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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mdy Healthcare | LSE:MDY | London | Ordinary Share | GB00B1VJNC59 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 10.00 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Nov 2019 to Nov 2024
TIDMMDY
RNS Number : 3479X
MDY Healthcare PLC
14 February 2012
MDY Healthcare plc
Preliminary results for the reporting period ended 30 September 2011
14 February 2012: MDY Healthcare plc ("MDY Healthcare" or the "Company"), the strategic investor in healthcare companies, today announces its preliminary results for the reporting period ended 30 September 2011.
Financial Highlights
-- Total investments valued at GBP16.4 million (30 September 2010: GBP7.3 million) as a result of the revaluation of the investment in Medivance.
-- Cash and cash equivalents reduced to GBP0.1 million (30 September 2010: GBP0.3 million).
-- After end of reporting period, cash position strengthened by sale of Company's investment in Medivance, raising US$20.0 million (c. GBP12.8 million).
-- Balance of US$1.8 million from sale of Medivance investment, being held in escrow pending potential warranty and indemnity claims, due to be paid out to MDY Healthcare, to the extent not utilised, by the end of May 2013.
-- Consolidated net asset value per share as at 30 September 2011 of 86p (30 September 2010: 35p).
-- Group generated a profit of GBP8.7 million in the reporting period, due to the fair value revaluation of the Company's investment in Medivance (2010: loss of GBP3.6 million).
-- Valuation of sole remaining investment, Stanmore, maintained at cost, representing the fair value of the investment.
-- Following receipt of funds received from realisation of Medivance investment, MDY Healthcare to seek shareholder approval to make a capital return of 52 pence per ordinary share to shareholders in April 2012, which is the subject of a separate announcement released today.
-- The Company's strategy is to make further payments of capital to shareholders on receipt of any escrow funds in respect of Medivance and the realisation, at the appropriate time to maximize value to shareholders, of the Company's investment in Stanmore.
Portfolio Highlights
-- After period end, the Company divested its shareholding in Medivance for a gross potential cash consideration of approximately US$21.8 million (c.GBP14.0 million), following acquisition of Medivance by C.R. Bard, Inc. for a total consideration of approximately US$250 million.
-- Divestment of Medivance shareholding for cash represented a 3.6 fold return on MDY Healthcare's original cost of investment.
-- Stanmore directors anticipate revenues in excess of GBP7.5 million (unaudited) for 12 months ended 31 December 2011 (2010: GBP6.1million (audited)). Stanmore received FDA marketing approval of the Juvenile Tumour System in July 2011 and launched the product soon after.
Grahame Cook, Chairman, said:
"I am pleased that the Board's strategy to restructure overheads to a minimum and to realise the Company's key investments has been highly successful. The proposed capital return of 52 pence per ordinary share is significantly more than the share price of 25.5 pence at the time of the appointment of the current Board. We anticipate at least one further return to shareholders in the next 18 months from the Medivance consideration retention and the realisation of our investment in Stanmore."
For further information, please contact:
MDY Healthcare plc Grahame Cook, Chairman +44 (0) 203 178 5925
Zeus Capital (Nomad)
Ross Andrews, Andrew Jones +44 (0) 161 831 1512
Notes for editors:
About MDY Healthcare
MDY Healthcare plc is a healthcare sector investing company quoted on AIM (ticker symbol: MDY). Further information can be found on the website www.mdyhealthcare.com.
MDY Healthcare plc
Chairman's review
Overview
During the reporting period, the MDY Healthcare group generated a profit of GBP8.7 million compared with a loss of GBP3.6 million in the prior reporting period. This was principally due to the movement in the fair value of the Company's investment in Medivance, Inc. ("Medivance") at 30 September 2011 and a significant reduction in the Group's operating costs.
After the end of the reporting period, MDY Healthcare announced that the Company had realised its investment in Medivance for a gross cash consideration of approximately US$21.8 million (approximately GBP14.0 million), following the completion of the acquisition of Medivance by C.R. Bard Inc., for a total consideration of approximately US$250 million (the "Transaction"). The post year-end divestment of the Medivance shareholding for cash represented a 3.6 fold return on MDY Healthcare's original cost of investment of US$6.0 million.
Of the total gross cash consideration, US$20.0 million (approximately GBP12.8 million) was received by the Company in November 2011. The balance of the Medivance proceeds, which is being held in escrow pending potential warranty and indemnity claims in accordance with the terms of the Transaction agreements, is due to be paid out to MDY Healthcare, to the extent not utilised, by the end of May 2013.
During the year, the directors completed the Company's planned cost reduction program, ensuring that the level of fixed costs is appropriate in the context of the value of the Company's remaining investment, liquid resources and strategy of returning capital to shareholders.
In July 2011, the Company materially reduced its head office costs by assigning the lease of the Company's head office and relocating into smaller serviced offices. At the time of assignment, the lease of the Company's head office had a five year unexpired term. The Company paid an exit premium of GBP180,000 and received repayment of its lease deposit plus accrued interest of GBP114,000, resulting in a net cash outflow of GBP66,000 plus associated advisory costs in connection with the assignment.
Total administration expenses during the period were GBP1.1 million compared to GBP2.2 million for the corresponding period to September 2010, due to a significant reduction in the Group operating and management costs. The full impact of the reduction in head office costs will be reflected in subsequent reporting periods as the lease assignment took place in the last quarter of the reporting period.
In September 2011, MDY Healthcare announced that the Company had, acting through its jointly controlled entity, Trust William Limited, sold the business and assets of Trust William Limited ("Trust William Business") to Optima Consumer Health Limited, a wholly owned subsidiary of William Ransom & Son Holdings plc, for a nominal consideration based on future net sales of the Trust William Business. The sale of the Trust William Business will terminate MDY Healthcare's obligation to fund that business, which has been loss making since its establishment. As part of this transaction, the Company acquired, for nominal consideration, the minority shareholding in Trust William Limited..
As at 30 September 2011, MDY Healthcare had total debt outstanding of GBP1.7 million including accrued interest. Following receipt of the proceeds from the sale of the Medivance investment, the Company repaid, on 1 December 2011, all outstanding debt together with all accrued interest.
The Company has one remaining strategic investment in SIW Holdings Limited ("Stanmore"). Over the last year, Stanmore has continued to make good commercial progress and promising developments in its innovative devices, details of which we include in the Strategic Portfolio Review.
Investment strategy and policies
During the reporting period, the Company did not make any new investments. Over the last year, we have implemented our strategy by divesting the Company's investment in Medivance and the Company's entire remaining portfolio of listed investments. The Company continues to manage its sole strategic investment with a view to delivering value to MDY Healthcare shareholders.
The Company will be seeking shareholder approval to cancel its trading facility on AIM as the Company's strategy going forward is to return capital to shareholders and not make any new investments.
The directors have previously stated that the Company intends to return the majority of the funds received from the realisation of its investment in Medivance to shareholders and has subsequently been in discussions with its advisers on the most efficient and timely way to achieve this. As a result of these discussions, the Company has today announced that it intends to make an initial return of 52 pence per ordinary share to shareholders (or such other lesser amount as the Court may approve) and that it is seeking shareholder and court approvals for a reduction of capital which will facilitate such return. It is expected that the return to shareholders will be made in April 2012.
Further details of the Company's proposals in this regard will be set out in the circular to be posted to shareholders shortly.
Strategic portfolio review
Following the realization of the Company's investment in Medivance, the Company now has one remaining strategic investment, Stanmore, which is private and is valued at the cost of the investment, representing the fair value. Despite there being good evidence of positive progress, there is limited evidence in the current market to support an upwards revaluation of this investment.
Stanmore Implants Worldwide Limited
As at 30 September 2011, MDY Healthcare holds approximately 12% of the issued share capital of Stanmore, being valued at cost (GBP2.4 million), representing the fair value.
The directors of Stanmore anticipate revenues in excess of GBP7.5 million (unaudited) for the 12 months to December 2011 (2010: GBP6.1 million (audited)) and consider the outlook for future sales growth through both existing and new customers to be positive.
Growth continues to be driven by an increased take up of the METS (modular endoprosthetic tumour system) product range and growing sales of the non-invasive Juvenile Tumour Systems. Stanmore has seen an increased demand from the UK and strong growth in exports. In July 2011, Stanmore received FDA marketing approval of the Juvenile Tumour System and launched the product soon after. The initial market reaction has been positive and early sales are encouraging.
The acquisition of the assets of the Acrobot Company Ltd in 2010 continues to provide benefits to Stanmore in patient specific solutions with computer aided navigation. "Saville Row", the world's first fully personalised knee and hip replacement system was launched in Q3 2011 and over 20 implants had been completed by the end of December 2011. Early results are so far very encouraging and these patients have seen early mobility and excellent knee function.
Stanmore continues to make good progress with ITAP, its innovative device for directly attaching prosthetic devices to the skeleton of amputees. The ITAP implant is being developed for a wide-range of applications including upper and lower limb, digits and craniofacial prostheses. The Transfemoral ITAP trial continues at the Royal National Orthopaedic Hospital in Stanmore. ITAP has attracted significant interest from several institutions both in the UK and overseas in relation to exploiting the commercial possibilities for this technology.
Financial review
At 30 September 2011, MDY Healthcare's total investments (current and non-current) were valued at GBP16.4 million (30 September 2010: GBP7.3 million). Cash and cash equivalents reduced to GBP0.1 million (30 September 2010: GBP0.3 million) due to ongoing operating expenses.
Net asset value per share as at 30 September 2011 was GBP0.86 (30 September 2010: GBP0.35). Revenue for the period was GBP102,000 (2010: GBP136,000).
The MDY Healthcare group generated a profit of GBP8.7 million during the period compared with a loss of GBP3.6 million in the prior reporting period, due largely to the movement in the fair value of the Company's investment in Medivance.
Total reported administration expenses were GBP1.1 million (2010: GBP2.2 million).
Other operating income was GBP9.9m (2010: GBP0.1m) reflecting the gain on the revaluation of the Company's investment in Medivance.
Earnings per share for continuing operations for the reporting period were 52.96p against losses of 18.10p per share for the corresponding period in 2010. Loss per share in respect of discontinued operations were 1.20p, compared to a loss per share of 4.21p in 2010.
Following the completion of disposal of the assets and business of Trust William referred to above, Trust William Limited is now accounted for as a wholly owned subsidiary. The goodwill arising on acquisition of GBP0.4 million has been subject to impairment review and has been fully provided for in the period.
On 30 September 2010, the board awarded to the directors, Mr Cook and Mr Hunt, up to 600,000 options to each of Mr Cook and Mr Hunt. The options over ordinary shares of 1 pence each have become exercisable following the sale of the Company's investment in Medivance. The options are exercisable at a price of 20.5 pence per share (the average mid-market price of a share of the Company for the 30 trading days preceding the date of grant).
In June 2011, the Company strengthened its liquid resources by securing a loan facility of up to GBP150,000 from a related party, Bronsstadet AB. Pursuant to the terms of the facility agreement, Bronsstadet agreed to make available to the Company a revolving credit facility of up to GBP150,000 for a 364 day term. Interest accrued on any advance under the facility at the rate of 8% per annum. Amounts drawdown under the facility could be repaid or re-borrowed during the term of the facility at the option of the Company. Amounts would become repayable earlier in the event of the divestment by the Company of certain of its investments. Following receipt of the proceeds from the sale of the Medivance investment, on 1 December 2011 the Company repaid all outstanding amounts under this facility together with all accrued interest.
As part of the consideration for the acquisition of healthcare investments in 2009, MDY Healthcare issued to 3i Group plc, a related party, GBP1,587,842 fixed rate unsecured loan notes (the "Loan Notes"). The Company was able, at its election, to redeem the Loan Notes (in whole or in part) at any time on notice. Following receipt of the proceeds from the sale of the Medivance investment, on 1 December 2011, the Company repaid all outstanding Loan Notes together with all accrued interest.
Conclusion
During the period, the directors have executed their strategy of significantly reducing the Company's operating costs, whilst continuing to support the Company's strategic assets, Medivance and Stanmore. The divestment of the Medivance investment has created significant value for shareholders and, subject to the necessary approvals, will enable shareholders to receive a return of capital. Stanmore has performed well in the period and the directors will continue to manage this investment with a view to generating further returns for shareholders.
MDY Healthcare plc
Consolidated Income Statement
For the reporting period ended 30 September 2011
Hot Features
Premium
Audited Audited
Notes 2011 2010
GBP'000 GBP'000
Revenue 102 136
Cost of sales (69) (100)
-------------------------------------------------- ---------------- ----------
Gross profit 33 36
-------------------------------------------------- ---------------- ----------
Administrative expenses (1,071) (2,196)
Other operating income 9,911 70
Other operating expense (8) (1,439)
Operating profit/(loss) 8,865 (3,529)
-------------------------------------------------- ---------------- ----------
Finance expense (127) (206)
Finance income 11 105
Profit/(loss) before tax 8,749 (3,630)
-------------------------------------------------- ---------------- ----------
Tax - -
Total comprehensive income/(loss)
for the year 8,749 (3,630)
-------------------------------------------------- ---------------- ----------
Comprehensive income/(loss) for
the year - continuing operations 8,952 (2,944)
Comprehensive income/(loss) for
the year - discontinued operations (203) (686)
Total comprehensive income/(loss)
for the year 8,749 (3,630)
Basic earnings/(loss) per share
- continuing operations 52.96p (18.10)p
-------------------------------------------------- ---------------- ----------
Diluted earnings/(loss) per share
- continuing operations 49.45p (18.10)p
-------------------------------------------------- ---------------- ----------
Basic loss per share - discontinued
operations (1.20)p (4.21)p
-------------------------------------------------- ---------------- ----------
Diluted loss per share - discontinued
operations (1.20)p (4.21)p
-------------------------------------------------- ---------------- ----------
Consolidated Statement of Other Comprehensive Income
For the reporting period ended 30 September 2011
Audited Audited
Notes 2011 2010
GBP'000 GBP'000
Profit/(loss) for the year 8,749 (3,630)
Exchange differences on translation
of foreign operations (122) -
------------------------------------- -------- --------- ---------
Total comprehensive income/(loss)
for the period 8,627 (3,630)
----------------------------------------------- --------- ---------
MDY Healthcare plc
Consolidated Statement of Financial Position
As at 30 September 2011
Audited Audited
Notes 2011 2010
GBP'000 GBP'000
Non-current assets
Intangible assets 3 - 58
Property, plant and equipment 5 50
Investments 4 16,374 7,078
---------------------------------- ------- ---------- ----------
Total non-current assets 16,379 7,186
---------------------------------- ------- ---------- ----------
Current assets
Assets held for sale 4 11 231
Inventories - 15
Trade and other receivables 22 190
Cash and cash equivalents 64 284
Total current assets 97 720
Total assets 16,476 7,906
---------------------------------- ------- ---------- ----------
Current liabilities
Trade and other payables 70 551
Loans and loan notes 6 1,682 -
Total current liabilities 1,752 551
Net current (liabilities)/assets (1,655) 169
---------------------------------- ------- ---------- ----------
Total assets less current
liabilities 14,724 7,355
Non-current liabilities
Loan notes 6 - 1,588
Net assets 14,724 5,767
---------------------------------- ------- ---------- ----------
Equity
Share capital 7,023 7,015
Share premium 101,957 101,815
Share based payment reserve 180 -
Other reserves 22,871 22,993
Retained earnings (117,307) (126,056)
---------------------------------- ------- ---------- ----------
Total equity 14,724 5,767
---------------------------------- ------- ---------- ----------
MDY Healthcare plc
Consolidated Statement of Changes in Equity
For the reporting period ended 30 September 2011
Issued Share Profit Share
share premium and loss Other option
capital account account reserves reserve Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- --------- ----------- ---------- --------- ---------
Balance at 1 October
2009 7,015 101,815 (122,426) 22,993 - 9,397
Loss for the year - - (3,630) - - (3,630)
Balance at 30 September
2010 7,015 101,815 (126,056) 22,993 - 5,767
Issue of ordinary
shares 8 142 - - - 150
Profit for the year - - 8,749 - 8,749
Foreign exchange
loss on translation
of subsidiary results - - - (122) - (122)
Credit to equity
for equity settled
share based payment
charge - - - - 180 180
------------------------- --------- --------- ----------- ---------- --------- ---------
Balance at 30 September
2011 7,023 101,957 (117,307) 22,871 180 14,724
------------------------- --------- --------- ----------- ---------- --------- ---------
Issued Share Profit Share
share premium and loss Other option
Company capital account account Reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 October
2009 7,015 101,815 (102,116) 3,132 - 9,846
Loss for the year - - (4,842) - - (4,842)
Balance at 30 September
2010 7,015 101,815 (106,958) 3,132 - 5,004
Issue of ordinary
shares 8 142 - - - 150
Profit for the year - - 9,424 - - 9,424
Credit to equity
for equity settled
share based payment
charge - - - - 180 180
------------------------- --------- --------- ----------- ---------- --------- ---------
Balance at 30 September
2011 7,023 101,957 (97,534) 3,132 180 14,758
------------------------- --------- --------- ----------- ---------- --------- ---------
MDY Healthcare plc
Consolidated Statement of Cash Flows
For the reporting period ended 30 September 2011
Audited Audited
Notes 2011 2010
GBP'000 GBP'000
---------------------------------------- -------- --------- ---------
Cash flows from operating activities
Profit/(loss) for the accounting
period 8,749 (3,630)
Adjustments for:
Depreciation 9 22
Amortisation 57 46
Loss on disposal of property, 39
plant and equipment -
Loss on disposal of intangible 1 -
assets
Impairment of goodwill 395 -
Release of provision against
former minority share of intercompany (395) -
debt
Net change in the fair value
of financial assets through
the Statement of Comprehensive
Income (9,903) 1,369
Share based payment expense 180 -
Foreign exchange (122) -
Interest payable 127 -
Interest receivable (11) (105)
-------------------------------------------------- --------- ---------
Operating loss before movement
in working capital and provisions (874) (2,298)
Decrease/(increase) in inventory 15 (3)
Decrease in trade and other
receivables 168 276
(Decrease)/increase in trade
and other payables (481) 334
-------------------------------------------------- --------- ---------
Cash (used)/generated by operations (298) 607
-------------------------------------------------- --------- ---------
Net cash outflow from operating
activities (1,172) (1,691)
-------------------------------------------------- --------- ---------
Cash flows from investing activities
Interest received 11 105
Acquisition of intangible assets - (15)
Acquisition of property, plant
and equipment (6) (1)
Proceeds from the sale of property,
plant and equipment 3 -
Proceeds from the sale of investments 828 755
-------------------------------------------------- --------- ---------
Net cash inflow from investing
activities 836 844
-------------------------------------------------- --------- ---------
Cash flows from financing activities
Proceeds from the issue of share 150 -
capital
Loan received 30 -
Interest paid (64) -
---------------------------------------- -------- --------- ---------
Net cash inflow from financing 116 -
activities
---------------------------------------- -------- --------- ---------
Net decrease in cash and cash
equivalents (220) (847)
Cash and cash equivalents at
start of year 284 1,131
Cash and cash equivalents at
the end of the year 64 284
-------------------------------------------------- --------- ---------
MDY Healthcare plc
Notes to the preliminary results for the reporting period ended 30 September 2011
Reporting entity
MDY Healthcare plc (the "Company") is a public limited company (traded on AIM) incorporated in and domiciled in the United Kingdom. The address of the Company's registered office is 23 Bridge Street, Ellon, Aberdeenshire, Scotland. The consolidated financial statements of the Company as at and for the reporting period ended 30 September 2011 comprise the Company and its subsidiaries (together referred to as the "Group"). The Group is a healthcare sector specialised investment company.
a) Statement of Compliance
The preliminary announcement has been prepared using accounting policies consistent with those set out in the MDY Healthcare plc Annual Report for the reporting period ended 30 September 2011.
b) Basis of accounting
The Group and parent company financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the EU. On publishing the parent company financial statements here together with the Group financial statements, the Company is taking advantage of the exemption in section 408 of the Companies Act 2006 not to present its individual Statement of Comprehensive Income and related notes that form a part of these approved financial statements.
c) Basis of Measurement
The financial statements are prepared on the historical cost basis except for the following:
-- Financial investments at fair value through the statement of comprehensive income are measured at fair value
-- Available-for-sale financial assets are measured at fair value.
d) Going Concern
The financial statements have been prepared on a going concern basis which the directors believe to be appropriate for the reasons below.
The reporting period ended 30 September 2011 has benefited from cost saving measures that have been implemented by the Company and the effect of these will continue in future periods. On 15(th) September 2011, the Company completed the disposal of the trade and assets of Trust William Limited, the jointly controlled entity in which it had an 80.1% interest, to its joint venture partner, in order to further reduce its cash outflows. The transaction also included the transfer of the joint venture partner's 19.9% interest in the share capital of Trust William Limited to MDY Healthcare plc.
After the end of the reporting period the Company sold its investment in Medivance. This has resulted in cash receipts of US$20.0m (c. GBP12.8m). The directors have prepared financial projections, including cash flows, for a period up to 30 June 2013. Based on these projections, which take account of the receipt of the consideration received and receivable in respect of the disposal of Medivance and the proposed return of capital to shareholders as described in the Chairman's Statement above, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
In preparing these financial statements, the directors have given consideration to the above matters and on this basis they believe that it remains appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustments that would result from this going concern basis of preparation being inappropriate.
e) Functional and presentation currency
The financial statements are presented in pounds sterling, rounded to the nearest thousand, which is the Company's functional currency. Functional currencies within the Group consist primarily of pounds sterling.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these consolidated financial statements
The financial statements were approved by the Board of directors on 13 February 2012.
f) Use of estimates and judgements
The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are noted below:
Key estimates and judgements used in the preparation of these financial statements principally relate to:
-- valuation of investments -- recoverability of intra-group balances -- going concern
In considering the fair value of investments, the directors have assessed the value of recent transactions relating to those investments and also to the underlying performance and business operations of those investments.
In considering the recoverability of certain assets and debtor balances and preparing impairment calculations, the directors have assessed the potential realisation of these assets and debtor balances in the context of the performance of the business operations of the relevant asset or debtor. Impairment assessments have been based on the directors' consideration of the most likely outcome for the Group and the Company in relation to the relevant asset or debtor.
Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these accounting policies, and have been applied consistently by Group entities.
Basis of consolidation
The consolidated financial statements include the financial statements of MDY Healthcare plc and its subsidiary undertakings prepared up to 30 September 2011. Subsidiaries are those entities over which the Group has the power to control the operating and financial policy so as to obtain economic benefit from its activities. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The acquisition method of accounting is applied for acquisitions with fair values being attributed to the identifiable net assets acquired.
Intra-Group balances, and any unrealised income and expenses arising from intra-Group transactions, are eliminated in preparing the consolidated financial statements.
Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring the venturers' unanimous consent for strategic financial and operating decisions. The consolidated financial statements include the Group's proportionate share of the entities' assets, liabilities, revenue and expenses with items of a similar nature on a line-by-line basis, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases.
Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date).Goodwill is measured as the excess of the sum of consideration transferred, the amount of any non-controlling interest in the acquiree and the fair-value of the acquirer's previously held equity interest (if any) in the entity over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
If, after assessment, the Group's interest in the fair value of the acquiree's identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer's previously held equity interest in the acquire (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of the goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
1. Segmental Reporting
Segmental reporting is presented in respect of the Group's business segments. The business segments are based on the Group's management and internal reporting structure. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated to a segment on a reasonable basis.
Business segments
The Group comprises the following main business segments:
-- Investing - representing the Group's activities investing in healthcare and related companies.
-- Retail - representing the Group's interests in Trust William Limited, the multi-channel retail jointly controlled entity, which sells natural healthcare products via the internet, mail order and telesales. These operations were classified as discontinued.
Continuing operations Discontinued
operations
Investing Investing Retail Retail Total Total
2011 2010 2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----------- ----------- --------- --------- --------- ---------
Group revenue 19 20 83 116 102 136
Gross profit 19 20 14 16 33 36
Result from operating
activities 9,068 (3,172) (203) (357) 8,865 (3,529)
Finance (expense)
income, net (116) (23) - (78) (116) (101)
Profit/(loss) before
and after tax 8,952 (3,195) (203) (435) 8,749 (3,630)
Segment assets 16,466 7,773 10 133 16,476 7,906
Segment liabilities (1,729) (2,129) (23) (10) (1,752) (2,139)
Capital expenditure - - - 16 - 16
Depreciation and amortisation 8 19 58 49 66 68
The Group and Company have non-current assets of GBP16,379,000 of which GBP2,406,000 are located in the United Kingdom and GBP13,973,000 are located in the USA.
2. Profit/(loss) per share
Basic Diluted Basic Diluted
2011 2011 2010 2010
------------------------------------- ------------ ------------ ------------ ------------
Continuing Operations
Net profit/(loss) for the reporting
period GBP'000 8,952 8,952 (2,944) (2,944)
Weighted average number of ordinary
shares outstanding 16,902,553 18,102,553 16,271,676 16,271,676
Profit/(loss) per ordinary share 52.96p 49.45p (18.10)p (18.10)p
------------------------------------- ------------ ------------ ------------ ------------
Basic Diluted Basic Diluted
2011 2011 2010 2010
--------------------------------- ------------ ------------ ------------ ------------
Discontinued Operations
Net profit/(loss) for the
reporting period GBP'000 (203) (203) (686) (686)
Weighted average number
of ordinary shares outstanding 16,902,553 16,902,553 16,271,676 16,271,676
Profit/(loss) per ordinary
share (1.20)p (1.20)p (4.21)p (4.21)p
--------------------------------- ------------ ------------ ------------ ------------
The basic net profit/(loss) per ordinary share is calculated using a numerator of the net loss for the reporting period and a denominator of the weighted average number of ordinary shares in issue for the reporting period. The diluted net loss per ordinary share is calculated using a numerator of the net loss for the reporting period and a denominator of the weighted average number of ordinary shares adjusted for the effect of all potentially dilutive shares, including share options and warrants, assuming they are converted. In 2010 there was no difference between the basic net loss per share and the diluted loss per share as ordinary share equivalents from share options were excluded from the computation as their effects were anti-dilutive.
Weighted average number of ordinary shares 2011 2010
--------------------------------------------- ------------ ------------
Issued ordinary shares 1 October 16,271,676 16,271,676
Effect of shares issued in the reporting 630,877 -
period
Basic weighted average number of ordinary
shares at 30 September 16,902,553 16,271,676
Share options 1,200,000 -
Diluted weighted average number of ordinary
shares at 30 September 18,102,553 16,271,676
3. Intangible assets
Group Goodwill Website Total
GBP000 GBP'000 GBP'000
Cost
At 30 September 2009 - 128 128
Additions - 15 15
----------------------------------------- --------- --------- ------------
At 30 September 2010 - 143 143
Recognised on acquisition of subsidiary 395 - 395
Additions - - -
Disposals - (143) (143)
At 30 September 2011 395 - 395
----------------------------------------- --------- --------- ------------
Amortisation
At 30 September 2009 - 39 39
Charge for the year - 46 46
----------------------------------------- --------- --------- ------------
At 30 September 2010 85 85
Impairment losses for the year (395) - (395)
Charge for the period - 57 57
Disposal - (142) (142)
----------------------------------------- --------- --------- ------------
At 30 September 2011 (395) - (395)
----------------------------------------- --------- --------- ------------
Net book value
30 September 2011 - - -
----------------------------------------- --------- --------- ------------
30 September 2010 - 58 58
----------------------------------------- --------- --------- ------------
Goodwill of GBP395,000 arises in respect of the acquisition of the remaining equity interest of Trust William Limited. The interest in Trust William Limited was previously accounted for as a jointly controlled entity. On 15 September 2011 the Company acquired the remaining 19.9% shareholding in Trust William Limited. Trust William limited is accounted for as a subsidiary from 15 September 2011. Following the disposal of the entire trade and assets of Trust William Limited on 15 September 2011, an impairment loss of GBP395,000 has been reflected in respect of this goodwill.
4. Investments
Non-current Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Subsidiary undertakings (i) - - - -
Jointly controlled entities - - - 1
Available for sale financial - - - -
assets
Financial assets held for trading
at fair value through the statement
of comprehensive income 16,374 7,078 16,374 7,078
-------------------------------------- --------- --------- --------- ---------
16,374 7,078 16,374 7,079
Current
Financial assets designated
at fair value through the statement
of comprehensive income (iv) 11 231 11 231
Available for sale financial - - - -
assets
-------------------------------------- --------- --------- --------- ---------
16,385 7,309 16,385 7,310
-------------------------------------- --------- --------- --------- ---------
i) Subsidiary undertakings Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- --------- --------- ---------
At 1 October - - - -
Assets written down - - - -
--------------------------- --------- --------- --------- ---------
At 30 September - - - -
--------------------------- --------- --------- --------- ---------
Details of subsidiary undertakings
are as follows: Country
of registration Class
or incorporation Principal of shares %
Subsidiary activity held holding
------------------------------------ ------------------- ---------------- ------------ ---------
Ordinary
Biocure Limited Scotland Dormant shares 100%
England Holding Ordinary
Medisys America Limited & Wales Company shares 100%
England Ordinary
Medisys Safety Products Limited & Wales Dormant shares 100%
Medisys Asia Pacific (Pte) Ordinary
Limited Singapore In Liquidation shares 100%
Ordinary
Medisys USA Inc. USA Dormant shares 100%*
------------------------------------ ------------------- ---------------- ------------ ---------
England Ordinary
Trust William Limited & Wales Non-trading shares 100%
------------------------------------ ------------------- ---------------- ------------ ---------
* Indirect shareholding
Acquisition of Trust William Limited
ii) Jointly controlled entities
Aggregate amounts relating to joint ventures are as follows:
Trust William Limited Group Group
2011 2010
GBP'000 GBP'000
----------------------- --------- ---------
Revenue 83 116
Loss after tax (203) (435)
Total assets 10 133
Total liabilities (23) (10)
----------------------- --------- ---------
On 15 September 2011, the trade and assets of Trust William Limited were sold to Optima Consumer Health Limited , a wholly owned subsidiary of William Ransom & Son Holdings plc for a nominal consideration based on future net sales of the Trust William Business. On the same date, the remaining 19.9% shareholding in Trust William Limited was transferred to MDY Healthcare plc at par value. See note 5 for amounts recognised on disposal of jointly controlled entity and acquisition of subsidiary.
iii) Available-for-sale-financial Group Group Company Company assets 2011 2010 2011 2010 Fair value GBP'000 GBP'000 GBP'000 GBP'000 ----------------------------------- ---------- --------- --------- --------- At 1 October - 348 - 348 Revaluation increase/(decrease) - - - - Impairment provision - (348) - (348) ----------------------------------- ---------- --------- --------- --------- At 30 September - - - -
In line with the Group's accounting policy, any revaluation of available-for-sale financial assets is recognised in the consolidated statement of income.
iv) Financial assets held for trading at fair value through Group Group Company Company the statement of comprehensive 2011 2010 2011 2010 income GBP'000 GBP'000 GBP'000 GBP'000 Fair value --------------------------------- --------- --------- --------- --------- At 1 October 7,078 7,483 7,078 7,483 Increase in fair value 9,896 55 9,896 55 Decrease in fair value - (235) - (235) Disposals (600) (225) (600) (225) --------------------------------- --------- --------- --------- --------- At 30 September 16,374 7,078 16,374 7,078 v) Financial assets designated Group Group Company Company at fair value through the statement 2011 2010 2011 2010 of comprehensive income GBP'000 GBP'000 GBP'000 GBP'000 -------------------------------------- --------- --------- --------- --------- At 1 October 231 1,602 231 1,602 Increase in fair value - - - - Decrease in fair value (8) (168) (8) (168) Disposals (212) (1,203) (212) (1,203) -------------------------------------- --------- --------- --------- --------- At 30 September 11 231 11 231 5. Disposal of Jointly controlled entity and acquisition of subsidiary
On 15 September 2011, the trade and assets of Trust William Limited were sold to Optima Consumer Health Limited, a wholly owned subsidiary of William Ransom & Son Holdings plc for a nominal consideration based on future net sales of the Trust William Business. On the same date, the remaining 19.9% shareholding in Trust William Limited was transferred to MDY Healthcare plc at par value.
In accordance with IFRS 3, the interest previously held in Trust William Limited is treated as if it were disposed of and re-acquired at fair value on the acquisition date. Accordingly, the interest in Trust William Limited has been re-measured to its fair value at 15 September 2011 and any resulting gain or loss compared to its carrying amount has been recognised in the Consolidated Income Statement.
On acquisition of the subsidiary the provision of GBP395,000 in relation to the minority share of inter-company debt was released.
Gain/(loss) on disposal of jointly controlled entity
GBP'000
------------------------------------------------- --------
Carrying value of Trust William at 15 September
2011 (1,592)
Fair value of Trust William at 15 September
2011 (1,592)
------------------------------------------------- --------
Gain on disposal of Trust William -
------------------------------------------------- --------
Acquisition of Trust William as a subsidiary
The amounts recognised in respect of the identifiable assets and liabilities assumed are set out in the table below:
GBP'000
-------------------------------- --------
Financial assets
Trade and other receivables 7
Cash and cash equivalents 3
Financial liabilities
Trade and other payables (1,997)
Total identifiable liabilities (1,987)
Goodwill GBP'000
------------------------------------------------ --- ---------
Consideration transferred to obtain control -
Fair value of previously-held equity interest (1,592)
Less: Fair value of identifiable liabilities
of Trust William (1,987)
----------------------------------------------------- ---------
Goodwill 395
----------------------------------------------------- ---------
Consideration was par value of the outstanding shares transferred GBP199.
There were no acquisition costs relating to the acquisition of the remaining 19.9% shareholding in Trust William Limited.
As the trade and assets of Trust William were disposed on 15 September 2011, there is no revenue recognised in the Consolidated Income Statement in respect of Trust William Limited from date of acquisition as a subsidiary. The Consolidated Income Statement includes GBP395,000 impairment loss in respect of goodwill arising on acquisition of Trust William Limited as a subsidiary.
If the acquisition of Trust William Limited, had been completed on the first day of the financial year, the group revenues for the period would have been GBP0.1m and the group profit would have been GBP8.7m.
6. Loans and Loan Notes
Group Group Company Company
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Loan notes 1,652 1,588 1,652 1,588
Loan 30 - 30 -
------------ --------- --------- --------- ---------
1,682 1,588 1,682 1,588
------------ --------- --------- --------- ---------
Loan Notes
The 3i loan notes were, as originally agreed, redeemable as to 50% on 31 December 2011 and 50% on 31 December 2012. On 22 June 2011, 3i agreed to defer the repayment due at 31 December 2011 until 31 March 2012 with the remaining 50% remaining due on 31 December 2012. 3i further agreed that the quarterly payment of interest due 30 June 2011 under the loan notes and all further interest accruing up until (but excluding) 31 March 2012, shall not be payable quarterly but be rolled up and become payable to 3i on the earlier of 31 March 2012 or the date upon which the Loan Notes become otherwise due and payable in accordance with their terms (as amended).
The loan notes would become repayable earlier in the event of the divestment by the Company of certain of its investments. The Company could, at its election, redeem the loan notes (in whole or in part) at any time on notice.
On 27(th) January 2011, the Company informed 3i that it anticipated that there would be, on 31 March 2011, the next Cash and Cash Equivalents Test date for the purposes of the loan note instrument, a Cash and Cash Equivalents Default (as defined in the instrument). Subsequently, on 31 March, and at the respective quarterly test dates thereafter, the Company was in default of the Cash and Cash Equivalents Test. Under condition 2c (ii) in Schedule 2 of the instrument, such defaults entitled 3i to require MDY Healthcare plc, to redeem all of the loan notes amounting to GBP1,587,842 plus accrued interest outstanding thereon.
At 1 October 2010 and throughout the reporting period, the consolidated net assets of the Company fell below GBP6,000,000, in breach of the net asset covenant in the loan note instrument. This breach entitled 3i, by notice, to require MDY Healthcare plc to redeem all or part of the loan note together with all accrued and unpaid interest. This covenant breach was not remedied in the period.
On 27th January 2011, 3i agreed that it would not exercise their right to require the Company to redeem the loan notes as a result of the default occurring on 31 March nor on any of the Cash and Cash Equivalents Tests falling on 30 June 2011, 30 September 2011 and 31 December 2011.
After the period end, on 1 December 2011, the Company, having realised its investment in Medivance, repaid 3i GBP1,672,800 in settlement of the entire loan note liability and all accrued interest thereon up to the date of repayment.
Loan facility
On 29 June 2011, the Company entered into an agreement with Brondsstadet AB, for the provision of an unsecured revolving credit facility of GBP150,000, with interest accruing on
amounts drawn down under the facility accruing at an annual rate of interest rate of 8%. Such interest was to be repaid no later than the termination of the agreement on 26(th) June 2012, when all advances and interest fall due for repayment. The advance, and interest accrued, could become repayable earlier in the event of a divestment by the Company of certain of its investments. As at 30(th) September 2011 the Company had drawn GBP30,000 in respect of the facility.
After the period end, on 1 December 2011, the Company, having realised its investment in Medivance Inc., repaid Brondsstadet AB the total of the principal and accrued interest outstanding in respect of all advances made under the loan facility.
7. Related party transactions
Transactions with key management personnel
2010
During the reporting period ended 30 September 2010, GBP300,000 was paid to MCM Limited, of which D Wong (a former director of the Company who served for part of reporting period ended 30 September 2010) was a retained consultant.
During the reporting period (November 2010), the Company sold 600,000 A preferred shares in SIW Holdings Limited ("Stanmore") to Alan MacKay, a former director of the Company, for a total cash consideration of GBP600,000. The sale of shares to Alan Mackay constituted a transaction with a related party for the purposes of rule 13 of the AIM Rules for Companies by virtue of the fact that Mr Mackay is a former director of the Company.
Transactions with substantial shareholders
2011
On 21 December 2010, a total of 810,810 new ordinary shares of 1 pence each, representing 4.75% of the company's enlarged issued ordinary share capital, were allotted to Bronsstadet AB for cash at a price of 18.5 pence per share, being the mid-price of an ordinary share of the Company at the close of business on 14 December 2010. Bronsstadet AB is a company wholly owned by Mr Peter Gyllenhammar, one of MDY Healthcare's existing major shareholders.
On 29 June 2011, the Company entered into an agreement for a loan facility of up to GBP150,000 with Bronsstadet AB. Pursuant to the terms of the facility agreement, Bronsstadet AB agreed to make available to the Company a revolving credit facility of up to GBP150,000 for a 364 day term. Interest accrued on any advance under the facility at the rate of 8% per annum. Amounts drawn down under the facility may be repaid or re-borrowed during the term of the facility at the option of the Company. Amounts may become repayable earlier in the event of the divestment by the Company of certain of its investments. As at 30 September 2011 the Company had drawn down GBP30,000 in respect of this facility. After the period end, on 1 December 2011, the Company, having realised its investment in Medivance Inc., repaid Bronsstadet AB the total principal the Company had drawn down under this facility together with accrued interest up to the date of repayment.
The preliminary financial statements for the reporting period ended 30 September 2011 have been prepared by the Company and were approved by the Directors on 13 February 2012. These financial statements do not constitute the full accounts.
Copies of this announcement will also be posted on the Company's website: www.mdyhealthcare.com.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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