Midas Capital announces preliminary results for the year to 31 December 2009

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1 News Release 31 March 2010 Midas Capital announces preliminary results for the year to 31 December 2009 Midas Capital plc, the AIM quoted company Fund Management company, announces its preliminary results for the year ended 31 December Salient points Group refocused on Fund Management during 2009 and early 2010 with disposals of Intelli Corporate Finance in October 2009, iimia Wealth Management in January 2010, and exchanged on the disposal of its international Fund Management subsidiaries on 30 March Loss from continuing operations before tax of 2.2 million ( million) Adjusted profit on continuing operations of 5.3 million ( million) includes other operating income but is before tax, net finance costs exceptional items, share based payments and amortisation Diluted Adjusted earnings per share on continuing operations of 6.36p (2008: 6.10p) Non cash impairment charge of 9.4 million ( million) Shareholders funds of 33.8 million ( million) Operational Highlights Funds under Management & Advice for continuing businesses 1.5 billion ( billion) Colin Rutherford, Chairman and Chief Executive Officer, Midas Capital plc, says: The past year has seen the Group pursue its strategy of selling non core activities to focus on its multi-asset Fund Management offering. The disposals of Intelli, iimia Wealth Management and international Fund Management subsidiaries will allow the Group to concentrate on organic growth, further reductions in gearing and protecting and building Shareholder value. The market in 2010 looks set to pose challenges however, I believe that our business is now well placed with our mix of products, experience and young talent to build our position as a major player in the multi-asset Fund Management sector.

2 For further information, please contact: Colin Rutherford, Chairman & Chief Executive, Midas Capital Roland Cross, Director, Broadgate Mainland James Steel, Director, Arbuthnot Securities Web: midascapital.co.uk Page 2

3 Chairman s statement Progress The year ended 31 December 2009 witnessed remarkable UK equity market resilience, albeit on lower volumes, amid prevailing global political and economic uncertainty. Upper quartile performance returned to our main funds in Liverpool whilst a more conservative asset allocation in Reading attracted significant inflows particularly into Special Situations. In parallel our central team executed the next phase of our strategy with conviction and our Group now consists of two trading locations, Liverpool and Reading, focused on growing our multi-asset Fund Management activities. The Group is now shorn of non-core Corporate Advisory, Wealth Management and exchanged on the disposal of International Fund Management with effect from 30 March Statutory results and trading performance The continuing Group made an underlying adjusted profit before tax, net finance costs, amortisation, impairment, share based payments and exceptional items of 5.3 million ( million) on revenue of 17.5 million ( million). The Group s Funds Under Management for ongoing activities (FUM) amounted to 1.5 billion ( billion) net of the transfer of 638 million of mixed discretionary and advisory business following the disposal of Wealth Management and 62 million of assets managed by the International Fund Management division. The Group has continued to mitigate costs and we anticipate further savings in the year ahead. Whilst our internal earnings forecast is based upon our view of an improved outlook in the carrying value of our Fund Management business year on year, in line with current industry average growth rates, we have decided to make a further measured non cash impairment charge of 9.4 million (2008: 55.6 million). After this additional impairment charge, the Group made a loss on continuing activities before taxation of 2.2 million (2008: loss 56.7 million), and an overall loss after taxation and the results of discontinued activities of 7.0 million (2008: loss 55.9 million). Corporate activity and proposed capital reconstruction As reported previously, we have sold our Corporate Advisory, Wealth Management and latterly exchanged on the disposal of our International Fund Management activities. The Corporate Advisory disposal allowed us to retire 2.4 million of Preference Capital. We aim to utilise the net proceeds of our other two disposals post year end and any related surplus working capital in the Group to retire a significant part of our remaining Preference Share capital. To assist retiring the remaining balance ahead of the July 2016 redemption date, and to restore our ability to pay dividends in due course, we shall be pursuing a capital reconstruction in the near term. Personnel The January awards under the Management Incentive Plan (MIP), approved by Shareholders at the General Meeting in June 2009, have been well received both internally and externally. We have also overhauled our remuneration structure to provide fair reward for the key value drivers in our Fund Management and Distribution activities. We are committed to developing our younger Page 3

4 talent pool and we anticipate additions to our team as we broaden our product range and selling activities. Future prospects The uncertain economic outlook continues to present significant trading challenges, however we are now benefitting from net creations and are turning our attention to our next phase of organic growth. Our value proposition being clear, we also aim to further reduce our gearing whilst protecting and building Shareholder value. We may also be opportunistic as we grow, but not at the expense of our focus. I would like to thank everyone in our team, our Board, Advisors and of course Bankers for their continued support. We have made excellent progress during the last twelve months and entered the new financial year in a much stronger position. Colin Rutherford Chairman and Chief Executive Officer 30 March 2010 Page 4

5 Consolidated income statement for the year ended 31 December (restated)* Revenue 17,544 19,292 Administrative expenses Other operating expenses (12,237) (12,896) Share based payments (70) (284) Amortisation Impairment (2,968) (9,411) (3,060) (55,609) Exceptional operating expense - (1,285) Total administrative expenses (24,686) (73,134) Operating loss from continuing operations (7,142) (53,842) Exceptional gain on restructuring 7,196 - Finance revenue Finance costs (2,306) (3,055) Loss for the year from continuing operations before taxation (2,247) (56,676) Taxation 216 1,167 Loss for the year from continuing operations (2,031) (55,509) Discontinued operations Loss for the year from discontinued operations (4,983) (354) Loss for the year attributable to equity holders of the parent (7,014) (55,863) Earnings per share pence pence - basic (11.07) (109.57) - diluted (11.07) (109.33) Earnings per share from continuing operations - basic (3.20) (108.87) - diluted (3.20) (108.64) *Certain numbers shown here do not correspond to the 2008 financial statements and reflect restatements made as detailed in Notes to the financial statements. Page 5

6 Consolidated Balance sheet as at 31 December Non-current assets Goodwill 34,544 50,819 Intangible assets 21,946 25,239 Property and equipment Financial assets Deferred tax assets ,657 77,462 Current assets Trade and other receivables 2,165 3,130 Income tax receivables 485 1,240 Cash and cash equivalents 2,448 9,379 5,098 13,749 Assets classified as held for sale 7,892 - Total Assets 69,647 91,211 Current liabilities Trade and other payables 1,438 2,651 Financial liabilities 1,153 38,657 Income tax payable 1,098 2,001 Provisions ,098 43,869 Non-current liabilities Financial liabilities 23, Deferred tax liabilities 6,147 7,052 Provisions ,491 7,983 Liabilities associated with the assets classified as held for 1,235 - sale Total liabilities 35,824 51,852 Net assets 33,823 39,359 Equity Share capital 5,746 5,733 Share premium 18,902 10,434 Treasury shares (32) (83) Merger reserve - 12,503 Warrant reserve Capital redemption reserve 176 2, Retained earnings 6,593 10,772 Total equity 33,823 39,359 Page 6

7 Consolidated Cash Flow Statement for the year ended 31 December Operating activities Loss for the year (7,014) (55,863) Adjustments to reconcile operating profit to net cash flow from operating activities: Tax on discontinued operations (324) (351) Tax on continuing operations (216) (1,167) Net finance cost 2,291 2,643 Depreciation Amortisation and impairment of intangible assets 16,015 58,854 Share based payments expense (34) 492 (Increase)/decrease in trade and other receivables (471) 1,428 Decrease in trade and other payables (1,519) (383) Impairment of land and buildings Movement in provisions Profit on disposal of subsidiaries before impairment (767) - Exceptional gain on restructuring (7,196) - Movements in investments at fair value through profit or loss Cash generated from operations 1,725 6,784 Income tax paid (955) (51) Net cash flow from operating activities 770 6,733 Investing activities Interest received Purchase of property and equipment (29) (124) Purchase of intangible assets (5) (17) Proceeds from disposal of investments 58 - Purchase of subsidiaries, net of cash and costs of acquisition - (58,664) Proceeds from sale of subsidiaries 2,296 - Net cash flow from investing activities 2,345 (58,369) Financing activities Proceeds from share issue (less issue costs) - 9,737 Interest paid (2,499) (1,795) Dividends paid to equity shareholders of the parent - (455) New borrowings - 40,000 Payments to acquire new borrowings - (835) Cost of debt Restructuring (1,285) - Repayment of borrowings (4,188) (2,049) Settlement of loans and receivables (23) - Net cash flow from financing activities (7,995) 44,603 Decrease in cash and cash equivalents (4,880) (7,033) Cash and cash equivalents at the beginning of the year 9,379 16,412 Cash and cash equivalents at the year end 4,499 9,379 Page 7

8 Notes 1. The financial information set out above does not constitute the Group s statutory accounts for the year ended 31 December The statutory accounts for 2009 contain an unqualified audit report and will be delivered to the Registrar of Companies following the Company s Annual General Meeting which will be held at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL on Tuesday 18 May 2010 at hours. The statutory accounts for the period to 31 December 2008 contained an unqualified audit report and have been delivered to the Registrar of Companies. The registered office address is 23 Cathedral Yard, Exeter EX1 1HB. 4. Copies of the Annual Report and accounts will be published on the group s website and posted to shareholders in April 2010 and will be available to the public at the registered office at the same time. Page 8