![](/cdn/assets/images/search/clock.png)
We could not find any results for:
Make sure your spelling is correct or try broadening your search.
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 |
RNS Number:0883Z Goldshield Group PLC 27 June 2007 Goldshield Group plc Goldshield Group plc ("Goldshield"), the marketing-led Pharmaceutical Company, today announces its preliminary results for the twelve months to 31 March 2007. * Revenue of #74.3 million (2006: #80.0 million) * Profit before tax at #0.6 million (2006: #6.8million) * Pre-exceptional earnings before tax, amortisation and impairment losses (EBTA) #14.7 million (2006: #17.3 million) * Net cash #23.3 million (2006: #15.9 million) * Dividend of 5.1p to be paid on 20 August 2007 (2006: 5.1p) * Strategic review completed * Department of Health (DoH) settlement #4.0 million * Six new products set for launch in 2007 Commenting on the results, Rakesh Patel, Finance Director, said; "Our Strategic Review has highlighted the potential for our Pharmaceutical and Healthcare divisions. We are to concentrate our efforts on maintaining and growing our core businesses and maximising value for our shareholders." -ends- Date: 27 June 2007 For further information contact: Goldshield Group PLC City Profile Group Dr. Keith Hellawell QPM, Chairman Jonathan Gillen Rakesh Patel, Finance Director William Attwell 020-8649-8500 020-7448-3244 www.goldshieldplc.com Chairman's Overview The threat of legal action against the Company and two of its Directors for alleged conspiracy to defraud arising out of the sale of warfarin in the late 1990's has had a detrimental effect on the share price. A substantial amount of Directors time and millions of pounds in legal fees have been soaked up as a result. However, the major clients and shareholders have continued to support the business and the management team which is to their great credit. Since my appointment we have addressed the problems the Company faces in order to establish more certainty for the future. In this regard, on the 22 June 2007, without admission of liability, we reached a #4.0 million full and final settlement with the Department of Health (DoH). We are also pursuing through the Court of Appeal our belief that the "crime" the Company is charged with, which we do not believe we committed, is not in fact a criminal offence. The Company is also seeking clarification as to its potential liability in the event that that argument is not successful. In April 2007, we announced we were undertaking a strategic review of our business. Our conclusions were that we focus once again on our core Pharmaceutical and Healthcare operations which I expand on below. A consequence of the litigation is that our CEO, and founder of the Company, Ajit Patel decided to step down from the Board in order to have more time to prepare his defence. The other founding member of the Company Kirti Patel, has also handed his resignation to the Board in order to have more flexibility in preparing for his upcoming trial. However, we are pleased he has agreed to work his notice period. His expertise and contacts will be of considerable help as we re-energise this activity. The Board wish them both well and thank them wholeheartedly for their vision in setting up the business and their personal commitment and dedication to its success. We are delighted to announce that Rakesh Patel, our Finance Director has been appointed CEO. He has 15 years experience within Goldshield, is well respected by the staff and known within the city. I feel sure he will make a huge contribution to the Company's growth over the coming years. We are looking to make an early appointment of a new Finance Director to replace him. Strategy review The review of our activities demonstrated the considerable potential of the Pharmaceuticals and Healthcare divisions. We have two strong activities which need management time and commitment to ensure that they deliver on their potential. This "focus" will be an important aspect of the development of our Company. Within Pharmaceuticals, the major drug companies are selling off the products as their patent expires. Over a number of years we have developed considerable experience of acquiring and developing these products. Indeed, it is interesting to note that in the period since 2003 the performance of our existing portfolio of products has only marginally declined. Yet this has been a period of no new product acquisitions and when management time has been focused on other parts of the Company. I would add that the relocation of some of our administrative activities to India has helped Goldshield to maintain margins in a highly competitive environment. We believe that this efficiency will be of value to Goldshield as we focus on growth. In Healthcare, there is change within the UK and European regulatory environment. These new changes place regulatory requirements on all UK and European organisations which will require them to have access to medical and regulatory infrastructure which Goldshield already has in place in its Pharmaceutical division. The Directors believe that this will be beneficial to Goldshield. In addition, some of our new products such as LIPObind, a Medicines and Healthcare products Regulatory Agency (MHRA) approved medical device, have attractive growth prospects. During its development, Goldshield has established an extensive distributor base. We now have distribution channels in over sixty countries with access to doctors, pharmacies and hospitals. We need to exploit this potential with the acquisition of more products and more marketing commitment. It is a good opportunity for the Group. It has been decided that we will dispose of certain of our non-core Indian business and assets and we have entered into an agreement with Ajit Patel for him to acquire these operations. A circular with full details of these disposals is being sent to shareholders. Both the Wellbeing villages and the resort in Goa offer long term potential. As soon as planning permissions have been obtained, we will consider co-developing the land under a joint venture. We will therefore commit no further significant resources to these operations. In addition to the changes at executive Director level, two important retirements mean further changes. Peter Brown, the former Chairman of the Board and Ken Pelton, the longest serving non-executive Director, have each decided not to seek re-election at the next AGM. They have provided an invaluable service to the Group, for which I would like to offer my sincerest thanks. We are delighted to announce the appointment of one new non-executive Director. Nick Woollacott, a main board member of Latice Group plc (now merged with the National Grid) and until recently the senior independent Director of Enterprise plc, is expected to join the Board in August, 2007. He brings with him a wealth of experience and a history of success which will contribute to our progress. We are also interviewing other candidates for non-executive Director positions. Conclusion The last few years have been demanding for shareholders. The DoH and SFO charges together with the development of new activities in India have all been distractions away from the core business. Yet, it has continued to perform well. I am confident that the combination of the decisions outlined above together with re-focused attention on the Pharmaceuticals and Healthcare divisions will lead to a return to growth. Commentary on the results for the Group are contained in the Report of the Directors, pages 11 to 16. Dr. Keith Hellawell QPM Chairman 26 June 2007 Chief Executive Officer's Operating Review It is my pleasure to report on the year ended 31 March 2007. We have made some good progress despite facing difficulties over the past 12 months. I would add that the settlement with the Department of Health (DoH) comes at a very important time. Despite the challenges the Group has experienced over the past 12 months, we have continued to make progress. The Group reported sales for the year of #74.3 million, which is lower than the previous year of #80.0 million. We have announced a profit before tax for the year of #0.6 million (2006: #6.8 million). Pre-exceptional earnings before tax, amortisation and impairment losses (EBTA) were below last year at #14.7 million (2006: #17.3 million). We have been impacted by exceptional costs for the year primarily relating to legal costs of #5.6 million (2006: #1.7 million). However, the business has continued to generate cash and at the year end the net cash position had improved to #23.3 million (2006: #15.9 million). Given the confidence in the potential of the underlying business and the strong cash position, the Board is recommending a dividend of 5.1 pence. The total dividend paid during the year has risen to 6.8 pence. This is an increase of 0.6 pence from 2006. The Group continues to deal with the ongoing Serious Fraud Office investigation, which began in April 2002. Going forward, we expect the next 18 months to be more demanding on myself, Kirti Patel and other Directors as we prepare our defences which are expected to come to trial in 2008/9. As shareholders will have seen, the strategic review has highlighted the Group's potential. We have concluded that we should focus on our core business of marketing and selling Pharmaceutical and Healthcare products. We are proposing to divest ourselves of most of our service businesses with the exception of the Wellbeing Clinics in India. Whilst the Indian Wellbeing villages and resort no longer form part of the core strategy of the Company, the Directors believe that shareholder value can be delivered by developing the Care village and resort sites in Goa by entering into a joint venture development agreement. In order to concentrate on my legal case and to focus on developing a more service-oriented business, I will be stepping down as the Group CEO and leave the Board on 2 July 2007. Over the last five years we have developed a strong management team and I am very happy to leave the Group in the hands of Rakesh Patel, our Finance Director who will become Chief Executive. Rakesh has worked for the Group since 1992 and he has an excellent understanding of our business. I am confident that he will drive the Group forward. Ajit R Patel Chief Executive Officer 26 June 2007 Report of the Directors The Directors present their report together with the financial statements for the year ended 31 March 2007. Principal activities The quoted Company is parent undertaking and did not trade with third parties during the year. The Group is engaged in the development, marketing and distribution of pharmaceutical and healthcare products. Results and dividends The profit before tax on ordinary activities of the Group was #0.6 million. The Directors propose a dividend of 5.1 pence per Ordinary Share expected to be paid on 20 August 2007 to those members on the register at the close of business on 27 July 2007. The dividend payments during 2007 amounted to 6.8 pence per Ordinary Share comprising of an interim dividend of 1.7 pence per Ordinary Share paid on 9 January 2007 and a dividend of 5.1 pence per Ordinary Share paid on 18 August 2006. Operating review and future developments Revenue for the year was #74.3 million compared to #80.0 million in the previous year. Pre-exceptional profit before tax reduced from #11.5 million in the previous year to #10.0 million in the current year representing 13.5 % of revenue. Emphasis during the year has been on maintaining the current business, building cash reserves and evaluating our options for future growth. Pharmaceuticals division The Pharmaceutical divisions achieved total sales of #54.6 million (2006: #56.5 million). Our European retail brand business achieved sales of #31.3 million (2006: #32.3 million). The decrease is attributable to a number of factors; product supply, delays in regulatory approvals and the re-importation of export sales back into the UK by parallel importers. The parallel import issue has now been addressed and we expect to see an improvement during the second quarter of the next financial year. We have continued to build our analgesic brand Codipar (Co-codomol) where sales have increased to #2.9 million (2006: #1.8 million). Also, a major opportunity for the forthcoming year comes from the PCT (Primary Care Trust) portfolio strategy. An initial start has been made on this project from January and results, so far, are very encouraging. Our Hospitals business in Europe recorded sales which were slightly ahead at #11.3 million (2006: #11.1 million), despite the loss of certain NHS supply contracts due to the pricing strategies of competitors. The European business has doubled its sales volumes since the previous year despite product supply restrictions. Two new products, Flexinozzles and Cophenylcaine were introduced into the Anaesthesia market. We have a strong pipeline of new products scheduled for launch in the coming months. Zapain, an adult paracetamol solution, has recently achieved UK registration and this will give us entry into the Palliative Care sector. Our Autodetect epidural syringe has contributed to increased sales in UK and Europe. Our range of differentiated bupivacaine epidural infusions have received DoH and National Patient Safety Agency (NPSA) endorsement resulting in a large number of NHS trusts preparing to switch to our infusions. Bufecaine infusion bags are planned to be introduced in the coming months, which should also lead to increased sales. The Group's Retail Generics business recorded sales of #7.4 million (2006: #9.5 million). The generic market remains price competitive. The focus has been to recover losses and to minimise expenditure on loss making products. Sales in our Country Distributor business were #4.7 million (2006: #3.7 million). This growth came primarily from expanding the business with existing partners in South Africa, Australia and Saudi Arabia. The performance of this business should improve with the establishment of new product registrations and improved product supply. Healthcare division Sales for the direct to consumer units in Europe for the period were lower at #11.5 million (2006: #14.1 million). Sales for the North American units for the period were also lower at #5.8 million (2006: #6.9 million). The shortfall in sales in this area is a direct result of the increased competition from generics and pressure on margins over the last three years. As a result, the Company has been pursuing a more branded approach in these businesses. There are already some encouraging results which should yield a more positive outlook. Recruitment of new customers at an acceptable cost continues to present the greatest challenge to the division. A key strategy will be to build an extensive customer database with detailed profiles across all regions. We plan to adopt an extensive personalised marketing approach focusing on customer relationships. This will enable the increase of customer lifetime values and the number of annual transactions being made across a wider portfolio of products. Strategies will be put in place that focus on customer retention and loyalty. Our Healthcare division will decentralise its tactical product development function on a regional basis. Products will be customised to meet regional needs and lifestyle requirements. This will be complemented by the launch of strategic group brands. This will lead to a faster time to market with lower costs of development. The successful launch of a new product, LIPObind is testament to this. As a brand, it will be less exposed to low-cost competitive generic alternatives and the roll out across Europe. We expect the market in India to also provide a good contribution to sales. It is time to build the brands and to acquire new customers in what is, a price sensitive market. The growth of the Goldshield brand has been inhibited as price sensitive customers have moved to generic brands. Goldshield must therefore reposition the brands as a purveyor of quality consumer health products. Our products must be priced to compete with the generic market whilst allowing customers to follow a predetermined path to a branded solution. In the US, the focus will now be on maintaining market share. In India, the division will be split into two units: 1. Healthcare India Products, which will continue to make inroads into the Indian market and strengthen its global presence. 2. Wellbeing Centres which will be limited to its current two centres at Mumbai and Ahmedabad. Future developments The last few years have been demanding for shareholders. The DoH and SFO charges together with the demands of developing the new activities in India have distracted the management team from the core business. It has continued to perform well despite this. We are confident that the combination of the decisions outlined above together with the re-focus upon the Pharmaceuticals and Healthcare divisions will assist with the Group's strategy for growth. Risk management objectives and policies Please refer to Note 20 in the Notes to the Financial Statements explaining the details on financial risk management of financial instruments. General risk management objectives and policies are contained in the Chairman's Overview. Directors The Directors who served during the year are set out below. The beneficial interests of the Directors and their families in the shares of the Company at 1 April 2006 and 31 March 2007, as recorded in the register maintained by the Company, were as follows: 5p Ordinary shares 31 March 2007 1 April 2006 Executive Directors Ajit R Patel 3,300,000 3,300,000 Kirti V Patel 1,388,868 1,388,868 Rakesh V Patel 549,791 549,791 Ajay M Patel 360,000 360,000 Mike Reardon 1,000 1,000 Non-executive Directors Peter M Brown (Note 1) 100,000 100,000 Ken O Pelton 105,816 105,816 Dr. Keith Hellawell QPM - - Note: 1. Twenty thousand of P M Brown's shares are owned by Synergy Holdings Limited, a company controlled by him. As at 20 June 2007 there had been no change in Directors' shareholdings since 31 March 2007. Details of Directors' share options are set out in the Remuneration Report on page 25. Rakesh V Patel and Ajay M Patel retire by rotation, and being eligible, offer themselves for re-election at the Annual General Meeting. Peter M Brown, who is over 70 years old, retires and has expressed his desire not to offer for re-election at the Annual General Meeting. Ken O Pelton who joined the Board in 1992, retires and has expressed his desire not to offer for re-election at the Annual General Meeting. Ajit R Patel has submitted his resignation and will leave the company on 2 July 2007. Kirti V Patel has submitted his resignation and will leave the company on 31 December 2007. Rakesh V Patel is the new Chief Executive Officer taking over from Ajit R Patel. Employees At 31 March 2007 the Group employed 913 personnel of whom 90 are based in the UK, 39 in North America, 8 in Ireland/mainland Europe and 776 in India. The Group is an equal opportunities employer and does not discriminate between employees on the grounds of race, ethnic origin, sex, age or disability. The success of the Group is dependent upon the quality and performance of its employees and the Group continues to ensure this through continuous training and development, facilitated by Investors in People. The Board acknowledges that its staff are its most important asset. It places a strong emphasis on the training and development of its employees through 'on the job' training and through staff attending courses. This is a continuous process of training and all staff regularly attend courses on communication, planning, decision-making and problem solving. In addition managers attend courses and 'on the job' training on staff development, motivation, recruitment, appraisals and team building. The Group also encourages staff to take vocational courses. The Group encourages all of its employees to participate in its growth and welcomes staff input at all levels. The Group is also operating a well-defined performance pay scheme, which is fair, equitable, transparent and acts as a strong motivation to its staff. Information about the Group's activities is regularly communicated through notices and staff meetings. Employee sharesave scheme An employee sharesave scheme is open to all eligible employees. Under the terms of the scheme the Directors may offer options to purchase ordinary shares in the Company to employees who enter into an Inland Revenue approved sharesave contract. The price of each share option was at a discount of 20% from the market price at the date of granting the options. Options may normally be exercised during the period of six months after the completion of the sharesave contract. Share options During the year no fresh share options were granted to employees. Details of the options granted so far are set out in note 12 to the financial statements. Details of the Directors' Share Options are shown in the Director's Remuneration Report on page 25. Charitable and political donations Donations to charitable organisations amounted to #81,880 (2006: #100,692). Donations to political organisations amounted to #nil (2006: #nil). Directors' responsibilities The Directors' responsibilities are contained in the Statement of Directors' Responsibilities. Substantial shareholders As at 12 May 2007 the Company has been advised of the following holdings, in addition to those of the Directors disclosed above, of 3% or more of the nominal value of the Company's shares: Name Shareholding % Schroder Investment Management Limited 9,401,300 25.3% Barclays Global Investors 2,366,160 6.4% Hermes Pension Management 2,232,591 6.0% Halifax Share Dealing Services 2,148,735 5.8% Axa Rosenberg 1,878,444 5.1% Legal & General Investment Management 1,586,679 4.3% Canada Life 1,288,766 3.5% Payment policy and practice It is the Group's policy to settle the terms of payment with suppliers when agreeing the terms of the transaction to ensure that suppliers are aware of these terms. In general the trading terms entered into are payment at the end of the month following the month of invoice. Trade payables due at the year end amount to 41 days purchases (2006: 45 days). Research and development Details of research and development expenditure are shown in the Report of the Finance Director on page 7 under research and development expenditure. Auditor Grant Thornton UK LLP offer themselves for re-appointment as auditor in accordance with Section 385 of the Companies Act 1985. Annual General Meeting It is proposed that the next AGM be held on 8 August 2007, at 10.00 am, notice of which is set out on pages 59 to 61. In addition to the proposed resolutions to receive the Report and Accounts, declare a dividend, re-appoint Directors in accordance with the Company's Articles of Association, to appoint Grant Thornton UK LLP as Auditor and to authorise the Directors to fix the Auditor's remuneration; and to approve the Remuneration Report, it is proposed that the following business be transacted: Directors' authority to allot securities (Resolution 7 - Ordinary resolution) The Directors seek to renew this authority each year at the AGM. The effect of resolution 7 is to grant to the Directors authority to allot new securities limited to a maximum amount of #619,600 representing approximately one third of the Company's issued share capital as at 31 March 2007 (being the date of the Company's last Annual Accounts). This renewed authority would remain in force for 15 months from the passing of the resolution or, if earlier, the next AGM. Disapplication of pre-emption rights (Resolution 8 - Special resolution) The Directors seek to renew this authority each year at the AGM. Under the Companies Act 1985, shareholders have "rights of pre-emption" in relation to the issue of equity securities. This means that if new shares in the Company are to be offered for subscription for cash they must first be offered to the existing shareholders in proportion to their holdings at the time of such offer. The Companies Act requires that the Directors seek the approval of the shareholders if they wish to disapply these rights. The Directors are seeking authority to disapply pre-emption rights over 1,858,802 equity securities, representing approximately 5% of the issued share capital of the Company as at 31 March 2007. This renewed authority would remain in force for 15 months from the passing of the resolution or, if earlier, the next AGM. Company's authority to purchase its own shares (Resolution 9 - Special resolution) The Directors are seeking to renew the authority for the Company to purchase in the open market up to 10% of the issued share capital of the Company. The Company undertakes that it will, if the resolution is passed, only exercise such authority to buy back its own shares if such purchase would have the effect of increasing the earnings per share and if they believed that to do so would be in the best interests of the shareholders generally. If the resolution is passed the Company will be authorised to buy in one transaction or any number of transactions an aggregate maximum of 3,717,603 shares, representing approximately 10% of the issued share capital of the Company as at 20 June 2007 (being the latest practicable date prior to publication of the Notice of AGM). The maximum price the Company will be permitted to pay will be equal to 5% above the average middle market quotations for the five business days preceding the transaction and the minimum price will be 5 pence (being the nominal value of the shares). The total number of options to subscribe for ordinary shares outstanding as at 20 June 2007 was 2,056,478, representing approximately 5.5% of the issued share capital of the Company at such date. If the authority to purchase shares were to be exercised in full, the total number of options to subscribe for ordinary shares outstanding as at 20 June 2007 would represent 2.5% of the issued share capital (assuming no other further ordinary shares were issued after that date). Statement of Directors' Responsibilities The Directors are responsible for preparing the Annual Report and the Group financial statements in accordance with applicable law and International Financial Reporting Standards as adopted by the European Union and the parent company financial statements in accordance with applicable law and UK generally accepted accounting principles. Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing those financial statements, the Directors are required to: * select suitable accounting policies and then apply them consistently * make judgements and estimates that are reasonable and prudent * state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements * prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in the business. The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. They are responsible for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Services Authority. A copy of the financial statements of the Group is placed on the Goldshield website. The maintenance and integrity of the website is the responsibility of the Directors and the work carried out by the auditor does not involve consideration of these matters. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Accordingly, the auditor's accept no responsibility for any changes that may have occured to the financial statements since they were initially presented on the website. In so far as the Directors are aware: * there is no relevant audit information of which the Company's auditor's are unaware; and * the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor's are aware of that information. BY ORDER OF THE BOARD S Venkateswaran Secretary 26 June 2007 Consolidated Income Statement for the year ended 31 March 2007 Before Before impairment impairment and and Notes exceptional Exceptional Total exceptional Exceptional Total items items Impairment 2007 items items Impairment 2006 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 Revenue 2 74,274 - - 74,274 80,025 - - 80,025 Cost of sales (26,213) - - (26,213) (28,429) - - (28,429) ----------------------------------------------------------------------------------- Gross profit 48,061 - - 48,061 51,596 - - 51,596 Distribution costs (3,407) - - (3,407) (4,912) - - (4,912) Impairment losses 7 - - (3,800) (3,800) - - (2,992) (2,992) Exceptional legal and professional costs - (5,602) - (5,602) - (1,651) - (1,651) Other administrative expenses (35,350) - - (35,350) (35,509) - - 35,509) ----------------------------------------------------------------------------------- Administrative expenses (35,350) (5,602) (3,800)(44,752) (35,509) (1,651) (2,992)(40,152) ----------------------------------------------------------------------------------- Operating (loss)/profit 3 9,304 (5,602) (3,800) (98) 11,175 (1,651) (2,992) 6,532 Finance costs 5 (4) - - (4) (6) - - (6) Finance income 5 705 - - 705 281 - - 281 ----------------------------------------------------------------------------------- Profit before tax 10,005 (5,602) (3,800) 603 11,450 (1,651) (2,992) 6,807 Income tax expense 6 (4,047) 1,681 - (2,366) (3,422) 495 - (2,927) ----------------------------------------------------------------------------------- (Loss)/profit after tax attributable to shareholders of parent 5,958 (3,921) (3,800) (1,763) 8,028 (1,156) (2,992) 3,880 =================================================================================== (Loss)/earnings per share Basic (pence) 14 (4.7) 10.5 ======== ======== Diluted (pence) 14 (4.7) 10.4 ======== ======== Dividends Proposed dividend per share (pence) 15 5.1 5.1 ======== ======== Proposed dividend (#'000) 15 1,896 1,893 Dividends paid during ======== ======== the period (pence) 6.8 6.2 Dividends paid during ======== ======== the period (#'000) 15 2,525 2,300 ======== ======== The accompanying accounting policies and notes form an integral part of these financial statements. Consolidated Balance Sheet as at 31 March 2007 Notes 2007 2006 #'000 #'000 Assets Non-current Goodwill 7 7,703 10,237 Other intangible assets 7 13,329 19,515 Property, plant and equipment 8 3,539 1,612 Deferred tax assets 13 1,840 957 ------------------- 26,411 32,321 Current Inventories 9 8,480 11,530 Trade and other receivables 10 11,984 10,680 Cash and cash equivalents 11 23,321 15,855 ------------------- 43,785 38,065 ------------------- Total assets 70,196 70,386 =================== Equity Equity attributable to shareholders of Goldshield Group plc Share capital 12 1,859 1,856 Share premium 21,549 21,485 Translation reserve (692) (90) Retained earnings 17,966 22,221 ------------------- Total equity 40,682 45,472 ------------------- Liabilities Non-current Deferred tax liabilities 13 1,117 1,649 ------------------- 1,117 1,649 Current Provisions 16 5,177 1,278 Trade and other payables 17 16,092 15,677 Other liabilities 18 2,533 2,816 Current tax liabilities 4,595 3,494 ------------------- 28,397 23,265 ------------------- Total liabilities 29,514 24,914 ------------------- Total equity and liabilities 70,196 70,386 =================== The financial statements were approved by the Board of Directors on 26 June 2007 and signed on their behalf by: Ajit R Patel, Chief Executive Officer Rakesh V 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 2007 2007 2006 Note #'000 #'000 Cash flows from operating activities Result for the period before tax 603 6,807 Depreciation 632 512 Amortisation 4,661 5,880 Impairment losses 3,800 2,992 Equity settled share options 95 121 Finance costs 4 6 Finance income (705) (281) ---------------------------------------------------------------------------- 9,090 16,037 Decrease/(increase) in inventories 3,050 (229) (Increase)/decrease in trade and other receivables (1,304) 1,236 Increase/(decrease) in provisions, trade payables and other liabilities 3,826 (243) Taxes paid (2,678) (3,921) ---------------------------------------------------------------------------- Net cash from operating activities 11,984 12,880 Cash flows from investing activities Additions to property, plant and equipment (2,686) (963) Additions to other intangible assets - (225) Purchase of businesses and deferred consideration (75) (35) Interest received 705 281 ---------------------------------------------------------------------------- Net cash from investing activities (2,056) (942) Cash flows from financing activities Proceeds from share issue 67 55 Interest paid (4) (6) Dividends paid (2,525) (2,300) ---------------------------------------------------------------------------- Net cash from financing activities (2,462) (2,251) Net increase in cash and cash equivalents 7,466 9,687 Cash and cash equivalents at beginning of period 15,855 6,168 ---------------------------------------------------------------------------- Cash and cash equivalents at end of period 11 23,321 15,855 ============================================================================ 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 2007 Equity attributable to equity holders of Goldshield Group plc Share Share Translation Retained Minority Total capital premium reserve earnings interest equity #'000 #'000 #'000 #'000 #'000 #'000 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 ==================================================================== Balance 1 April 2006 1,856 21,485 (90) 22,221 - 45,472 Currency translation differences - - (602) - - (602) Deferred tax on translation reserve - - - 181 - 181 Deferred tax on pre 7 November grants of share options - - - (243) - (243) -------------------------------------------------------------------- Net losses not recognised in income statement - - (602) (62) - (664) Loss for the period - - - (1,763) - (1,763) -------------------------------------------------------------------- Total recognised expense for the period - - (602) (1,825) - (2,427) -------------------------------------------------------------------- Shares issued 3 64 - - - 67 Employee share based compensation - - - 95 - 95 Dividends paid - - - (2,525) - (2,525) -------------------------------------------------------------------- Balance at 31 March 2007 1,859 21,549 (692) 17,966 - 40,682 ==================================================================== The accompanying accounting policies and notes form an integral part of these financial statements. Notes to the Financial Statements 1. PRINCIPAL ACCOUNTING POLICIES Basis of preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards(IFRSs) as adopted by the European Union (EU) and as issued by the International Accounting Standards Board (IASB). 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. Adoption of new and revised Standards In the current year, the Group has adopted all of the new and revised Standards and interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (the IFRIC) of the IASB that are relevant to its operations and effective for the annual reporting periods beginning on 1 April 2006. The adoption of these new and revised Standards and Interpretations do not have a material financial impact on the financial statements of the Group. New IFRS standards and Interpretations not adopted The IASB and IFRIC have issued additional standards and interpretations which are effective for periods starting after the date of these financial statements. The following standards and interpretations with their effective date have yet to be adopted by the Group: * IFRS 7 Financial Instruments: Disclosures - 1 January 2007 * IFRS 8 Operating Segments - 1 January 2009 * IFRIC 8 Scope of IFRS 2 - 1 May 2006 * IFRIC 9 Reassessment of Embedded Derivatives - 1 June 2006 * IFRIC 10 Interim Financial Reporting and Impairment - 1 November 2006 * IFRIC 11 IFRS 2 - Group and Treasury Share Transactions - 1 March 2007 * IFRIC 12 Service Concession Agreements - 1 January 2008 The Group does not anticipate that the adoption of these standards and interpretations will have a material effect on its financial statements on initial adoption. Basis of consolidation The Group financial statements consolidate those of the Company and of its subsidiary undertakings drawn up to 31 March 2007. A subsidiary is an entity which the Company controls, this is achieved by owning more than 50% of the issued share capital. 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 for the Global Solutions - call centre business is determined by the man days spent on the project for rendering the service at the end of each billing cycle. Subscription revenue is accrued over the period of the subscription. 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 not 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. Capitalised development costs are amortised from the point at which the asset is ready to use on a straight-line basis over its useful life, not exceeding five years. 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. Land is not depreciated. 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. Directly attributable costs for construction of assets is shown under Capital work in progress and will be transferred to the relevant category on completion of construction of the asset. 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 leasee. 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 parties are charged to the profit and loss account as they are incurred. The provisions are not discounted as the impact is not material. Exceptional legal costs Exceptional legal costs are expenditure incurred and provided for defending the legal claims against the Group by Department of Heath and Serious Fraud Office. 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 fair values on initial recognition. 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 the 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. Equity comprises of the following: - Share capital - represents the nominal value of equity shares - Share premium - represents the excess over nominal value of fair value of consideration - Retained earnings - represents the accumulated retained profits - Translation reserve - represents gains or losses on foreign currency transactions Accounting estimates and judgements Refer to note 24 of Consolidated IFRS Financial Statements on page 49. 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 other business units like Country Distributors, Global Services, Wellbeing Centre, Wellbeing Villages, Resorts 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 2007 Retail Retail Other Brands Generics Hospitals D2C WE D2C NA Segments Total #'000 #'000 #'000 #'000 #'000 #'000 #'000 Revenue External sales 31,266 7,420 11,364 11,580 5,852 6,792 74,274 -------------------------------------------------------------------- Total revenue 31,266 7,420 11,364 11,580 5,852 6,792 74,274 -------------------------------------------------------------------- Result Segment result 4,743 135 2,539 (441) (2,653) (4,421) (98) -------------------------------------------------------------------- Operating loss (98) Finance costs (4) Finance income 705 Income tax expense (2,366) ------- Loss for the period (1,763) ======= Other information Segment assets 22,157 2,607 14,912 4,368 1,176 23,135 68,356 Unallocated corporate assets 1,840 ------- Consolidated total assets 70,196 ======= Segment liabilities 9,468 880 3,509 2,121 723 7,382 24,083 Unallocated corporate liabilities 5,712 ------- Consolidated total liabilities 29,795 ======= Capital expenditure - - 28 11 30 2,617 2,686 Depreciation and amortisation 4,134 - 101 1 32 1,025 5,293 Impairment losses 1,042 - - - 2,132 626 3,800 Non-cash expenses other than depreciation - - - - - 95 95 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 Geographical segments 2007 2006 #'000 #'000 Revenue United Kingdom 53,738 58,778 Ireland 12,814 12,255 North America 5,852 6,957 India 1,870 2,035 ---------------------- Total 74,274 80,025 ====================== Assets United Kingdom 41,626 43,003 Ireland 18,824 19,711 North America 1,176 3,681 India 8,570 3,991 ---------------------- Total 70,196 70,386 ====================== Capital expenditure United Kingdom 72 241 Ireland 28 42 North America 30 7 India 2,556 898 ---------------------- Total 2,686 1,188 ====================== 3. OPERATING (LOSS)/PROFIT The operating (loss)/profit is stated after charging: 2007 2006 #'000 #'000 Auditor's remuneration: - Audit services (see below) 77 64 - Other services (see below) 193 197 Depreciation and amortisation: - Intangible assets 4,661 5,880 - Property, plant and equipment 632 512 Hire of plant and machinery 139 88 Impairment losses 3,800 2,992 Exceptional legal and professional costs 5,602 1,651 Other operating lease rentals 1,095 1,043 Foreign exchange losses 366 205 Research and development: - current year expenditure 115 237 =================== Auditors remuneration for audit and non-audit services in jurisdictions in which the Group has a presence are analysed below: Group audit 2007 2006 #'000 #'000 Audit fees to Company's auditor for audit of the Group's annual accounts 77 64 ------------------- 77 64 =================== Other services 2007 2006 #'000 #'000 Audit fees to Company's auditor and associates for Company's subsidiaries pursuant to legislation 89 79 Advisory 48 40 Corporation tax 45 73 VAT 11 5 ------------------- 193 197 =================== 4. DIRECTORS AND EMPLOYEES Employees Staff costs during the year were as follows: 2007 2006 #'000 #'000 Wages and salaries 8,820 8,536 Social security costs 660 675 Share options 95 121 Other pension costs 253 253 ------------------- 9,828 9,585 =================== The average number of employees is analysed below: 2007 2006 Number Number Administration 341 310 Marketing and selling 456 431 Management 97 98 Warehouse 28 31 ------------------- 922 870 =================== The Group contributes to employee money pension schemes at a percentage of pay (depending on grade). The share option charge includes an amount of #32,000 (2006: #19,000) pertaining to key management personnel. Directors' remuneration The emoluments of the Directors were as follows: 2007 2006 #'000 #'000 Emoluments 1,631 1,537 Payments to third parties for consultancy services 113 5 Pension contributions to money purchase pension schemes 86 83 ------------------- 1,830 1,625 =================== During the year four Directors (2006: 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 22 to 26. 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: 2007 2006 #'000 #'000 Interest income resulting from - special interest bearing account 365 - - short term bank deposits 310 281 - corporation tax 30 - ------------------- Finance income 705 281 =================== Interest expense resulting from - bank overdrafts (1) (2) - corporation tax (2) - - others (1) (4) ------------------- Finance costs (4) (6) =================== 6. INCOME TAX EXPENSE 2007 2006 #'000 #'000 Result for the year before tax 603 6,807 Tax rate 30% 30% ------------------- Expected tax expense (181) (2,042) Adjustments for deferred tax 1,328 492 Tax rate adjustment for future period (tax rate will change for certain entities) (118) - Adjustment for non-deductible expenses - overseas losses not utilised (1,064) 628 - overseas profits not taxed 608 - - capital allowance 481 653 - other non-deductible expenses (4,303) (2,412) Adjustment to tax charge in respect of prior periods 883 (75) Other short term timing difference - (171) ------------------- Actual tax expense, net (2,366) (2,927) =================== Comprising Current tax expense (4,459) (3,344) Adjustment to tax charges in respect of prior periods 883 (75) ------------------- (3,576) (3,419) Deferred tax income resulting from the - origination and reversal of temporary difference 1,210 492 ------------------- 1,210 492 ------------------- (2,366) (2,927) =================== 7. INTANGIBLE ASSETS Brand names know-how licences and trade marks Goodwill Total #'000 #'000 #'000 Cost At 1 April 2005 64,356 26,050 90,406 Exchange differences 5 1,299 1,304 Additions acquired separately 225 - 225 ---------------------------- At 31 March 2006 64,586 27,349 91,935 ---------------------------- At 1 April 2006 64,586 27,349 91,935 Exchange differences (11) (1,912) (1,923) ---------------------------- At 31 March 2007 64,575 25,437 90,012 ---------------------------- Amortisation and impairment losses At 1 April 2005 37,567 14,742 52,309 Exchange differences 5 997 1,002 Amortisation 5,880 - 5,880 Impairment losses 1,619 1,373 2,992 ---------------------------- At 31 March 2006 45,071 17,112 62,183 ---------------------------- At 1 April 2006 45,071 17,112 62,183 Exchange differences (10) (1,654) (1,664) Amortisation 4,661 - 4,661 Impairment losses 1,524 2,276 3,800 ---------------------------- At 31 March 2007 51,246 17,734 68,980 ---------------------------- Carrying amounts At 1 April 2005 26,789 11,308 38,097 ---------------------------- At 31 March 2006 19,515 10,237 29,752 ---------------------------- At 31 March 2007 13,329 7,703 21,032 ---------------------------- Subsequent to the annual impairment test for 2007, the carrying amount of goodwill is allocated to the following cash generating units: 2007 2006 #'000 #'000 Hospitals 6,980 7,090 D2C North America - 2,280 Regina 723 867 ----------------- 7,703 10,237 ================= 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 2007 2006 Hospitals Constant Constant D2C North America Constant 4% Regina Constant 7% ======================= Discount rates 2007 2006 #'000 #'000 Hospitals 8% 8% D2C North America 8% 8% Regina 8% 8% ======================= Management assumes the Hospitals, D2C North America and Regina units to continue to earn the current level of profit margins and achieve the same level of sales in the future forecasts. The growth rate for the Hospitals business, D2C North America and Regina business is assumed to be constant based on past experience. The discount rate applied for the impairment review workings is based on the Weighted Average Cost of Capital for the Group. The US business has shown a downward trend reflected by lower revenue and reduced profitability as compared to previous years. The future forecasts for the business do not indicate substantial improvement in both revenue and profitability, which has resulted in recognising further impairment charge in the year. The Regina business has shown a small improvement in the turnover in the current year, however based on the profitability and the assumption of simliar level of sales in the future forecasts in an impairment charge is recognised. The related goodwill impairment loss of #2,276,000 (2006: #1,373,000) is included under "Impairment losses" in the income statement. The amount attributed to D2C North America unit is #2,132,000 (2006: #1,148,000) and Regina unit is #144,000(2006: #225,000). 8. PROPERTY, PLANT AND EQUIPMENT Land & Capital Work Office Plant & Motor buildings in progress equipment equipment vehicles Total #'000 #'000 #'000 #'000 #'000 #'000 Cost 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 ------------------------------------------------------------------------ At 1 April 2006 791 - 2,734 539 16 4,080 Exchange differences (71) - (194) (15) (2) (282) Additions 1,664 130 733 146 13 2,686 Disposals - - (3) - - (3) ------------------------------------------------------------------------ At 31 March 2007 2,384 130 3,270 670 27 6,481 ------------------------------------------------------------------------ Depreciation 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 ------------------------------------------------------------------------ At 1 April 2006 87 - 1,989 385 7 2,468 Exchange differences (8) - (134) (12) (1) (155) Depreciation 63 - 436 127 6 632 Disposals - (3) - - (3) ------------------------------------------------------------------------ At 31 March 2007 142 - 2,288 500 12 2,942 ------------------------------------------------------------------------ Carrying amounts At 1 April 2005 54 - 842 217 5 1,118 ------------------------------------------------------------------------ At 31 March 2006 704 - 745 154 9 1,612 ------------------------------------------------------------------------ At 31 March 2007 2,242 130 982 170 15 3,539 ------------------------------------------------------------------------ Land and buildings includes #1,655,000 (2006: #353,000) of land which is not being depreciated. 9. INVENTORIES 2007 2006 #'000 #'000 Finished goods and goods for resale 11,309 14,124 Write down on inventories (2,829) (2,594) -------------------- 8,480 11,530 ==================== In 2007, a total of #26,213,000 of inventories was included in the income statement as an expense (2006: #28,429,000). An amount of #1,052,500 for write down of inventories (2006: #1,359,000) has been included within administrative expenses in the income statement. No reversal of previous write-downs was recognised as a reduction of expense in 2007 or 2006. None of the inventories are pledged as securities for liabilities. 10. TRADE AND OTHER RECEIVABLES 2007 2006 #'000 #'000 Trade receivables 11,443 11,825 Allowance for doubtful debts (836) (1,879) -------------------- Trade receivables, net 10,607 9,946 Prepayments and accrued income 1,377 734 -------------------- Total 11,984 10,680 ==================== 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 2007 2006 #'000 #'000 Cash at bank and in hand 20,212 9,351 Short-term bank deposits 3,109 6,504 -------------------- Total 23,321 15,855 ==================== The effective interest rate on short-term bank deposits was 4.8% (2006: 3.8%); these deposits have an average maturity of 22 days (2006: 9 days). 12. SHARE CAPITAL AND SHARE OPTIONS 2007 2006 #'000 #'000 Authorised 100,000,000 ordinary shares of 5 pence each (2006: 100,000,000) 5,000 5,000 ==================== 2007 2006 #'000 #'000 Allotted, called up and fully paid 37,176,033 ordinary shares of 5 pence each (2006: 37,126,611) 1,859 1,856 ==================== 2007 2006 Share issued and fully paid, Number Number - beginning of the year 37,126,611 37,070,778 - issued during the year 49,422 55,833 ------------------------ Share issued and fully paid 37,176,033 37,126,611 ======================== During the year 49,422 shares were issued under the unapproved employee share option scheme and the employee share save scheme. The difference between the total consideration of #66,826 and the nominal value of #2,471 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 25. The market price at 31 March 2007 was 170 pence and the range during the year ended 31 March 2007 was 170 pence to 337 pence. The following share options which have been granted by the Company were outstanding at the year end: Date of grant Earliest Latest 2007 2006 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 22,917 31,580 5p Ordinary shares at 640 pence 11-Jan-00 11-Jan-03 10-Jan-10 - 1,923 5p Ordinary shares at 640 pence 11-Jan-00 11-Jan-05 10-Jan-10 175,337 177,260 5p Ordinary shares at 871 pence 10-Jul-00 10-Jul-03 9-Jul-10 7,453 8,118 5p Ordinary shares at 871 pence 10-Jul-00 10-Jul-05 9-Jul-10 1,805 1,805 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-10 924 924 5p Ordinary shares at 686 pence 18-Jul-01 18-Jul-04 17-Jul-11 7,261 7,686 5p Ordinary shares at 686 pence 18-Jul-01 18-Jul-06 17-Jul-11 123,491 124,499 5p Ordinary shares at 586.5 pence 3-Dec-01 3-Dec-04 2-Dec-11 3,545 3,783 5p Ordinary shares at 586.5 pence 3-Dec-01 3-Dec-06 2-Dec-11 3,545 3,783 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-12 294,110 321,979 5p Ordinary shares at 196 pence 4-Aug-03 4-Aug-06 4-Aug-13 - 56,939 5p Ordinary shares at 196 pence 4-Aug-03 4-Aug-08 3-Aug-13 59,540 72,805 5p Ordinary shares at 157.5 pence 4-Aug-03 4-Aug-06 4-Aug-13 - 38,549 5p Ordinary shares at 157.5 pence 4-Aug-03 4-Aug-08 4-Aug-13 46,757 53,767 5p Ordinary shares at 260.7 pence 26-Jul-04 26-Jul-07 25-Jul-14 161,042 180,044 5p Ordinary shares at 260.7 pence 26-Jul-04 26-Jul-09 25-Jul-14 161,042 180,044 5p Ordinary shares at 270 pence 21-Jul-05 21-Jul-08 20-Jul-15 101,448 124,347 5p Ordinary shares at 270 pence 21-Jul-05 21-Jul-10 20-Jul-15 99,415 122,314 The employee 'sharesave scheme' 5p Ordinary shares at 696 pence 23-Aug-00 1-Oct-07 31-Mar-08 1,056 1,056 Date of grant Earliest date Latest date 2007 2006 of exercise of exercise Number Number The employee 'sharesave scheme' 5p Ordinary shares at 555 pence 10-Aug-01 1-Oct-04 31-Mar-07 - 304 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 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 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 The Directors' interests (including beneficial and family interests) in the above share options are set out in the Directors Remuneration Report on page 25. 2007 2007 2006 2006 Weighted average Number Weighted average Number exercise price of exercise price of Pence options Pence options Outstanding at the beginning of the period 300.34 2,351,890 304.94 2,302,891 Forfeited/surrendered during the period 254.99 (245,990) 325.62 (204,988) Exercised during the period 135.22 (49,422) 190.65 (28,817) Granted during the period - - 270.00 282,804 -------------------------------------------------------- Outstanding at the end of the period 309.73 2,056,478 300.34 2,351,890 -------------------------------------------------------- Exercisable at the end of the period 331.97 1,093,472 289.60 981,998 ======================================================== As at 31 March 2007, the Group maintained two sharebased 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 three, five or seven years. The sharesave scheme can be exercised for 6 months only after the three, five or seven year maturity dates. The options outstanding at 31 March 2007 have an exercise price in the range of 126 pence to 871 pence and a weighted average contractual life of 4.10 years. There were no share options granted during the year. 13. DEFERRED TAX ASSETS AND LIABILITIES Defered tax assets and liabilities are attributable to the following: 2007 2007 2006 2006 Deferred Deferred Deferred Deferred tax assets tax liabilities tax assets tax liabilities Non-current assets #'000 #'000 #'000 #'000 Other intangible assets - 1,117 - 1,894 Property, plant and equipment 78 - - (77) Share options 96 - 310 - Translation reserve 208 - 27 - ------------------------------------------------------------ Total carried forward 382 1,117 337 1,817 2007 2007 2006 2006 Deferred Deferred Deferred Deferred tax tax tax tax assets liabilities assets liabilities #'000 #'000 #'000 #'000 Total brought forward 382 1,117 337 1,817 Current liabilities Other liabilities 963 - - (168) Unused tax losses 495 - 620 - ------------------------------------------------------------ Total 1,840 1,117 957 1,649 ============================================================ Equity Translation reserve 181 - (93) - Share options (243) - 243 - ------------------------------------------------------------ Total (62) - 150 - ============================================================ Please also refer to note 6 for information on the Group's tax expense. 14. (LOSS)/EARNINGS PER SHARE The calculation of the basic (loss)/earnings per share is based on the (loss)/ 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 (loss)/earnings and weighted average number of shares used in the calculations are set out below. 2007 2006 Weighted Weighted average Per share average Per share Loss number of amount Earnings number of amount #'000 shares'000 pence #'000 shares'000 pence (Loss)/profit attributable to shareholders (1,763) 37,146 - 3,880 37,098 - Basic (loss)/earnings per share (4.7) 10.5 ======== ======== Diluted (loss)/earnings per share 37,146 (4.7) 37,427 10.4 ======== ======== Weighted average number of ordinary shares 2007 2006 shares 000's shares 000's Issued ordinary share at 1 April 37,127 37,071 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 Effect of share issued in September 2006 18 - Effect of share issued in March 2007 1 - ----------------------------- Weighted average number of ordinary share at 31 March 37,146 37,098 ============================= Weighted average number of ordinary shares (diluted) 2007 2006 000's 000's Weighted average number of ordinary share at 31 March 37,146 37,098 Effect of share options on issue - 329 Weighted average number of ordinary shares ----------------------------- (diluted) at 31 March 37,146 37,427 ============================= 15. EQUITY DIVIDENDS 2007 2006 #'000 #'000 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 Ordinary shares - dividend for 2006 of 5.1 pence per share paid 18 August 2006 1,893 - Ordinary shares - dividend for 2007 of 1.7 pence per share paid 9 January 2007 632 - ----------------------------- 2,525 2,300 ============================= 2007 2006 Pence Pence Proposed dividend per share 5.1 5.1 ============================= 2007 2006 #'000 #'000 Proposed dividend 1,896 1,893 ============================= 16. PROVISIONS #'000 Carrying amount 1 April 2006 1,278 Additional provisions 5,602 Used provisions (1,703) ------------ Carrying amount 31 March 2007 5,177 ============ Provisions are considered current as their timing of settlement is not at the discretion of the Group. Provisions 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 a period of 2-20 months from the date of initiation based on the actual legal costs as and when incurred. As the timing of spend on the legal costs is dependant on the progress of the litigation which involves various counter parties and legal authorities, that Group cannot reliably estimate the amounts that will be paid after more than 12 months from the balance sheet date. Thus, the whole amount is classified as current. 17. TRADE AND OTHER PAYABLES 2007 2006 #'000 #'000 Trade payables 5,123 5,219 Capital creditors 75 150 Accruals 10,893 10,308 ----------------------------- 16,092 15,677 ============================= 18. OTHER LIABILITIES 2007 2006 #'000 #'000 Other creditors 2,154 2,242 Social security and other taxes 379 574 ----------------------------- 2,533 2,816 ============================= 19. OPERATING LEASES The Group's minimum operating lease payments are as follows: 2007 2006 Land & 2007 Land & 2006 buildings Other buildings Other #'000 #'000 #'000 #'000 Within one year 887 46 952 53 Between one to five years 1,678 5 1,264 8 More than five years 1,524 - 367 - ---------------------------------------- 4,089 51 2,583 61 ======================================== Lease payments recognised as an expense during the period amount to #1,095,000 (2006: #1,065,000). No sublease income is expected as all assets held under lease agreements are used exclusively by the Group. No operating lease agreements 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 at Mumbai, none of the operating lease agreements contain renewal options or escalation clauses. The Company did not have any financial leases at 31 March 2007 (31 March 2006: #nil). 20. FINANCIAL INSTRUMENTS The Group uses financial instruments, comprising cash, short term borrowings, trade receivables and trade payables, 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 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 (2006: #500,000). 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. #20.2 million (2006: #20.1 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, however there were none in place at the year end. 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 2007 Sterling 338 2,763 890 (2) 3,989 Dollar 316 - - - 316 Euro 537 - - - 537 Indian Rupees - - - 4,228 4,228 ------------------------------------------------- 1,191 2,763 890 4,226 9,070 ------------------------------------------------- 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 ------------------------------------------------- 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 2007, the Group entered into contracts to purchase and construct property, plant and equipment for #453,000 (2006: #172,000). These commitments are expected to be settled in the following financial year. 22. SUBSIDIARY UNDERTAKINGS At 31 March 2007 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 England and Wales #1 ordinary shares 100% Marketing and Limited 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 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 Real Estate Pvt. Limited India Ordinary shares 100% Development of Wellbeing Villages and Resorts Complete Wellbeing Publishing India Ordinary shares 100% Publishing Pvt. Limited magazines for consumers and selling copies, subscriptions and advertising space 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 England & Ordinary shares 100% Accounting and Limited Wales Taxation Service 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 2007 were #583,000 (2006: #329,000). 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. The claim is presently pending before the High Court Commercial in Ireland. Serious Fraud Office (SFO) Investigation update In April 2006, the SFO framed formal charges against the company and two of the Company Directors. The Directors do not believe the Group has acted in an unlawful manner and the case is being defended. Legal and professional costs in this matter have been provided for. Scottish and Northern Irish Department of Health claims Claims have 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 Directors believe the Group is free from wrong-doing in respect of these allegations. A defence has been filed. Further information required by IAS 37 is not disclosed on the grounds that it can be expected to prejudice the outcome of the litigation. 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 judgements concerning the future. The estimates and judgements 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. Refer to note 7 of Consolidated IFRS Financial Statements on page 40. 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. Share options The share options calculation takes into account future dividends of 6 pence and a volatility rate of 45%, based on expected share price. It is assumed that the 3 and 5 year share save options are held for 3 and 5 years respectively, ie. the duration of the savings contracts, because the bonus is paid then and the employee has cash tied up. For the 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. The riskfree interest rate was determined at 5%. The underlying expected volatility was based upon a calculation of historic volatility during the period 2002-2004. Income taxes The Group is subject to taxes in various jurisdictions. Significant judgment is required in determining the Group provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates as to whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provision in the year in which such determination is made. 25. RELATED PARTY TRANSACTIONS The Group has agreed to an unsecured facility amounting to #500,000 (2006: #nil) each to Ajit R Patel and Kirti V Patel, for payment of legal fees in defending charges framed by the Serious Fraud Office (SFO). An amount of #200,000 (2006: #nil) has been provided for against these facilities and forms part of the exceptional legal costs in the Income Statement. The amount drawn against these facilities as at 31 March 2007 is #482,000 (2006: #nil). Subsequent to 31 March 2007 the Group has received #800,000 from the Insurance Company and the broker against settlement of claim for the Director's and Officer's Insurance policy which has been set against the unsecured facility to the Director's. 26. POST BALANCE SHEET EVENTS Settlement of English Department of Health claims The Group has reached an agreed #4 million settlement with the English Department of Health regarding the alleged conspiracy surrounding the sale of the anticoagulant drug, warfarin. Under the terms of the settlement Goldshield have agreed to pay this amount, on a full and final basis and without admission of liability. Disposal of certain Indian business and assets To enable the business to focus both management time and the full resources of Goldshield on its Pharmaceutical and Healthcare businesses, it has been decided that the Group will dispose of certain of the non-core Indian businesses and also to outsource the development of the Wellbeing Healthcare villages and resort in Goa. The sites identified by the Group will be retained pending receipt of the planning approvals at which time they will be co-developed. Ajit R Patel has expressed an interest in acquiring these non-core assets and has entered into an agreement with Goldshield, summary details of which are set out below. Ajit R Patel, or a company controlled by him, will purchase the entire issued share capital of Goldshield Business Solutions Private Limited (GBSPL), an Indian incorporated wholly owned subsidiary of Goldshield for a consideration of INR 110 million (approximately #1.4 million). The consideration will be payable in cash on completion and will be applied to general corporate purposes. GBSPL will be required by 28 February, 2008 to change its name to Sanda Business Solutions and the Goldshield name will revert to the Group. Company Balance Sheet at 31 March 2007 Notes 2007 2006 #'000 #'000 Fixed assets Goodwill 5 809 2,127 Other intangible assets 5 12,521 17,383 Investments 6 7,159 6,871 ----------------------- 20,489 26,381 ----------------------- Current assets Debtors: due after more than one year 7 3,893 9,919 Debtors: due within one year 7 3,097 7 Cash at bank and in hand 9,974 7,829 16,964 17,755 Creditors: amounts falling due within one year 8 (1,911) (13,160) ----------------------- Net current assets 15,053 4,595 ----------------------- Total assets less current liabilities 35,542 30,976 Provisions for liabilities 9 (1,117) (1,894) ----------------------- 34,425 29,082 ======================= Capital and reserves Called up share capital 10 1,859 1,856 Share premium account 11 21,549 21,485 Profit and loss account 11 11,017 5,741 ----------------------- Shareholders' funds 12 34,425 29,082 ======================= The financial statements were approved by the Board of Directors on 26 June 2007 and signed on their behalf by: Ajit R Patel, Chief Executive Officer Rakesh V Patel, Finance Director The accompanying accounting policies and notes form an integral part of these financial statements. Notes to the Company's Financial Statements 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. 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 fair values, which equal the estimated present value of the future cash flows. * Bank borrowings Interest bearing bank loans and overdrafts are recorded at the fair value. 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 value. * Equity instruments Equity instruments issued by the Company are recorded at the fair value. 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 profit after tax for the year of the Company was #7,801,000 (2006: Loss #1,290,000) which is dealt with in the financial statements of the Company. Auditors remuneration The audit fees for the Company was #6,000 (2006: #5,000). Auditor's remuneration for other services is disclosed in note 3 of Consolidated IFRS financial statements on page 38. Fees paid to Company's auditor, Grant Thornton UK LLP, and its associates for services other than statutory audit of the Company are not disclosed in Goldshield Group plc's accounts since the consolidated accounts of Goldshield Group plc are required to disclose non-audit fees on a consolidated basis. 3. DIRECTOR AND EMPLOYEES There were no employees in the Company as at 31 March 2007 and 31 March 2006. Details in respect of Directors' emoluments are included within the Directors' Remuneration Report on page 24. 4. EQUITY DIVIDENDS 2007 2006 #'000 #'000 Ordinary shares - dividend for 2005 of 4.5 pence per share paid on 3 August 2005 - 1,669 Ordinary shares - dividend for 2006 of 1.7 pence per share paid on 13 January 2006 - 631 Ordinary shares - dividend for 2006 of 5.1 pence per share paid on 18 August 2006 1,893 - Ordinary shares - dividend for 2007 of 1.7 pence per share paid on 9 January 2007 632 - --------------------------- 2,525 2,300 =========================== 2007 2006 Pence Pence Proposed dividend per share 5.1 5.1 =========================== 2007 2006 #'000 #'000 Proposed dividend 1,896 1,893 =========================== 5. INTANGIBLE FIXED ASSETS Brand names know-how licences and trade marks Goodwill Total #'000 #'000 #'000 Cost At 1 April 2006 and 31 March 2007 48,894 14,605 63,499 --------------------------------------- Amortisation and impairment losses At 1 April 2006 31,511 12,478 43,989 Amortisation 4,105 551 4,656 Impairment losses 757 767 1,524 --------------------------------------- At 31 March 2007 36,373 13,796 50,169 --------------------------------------- Carrying amounts At 31 March 2007 12,521 809 13,330 ======================================= At 31 March 2006 17,383 2,127 19,510 ======================================= 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. The discount rate used to calculate the impairment loss is 8%. The length of the forecast period considered for the impairment workings is 2 to 5 years based on the acquisition date of the products and no growth in revenue is considered in the future forecasts. 6. FIXED ASSET INVESTMENTS 2007 2006 #'000 #'000 Investments in Group undertakings at cost 7,159 6,871 ================== 2007 Cost #'000 At 1 April 2006 6,871 Additions 4,758 ------- At 31 March 2007 11,629 Amounts written off in year ended 31 March 2007 (4,470) ------- Net book amount at 31 March 2007 7,159 ------- Shares in subsidiary undertakings Refer Note 22 of Consolidated IFRS financial statements on Page 48. 7. DEBTORS Debtors due after more than one year 2007 2006 #'000 #'000 Amounts owing by subsidiary undertakings 3,893 9,919 =================== Debtors due within one year 2007 2006 #'000 #'000 Other debtors 1 - Amounts owing by subsidiary undertakings 3,096 - Prepayments and accrued income - 7 ------------------ 3,097 7 =================== 8. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2007 2006 #'000 #'000 Amounts owing to subsidiary undertakings - 11,346 Capital creditors 75 150 Current taxation 1,326 1,104 Social security and other taxes 174 224 Other creditors 336 336 ---------------------------- 1,911 13,160 ============================ 9. PROVISIONS FOR LIABILITIES 2007 2006 #'000 #'000 Deferred taxation 1,117 1,894 ============================ Deferred taxation provided for in the financial statements is set out below: 2007 2006 #'000 #'000 Accelerated capital allowances 1,117 1,894 ---------------------------- Total 1,117 1,894 ============================ 2007 2006 #'000 #'000 At 1 April 2006 1,894 2,913 Movement in the year (777) (1,019) ---------------------------- At 31 March 2007 1,117 1,894 ============================ 10. CALLED UP SHARE CAPITAL 2007 2006 #'000 #'000 Authorised 100,000,000 ordinary shares of 5 pence each (2006: 100,000,000) 5,000 5,000 ============================ 2007 2006 #'000 #'000 Allotted, called up and fully paid 37,176,033 ordinary shares of 5 pence each (2006: 37,126,611) 1,859 1,856 ============================ During the year 49,422 shares were issued under the unapproved employee share option scheme and the employee share save scheme. The difference between the total consideration of #66,826 and the nominal value of #2,471 has been credited to the share premium account Share options Refer Note 12 of Consolidated IFRS financial statements on pages 43 to 44. 11. SHARE PREMIUM ACCOUNT AND RESERVES Profit Share & loss premium account account #'000 #'000 At 1 April 2006 5,741 21,485 Equity dividends paid (2,525) - Premium on allotment during the year - 64 Retained profit for the year 7,801 - ---------------------------- At 31 March 2007 11,017 21,549 ============================ 12. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2007 2006 #'000 #'000 Profit/(loss) for the financial year after taxation 7,801 (1,289) Equity dividends paid (2,525) (2,300) Issue of shares 67 128 ---------------------------- Net increase/(decrease) in shareholders' funds 5,343 (3,461) Shareholders' funds at 1 April 2006 29,082 32,543 ---------------------------- Shareholders' funds at 31 March 2007 34,425 29,082 ============================ 13. CONTINGENT LIABILITIES Refer to note 23 of Consolidated IFRS financial statements on page 49. 14. POST BALANCE SHEET EVENTS Refer to note 26 of Consolidated IFRS financial statements on page 50. This information is provided by RNS The company news service from the London Stock Exchange END FR UNAARBARNUUR
1 Year Goldshield Chart |
1 Month Goldshield Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions