RNS Number : 1366J
Goldshield Group plc
28 November 2008
GOLDSHIELD HALF YEAR RESULTS
Goldshield Group plc ("Goldshield"), the Pharmaceutical and Consumer Health Company, today announces its unaudited half year results for
the six months to 30 September 2008.
* Group revenue up 23% to �50.2 million (2007: �40.9 million)
* Profit before tax up 44% to �8.8 million (2007: �6.1 million)
* EBTA* up 41% to �11.1 million (2007: �7.9 million)
* EPS up 82% to 16.0p (2007: 8.8p)
* Net Cash �24.9 million (2007: �26.3 million)
* Interim dividend up 16% to 2.9p to be paid on 8 January 2009 (2007: 2.5p)
* EBTA defined as [earnings before tax, amortisation, impairment losses and exceptional items]
Commenting on the results, Rakesh Patel, Chief Executive, said,
" I am very pleased to be able to report another strong set of results for Goldshield. Revenue across the Group is up 23% and profits
have increased by some 44%. Our decision to refocus on Goldshield's core strengths has proved extremely advantageous."
" We remain committed to our long-term strategy of developing the infrastructure of the Group. In line with this, we are evaluating some
strategic investments. We have a solid platform from which we can move the business forward."
-ends-
Date: 28 November 2008
For further information contact:
Goldshield Group plc City Profile
Rakesh Patel, Chief Executive Jonathan Gillen
Ram Swamy, Chief Financial Officer William Attwell
020-8649-8500 020-7448-3244
www.goldshieldplc.com
Chairman's Overview
I am pleased with the progress the Company has made during the period under review. Our decision to refocus our attention to
pharmaceutical and consumer health products is beginning to show positive results. This bodes well for the future but we acknowledge there
is further work to do. We are continuing to develop the necessary internal processes to gain the maximum benefit.
Both turnover and profits are extremely encouraging, but we are mindful of the economic downturn which may affect our strong progress to
date. We are, however, confident in the resilience of our business to continue to perform well.
The action brought against us by the Serious Fraud Office (SFO) continues following their decision to appeal the Trial Judge's ruling
not to allow them to continue with the prosecution. My hope is this matter will be finally resolved by this financial year end.
Dr. Keith Hellawell QPM
Chairman
27 November 2008
Chief Executive Officer's Operating Review
Overview
This has been a solid period across the Group. Our trading performance has been strong and we now have in place the platform for
sustainable and continued growth. The growth in sales which has been reported today is across both the pharmaceutical and consumer health
divisions, which are the key drivers of our business.
As I have commented before, the strategy is to focus upon our core pharmaceutical and consumer health businesses. It is this decision
which has driven a 22.7% growth in sales with turnover rising to �50.2 million (2007: �40.9 million) and a 44.3% growth in profits with
profit before tax rising to �8.8 million (2007: �6.1 million). Our pre-exceptional earnings before tax, amortisation and impairment losses
(EBTA) have also grown to �11.1 million (2007: �7.9 million). Earnings Per Share (EPS) is up 81.8% to 16.0p (2007: 8.8p).
As shareholders will appreciate, we have not invested in any significant product development during the past five years. To maintain and
enhance the depth of our portfolio, we will gradually begin to invest in new products with the aim of growing organically and through
strategic investment. In the absence of a return to a normal banking environment, this investment will come from our existing cash
reserves.
In light of the Group's performance we are pleased to be able to increase the interim dividend by 16.0% to 2.9 pence (2007: 2.5 pence).
This will be paid to shareholders on the register as of 12 December 2008 on 8 January 2009. As shareholders will appreciate, our balance
sheet has been and will be of considerable benefit to the Group in these troubled times. Whilst I remain committed to maintaining an
efficient balance sheet, careful consideration needs to be given to the deployment of resources during these challenging times where the
availability of credit remains difficult. We are also evaluating a number of investments and opportunities which we believe will deliver
further growth.
An important part of our long term strategy is to develop the infrastructure which will support our current product portfolios. We
continue to invest in people, marketing and systems to ensure that we deliver the very best products to our customers in the coming years.
Senior management
I was very pleased to announce in August 2008 that Ram Swamy joined the Board as our Chief Financial Officer. Further, we have recruited
a Head of Quality, a Director of Strategic Brand Marketing, a Head of Medical affairs and a Director of Sales for Consumer Health. Our
objective to have a skilled senior management team which can support the Group's growth strategies is well underway.
Pharmaceuticals division
Our Pharmaceuticals division has enjoyed a strong period of growth. It reported a net increase in sales of 27.3% with sales of �37.3
million (2007: �29.3 million). Our operating profit was �10.3 million (2007: �5.9 million), which is ahead of our original expectations.
Our European retail business achieved a 34.1% increase in sales to �22.0 million (2007: �16.4 million). Key brands that have performed
well include Codipar, Macrodantin and Zapain. This growth is primarily due to better inventory management. Following the recent announcement
on the Pharmaceutical Pricing Regulation Scheme (PPRS), the 3.9% price reduction effective February 2009 on our branded pharmaceutical
products will inevitably put pressure on our pricing and margins on products sold to the NHS.
Sales in our European Hospitals business showed a 12.5% increase to �6.3 million (2007: �5.6million). This business has benefited from
several new tenders. Notwithstanding the regulatory delays, we are pleased to announce that Synopsis, our Osteoarthritis pain management
product is expected to be launched by the first quarter of 2009.
Our Retail Generics business has performed well with a 24.5% increase in sales at �6.1 million (2007: �4.9 million). We have an improved
product mix compared with this time last year and the availability of product has also improved due to better inventory management.
Our Country Distributors business achieved total sales for the six months of �2.9 million (2007: �2.4 million) an increase of 20.8%, and
we expect this division to grow as we obtain new registrations in existing markets.
Consumer Health division
The Consumer Health division has shown an increase in sales of 16.0% to �12.3 million (2007: �10.6 million). Our Operating loss was �2.1
million (2007: loss �0.7 million). The challenge remains to continue to attract new customers to the brands across our business and improve
our margins.
Our European Consumer Health division achieved sales of �9.1 million (2007: �7.9 million) a 15.2% increase. We have extended our
distribution network via direct to consumer, retail outlets and the web. We are delighted to report that LIPObind has been confirmed as the
best selling product in the slimming category by sales in UK retail by AC Nielsen in August 2008. The business continues to focus its
attention on product rationalisation. A significant opportunity lies in the acceleration of online sales, giving us the ability to attract
and engage with consumers on a more personalised, one to one basis.
We are pleased to announce the launch of a new brand Appesat, a clinically proven appetite suppressant, which was launched in November
2008 in the UK and US. We hope this new product will add significantly to our offering and enhance our product line for consumers.
Our US Consumer Health division achieved sales of �2.9 million (2007: �2.6 million) an 11.5% increase. The business has focused on
distributor and customer recruitment and has benefited from a change in management structure to ensure a more efficient work flow. The
business has been impacted by the strengthening of the dollar rate, but we remain optimistic with a number of new product introductions and
increased volumes.
We continue apace with our development programme for the Consumer Health division. We expect further product launches by the end of the
financial year. Our focus remains on the marketing of key brands and the development of products across the globe.
Trading and future prospects
I am encouraged by the continued progress given that the economic environment is likely to be volatile. The Board is, however, confident
in the resilience of our business. The Group has net cash of �24.9 million and we will continue to review opportunities across the
business.
Statement of Directors' responsibilities
The Directors of Goldshield Group plc confirm that to the best of their knowledge this condensed set of financial statements has been
prepared in accordance with IAS 34 as adopted by the European Union, and the Chief Executive Officer's Operating Review includes a true and
fair view of the assets, liabilities, financial position and profits of Goldshield Group plc as required by the Disclosure and Transparency
Rules (DTR) 4.2.4 and a fair view of the information required by DTR 4.2.7 and DTR 4.2.8.
Rakesh Patel
Chief Executive Officer
27 November 2008
Note: Earnings before tax, amortisation, impairment and exceptional costs are calculated as follows:-
Six months ended 30 Six months ended 30 Year
September September ended
31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
�'000 �'000 �'000
Revenue 50,151 40,915 84,934
Profit before tax
8,795 6,068 12,395
Amortisation 2,148 2,154 4,300
Impairment losses 112 307 483
Exceptional legal and - (610) 328
professional costs
Earnings before
tax,amortisation,impairment 11,055 7,919 17,506
and exceptional costs
Consolidated Income Statement for the six months ended 30 September 2008
Total Total
Total
Before impairment Six months ended 30 Six months ended 30
Year
and exceptional September 2008 September 2007
ended 31March 2008
items (unaudited) (unaudited)
(audited)
Notes Exceptional items
Impairment
�'000 �'000 �'000 �'000 �'000
�'000
Revenue 2 50,151 - - 50,151 40,915
84,934
Cost of sales (15,034) - - (15,034) (13,084)
(27,425)
Gross profit 35,117 - - 35,117 27,831
57,509
Distribution costs (3,043) - - (3,043) (1,835)
(4,340)
Impairment losses 6,7 - - (112) (112) (307)
(483)
Exceptional legal and
professional costs - - - - 610
(328)
Other administrative expenses
(23,722) - - (23,722) (20,857)
(41,194)
Administrative expenses
(23,722) - (112) (23,834) (20,554)
(42,005)
Operating profit 8,352 - (112) 8,240 5,442
11,164
Finance costs - - - - -
(10)
Finance Income 555 - - 555 626
1,241
Profit before tax 8,907 - (112) 8,795 6,068
12,395
Income tax expense 3 (3,167) - - (3,167) (2,804)
(6,142)
Profit after tax attributable
to shareholders of parent
5,740 - (112) 5,628 3,264
6,253
Earnings per share
Basic (pence) 5 16.0 8.8
16.9
Diluted (pence) 5 16.0 8.8
16.9
Dividends
Proposed dividend
per share (pence) 2.9 2.5
5.5
Proposed dividend (�'000)
1,012 959
1,936
Dividends paid
during the period (pence)
5.5 5.1
7.6
Dividends paid
during the period (�'000)
1,936 1,896
2,817
The accompanying accounting policies and notes form an integral part of the interim financial statement.
Consolidated Balance Sheet as at 30 September 2008
As at 30 As at 30 As at 31
September September March
Notes 2008 2007 2008
(unaudited) (unaudited) (audited)
�'000 �'000 �'000
Assets
Non-current
Intangible assets 6 15,192 18,683 17,416
Property, plant and equipment 7 4,003 3,721 4,106
Held to maturity investments 350 368 377
Deferred tax assets 702 1,536 638
20,247 24,308 22,537
Current
Inventories 12,529 9,013 11,686
Trade and other receivables 13,782 12,311 12,753
Cash and cash equivalents 24,946 26,348 19,197
51,257 47,672 43,636
Total assets 71,504 71,980 66,173
Equity
Equity attributable to
shareholders of Goldshield
Group plc
Share capital 8 1,919 1,918 1,919
Share premium 8 22,274 22,258 22,274
Treasury shares (4,667) - (4,667)
Share held by employee benefit (2,761) (39) (1,939)
trust
Translation reserve 263 (327) 691
Retained earnings 24,893 19,186 21,092
Total equity 41,921 42,996 39,370
Liabilities
Non-current
Deferred tax liabilities 644 1,117 805
644 1,117 805
Current
Provisions 2,554 3,320 3,335
Trade and other payables 19,364 16,407 16,974
Other liabilities 1,848 3,374 1,122
Current tax liabilities 5,173 4,766 4,567
28,939 27,867 25,998
Total liabilities 29,583 28,984 26,803
Total equity and liabilities 71,504 71,980 66,173
The accompanying accounting policies and notes form an integral part of the interim financial statement.
Consolidated Cash Flow Statement for the six months ended 30 September 2008
Six months Six months ended 30 Year
ended September ended
30 September 2007(unaudited) 31 March
2008 2008
(unaudited) (audited)
�'000 �'000 �'000
Cash flows from operating
activities
Result for the period before 8,795 6,068 12,395
tax
Depreciation 289 336 617
Amortisation 2,148 2,154 4,300
Impairment losses
-intangible assets 112 112 237
-property,plant and equipment - 195 246
Equity settled share 109 60 (102)
options/rewards
Profit on disposal of assets
-intangible assets - (43) (43)
-property,plant and equipment (26) (4) (4)
Finance costs - - 10
Finance income (555) (626) (1,241)
10,872 8,252 16,415
Increase in inventories (843) (533) (3,206)
Increase in trade and other (1,029) (327) (769)
receivables
Increase/ (decrease) in 1,918
provisions, trade payables and (692) (1,923)
other liabilities
Taxes paid (2,532) (2,353) (5,767)
Net cash from operating 8,386 4,347 4,750
activities
Cash flows from investing
activities
Additions
-intangible assets (4) - (39)
-property,plant and equipment (466) (566) (1,206)
Proceeds on disposal of assets
-intangible assets - 150 150
-property,plant and equipment 36 5 5
Purchase of held to maturity - (368) (377)
investments
Interest received 555 626 1,241
Net cash from investing 121 (153) (226)
activities
Cash flows from financing
activities
Proceeds from share issue - 768 785
Purchase of sharesby employee (822) (39) (1,939)
benefit trust
Purchase of treasury shares - - (4,667)
Interest paid - - (10)
Dividends paid (1,936) (1,896) (2,817)
Net cash from financing (2,758) (1,167) (8,648)
activities
Net increase/(decrease) in
cash and cash equivalents 5,749 3,027 (4,124)
Cash and cash equivalents at
beginning of period 19,197 23,321 23,321
Cash and cash equivalents at
end of period 24,946 26,348 19,197
Consolidated Statement of Recognised Income and Expense for the six months ended 30 September 2008
Six months Six months
ended ended
30 September 30 September Year ended 31 March
2008 2007 2008
(unaudited) (unaudited) (audited)
�'000 �'000 �'000
Net of tax
-Currency translation (428) 157 1,175
differences
Net (expense)/income
recognised directly in equity (428) 157 1,175
Profit for the period 5,628 3,264 6,253
Total recognised income for 5,200 3,421 7,428
the period
Notes to the Interim Financial Statement
1. Principal accounting policies
Statement of compliance
The interim financial statement has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting".
It does not include all of the information required for full annual financial statements, and should be read in conjunction with the
consolidated financial statement of the Group as at and for the year ended 31 March 2008.
New IFRS standards and interpretations not adopted
The IASB and IFRIC have issued the following Standards and Interpretations which are effective for periods starting after the 31 March
2009 financial statements which are yet to be adopted by the Group.
International Accounting Standards (IAS/IFRS)
* IFRS 2 Amendment to IFRS 2 - Vesting conditions and cancellations - 1 January 2009
* IFRS 3 Business Combinations (revised January 2008) - 1 July 2009
* IAS 23 Borrowing costs (revised March 2007) - 1 January 2009
* IAS 27 Consolidated and Separate Financial Statements (revised January 2008) - 1 July 2009
International Financial Reporting Interpretations Committee (IFRIC)
* IFRIC 11 IFRS 2 - Group and Treasury Share Transactions - 1 March 2007
* IFRIC 12 Service Concession Agreements - 1 January 2008
* IFRIC 13 Customer Loyalty Programmes - 1 July 2008
* IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their interaction - 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 the balance sheet date. A
subsidiary is an entity which the Company controls, which 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.
An Employee Benefit Trust that is controlled by its sponsoring entity, which is the Company in case of the Group, is consolidated into
the financial statements.
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. Advertising revenue for the Wellbeing media business is recognised when the related
advertisement appears in the magazine.
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 licences, 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.
Software
Acquired software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These
costs are amortised over their estimated useful lives between three to five years.
Property, plant and equipment
Property, plant and equipment is stated at cost less the accumulated depreciation. 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 are shown under Capital work in progress and will be transferred to the relevant
category on completion of construction of the asset.
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. 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 at the amount by which the asset's or cash generating
unit's carrying amount exceeds its recoverable amount. The recoverable amount is based on the higher of the fair value less costs to sell
and value in use.
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.
Inventories
Inventories are stated at the lower of cost and net realisable value. The cost is determined using the weighted average price method.
The cost of finished goods comprises of product cost, its packaging and applicable duties and taxes. Net realisable value is the estimated
selling price in the ordinary course of business, less applicable variable selling expenses.
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.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal
of the temporary differences is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable
future.
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 benefit trust
The assets and liabilities of the Employee Benefit Trust (EBT) have been included in the Group Financial Statements. Any assets held by
the EBT cease to be recognised on the Consolidated Balance Sheet when the assets vest unconditionally in identified beneficiaries.
The costs of purchasing own shares held by the EBT are shown as a deduction against equity. The proceeds from the sale of own shares
held increase equity. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the Consolidated Income
Statement.
Employee benefits
The Group operates a defined contribution pension scheme whereby contributions are made to individual employee pension plans of certain
employees. These costs are charged against profits in respect of the accounting period in which they are paid.
Indian gratuity costs, which represent a form of long term service benefits are accrued based on actuarial valuation at the balance
sheet date, carried out by an independent actuary.
Leased assets
All leased assets are identified as operating leases if they do not transfer substantially all the risks and rewards to the lessee.
Payments made under operating leases are charged to the Consolidated Income Statement 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 the income statement. 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 the 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.
Long term share incentive plan
As soon as practicable after the start of each performance period, each eligible participant will be notified about the number of shares
awarded to him/her in respect of that period. The participant will also be informed about the form of the award, the performance targets to
be achieved in relation to the performance period and any other conditions to which the award may be subject. The fair value of the share
awards granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at each award date
and spread over the period during which the participants become unconditionally entitled to the awards. The fair value of the share awards
is measured using a binomial model, taking into account the terms and conditions upon which the shares will be released to the
participants.
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 Consolidated Income Statement as they are incurred. The provisions are not discounted as the impact
is not material.
Exceptional legal and professional costs
Exceptional legal and professional costs are expenditure incurred and provided for defending the legal claims against the Group by the
Department of Heath and the 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 Consolidated Balance Sheet when the Group becomes a party to the
contractual terms of the instrument.
Held to maturity investments
Held to maturity investments are non-derivative financial assets with fixed or determinable payments and a fixed date of maturity where
it is the intention of the Directors to hold them until maturity. Held to maturity investments are measured subsequent to initial
recognition at amortised cost using the effective interest method. If there is objective evidence that the investment has been impaired, the
financial asset is measured at the present value of estimated cash flows. Any changes to the carrying amount of the investment are
recognised in the income statement.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that
the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties
of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more
than 60 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between
the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The
carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the Income
Statement within 'Other administrative expenses'. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of
amounts previously written off are credited against 'Other administrative expenses' in the income statement.
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 Consolidated Income Statement
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 initially stated at their fair values and thereafter at amortised cost.
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
- Treasury shares - represents purchase of the Company's equity share capital, the consideration paid, including any transaction costs
and is deducted from total shareholders' equity
- Shares held by Employee Benefit Trust - represents amounts paid for shares of the Company held by the Employee Benefit Trust of the
Long Term Incentive Plan
- Retained earnings - represents the accumulated retained profits
- Translation reserve - represents gains or losses on foreign currency transactions
2. Segmental Reporting
Segment information is presented in the interim financial statement 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, Consumer Health Europe (CH E) and,
Consumer Health North America (CH 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.
Segment results
Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
All inter-segment transfers are priced and carried out at arm's length.
Unallocated segment income and expenses
Unallocated segment income comprises interest income and miscellaneous receipts not directly attributable to any particular segment.
Unallocated segment expenditure represents interest on loans and provision for income taxes, which cannot be directly attributed to any
segment.
Primary segment disclosure - Business segments
6 months ended 30 September Retail Brands Retail Generics Other Segments
2008 Hospitals CH E CH NA Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Revenue
External sales 22,022 6,057 6,289 9,072 2,895 3,816 50,151
Total revenue 22,022 6,057 6,289 9,072 2,895 3,816 50,151
Result
Segment result 6,309 1,919 1,715 (1,222) (628) 147 8,240
Operating profit 8,240
Finance costs -
Finance income 555
Income tax expense (3,167)
Profit for the period 5,628
6 months ended 30 September Retail Brands Retail Generics Other Segments
2007 Hospitals CH E CH NA Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Revenue
External sales 16,372 4,889 5,593 7,866 2,569 3,626 40,915
Total revenue 16,372 4,889 5,593 7,866 2,569 3,626 40,915
Result
Segment result 3,991 1,137 471 (159) (305) 307 5,442
Operating profit 5,442
Finance costs -
Finance income 626
Income tax expense (2,804)
Profit for the period 3,264
Year ended 31 March 2008 Retail Brands Retail Generics Other Segments
Hospitals CH E CH NA Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Revenue
External sales 36,585 9,251 12,614 13,751 5,103 7,630 84,934
Total revenue 36,585 9,251 12,614 13,751 5,103 7,630 84,934
Result
Segment result 9,604 1,956 1,587 (833) (454) (696) 11,164
Operating profit 11,164
Finance costs (10)
Finance income 1,241
Income tax expense (6,142)
Profit for the year 6,253
3. Tax on profit on ordinary activities
Tax on profits on ordinary activities is calculated at the standard rate of corporation tax in the United Kingdom of 28%.
The taxation charge of �3.17 million (2007: �2.80 million) represents an effective tax rate of 36.0% (2007: 46.2%).
4. Equity dividends
The amount of �1.94 million pertaining to the final dividend proposed as at 31 March 2008 has been paid on 20 August 2008.
The Directors have declared an interim dividend of 2.9 pence per share for 2008/09 (2007/08 interim dividend: 2.5 pence, 2007/08 final
dividend: 5.5 pence). The dividend will be paid on 8 January 2009 to those shareholders on the register on 12 December 2008.
5. Earnings per share
The earnings are based on the earnings attributable to ordinary shareholders and the weighted average number of shares is based on
ordinary shares outstanding during the period.
Basic Earnings Diluted Earnings per share
per share
6 months to 30 September 2008 5,628 5,628
earnings (�'000)
Weighted average number of 35,149 35,151
share (000)
Per share amount (pence) 16.0 16.0
6 months to 30 September 3,264 3,264
2007earnings(�'000)
Weighted average number of 37,176 37,176
share (000)
Per share amount (pence) 8.8 8.8
Year to 31 March 2008 earnings 6,253 6,253
(� '000)
Weighted average number of 36,915 36,916
share (000)
Per share amount (pence) 16.9 16.9
6. Intangible assets
Brand names know-how
licences and trade
marks Goodwill Software Total
�'000 �'000 �'000 �'000
Cost
At 1 April 2008 64,431 26,921 39 91,391
Exchange differences 2 707 (3) 706
Additions - - 4 4
At 30 September 2008 64,433 27,628 40 92,101
At 1 April 2007 64,575 25,437 - 90,012
Exchange differences 12 (339) - (327)
Disposals (225) - - (225)
At 30 September 2007 64,362 25,098 - 89,460
Amortisation and impairment
At 1 April 2008 55,581 18,391 3 73,975
Exchange differences 1 673 - 674
Amortisation 2,142 - 6 2,148
Impairment losses - 112 - 112
At 30 September 2008 57,724 19,176 9 76,909
At 1 April 2007 51,246 17,734 - 68,980
Exchange differences 12 (438) - (426)
Amortisation 2,154 - - 2,154
Impairment losses - 112 - 112
Disposals (43) - - (43)
At 30 September 2007 53,369 17,408 - 70,777
Carrying amounts
At 30 September 2008 6,709 8,452 31 15,192
At 30 September 2007 10,993 7,690 - 18,683
At 31 March 2008 8,850 8,530 36 17,416
The performance of Regina business has been reviewed and an impairment provision of �112,000 has been made as at 30 September 2008 (30
September 2007: �112,000, 31 March 2008: �237,000).
7. Property, plant and equipment
During the period ended 30 September 2008 the Group acquired assets with a cost of �466,000 (30 September 2007: �566,000, 31 March 2008:
�1,206,000)
Assets with a carrying value of �10,000 were disposed of during the period ended 30 September 2008 (30 September 2007: �3,000, 31 March
2008: �3,000) resulting in a gain on disposal of �26,000 (30 September 2007: �4,000, 31 March 2008: �4,000).
There is no impairment provision for the period ended 30 September 2008 (30 September 2007: �195,000, 31 March 2008: �246,000).
8. Share Capital
Ordinary shares Ordinary shares Share premium
of 5 pence of 5 pence
shares'000 �'000 �'000
Authorised
At 30 September 2007, 31 March
2008
and 30 September 2008 100,000 5,000 -
Allotted, called up and fully
paid
At 1 April 2007 37,176 1,859 21,549
Issued to employee benefit 780 39 -
trust
Issued under share option 405 20 709
scheme
At 30 September 2007 38,361 1,918 22,258
At 1 April 2007 37,176 1,859 21,549
Issued to employee benefit 780 39 -
trust
Issued under share option 405 20 709
scheme
Issued under share save scheme 6 1 16
At 31 March 2008 38,367 1,919 22,274
At 1 April 2008 38,367 1,919 22,274
At 30 September 2008 38,367 1,919 22,274
There were no shares issued during the period ended 30 September 2008.
9. Statement of changes in equity
Equity attributable to equity holders of
Goldshield Group plc
Share capital Share premium Own shares Translation reserve Retained earnings Total equity
�'000 �'000 �'000 �'000 �'000 �'000
Balance 1 April 2007 1,859 21,549 - (484) 17,758 40,682
Currency translation
differences - - - 224 - 224
Deferred tax on translation
reserve - - - (67) - (67)
Net income recognised directly
in equity - - - 157 - 157
Profit for the period - - - - 3,264 3,264
Total recognised income for
the period - - - 157 3,264 3,421
Shares issued 59 709 - - - 768
Shares held by employee
benefit trust - - (39) - - (39)
Employee share based
compensation - - - - 60 60
Dividends paid - - - - (1,896) (1,896)
Balance at 30 September 2007 1,918 22,258 (39) (327) 19,186 42,996
Equity attributable to equity holders of
Goldshield Group plc
Share capital Share premium Own shares Translation reserve Retained earnings Total equity
�'000 �'000 �'000 �'000 �'000
�'000
Balance 1 April 2007 21,549 - (484) 40,682
1,859 17,758
Currency translation - - - 1,651 - 1,651
differences
Deferred tax on translation - - - (476) - (476)
reserve
Net income recognised directly
in equity - - - 1,175 - 1,175
Profit for the period - - - - 6,253 6,253
Total recognised income for
the period - - - 1,175 6,253 7,428
Shares issued 60 725 - - - 785
Shares held by employee
benefit trust - - (1,939) - - (1,939)
Treasury shares - - (4,667) - - (4,667)
Employee share based
compensation - - - - (102) (102)
Dividends paid - - - - (2,817) (2,817)
Balance at 31 March 2008 1,919 22,274 (6,606) 691 21,092 39,370
Balance 1 April 2008
1,919 22,274 (6,606) 691 21,092 39,370
Currency translation - - - (595) - (595)
differences
Deferred tax on translation - - - 167 - 167
reserve
Net expense recognised
directly in equity - - - (428) - (428)
Profit for the period - - - - 5,628 5,628
Total recognised income for
the year - - - (428) 5,628 5,200
Shares held by employee
benefit trust - - (822) - - (822)
Employee share based
compensation - - - - 109 109
Dividends paid - - - - (1,936) (1,936)
Balance at 30 September 2008 1,919 22,274 (7,428) 263 24,893 41,921
10. Contingent liabilities
Indemnities and guarantees
The Group has given indemnities in respect of advance payments, deferred purchase consideration and import duty guarantees issued on its
behalf in the normal course of business. The indemnities given at 30 September 2008 were �573,000 (30 September 2007: �574,000, 31 March
2008: �707,000).
Serious Fraud Office (SFO) Investigation update
The Serious Fraud Office has applied for leave to appeal against the decision of Mr. Justice Pitchford to refuse the SFO's application
to amend its indictment of the Company and two of its former Directors for conspiracy to defraud the Department of Health between 1996
and1999.
The Court of Appeal is likely to hear the applications at a hearing listed for three days from 3 December, 2008.
The Directors do not believe the Company has acted in an unlawful manner and the case is being defended. Legal and professional costs in
this matter have been provided for.
11. Preparation of Interim Financial Statement
The interim financial statement is unaudited but has been reviewed by the auditors and their report is set out on page 22. The financial
information does not constitute statutory accounts within the meaning of section 240 of the Companies Act. Statutory accounts for Goldshield
Group plc for the year ended 31 March 2008 on which the auditors gave an unqualified report have been delivered to the Registrar of
Companies. The accounting policies and presentation of figures in the interim financial statement are consistent with those in the last
annual accounts.
12. Approval of Interim Financial Statement
The interim financial statement was approved by the Board of Directors on 27 November 2008. Copies of this statement will be available
to members of the public, free of charge, from the Company at No.1 Croydon, 12-16 Addiscombe Road, Croydon, Surrey, CR0 0XT.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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