RNS Number:0883Z
Goldshield Group PLC
27 June 2007
Goldshield Group plc
Goldshield Group plc ("Goldshield"), the marketing-led Pharmaceutical Company,
today announces its preliminary results for the twelve months to 31 March 2007.
* Revenue of #74.3 million (2006: #80.0 million)
* Profit before tax at #0.6 million (2006: #6.8million)
* Pre-exceptional earnings before tax, amortisation and impairment losses (EBTA)
#14.7 million (2006: #17.3 million)
* Net cash #23.3 million (2006: #15.9 million)
* Dividend of 5.1p to be paid on 20 August 2007 (2006: 5.1p)
* Strategic review completed
* Department of Health (DoH) settlement #4.0 million
* Six new products set for launch in 2007
Commenting on the results, Rakesh Patel, Finance Director, said;
"Our Strategic Review has highlighted the potential for our Pharmaceutical and
Healthcare divisions.
We are to concentrate our efforts on maintaining and growing our core businesses
and maximising value for our shareholders."
-ends-
Date: 27 June 2007
For further information contact:
Goldshield Group PLC City Profile Group
Dr. Keith Hellawell QPM, Chairman Jonathan Gillen
Rakesh Patel, Finance Director William Attwell
020-8649-8500 020-7448-3244
www.goldshieldplc.com
Chairman's Overview
The threat of legal action against the Company and two of its Directors for
alleged conspiracy to defraud arising out of the sale of warfarin in the late
1990's has had a detrimental effect on the share price. A substantial amount of
Directors time and millions of pounds in legal fees have been soaked up as a
result. However, the major clients and shareholders have continued to support
the business and the management team which is to their great credit.
Since my appointment we have addressed the problems the Company faces in order
to establish more certainty for the future. In this regard, on the 22 June 2007,
without admission of liability, we reached a #4.0 million full and final
settlement with the Department of Health (DoH). We are also pursuing through the
Court of Appeal our belief that the "crime" the Company is charged with, which
we do not believe we committed, is not in fact a criminal offence. The Company
is also seeking clarification as to its potential liability in the event that
that argument is not successful.
In April 2007, we announced we were undertaking a strategic review of our
business. Our conclusions were that we focus once again on our core
Pharmaceutical and Healthcare operations which I expand on below.
A consequence of the litigation is that our CEO, and founder of the Company,
Ajit Patel decided to step down from the Board in order to have more time to
prepare his defence.
The other founding member of the Company Kirti Patel, has also handed his
resignation to the Board in order to have more flexibility in preparing for his
upcoming trial. However, we are pleased he has agreed to work his notice period.
His expertise and contacts will be of considerable help as we re-energise this
activity.
The Board wish them both well and thank them wholeheartedly for their vision in
setting up the business and their personal commitment and dedication to its
success.
We are delighted to announce that Rakesh Patel, our Finance Director has been
appointed CEO. He has 15 years experience within Goldshield, is well respected
by the staff and known within the city. I feel sure he will make a huge
contribution to the Company's growth over the coming years. We are looking to
make an early appointment of a new Finance Director to replace him.
Strategy review
The review of our activities demonstrated the considerable potential of the
Pharmaceuticals and Healthcare divisions. We have two strong activities which
need management time and commitment to ensure that they deliver on their
potential. This "focus" will be an important aspect of the development of our
Company.
Within Pharmaceuticals, the major drug companies are selling off the products as
their patent expires. Over a number of years we have developed considerable
experience of acquiring and developing these products. Indeed, it is interesting
to note that in the period since 2003 the performance of our existing portfolio
of products has only marginally declined. Yet this has been a period of no new
product acquisitions and when management time has been focused on other parts of
the Company. I would add that the relocation of some of our administrative
activities to India has helped Goldshield to maintain margins in a highly
competitive environment. We believe that this efficiency will be of value to
Goldshield as we focus on growth.
In Healthcare, there is change within the UK and European regulatory environment.
These new changes place regulatory requirements on all UK and European
organisations which will require them to have access to medical and regulatory
infrastructure which Goldshield already has in place in its Pharmaceutical
division. The Directors believe that this will be beneficial to Goldshield. In
addition, some of our new products such as LIPObind, a Medicines and Healthcare
products Regulatory Agency (MHRA) approved medical device, have attractive
growth prospects.
During its development, Goldshield has established an extensive distributor base.
We now have distribution channels in over sixty countries with access to doctors,
pharmacies and hospitals. We need to exploit this potential with the acquisition
of more products and more marketing commitment. It is a good opportunity for the
Group.
It has been decided that we will dispose of certain of our non-core Indian
business and assets and we have entered into an agreement with Ajit Patel
for him to acquire these operations. A circular with full details of these
disposals is being sent to shareholders.
Both the Wellbeing villages and the resort in Goa offer long term potential. As
soon as planning permissions have been obtained, we will consider co-developing
the land under a joint venture. We will therefore commit no further significant
resources to these operations.
In addition to the changes at executive Director level, two important
retirements mean further changes. Peter Brown, the former Chairman of the Board
and Ken Pelton, the longest serving non-executive Director, have each decided
not to seek re-election at the next AGM. They have provided an invaluable
service to the Group, for which I would like to offer my sincerest thanks.
We are delighted to announce the appointment of one new non-executive Director.
Nick Woollacott, a main board member of Latice Group plc (now merged with the
National Grid) and until recently the senior independent Director of Enterprise
plc, is expected to join the Board in August, 2007. He brings with him a wealth
of experience and a history of success which will contribute to our progress. We
are also interviewing other candidates for non-executive Director positions.
Conclusion
The last few years have been demanding for shareholders. The DoH and SFO charges
together with the development of new activities in India have all been
distractions away from the core business. Yet, it has continued to perform well.
I am confident that the combination of the decisions outlined above together
with re-focused attention on the Pharmaceuticals and Healthcare divisions will
lead to a return to growth.
Commentary on the results for the Group are contained in the Report of the
Directors, pages 11 to 16.
Dr. Keith Hellawell QPM
Chairman
26 June 2007
Chief Executive Officer's Operating Review
It is my pleasure to report on the year ended 31 March 2007. We have made some
good progress despite facing difficulties over the past 12 months. I would add
that the settlement with the Department of Health (DoH) comes at a very
important time.
Despite the challenges the Group has experienced over the past 12 months, we
have continued to make progress. The Group reported sales for the year of #74.3
million, which is lower than the previous year of #80.0 million. We have
announced a profit before tax for the year of #0.6 million (2006: #6.8 million).
Pre-exceptional earnings before tax, amortisation and impairment losses (EBTA)
were below last year at #14.7 million (2006: #17.3 million). We have been
impacted by exceptional costs for the year primarily relating to legal costs of
#5.6 million (2006: #1.7 million). However, the business has continued to
generate cash and at the year end the net cash position had improved to #23.3
million (2006: #15.9 million).
Given the confidence in the potential of the underlying business and the strong
cash position, the Board is recommending a dividend of 5.1 pence. The total
dividend paid during the year has risen to 6.8 pence. This is an increase of 0.6
pence from 2006.
The Group continues to deal with the ongoing Serious Fraud Office investigation,
which began in April 2002. Going forward, we expect the next 18 months to be
more demanding on myself, Kirti Patel and other Directors as we prepare our
defences which are expected to come to trial in 2008/9.
As shareholders will have seen, the strategic review has highlighted the Group's
potential. We have concluded that we should focus on our core business of
marketing and selling Pharmaceutical and Healthcare products. We are proposing
to divest ourselves of most of our service businesses with the exception of the
Wellbeing Clinics in India. Whilst the Indian Wellbeing villages and resort no
longer form part of the core strategy of the Company, the Directors believe that
shareholder value can be delivered by developing the Care village and resort
sites in Goa by entering into a joint venture development agreement.
In order to concentrate on my legal case and to focus on developing a more
service-oriented business, I will be stepping down as the Group CEO and leave
the Board on 2 July 2007.
Over the last five years we have developed a strong management team and I am
very happy to leave the Group in the hands of Rakesh Patel, our Finance Director
who will become Chief Executive. Rakesh has worked for the Group since 1992 and
he has an excellent understanding of our business. I am confident that he will
drive the Group forward.
Ajit R Patel
Chief Executive Officer
26 June 2007
Report of the Directors
The Directors present their report together with the financial statements for
the year ended 31 March 2007.
Principal activities
The quoted Company is parent undertaking and did not trade with third parties
during the year. The Group is engaged in the development, marketing and
distribution of pharmaceutical and healthcare products.
Results and dividends
The profit before tax on ordinary activities of the Group was #0.6 million. The
Directors propose a dividend of 5.1 pence per Ordinary Share expected to be paid
on 20 August 2007 to those members on the register at the close of business on
27 July 2007. The dividend payments during 2007 amounted to 6.8 pence per
Ordinary Share comprising of an interim dividend of 1.7 pence per Ordinary Share
paid on 9 January 2007 and a dividend of 5.1 pence per Ordinary Share paid on 18
August 2006.
Operating review and future developments
Revenue for the year was #74.3 million compared to #80.0 million in the previous
year. Pre-exceptional profit before tax reduced from #11.5 million in the
previous year to #10.0 million in the current year representing 13.5 % of
revenue.
Emphasis during the year has been on maintaining the current business, building
cash reserves and evaluating our options for future growth.
Pharmaceuticals division
The Pharmaceutical divisions achieved total sales of #54.6 million (2006: #56.5
million). Our European retail brand business achieved sales of #31.3 million
(2006: #32.3 million). The decrease is attributable to a number of factors;
product supply, delays in regulatory approvals and the re-importation of export
sales back into the UK by parallel importers. The parallel import issue has now
been addressed and we expect to see an improvement during the second quarter of
the next financial year.
We have continued to build our analgesic brand Codipar (Co-codomol) where sales
have increased to #2.9 million (2006: #1.8 million). Also, a major opportunity
for the forthcoming year comes from the PCT (Primary Care Trust) portfolio
strategy. An initial start has been made on this project from January and
results, so far, are very encouraging.
Our Hospitals business in Europe recorded sales which were slightly ahead at
#11.3 million (2006: #11.1 million), despite the loss of certain NHS supply
contracts due to the pricing strategies of competitors. The European business
has doubled its sales volumes since the previous year despite product supply
restrictions.
Two new products, Flexinozzles and Cophenylcaine were introduced into the
Anaesthesia market. We have a strong pipeline of new products scheduled for
launch in the coming months. Zapain, an adult paracetamol solution, has recently
achieved UK registration and this will give us entry into the Palliative Care
sector. Our Autodetect epidural syringe has contributed to increased sales in UK
and Europe. Our range of differentiated bupivacaine epidural infusions have
received DoH and National Patient Safety Agency (NPSA) endorsement resulting in
a large number of NHS trusts preparing to switch to our infusions. Bufecaine
infusion bags are planned to be introduced in the coming months, which should
also lead to increased sales.
The Group's Retail Generics business recorded sales of #7.4 million (2006: #9.5
million). The generic market remains price competitive. The focus has been to
recover losses and to minimise expenditure on loss making products.
Sales in our Country Distributor business were #4.7 million (2006: #3.7 million).
This growth came primarily from expanding the business with existing partners in
South Africa, Australia and Saudi Arabia. The performance of this business
should improve with the establishment of new product registrations and improved
product supply.
Healthcare division
Sales for the direct to consumer units in Europe for the period were lower at
#11.5 million (2006: #14.1 million). Sales for the North American units for the
period were also lower at #5.8 million (2006: #6.9 million). The shortfall in
sales in this area is a direct result of the increased competition from generics
and pressure on margins over the last three years. As a result, the Company has
been pursuing a more branded approach in these businesses. There are already
some encouraging results which should yield a more positive outlook.
Recruitment of new customers at an acceptable cost continues to present the
greatest challenge to the division. A key strategy will be to build an extensive
customer database with detailed profiles across all regions. We plan to adopt an
extensive personalised marketing approach focusing on customer relationships.
This will enable the increase of customer lifetime values and the number of
annual transactions being made across a wider portfolio of products. Strategies
will be put in place that focus on customer retention and loyalty.
Our Healthcare division will decentralise its tactical product development
function on a regional basis. Products will be customised to meet regional needs
and lifestyle requirements. This will be complemented by the launch of strategic
group brands. This will lead to a faster time to market with lower costs of
development. The successful launch of a new product, LIPObind is testament to
this. As a brand, it will be less exposed to low-cost competitive generic
alternatives and the roll out across Europe. We expect the market in India to
also provide a good contribution to sales.
It is time to build the brands and to acquire new customers in what is, a price
sensitive market. The growth of the Goldshield brand has been inhibited as price
sensitive customers have moved to generic brands. Goldshield must therefore
reposition the brands as a purveyor of quality consumer health products. Our
products must be priced to compete with the generic market whilst allowing
customers to follow a predetermined path to a branded solution.
In the US, the focus will now be on maintaining market share.
In India, the division will be split into two units:
1. Healthcare India Products, which will continue to make inroads into
the Indian market and strengthen its global presence.
2. Wellbeing Centres which will be limited to its current two centres at Mumbai
and Ahmedabad.
Future developments
The last few years have been demanding for shareholders. The DoH and SFO charges
together with the demands of developing the new activities in India have
distracted the management team from the core business. It has continued to
perform well despite this. We are confident that the combination of the
decisions outlined above together with the re-focus upon the Pharmaceuticals and
Healthcare divisions will assist with the Group's strategy for growth.
Risk management objectives and policies
Please refer to Note 20 in the Notes to the Financial Statements explaining the
details on financial risk management of financial instruments. General risk
management objectives and policies are contained in the Chairman's Overview.
Directors
The Directors who served during the year are set out below.
The beneficial interests of the Directors and their families in the shares of
the Company at 1 April 2006 and 31 March 2007, as recorded in the register
maintained by the Company, were as follows:
5p Ordinary shares
31 March 2007 1 April 2006
Executive Directors
Ajit R Patel 3,300,000 3,300,000
Kirti V Patel 1,388,868 1,388,868
Rakesh V Patel 549,791 549,791
Ajay M Patel 360,000 360,000
Mike Reardon 1,000 1,000
Non-executive Directors
Peter M Brown (Note 1) 100,000 100,000
Ken O Pelton 105,816 105,816
Dr. Keith Hellawell QPM - -
Note: 1. Twenty thousand of P M Brown's shares are owned by Synergy Holdings
Limited, a company controlled by him.
As at 20 June 2007 there had been no change in Directors' shareholdings since
31 March 2007.
Details of Directors' share options are set out in the Remuneration Report on
page 25.
Rakesh V Patel and Ajay M Patel retire by rotation, and being eligible, offer
themselves for re-election at the Annual General Meeting.
Peter M Brown, who is over 70 years old, retires and has expressed his desire
not to offer for re-election at the Annual General Meeting.
Ken O Pelton who joined the Board in 1992, retires and has expressed his desire
not to offer for re-election at the Annual General Meeting.
Ajit R Patel has submitted his resignation and will leave the company on 2 July
2007.
Kirti V Patel has submitted his resignation and will leave the company on 31
December 2007.
Rakesh V Patel is the new Chief Executive Officer taking over from Ajit R Patel.
Employees
At 31 March 2007 the Group employed 913 personnel of whom 90 are based in the UK,
39 in North America, 8 in Ireland/mainland Europe and 776 in India. The Group is
an equal opportunities employer and does not discriminate between employees on
the grounds of race, ethnic origin, sex, age or disability.
The success of the Group is dependent upon the quality and performance of its
employees and the Group continues to ensure this through continuous training and
development, facilitated by Investors in People.
The Board acknowledges that its staff are its most important asset. It places a
strong emphasis on the training and development of its employees through 'on the
job' training and through staff attending courses. This is a continuous process
of training and all staff regularly attend courses on communication, planning,
decision-making and problem solving. In addition managers attend courses and 'on
the job' training on staff development, motivation, recruitment, appraisals and
team building. The Group also encourages staff to take vocational courses.
The Group encourages all of its employees to participate in its growth and
welcomes staff input at all levels. The Group is also operating a well-defined
performance pay scheme, which is fair, equitable, transparent and acts as a
strong motivation to its staff.
Information about the Group's activities is regularly communicated through
notices and staff meetings.
Employee sharesave scheme
An employee sharesave scheme is open to all eligible employees. Under the terms
of the scheme the Directors may offer options to purchase ordinary shares in the
Company to employees who enter into an Inland Revenue approved sharesave
contract. The price of each share option was at a discount of 20% from the
market price at the date of granting the options. Options may normally be
exercised during the period of six months after the completion of the sharesave
contract.
Share options
During the year no fresh share options were granted to employees. Details of the
options granted so far are set out in note 12 to the financial statements.
Details of the Directors' Share Options are shown in the Director's Remuneration
Report on page 25.
Charitable and political donations
Donations to charitable organisations amounted to #81,880 (2006: #100,692).
Donations to political organisations amounted to #nil (2006: #nil).
Directors' responsibilities
The Directors' responsibilities are contained in the Statement of Directors'
Responsibilities.
Substantial shareholders
As at 12 May 2007 the Company has been advised of the following holdings, in
addition to those of the Directors disclosed above, of 3% or more of the nominal
value of the Company's shares:
Name Shareholding %
Schroder Investment Management Limited 9,401,300 25.3%
Barclays Global Investors 2,366,160 6.4%
Hermes Pension Management 2,232,591 6.0%
Halifax Share Dealing Services 2,148,735 5.8%
Axa Rosenberg 1,878,444 5.1%
Legal & General Investment Management 1,586,679 4.3%
Canada Life 1,288,766 3.5%
Payment policy and practice
It is the Group's policy to settle the terms of payment with suppliers when
agreeing the terms of the transaction to ensure that suppliers are aware of
these terms. In general the trading terms entered into are payment at the end of
the month following the month of invoice. Trade payables due at the year end
amount to 41 days purchases (2006: 45 days).
Research and development
Details of research and development expenditure are shown in the Report of the
Finance Director on page 7 under research and development expenditure.
Auditor
Grant Thornton UK LLP offer themselves for re-appointment as auditor in
accordance with Section 385 of the Companies Act 1985.
Annual General Meeting
It is proposed that the next AGM be held on 8 August 2007, at 10.00 am, notice
of which is set out on pages 59 to 61. In addition to the proposed resolutions
to receive the Report and Accounts, declare a dividend, re-appoint Directors in
accordance with the Company's Articles of Association, to appoint Grant Thornton
UK LLP as Auditor and to authorise the Directors to fix the Auditor's
remuneration; and to approve the Remuneration Report, it is proposed that the
following business be transacted:
Directors' authority to allot securities (Resolution 7 - Ordinary resolution)
The Directors seek to renew this authority each year at the AGM. The effect of
resolution 7 is to grant to the Directors authority to allot new securities
limited to a maximum amount of #619,600 representing approximately one third of
the Company's issued share capital as at 31 March 2007 (being the date of the
Company's last Annual Accounts). This renewed authority would remain in force
for 15 months from the passing of the resolution or, if earlier, the next AGM.
Disapplication of pre-emption rights (Resolution 8 - Special resolution)
The Directors seek to renew this authority each year at the AGM. Under the
Companies Act 1985, shareholders have "rights of pre-emption" in relation to the
issue of equity securities. This means that if new shares in the Company are to
be offered for subscription for cash they must first be offered to the existing
shareholders in proportion to their holdings at the time of such offer. The
Companies Act requires that the Directors seek the approval of the shareholders
if they wish to disapply these rights. The Directors are seeking authority to
disapply pre-emption rights over 1,858,802 equity securities, representing
approximately 5% of the issued share capital of the Company as at 31 March 2007.
This renewed authority would remain in force for 15 months from the passing of
the resolution or, if earlier, the next AGM.
Company's authority to purchase its own shares (Resolution 9 - Special resolution)
The Directors are seeking to renew the authority for the Company to purchase in
the open market up to 10% of the issued share capital of the Company. The
Company undertakes that it will, if the resolution is passed, only exercise such
authority to buy back its own shares if such purchase would have the effect of
increasing the earnings per share and if they believed that to do so would be in
the best interests of the shareholders generally. If the resolution is passed
the Company will be authorised to buy in one transaction or any number of
transactions an aggregate maximum of 3,717,603 shares, representing
approximately 10% of the issued share capital of the Company as at 20 June 2007
(being the latest practicable date prior to publication of the Notice of AGM).
The maximum price the Company will be permitted to pay will be equal to 5% above
the average middle market quotations for the five business days preceding the
transaction and the minimum price will be 5 pence (being the nominal value of
the shares).
The total number of options to subscribe for ordinary shares outstanding as at
20 June 2007 was 2,056,478, representing approximately 5.5% of the issued share
capital of the Company at such date. If the authority to purchase shares were to
be exercised in full, the total number of options to subscribe for ordinary
shares outstanding as at 20 June 2007 would represent 2.5% of the issued share
capital (assuming no other further ordinary shares were issued after that date).
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the Group
financial statements in accordance with applicable law and International
Financial Reporting Standards as adopted by the European Union and the parent
company financial statements in accordance with applicable law and UK generally
accepted accounting principles.
Company law requires the Directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Group and the Company and of the profit or loss of the Group for that period. In
preparing those financial statements, the Directors are required to:
* select suitable accounting policies and then apply them consistently
* make judgements and estimates that are reasonable and prudent
* state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group will continue in the business.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the financial statements comply
with the Companies Act 1985. They are also responsible for safeguarding the
assets of the Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. They are responsible for ensuring
that the Annual Report includes information required by the Listing Rules of the
Financial Services Authority.
A copy of the financial statements of the Group is placed on the Goldshield
website.
The maintenance and integrity of the website is the responsibility of the
Directors and the work carried out by the auditor does not involve consideration
of these matters. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions. Accordingly, the auditor's accept no responsibility for any
changes that may have occured to the financial statements since they were
initially presented on the website.
In so far as the Directors are aware:
* there is no relevant audit information of which the Company's auditor's are
unaware;
and
* the Directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
auditor's are aware of that information.
BY ORDER OF THE BOARD
S Venkateswaran
Secretary
26 June 2007
Consolidated Income Statement
for the year ended 31 March 2007
Before Before
impairment impairment
and and
Notes exceptional Exceptional Total exceptional Exceptional Total
items items Impairment 2007 items items Impairment 2006
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue 2 74,274 - - 74,274 80,025 - - 80,025
Cost of sales (26,213) - - (26,213) (28,429) - - (28,429)
-----------------------------------------------------------------------------------
Gross profit 48,061 - - 48,061 51,596 - - 51,596
Distribution costs (3,407) - - (3,407) (4,912) - - (4,912)
Impairment losses 7 - - (3,800) (3,800) - - (2,992) (2,992)
Exceptional legal and
professional costs - (5,602) - (5,602) - (1,651) - (1,651)
Other administrative expenses (35,350) - - (35,350) (35,509) - - 35,509)
-----------------------------------------------------------------------------------
Administrative expenses (35,350) (5,602) (3,800)(44,752) (35,509) (1,651) (2,992)(40,152)
-----------------------------------------------------------------------------------
Operating (loss)/profit 3 9,304 (5,602) (3,800) (98) 11,175 (1,651) (2,992) 6,532
Finance costs 5 (4) - - (4) (6) - - (6)
Finance income 5 705 - - 705 281 - - 281
-----------------------------------------------------------------------------------
Profit before tax 10,005 (5,602) (3,800) 603 11,450 (1,651) (2,992) 6,807
Income tax expense 6 (4,047) 1,681 - (2,366) (3,422) 495 - (2,927)
-----------------------------------------------------------------------------------
(Loss)/profit after tax
attributable to shareholders
of parent 5,958 (3,921) (3,800) (1,763) 8,028 (1,156) (2,992) 3,880
===================================================================================
(Loss)/earnings per share
Basic (pence) 14 (4.7) 10.5
======== ========
Diluted (pence) 14 (4.7) 10.4
======== ========
Dividends
Proposed dividend per
share (pence) 15 5.1 5.1
======== ========
Proposed dividend (#'000) 15 1,896 1,893
Dividends paid during ======== ========
the period (pence) 6.8 6.2
Dividends paid during ======== ========
the period (#'000) 15 2,525 2,300
======== ========
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Balance Sheet
as at 31 March 2007
Notes 2007 2006
#'000 #'000
Assets
Non-current
Goodwill 7 7,703 10,237
Other intangible assets 7 13,329 19,515
Property, plant and equipment 8 3,539 1,612
Deferred tax assets 13 1,840 957
-------------------
26,411 32,321
Current
Inventories 9 8,480 11,530
Trade and other receivables 10 11,984 10,680
Cash and cash equivalents 11 23,321 15,855
-------------------
43,785 38,065
-------------------
Total assets 70,196 70,386
===================
Equity
Equity attributable to shareholders
of Goldshield Group plc
Share capital 12 1,859 1,856
Share premium 21,549 21,485
Translation reserve (692) (90)
Retained earnings 17,966 22,221
-------------------
Total equity 40,682 45,472
-------------------
Liabilities
Non-current
Deferred tax liabilities 13 1,117 1,649
-------------------
1,117 1,649
Current
Provisions 16 5,177 1,278
Trade and other payables 17 16,092 15,677
Other liabilities 18 2,533 2,816
Current tax liabilities 4,595 3,494
-------------------
28,397 23,265
-------------------
Total liabilities 29,514 24,914
-------------------
Total equity and liabilities 70,196 70,386
===================
The financial statements were approved by the Board of Directors on 26 June 2007
and signed on their behalf by:
Ajit R Patel, Chief Executive Officer
Rakesh V Patel, Finance Director
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Cash Flow Statement
for the year ended 31 March 2007
2007 2006
Note #'000 #'000
Cash flows from operating activities
Result for the period before tax 603 6,807
Depreciation 632 512
Amortisation 4,661 5,880
Impairment losses 3,800 2,992
Equity settled share options 95 121
Finance costs 4 6
Finance income (705) (281)
----------------------------------------------------------------------------
9,090 16,037
Decrease/(increase) in inventories 3,050 (229)
(Increase)/decrease in trade and other receivables (1,304) 1,236
Increase/(decrease) in provisions,
trade payables and other liabilities 3,826 (243)
Taxes paid (2,678) (3,921)
----------------------------------------------------------------------------
Net cash from operating activities 11,984 12,880
Cash flows from investing activities
Additions to property, plant and equipment (2,686) (963)
Additions to other intangible assets - (225)
Purchase of businesses and deferred consideration (75) (35)
Interest received 705 281
----------------------------------------------------------------------------
Net cash from investing activities (2,056) (942)
Cash flows from financing activities
Proceeds from share issue 67 55
Interest paid (4) (6)
Dividends paid (2,525) (2,300)
----------------------------------------------------------------------------
Net cash from financing activities (2,462) (2,251)
Net increase in cash and cash equivalents 7,466 9,687
Cash and cash equivalents at beginning of period 15,855 6,168
----------------------------------------------------------------------------
Cash and cash equivalents at end of period 11 23,321 15,855
============================================================================
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Statement of Changes in Equity
for the year ended 31 March 2007
Equity attributable to equity holders of
Goldshield Group plc
Share Share Translation Retained Minority Total
capital premium reserve earnings interest equity
#'000 #'000 #'000 #'000 #'000 #'000
Balance 1 April 2005 1,854 21,359 (400) 20,370 106 43,289
Currency translation differences - - 310 - - 310
Deferred tax on translation reserve - - - (93) - (93)
Deferred tax on pre 7 November
grants of share options - - - 243 - 243
Disposal of minority interest - - - - (106) (106)
--------------------------------------------------------------------
Net gains/(losses) not recognised
in income statement - - 310 150 (106) 354
Profit for the period - - - 3,880 - 3,880
--------------------------------------------------------------------
Total recognised income and expense
for the period - - 310 4,030 (106) 4,234
Shares issued 2 126 - - - 128
Employee share based compensation - - - 121 - 121
Dividends paid - - - (2,300) - (2,300)
--------------------------------------------------------------------
Balance at 31 March 2006 1,856 21,485 (90) 22,221 - 45,472
====================================================================
Balance 1 April 2006 1,856 21,485 (90) 22,221 - 45,472
Currency translation differences - - (602) - - (602)
Deferred tax on translation reserve - - - 181 - 181
Deferred tax on pre 7 November
grants of share options - - - (243) - (243)
--------------------------------------------------------------------
Net losses not recognised
in income statement - - (602) (62) - (664)
Loss for the period - - - (1,763) - (1,763)
--------------------------------------------------------------------
Total recognised expense
for the period - - (602) (1,825) - (2,427)
--------------------------------------------------------------------
Shares issued 3 64 - - - 67
Employee share based compensation - - - 95 - 95
Dividends paid - - - (2,525) - (2,525)
--------------------------------------------------------------------
Balance at 31 March 2007 1,859 21,549 (692) 17,966 - 40,682
====================================================================
The accompanying accounting policies and notes form an integral part of these
financial statements.
Notes to the Financial Statements
1. PRINCIPAL ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards(IFRSs) as adopted by the European
Union (EU) and as issued by the International Accounting Standards Board (IASB).
A summary of the accounting policies applied in the preparation of financial
statements is given below. These policies have been consistently applied to all
the periods presented, unless otherwise stated.
Adoption of new and revised Standards
In the current year, the Group has adopted all of the new and revised Standards
and interpretations issued by the International Accounting Standards Board
(the IASB) and the International Financial Reporting Interpretations Committee
(the IFRIC) of the IASB that are relevant to its operations and effective for
the annual reporting periods beginning on 1 April 2006. The adoption of these
new and revised Standards and Interpretations do not have a material financial
impact on the financial statements of the Group.
New IFRS standards and Interpretations not adopted
The IASB and IFRIC have issued additional standards and interpretations which
are effective for periods starting after the date of these financial statements.
The following standards and interpretations with their effective date have yet
to be adopted by the Group:
* IFRS 7 Financial Instruments: Disclosures - 1 January 2007
* IFRS 8 Operating Segments - 1 January 2009
* IFRIC 8 Scope of IFRS 2 - 1 May 2006
* IFRIC 9 Reassessment of Embedded Derivatives - 1 June 2006
* IFRIC 10 Interim Financial Reporting and Impairment - 1 November 2006
* IFRIC 11 IFRS 2 - Group and Treasury Share Transactions - 1 March 2007
* IFRIC 12 Service Concession Agreements - 1 January 2008
The Group does not anticipate that the adoption of these standards and
interpretations will have a material effect on its financial statements on
initial adoption.
Basis of consolidation
The Group financial statements consolidate those of the Company and of its
subsidiary undertakings drawn up to 31 March 2007. A subsidiary is an entity
which the Company controls, this is achieved by owning more than 50% of the
issued share capital. Profits or losses on intra-group transactions are
eliminated in full. The results of the subsidiary undertakings acquired during
the year have been included from the date of acquisition. On acquisition of a
subsidiary, all of the subsidiary's assets and liabilities which exist at the
date of acquisition are recorded at the fair values reflecting their condition
at that date. Goodwill arising on consolidation, representing the excess of the
fair value of the consideration given over the fair values of the identifiable
net assets acquired, is capitalised net of any provision for impairment.
Revenue
Revenue from the sale of goods is recognised in the income statement when the
significant risks and rewards of ownership have been transferred to the buyer.
Revenue is measured at the fair value of the consideration received/receivable
by the Group for goods supplied and services provided, excluding value added tax
and trade discounts. Revenue from services rendered is recognised in the income
statement by reference to the stage of completion of transactions at the balance
sheet date. The stage of completion for the Global Solutions - call centre
business is determined by the man days spent on the project for rendering the
service at the end of each billing cycle. Subscription revenue is accrued over
the period of the subscription.
Intangible assets
Goodwill
All business combinations are accounted for under the purchase method and
goodwill has been recognised on acquisitions of subsidiaries. In respect of
business combinations that have occurred since 1 April 2004, goodwill represents
the difference between the cost of the acquisition and the fair value of the net
identifiable assets acquired. Goodwill is stated at cost less any accumulated
impairment losses. Goodwill arising on acquisitions before 1 April 2004 has been
retained at the previous UK GAAP amounts at 31 March 2004. Goodwill is allocated
to cash generating units and is not amortised but tested for impairment annually
or more frequently if events or changes in circumstances indicate that it might
be impaired.
Other intangible assets
Externally purchased product licenses, trademarks, brand-names, know-how and
similar intangible items are capitalised at historical cost, net of any
provision for impairment and amortised on a straight line basis over their
estimated useful economic lives which range between seven and ten years. The
amortisation cost has been included within administrative expenses in the income
statement.
Impairment
The Group's goodwill and other intangible assets are tested for impairment
annually or more frequently, if events or changes in circumstances indicate that
it might be impaired. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash
flows (cash generating units). An impairment loss is recognised for the
amount by which the asset's or cash generating unit's carrying amount exceeds
its recoverable amount. The recoverable amount is based on internal discounted
cash - flow evaluation. If at the balance sheet date there is any indication
that an impairment loss recognised in prior periods for an asset other than
goodwill no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
Research and development expenditure
Expenditure on development activities is capitalised if the product or process
is technically and commercially feasible, the costs are separately identifiable
and the Group has sufficient resources to complete development. Capitalised
development costs are stated at cost less accumulated amortisation and impairment
losses. Capitalised development costs are amortised from the point at which
the asset is ready to use on a straight-line basis over its useful life, not
exceeding five years. All other research and development expenditure is written
off to the income statement in the period in which it is incurred.
Property, plant and equipment
Property, plant and equipment are stated at cost less the accumulated
depreciation on the same. Depreciation is charged on a straight line basis over
the estimated useful lives on the cost of the assets less their residual value.
Land is not depreciated. The estimated useful lives are as follows:
Freehold buildings and
leasehold improvements - 25 Years or over the period of lease
Office equipment - 5 Years
Plant and equipment - 6 to 7 Years
Motor vehicles - 5 Years
Residual values are re-assessed annually.
Directly attributable costs for construction of assets is shown under Capital
work in progress and will be transferred to the relevant category on completion
of construction of the asset.
Inventories
Inventories are stated at the lower of cost and net realisable value. The cost
of inventories are valued using the weighted average price method.
Accounting for income taxes
Current income tax assets and / or liabilities comprise those obligations to, or
claims from, fiscal authorities relating to the current or prior reporting
period, that are unpaid at the balance sheet date. They are calculated according
to the tax rates and tax laws applicable to the fiscal periods to which they
relate, based on the taxable profit for the year.
Deferred tax is recognised on all temporary differences. This involves
comparison of the carrying amount of assets and liabilities in the consolidated
financial statements with their respective tax bases. However, deferred tax is
not provided on the initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. Deferred tax
liabilities are always provided for in full. Deferred tax assets and liabilities
are calculated, without discounting, at tax rates that are expected to apply to
the period when asset is realised or the liability is settled, based on tax
rates (tax laws) that have been enacted or substantially enacted by the balance
sheet date. All changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the income statement, except where they relate to
items that are charged or credited directly to equity (such as translation
reserve and pre 7 November 2002 grants of share options) in which case the
related deferred tax is also charged or credited directly to equity.
Tax losses available to be carried forward as well as other income tax credits
to the Group are assessed for recognition as deferred tax assets. Deferred tax
assets are only recognised to the extent that it is probable that future taxable
profits will be available against which the asset can be recognised and are
reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an
original maturity of three months or less. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included as
a component of cash.
Employee benefits
The Group operates a defined contribution pension scheme whereby contributions
are made to individual employee pension plans of certain employees. These costs
are charged against profits in respect of the accounting period in which they
are paid.
Indian Gratuity costs, which represent a form of long term service
benefits are accrued based on actuarial valuation at the balance sheet date,
carried out by an independent actuary.
Leased assets
All leased assets are identified as operating leases if they do not transfer
substantially all the risks and rewards to the leasee.
Payments made under operating leases are charged to the profit and loss account
on a straight line basis over the period of the lease.
Foreign currencies
The reporting currency for these financial statements is GB sterling (#) which
is the parent company's functional currency.
Transactions in foreign currencies are translated at the exchange rate ruling at
the date of the transaction. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. Foreign exchange differences arising on translation are recognised in
profit or loss. Non monetary assets and liabilities that are measured in terms
of historical cost in a foreign entity are translated using the exchange rate at
the date of the transaction.
All assets and liabilities in the financial statements of foreign subsidiaries
are translated at the closing rate at the balance sheet date. The results of
foreign operations have been converted into Group's reporting currency at the
actual rates over the reporting period and the exchange differences arising have
been taken to translation reserve, a component of equity. The exchange
differences arising from re-translation of the net investments in subsidiaries
are directly taken to translation reserve. All other exchange differences are
dealt with through the income statement.
Share options
For all employee share options granted after 7 November 2002 and vesting on or
after 1 January 2005, an expense is recognised in the income statement with a
corresponding credit to equity. The equity share based payment is measured at
the fair value at the grant date using the binomial lattice method. If vesting
periods or other vesting conditions apply, the expense is allocated over the
vesting period, based on the best available estimate of the number of share
options expected to vest.
Provisions - Legal and other disputes
Provision is made where a reliable estimate can be made of the likely outcome
of legal or other disputes against the Group. In addition, provision is made for
legal and other expenses arising from claims received or other disputes. No
provision is made for other possible claims or where an obligation exists but
it is not possible to make a reliable estimate. Costs associated with claims
made by the Group against third parties are charged to the profit and loss
account as they are incurred. The provisions are not discounted as the impact is
not material.
Exceptional legal costs
Exceptional legal costs are expenditure incurred and provided for defending the
legal claims against the Group by Department of Heath and Serious Fraud Office.
Dividends
Dividends proposed or declared after the balance sheet dates are not recognised
as a liability. However the amounts of such dividends are disclosed in the
financial statements.
Segmental reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment) or in providing products or
services within a particular economic environment (geographic segment) which is
subject to risks and rewards that are different from those of other segments.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual terms of the instrument.
- Trade receivables
Trade receivables do not carry any interest and are stated at their fair values
as reduced to equal the estimated present value of the future cash flows.
- Bank borrowings
Interest bearing bank loans and overdrafts are recorded at fair values on
initial recognition. Finance charges including premiums payable on settlement or
redemption and direct issue costs, are accounted for on an accruals basis to the
profit and loss account using the effective interest method and are added to the
carrying value of the instrument to the extent that they are not settled in the
period in which they arise.
- Trade payables
Trade payables are not interest bearing and are stated at their fair values.
- Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
Equity comprises of the following:
- Share capital - represents the nominal value of equity shares
- Share premium - represents the excess over nominal value of fair value of
consideration
- Retained earnings - represents the accumulated retained profits
- Translation reserve - represents gains or losses on foreign currency
transactions
Accounting estimates and judgements
Refer to note 24 of Consolidated IFRS Financial Statements on page 49.
2. SEGMENTAL REPORTING
Segment information is presented in the consolidated financial statements in
respect of the Group's business segments, which are the primary basis of segment
reporting. The business segment-reporting format reflects the Group's management
and internal reporting structure.
Primary - Business segments
The Group is organised into five major business units - Retail Brands, Retail
Generics, Hospitals, Direct to Consumer Western Europe (D2C WE) and, Direct to
Consumer North America (D2C NA). Certain other business units like Country
Distributors, Global Services, Wellbeing Centre, Wellbeing Villages, Resorts and
Management Services constitute the other segments. These units form the basis
for the Group's reporting of primary segment information.
Secondary - Geographical segments
The geographical segments are considered for disclosure as secondary segment.
Geographical revenues are segregated based on the location from which the
revenues are generated. Assets are identified to the segment on the basis of
their place of use.
Segment results
Segment results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.
All inter-segment transfers are priced and carried out at arm's length.
Segment assets and liabilities
Segment assets include all operating assets used by a segment and consist
principally of operating cash, debtors and fixed assets, net of allowances and
provisions which are reported as direct offsets in the balance sheet.
Segment liabilities include all operating liabilities and consist principally of
creditors and accrued liabilties.
Segment assets and liabilities do not include deferred income taxes.
Unallocated segment income and expenses.
Unallocated segment income comprises interest income and miscellaneous receipts
not directly attributable to any particular segment. Unallocated segment
expenditure represents interest on loans and provision for income taxes, which
cannot be directly attributed to any segment.
Primary segment disclosure - Business segments
31 March 2007 Retail Retail Other
Brands Generics Hospitals D2C WE D2C NA Segments Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue
External sales 31,266 7,420 11,364 11,580 5,852 6,792 74,274
--------------------------------------------------------------------
Total revenue 31,266 7,420 11,364 11,580 5,852 6,792 74,274
--------------------------------------------------------------------
Result
Segment result 4,743 135 2,539 (441) (2,653) (4,421) (98)
--------------------------------------------------------------------
Operating loss (98)
Finance costs (4)
Finance income 705
Income tax expense (2,366)
-------
Loss for the period (1,763)
=======
Other information
Segment assets 22,157 2,607 14,912 4,368 1,176 23,135 68,356
Unallocated corporate assets 1,840
-------
Consolidated total assets 70,196
=======
Segment liabilities 9,468 880 3,509 2,121 723 7,382 24,083
Unallocated corporate liabilities 5,712
-------
Consolidated total liabilities 29,795
=======
Capital expenditure - - 28 11 30 2,617 2,686
Depreciation and amortisation 4,134 - 101 1 32 1,025 5,293
Impairment losses 1,042 - - - 2,132 626 3,800
Non-cash expenses other
than depreciation - - - - - 95 95
31 March 2006 Retail Retail Other
Brands Generics Hospitals D2C WE D2C NA Segments Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue
External sales 32,255 9,456 11,067 14,109 6,957 6,181 80,025
-----------------------------------------------------------------
Total revenue 32,255 9,456 11,067 14,109 6,957 6,181 80,025
-----------------------------------------------------------------
Result
Segment result 4,690 (87) 2,532 691 (1,377) 83 6,532
-----------------------------------------------------------------
Operating profit 6,532
Finance costs (6)
Finance income 281
Income tax expense (2,927)
-------
Profit for the period 3,880
=======
Other information
Segment assets 28,239 4,272 12,751 3,485 3,681 17,001 69,429
Unallocated corporate assets 957
-------
Consolidated total assets 70,386
=======
Segment liabilities 8,915 1,187 3,281 2,356 634 3,398 19,771
Unallocated corporate liabilities 5,143
-------
Consolidated total liabilities 24,914
=======
Capital expenditure - - 42 - 7 1,139 1,188
Depreciation and amortisation 5,177 - 91 - 59 1,065 6,392
Impairment losses 1,245 - - - 1,148 599 2,992
Non-cash expenses other
than depreciation - - - - - 121 121
Geographical segments 2007 2006
#'000 #'000
Revenue
United Kingdom 53,738 58,778
Ireland 12,814 12,255
North America 5,852 6,957
India 1,870 2,035
----------------------
Total 74,274 80,025
======================
Assets
United Kingdom 41,626 43,003
Ireland 18,824 19,711
North America 1,176 3,681
India 8,570 3,991
----------------------
Total 70,196 70,386
======================
Capital expenditure
United Kingdom 72 241
Ireland 28 42
North America 30 7
India 2,556 898
----------------------
Total 2,686 1,188
======================
3. OPERATING (LOSS)/PROFIT
The operating (loss)/profit is stated after charging:
2007 2006
#'000 #'000
Auditor's remuneration:
- Audit services (see below) 77 64
- Other services (see below) 193 197
Depreciation and amortisation:
- Intangible assets 4,661 5,880
- Property, plant and equipment 632 512
Hire of plant and machinery 139 88
Impairment losses 3,800 2,992
Exceptional legal and professional costs 5,602 1,651
Other operating lease rentals 1,095 1,043
Foreign exchange losses 366 205
Research and development:
- current year expenditure 115 237
===================
Auditors remuneration for audit and non-audit services in jurisdictions in which
the Group has a presence are analysed below:
Group audit 2007 2006
#'000 #'000
Audit fees to Company's auditor for audit
of the Group's annual accounts 77 64
-------------------
77 64
===================
Other services 2007 2006
#'000 #'000
Audit fees to Company's auditor and associates for
Company's subsidiaries pursuant to legislation 89 79
Advisory 48 40
Corporation tax 45 73
VAT 11 5
-------------------
193 197
===================
4. DIRECTORS AND EMPLOYEES
Employees
Staff costs during the year were as follows: 2007 2006
#'000 #'000
Wages and salaries 8,820 8,536
Social security costs 660 675
Share options 95 121
Other pension costs 253 253
-------------------
9,828 9,585
===================
The average number of employees is analysed below:
2007 2006
Number Number
Administration 341 310
Marketing and selling 456 431
Management 97 98
Warehouse 28 31
-------------------
922 870
===================
The Group contributes to employee money pension schemes at a percentage of pay
(depending on grade). The share option charge includes an amount of #32,000
(2006: #19,000) pertaining to key management personnel.
Directors' remuneration
The emoluments of the Directors were as follows:
2007 2006
#'000 #'000
Emoluments 1,631 1,537
Payments to third parties for consultancy
services 113 5
Pension contributions to money purchase
pension schemes 86 83
-------------------
1,830 1,625
===================
During the year four Directors (2006: four Directors) participated in money
purchase pension schemes.
Further details of the remuneration and share options of the Directors are given
in the Directors' Remuneration Report on pages 22 to 26.
5. FINANCE INCOME AND FINANCE COSTS
Finance income and costs includes all interest related income and expenses. The
following amounts have been included in the income statement line for the
reporting periods presented:
2007 2006
#'000 #'000
Interest income resulting from
- special interest bearing account 365 -
- short term bank deposits 310 281
- corporation tax 30 -
-------------------
Finance income 705 281
===================
Interest expense resulting from
- bank overdrafts (1) (2)
- corporation tax (2) -
- others (1) (4)
-------------------
Finance costs (4) (6)
===================
6. INCOME TAX EXPENSE
2007 2006
#'000 #'000
Result for the year before tax 603 6,807
Tax rate 30% 30%
-------------------
Expected tax expense (181) (2,042)
Adjustments for deferred tax 1,328 492
Tax rate adjustment for future period
(tax rate will change for certain entities) (118) -
Adjustment for non-deductible expenses
- overseas losses not utilised (1,064) 628
- overseas profits not taxed 608 -
- capital allowance 481 653
- other non-deductible expenses (4,303) (2,412)
Adjustment to tax charge in respect
of prior periods 883 (75)
Other short term timing difference - (171)
-------------------
Actual tax expense, net (2,366) (2,927)
===================
Comprising
Current tax expense (4,459) (3,344)
Adjustment to tax charges in respect of
prior periods 883 (75)
-------------------
(3,576) (3,419)
Deferred tax income resulting from the
- origination and reversal of temporary
difference 1,210 492
-------------------
1,210 492
-------------------
(2,366) (2,927)
===================
7. INTANGIBLE ASSETS
Brand names
know-how
licences and
trade marks Goodwill Total
#'000 #'000 #'000
Cost
At 1 April 2005 64,356 26,050 90,406
Exchange differences 5 1,299 1,304
Additions acquired separately 225 - 225
----------------------------
At 31 March 2006 64,586 27,349 91,935
----------------------------
At 1 April 2006 64,586 27,349 91,935
Exchange differences (11) (1,912) (1,923)
----------------------------
At 31 March 2007 64,575 25,437 90,012
----------------------------
Amortisation and impairment losses
At 1 April 2005 37,567 14,742 52,309
Exchange differences 5 997 1,002
Amortisation 5,880 - 5,880
Impairment losses 1,619 1,373 2,992
----------------------------
At 31 March 2006 45,071 17,112 62,183
----------------------------
At 1 April 2006 45,071 17,112 62,183
Exchange differences (10) (1,654) (1,664)
Amortisation 4,661 - 4,661
Impairment losses 1,524 2,276 3,800
----------------------------
At 31 March 2007 51,246 17,734 68,980
----------------------------
Carrying amounts
At 1 April 2005 26,789 11,308 38,097
----------------------------
At 31 March 2006 19,515 10,237 29,752
----------------------------
At 31 March 2007 13,329 7,703 21,032
----------------------------
Subsequent to the annual impairment test for 2007, the carrying amount of
goodwill is allocated to the following cash generating units:
2007 2006
#'000 #'000
Hospitals 6,980 7,090
D2C North America - 2,280
Regina 723 867
-----------------
7,703 10,237
=================
The recoverable amounts for the cash generating units given above are determined
based on internal discounted cash flow evaluation. The cash flow evaluation is
based on actual operating results and five year forecasts at the growth rates
stated in the key assumptions.
The key assumptions are:
Growth rates 2007 2006
Hospitals Constant Constant
D2C North America Constant 4%
Regina Constant 7%
=======================
Discount rates 2007 2006
#'000 #'000
Hospitals 8% 8%
D2C North America 8% 8%
Regina 8% 8%
=======================
Management assumes the Hospitals, D2C North America and Regina units to continue
to earn the current level of profit margins and achieve the same level of sales
in the future forecasts.
The growth rate for the Hospitals business, D2C North America and Regina
business is assumed to be constant based on past experience.
The discount rate applied for the impairment review workings is based on the
Weighted Average Cost of Capital for the Group.
The US business has shown a downward trend reflected by lower revenue and
reduced profitability as compared to previous years. The future forecasts for
the business do not indicate substantial improvement in both revenue and
profitability, which has resulted in recognising further impairment charge in
the year.
The Regina business has shown a small improvement in the turnover in the current
year, however based on the profitability and the assumption of simliar level of
sales in the future forecasts in an impairment charge is recognised.
The related goodwill impairment loss of #2,276,000 (2006: #1,373,000) is
included under "Impairment losses" in the income statement. The amount
attributed to D2C North America unit is #2,132,000 (2006: #1,148,000) and Regina
unit is #144,000(2006: #225,000).
8. PROPERTY, PLANT AND EQUIPMENT
Land & Capital Work Office Plant & Motor
buildings in progress equipment equipment vehicles Total
#'000 #'000 #'000 #'000 #'000 #'000
Cost
At 1 April 2005 99 - 2,398 482 10 2,989
Exchange differences 6 - 113 8 1 128
Additions 686 - 223 49 5 963
------------------------------------------------------------------------
At 31 March 2006 791 - 2,734 539 16 4,080
------------------------------------------------------------------------
At 1 April 2006 791 - 2,734 539 16 4,080
Exchange differences (71) - (194) (15) (2) (282)
Additions 1,664 130 733 146 13 2,686
Disposals - - (3) - - (3)
------------------------------------------------------------------------
At 31 March 2007 2,384 130 3,270 670 27 6,481
------------------------------------------------------------------------
Depreciation
At 1 April 2005 45 - 1,556 265 5 1,871
Exchange differences 3 - 74 8 - 85
Depreciation 39 - 359 112 2 512
------------------------------------------------------------------------
At 31 March 2006 87 - 1,989 385 7 2,468
------------------------------------------------------------------------
At 1 April 2006 87 - 1,989 385 7 2,468
Exchange differences (8) - (134) (12) (1) (155)
Depreciation 63 - 436 127 6 632
Disposals - (3) - - (3)
------------------------------------------------------------------------
At 31 March 2007 142 - 2,288 500 12 2,942
------------------------------------------------------------------------
Carrying amounts
At 1 April 2005 54 - 842 217 5 1,118
------------------------------------------------------------------------
At 31 March 2006 704 - 745 154 9 1,612
------------------------------------------------------------------------
At 31 March 2007 2,242 130 982 170 15 3,539
------------------------------------------------------------------------
Land and buildings includes #1,655,000 (2006: #353,000) of land which is not
being depreciated.
9. INVENTORIES
2007 2006
#'000 #'000
Finished goods and goods for resale 11,309 14,124
Write down on inventories (2,829) (2,594)
--------------------
8,480 11,530
====================
In 2007, a total of #26,213,000 of inventories was included in the income
statement as an expense (2006: #28,429,000).
An amount of #1,052,500 for write down of inventories (2006: #1,359,000) has
been included within administrative expenses in the income statement.
No reversal of previous write-downs was recognised as a reduction of expense in
2007 or 2006. None of the inventories are pledged as securities for liabilities.
10. TRADE AND OTHER RECEIVABLES
2007 2006
#'000 #'000
Trade receivables 11,443 11,825
Allowance for doubtful debts (836) (1,879)
--------------------
Trade receivables, net 10,607 9,946
Prepayments and accrued income 1,377 734
--------------------
Total 11,984 10,680
====================
Trade receivables are usually due within 48 days and do not bear any effective
interest rate. All trade receivables except the factored portion of the Retail
Generics segment are subject to credit risk exposure. However the Group does not
identify specific concentration of credit risk with regards to trade receivables,
as the amount recognised resemble a large number of receivables from various
customers.
The fair value of these short term financial assets is not individually
determined as the carrying amounts is a reasonable approximation of fair value.
11. CASH AND CASH EQUIVALENTS
2007 2006
#'000 #'000
Cash at bank and in hand 20,212 9,351
Short-term bank deposits 3,109 6,504
--------------------
Total 23,321 15,855
====================
The effective interest rate on short-term bank deposits was 4.8% (2006: 3.8%);
these deposits have an average maturity of 22 days (2006: 9 days).
12. SHARE CAPITAL AND SHARE OPTIONS
2007 2006
#'000 #'000
Authorised
100,000,000 ordinary shares of 5 pence each
(2006: 100,000,000) 5,000 5,000
====================
2007 2006
#'000 #'000
Allotted, called up and fully paid
37,176,033 ordinary shares of 5 pence each
(2006: 37,126,611) 1,859 1,856
====================
2007 2006
Share issued and fully paid, Number Number
- beginning of the year 37,126,611 37,070,778
- issued during the year 49,422 55,833
------------------------
Share issued and fully paid 37,176,033 37,126,611
========================
During the year 49,422 shares were issued under the unapproved employee share
option scheme and the employee share save scheme. The difference between the
total consideration of #66,826 and the nominal value of #2,471 has been credited
to the share premium account.
Share options
Details of Directors' share options are set out in the Directors Remuneration
Report on page 25.
The market price at 31 March 2007 was 170 pence and the range during the year
ended 31 March 2007 was 170 pence to 337 pence.
The following share options which have been granted by the Company were
outstanding at the year end:
Date of grant Earliest Latest 2007 2006
date of date of Number Number
exercise exercise
The 'unapproved scheme'
5p Ordinary shares at 180 pence 3-Jun-98 3-Jun-01 2-Jun-08 735,000 735,000
5p Ordinary shares at 480.5 pence 11-Aug-99 11-Aug-02 10-Aug-09 22,917 31,580
5p Ordinary shares at 640 pence 11-Jan-00 11-Jan-03 10-Jan-10 - 1,923
5p Ordinary shares at 640 pence 11-Jan-00 11-Jan-05 10-Jan-10 175,337 177,260
5p Ordinary shares at 871 pence 10-Jul-00 10-Jul-03 9-Jul-10 7,453 8,118
5p Ordinary shares at 871 pence 10-Jul-00 10-Jul-05 9-Jul-10 1,805 1,805
5p Ordinary shares at 775 pence 18-Dec-00 18-Dec-03 17-Dec-10 924 924
5p Ordinary shares at 775 pence 18-Dec-00 18-Dec-05 17-Dec-10 924 924
5p Ordinary shares at 686 pence 18-Jul-01 18-Jul-04 17-Jul-11 7,261 7,686
5p Ordinary shares at 686 pence 18-Jul-01 18-Jul-06 17-Jul-11 123,491 124,499
5p Ordinary shares at 586.5 pence 3-Dec-01 3-Dec-04 2-Dec-11 3,545 3,783
5p Ordinary shares at 586.5 pence 3-Dec-01 3-Dec-06 2-Dec-11 3,545 3,783
5p Ordinary shares at 366 pence 23-Jul-02 23-Jul-05 22-Jul-12 11,270 11,270
5p Ordinary shares at 366 pence 23-Jul-02 23-Jul-05 22-Jul-12 294,110 321,979
5p Ordinary shares at 196 pence 4-Aug-03 4-Aug-06 4-Aug-13 - 56,939
5p Ordinary shares at 196 pence 4-Aug-03 4-Aug-08 3-Aug-13 59,540 72,805
5p Ordinary shares at 157.5 pence 4-Aug-03 4-Aug-06 4-Aug-13 - 38,549
5p Ordinary shares at 157.5 pence 4-Aug-03 4-Aug-08 4-Aug-13 46,757 53,767
5p Ordinary shares at 260.7 pence 26-Jul-04 26-Jul-07 25-Jul-14 161,042 180,044
5p Ordinary shares at 260.7 pence 26-Jul-04 26-Jul-09 25-Jul-14 161,042 180,044
5p Ordinary shares at 270 pence 21-Jul-05 21-Jul-08 20-Jul-15 101,448 124,347
5p Ordinary shares at 270 pence 21-Jul-05 21-Jul-10 20-Jul-15 99,415 122,314
The employee 'sharesave scheme'
5p Ordinary shares at 696 pence 23-Aug-00 1-Oct-07 31-Mar-08 1,056 1,056
Date of grant Earliest date Latest date 2007 2006
of exercise of exercise Number Number
The employee 'sharesave scheme'
5p Ordinary shares at 555 pence 10-Aug-01 1-Oct-04 31-Mar-07 - 304
5p Ordinary shares at 275.2 pence 2-Jul-02 1-Aug-07 31-Jan-08 14,431 14,431
5p Ordinary shares at 275.2 pence 2-Jul-02 1-Aug-09 31-Jan-10 6,531 6,531
5p Ordinary shares at 266 pence 10-Jan-03 1-Feb-06 31-Jul-08 - 1,421
5p Ordinary shares at 266 pence 10-Jan-03 1-Feb-08 31-Jul-10 2,469 2,469
5p Ordinary shares at 126 pence 15-Aug-03 1-Sep-06 28-Feb-07 - 39,933
5p Ordinary shares at 126 pence 15-Aug-03 1-Sep-08 28-Feb-09 15,165 15,165
5p Ordinary shares at 174 pence 2-Feb-04 1-Mar-07 31-Aug-07 - 11,237
The Directors' interests (including beneficial and family interests) in the
above share options are set out in the Directors Remuneration Report on page 25.
2007 2007 2006 2006
Weighted average Number Weighted average Number
exercise price of exercise price of
Pence options Pence options
Outstanding at the beginning of the period 300.34 2,351,890 304.94 2,302,891
Forfeited/surrendered during the period 254.99 (245,990) 325.62 (204,988)
Exercised during the period 135.22 (49,422) 190.65 (28,817)
Granted during the period - - 270.00 282,804
--------------------------------------------------------
Outstanding at the end of the period 309.73 2,056,478 300.34 2,351,890
--------------------------------------------------------
Exercisable at the end of the period 331.97 1,093,472 289.60 981,998
========================================================
As at 31 March 2007, the Group maintained two sharebased payment schemes:
Goldshield Group plc unapproved scheme
The unapproved share options scheme is administered by the Group. Options are
granted to employees during their tenure of service and these can be exercised
until expiry of 10 years from the date of grant, provided the employee continues
to remain in service at the earliest exercise date. The options are exercisable
based on the achievement of performance criteria with regards to growth in
Earnings per share and Turnover. The Remuneration Committee has the discretion
to consider any exception in meeting the performance criteria when the options
are exercised.
Goldshield Group plc sharesave scheme
The scheme allows all eligible employees to benefit from the growth of the
Company through savings deducted directly from pay, tax-free bonuses and a right
to purchase Goldshield Group plc shares in the future but at a fixed price,
which does not exceed the middle market value of a share over the three dealing
days immediately preceding the issue of this invitation. The approved sharesave
scheme has option exercise terms of three, five or seven years. The sharesave
scheme can be exercised for 6 months only after the three, five or seven year
maturity dates.
The options outstanding at 31 March 2007 have an exercise price in the range of
126 pence to 871 pence and a weighted average contractual life of 4.10 years.
There were no share options granted during the year.
13. DEFERRED TAX ASSETS AND LIABILITIES
Defered tax assets and liabilities are attributable to the following:
2007 2007 2006 2006
Deferred Deferred Deferred Deferred
tax assets tax liabilities tax assets tax liabilities
Non-current assets #'000 #'000 #'000 #'000
Other intangible assets - 1,117 - 1,894
Property, plant and equipment 78 - - (77)
Share options 96 - 310 -
Translation reserve 208 - 27 -
------------------------------------------------------------
Total carried forward 382 1,117 337 1,817
2007 2007 2006 2006
Deferred Deferred Deferred Deferred
tax tax tax tax
assets liabilities assets liabilities
#'000 #'000 #'000 #'000
Total brought forward 382 1,117 337 1,817
Current liabilities
Other liabilities 963 - - (168)
Unused tax losses 495 - 620 -
------------------------------------------------------------
Total 1,840 1,117 957 1,649
============================================================
Equity
Translation reserve 181 - (93) -
Share options (243) - 243 -
------------------------------------------------------------
Total (62) - 150 -
============================================================
Please also refer to note 6 for information on the Group's tax expense.
14. (LOSS)/EARNINGS PER SHARE
The calculation of the basic (loss)/earnings per share is based on the (loss)/
earnings attributable to ordinary shareholders divided by the weighted average
number of shares in issue during the year.
The calculation of diluted earnings per share is based on the basic earnings per
share, adjusted to allow for the issue of shares and the post tax effect of
dividends, on the assumed conversion of all dilutive options.
Reconciliations of the (loss)/earnings and weighted average number of shares
used in the calculations are set out below.
2007 2006
Weighted Weighted
average Per share average Per share
Loss number of amount Earnings number of amount
#'000 shares'000 pence #'000 shares'000 pence
(Loss)/profit attributable to shareholders (1,763) 37,146 - 3,880 37,098 -
Basic (loss)/earnings per share (4.7) 10.5
======== ========
Diluted (loss)/earnings per share 37,146 (4.7) 37,427 10.4
======== ========
Weighted average number of ordinary shares 2007 2006
shares 000's shares 000's
Issued ordinary share at 1 April 37,127 37,071
Effect of share issued in July 2005 - 20
Effect of share issued in September 2005 - 3
Effect of share issued in December 2005 - 1
Effect of share issued in January 2006 - 2
Effect of share issued in March 2006 - 1
Effect of share issued in September 2006 18 -
Effect of share issued in March 2007 1 -
-----------------------------
Weighted average number of ordinary share at 31 March 37,146 37,098
=============================
Weighted average number of ordinary shares (diluted) 2007 2006
000's 000's
Weighted average number of ordinary share at 31 March 37,146 37,098
Effect of share options on issue - 329
Weighted average number of ordinary shares -----------------------------
(diluted) at 31 March 37,146 37,427
=============================
15. EQUITY DIVIDENDS
2007 2006
#'000 #'000
Ordinary shares - dividend for 2005 of 4.5 pence
per share paid 3 August 2005 - 1,669
Ordinary shares - dividend for 2006 of 1.7 pence
per share paid 13 January 2006 - 631
Ordinary shares - dividend for 2006 of 5.1 pence
per share paid 18 August 2006 1,893 -
Ordinary shares - dividend for 2007 of 1.7 pence
per share paid 9 January 2007 632 -
-----------------------------
2,525 2,300
=============================
2007 2006
Pence Pence
Proposed dividend per share 5.1 5.1
=============================
2007 2006
#'000 #'000
Proposed dividend 1,896 1,893
=============================
16. PROVISIONS
#'000
Carrying amount 1 April 2006 1,278
Additional provisions 5,602
Used provisions (1,703)
------------
Carrying amount 31 March 2007 5,177
============
Provisions are considered current as their timing of settlement is not at the
discretion of the Group.
Provisions represent legal fees being an estimate of the ongoing costs for
defending legal claims against the Group. It is anticipated that the provisions
will be used within a period of 2-20 months from the date of initiation based on
the actual legal costs as and when incurred.
As the timing of spend on the legal costs is dependant on the progress of the
litigation which involves various counter parties and legal authorities, that
Group cannot reliably estimate the amounts that will be paid after more than 12
months from the balance sheet date. Thus, the whole amount is classified as
current.
17. TRADE AND OTHER PAYABLES
2007 2006
#'000 #'000
Trade payables 5,123 5,219
Capital creditors 75 150
Accruals 10,893 10,308
-----------------------------
16,092 15,677
=============================
18. OTHER LIABILITIES
2007 2006
#'000 #'000
Other creditors 2,154 2,242
Social security and other taxes 379 574
-----------------------------
2,533 2,816
=============================
19. OPERATING LEASES
The Group's minimum operating lease payments are as follows:
2007 2006
Land & 2007 Land & 2006
buildings Other buildings Other
#'000 #'000 #'000 #'000
Within one year 887 46 952 53
Between one to five years 1,678 5 1,264 8
More than five years 1,524 - 367 -
----------------------------------------
4,089 51 2,583 61
========================================
Lease payments recognised as an expense during the period amount to #1,095,000
(2006: #1,065,000). No sublease income is expected as all assets held under
lease agreements are used exclusively by the Group.
No operating lease agreements contain any contingent rent clauses.
The office buliding in India has a renewal option and escalation clause for
lease rentals. Apart from the India office building at Mumbai, none of the
operating lease agreements contain renewal options or escalation clauses.
The Company did not have any financial leases at 31 March 2007 (31 March 2006:
#nil).
20. FINANCIAL INSTRUMENTS
The Group uses financial instruments, comprising cash, short term borrowings,
trade receivables and trade payables, which arise directly from its operations.
The main purpose of these financial instruments is to raise finance for the
Group's operations.
Short term debtors and creditors
The Group's trade and other receivables are actively monitored to avoid
significant concentrations of credit risk.
Interest rate risk
The Group finances its operations through a mixture of retained profits and bank
facilities. Bank borrowings are made using variable interest rates.
Liquidity risk
The Group seeks to manage financial risk, to ensure sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably. Short-term flexibility is achieved through overdraft facilities and
short/medium term borrowings.
Borrowing facilities
The Group has undrawn facilities available of #500,000 expiring within one year
(2006: #500,000).
Currency risk
The Group is exposed to translation and transaction foreign exchange risk. In
relation to translation risk the proportion of assets held in the foreign
currency are matched to an appropriate level of borrowings in the same currency.
Transaction exposures are hedged when known, mainly using the forward exchange
hedge market.
The Group seeks to hedge its exposures using a variety of financial instruments,
with the objective of minimising the impact of fluctuations in exchange rates on
future transactions and cash flows.
The Group has overseas subsidiaries operating in Ireland where reserves and
expenses are denominated in Euros. The Group has funded the acquisition cost and
working capital by a Euro loan. As the Group receives net cash inflows in Euros
this loan is being reduced and replaced, as necessary, by funding denominated in
Sterling.
#20.2 million (2006: #20.1 million) of the sales of the Group's business is to
customers in continental Europe/foreign markets excluding North American
operations. The majority of these sales are invoiced in the currencies of the
customers involved. The Group policy is to minimise all currency exposures on
any balance not expected to mature within 30 days of its arising through
the use of forward currency contracts, however there were none in place at the
year end. All other sales of UK business are denominated in sterling.
The tables below show the extent to which Group companies have monetary assets
and liabilities in currencies other than their local currency.
Functional currency of operation Net foreign currency monetary assets/(liabilities)
Indian Other
US Dollars Euro Rupees currencies Total
#'000 #'000 #'000 #'000 #'000
2007
Sterling 338 2,763 890 (2) 3,989
Dollar 316 - - - 316
Euro 537 - - - 537
Indian Rupees - - - 4,228 4,228
-------------------------------------------------
1,191 2,763 890 4,226 9,070
-------------------------------------------------
2006
Sterling 252 1,766 1,058 - 3,076
Dollar 361 - 382 - 743
Euro 398 78 - - 476
Indian Rupees 42 - - 1,734 1,776
-------------------------------------------------
1,053 1,844 1,440 1,734 6,071
-------------------------------------------------
Fair values
The fair values of the Group's financial instruments are considered equal to the
book value. As these financial instruments are not publicly traded, the fair
values presented are determined by calculating present values of the cash flows
anticipated until maturity of these financial assets.
21. CAPITAL COMMITMENTS
During the year ended 31 March 2007, the Group entered into contracts to
purchase and construct property, plant and equipment for #453,000
(2006: #172,000). These commitments are expected to be settled in the following
financial year.
22. SUBSIDIARY UNDERTAKINGS
At 31 March 2007 the Company held more than 20% of the allotted share capital of
the following significant undertakings:
Name Country of Class of share Proportion Nature of
registration or capital held held business
incorporation
Goldshield Pharmaceuticals England and Wales #1 ordinary shares 100% Marketing and
Limited distribution of
pharmaceutical
products
Goldshield Limited England and Wales #1 ordinary shares 100% Marketing and
distribution of
vitamins and health
supplements
Goldshield Management
Services Limited England and Wales #1 ordinary shares 100% Management
services
Vitamins Direct Limited England and Wales #1 ordinary shares 100% Marketing and
distribution of
vitamins and
health supplements
Regina Health Limited England and Wales #1 ordinary shares 100% Marketing and
distribution of
vitamins and health
supplements
B&S House of Health Limited England and Wales #1 ordinary shares 100% Marketing and
distribution of
vitamins and
health supplements
Natural Essentials Limited England and Wales #1 ordinary shares 100% Marketing and
distribution of
vitamins and
health supplements
Forley Generics Limited England and Wales #1 ordinary shares 100% Marketing of
pharmaceutical
products
Goldshield USA, Inc USA Ordinary shares 100% Intermediate
holding company
Golden Pride, Inc USA Ordinary shares 100% Marketing and
distribution of
vitamins and
health supplements
WT Rawleigh, Co Canada Ordinary shares 100% Marketing and
distribution of
vitamins and
health supplements
Goldshield Services Pvt. Limited India Ordinary shares 100% Management
services
Antigen Pharmaceuticals Limited Ireland Ordinary shares 100% Intermediate
holding company
Antigen International Limited Ireland Ordinary shares 100% Marketing and
distribution of
pharmaceutical
products
Antigen Overseas Limited Ireland Ordinary shares 100% Marketing and
distribution
of pharmaceutical
products
Anpharm Limited Ireland Ordinary shares 100% Marketing and
distribution of
pharmaceutical
products
Goldshield Healthcare Pvt. Limited India Ordinary shares 100% Marketing and
distribution of
vitamins and
health supplements
and telemarketing
services
Goldshield Real Estate Pvt. Limited India Ordinary shares 100% Development of
Wellbeing Villages
and Resorts
Complete Wellbeing Publishing India Ordinary shares 100% Publishing
Pvt. Limited magazines for
consumers and
selling copies,
subscriptions and
advertising space
Goldshield Direct,Inc. USA Ordinary shares 100% Marketing and
distribution of
vitamins and
health supplements
Goldshield Management Services, Inc. USA Ordinary shares 100% Management
services
Goldshield Business Solutions England & Ordinary shares 100% Accounting and
Limited Wales Taxation Service
23. CONTINGENT LIABILITIES
Indemnities and guarantees
The Group has given indemnities in respect of advance payments, deferred
purchase consideration and import duty guarantees issued on its behalf in the
normal course of business. The indemnities given at 31 March 2007 were #583,000
(2006: #329,000).
Irish operations
On 28 November 2001 the Group acquired the sales, marketing and distribution
rights for the Antigen brand from Antigen Holdings Limited. The companies and
assets were acquired at an estimated cost of #9.4 million. The estimated
consideration was to be settled in two parts, firstly by the payment of #5.2
million and secondly by an obligation to discharge the scheme of arrangement
liabilities of the acquired Antigen companies. The Directors obtained legal
opinion that the Group's exposure to the debts covered by the scheme was
restricted to the debts borne by the companies it acquired.
On 29 October 2002, Miza Ireland Limited and each of its Irish subsidiaries,
parties to the wider scheme of arrangement, were placed into examinership.
During the prior year the liquidator of Miza Ireland Limited claimed the sum of
Euro20.8 million although no grounds for the claim have been specified in detail.
Liability for the claim has been denied. The Directors have received legal
opinion that no basis for claim has been presented by the liquidator which could
result in a liability on the part of the company and that the subsidiaries
concerned have grounds for defending the claim.
On the 2 November 2005, the liquidator of Miza Ireland Limited served High Court
proceedings against the Group (and other defendants) for the above-said claim.
The claim is presently pending before the High Court Commercial in Ireland.
Serious Fraud Office (SFO) Investigation update
In April 2006, the SFO framed formal charges against the company and two of the
Company Directors. The Directors do not believe the Group has acted in an
unlawful manner and the case is being defended. Legal and professional costs in
this matter have been provided for.
Scottish and Northern Irish Department of Health claims
Claims have been received from the Scottish Health Authorities and the
Department of Health and Social Services and Public Safety for Northern Ireland
claiming damages of around #3.3 million and #1.0 million respectively. The Group
vigorously denies any liability for this claim.
The Directors believe the Group is free from wrong-doing in respect of these
allegations. A defence has been filed.
Further information required by IAS 37 is not disclosed on the grounds that it
can be expected to prejudice the outcome of the litigation. The expected legal
and professional costs for this action have been provided for.
24. ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The Group makes estimates and judgements concerning the future. The estimates
and judgements that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Impairment of goodwill and other intangibles
The Group test annually the carrying values of goodwill and other intangibles
for any possible impairment in accordance with the accounting policy statement
in Note 1. The achievement of the growth and profitability by the individual
cash generating units is critical in substantiating the carrying value of
goodwill and intangibles. Refer to note 7 of Consolidated IFRS Financial
Statements on page 40.
Legal and other disputes
The Group faces ongoing litigation issues for claims against it, the same
detailed in Note 23 on contingent liabilities. The Group continues to vigorously
deny any liabilities from these claims but the outcome of these legal issues and
any resulting financial implications could have a material impact on the Group's
financial statements.
Share options
The share options calculation takes into account future dividends of 6 pence and
a volatility rate of 45%, based on expected share price. It is assumed that the
3 and 5 year share save options are held for 3 and 5 years respectively, ie. the
duration of the savings contracts, because the bonus is paid then and the
employee has cash tied up. For the employee stock options it is assumed that 3
year options will be held for 5 years and that 5 year options will be held for 6
years. Both could be held for longer before expiry, but on average employees are
likely to seek liquidity or leave the company before the full term. The riskfree
interest rate was determined at 5%. The underlying expected volatility was based
upon a calculation of historic volatility during the period 2002-2004.
Income taxes
The Group is subject to taxes in various jurisdictions. Significant judgment is
required in determining the Group provision for income taxes. There are many
transactions and calculations for which the ultimate tax determination is
uncertain during the ordinary course of business. The Group recognises
liabilities for anticipated tax audit issues based on estimates as to whether
additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will
impact the income tax and deferred tax provision in the year in which such
determination is made.
25. RELATED PARTY TRANSACTIONS
The Group has agreed to an unsecured facility amounting to #500,000 (2006: #nil)
each to Ajit R Patel and Kirti V Patel, for payment of legal fees in defending
charges framed by the Serious Fraud Office (SFO). An amount of #200,000 (2006:
#nil) has been provided for against these facilities and forms part of the
exceptional legal costs in the Income Statement. The amount drawn against these
facilities as at 31 March 2007 is #482,000 (2006: #nil). Subsequent to 31 March
2007 the Group has received #800,000 from the Insurance Company and the broker
against settlement of claim for the Director's and Officer's Insurance policy
which has been set against the unsecured facility to the Director's.
26. POST BALANCE SHEET EVENTS
Settlement of English Department of Health claims
The Group has reached an agreed #4 million settlement with the English
Department of Health regarding the alleged conspiracy surrounding the sale of
the anticoagulant drug, warfarin. Under the terms of the settlement Goldshield
have agreed to pay this amount, on a full and final basis and without admission
of liability.
Disposal of certain Indian business and assets
To enable the business to focus both management time and the full resources of
Goldshield on its Pharmaceutical and Healthcare businesses, it has been decided
that the Group will dispose of certain of the non-core Indian businesses and
also to outsource the development of the Wellbeing Healthcare villages and
resort in Goa. The sites identified by the Group will be retained pending
receipt of the planning approvals at which time they will be co-developed.
Ajit R Patel has expressed an interest in acquiring these non-core assets and
has entered into an agreement with Goldshield, summary details of which
are set out below.
Ajit R Patel, or a company controlled by him, will purchase the entire issued
share capital of Goldshield Business Solutions Private Limited (GBSPL), an
Indian incorporated wholly owned subsidiary of Goldshield for a consideration of
INR 110 million (approximately #1.4 million). The consideration will be payable
in cash on completion and will be applied to general corporate purposes. GBSPL
will be required by 28 February, 2008 to change its name to Sanda Business
Solutions and the Goldshield name will revert to the Group.
Company Balance Sheet at 31 March 2007
Notes 2007 2006
#'000 #'000
Fixed assets
Goodwill 5 809 2,127
Other intangible assets 5 12,521 17,383
Investments 6 7,159 6,871
-----------------------
20,489 26,381
-----------------------
Current assets
Debtors: due after more than one year 7 3,893 9,919
Debtors: due within one year 7 3,097 7
Cash at bank and in hand 9,974 7,829
16,964 17,755
Creditors: amounts falling due within one year 8 (1,911) (13,160)
-----------------------
Net current assets 15,053 4,595
-----------------------
Total assets less current liabilities 35,542 30,976
Provisions for liabilities 9 (1,117) (1,894)
-----------------------
34,425 29,082
=======================
Capital and reserves
Called up share capital 10 1,859 1,856
Share premium account 11 21,549 21,485
Profit and loss account 11 11,017 5,741
-----------------------
Shareholders' funds 12 34,425 29,082
=======================
The financial statements were approved by the Board of Directors on 26 June 2007
and signed on their behalf by:
Ajit R Patel, Chief Executive Officer
Rakesh V Patel, Finance Director
The accompanying accounting policies and notes form an integral part of these
financial statements.
Notes to the Company's Financial Statements
1. PRINCIPAL ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with applicable United
Kingdom accounting standards and under the historic cost convention. The
Directors have reviewed the principal accounting policies and consider they
remain the most appropriate for the Company. The principal accounting policies
of the Company have remained unchanged from the previous year.
Investments
Investments in subsidiary undertakings in the balance sheet of the Company are
included at the cost of the shares held less amounts written off.
Intangible fixed assets
Goodwill, brand names, know-how, licences, trademarks and similar intangible
items are capitalised at historical cost net of any provision for impairment and
amortised on a straight line basis over their estimated useful economic lives,
which range between seven and ten years.
Deferred taxation
Deferred tax is recognised on all timing differences where the transactions or
events that give the Group an obligation to pay more tax in the future, or a
right to pay less tax in the future have occurred by the balance sheet date.
Deferred tax assets are recognised when it is more likely than not that they
will be recovered. Deferred tax is measured using rates of tax that have been
enacted or substantially enacted by the balance sheet date. Defered taxes are
not discounted.
Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling at
the date of the transaction. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. All other exchange differences are dealt with through the profit and loss
account.
Financial instruments
Financial assets and financial liabilities are recognised on the Company's
balance sheet when the Company becomes a party to the contractual terms of the
instrument.
* Trade receivables
Trade receivables do not carry any interest and are stated at their fair values,
which equal the estimated present value of the future cash flows.
* Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the fair value.
Finance charges including premiums payable on settlement or redemption and
direct issue costs, are accounted for on an accruals basis to the profit and
loss account using the effective interest method and are added to the carrying
value of instrument to the extent that they are not settled in the period in
which they arise.
* Trade payables
Trade payables are not interest bearing and are stated at their fair value.
* Equity instruments
Equity instruments issued by the Company are recorded at the fair value.
2. RESULT FOR THE FINANCIAL YEAR
The Company has taken advantage of Section 230 of the Companies Act 1985 and has
not included its own profit and loss account in these financial statements. The
profit after tax for the year of the Company was #7,801,000 (2006: Loss
#1,290,000) which is dealt with in the financial statements of the Company.
Auditors remuneration
The audit fees for the Company was #6,000 (2006: #5,000). Auditor's remuneration
for other services is disclosed in note 3 of Consolidated IFRS financial
statements on page 38.
Fees paid to Company's auditor, Grant Thornton UK LLP, and its associates for
services other than statutory audit of the Company are not disclosed in
Goldshield Group plc's accounts since the consolidated accounts of Goldshield
Group plc are required to disclose non-audit fees on a consolidated basis.
3. DIRECTOR AND EMPLOYEES
There were no employees in the Company as at 31 March 2007 and 31 March 2006.
Details in respect of Directors' emoluments are included within the Directors'
Remuneration Report on page 24.
4. EQUITY DIVIDENDS
2007 2006
#'000 #'000
Ordinary shares - dividend for 2005 of 4.5 pence per
share paid on 3 August 2005 - 1,669
Ordinary shares - dividend for 2006 of 1.7 pence per
share paid on 13 January 2006 - 631
Ordinary shares - dividend for 2006 of 5.1 pence per
share paid on 18 August 2006 1,893 -
Ordinary shares - dividend for 2007 of 1.7 pence per
share paid on 9 January 2007 632 -
---------------------------
2,525 2,300
===========================
2007 2006
Pence Pence
Proposed dividend per share 5.1 5.1
===========================
2007 2006
#'000 #'000
Proposed dividend 1,896 1,893
===========================
5. INTANGIBLE FIXED ASSETS
Brand names
know-how
licences and
trade marks Goodwill Total
#'000 #'000 #'000
Cost
At 1 April 2006 and 31 March 2007 48,894 14,605 63,499
---------------------------------------
Amortisation and impairment losses
At 1 April 2006 31,511 12,478 43,989
Amortisation 4,105 551 4,656
Impairment losses 757 767 1,524
---------------------------------------
At 31 March 2007 36,373 13,796 50,169
---------------------------------------
Carrying amounts
At 31 March 2007 12,521 809 13,330
=======================================
At 31 March 2006 17,383 2,127 19,510
=======================================
The Board has considered the useful economic life for significant acquisitions
and concluded in each case that the useful economic life ranges between seven
and ten years.
The discount rate used to calculate the impairment loss is 8%.
The length of the forecast period considered for the impairment workings is 2 to
5 years based on the acquisition date of the products and no growth in revenue
is considered in the future forecasts.
6. FIXED ASSET INVESTMENTS
2007 2006
#'000 #'000
Investments in Group undertakings at cost 7,159 6,871
==================
2007
Cost #'000
At 1 April 2006 6,871
Additions 4,758
-------
At 31 March 2007 11,629
Amounts written off in year ended 31 March 2007 (4,470)
-------
Net book amount at 31 March 2007 7,159
-------
Shares in subsidiary undertakings
Refer Note 22 of Consolidated IFRS financial statements on Page 48.
7. DEBTORS
Debtors due after more than one year 2007 2006
#'000 #'000
Amounts owing by subsidiary undertakings 3,893 9,919
===================
Debtors due within one year
2007 2006
#'000 #'000
Other debtors 1 -
Amounts owing by subsidiary undertakings 3,096 -
Prepayments and accrued income - 7
------------------
3,097 7
===================
8. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2007 2006
#'000 #'000
Amounts owing to subsidiary undertakings - 11,346
Capital creditors 75 150
Current taxation 1,326 1,104
Social security and other taxes 174 224
Other creditors 336 336
----------------------------
1,911 13,160
============================
9. PROVISIONS FOR LIABILITIES
2007 2006
#'000 #'000
Deferred taxation 1,117 1,894
============================
Deferred taxation provided for in the financial statements is set out below:
2007 2006
#'000 #'000
Accelerated capital allowances 1,117 1,894
----------------------------
Total 1,117 1,894
============================
2007 2006
#'000 #'000
At 1 April 2006 1,894 2,913
Movement in the year (777) (1,019)
----------------------------
At 31 March 2007 1,117 1,894
============================
10. CALLED UP SHARE CAPITAL
2007 2006
#'000 #'000
Authorised
100,000,000 ordinary shares of 5 pence each
(2006: 100,000,000) 5,000 5,000
============================
2007 2006
#'000 #'000
Allotted, called up and fully paid
37,176,033 ordinary shares of 5 pence each
(2006: 37,126,611) 1,859 1,856
============================
During the year 49,422 shares were issued under the unapproved employee share
option scheme and the employee share save scheme. The difference between the
total consideration of #66,826 and the nominal value of #2,471 has been credited
to the share premium account
Share options
Refer Note 12 of Consolidated IFRS financial statements on pages 43 to 44.
11. SHARE PREMIUM ACCOUNT AND RESERVES
Profit Share
& loss premium
account account
#'000 #'000
At 1 April 2006 5,741 21,485
Equity dividends paid (2,525) -
Premium on allotment during the year - 64
Retained profit for the year 7,801 -
----------------------------
At 31 March 2007 11,017 21,549
============================
12. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2007 2006
#'000 #'000
Profit/(loss) for the financial year after taxation 7,801 (1,289)
Equity dividends paid (2,525) (2,300)
Issue of shares 67 128
----------------------------
Net increase/(decrease) in shareholders' funds 5,343 (3,461)
Shareholders' funds at 1 April 2006 29,082 32,543
----------------------------
Shareholders' funds at 31 March 2007 34,425 29,082
============================
13. CONTINGENT LIABILITIES
Refer to note 23 of Consolidated IFRS financial statements on page 49.
14. POST BALANCE SHEET EVENTS
Refer to note 26 of Consolidated IFRS financial statements on page 50.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UNAARBARNUUR
Goldshield (LSE:GSD)
Historical Stock Chart
From Jun 2024 to Jul 2024
Goldshield (LSE:GSD)
Historical Stock Chart
From Jul 2023 to Jul 2024
