercised at any time up until 24 October 2011. On 26 May 2006 C A Fowler, a director and shareholder of the Company, was granted the option to purchase 470,000 shares in the Company. The exercise price is 100 pence; the options are exercisable from 19 August 2008 and expire on 26 May 2016. The options are exercisable subject to various performance related conditions. The charge for these options has been reviewed and is not deemed to be significant and therefore is not recognised in these financial statements. 15. Share Premium 2007 2006 Group Company Group Company At 1 July 2006 5,101,552 5,085,311 5,102,380 5,086,139 Premium on allotment of shares less expenses of (5,101,552) (5,085,311) (828) (828) issue cancelled after court approval _______ ________ ________ ________ At 30 June 2007 #- #- #5,101,552 #5,085,311 _______ ________ _______ ________ 16. Profit and Loss Account 2007 2006 Group Company Group Company At 1 July 2006 (8,221,652) (1,625,481) (6,708,911) (1,662,421) (Loss)/profit for the year (786,110) (1,122,162) (1,512,741) 36,940 Cancellation of share premium 5,101,552 5,085,311 - - Cancellation of deferred ordinary shares 2,235,203 2,235,203 - - _______ ________ ________ ________ At 30 June 2007 (1,671,007) 4,572,871 (8,221,652) (1,625,481) _______ ________ _______ ________ 17. Reconciliation of Movements in Shareholders' Funds 2007 2006 Shareholders' Funds - Group Loss for the financial year (786,110) (1,512,741) Movement in share premium - (828) ________ _______ Net decrease in funds (786,110) (1,513,569) Opening shareholders' funds 1,517,358 3,030,927 ________ ________ Closing shareholders' funds #731,248 #1,517,358 ________ ________ Shareholders' funds #731,248 #1,517,358 ________ ________ 18. Financial Instruments Set out below are the disclosures relating to financial instruments. The Group has taken advantage of the exemption available under Financial Reporting Standard 13, "Derivatives and other financial instruments" not to provide numerical disclosures in relation to short-term debtors and creditors apart from the interest rate disclosure below. Fair Values The Directors have given serious consideration to this issue and have reached the conclusion that there is no significant difference between the book values and the fair values of the assets and liabilities of the Group as at 30 June 2007. Currency Risk The Group has no material balances of monetary assets or liabilities denominated, other than in the functional currency of operation, where the Group is liable to the currency risk. However one of the Company's subsidiaries major income flows are denominated in US$ whilst its expenditure is in sterling. The Group does not hedge this currency trading risk. Interest Rate Risk At Floating interest rates 2007 2006 Borrowing #1,406 #12,214 ______ ______ Floating rate financial liabilities comprise bank borrowings and overdrafts at commercial rates. Market Price Risk Market price risk arises mainly from uncertainty about future movements in equity prices which applies to the Group's listed and unlisted investments. The Directors review the market risk on an ongoing basis. 19. Reconciliation of Operating Loss to Net Cash Outflow Group from Operating Activities 2007 2006 Operating loss (406,668) (1,011,977) Depreciation of tangible fixed assets 7,713 15,091 Amortisation of intangible fixed assets 93,336 24,558 Write off of fixed assets 4,650 - Decrease in debtors 7,566 3,440 Increase/(decrease) in creditors 146,959 (64,647) Share of loss in associated company - (24,997) Movement on share premium account - (828) Write down of fixed asset investment - 991 Minority interest movement (86,738) 5,317 Non cash fixed asset investments addition (195,918) - _______ ________ Net cash outflow from operating activities #(429,100) #(1,053,052) _______ _______ 20. Reconciliation of net Cash Flow in Movement is Net Funds Group 2007 2006 Shareholders' Funds - Group Increase/(decrease) in cash 134,698 (473,876) _______ _______ Change in net funds arising from cashflows 134,698 (473,876) Net funds 30 June 2006 188,073 661,949 ______ _______ Net funds 30 June 2007 #322,771 #188,073 _______ _______ 21. Analysis of Changes in Net Funds Other non 2006 Cash flow Cash changes 2007 Cash at bank and in hand 200,287 123,890 - 324,177 Bank overdraft (12,214) 10,808 - (1,406) _______ ________ _______ ________ #188,073 #134,698 #- #322,771 _______ ________ _______ ________ 22. Capital Commitments There are no capital commitments at the balance sheet date. 23. Other Commitments At 30 June 2007 the Company had annual commitments under non-cancellable operating leases as set out below. Land and Buildings 2007 2006 Operating leases which expire: Within 1 year #53,310 #72,600 ______ _______ 24. Controlling Party In the Directors opinion there was no controlling party at 30 June 2007. 25. Related Party Transactions In accordance with Section 3(c) of Financial Reporting Standard No.8 Related Party Transactions, transactions with other companies have not been disclosed where the ultimate parent holds 90% or more of the voting rights. The Group paid #36,000 (2006 - #42,300) in respect of a contribution for the Chairman's office to HSC Limited, a Company of which P M L Hannen is a Director and shareholder. During the year, P M L Hannen, a director and shareholder, lent the Company #186,000 which is included within other creditors. Of this amount, #120,000 is unsecured and the balance is secured on 40,000 ordinary shares in Celtic Resources Plc which are held by the Company. The loan carries an interest rate of 6% and is repayable on receipt of one month's notice from the lender. 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 10 December 2007. Ordinary Business 1. To receive and adopt the report of the Directors and the audited financial statements for the financial year ended 30 June 2007. 2. To re-appoint CLB Littlejohn Frazer as auditors and to authorise the Directors to fix their remuneration. 3. To re-elect M G C T Baines who retires by rotation as a Director. 4. To re-elect P D N Robertson who retires by rotation as a Director. The biographies of the Directors being elected in resolution 3 and 4 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. 5 will be proposed as an ordinary resolution and resolution no. 6 will be proposed as a special resolution: Ordinary Resolution 5. 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 #2,597,745 provided 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 6. THAT, subject to and conditionally upon the passing of resolution no. 5 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. 5 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. By order of the Board R Chudasama Ocean House Company Secretary 10-12 Little Trinity Lane London EC4V 2DH 30 October 2007 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. 30 October 2007 -Ends- For further enquiries: Charles Fowler, Managing Director Tel: +44 20 7332 2040 MG Capital plc Hugh Oram, Nominated Adviser Tel: +44 20 7710 7400 Nabarro Wells & Co. Limited This information is provided by RNS The company news service from the London Stock Exchange END FR MGMFGVGFGNZM
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