RNS Number:6318T
MG Capital PLC
04 November 2005
MG CAPITAL PLC
Results for the year ended 30 June 2005
Chairman's Statement
The year to 30th June 2005 has been an eventful and positive one for the MG
Capital Group, and we have taken some important steps forward in the development
of the Group into a substantial specialist investment house.
The acquisition of Hannen and Company and an accompanying share placing in early
October 2004 was rapidly followed by the acquisition of a majority holding in
Asian specialist Jade Absolute Fund Managers later the same month. Both these
events were fully reported on in the previous Annual Report and in the Interims.
A few months later, in February 2005, we concluded an agreement with an
experienced team of China specialists to set up MG Maple Capital, a new company
operating principally out of Beijing. MG Maple is currently 100% owned by MG
Capital, but will become 51% owned once the conditions of an "earn-in" in favour
of the two principals of MG Maple have been satisfied. The Beijing office is now
fully operational and staffed by a team of four executives. Before the end of
the period under review MG Maple had secured its first corporate advisory
mandate from a Shanghai-based manufacturing company, and it is anticipated that
in due course they will finalise further advisory mandates in China.
In April 2005 we set up a new associate company called Aztec Capital to take
over the marketing of the Elite MoneyGuru Income with Growth Trust, and it is
the intention for it in time to develop and market a range of other conventional
open ended investment products.
Meanwhile MG Global Investment has become investment advisor to Family
Investments Limited ("FIL"), a Bahamas domiciled open ended investment company
whose principal strategy is to be a "hands on" investor, and which provides
relatively early stage private equity to smaller companies in the UK and
elsewhere considered to have global potential. The fund has had a strong track
record and we believe that this will be invaluable in securing private equity
funds or mandates for MG Global to manage or advise.
Our 51% subsidiary Jade Absolute Fund Managers continues to develop its business
with our active encouragement and support. The existing funds under management
and advice are performing well, and maintaining this performance of course
remains the top priority. However, the Jade team are also actively looking to
take advantage of opportunities to raise new funds.
Turning to the financial side, I should point out that our retained profit for
the year of #156,415 was flattered in the year under review by write backs of
#625,245 resulting from the restructuring of the Group in October 2004 which
involved the release of preference share dividend reserve and the cancellation
of a Director's loans to the Company.
Shareholders will recall that as a result of the acquisition of Hannen and
Company in October we own, among other assets, 374,691 ordinary shares in Celtic
Resources plc. The share price of that company has in the last few weeks
experienced some volatility with the share price recently trading below 160p as
a result of Celtic's apparent failure to complete a major transaction in Russia.
The Directors take the view that the value of Celtic's existing assets remains
substantially in excess of the market capitalisation of the company at its
current share price of around 221p and that it would be premature to consider
that the value of this holding has been permanently diminished.
I am pleased to be able to report that at an Extraordinary General Meeting on 19
August 2005 Shareholders overwhelming approved the setting up of a share option
scheme for employees, subject to Revenue approval, and the grant of options to
the Company's managing director Charles Fowler.
As can be seen from the audited financial statements, as at 30 June 2005 the
Company had an accumulated deficit on its profit and loss account of #1,662,421.
Under English company law, a company may reduce its share capital (including its
share premium account) and apply the reserve arising on the reduction in writing
off an accumulated deficit on its profit and loss account provided it obtains
the approval of shareholders in general meeting and the confirmation of the High
Court. The Company is proposing to undertake such a reduction in order to cancel
the Deferred Shares and the amount standing to the credit of the Company's share
premium account. The holders of the Deferred Shares have indicated that they are
willing to agree to the cancellation of such shares.
Shareholders will note that the proposed reduction of capital and cancellation
of share premium account will create a reserve larger than the amount of the
Company's accumulated losses. Subject to the protection of creditors (as to
which see below), it is anticipated that the balance of the reserve arising
after elimination of the Company's accumulated losses will (once those creditors
who have not consented to the reduction have been discharged) be capable of
being treated as a distributable reserve. This will be available to fund payment
of dividends to shareholders in the future (when and to the extent that the
directors consider it appropriate to recommend the payment of such dividend) and
for other corporate purposes of the Company.
The Court will be concerned to ensure that the interests of the Company's
creditors are not prejudiced by the proposed reduction of capital and
cancellation of share premium account. It is anticipated that the Company will
be required to undertake not to treat surplus of the reserve arising (after
elimination of the accumulated losses) as distributable until all those
creditors of the Company existing at the date of the reduction becomes effective
have either been discharged or consented to the proposed reduction. The precise
form of creditor protection is for the Court to determine and the Company will
give such undertakings as the Court requires and that the Company's legal
advisers indicate are appropriate.
A resolution seeking approval by Shareholders of the share capital reduction is
being put to Shareholders at the Company's Annual General Meeting on 9th
December 2005. For details of the meeting and the resolutions please refer to
the Notice at the end of this report.
Peter Hannen
Chairman
Consolidated Profit and Loss Account
For the year ended 30 June 2005
2005 2004
# #
Turnover
Continuing operations 78,353 -
Acquisitions 728,385 -
Discontinued operations - 710,286
_______ _______
806,738 710,286
Net operating expenses (1,311,960) (668,761)
_______ ________
Operating loss
Continuing operations (671,781) (439,672)
Acquisitions 166,559 -
Discontinued operations - 481,197
_______ _______
(505,222) 41,525
Exceptional restructuring income 301,002 -
Share of operating loss in associated company (8,377) -
Interest payable and similar charges (2,384) (53,597)
Interest receivable 32,430 1,498
Loss on ordinary activities before taxation (182,551) (10,574)
Tax on loss on ordinary activities (26,000) -
Loss on ordinary activities after taxation (208,551) (10,574)
Equity minority interest 40,723 (4,085)
Non-equity dividends credited(payable) 324,243 (91,569)
Profit/(loss) attributable to the members
of the parent company 156,415 (106,228)
Basic earnings per share (2004 restated) 4.5p (28.1p)
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 2005
2005 2004
# #
Fixed assets
Intangible assets 233,479 -
Tangible assets 24,883 47,042
Investments 2,186,180 -
2,444,542 47,042
Current assets
Debtors 319,533 99,167
Cash at bank and in hand 674,415 362
________ ________
993,948 99,529
Creditors: amounts falling due within one year (277,258) (713,735)
________ ________
Net current assets/(liabilities) 716,690 (614,206)
________ ________
Total assets less current liabilities 3,161,232 (567,164)
Creditors:
amounts falling due after more than one year - 952,530
Capital and reserves
Called up share capital 4,637,458 2,473,376
Share premium account 5,102,380 2,548,013
Profit and loss account (6,708,911) (6,865,326)
Preference dividend reserve - 324,243
________ ________
Shareholders' funds
(including non-equity interests) 3,030,927 (1,519,694)
Total capital employed 3,030,927 (567,164)
Minority interest - equity 130,305 -
3,161,232 (567,164)
These financial statements were approved by the Board of Directors on 2 November
2005 and were signed on its behalf by:
C A Fowler M G C T Baines
Director Director
Consolidated Cashflow Statement
For the year ended 30 June 2005
2005 2004
# #
Net cash (outflow)/inflow from operating activities (819,702) 63,164
Returns on investments and servicing of finance
Interest paid (2,384) (53,597)
Interest received 32,430 1,498
_______ _______
Net cash inflow/(outflow) from returns on
investments and servicing of finance 30,046 (52,099)
_______ _______
Taxation (36,564) -
Capital expenditure and financial investment
Payment to acquire tangible fixed assets (16,609) -
Payments to acquire investments (646,541)
_______ _______
(663,150) -
Acquisitions and disposals (see note 10)
Purchase of subsidiary undertakings (276,574) -
Net cash acquired with subsidiaries 476,017 -
_______ _______
199,443
_______ _______
Cash (outflow)/inflow before financing (1,289,927) 11,065
Financing
Issue of ordinary share capital 1,177,332 -
Share premium 1,177,332 -
Costs of issue (303,744) -
_________ _______
2,050,920 -
_________ _______
Increase in cash 760,993 11,065
This information is provided by RNS
The company news service from the London Stock Exchange
END
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