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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Goldshield Grp | LSE:GSD | London | Ordinary Share | GB0002893823 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 486.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:1950F
Goldshield Group PLC
27 June 2006
DEVELOPMENT UNDER WAY AS GOLDSHIELD
INITIATES NEW WELLBEING CENTRES
Goldshield Group plc ("Goldshield"), the marketing-led Wellbeing Company, today
announces preliminary results for the twelve months to 31 March 2006.
*Revenue #80.0 million (2005: #80.8 million)
*Profit before tax ahead of last year at #6.8 million (2005: #4.5 million) up by
51.1%
*Pre-exceptional earnings before tax, amortisation and impairment losses(EBTA)
#17.3 million (2005: #16.3 million) up by 6.1%
*Diluted earnings per share rose to 10.4p (2005: 1.3p)
*Headline earnings per share 36.1p (2005: 32.4p)
*Net cash improved to #15.9 million (2005: #6.2 million)
*Dividend proposed 5.1p (2005: 4.5p) up by 13.3%
*Land acquired for Wellbeing sites in India
Commenting on the results, Ajit Patel, Chief Executive, said,
"We have maintained our business, delivered more profits, built up more cash and
increased dividend. In addition we have completed a comprehensive review of
strategic options for the future."
"We are extremely excited about the Wellbeing initiatives taking place in India.
Phase one of our first Wellbeing Village, due for completion in December 2007,
will have everything on site to enable people to live in comfort prior to and
during retirement. We will also open clinics, offering a wide range of medical
services, throughout India. The first centre will open in Mumbai in the autumn.
We strongly believe that the Wellbeing initiatives offer Goldshield excellent
growth prospects."
-ends-
Date: 27 June 2006
For further information contact:
Goldshield Group PLC City Profile Group
Ajit Patel, Chief Executive Simon Courtenay
Rakesh Patel, Finance Director Andrew Harris
020-8649-8500 020-7448-3244
www.goldshieldplc.com
-----------------------------
Chairman's Overview
In a demanding year Goldshield continues its development. As the Chief Executive
reports in detail, your Company has focused upon delivering a number of key near
term business objectives during the year. In this way Goldshield has created a
platform for future growth. This success has been achieved at a time when a
considerable amount of management time has been absorbed by the Department of
Health case against the Company and the SFO case against both the Company and
two of its leading executives including the CEO.
Within the business we set a number of key objectives for the year; to maintain
sales, to build our cash reserves and to develop our strategy in India. All
three have been achieved. As a result, our prospects for the future look strong.
The SFO case has, finally, moved forward. While we continue to deny vigorously
the SFO's allegations, Ajit Patel, Kirti Patel and the Company have now been
charged. The next step is the service of the prosecution case in mid-July 2006.
This will be the first opportunity that we have had, to get a more detailed
insight into the case put forward by the SFO. The legal costs associated with
both the SFO action and Department of Health claims are significant and are
disclosed separately as exceptional items in the Income Statement and provided
for where appropriate.
We have taken these allegations very seriously and have established an
independent Board subcommittee whose function is to consider the Company's
strategy and formal response at each stage of the proceedings.
The Board is delighted to welcome Keith Hellawell as a Non-Executive Director
and Chairman designate. Keith's impressive public sector experience as Chief
Constable of Yorkshire and the 'National Drugs Coordinator' is supplemented by
significant main Board experience in large private businesses. We look forward
to benefiting from his experience on the main Board and Board committees.
Peter M Brown
Chairman
26 June 2006
Chief Executive Officer's Operating Review
Introduction
It is my pleasure to report on the year ended 31 March 2006. I am delighted with
the financial achievements during the year as well as progress made in
operations and the future strategic direction of the Group.
Our overall aims for the year were to maintain the current business, to build
cash reserves and to develop new strategies to support future growth. This is
the first year that the company is reporting in accordance with the new IFRS's
standards. For that reason, the sales and Profit and Loss accounts for previous
years have been adjusted. In line with our aim for the year, I am pleased to
report that sales have been maintained at the same level as last year at #80.0
million. Profit before tax was ahead of last year at #6.8 million (2005: #4.5
million). Pre-exceptional earnings before tax, amortisation and impairment
losses (EBTA) were ahead of last year at #17.3 million (2005: #16.3 million).
The exceptional costs for the year were #1.7 million (2005: #1.0 million). The
net cash at the end of the year was #15.9 million (2005: #6.2 million).
Based on the results, I am pleased to announce that the Board is recommending a
dividend of 5.1 pence (2005: 4.5 pence). The dividend paid during the year was
6.2 pence (2005: 4.0 pence).
In addition to maintaining and developing the current business, to be known as
"Wellbeing Products" and building cash reserves, a comprehensive review of
strategic options for the future has been completed. We have decided to extend
the sphere of our activity and focus on the market for Wellbeing services to
include Wellbeing Clinics, Wellbeing Resorts and Wellbeing Villages. These
services are explained in more detail below.
The Indian economy is growing rapidly, attracting foreign direct investments at
unprecedented levels. India has been predicted to become the World's third
largest economy. Significantly, for a provider of healthcare services, the
Indian population has a much younger age profile than those of the other large
economies. With our managerial infrastructure now established in India, it makes
sense for us to concentrate our energies in this region over the next five
years. Accordingly, the overall strategy for the short to medium term will be to
maintain the current Wellbeing Products business. The initial wellbeing centres
will be financed from the Group's existing cash flows.
The last four years have been the most turbulent in our Group's history.
However, we are focusing our resources on the business areas of the future. The
Company still faces a number of challenges; in particular we have to clear
ourselves of the charges brought against the Company, myself and Kirti Patel,
by the Serious Fraud Office. In relation to this matter, I am grateful for the
continuing support and confidence shown by many shareholders as well as the
Group Board Directors. Despite these challenges, we remain confident that over
the next few years the Group will deliver significant progress.
Operations
The emphasis during the year has been on maintaining the current business,
building cash reserves and evaluating our future options for growth. During the
year we experienced failed transfers on products earlier acquired from Wyeth.
This resulted in a revenue loss in excess of #1.5 million. In our UK NHS
business, we suffered an enforced price reduction of 7% from the Department of
Health (DoH). Despite these difficulties the overall sales for the year were
similar to last year at #80.0 million. Profit before tax was ahead of last year
at #6.8 million (2005: #4.5 million). Pre-exceptional EBTA for the year was
ahead of last year at #17.3 million (2005: #16.3 million).
The sales for our Hospitals business in Europe were #11.1 million (2005: #12.0
million), despite loss of revenue resulting from product transfer failures. New
product development has been slow although three new products were launched
during the period. One of which the Ranitidine injection received immediate
adoption via the tender system. On the other hand Autodetect and Noseeze, two
new medical devices will require more marketing and sales support to grow. Our
range of differentiated Bupivacaine epidural infusions have received DoH and
NPSA endorsement resulting in a large number of NHS trusts preparing to switch
to our infusions. This should lead to increased sales over the next few months.
The Retail Generics business recorded sales of #9.5 million as against #9.7
million last year. This was achieved despite increased competition. Whilst
volumes increased, the value and profitability declined. Going forward we will
put less emphasis on volumes and greater emphasis on margins which will result a
reduction in sales revenue.
Our European Retail Brands business, despite an enforced price reduction of 7%
in the UK by the DoH, has continued to deliver the expected results with sales
of #32.3 million (2005: #30.9 million). Codipar, a key product has shown a
steady rise in sales from #0.5 million to #1.8 million as a result of increased
promotion throughout the year. Fenbid Gel range, Nitrofurantoin Suspension,
Fersamal Syrup and the Cytacon range have shown a positive growth. The launch of
Ostex, a high dose Glucosamine product in the second half of the year enhanced
sales. The Dispensing Doctor team has had another good year with sales
increasing by 18%.
Opportunities have been identified to bring some of the health food supplements
into Retail Pharmacy starting with Lubramine and Lubramine G in June 2006. Line
extensions to the Mother and Baby range are planned in the first half of next
year including our first "device" product, the Kamillosan baby soother
thermometer, and Kamillosan nappy cream.
The North American Direct to Consumer businesses continue to be fairly flat,
however profitability has improved. We did marginally improve on the new
customer recruitment front which has helped stabilize the overall sales and
profitability. The market has become more generic in nature and hence in the
coming year we will spend time evaluating options for more branded products. In
India, where we are currently test marketing, the results have been mixed and it
is too early tocomment.
Both the Country Distributor and the Third Party Services businesses continue to
perform on target. With increased resource allocation and new management teams
in place, both these businesses will see better performance during the next year
or so. Our back office operations in Mumbai, India are now well established.
Going forward we will maintain our regional head office in Mumbai, which is the
main commercial hub of India. However to counteract rising inflation and costs
that are occurring throughout India, we have acquired more office space in Goa
for future expansion.
Future Developments
Our new initiative of building "Wellbeing Villages" across India is well under
way. These villages will cater for the Wellbeing of active people over the age
of 50. Each village will have facilities including a hospital, nursing home,
restaurants, shops, along with sports and leisure amenities. It will also
include a hotel for short stay visitors, residents' friends and relatives.
Various levels of assistance, including domestic and nursing care will be
available not just to residentsof the village but the wider community at large.
Our target customers will include people from various demographics both Indian
and overseas.
The land for the first project, measuring over 1,000,000 square feet, has been
acquired in South Goa. The total project size, to be built in phases and subject
to milestones, will be in excess of 750,000 square feet of built up area. The
first phase of over 250,000 square feet is expected to complete before the end
December 2007.
Our aim is to build several of these Wellbeing Villages in various locations in
India over the coming years. Therefore we will commence a land acquisition
programme during the next 12 months. The second initiative of building Wellbeing
Centres across India has also commenced. The larger Wellbeing Centres will be
located in major population areas and will provide facilities to include Health
and Beauty, Homeopathic, Ayurvedic, Dental, Opthalmic, Skin, Diet, and Fitness
related services. Smaller clinics providing basic diagnostic services will
strategically be located in smaller towns and villages.
The first Wellbeing Centre is on target to open in Mumbai in the autumn of 2006.
Based on milestones, we expect to open a total of 24 centres and clinics in the
next 36 months. The main customer groups being targeted are corporate clients
for their employees, families and local communities and insurance companies for
their clients.
The last of the initiatives, Wellbeing Resorts, will target a new breed of
medical tourist. Tourists who are looking to combine holidays with medical
services to save both time and cost. The land, measuring about 810,000 square
feet, to build the first dedicated resort of its kind in India, has been
acquired in South Goa. This project is due to commence building by December 2006
and the first phase is expected to be completed by December 2007. It will house
a Medical Centre, Spa, a Hotel and Leisure Facilities.
The first phase of this project will provide 100 rooms with a total built up
area of 150,000 square feet with the capacity to build up to 500,000 square feet
if required. The main target customers will be European as well as wealthy
Indians. Whilst wishing to take full advantage of the opportunities within the
rapidly growing Indian market your management is very conscious of the risks of
over expansion and will adopt a conservative financing strategy. We will also
seek to ensure that the individual business models are established and viable
before rolling out other sites.
As reported in my last review, we have undertaken a review of our product
development. Whilst this process is not entirely complete, we have reorganized
the Group so that it is more marketing driven. To that extent we are building a
more marketing focused management team. We expect this to be in place during
2006. Our aim is to develop more branded products with more "Fast Moving
Consumer Products" approach.
I would like to thank Peter Brown for his support and sound advice during his
Chairmanship and am pleased that he is able to continue to serve in a
Non-Executive capacity.
Current Trading and Prospects
The current business redefined as, Wellbeing Products, is expected to perform at
similar levels during the next 12 months, with renewed focus on building brands.
Significant resources are now being directed at the new initiatives whilst
continuing to keep the cash flow from current business healthy.
The year ahead is very exciting and challenging. We have done extensive
preliminary legal work on both the SFO and the DoH cases in the last four years.
The expected date of the hearing has been delayed until 2008 and so we can now
concentrate all our energies on building the Group's future and developing the
new initiatives.
Despite the difficulties of the past four years, all the members of the Board of
your Company are very excited about our new initiatives and their significant
prospects for growth.
Ajit Patel
Chief Executive Officer
26 June 2006
Consolidated Income Statement
for the year ended 31 March 2006
Before Before
impairment impairment
and and
Notes exceptional Exceptional Total exceptional Exceptional Total
items items Impairment 2006 items items Impairment 2005
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue 2 80,025 - - 80,025 80,767 - - 80,767
Cost of sales (28,429) - - (28,429) (28,947) - - (28,947)
----------------------------------------------------------------------------------------------------------------------
Gross profit 51,596 - - 51,596 51,820 - - 51,820
Distribution costs (4,912) - - (4,912) (3,824) - - (3,824)
Impairment losses 7 - - (2,992) (2,992) - - (4,623) (4,623)
Exceptional legal and
professional costs - (1,651) - ( 1,651) - (1,004) - (1,004)
Other administrative
expenses (35,509) - - (35,509) (37,548) - - (37,548)
----------------------------------------------------------------------------------------------------------------------
Administrative expenses (35,509) (1,651) (2,992)(40,152) (37,548) (1,004) (4,623) (43,175)
----------------------------------------------------------------------------------------------------------------------
Operating profit 3 11,175 (1,651) (2,992) 6,532 10,448 (1,004) (4,623) 4,821
Finance costs 5 (6) - - (6) (358) - - (358)
Finance income 5 281 - - 281 40 - - 40
----------------------------------------------------------------------------------------------------------------------
Profit before tax 11,450 (1,651) (2,992) 6,807 10,130 (1,004) (4,623) 4,503
Income tax expense 6 (3,422) 495 - (2,927) (4,333) 301 - (4,032)
----------------------------------------------------------------------------------------------------------------------
Profit after tax 8,028 (1,156) (2,992) 3,880 5,797 (703) (4,623) 471
======================================================================================================================
Attributable to shareholders
of parent 8,028 (1,156) (2,992) 3,880 5,797 (703) (4,623) 471
Attributable to minority
interest - - - - - - - -
======================================================================================================================
Earnings per share
Basic (pence) 14 10.5 1.3
======= =======
Diluted (pence) 14 10.4 1.3
======= =======
Dividends
Proposed dividend per
share (pence) 15 5.1 4.5
======= =======
Proposed dividend
(#'000) 15 1,893 1,668
======= =======
Dividends paid during
the period (pence) 6.2 4.0
======= =======
Dividends paid during
the period (#'000) 2,300 1,482
======= =======
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Balance Sheet as at 31 March 2006
Notes 2006 2005
#'000 #'000
Assets
Non-current
Goodwill 7 10,237 11,308
Other intangible assets 7 19,515 26,789
Property, plant and equipment 8 1,612 1,118
Deferred tax assets 13 957 841
------------------------------
32,321 40,056
Current
Inventories 9 11,530 11,301
Trade and other receivables 10 10,680 11,916
Cash and cash equivalents 11 15,855 6,168
------------------------------
38,065 29,385
------------------------------
Total assets 70,386 69,441
==============================
Equity
Equity attributable to shareholders
of Goldshield Group plc
Share capital 12 1,856 1,854
Share premium 21,485 21,359
Translation reserve (90) (400)
Retained earnings 22,221 20,370
-----------------------------
45,472 43,183
Minority interest - 106
-----------------------------
Total equity 45,472 43,289
-----------------------------
Liabilities
Non-current
Deferred tax liabilities 13 1,649 2,639
-----------------------------
1,649 2,639
Current
Provisions 16 1,278 918
Trade and other payables 17 15,677 16,161
Other liabilities 18 2,816 2,995
Current tax liabilities 3,494 3,439
-----------------------------
23,265 23,513
-----------------------------
Total liabilities 24,914 26,152
-----------------------------
Total equity and liabilities 70,386 69,441
=============================
The financial statements were approved by the Board of Directors on 26 June 2006
and signed on their behalf by:
Ajit Patel,
Chief Executive Officer
Rakesh Patel,
Finance Director
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Cash Flow Statement
for the year ended 31 March 2006
2006 2005
Note #'000 #'000
Cash flows from operating activities
Result for the period before tax 6,807 4,503
Depreciation 512 651
Amortisation 5,880 6,185
Impairment losses 2,992 4,623
Equity settled share options 121 72
Profit on disposal of tangible fixed assets - (96)
Finance costs 6 358
Finance income (281) (40)
--------------------------------------------------------------------------------------------------
16,037 16,256
Increase/(decrease) in inventories (229) 2,690
Decrease in trade and other receivables 1,236 1,510
Decrease in provisions, trade payables and
other liabilities (243) (1,097)
Taxes paid (3,921) (5,670)
-------------------------------------------------------------------------------------------------
Net cash from operating activities 12,880 13,689
Cash flows from investing activities
Additions to property, plant and equipment (963) (639)
Additions to other intangible assets (225) -
Proceeds from disposals of property, plant and equipment - 282
Purchase of businesses and deferred consideration (35) (75)
Interest received 281 40
-------------------------------------------------------------------------------------------------
Net cash from investing activities (942) (392)
Cash flows from financing activities
Repayment of bank loans - (5,500)
Proceeds from share issue 55 25
Interest paid (6) (358)
Dividends paid (2,300) (1,482)
-------------------------------------------------------------------------------------------------
Net cash from financing activities (2,251) (7,315)
Net increase in cash and cash equivalents 9,687 5,982
Cash and cash equivalents at beginning of period 6,168 186
Cash and cash equivalents at end of period 11 15,855 6,168
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Statement of Changes in Equity for the year ended 31 March 2006
Equity attributable to equity holders of Minority Total
Goldshield Group plc interest equity
Share Share Translation Retained
capital premium reserve earnings
#'000 #'000 #'000 #'000 #'000 #'000
Balance 1 April 2004 1,851 21,234 - 21,189 106 44,380
Currency translation differences - - (400) - - (400)
Deferred tax on translation reserve - - - 120 - 120
------------------------------------------------------------------------------------------------------------------------
Net gains/(losses) not recognised
in income statement - - (400) 120 - (280)
Profit for the period - - - 471 - 471
Total recognised income and expense
for the period - - (400) 591 - 191
------------------------------------------------------------------------------------------------------------------------
Shares issued 3 125 - - - 128
Employee share based compensation - - - 72 - 72
Dividends paid - - - (1,482) - (1,482)
------------------------------------------------------------------------------------------------------------------------
Balance at 31 March 2005 1,854 21,359 (400) 20,370 106 43,289
========================================================================================================================
Balance 1 April 2005 1,854 21,359 (400) 20,370 106 43,289
Currency translation differences - - 310 - - 310
Deferred tax on translation reserve - - - (93) - (93)
Deferred tax on pre 7 November
grants of share options - - - 243 - 243
Disposal of minority interest - - - - (106) (106)
------------------------------------------------------------------------------------------------------------------------
Net gains/(losses) not recognised
in income statement - - 310 150 (106) 354
Profit for the period - - - 3,880 - 3,880
------------------------------------------------------------------------------------------------------------------------
Total recognised income and expense
for the period - - 310 4,030 (106) 4,234
Shares issued 2 126 - - - 128
Employee share based compensation - - - 121 - 121
Dividends paid - - - (2,300) - (2,300)
------------------------------------------------------------------------------------------------------------------------
Balance at 31 March 2006 1,856 21,485 (90) 22,221 - 45,472
========================================================================================================================
The accompanying accounting policies and notes form an integral part of these financial statements.
Notes to the Financial Statements
1 PRINCIPAL ACCOUNTING POLICIES
Statement of compliance
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union and as issued by the International Accounting Standards Board (IASB).
These are the Groups first IFRS consolidated financial statements and IFRS 1 -
First - time Adoption of International Financial Reporting Standards (IFRS 1)
has been applied.
The date of transition to IFRS for the Group was 1 April 2004. A summary of the
accounting policies applied in the preparation of financial statements is given
below. These policies have been consistently applied to all the periods
presented, unless otherwise stated. The impact of the transition from UK GAAP to
IFRS is explained in note 25 to the financial statements.
Basis of preparation
The Group has applied IFRS 1, which requires full retrospective application of
all applicable accounting standards, but exemptions are permitted in specific
areas.
The Group has elected to make use of the following exemptions:
Business combinations
The Group has elected not to apply IFRS 3 - Business Combinations,
retrospectively to business combinations prior to 1 April 2004.
Share - based payment transactions
The Group has applied IFRS 2 - Share Based Payment, retrospectively to equity
instruments granted after 7 November 2002 and vesting on or after 1 January
2005.
Cumulative translation differences
Translation differences on the re-translation of foreign operations that arose
prior to the date of transition have been deemed to be zero.
An explanation of how the transition to IFRSs has affected the reported
financial position, financial performance and cash flows of the Group is
provided in note 25. This note includes reconciliations of equity and profit or
loss for comparative periods reported under UK GAAP to those reported for those
periods under IFRS. These consolidated financial statements have been prepared
on the basis of mandatory IFRS's in issue at the Group's first IFRS annual
reporting date, 31 March 2006. It should be noted that accounting estimates and
assumptions are used in preparing the financial statements. Although these
estimates are based on management's best knowledge of current events and
actions, actual results may ultimately differ than those estimated.
Basis of consolidation
The Group financial statements consolidate those of the Company and of its
subsidiary undertakings drawn up to 31 March 2006. Profits or losses on
intra-group transactions are eliminated in full. The results of the subsidiary
undertakings acquired during the year have been included from the date of
acquisition. On acquisition of a subsidiary, all of the subsidiary's assets and
liabilities which exist at the date of acquisition are recorded at the fair
values reflecting their condition at that date. Goodwill arising on
consolidation, representing the excess of the fair value of the consideration
given over the fair values of the identifiable net assets acquired, is
capitalised net of any provision for impairment.
Revenue
Revenue from the sale of goods is recognised in the income statement when the
significant risks and rewards of ownership have been transferred to the buyer.
Revenue is measured at the fair value of the consideration received/receivable
by the Group for goods supplied and services provided, excluding value added tax
and trade discounts. Revenue from services rendered is recognised in the income
statement by reference to the stage of completion of transactions at the balance
sheet date. The stage of completion is determined by the man days spent on the
project for rendering the service at the end of each billing cycle.
Intangible assets
Goodwill
All business combinations are accounted for under the purchase method and
goodwill has been recognised on acquisitions of subsidiaries. In respect of
business combinations that have occurred since 1 April 2004, goodwill represents
the difference between the cost of the acquisition and the fair value of the net
identifiable assets acquired. Goodwill is stated at cost less any accumulated
impairment losses. Goodwill arising on acquisitions before 1 April 2004 has been
retained at the previous UK GAAP amounts at 31 March 2004. Goodwill is allocated
to cash generating units and is no longer amortised but tested for impairment
annually or more frequently if events or changes in circumstances indicate that
it might be impaired.
Other intangible assets
Externally purchased product licenses, trademarks, brand-names, know-how and
similar intangible items are capitalised at historical cost, net of any
provision for impairment and amortised on a straight line basis over their
estimated useful economic lives which range between seven and ten years. The
amortisation cost has been included within administrative expenses in the
income statement.
Impairment
The Group's goodwill and other intangible assets are tested for impairment
annually or more frequently, if events or changes in circumstances indicate that
it might be impaired. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash
flows (cash generating units). 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 based on internal discounted
cash - flow evaluation. If at the balance sheet date there is any indication
that an impairment loss recognised in prior periods for an asset other than
goodwill no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
Research and development expenditure
Expenditure on development activities is capitalised if the product or process
is technically and commercially feasible, the costs are separately identifiable
and the Group has sufficient resources to complete development. Capitalised
development costs are stated at cost less accumulated amortisation and
impairment losses. All other research and development expenditure is written
off to the income statement in the period in which it is incurred.
Property, plant and equipment
Property, plant and equipment are stated at cost less the accumulated
depreciation on the same. Depreciation is charged on a straight line basis over
the estimated useful lives on the cost of the assets less their residual value.
The estimated useful lives are as follows:
Freehold buildings and
leasehold improvements - 25 Years or over the period of lease
Office equipment - 5 Years
Plant and equipment - 6 to 7 Years
Motor vehicles - 5 Years
Residual values are re-assessed annually.
Inventories
Inventories are stated at the lower of cost and net realisable value. The cost
of inventories are valued using the weighted average price method.
Accounting for income taxes
Current income tax assets and / or liabilities comprise those obligations to, or
claims from, fiscal authorities relating to the current or prior reporting
period, that are unpaid at the balance sheet date. They are calculated according
to the tax rates and tax laws applicable to the fiscal periods to which they
relate, based on the taxable profit for the year.
Deferred tax is recognised on all temporary differences. This involves
comparison of the carrying amount of assets and liabilities in the consolidated
financial statements with their respective tax bases. However, deferred tax is
not provided on the initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. Deferred tax
liabilities are always provided for in full. Deferred tax assets and liabilities
are calculated, without discounting, at tax rates that are expected to apply to
the period when asset is realised or the liability is settled, based on tax
rates (tax laws) that have been enacted or substantially enacted by the balance
sheet date. All changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the income statement, except where they relate to
items that are charged or credited directly to equity (such as translation
reserve and pre 7 November 2002 grants of share options) in which case the
related deferred tax is also charged or credited directly to equity.
Tax losses available to be carried forward as well as other income tax credits
to the Group are assessed for recognition as deferred tax assets. Deferred tax
assets are only recognised to the extent that it is probable that future taxable
profits will be available against which the asset can be recognised and are
reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an
original maturity of three months or less. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included as
a component of cash.
Employee benefits
The Group operates a defined contribution pension scheme whereby contributions
are made to individual employee pension plans of certain employees. These costs
are charged against profits in respect of the accounting period in which they
are paid.
Indian Gratuity costs, which represent a form of long term service benefits are
accrued based on actuarial valuation at the balance sheet date, carried out by
an independent actuary.
Leased assets
All leased assets are identified as operating leases if they do not transfer
substantially all the risks and rewards to the lessee.
Payments made under operating leases are charged to the profit and loss account
on a straight line basis over the period of the lease.
Foreign currencies
The reporting currency for these financial statements is GB sterling (#) which
is the parent company's functional currency.
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. Foreign exchange differences arising on translation are recognised in
profit or loss. Non monetary assets and liabilities that are measured in terms
of historical cost in a foreign entity are translated using the exchange rate at
the date of the transaction.
All assets and liabilities in the financial statements of foreign subsidiaries
are translated at the closing rate at the balance sheet date. The results of
foreign operations have been converted into Group's reporting currency at the
actual rates over the reporting period and the exchange differences arising have
been taken to translation reserve, a component of equity. The exchange
differences arising from re-translation of the net investments in subsidiaries
are directly taken to translation reserve. All other exchange differences are
dealt with through the income statement.
Share options
For all employee share options granted after 7 November 2002 and vesting on or
after 1 January 2005, an expense is recognised in the income statement with a
corresponding credit to equity. The equity share based payment is measured at
the fair value at the grant date using the binomial lattice method. If vesting
periods or other vesting conditions apply, the expense is allocated over the
vesting period, based on the best available estimate of the number of share
options expected to vest.
Provisions - Legal and other disputes
Provision is made where a reliable estimate can be made of the likely outcome of
legal or other disputes against the Group. In addition, provision is made for
legal and other expenses arising from claims received or other disputes. No
provision is made for other possible claims or where an obligation exists but it
is not possible to make a reliable estimate. Costs associated with claims made
by the Group against third party are charged to the profit and loss account as
they are incurred.
Dividends
Dividends proposed or declared after the balance sheet dates are not recognised
as a liability. However the amounts of such dividends are disclosed in the
financial statements.
Segmental reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment) or in providing products or
services within a particular economic environment (geographic segment) which is
subject to risks and rewards that are different from those of other segments.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual terms of the instrument.
- Trade receivables
Trade receivables do not carry any interest and are stated at their fair values
as reduced to equal the estimated present value of the future cash flows.
- Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges including premiums payable
on settlement or redemption and direct issue costs, are accounted for on an
accruals basis to the profit and loss account using the effective interest
method and are added to the carrying value of instrument to the extent that they
are not settled in the period in which they arise.
- Trade payables
Trade payables are not interest bearing and are stated at their fair values.
- Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
2. SEGMENTAL REPORTING
Segment information is presented in the consolidated financial statements in
respect of the Group's business segments, which are the primary basis of segment
reporting. The business segment-reporting format reflects the Group's management
and internal reporting structure.
Primary - Business segments
The Group is organised into five major business units - Retail Brands, Retail
Generics, Hospitals, Direct to Consumer Western Europe (D2C WE) and, Direct to
Consumer North America (D2C NA). Certain small business units like Country
Distributors, Global Services and Management Services constitute the other
segments. These units form the basis for the Group's reporting of primary
segment information.
Secondary - Geographical segments
The geographical segments are considered for disclosure as secondary segment.
Geographical revenues are segregated based on the location from which the
revenues are generated.
Assets are identified to the segment on the basis of their place of use.
Segment results
Segment results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.
All inter-segment transfers are priced and carried out at arm's length.
Segment assets and liabilities
Segment assets include all operating assets used by a segment and consist
principally of operating cash, debtors and fixed assets, net of allowances and
provisions which are reported as direct offsets in the balance sheet. Segment
liabilities include all operating liabilities and consist principally of
creditors and accrued liabilties.
Segment assets and liabilities do not include deferred income taxes.
Unallocated segment income and expenses.
Unallocated segment income comprises interest income and miscellaneous receipts
not directly attributable to any particular segment. Unallocated segment
expenditure represents interest on loans and provision for income taxes, which
cannot be directly attributed to any segment.
Primary segment disclosure - Business segments
31 March 2006 Retail Retail Other
Brands Generics Hospitals D2C WE D2C NA Segments Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue
External sales 32,255 9,456 11,067 14,109 6,957 6,181 80,025
----------------------------------------------------------------------------------------------------------
Total revenue 32,255 9,456 11,067 14,109 6,957 6,181 80,025
----------------------------------------------------------------------------------------------------------
Result
Segment result 4,690 (87) 2,532 691 (1,377) 83 6,532
----------------------------------------------------------------------------------------------------------
Operating profit 6,532
Finance costs (6)
Finance income 281
Income tax expense (2,927)
--------
Profit for the period 3,880
========
Other information
Segment assets 28,239 4,272 12,751 3,485 3,681 17,001 69,429
Unallocated corporate assets 957
--------
Consolidated total assets 70,386
========
Segment liabilities 8,915 1,187 3,281 2,356 634 3,398 19,771
Unallocated corporate liabilities 5,143
--------
Consolidated total liabilities 24,914
========
Capital expenditure - - 42 - 7 1,139 1,188
Depreciation and amortisation 5,177 - 91 - 59 1,065 6,392
Impairment losses 1,245 - - - 1,148 599 2,992
Non-cash expenses other
than depreciation - - - - - 121 121
31 March 2005 Retail Retail Other
Brands Generics Hospitals D2C WE D2C NA Segments Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue
External sales 30,898 9,653 11,984 15,929 6,938 5,365 80,767
----------------------------------------------------------------------------------------------------------
Total revenue 30,898 9,653 11,984 15,929 6,938 5,365 80,767
----------------------------------------------------------------------------------------------------------
Result
Segment result 4,713 1,337 2,271 631 (5,023) 892 4,821
----------------------------------------------------------------------------------------------------------
Operating profit 4,821
Finance costs (358)
Finance income 40
Income tax expense (4,032)
--------
Profit for the period 471
========
Other information
Segment assets 33,832 5,955 12,456 2,080 4,323 9,954 68,600
Unallocated corporate assets 841
--------
Consolidated total assets 69,441
========
Segment liabilities 8,271 1,021 3,661 3,429 796 2,896 20,074
Unallocated corporate liabilities 6,078
--------
Consolidated total liabilities 26,152
========
Capital expenditure - - 64 - 5 570 639
Depreciation and amortisation 5,495 - 76 - 76 1,189 6,836
Impairment losses - - - - 4,500 123 4,623
Non-cash expenses other
than depreciation - - - - - 72 72
Geographical segments 2006 2005
#'000 #'000
Revenue
United Kingdom 58,778 61,123
Ireland 12,255 11,422
North America 6,957 6,938
India 2,035 1,284
------------------------------------------------------------------------
Total 80,025 80,767
========================================================================
Assets
United Kingdom 43,003 44,331
Ireland 19,711 18,797
North America 3,681 4,323
India 3,991 1,990
------------------------------------------------------------------------
Total 70,386 69,441
========================================================================
Capital expenditure
United Kingdom 241 38
Ireland 42 64
North America 7 5
India 898 532
------------------------------------------------------------------------
Total 1,188 639
========================================================================
3. OPERATING PROFIT
The operating profit is stated after charging/(crediting):
2006 2005
#'000 #'000
Auditors' remuneration:
- Audit services 143 165
- Non audit services (see below) 118 152
Depreciation and amortisation:
- Intangible assets 5,880 6,185
- Property, plant and equipment 512 651
Hire of plant and machinery 88 90
Profit on disposal of property,
plant and equipment - (96)
Impairment losses 2,992 4,623
Exceptional legal and professional costs 1,651 1,004
Other operating lease rentals 1,043 929
Foreign exchange losses/(gains) 205 (510)
Research and development:
- current year expenditure 237 537
========================================================================
Auditors remuneration for non audit services principally consists of compliance
work for corporation taxes and sales taxes in jurisdictions in which the Group
has a presence and are analysed below:
2006 2005
#'000 #'000
Advisory 40 42
Corporation Tax 73 91
VAT 5 19
------------------------------------------------------------------------
118 152
========================================================================
4. DIRECTORS AND EMPLOYEES
Employees
Staff costs during the year
were as follows: 2006 2005
#'000 #'000
Wages and salaries 8,536 7,623
Social security costs 675 626
Share options 121 72
Other pension costs 253 234
------------------------------------------------------------------------
9,585 8,555
========================================================================
The average number of employees
is analysed below: 2006 2005
Number Number
Administration 310 304
Marketing and selling 431 409
Management 98 83
Warehouse 31 35
------------------------------------------------------------------------
870 831
========================================================================
The Group contributes to employee money pension schemes at a percentage of pay
(depending on grade). The share option charge includes an amount of #18,596
(2005: #6,695) pertaining to key management personnel.
Directors' remuneration
The emoluments of the Directors were as follows:
2006 2005
#'000 #'000
Emoluments 1,537 1,424
Payments to third parties for
consultancy services 5 9
Pension contributions to money
purchase pension schemes 83 73
------------------------------------------------------------------------
1,625 1,506
========================================================================
During the year four Directors (2005: four Directors) participated in money
purchase pension schemes. Further details of the remuneration and share options
of the Directors are given in the Directors' Remuneration Report on pages
21 to 25.
5. FINANCE INCOME AND FINANCE COSTS
Finance income and costs includes all interest related income and expenses. The
following amounts have been included in the income statement line for the
reporting periods presented:
2006 2005
#'000 #'000
Interest income resulting from
- short term bank deposits 281 36
- corporation tax - 4
------------------------------------------------------------------------
Finance income 281 40
========================================================================
Interest expense resulting from
- bank loans - (126)
- bank overdrafts (2) (2)
- corporation tax - (213)
- others (4) (17)
------------------------------------------------------------------------
Finance costs (6) (358)
========================================================================
6. INCOME TAX EXPENSE
2006 2005
#'000 #'000
Result for the year before tax 6,807 4,503
Tax rate 30% 30%
Expected tax expense (2,042) (1,351)
Adjustments for deferred tax 492 (1,361)
Adjustment for non-deductible expenses
- overseas losses not utilised 628 (746)
- capital allowance 653 8
- other non-deductible expenses (2,412) (1,342)
Adjustment to tax charge in respect of
prior periods (75) 1,065
Other short term timing difference (171) 206
Tax losses carried forward - (511)
------------------------------------------------------------------------
Actual tax expense, net (2,927) (4,032)
========================================================================
Comprising
Current tax expense (3,419) (2,692)
Deferred tax income/(expense),
resulting from the 492 (1,340)
- origination and reversal of temporary
difference 492 (72)
- utilisation of unused tax losses - (1,268)
========================================================================
7. INTANGIBLE ASSETS
Brand names
know-how
licences and
trade marks Goodwill Total
#'000 #'000 #'000
Cost
At 1 April 2004 64,342 26,049 90,391
Exchange differences 14 1 15
------------------------------------------------------------------------------------------
At 31 March 2005 64,356 26,050 90,406
------------------------------------------------------------------------------------------
At 1 April 2005 64,356 26,050 90,406
Exchange differences 5 1,299 1,304
Additions 225 - 225
------------------------------------------------------------------------------------------
At 31 March 2006 64,586 27,349 91,935
------------------------------------------------------------------------------------------
Amortisation and impairment losses
At 1 April 2004 31,368 10,267 41,635
Exchange differences 14 (148) (134)
Amortisation 6,185 - 6,185
Impairment losses - 4,623 4,623
------------------------------------------------------------------------------------------
At 31 March 2005 37,567 14,742 52,309
------------------------------------------------------------------------------------------
At 1 April 2005 37,567 14,742 52,309
Exchange differences 5 987 992
Amortisation 5,880 - 5,880
Impairment losses 1,619 1,373 2,992
------------------------------------------------------------------------------------------
At 31 March 2006 45,071 17,112 62,183
------------------------------------------------------------------------------------------
Carrying amounts
At 1 April 2004 32,974 15,782 48,756
------------------------------------------------------------------------------------------
At 31 March 2005 26,789 11,308 38,097
------------------------------------------------------------------------------------------
At 31 March 2006 19,515 10,237 29,752
------------------------------------------------------------------------------------------
Subsequent to the annual impairment test for 2006, the carrying amount of
goodwill is allocated to the following cash generating units :
2006 2005
#'000 #'000
Hospitals 7,090 7,033
D2C North America 2,280 3,183
Regina 867 1,092
------------------------------------------------------------------------
10,237 11,308
========================================================================
The recoverable amounts for the cash generating units given above are determined
based on internal discounted cash-flow evaluation. The cash flow evaluation is
based on actual operating results and five year forecasts at the growth rates
stated in the key assumptions.
The key assumptions are:
Growth rates 2006 2005
Hospitals Constant Constant
D2C North America 4% 11%
Regina 7% 10%
========================================================================
Discount rates 2006 2005
Hospitals 8% 10%
D2C North America 8% 10%
Regina 8% 10%
========================================================================
The management assumes the Hospitals, D2C NA and Regina units to continue to
earn the current level of profit margins and achieve year on year sales growth
as assumed in the five year forecasts.
The growth rate assumed for the Regina business is based on the past trends and
also supported by new marketing initiatives undertaken to promote the brand.
The US business expects to achieve its growth due the organisational
restructuring undertaken, new product launches and development of additional
marketing channels.
The growth rate for the Hospitals business is assumed to be constant based on
past experiences.
The discounting rate applied for the impairment review workings is based on the
Weighted Average Cost of Capital for the Group.
Based on the current performance levels and achievement of key assumptions in
the forecast of D2C NA and the Regina business the management considers it
appropriate to recognise the impairment charge.
The related goodwill impairment loss of #1,372,594 (2005: #4,623,010) is
included under "Impairment losses" in the Income statement. The amount
attributed to D2C North America unit is #1,147,851 (2005: #4,499,684) and Regina
unit is #224,743 (2005: #123,326).
8. PROPERTY, PLANT AND EQUIPMENT
Land & Office Plant & Motor
buildings equipment equipment vehicles Total
#'000 #'000 #'000 #'000 #'000
Cost
At 1 April 2004 70 1,912 588 61 2,631
Exchange differences (2) (26) 2 1 (25)
Additions 63 512 64 - 639
Disposals (32) - (172) (52) (256)
-----------------------------------------------------------------------
At 31 March 2005 99 2,398 482 10 2,989
-----------------------------------------------------------------------
At 1 April 2005 99 2,398 482 10 2,989
Exchange differences 6 113 8 1 128
Additions 686 223 49 5 963
-----------------------------------------------------------------------
At 31 March 2006 791 2,734 539 16 4,080
-----------------------------------------------------------------------
Depreciation
At 1 April 2004 6 1,060 178 54 1,298
Exchange differences - (9) - 1 (8)
Depreciation 39 505 105 2 651
Disposals - - (18) (52) (70)
-----------------------------------------------------------------------
At 31 March 2005 45 1,556 265 5 1,871
-----------------------------------------------------------------------
At 1 April 2005 45 1,556 265 5 1,871
Exchange differences 3 74 8 - 85
Depreciation 39 359 112 2 512
-----------------------------------------------------------------------
At 31 March 2006 87 1,989 385 7 2,468
-----------------------------------------------------------------------
Carrying amounts
At 1 April 2004 64 852 410 7 1,333
-----------------------------------------------------------------------
At 31 March 2005 54 842 217 5 1,118
-----------------------------------------------------------------------
At 31 March 2006 704 745 154 9 1,612
-----------------------------------------------------------------------
Land and buildings includes #353,397 of land purchased during the year which is
not being depreciated.
9. INVENTORIES
2006 2005
#'000 #'000
Finished goods and goods for resale 14,124 13,439
Write down on inventories (2,594) (2,138)
-----------------------------------------------------------------------
11,530 11,301
========================================================================
In 2006, a total of #28,429,312 of inventories was included in profit and loss
as an expense (2005: #28,946,953).
An amount of #1,359,306 for write down of inventories (2005: #803,075) has been
included within administrative expenses in the income statement.
No reversal of previous write-downs was recognised as a reduction of expense in
2005 or 2006. None of the inventories are pledged as securities for liabilities.
10. TRADE AND OTHER RECEIVABLES
2006 2005
#'000 #'000
Trade receivables 11,825 13,320
Allowance for doubtful debts (1,879) (2,022)
-----------------------------------------------------------------------
Trade receivables, net 9,946 11,298
Prepayments and accrued income 734 618
-----------------------------------------------------------------------
Total 10,680 11,916
========================================================================
Trade receivables are usually due within 48 days and do not bear any effective
interest rate. All trade receivables except the factored portion of the Retail
Generics segment are subject to credit risk exposure. However the Group does not
identify specific concentration of credit risk with regards to trade
receivables, as the amount recognised resemble a large number of receivables
from various customers.
The fair value of these short term financial assets is not individually
determined as the carrying amounts is a reasonable approximation of fair value.
11. CASH AND CASH EQUIVALENTS
2006 2005
#'000 #'000
Cash at bank and in hand 9,351 6,168
Short-term bank deposits 6,504 -
---------------------------------------------------------------------
Total 15,855 6,168
=====================================================================
The effective interest rate on short-term bank deposits was 3.8% (2005: Nil);
these deposits have an average maturity of 9 days.
12. SHARE CAPITAL AND SHARE OPTIONS
2006 2005
#'000 #'000
Authorised
100,000,000 ordinary shares of
5 pence each (2005: 100,000,000) 5,000 5,000
=====================================================================
2006 2005
#'000 #'000
Allotted, called up and fully paid
37,126,611 ordinary shares of
5 pence each (2005: 37,070,778) 1,856 1,854
=====================================================================
2006 2005
Share issued and fully paid, Number Number
- beginning of the year 37,070,778 37,017,738
- issued during the year 55,833 53,040
---------------------------------------------------------------------
Share issued and fully paid 37,126,611 37,070,778
=====================================================================
During the year 55,833 shares were issued under the unapproved employee share
option scheme and the employee share save scheme. The difference between the
total consideration of #128,962 and the nominal value of #2,792 has been
credited to the share premium account.
Share options
Details of Directors' share options are set out in the Directors Remuneration
Report on page 24.
The market price at 31 March 2006 was 290 pence and the range during the year
ended 31 March 2006 was 264 pence to 396 pence.
The following share options which have been granted by the Company were
outstanding at the year end:
Date of grant Earliest Latest 2006 2005
date of date of Number Number
exercise exercise
The 'unapproved scheme'
5p Ordinary shares at 180 pence 3-Jun-98 3-Jun-01 2-Jun-08 735,000 735,000
5p Ordinary shares at 480.5 pence 11-Aug-99 11-Aug-02 10-Aug-09 31,580 32,662
5p Ordinary shares at 640 pence 11-Jan-00 11-Jan-03 10-Jan-10 1,923 1,923
5p Ordinary shares at 640 pence 11-Jan-00 11-Jan-05 10-Jan-10 177,260 179,260
5p Ordinary shares at 871 pence 10-Jul-00 10-Jul-03 9-Jul-10 8,118 10,586
5p Ordinary shares at 871 pence 10-Jul-00 10-Jul-05 9-Jul-10 1,805 3,814
5p Ordinary shares at 775 pence 18-Dec-00 18-Dec-03 17-Dec-10 924 924
5p Ordinary shares at 775 pence 18-Dec-00 18-Dec-05 17-Dec-10 924 5,827
5p Ordinary shares at 686 pence 18-Jul-01 18-Jul-04 17-Jul-11 7,686 11,943
5p Ordinary shares at 686 pence 18-Jul-01 18-Jul-06 17-Jul-11 124,499 128,756
5p Ordinary shares at 586.5 pence 3-Dec-01 3-Dec-04 2-Dec-11 3,783 8,336
5p Ordinary shares at 586.5 pence 3-Dec-01 3-Dec-06 2-Dec-11 3,783 8,336
5p Ordinary shares at 366 pence 23-Jul-02 23-Jul-05 22-Jul-12 11,270 11,270
5p Ordinary shares at 366 pence 23-Jul-02 23-Jul-05 22-Jul-12 321,979 337,006
5p Ordinary shares at 196 pence 4-Aug-03 4-Aug-06 4-Aug-13 56,939 56,939
5p Ordinary shares at 196 pence 4-Aug-03 4-Aug-08 3-Aug-13 72,805 72,805
5p Ordinary shares at 157.5 pence 4-Aug-03 4-Aug-06 4-Aug-13 38,549 44,919
5p Ordinary shares at 157.5 pence 4-Aug-03 4-Aug-08 4-Aug-13 53,767 59,842
5p Ordinary shares at 260.7 pence 26-Jul-04 26-Jul-07 25-Jul-14 180,044 225,338
5p Ordinary shares at 260.7 pence 26-Jul-04 26-Jul-09 25-Jul-14 180,044 225,338
5p Ordinary shares at 270 pence 21-Jul-05 21-Jul-08 20-Jul-15 124,347 -
5p Ordinary shares at 270 pence 21-Jul-05 21-Jul-10 20-Jul-15 122,314 -
The employee 'sharesave scheme'
5p Ordinary shares at 180 pence 9-Oct-98 1-Dec-05 31-May-06 - 17,766
5p Ordinary shares at 375 pence 24-Aug-99 1-Oct-04 31-Mar-05 - 900
5p Ordinary shares at 696 pence 23-Aug-00 1-Oct-07 31-Mar-08 1,056 1,056
5p Ordinary shares at 555 pence 10-Aug-01 1-Oct-04 31-Mar-07 304 1,047
5p Ordinary shares at 555 pence 10-Aug-01 1-Oct-06 31-Mar-07 - 912
5p Ordinary shares at 436 pence 07-Feb-02 1-Apr-05 30-Sep-05 - 1,307
5p Ordinary shares at 275.2 pence 2-Jul-02 1-Aug-05 31-Jan-06 - 13,460
5p Ordinary shares at 275.2 pence 2-Jul-02 1-Aug-07 31-Jan-08 14,431 14,431
5p Ordinary shares at 275.2 pence 2-Jul-02 1-Aug-09 31-Jan-10 6,531 6,531
5p Ordinary shares at 266 pence 10-Jan-03 1-Feb-06 31-Jul-08 1,421 1,989
5p Ordinary shares at 266 pence 10-Jan-03 1-Feb-08 31-Jul-10 2,469 2,469
5p Ordinary shares at 126 pence 15-Aug-03 1-Sep-06 28-Feb-07 39,933 51,677
5p Ordinary shares at 126 pence 15-Aug-03 1-Sep-08 28-Feb-09 15,165 15,165
5p Ordinary shares at 174 pence 2-Feb-04 1-Mar-07 31-Aug-07 11,237 13,357
The Directors' interests (including beneficial and family interests) in the above
share options are set out in the Directors Remuneration Report on page 24.
2006 2005
Weighted 2006 Weighted 2005
average Number average Number
exercise price of exercise price of
Pence options Pence options
Outstanding at the beginning of the period 304.94 2,302,891 305.68 2,165,919
Forfeited during the period 325.62 (204,988) 251.54 (391,376)
Exercised during the period 190.65 (28,817) 193.58 (13,040)
Granted during the period 270.00 282,804 260.70 541,388
-------------------------------------------------------------------------------------------------
Outstanding at the end of the period 300.34 2,351,890 304.94 2,302,891
-------------------------------------------------------------------------------------------------
Exercisable at the end of the period 289.60 981,998 292.99 982,581
=================================================================================================
As at 31 March 2006, the Group maintained two share- based payment schemes:
Goldshield Group plc unapproved scheme
The unapproved share options scheme is administered by the Group. Options are
granted to employees during their tenure of service and these can be exercised
until expiry of 10 years from the date of grant, provided the employee continues
to remain in service at the earliest exercise date. The options are exercisable
based on the achievement of performance criteria with regards to growth in Earnings
per share and Turnover. The Remuneration Committee has the discretion to consider
any exception in meeting the performance criteria when the options are exercised.
Goldshield Group plc sharesave scheme
The scheme allows all eligible employees to benefit from the growth of the
Company through savings deducted directly from pay, tax-free bonuses and a right
to purchase Goldshield Group plc shares in the future but at a fixed price, which
does not exceed the middle market value of a share over the three dealing days
immediately preceding the issue of this invitation. The approved sharesave
scheme has option exercise terms of 3,5 or 7 years. The sharesave scheme can be
exercised for 6 months only after the 3,5 or 7 year maturity dates.
The options outstanding at 31 March 2006 have an exercise price in the range of
126 pence to 871 pence and a weighted average contractual life of 5.26 years.
282,804 additional options were granted during 2005. The fair values of options
granted during 2005 were determined using the Binomial Lattice valuation model.
The weighted average fair value of share options granted during the year was 107
pence.
Significant inputs into the calculation include a weighted average share price of
270 pence and exercise prices as illustrated above. Furthermore, the calculation
takes into account future dividends of 6 pence and a volatility rate of 45%,
based on expected share price. It is assumed that 3 and 5 year share save options
are held for 3 and 5 years respectively ie. the durations of the savings contracts,
because the bonus is paid then and the employee has cash tied up. For employee
stock options it is assumed that 3 year options will be held for 5 years and that
5 year options will be held for 6 years. Both could be held for longer before
expiry, but on average employees are likely to seek liquidity or leave the company
before the full term. Risk-free interest rate was determined at 5%. The underlying
expected volatility was based upon calculation of historic volatility during the
period 2002-2004.
13. DEFERRED TAX ASSETS AND LIABILITIES
Defered tax assets and liabilities are attributable to the following:
2006 2006 2005 2005
Deferred Deferred Deferred Deferred
tax tax tax tax
assets liabilities assets liabilities
Non-current assets #'000 #'000 #'000 #'000
Other intangible assets - 1,894 - 2,836
Property, plant and equipment - (77) - -
Share options 310 - 32 -
Translation reserve 27 - 120 -
-------------------------------------------------------------------------------------------------------
Total carried forward 337 1,817 152 2,836
Current liabilities
Other liabilities - (168) (197)
Unused Tax Losses 620 - 689 -
-------------------------------------------------------------------------------------------------------
Total 957 1,649 841 2,639
=======================================================================================================
Equity
Translation reserve (93) - 120 -
Share options 243 - - -
-------------------------------------------------------------------------------------------------------
Total 150 - 120 -
=======================================================================================================
Please also refer to note 6 for information on the Group's tax expense.
14. EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the year.
The calculation of diluted earnings per share is based on the basic earnings per
share, adjusted to allow for the issue of shares and the post tax effect of
dividends, on the assumed conversion of all dilutive options.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below.
2006 2005
Weighted Weighted
average Per share average Per share
Earnings number of amount Earnings number of amount
#'000 shares'000 pence #'000 shares '000 pence
Profit attributable to shareholders 3,880 37,098 471 37,043
Basic earnings per share 10.5 1.3
======= =======
Diluted earnings per share 37,427 10.4 37,239 1.3
======= =======
Weighted average number of ordinary shares 2006 2005
000's 000's
Issued ordinary share at 1 April 37,071 37,018
Effect of share issued in July 2004 - 7
Effect of share issued in August 2004 - 1
Effect of share issued in September 2004 - 13
Effect of share issued in November 2004 - 1
Effect of share issued in February 2005 - 3
Effect of share issued in July 2005 20 -
Effect of share issued in September 2005 3 -
Effect of share issued in December 2005 1 -
Effect of share issued in January 2006 2 -
Effect of share issued in March 2006 1 -
---------------------------------------------------------------------------------------------------------------------
Weighted average number of ordinary share at 31 March 37,098 37,043
=====================================================================================================================
Weighted average number of ordinary shares (diluted) 2006 2005
000's 000's
Weighted average number of ordinary share at 31 March 37,098 37,043
Effect of share options on issue 329 196
---------------------------------------------------------------------------------------------------------------------
Weighted average number of ordinary shares (diluted) at 31 March 37,427 37,239
=====================================================================================================================
15. EQUITY DIVIDENDS
2006 2005
#'000 #'000
Ordinary shares - dividend for 2004 of 2.5 pence
per share paid 15 October 2004 - 925
Ordinary shares - dividend for 2005 of 1.5 pence
per share paid 17 January 2005 - 557
Ordinary shares - dividend for 2005 of 4.5 pence
per share paid 3 August 2005 1,669 -
Ordinary shares - dividend for 2006 of 1.7 pence
per share paid 13 January 2006 631 -
---------------------------------------------------------------------------------
2,300 1,482
=================================================================================
2006 2005
Pence Pence
Proposed dividend per share 5.1 4.5
=================================================================================
2006 2005
#'000 #'000
Proposed dividend 1,893 1,668
=================================================================================
16. PROVISIONS
#'000
Carrying amount 1 April 2005 918
Additional provisions 1,333
Used provisions (973)
-------------------------------------------------------------------
Carrying amount 31 March 2006 1,278
===================================================================
Provisions are considered current and they represent legal fees being an
estimate of the ongoing costs for defending legal claims against the Group. It
is anticipated that the provisions will be used within one year from the date of
initiation based on the actual legal costs as and when incurred.
17. TRADE AND OTHER PAYABLES
2006 2005
#'000 #'000
Trade payables 5,219 5,023
Capital creditors 150 35
Accruals 10,308 11,103
-------------------------------------------------------------------
15,677 16,161
===================================================================
18. OTHER LIABILITIES
2006 2005
#'000 #'000
Other creditors 2,242 1,958
Social security and other taxes 574 1,037
-------------------------------------------------------------------
2,816 2,995
===================================================================
19. OPERATING LEASES
The Group's minimum operating lease payments
are as follows:
2006 2005
Land & 2006 Land & 2005
buildings Other buildings Other
#'000 #'000 #'000 #'000
Within one year 952 53 753 72
Between one to five years 1,264 8 611 60
More than five years 367 - 425 -
-----------------------------------------------------------------------------------
2,583 61 1,789 132
===================================================================================
Lease payments recognised as an expense during the period amount to #1,064,700
(2005: #946,452). No sublease income is expected as all assets held under lease
agreements are used exclusively by the Group.
All operating lease agreements do not contain any contingent rent clauses.
The office buliding in India has a renewal option and escalation clause for
lease rentals. Apart from the India office building, none of the operating lease
agreements contain renewal options or escalation clauses.
The Company did not have any financial leases at 31 March 2006
(31 March 2005: nil).
20. FINANCIAL INSTRUMENTS
The Group uses financial instruments, comprising cash, short term borrowings,
trade debtors and trade creditors, which arise directly from its operations. The
main purpose of these financial instruments is to raise finance for the Group's
operations.
Short term debtors and creditors
Short term debtors and creditors have been excluded from the following
disclosures except those relating to currency risk. The Group's trade and other
receivables are actively monitored to avoid significant concentrations of credit
risk.
Interest rate risk
The Group finances its operations through a mixture of retained profits and bank
facilities. Bank borrowings are made using variable interest rates.
Liquidity risk
The Group seeks to manage financial risk, to ensure sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably.
Short-term flexibility is achieved through overdraft facilities and short/medium
term borrowings.
Borrowing facilities
The Group has undrawn facilities available of #500,000 expiring within one year
(2005: #250,000).
Currency risk
The Group is exposed to translation and transaction foreign exchange risk. In
relation to translation risk the proportion of assets held in the foreign
currency are matched to an appropriate level of borrowings in the same currency.
Transaction exposures are hedged when known, mainly using the forward exchange
hedge market.
The Group seeks to hedge its exposures using a variety of financial instruments,
with the objective of minimising the impact of fluctuations in exchange rates on
future transactions and cash flows.
The Group has overseas subsidiaries operating in Ireland where reserves and
expenses are denominated in Euros. The Group has funded the acquisition cost and
working capital by a Euro loan. As the Group receives net cash inflows in Euros
this loan is being reduced and replaced, as necessary, by funding denominated in
Sterling.
#20.1 million (2005: #19.1 million) of the sales of the Group's business is to
customers in continental Europe/foreign markets excluding North American
operations. The majority of these sales are invoiced in the currencies of the
customers involved. The Group policy is to minimise all currency exposures on
any balance not expected to mature within 30 days of its arising through the use
of forward currency contracts. All other sales of UK business are denominated in
sterling.
The tables below show the extent to which Group companies have monetary assets
and liabilities in currencies other than their local currency.
Functional currency of operation Net foreign currency monetary assets/(liabilities)
Indian Other
US Dollars Euro Rupees currencies Total
#'000 #'000 #'000 #'000 #'000
2006
Sterling 252 1,766 1,058 - 3,076
Dollar 361 - 382 - 743
Euro 398 78 - - 476
Indian Rupees 42 - - 1,734 1,776
------------------------------------------------------------------------------------------
1,053 1,844 1,440 1,734 6,071
==========================================================================================
2005
Sterling 734 2,624 - 910 4,268
Dollar (1) - - 204 202
Euro 459 (602) - (12) (155)
Indian Rupees 8 - 359 - 367
------------------------------------------------------------------------------------------
1,200 2,022 359 1,102 4,682
==========================================================================================
Fair values
The fair values of the Group's financial instruments are considered equal to the
book value. As these financial instruments are not publicly traded, the fair
values presented are determined by calculating present values of the cash flows
anticipated until maturity of these financial assets.
21. CAPITAL COMMITMENTS
During the year ended 31 March 2006, the Group entered into a contract to
purchase property, plant and equipment for #171,750 (2005: #nil). These
commitments are expected to be settled in the following financial year.
22. SUBSIDIARY UNDERTAKINGS
At 31 March 2006 the Company held more than 20% of the allotted share capital of
the following significant undertakings:
Name Country of Class of share Proportion Nature of
registration or capital held held business
incorporation
Goldshield Pharmaceuticals Limited England and Wales #1 ordinary shares 100% Marketing and distribution of
pharmaceutical products
Goldshield Limited England and Wales #1 ordinary shares 100% Marketing and distribution of
vitamins and health supplements
Goldshield Management Services
Limited England and Wales #1 ordinary shares 100% Management services
Vitamins Direct Limited England and Wales #1 ordinary shares 100% Marketing and distribution of
vitamins and health supplements
Regina Health Limited England and Wales #1 ordinary shares 100% Marketing and distribution of
vitamins and health supplements
B&S House of Health Limited England and Wales #1 ordinary shares 100% Marketing and distribution of
vitamins and health supplements
Natural Essentials Limited England and Wales #1 ordinary shares 100% Marketing and distribution of
vitamins and health supplements
One World Supplements Limited Jersey #1 ordinary shares 100% Marketing and distribution of
vitamins and health supplements
Forley Generics Limited England and Wales #1 ordinary shares 100% Marketing of pharmaceutical
products
Goldshield USA, Inc USA Ordinary shares 100% Intermediate holding company
Golden Pride, Inc USA Ordinary shares 100% Marketing and distribution of
vitamins and health supplements
WT Rawleigh, Co Canada Ordinary shares 100% Marketing and distribution of
vitamins and health supplements
Goldshield Services Pvt Limited India Ordinary shares 100% Management services
Antigen Pharmaceuticals Limited Ireland Ordinary shares 100% Intermediate holding company
Antigen International Limited Ireland Ordinary shares 100% Marketing and distribution of
pharmaceutical products
Antigen Overseas Limited Ireland Ordinary shares 100% Marketing and distribution of
pharmaceutical products
Anpharm Limited Ireland Ordinary shares 100% Marketing and distribution of
pharmaceutical products
Goldshield Healthcare Pvt Limited India Ordinary shares 100% Marketing and distribution of
vitamins and health supplements
and telemarketing services
Goldshield Direct,Inc. USA Ordinary shares 100% Marketing and distribution of
vitamins and health supplements
Goldshield Management Services, Inc. USA Ordinary shares 100% Management services
Goldshield Business Solutions Limited England & Wales Ordinary shares 100% Accounting and
Taxation Services
23. CONTINGENT LIABILITIES
Indemnities and guarantees
The Group has given indemnities in respect of advance payments, deferred
purchase consideration and import duty guarantees issued on its behalf in the
normal course of business. The indemnities given at 31 March 2006 were #329,198
(2005: #331,540).
Irish operations
On 28 November 2001 the Group acquired the sales, marketing and distribution
rights for the Antigen brand from Antigen Holdings Limited. The companies and
assets were acquired at an estimated cost of #9.4 million. The estimated
consideration was to be settled in two parts, firstly by the payment of #5.2
million and secondly by an obligation to discharge the scheme of arrangement
liabilities of the acquired Antigen companies. The Directors obtained legal
opinion that the Group's exposure to the debts covered by the scheme was
restricted to the debts borne by the companies it acquired.
On 29 October 2002, Miza Ireland Limited and each of its Irish subsidiaries,
parties to the wider scheme of arrangement, were placed into examinership.
During the prior year the liquidator of Miza Ireland Limited claimed the sum of
Euro20.8 million although no grounds for the claim have been specified in detail.
Liability for the claim has been denied. The Directors have received legal
opinion that no basis for claim has been presented by the liquidator which
could result in a liability on the part of the company and that the
subsidiaries concerned have grounds for defending the claim.
On the 2 November 2005, the liquidator of Miza Ireland Limited served High Court
proceedings against the Group (and other defendants) for the above-said claim
and the claim is being defended with the help of our solicitors.
Serious Fraud Office (SFO) Investigation
On 10 April 2002 the Group's premises and those of the Chief Executive were
visited by the SFO and certain documentation taken away. A press statement
issued by the SFO stated that its operations formed part of an investigation
into suspected conspiracy to defraud the National Health Service (NHS)
concerning the prices charged for penicillin based antibiotics and Warfarin
between 1 January 1996 and 31 December 2000.
The Directors do not believe the Group has acted in an unlawful or improper
manner, nor has it at any time conspired to defraud the NHS and no provision
has been made accordingly. Two of the Company Directors - Ajit Patel and Kirti
Patel were interviewed by the SFO in March and April 2005 and the company
continues to provide co-operation in the conduct of the enquiry.
In April 2006, the SFO framed formal charges against the company and two of the
Company Directors which are being defended. Legal and professional costs in this
matter have been expensed as incurred.
Department of Health (DoH) and related claims
On 20 December 2002, the DoH issued a legal claim against the Group and three
other companies (Norton Healthcare Limited, Norton Pharmaceuticals Limited and
Regent GM Laboratories Limited) amounting to #28.6 million for alleged anti-
competitive practices involving the fixing of selling prices and controlling
the market and production of Warfarin between January 1997 and September 2000.
The Directors believe the Group is free from wrong-doing in respect of these
allegations. A defence has been filed.
Similar claims has been received from the Scottish Health Authorities and the
Department of Health and Social Services and Public Safety for Northern Ireland
claiming damages of around #3.3 million and #1.0 million respectively. The Group
vigorously denies any liability for this claim.
The information required by IAS 37 is not disclosed on the grounds that it can
be expected to prejudice the outcome of the litigation. The Directors are of
the opinion that the claim can be successfully resisted and the expected legal
and professional costs for this action have been provided for.
24. ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The estimates
and assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Impairment of goodwill and other intangibles
The Group test annually the carrying values of goodwill and other intangibles
for any possible impairment in accordance with the accounting policy statement
in Note 1. The achievement of the growth and profitability by the individual
cash generating units is critical in substantiating the carrying value of
goodwill and intangibles.
Legal and other disputes
The Group faces ongoing litigation issues for claims against it, the same
detailed in Note 23 on contingent liabilities. The Group continues to vigorously
deny any liabilities from these claims but the outcome of these legal issues and
any resulting financial implications could have a material impact on the Group's
financial statements.
25. EXPLANATION OF TRANSITION OF IFRSs
As stated in note 1, these are the Group's first consolidated financial
statements prepared in accordance with IFRSs.
The accounting policies set out in note 1 have been applied in preparing the
financial statements for the year ended 31 March 2006, the comparative
information presented in these financial statements for the year ended 31 March
2005 and in preparation of an opening IFRS balance sheet at 1 April 2004 (the
Group's date of transition).
IFRS 1 requires full retrospective application of all applicable accounting
standards, but exemptions are permitted in specific areas. The Group has elected
to avail of the exemptions pertaining to business combinations, share-based
payment transactions and recognition of cumulative translation differences.
An explanation of how the the transition from UK GAAP to IFRS has affected the
Group's financial position, financial performance and cash flows is set out in
the accompying notes:
Reconciliation of equity for the year ended 31 March 2005
Note 1 April 2004 31 March 2005
Effect of Effect of
Previous transition Previous transition
GAAP to IFRS IFRS GAAP to IFRS IFRS
#'000 #'000 #'000 #'000 #'000 #'000
Assets
Goodwill a,b 21,456 (5,674) 15,782 14,155 (2,847) 11,308
Other intangible assets b 27,300 5,674 32,974 22,597 4,192 26,789
Property, plant and
equipment 1,333 - 1,333 1,118 - 1,118
Deferred tax assets f 240 10 250 689 152 841
-----------------------------------------------------------------------------------------------------------------
Total non-current assets 50,329 10 50,339 38,559 1,497 40,056
-----------------------------------------------------------------------------------------------------------------
Inventories 13,991 - 13,991 11,301 - 11,301
Trade and other receivables 13,426 - 13,426 11,916 - 11,916
Cash and cash equivalents 186 - 186 6,168 - 6,168
-----------------------------------------------------------------------------------------------------------------
Total current assets 27,603 - 27,603 29,385 - 29,385
-----------------------------------------------------------------------------------------------------------------
Total assets 77,932 10 77,942 67,944 1,497 69,441
=================================================================================================================
Equity
Share capital 1,851 - 1,851 1,854 - 1,854
Share premium 21,234 - 21,234 21,359 - 21,359
Translation reserve e - - - - (400) (400)
Retained earnings 20,254 935 21,189 16,805 3,565 20,370
-----------------------------------------------------------------------------------------------------------------
Total equity attributable
to equity of parent 43,339 935 44,274 40,018 3,165 43,183
Minority interest 106 - 106 106 - 106
-----------------------------------------------------------------------------------------------------------------
Total equity 43,445 935 44,380 40,124 3,165 43,289
-----------------------------------------------------------------------------------------------------------------
Liabilities
Deferred tax liabilities 829 - 829 2,639 - 2,639
-----------------------------------------------------------------------------------------------------------------
Total non-current liabilities 829 - 829 2,639 - 2,639
-----------------------------------------------------------------------------------------------------------------
Bank loan 5,500 - 5,500 - - -
Trade, other payables and provisions 17,959 - 17,959 17,079 - 17,079
Other liabilities d 4,106 (925) 3,181 4,663 (1,668) 2,995
Current tax liabilities 6,093 - 6,093 3,439 - 3,439
-----------------------------------------------------------------------------------------------------------------
Total current liabilities 33,658 (925) 32,733 25,181 (1,668) 23,513
-----------------------------------------------------------------------------------------------------------------
Total liabilities 34,487 (925) 33,562 27,820 (1,668) 26,152
-----------------------------------------------------------------------------------------------------------------
Total equity and liabilities 77,932 10 77,942 67,944 1,497 69,441
=================================================================================================================
The reconciliation of the Group's equity reported under previous GAAP to its
equity under IFRS as at 1 April 2004 and 31 March 2005 may be summarised as
follows:
1 April 31 March
Note 2004 2005
#'000 #'000
Translation reserve - Previous GAAP - -
- reclassification of currency translation difference - 400
-----------------------------------------------------------------------------------------------
Translation reserve - IFRS - 400
===============================================================================================
Retained earnings - Previous GAAP (20,254) (16,805)
- elimination of goodwill amortisation - (1,468)
- impairment of goodwill - 123
- reversal of dividend accrual d (925) (1,668)
- recognition of deferred tax asset f (10) (152)
- reclassification of currency translation difference - (400)
-----------------------------------------------------------------------------------------------
Retained earnings - IFRS (21,189) (20,370)
===============================================================================================
Profit and loss report under previous GAAP for the year ending 31 March 2005 is
reconciled to IFRS as follows:
31 March 2005
Note Effect of
Previous transition
GAAP to IFRS IFRS
#'000 #'000 #'000
Reconciliation of Profit & Loss
Revenue 80,807 (40) 80,767
Cost of sales (28,959) 12 (28,947)
------------------------------------------------------------------------------------------------------------
Gross profit 51,848 (28) 51,820
------------------------------------------------------------------------------------------------------------
Distribution expenses (3,824) - (3,824)
Impairment losses a (3,830) (793) (4,623)
Exceptional legal and professional costs (1,004) - (1,004)
Other administrative expenses (39,524) 1,976 (37,548)
------------------------------------------------------------------------------------------------------------
Operating profit 3,666 1,155 4,821
Finance costs (362) 4 (358)
Finance income 42 (2) 40
------------------------------------------------------------------------------------------------------------
Profit before tax 3,346 1,157 4,503
Income tax expense (4,057) 25 (4,032)
------------------------------------------------------------------------------------------------------------
Profit after tax (711) 1,182 471
============================================================================================================
Attributable to shareholders of parent (711) - 471
============================================================================================================
a) Under UK GAAP goodwill arising on business combinations was amortised on a
straight - line basis over its estimated economic life which ranged between
seven and ten years. Under IFRS Goodwill is tested for impairment annually or
more frequently if events or changes in circumstances indicate that it might be
impaired, and not amortised. The Group has elected not to apply IFRS 3 -
Business Combinations retrospectively to business combinations prior to IFRS
adoption. The effect of the above adjustments is to add back the amortisation
charge (administrative expenses) by #1,342,329 as on 31 March 2005. As a result
of the above the carrying value of Goodwill is increased by #1,344,004 as on 31
March 2005. The difference is because of conversion of results at the average
exchange rate and balance sheet items at closing rate.
b) Licenses related to acquired pharmaceutical products categorised as Goodwill
under UK GAAP have been reclassified and transferred to Brand Names, Know-How,
Licenses and Trademarks (Other intangibles) there-by increasing the carrying
value of Brand Names, Licenses and Trademarks by and correspondingly reducing
the carrying value of Goodwill by #5,675,274 as on 1 April 2004. The effect for
31 March 2005 is reclassification of amortisation by #740,444 respectively. This
will have no effect on retained earnings.
c) The Group applied IFRS 2- Share Based Payment, to all share options granted
after 7 November 2002 and vesting on or after 1 January 2005. Under UK GAAP, the
Group followed a policy of valuing the options at the difference between
exercise price and the market value at the date of grant and accruing the same
over the period to which the benefit relates. Under IFRS 2 the fair value is
estimated by employing the binomial model. The resultant charges to the profit
and loss account of the respective periods under administrative expenses is
#71,587 as on 31 March 2005 and correspondingly an increase in equity by the
same amount.
d) Under UK GAAP, proposed dividends were accrued in the accounting period to
which they related. Under IAS 10 - Events after Balance Sheet Date, dividends
are recognised in the accounting period in which they are declared or approved
by shareholders. Under UK GAAP a provision for the dividend made was #1,668,185
as on 31 March 2005 and #925,443 as on 1 April 2004. The dividends as on
respective closing dates were not declared or approved by the shareholders and
as a result the accrual for dividend is reversed in each respective periods.
e) Under UK GAAP, the results of foreign operations were translated at the
closing rate of the reporting currency i.e. Sterling Pound. Under IFRS the same
is translated at the average rate over the reporting period. The exchange
difference arising on translation is shown in translation reserve #112,751
(loss) as on 31 March 2005.
f) The above changes increased the deferred tax asset as follows:
1 April
2004
#
Translation reserve -
Share options 9,827
--------------------------------------------------------
Total 9,827
========================================================
31 March
2005
#
Share options - 1 April 2004 9,827
Translation reserve 120,048
Share options 21,477
--------------------------------------------------------
Total 151,352
========================================================
Explanation of material adjustments to the cash flow statement for the year
ended 31 March 2005
There are no material differences between the cash flow statement presented
under IFRS and the cash flow statement presented under previous GAAP. The
changes are in the headings in the cash flow statement and reclassification of
certain items.
Company Balance Sheet at 31 March 2006
Notes 2006 2005
#'000 #'000
Restated
Fixed assets
Goodwill 5 2,127 4,194
Other intangible assets 5 17,383 22,585
Investments 6 6,871 7,275
------------------------------------------------------------------------------------
26,381 34,054
------------------------------------------------------------------------------------
Current assets
Debtors: due after more than one year 9,919 21,018
Debtors: due within one year 7 -
Cash at bank and in hand 7,829 453
------------------------------------------------------------------------------------
17,755 21,471
------------------------------------------------------------------------------------
Creditors: amounts falling due within
one year 7 (13,160) (20,069)
Net current assets 4,595 1,402
Total assets less current liabilities 30,976 35,456
Provisions for liabilities 8 (1,894) (2,913)
------------------------------------------------------------------------------------
29,082 32,543
====================================================================================
Capital and reserves
Called up share capital 9 1,856 1,854
Share premium account 21,485 21,359
Profit and loss account 5,741 9,330
------------------------------------------------------------------------------------
Shareholders' funds 10 29,082 32,543
====================================================================================
The financial statements were approved by the Board of Directors on 26 June 2006
and signed on their behalf by:
Ajit Patel,
Chief Executive Officer
Rakesh Patel,
Finance Director
The accompanying accounting policies and notes form an integral part of these
financial statements.
Company Statement of Total Recognised Gains and Losses for the year ended 31
March 2006
2006 2005
#'000 #'000
Loss for the financial year (1,289) 5,567
--------------------------------------------------------------
Total recognised gains and losses
for the year (1,289) 5,567
========
Prior period adjustment
(as explained in note 4) 1,668
--------
Total recognised gains and losses
recognised since the last financial
statements 379
========
Notes to the Company's Financial Statement
1. PRINCIPAL ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with applicable United
Kingdom accounting standards and under the historic cost convention. The
Directors have reviewed the principal accounting policies and consider they
remain the most appropriate for the Company. The principal accounting policies
of the Company have remained unchanged from the previous year apart from
adoption of the following standards:
* FRS 20 '(IFRS 2) Share Based Payment'
* FRS 21 '(IAS 19) Events After the Balance Sheet Date'
* FRS 23 'Borrowing Costs'
* FRS 24 'Related Party Disclosures'
* FRS 25 'Accounting for Investments'
* FRS 26 'Accounting and Reporting by Retirement Benefit Plans'
The application of most of these standards has had no financial effect, those
which have effected the results are explained below.
Changes in accounting policies
In preparing the financial statements for the current year, the Company has
adopted the following Financial Reporing Standards that are relevant to the
Company.
FRS 21 '(IAS 10) Events After the Balance Sheet Date'
The adoption of FRS 21 has resulted in a change in accounting policy in respect
of proposed equity dividends. If the Company declares dividends to the holders
of equity instruments after the balance sheet date, the Company does not
recognise those dividends as a liability at the balance sheet date. Previously
where these equity dividends were proposed after the balance sheet date but
before authorisation of the financial statements they were recorded as
liabilities at the balance sheet date. The aggregate amount of equity dividends
proposed before approval of the financial statements, which have not been shown
as liabilities at the balance sheet date, are disclosed in the notes to the
financial statements. The financial effect of this change in accounting policy
is set out in note 4.
Investments
Investments in subsidiary undertakings in the balance sheet of the Company are
included at the cost of the shares held less amounts written off.
Intangible fixed assets
Goodwill, brand names, know-how, licences, trademarks and similar intangible
items are capitalised at historical cost net of any provision for impairment and
amortised on a straight line basis over their estimated useful economic lives,
which range between seven and ten years.
Deferred taxation
Deferred tax is recognised on all timing differences where the transactions or
events that give the Group an obligation to pay more tax in the future, or a
right to pay less tax in the future have occurred by the balance sheet date.
Deferred tax assets are recognised when it is more likely than not that they
will be recovered. Deferred tax is measured using rates of tax that have been
enacted or substantially enacted by the balance sheet date. Defered taxes are
not discounted.
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. All other exchange differences are dealt with through the profit and loss
account.
Financial instruments
Financial assets and financial liabilities are recognised on the Company's
balance sheet when the Company becomes a party to the contractual terms of the
instrument.
* Trade receivables
Trade receivables do not carry any interest and are stated at their nominal
amounts as reduced to equal the estimated present value of the future cash
flows.
* Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges including premiums payable
on settlement or redemption and direct issue costs, are accounted for on an
accruals basis to the profit and loss account using the effective interest
method and are added to the carrying value of instrument to the extent that they
are not settled in the period in which they arise.
* Trade payables
Trade payables are not interest bearing and are stated at their nominal value.
* Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
2. RESULT FOR THE FINANCIAL YEAR
The Company has taken advantage of Section 230 of the Companies Act 1985 and has
not included its own profit and loss account in these financial statements. The
loss after tax for the year of the Company was #1,289,380 (2005: Profit
#5,566,973) which is dealt with in the financial statements of the Company.
Auditors remuneration
The audit fees for the company was #nil (2005: #nil). The audit fees of the
company is recorded and paid from other subsidiaries of Goldshield Group plc.
3. DIRECTOR AND EMPLOYEES
There were no employees in the Company as at 31 March 2006 and 31 March 2005.
Details in respect of Directors' emoluments are included within the Directors'
Remuneration Report on page 23.
4. PRIOR PERIOD ADJUSTMENT
FRS 21 Events after the Balance Sheet Date.
Under the terms of FRS 21 dividends which have been declared after the balance
sheet date are not recognised as a liability at that date.
The effect of changes in accounting policy on financial information of prior
period is as follows:-
Dividends 2005
#'000
Dividends previously charged to profit and loss in the period 2,225
Dividends charged to profit and loss under FRS 21 557
---------------------------------------------------------------------------------
Net increase to retained profit in the period 1,668
---------------------------------------------------------------------------------
Retained profit for the year:
As previously reported 3,342
FRS 21 1,668
---------------------------------------------------------------------------------
As restated 5,010
---------------------------------------------------------------------------------
Creditors: amounts falling due within one year:
As previously reported (21,737)
FRS 21 1,668
---------------------------------------------------------------------------------
As restated (20,069)
---------------------------------------------------------------------------------
Reserves profit and loss account:
As previously reported 7,662
FRS 21 1,668
---------------------------------------------------------------------------------
As restated 9,330
---------------------------------------------------------------------------------
5. EQUITY DIVIDENDS
2006 2005
#'000 #'000
Ordinary shares - dividend for 2004 of 2.5 pence per share paid 15 October 2004 - 925
Ordinary shares - dividend for 2005 of 1.5 pence per share paid 17 January 2005 - 557
Ordinary shares - dividend for 2005 of 4.5 pence per share paid 3 August 2005 1,669 -
Ordinary shares - dividend for 2006 of 1.7 pence per share paid on 13 January 2006 631 -
------------------------------------------------------------------------------------------------------
2,300 1,482
======================================================================================================
2006 2005
Pence Pence
Proposed dividend per share 5.1 4.5
======================================================================================================
2006 2005
#'000 #'000
Proposed dividend 1,893 1,668
======================================================================================================
6. INTANGIBLE FIXED ASSETS
Brand names
know-how
licences and
trade marks Goodwill Total
#'000 #'000 #'000
Cost
At 1 April 2005 48,669 14,605 63,274
Additions 225 - 225
--------------------------------------------------------------------------
At 31 March 2006 48,894 14,605 63,499
--------------------------------------------------------------------------
Amortisation and impairment losses
At 1 April 2005 26,084 10,411 36,495
Amortisation 4,544 1,331 5,875
Impairment losses 883 736 1,619
--------------------------------------------------------------------------
At 31 March 2006 31,511 12,478 43,989
--------------------------------------------------------------------------
Carrying amounts
At 31 March 2006 17,383 2,127 19,510
==========================================================================
At 31 March 2005 22,585 4,194 26,779
==========================================================================
The Board has considered the useful economic life for significant acquisitions
and concluded in each case that the useful economic life ranges between seven
and ten years.
7. FIXED ASSET INVESTMENTS
2006 2005
#'000 #'000
Investments in Group undertakings at cost 6,871 7,275
=========================================================================
2006
Cost #'000
At 1 April 2005 7,275
Additions 10,467
-------
At 31 March 2006 17,742
Amounts written off in year ended 31 March 2006 (10,871)
--------
Net book amount at 31 March 2006 6,871
========
Shares in subsidiary undertakings
Refer Note 22 of Consolidated IFRS Financial Statements on Page 48.
8. DEBTORS
Debtors due after more than one year 2006 2005
#'000 #'000
Amounts owing by subsidiary undertakings 9,919 21,018
=========================================================================
Debtors due within one year
2006 2005
#'000 #'000
Prepayments and accrued income 7 -
=========================================================================
9. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2006 2005
#'000 #'000
Amounts owing to subsidiary undertakings 11,346 17,958
Capital creditors 150 -
Current taxation 1,104 1,925
Social security and other taxes 224 186
Other creditors 336 -
-------------------------------------------------------------------------
13,160 20,069
=========================================================================
10. PROVISIONS FOR LIABILITIES
2006 2005
#'000 #'000
Deferred taxation 1,894 2,913
=========================================================================
Deferred taxation provided for in the financial statements is set out below:
2006 2005
#'000 #'000
Accelerated capital allowances 1,894 2,913
-------------------------------------------------------------------------
Total 1,894 2,913
=========================================================================
2006 2005
#'000 #'000
At 1 April 2005 2,913 -
Movement in the year (1,019) 2,913
-------------------------------------------------------------------------
At 31 March 2006 1,894 2,913
=========================================================================
11. CALLED UP SHARE CAPITAL
2006 2005
#'000 #'000
Authorised
100,000,000 ordinary shares of 5 pence each
(2005: 100,000,000) 5,000 5,000
=========================================================================
2006 2005
#'000 #'000
Allotted, called up and fully paid
37,126,611 ordinary shares of 5 pence each
(2005: 37,070,778) 1,856 1,854
=========================================================================
During the year 55,833 shares were issued under the unapproved employee share
option scheme and the employee share save scheme. The difference between the
total consideration of #128,962 and the nominal value of #2,792 has been
credited to the share premium account.
Share options Refer Note 12 of Consolidated IFRS Financial Statements on pages
43-44.
12. SHARE PREMIUM ACCOUNT AND RESERVES
Profit Share
& loss premium
account account
#'000 #'000
At 1 April 2005 (as restated) 9,330 21,359
Equity dividends paid (2,300) -
Premium on allotment during the year - 126
Retained loss for the year (1,289) -
-------------------------------------------------------------------------
At 31 March 2006 5,741 21,485
=========================================================================
13. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2006 2005
#'000 #'000
Restated
Loss for the financial year after taxation (1,289) 5,567
Equity dividends paid (2,300) (1,482)
Issue of shares 128 128
--------------------------------------------------------------------------
Net (decrease)/increase in shareholders' funds (3,461) 4,213
Shareholders' funds at 1 April 2005 32,543 28,330
--------------------------------------------------------------------------
Shareholders' funds at 31 March 2006 29,082 32,543
14. CONTINGENT LIABILITIES
Refer to note 23 of Consolidated IFRS Financial Statements on page 49.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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