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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Goldshield Grp | LSE:GSD | London | Ordinary Share | GB0002893823 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 486.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:9621M
Goldshield Group PLC
30 November 2006
GOLDSHIELD ANNOUNCES INTERIM RESULTS
Goldshield Group plc ("Goldshield"), the generic pharmaceutical company, today
announces its unaudited interim results for the six months to 30 September 2006.
*Sales #36.0 million (2005: #39.9 million)
*EBTA #6.8 million (2005: #7.3 million)
*EPS loss (9.8p) (2005: 3.4 p)
*Net Cash position of #17.2 million (2005: # 8.2 million)
*Interim dividend of 1.7p to be paid on 11 January 2007 (2005: 1.7p)
*Exciting opportunities in India
Commenting on the results, Ajit Patel, Chief Executive, said,
" Although the overall results are mixed, I am satisfied with the progress made.
We are taking steps to invest in new initiatives that will deliver improving
results in the future. During the period we have started the process of
re-positioning ourselves as a provider of wellbeing products and services.
We have started development of the first phase of our 'Wellbeing' initiative."
-ends-
Date: 30 November 2006
For further information contact:
Goldshield Group PLC cityPROFILE
Ajit Patel, Chief Executive Simon Courtenay
Rakesh Patel, Finance Director William Attwell
020-8588-9100 020-7448-3244
www.goldshieldplc.com
-------------------------
Chairman's statement Interim Results September 2006
I am delighted to have become Chairman of Goldshield. Since joining the Company,
I have been impressed by the strategic growth plans and the dedication and
foresight of its CEO, Directors and managers. The Company has continued to
achieve success and make excellent progress across its operations despite a
backdrop of adversity.
In April this year, after 4.5 years of protracted investigation by the SFO,
charges were brought against the Company and two of its most senior Directors
regarding alleged illicit activities in the late nineties. The Company and both
directors deny strongly any allegations of wrongdoing. A substantial amount of
energy and resources has had to be devoted by senior staff to assist the SFO
with its enquiries.
Since taking office, I have tried to mitigate the impact of this litigation by
restricting much of the responsibility for its progress to myself and two other
Directors. This has enabled the senior operational management team to focus on
the Company's development and growth strategy. In this regard I was pleased to
be present in India at the laying of the foundation stone on the first of two
substantial building projects under the "Wellbeing" banner. We have high hopes
or the development of this operation. Moreover, the period under review saw the
successful publication of our first magazine, "Complete Wellbeing", and the
setup of our first clinic in Mumbai. These projects herald the beginning of a
new chapter in the Company's history.
My appointment as Chairman was due to my predecessor, Peter Brown, standing down
after three years. Peter remains on the Board as a non-executive Director until
we appoint a suitable replacement. Peter's wise counsel has been of huge value
to the Company through difficult and challenging times and I would like to thank
him personally for his energy and guidance.
Dr. Keith Hellawell
Chairman
29 November 2006
Chief Executive Officer's Operating Review
Operating Review
The Board is pleased with the progress that the Company has made in the first
six months of the year. There has been much progress towards building the
platform from which the Company will drive its future growth.
Sales for the period ended were lower at #36.0 million (2005: #39.9 million) and
loss before tax at #3.6 million (2005: profit #3.2 million). Pre exceptional
earnings before tax, amortisation and impairment losses (EBTA) were #6.8 million
(2005: #7.3 million). Notwithstanding the legal provisions and impairment
charges made in this period, the Board believes the performance of the second
half will be at the similar level to the first.
The Company is still making solid progress and to demonstrate our confidence in
the future, I am therefore pleased to announce that the Board is recommending
an interim dividend of 1.7 pence (2005: 1.7p)
The shortfall in sales is explained by our strategic decision to concentrate
only on the more profitable generics, the impact of parallel imports of our core
profitable products; and the effects of further erosions of our market share in
the European direct sales business. The earnings shortfall is also due to
increased overheads associated with the investment in new activities in India.
During the period we have started the process of repositioning ourselves as a
provider of a range of wellbeing products and services. Global spend on
healthcare services is growing as we expand the range of products and services
we offer under the wellbeing brand.
We have also licensed our first medically approved "Dietary Fat Binder",
"Lipobind" which will be sold without a prescription. It will be launched early
next year across multiple territories, an important first for Goldshield.
Legal issues
As outlined in the Chairman's Statement in April this year the Serious Fraud
Office charged the Company and 2 directors in connection with its investigation
into the market for the anti-coagulant drug, Warfarin.
We are continuing with the preparations to defend our position robustly.
There are no further developments to report in our case with the Department of
Health.
The Company has reviewed the legal costs that will be required to defend a trial
and has provided for #4.2 million as part of the exceptional legal costs in the
income statement.
The Company supports two of its Directors, Kirti Patel and myself, in defending
the charges framed by the Serious Fraud Office and has advanced unsecured loans
as mentioned in the Note 9 on page 18.
Operations
In India, the test marketing of wellbeing products is progressing well and the
results are very encouraging. We expect to start increasing our marketing and
sales efforts early next year. We are launching a direct sales operation in
India and we have also been test marketing our "Healthcare at Home" service in
the therapeutic area of oncology. Homecare is an exciting growth market where we
have an early entrant advantage. We see the opportunity to later branch into
nephrology & haematology.
Work on our first wellbeing centre is complete and we are currently in the
process of launching this into the market. The initial feedback from visitors
is very encouraging. We anticipate our official opening in the second week of
December. The second of our centres is already under construction and we expect
this to open in early February. The diagnostic and wellbeing market segment is
going through a major growth phase in India and we are expecting to exploit the
opportunities this trend presents.
Plans for both our retirement village and the wellbeing resort in Goa have been
submitted and we are currently awaiting approvals. We are slightly behind
schedule on the approval process but all issues have now been resolved and we
expect approvals for the village before the year end and approval for the resort
to follow during late January to early February 2007.
The Hospitals business in Europe achieved sales of #5.6 million (2005: #5.6m).
The UK business has continued to restructure its distribution model. This has
had the benefit of reducing stock and increasing our control of our supply to
hospitals. This in turn has resulted in a reduced distribution cost whilst
improving the quality and efficiency of service. The change in NHS purchasing to
a single National Tender first introduced in November 2004 and finalised by
June 2006 has seen the cancellation of several regional contracts, which has
affected our sales.
The European business has grown by 22% over the previous year achieving sales of
#261k (2005: #214k) despite supply restrictions due to pending regulatory
approvals. The launch of CE marked devices and export sales of some products
have contributed to this growth and will support future growth.
Our range of differentiated Bupivacaine epidural infusions has received
Department of Health (DOH) and National Patient Safety Association (NPSA)
approval and we anticipate wider European interest in our "Bufecaine"
(Bupivacaine and Fentanyl) infusions which will create greater opportunities
for us throughout the UK and EU.
Overall all the direct to consumer businesses continue to disappoint. Sales were
down by over #1.0 million as compared to same period last year.
Recruitment of new customers at the right cost continues to affect the business.
That said, a combination of new products, new routes to market and a strategic
evaluation in September 2006 are now enabling us to attract new customers at
lower cost.
In particular, "Lipobind", our new clinically proven and approved fat binder
will attract new customers and help rebuild sales. The "Flexeze" brand, made a
good contribution towards sales, boosted by the promotion of the high value
"Flexeze XBS".
In France we have lost ground as products have had to be re-aligned to conform
to the New European and French regulations. This has resulted in a lot of
product discontinuations. New products and brands that meet the revised
guidelines and customer needs will be introduced over the next few months.
The combined businesses of Goldshield Direct and Goldshield Elite in North
America achieved sales of #3.0 million against #3.4 million in the same period
of last year. This business has been investing in being marketing-led and
customer recruitment. It is the unit's goal to develop its online division and
other distribution avenues until they represent a majority of its sales with an
improved acquisition cost-per-new customer. As life cycles of products become
shorter, these businesses will focus on introducing new products quickly and
effectively followed by replacements as each product life-cycle nears its end.
Also the focus will be on driving a large percentage of revenue from "new"
products - such as "MAXfx" which has contributed approximately 250,000 USD
since its launch this year.
Sales through European retail have also dipped in the first half. Some of this
reduction has been a result of parallel imports whilst we have deliberately
reduced some of our low margin generic sales. Some innovative strategies in
generics will yield slightly better margins in the second half.
We continue to face delays in the technical transfer of products that were
acquired previously from Wyeth, further impacting sales and profits. Our key new
products Codipar and Ostex are however showing encouraging sales growth.
In Europe, we have adopted a model of working through distributors selected by
their channel expertise. This new model is now showing encouraging signs and we
are confident of building several new partnerships for many of our products.
This should result in an increase in sales over the coming months.
In the UK we have also started an aggressive campaign to gain wider distribution
for a range of OTC products through Boots and other multiple retailers as well
as direct selling organisations like Ideal Home Shopping.
Sales via country distributors in international markets have shown a slight
increase despite some inventory issues relating to core products. This is
largely a result of new distributors for many of our products across a range of
countries. This model adopted in all countries other than UK and India should
yield more profitable growth in the next 12 to 24 months.
New products
Product development has taken a slight back seat for the last few years pending
restructuring of our business units. However they have been actively researching
new areas and as a result licensed our new fat binding product, Lipobind. Over
the next 12 months, this product will be launched in many parts of the world
where we have the rights to market. There have also been a number of smaller
regional and Unit specific product launches. Now that we are focused on working
with multiple country and channel specific partners in most parts of the world,
we will start to see more new product sales as well as sales from line
extensions of our established brands.
Current trading and future prospects
The Board expects that the performance in the second half will be at a similar
level to the first. This will result in the Company falling short of current
market expectations.
In light of the ongoing litigation, we are making substantial provisions of
#4.2 million for the anticipated costs associated with the lengthy and costly
court cases. The accounts also reflect an impairment charge of #1.9 million
upon a number of product lines and businesses whose performance has been below
expectations. However accounting policies do not provide for offsetting
revaluation of out performing products.
Although the overall results are mixed, I am satisfied with the progress the
Company has made in many areas. I expect that we will be able to report further
progress on our new initiatives and the strategy will deliver improving results
in the future.
Ajit Patel
Chief Executive Officer
29 November 2006
Note: Earnings before tax, amortisation, impairment and exceptional costs are
calculated as follows:-
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2006 2005 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Revenue 35,980 39,860 80,025
====== ====== ======
(Loss)/profit before tax (3,600) 3,239 6,807
Amortisation 2,489 3,000 5,880
Impairment losses 1,920 336 2,992
Exceptional legal and
professional costs 6,040 690 1,651
_______ _______ _______
Earnings before tax, amortisation,
impairment and exceptional costs 6,849 7,265 17,330
_______ _______ _______
Consolidated Income Statement for the six months ended 30 September 2006
Total Total Total
Six months Six months Year
Before ended ended ended
impairment 30 September 30 September 31 March
Notes and
exceptional Exceptional 2006 2005 2006
Items items Impairment (unaudited) (unaudited) (audited)
#'000 #'000 #'000 #'000 #'000 #'000
Revenue 2 35,980 - - 35,980 39,860 80,025
Cost of sales (12,459) - - (12,459) (14,109) (28,429)
___________________________________________________________________________
Gross profit 23,521 - - 23,521 25,751 51,596
Distribution costs (1,890) - - (1,890) (2,706) (4,912)
Impairment losses 6 - - (1,920) (1,920) (336) (2,992)
Exceptional legal
and professional
costs - (6,040) - (6,040) (690) (1,651)
Other administrative
expenses (17,557) - - (17,557) (18,862) (35,509)
___________________________________________________________________________
Administrative expenses (17,557) (6,040) (1,920) (25,517) (19,888) (40,152)
___________________________________________________________________________
Operating (loss)/profit 4,074 (6,040) (1,920) (3,886) 3,157 6,532
Finance costs (3) - - (3) (1) (6)
Finance income 289 - - 289 83 281
___________________________________________________________________________
(Loss)/profit before tax 4,360 (6,040) (1,920) (3,600) 3,239 6,807
Income tax expense 3 (1,833) 1,812 - (21) (1,978) (2,927)
(Loss)/profit after tax 2,527 (4,228) (1,920) (3,621) 1,261 3,880
Attributable to Shareholders ==========================================================================
of parent 2,527 (4,228) (1,920) (3,621) 1,261 3,880
==========================================================================
(Loss)/earnings per share
Basic 5 (9.8) 3.4 10.5
====== ====== ======
Diluted 5 - 3.4 10.4
====== ====== ======
Dividends
Proposed dividend
per share (pence) 1.7 1.7 5.1
====== ====== ======
Proposed dividend (#'000) 632 631 1,893
====== ====== ======
Dividends paid during the period(pence) 5.1 4.5 6.2
====== ====== ======
Dividends paid during the period (#'000) 1,893 1,669 2,300
====== ====== ======
The accompanying accounting policies and notes form an integral part of the interim financial statement.
Consolidated Balance Sheet as at 30 September 2006
As at As at As at
30 September 30 September 31 March
Notes 2006 2005 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Assets
Non-current
Goodwill 6 9,626 11,153 10,237
Other intangible assets 6 15,502 23,788 19,515
Property, plant and equipment 3,240 976 1,612
Deferred tax assets 1,024 734 957
__________________________________________
29,392 36,651 32,321
Current
Inventories 10,229 12,512 11,530
Trade and other receivables 10,904 12,122 10,680
Cash and cash equivalents 17,214 8,175 15,855
__________________________________________
38,347 32,809 38,065
__________________________________________
Total assets 67,739 69,460 70,386
==========================================
Equity
Equity attributable to shareholders of Goldshield Group plc
Share capital 7 1,858 1,856 1,856
Share premium 7 21,524 21,438 21,485
Translation reserve (651) 93 (90)
Retained earnings 16,795 19,859 22,221
__________________________________________
39,526 43,246 45,472
Minority interest - 106 -
__________________________________________
Total equity 39,526 43,352 45,472
__________________________________________
Liabilities
Non-current
Deferred tax liabilities 928 2,665 1,649
__________________________________________
928 2,665 1,649
Current
Provisions 6,420 1,098 1,278
Trade and other payables 14,769 16,568 15,677
Other liabilities 3,036 2,462 2,816
Current tax liabilities 3,060 3,315 3,494
__________________________________________
27,285 23,443 23,265
__________________________________________
Total liabilities 28,213 26,108 24,914
__________________________________________
Total equity and liabilities 67,739 69,460 70,386
==========================================
Consolidated Cash Flow Statement for the six months ended 30 September 2006
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2006 2005 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating activities
Result for the period before tax (3,600) 3,239 6,807
Depreciation 310 273 512
Amortisation 2,489 3,000 5,880
Impairment losses 1,920 336 2,992
Equity settled share options 30 45 121
Finance costs 3 1 6
Finance income (289) (83) (281)
________________________________________________________________________________
863 6,811 16,037
Decrease/(increase) in inventories 1,301 (1,211) (229)
(Increase)/decrease in trade and
other receivables (224) (206) 1,236
Increase/(decrease) in provisions, trade
payables and other liabilities 4,227 413 (243)
Taxes paid (1,172) (2,094) (3,921)
________________________________________________________________________________
Net cash from operating activities 4,995 3,713 12,880
Cash flows from investing activities
Additions to property, plant and equipment (2,070) (90) (963)
Additions to other intangable assets - - (225)
Purchase of businesses and deferred
consideration - (35) (35)
Interest received 289 83 281
________________________________________________________________________________
Net cash from investing activities (1,781) (42) (942)
Cash flows from financing activities
Proceeds from share issue 41 6 55
Interest paid (3) (1) (6)
Dividends paid (1,893) (1,669) (2,300)
________________________________________________________________________________
Net cash from financing activities (1,855) (1,664) (2,251)
Net increase in cash and cash equivalents 1,359 2,007 9,687
Cash and cash equivalents at beginning
of period 15,855 6,168 6,168
________________________________________________________________________________
Cash and cash equivalents at end
of period 17,214 8,175 15,855
================================================================================
Consolidated Statement of Changes in Equity for the six months ended 30
September 2006
Equity attributable to equity holders of Minority Total
Goldshield Group plc Interest Equity
Share Share Translation Retained
capital premium reserve earnings
#'000 #'000 #'000 #'000 #'000 #'000
Balance 1 April 2005 1,854 21,359 (400) 20,370 106 43,289
Currency translation
differences - - 493 - - 493
Deferred tax on translation
reserve - - - (148) - (148)
_________________________________________________________
Net gains/(losses) not
recognised in income
statement - - 493 (148) - 345
Profit for the period - - - 1,261 - 1,261
_________________________________________________________
Total recognised income and
expense for the period - - 493 1,113 - 1,606
Shares issued 2 79 - - - 81
Employee share based
compensation - - - 45 - 45
Dividends paid - - - (1,669) - (1,669)
_________________________________________________________
Balance at 30 September 2005 1,856 21,438 93 19,859 106 43,352
=========================================================
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
2002 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
=========================================================
Consolidated Statement of Changes in Equity for the six months ended 30
September 2006
Equity attributable to equity holders of Total
Goldshield Group plc Equity
Share Share Translation Retained
capital premium reserve earnings
#'000 #'000 #'000 #'000 #'000
Balance 1 April 2006 1,856 21,485 (90) 22,221 45,472
Currency translation differences - - (561) - (561)
Deferred tax on translation reserve - - - 168 168
Deferred tax on pre 7 November
2002 grants of share options - - - (110) (110)
__________________________________________________
Net gains/(losses) not recognised
in income statement - - (561) 58 (503)
Loss for the period - - - (3,621) (3,621)
__________________________________________________
Total recognised income and
expense for the period - - (561) (3,563) (4,124)
Shares issued 2 39 - - 41
Employee share based compensation - - - 30 30
Dividends paid - - - (1,893) (1,893)
__________________________________________________
Balance at 30 September 2006 1,858 21,524 (651) 16,795 39,526
==================================================
Notes to the Interim Financial Statement
1. Principal accounting policies
Statement of compliance
The interim financial statements have been prepared in accordance with
International Financial Reporting Standard (IFRS) IAS 34 "Interim Financial
Reporting". They do not include all of the information required for full annual
financial statements, and should be read in conjunction with the consolidated
financial statements of the Group as at and for the year ended 31 March 2006.
Basis of consolidation
The Group financial statements consolidate those of the Company and of its
subsidiary undertakings drawn up to 30 September 2006. Profits or losses on
intra-group transactions are eliminated in full. The results of the subsidiary
undertakings acquired during the year have been included from the date of
acquisition. On acquisition of a subsidiary, all of the subsidiary's assets and
liabilities which exist at the date of acquisition are recorded at the fair
values reflecting their condition at that date. Goodwill arising on
consolidation, representing the excess of the fair value of the consideration
given over the fair values of the identifiable net assets acquired, is
capitalised net of any provision for impairment.
Revenue
Revenue from the sale of goods is recognised in the income statement when the
significant risks and rewards of ownership have been transferred to the buyer.
Revenue is measured at the fair value of the consideration received/receivable
by the Group for goods supplied and services provided, excluding value added tax
and trade discounts. Revenue from services rendered is recognised in the income
statement by reference to the stage of completion of transactions at the balance
sheet date. The stage of completion is determined by the man days spent on the
project for rendering the service at the end of each billing cycle.
Intangible assets
Goodwill
All business combinations are accounted for under the purchase method and
goodwill has been recognised on acquisitions of subsidiaries. In respect of
business combinations that have occurred since 1 April 2004, goodwill represents
the difference between the cost of the acquisition and the fair value of the net
identifiable assets acquired. Goodwill is stated at cost less any accumulated
impairment losses. Goodwill arising on acquisitions before 1 April 2004 has been
retained at the previous UK GAAP amounts at 31 March 2004. Goodwill is allocated
to cash generating units and is no longer amortised but tested for impairment
annually or more frequently if events or changes in circumstances indicate that
it might be impaired.
Other intangible assets
Externally purchased product licenses, trademarks, brand-names, know-how and
similar intangible items are capitalised at historical cost, net of any provision
for impairment and amortised on a straight line basis over their estimated useful
economic lives which range between seven and ten years. The amortisation cost has
been included within administrative expenses in the income statement.
Impairment
The Group's goodwill and other intangible assets are tested for impairment
annually or more frequently, if events or changes in circumstances indicate that
it might be impaired. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash
flows (cash generating units). An impairment loss is recognised for the amount
by which the asset's or cash generating unit's carrying amount exceeds its
recoverable amount. The recoverable amount is based on internal discounted cash
- flow evaluation. If at the balance sheet date there is any indication that an
impairment loss recognised in prior periods for an asset other than goodwill no
longer exists, the recoverable amount is reassessed and the asset is reflected
at the recoverable amount.
Research and development expenditure
Expenditure on development activities is capitalised if the product or process
is technically and commercially feasible, the costs are separately identifiable
and the Group has sufficient resources to complete development. Capitalised
development costs are stated at cost less accumulated amortisation and
impairment losses. All other research and development expenditure is written off
to the income statement in the period in which it is incurred.
Property, plant and equipment
Property, plant and equipment are stated at cost less the accumulated
depreciation on the same. Depreciation is charged on a straight line basis over
the estimated useful lives on the cost of the assets less their residual value.
The estimated useful lives are as follows:
Freehold buildings and leasehold improvements - 25 Years or over the period of lease
Office equipment - 5 Years
Plant and equipment - 6 to 7 Years
Motor vehicles - 5 Years
Residual values are re-assessed annually.
Inventories
Inventories are stated at the lower of cost and net realisable value. The costs
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
periods, that are unpaid at the balance sheet date. They are calculated
according to the tax rates and tax laws applicable to the fiscal periods to
which they relate, based on the taxable profit for the year.
Deferred tax is recognised on all temporary differences. This involves
comparison of the carrying amount of assets and liabilities in the consolidated
financial statements with their respective tax bases. However, deferred tax is
not provided on the initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. Deferred tax
liabilities are always provided for in full. Deferred tax assets and liabilities
are calculated, without discounting, at tax rates that are expected to apply to
the period when asset is realised or the liability is settled, based on tax
rates (tax laws) that have been enacted or substantially enacted by the balance
sheet date. All changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the income statement, except where they relate to
items that are charged or credited directly to equity (such as translation
reserve and pre 7 November 2002 grants of share options) in which case the
related deferred tax is also charged or credited directly to equity.
Tax losses available to be carried forward as well as other income tax credits
to the Group are assessed for recognition as deferred tax assets. Deferred tax
assets are only recognised to the extent that it is probable that future taxable
profits will be available against which the asset can be recognised and are
reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an
original maturity of three months or less. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included as
a component of cash.
Employee benefits
The Group operates a defined contribution pension scheme whereby contributions
are made to individual employee pension plans of certain employees. These costs
are charged against profits in respect of the accounting period in which they
are paid.
Indian Gratuity costs, which represent a form of long term service benefits are
accrued based on actuarial valuation at the balance sheet date, carried out by
an independent actuary.
Leased assets
All leased assets are identified as operating leases if they do not transfer
substantially all the risks and rewards to the lessee.
Payments made under operating leases are charged to the profit and loss account
on a straight line basis over the period of the lease.
Foreign currencies
The reporting currency for these financial statements is GB sterling (#) which
is the parent company's functional currency. Transactions in foreign currencies
are translated at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities in foreign currencies are translated at the
rates of exchange ruling at the balance sheet date. Foreign exchange differences
arising on translation are recognised in profit or loss. Non monetary assets and
liabilities that are measured in terms of historical cost in a foreign entity
are translated using the exchange rate at the date of the transaction.
All assets and liabilities in the financial statements of foreign subsidiaries
are translated at the closing rate at the balance sheet date. The results of
foreign operations have been converted into Group's reporting currency at the
actual rates over the reporting period and the exchange differences arising have
been taken to translation reserve, a component of equity. The exchange
differences arising from re-translation of the net investments in subsidiaries
are directly taken to translation reserve. All other exchange differences are
dealt with through the income statement.
Share options
For all employee share options granted after 7 November 2002 and vesting on or
after 1 January 2005, an expense is recognised in the income statement with a
corresponding credit to equity. The equity share based payment is measured at
the fair value at the grant date using the binomial lattice method. If vesting
periods or other vesting conditions apply, the expense is allocated over the
vesting period, based on the best available estimate of the number of share
options expected to vest.
Provisions - Legal and other disputes
Provision is made where a reliable estimate can be made of the likely outcome of
legal or other disputes against the Group. In addition, provision is made for
legal and other expenses arising from claims received or other disputes. No
provision is made for other possible claims or where an obligation exists but it
is not possible to make a reliable estimate. Costs associated with claims made
by the Group against third party are charged to the profit and loss account as
they are incurred.
Dividends
Dividends proposed or declared after the balance sheet dates are not recognised
as a liability. However the amounts of such dividends are disclosed in the
financial statements.
Segmental reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment) or in providing products or
services within a particular economic environment (geographic segment) which is
subject to risks and rewards that are different from those of other segments.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual terms of the instrument.
- Trade receivables
Trade receivables do not carry any interest and are stated at their fair values
as reduced to equal the estimated present value of the future cash flows.
- Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges including premiums payable
on settlement or redemption and direct issue costs, are accounted for on an
accruals basis to the profit and loss account using the effective interest
method and are added to the carrying value of instrument to the extent that they
are not settled in the period in which they arise.
- Trade payables
Trade payables are not interest bearing and are stated at their fair values.
- Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
2. Segmental reporting
Segment information is presented in the consolidated financial statements in
respect of the Group's business segments, which are the primary basis of segment
reporting. The business segment reporting format reflects the Group's management
and internal reporting structure.
Primary - Business segments
The Group is organised into five major business units - Retail Brands, Retail
Generics, Hospitals, Direct to Consumer Western Europe (D2C WE) and, Direct to
Consumer North America (D2C NA). Certain small business units like Country
Distributors, Global Services and Management Services constitute the other
segments. These units form the basis for the Group's reporting of primary
segment information.
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.
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
6 months ended Retail Retail Other
30 September 2006 Brands Generics Hospitals D2C WE D2C NA Segments Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue
External sales 14,800 3,649 5,634 5,975 3,035 2,887 35,980
__________________________________________________________________
Total revenue 14,800 3,649 5,634 5,975 3,035 2,887 35,980
__________________________________________________________________
Result
Segment result 1,153 (38) 1,248 (93) (462) (5,694)* (3,886)
__________________________________________________________________
Operating loss (3,886)
Finance costs (3)
Finance income 289
Income tax expense (21)
__________________________________________________________________
Loss for the period (3,621)
==================================================================
* Segment result for other segments includes exceptional legal cost amounting to #5,197,000.
6 months ended Retail Retail Other
30 September 2005 Brands Generics Hospitals D2C WE D2C NA Segments Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue
External sales 16,098 5,050 5,618 7,165 3,422 2,507 39,860
__________________________________________________________________
Total revenue 16,098 5,050 5,618 7,165 3,422 2,507 39,860
__________________________________________________________________
Result
Segment result 2,489 161 1,088 516 (588) (509) 3,157
__________________________________________________________________
Operating profit 3,157
Finance costs (1)
Finance income 83
Income tax expense (1,978)
__________________________________________________________________
Profit for the period 1,261
==================================================================
Year ended Retail Retail Other
31 March 2006 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
===================================================================
3. Tax on profit on ordinary activities
Tax on profits on ordinary activities is calculated at the standard rate of
corporation tax in the United Kingdom of 30%.
The taxation charge of #0.02 million (2005: #2.0 million) represents an
effective tax rate of Nil % (2005: 61.7%)
4. Equity dividends
The amount of #1.89 million pertaining to the final dividend proposed as at 31
March, 2006 has been paid on 18 August 2006.
The Directors have declared an interim dividend of 1.70 pence per share for 2006
/07 (2005/06 interim dividend: 1.70 pence, 2005/06 final dividend: 5.10 pence).
The dividend will be paid on 11 January 2007 to those shareholders on the
register on 8 December 2006.
5. Earnings per share
The earnings are based on the earnings attributable to ordinary shareholders and
the weighted average number of shares is based on ordinary shares outstanding
during the period.
Basic Diluted
(Loss)/earnings (Loss)/earnings
per share per share
6 months to 30 September 2006 loss (#'000) (3,621) (3,621)
Weighted average number of shares (000) 37,131 37,404
Per share amount (pence) (9.8) -
================================
6 months to 30 September 2005 earnings (#'000) 1,261 1,261
Weighted average number of shares (000) 37,084 37,360
Per share amount (pence) 3.4 3.4
================================
Year to 31 March 2006 earnings (#'000) 3,880 3,880
Weighted average number of shares (000) 37,098 37,427
Per share amount (pence) 10.5 10.4
================================
6. Intangible non-current assets
Brand names
know-how
licences and
trade marks Goodwill Total
#'000 #'000 #'000
Cost
At 1 April 2006 64,586 27,349 91,935
Exchange differences (12) (1,216) (1,228)
_______________________________
At 30 September 2006 64,574 26,133 90,707
_______________________________
At 1 April 2005 64,358 26,049 90,407
Exchange differences (3) 950 947
_______________________________
At 30 September 2005 64,355 26,999 91,354
_______________________________
Amortisation and impairment
At 1 April 2006 45,071 17,112 62,183
Exchange differences (12) (1,001) (1,013)
Amortisation 2,489 - 2,489
Impairment losses 1,524 396 1,920
_______________________________
At 30 September 2006 49,072 16,507 65,579
_______________________________
At 1 April 2005 37,570 14,742 52,312
Exchange differences (3) 768 765
Amortisation 3,000 - 3,000
Impairment losses - 336 336
_______________________________
At 30 September 2005 40,567 15,846 56,413
_______________________________
Carrying amounts _______________________________
At 30 September 2006 15,502 9,626 25,128
===============================
At 30 September 2005 23,788 11,153 34,941
===============================
At 31 March 2006 19,515 10,237 29,752
===============================
An impairment provision of #283,533 has been recognised for the US business as
at 30 September 2006 (30 September 2005: #335,841, 31 March 2006: #1,147,851).
The performance of Regina business has also been reviewed and an impairment
provision of #112,371 has been made as at 30 September 2006 (30 September 2005:
#Nil, 31 March 2006: #224,743).
The carrying value of the Other Intangibles have been reviewed and an impairment
provision of #1,524,322 has been made as at 30 September 2006 (30 September
2005: #Nil, 31 March 2006 : #1,619,038).
7. Share capital
During the period, 32,592 shares were issued under the employee sharesave
scheme. The difference between the total consideration of #41,066 and nominal
value of #1,630 has been credited to share premium account.
8. 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 30 September 2006 were
#711,511 (30 September 2005: #410,496, 31 March 2006: #329,198).
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 case 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 which are being defended. Expected legal and professional costs
in this matter have been provided for.
Department of Health (DoH) and related claims update
The information required by IAS 37 with respect to the above claims is not
disclosed on the grounds that it can be expected to prejudice the outcome of the
litigation and the expected legal and professional costs for these actions have
been provided for.
9. Related party transactions
The Group has advanced unsecured loans amounting to #500,000 each to Ajit Patel
and Kirti Patel, Directors of the Company, for payment of legal fees in
defending the charges framed by Serious Fraud Office (SFO). The entire amount of
the loan of #1,000,000 has been provided for and forms part of the exceptional
legal costs in the Income statement. The unutilised amount of the loan as of 30
September 2006 is #764,611 and forms part of the #6,419,611 included within
provisions.
10. Preparation of Interim Financial Statement
The interim financial statement is unaudited but has been reviewed by the
auditors and their report is set out on page 20. The financial information does
not constitute statutory accounts within the meaning of section 240 of the
Companies Act. Statutory accounts for Goldshield Group plc for the year ended 31
March 2006 on which the auditors gave an unqualified report have been delivered
to the Registrar of Companies.
11. Approval of Interim Financial Statement
The interim financial statement was approved by the Board of Directors on 29
November 2006. Copies of this statement will be available to members of the
public, free of charge, from the Company at NLA Tower, 12-16 Addiscombe Road,
Croydon, Surrey, CR0 0XT.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FEWESUSMSEFF
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