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MG CAPITAL PLC

Interim Results

For the six months ended 31 December 2008

Statement by Chairman

The very sharp deterioration of global financial conditions following the Lehman's collapse in mid September came at an extremely unhelpful time for the Company.  We have been active and successful investment advisers in the farming/agriculture sector for a number of years and have identified it as a key area for us to expand our business. We were poised to close at least one significant transaction in the sector at the time of the collapse, but the timing of our plans has now been delayed, for how long we are still not sure.  Investors' confidence, as we are all aware, remains very fragile and looks as though it will inevitably take time to recover. Nevertheless, as we test market our specialist farming investment vehicle we have been encouraged to find that interest in agriculture is still very much alive among international institutional investors with many of them looking to build up exposure to this new asset class. 

The Lehman's crisis and its aftermath has also had an unfortunate impact upon the capital raising that we were working on for an Australian company involved in fibre optics in China, as mentioned in my Statement in the last Annual Report and Accounts.  At the time of my Statement, this transaction was still subject to approval by the client company's shareholders. Subsequently this approval was received and the deal went unconditional and we should have then been in receipt of a 5% fee. However the investor was badly affected by the crisis and subsequently defaulted on its commitment. We are still working on this mandate with other potential investors but it is likely that it will take several months work to have a chance to bring it to a successful conclusion.  

The re-financing of Sky Express, the Russian low cost airline, is still not completed, with a re-financing agreement still being worked on with a new investor. The airline has benefited from the fall back in aviation fuel prices but conditions are still very tough in the Russian aviation market.

As a result of anticipated fee revenues not being received during the period under review, there was an after tax loss attributable to equity holders of the Company of £289,132 for the period, compared to a loss of £123,372 for the first six months of the previous year. We are taking action to address our cost base and with our advisers are examining all options with an aim to bring our costs and revenues into balance by the end of the Company's current financial year, with measures that include the closure of our office in Beijing and a reduction in personnel and other expenses, but we will ensure that these steps will not affect our ability to launch our planned new products.  

Peter Hannen  

Chairman

19 March 2009

Unaudited Income Statement

For the six months ended 31 December 2008

	Notes	Unaudited 6 months to 31 Dec 2008 £		Unaudited 6 months to 31 Dec 2007 £		Audited 12 months to 30 Jun 2008 £
Revenue – continuing operations		113,210		114,185		186,667
		113,210		114,185		186,667
Administrative expenses		(388,743)		(299,406)		(1,053,905)
Other net gains		-		-		91,627
Operating (loss)		(275,533)		(185,221)		(775,611)
Finance income		664		1,862		4,901
Finance costs		(11,757)		(5,619)		(11,178)
(Loss) on continuing operations before taxation		(286,626)		(188,978)		(781,888)
Tax on loss on ordinary activities		(2,506)		(4,868)		(8,498)
(Loss) on ordinary activities after taxation – continuing operations		(289,132)		(193,846)		(790,386)
Profit for the Financial Year on discontinued operations		-		68,425		214,329
Equity minority interest		-		2,049		-
Retained (loss) for the period		(289,132)		(123,372)		(576,057)
Loss per share – basic and diluted from continuing operations	2	(6.02p)		(0.03p)		(16.45p)

 

Consolidated Unaudited Balance Sheet

As at 31 December 2008

	Notes	Unaudited As at 31 Dec 2008 £		Unaudited As at 31 Dec 2007 £		Audited As at 30 Jun 2008 £
NON-CURRENT ASSETS
Property, plant and equipment		6,721		12,679		9,130
Investments		196,418		195,918		195,918
Purchased Goodwill less impairment		115,585		115,585		115,585
		318,724		324,182		320,633
CURRENT ASSETS
Debtors		224,737		691,589		219,959
Cash at bank and in hand		33,022		113,231		84,008
		257,759		804,820		303,967
Disposal group held for sale		-		-		2,050
TOTAL ASSETS		576,483		1,129,002		626,650
LIABILITIES:
Current liabilities		(519,752)		(521,126)		(351,459)
Long term borrowings		(190,672)		-		(120,000)
Total Liabilities		(710,424)		(521,126)		(471,459)
NET (LIABILITIES) / ASSETS		(133,941)		607,876		155,191
EQUITY
Called up share capital		2,402,255		2,402,255		2,402,255
Retained Earnings		(2,536,196)		(1,794,379)		(2,247,064)
Equity attributable to the shareholders of the parent company		(133,941)		607,876		155,191
Minority Interests		-		-		-
TOTAL EQUITY		(133,941)		607,876		155,191

Consolidated Unaudited Cash flow Statement 

For the six months ended 31 December 2008

Notes		Unaudited 6 months  to 31 Dec 2008 £		Unaudited 6 months  to 31 Dec 2007 £		Audited 12 months to 30 Jun 2008 £
Net cash (outflow) from operating activities   3		(109,609)		(420,286)		(311,768)
Returns of investments and servicing of finance
Interest paid		(11,757)		(5,619)		(11,178)
Interest received		664		5,527		8,612
Net cash (outflow) from returns on investments and servicing of finance		(11,093)		(92)		(2,566)
Taxation		(2,506)		(4,868)		(8,498)
Capital expenditure and financial investment
Payments to acquire fixed assets		-		(1,499)		(33,881)
Payments to acquire investments		(500)		(64,000)		-
Receipts from sale of investments		-		281,205		-
Net cash inflow from capital expenditure and financial investment		(500)		215,706		(33,881)
Financing
Proceeds from long term borrowings		70,672		-		120,000
Net cash inflow from financing activities		70,672		-		120,000
(Decrease) in cash		(53,036)		(209,540)		(236,713)

Statement of Changes in Equity

For the six months ended 31 December 2008

	Share Capital £	Retained Earnings £	Minority Interest £	Total   £
As at 30/06/07	2,402,255	(1,671,007)	73,877	805,125
Loss in period	- -	(123,372) -	(73,877)	(123,372) (73,877)
Acquisition of minority interest
As at 31/12/07	2,402,255	(1,794,379)	-	607,876
Loss in period	-	(452,685)	-	(452,685)
As at 30/06/08	2,402,255	(2,247,064)	-	155,191
Loss in period	-	(289,132)	-	(289,132)
As at 31/12/08	2,402,255	(2,536,196)	-	(133,941)

Notes to Financial Statements

For the six months ended 31 December 2008

1. Basis of preparation

This Interim Statement, which has not been audited and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006, was approved by the Board on the 19th March 2009.  It has been prepared on the basis of the accounting policies set out in the Group's 2008 statutory accounts.  

The financial information has been prepared under the historical cost convention. This report is not prepared in accordance with IAS34 which is currently not mandatory.

The Group's Interim Statement consolidates the financial statements of MG Capital plc and its subsidiaries MG Global Investment Limited, MG Research Limited, Hannen & Company Limited and MG Maple Capital Ltd all of which have been made up to 31 December 2008.  

The results for the year ended 30 June 2008 have been extracted from the Group's published accounts for that period which have been filed with the Registrar of Companies. The auditors' report on the full statutory accounts of the Group for the year ended 30 June 2008 was unqualified.

At 31 December the group had net liabilities of £133,941. Within long term liabilities there are loans (convertible loan stock) from Peter Hannen amounting to £190,672. Peter Hannen has confirmed that he will not seek repayment of these loans and accrued interest until such time as the company can afford to pay them. In addition Peter Hannen has agreed to provide sufficient funding for the company to meet its day to day liabilities until such time as the company has matched revenue and costs. On that basis the directors are satisfied that the interim financial statements can be prepared on a going concern basis.

2. Earnings per share

The basic earnings per share for the six months to 31 December 2008 is calculated by dividing the Group's loss on continuing operations after taxation of £289,132 (six months to 31 December 2007: £193,846, year to 30 June 2008: £790,386) by the weighted average number of shares in issue during the period of 4,804,510 (six months to 31 December 2008: 4,804,510, year to 30 June 2008:  4,804,510).

 

3. Reconciliation of operating (loss) to net cash inflow from operating activities

	Unaudited 6 months to 31 Dec 2008 £		Unaudited 6 months to 31 Dec 2007 £		Audited 12 months to 30 Jun 2008 £
(Loss) on ordinary activities before taxation	(286,626)		(120,553)		(567,559)
Interest received	(664)		(5,527)		(8,612)
Interest paid	11,757		5,619		11,178
Depreciation and impairment	2,409		3,897		39,828
(Profit) on disposal of investments	-		(92,627)		-
(Increase) / decrease in debtors	(4,778)		(383,062)		277,146
Increase in creditors	168,293		179,795		10,128
Minority interest movement	-		(7,828)		(73,877)
Net cash (outflow) from Operating Activities	(109,609)		(420,286)		(311,768)

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