RNS No 9622a
GOLDSHIELD GROUP PLC
23rd November 1998
GOLDSHIELD GROUP PLC
Interim Results for the half year to 30th September 1998
Goldshield Group plc, the profitable, marketing-led, emerging
British pharmaceutical company, has pleasure in reporting its
first interim results for the six month period to 30th
September 1998.
HIGHLIGHTS
* Turnover up by 46% to #15.9m (1997: #10.9m)
* Pre-tax profit increased by an underlying 51% to #2.5m,
#2.1m after flotation costs (1997: #1.7m)
* Earnings per share up 11% to 4.1p (1997: 3.7p)
* Interim dividend of 0.46p (1997: nil)
* Strong level of organic growth
* Introduction of new products in both pharmaceutical and
healthcare
* Net cash of #10.2m
* Successful flotation in June 1998 at 180p per ordinary share
Ajit Patel, Chairman and Chief Executive said..............
"We are delighted with these results which are in line with
market expectations. We are confident of the outlook for the
second half and believe it will continue to show a good level
of organic growth."
Contact:
Goldshield Group plc 0181 649 8500
Ajit Patel, Chairman & Chief Executive
Buchanan Communications 0171 466 5000
Andy Yeo/Tom Gadsby
Chairman's Statement
Introduction
I have great pleasure in announcing Goldshield's first interim
results since its flotation in June this year. The Group has
shown significant growth in both sales and profits for the
first six months. Turnover has increased by 46% to #15.9m
(30.9.97: #10.9m) and profit before tax has increased by 29% to
#2.1m (30.9.97: #1.7m). This is stated after charging flotation
costs of #0.4m. Accordingly, the Company will pay an interim
dividend of 0.46p per share.
The Group's increase in turnover and profit has come from strong
organic growth especially from the healthcare product range. There
has also been the impact of a full half year's contribution from
pharmaceutical product acquisitions made in the second half of
last year.
The Group has continued with its product development strategy,
and has successfully introduced several products in both
pharmaceuticals and healthcare.
Goldshield floated on the London Stock Exchange on 12 June,
1998, at a share price of 180p per share which gave a market
capitalisation of #58m.
Financial Results
For the first six months of this financial year, turnover has
increased by 46% to #15.9m (30.9.97: #10.9m). Operating profits
before flotation costs of #0.4m rose by 46% to #2.3m
(30.9.97: #1.7m) over the same period last year. The total costs
of the flotation amounted to #0.8m of which #0.4m has been expensed
to the profit and loss account and the balance to the share premium
account.
Profit before tax has increased by 29% to #2.1m (30.9.97: #1.7m) and
fully diluted earnings per share increased by 11% to 4.1p
(30.9.97: 3.7p).
In view of these good results, the Board is announcing an interim
dividend of 0.46p per share payable on 26 February, 1999, to
shareholders on the register at close of business on 4 December,
1998.
Cash at bank and short-term deposits at 30 September, 1998,
totalled #10.2m. This increase of #6.8m since 31 March, 1998, is
principally the result of the net flotation proceeds of #4.4m and
internal cash generation of #2.4m.
The Group is committed to the development of a continuous product
pipeline in both healthcare and pharmaceuticals to ensure future
growth. Research and development expenditure has increased by 20%
to #0.3m for the period ended 30 September, 1998 compared to the
same period last year.
Pharmaceutical Products
Pharmaceutical products account for approximately 45% of the
Group's turnover. Sales of pharmaceuticals have risen by more
than 50% compared to the same period last year. The acquisitions
during the year ended 31 March 1998 of Stelazine, Rheumox,
Amsidine and Pitressin resulted in sales of #1.9m compared to
#0.2m, over the same period last year.
Sales and marketing efforts have also been expanded. It is our
intention to increase the number of pharmaceutical representatives
from 14 to 24 by the end of the financial year in anticipation of
further product launches.
I am also pleased to report that we are expecting two niche product
approvals in haematology and rheumatology and we anticipate
approval of at least three more product licences in the near
future.
Healthcare Products
The healthcare products continue to account for approximately
55% of the Group's turnover and the market for healthcare products
continues to grow. This growth has largely been organic and
sales have increased by over 40% compared to the same period
last year. This growth is a result of increases in our database
numbers, increased brand awareness, the ability to offer our
customers a wider choice of products and increased customer
loyalty.
We have launched five new products in the vitamins, minerals and
supplements sector. Sales of these products look promising for
the remainder of the year.
The Directors are pursuing the Group's marketing strategies of
widening its distribution channels to attract new customers and
introduce new products.
Corporate Governance
I am pleased to report that Mr Russell Race was appointed to
the Board on 22 July, 1998. Russell brings considerable
experience in Corporate Development as he was previously a
Corporate Finance Director of Hoare Govett.
Employees
It is encouraging to see a good proportion of employees who
have become shareholders and that a number of eligible employees
have participated in the Group's Employee Share Save Scheme
established in October 1998. I remain confident that this will
be another successful year, and I would like to express my
sincere thanks to all Goldshield employees for their hard work.
Conclusion
The Group has achieved strong sales growth in the first half
of this year and as we continue to implement the strategies
highlighted in the prospectus, the prospects for the remainder
of the year are encouraging.
Ajit Patel
Chairman / Chief Executive Officer
Consolidated Profit and Loss Account
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Notes 1998 1997 1998
(unaudited) (unaudited)(audited)
#'000 #'000 #'000
Turnover 15,989 10,949 25,658
______ ______ ______
Operating profit 1 1,929 1,575 3,646
Net Interest 227 100 183
______ ______ ______
Profit on ordinary
activities before
taxation 2,156 1,675 3,829
Taxation 2 (843) (591) (1,352)
______ ______ ______
Profit on ordinary
activities after
taxation 1,313 1,084 2,477
Dividend 3 (188) - (318)
______ ______ ______
Retained profit
for the period 1,125 1,084 2,159
______ ______ ______
Earnings per share
(pence) 4 4.1 4.3 9.7
Fully diluted
earnings per
share (pence) 4 4.1 3.7 8.5
Dividend per
share (pence) 3 0.46 0.00 1.20
There were no recognised gains or losses other than the profit
for the financial period.
Consolidated Balance Sheet
As at As at As at
30 September 30 September 31 March
Notes 1998 1997 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Intangible assets 10,191 4,761 10,411
Tangible assets 659 578 681
______ ______ ______
10,850 5,339 11,092
Current assets
Stocks 3,400 2,213 2,397
Debtors 1,691 1,646 2,105
Cash deposits 4,783 - 2,000
Cash at bank and
in hand 5,377 3,369 1,341
______ ______ ______
15,251 7,228 7,843
Creditors
Amounts falling
due within one
year (12,597) (6,594) (11,030)
______ ______ ______
Net current
assets/(liabilities) 2,654 634 (3,187)
______ ______ ______
Total assets less
current liabilities 13,504 5,973 7,905
Creditors
Amounts falling due
after more than
one year (823) (941) (1,700)
Provisions for
liabilities and
charges (162) (164) (142)
______ ______ ______
Net assets 12,519 4,868 6,063
______ ______ ______
Capital and reserves
Called up share
capital 1,609 1,273 1,308
Share premium account 5,327 362 447
Profit and loss account 5,583 3,233 4,308
______ ______ ______
Shareholders' funds 6 12,519 4,868 6,063
______ ______ ______
Consolidated Cash Flow
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Notes 1998 1997 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Net cash inflow from
operating activities 5 2,493 3,550 6,341
______ ______ ______
Returns on investments
and servicing of finance
Interest received 227 100 184
Interest paid - - (1)
______ ______ ______
Net cash inflow from
returns on investments
and servicing of finance 227 100 183
______ ______ ______
Taxation
UK Corporation tax paid (115) - (625)
Capital expenditure and
financial investment
Payments to acquire
intangible fixed assets (551) (3,110) (5,056)
Payments to acquire
tangible fixed assets (64) (302) (607)
Proceeds on disposal of
tangible fixed assets - - 11
______ ______ ______
Net cash outflow from
capital expenditure
and financial investment (615) (3,412) (5,652)
______ ______ ______
Net cash inflow before
financing 1,990 238 247
Equity dividends paid (352) - (157)
Management of liquid resources
Cash transfers (to)/from
deposit accounts (2,783) 1,600 (400)
Financing
Issue of shares 5,181 32 152
______ ______ ______
Increase/(decrease)
in cash 7 4,036 1,870 (158)
______ ______ ______
Notes to the Financial Statement
1. Operating profit
The operating profit is stated after an exceptional cost of
#370,000 relating to professional and other costs incurred in
relation to the flotation of the Company. A further #420,000
has been charged directly to the share premium account.
2. Taxation charge
The corporation tax charge for the six months has been calculated
at an effective rate of 39.1% (1997/98 35.3%).
3. Dividend
The Directors have declared an interim dividend of 0.46 pence
per share (1997/98 interim dividend: nil, 1997/98 final
dividend: 1.2 pence). The dividend will be paid on 26 February
1999 to those shareholders on the Register on 4 December 1998.
4. Earnings per share
The calculation of earnings per share is based on earnings after
tax of #1,313,000 (30.9.97: #1,084,000) and on 31,909,000
ordinary shares, being the weighted average number of shares
in the period ended 30 September 1998 (30.9.97: 25,188,000).
The weighted average number of ordinary shares used in the
calculation of fully diluted earnings is 32,244,000 ordinary
shares (30.9.97: 29,498,000).
5. Net cash inflow from operating activities
Six months Six months Year
ended ended ended
30 September 30 September 31 March
1998 1997 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating profit 1,929 1,575 3,646
Depreciation 82 62 125
Amortisation 730 183 827
Share option scheme reserve
(see note 6) 150 - -
Diminution in value of
fixed assets 45 263 594
(Increase)/decrease in stock (1,003) 39 (144)
Decrease/(increase) in debtors 401 (464) (845)
Increase in creditors 159 1,892 2,138
______ ______ ______
Net cash inflow from
operating activities 2,493 3,550 6,341
______ ______ ______
6. Reconciliation of movements in shareholders' funds
Six months Six months Year
ended ended ended
30 September 30 September 31 March
1998 1997 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Profit for the period 1,313 1,084 2,477
Dividends (188) - (318)
Issue of shares 5,181 32 152
Transfer to reserves 150 - -
______ ______ ______
Net increase in shareholders'
funds 6,456 1,116 2,311
Opening shareholders' funds 6,063 3,752 3,752
______ ______ ______
Closing shareholders' funds 12,519 4,868 6,063
______ ______ ______
The #150,000 transfer to profit and loss reserves arises in
respect of a provision relating to the employee share option
scheme, being the difference between the fair value of the
shares at the date of grant of the option and the consideration
payable for the shares.
7. Reconciliation of net cashflow to movement in net funds
Six months Six months Year
ended ended ended
30 September 30 September 31 March
1998 1997 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Increase/(decrease) in
cash in the period 4,036 1,870 (158)
Increase/(decrease) in
cash deposits in the period 2,783 (1,600) 400
______ ______ ______
Change in net funds resulting
from cash flows 6,819 270 242
Opening net funds 3,341 3,099 3,099
______ ______ ______
Closing net funds 10,160 3,369 3,341
______ ______ ______
8. Preparation of interim statement
The interim statement for the six months ended 30 September 1998
has been prepared on the basis of the accounting policies as set
out in the financial statement for the year ended 31 March 1998.
The interim statement is unaudited but has been reviewed by the
auditors and their report is set out below. The comparative
figures for the financial year ended 31 March 1998 are based
on the Company's statutory accounts for that year and have
been reported on by the Company's auditors and delivered to the
Registrar of Companies. The report of the auditors was
unqualified and did not contain a statement under section 237(2)
or (3) of the Companies Act 1985.
The interim statement does not constitute statutory accounts
within the meaning of section 240 of the Companies Act 1985.
9. Approval of interim statement
The interim statement was approved by the Board of Directors on
Friday 20 November 1998. Copies of this statement will be
available to members of the public, free of charge, from the
Company at 12-16 Addiscombe Road, Croydon, Surrey, CR0 0XT.
Review Report by the Auditors to Goldshield Group plc
We have reviewed the interim financial information for the six
months ended 30 September, 1998 which is the responsibility of,
and has been approved by, the directors. Our responsibility is
to report on the results of our review.
Our review was carried out having regard to the Bulletin
"Review of Interim Financial Information" issued by the Auditing
Practices Board. This review consisted principally of applying
analytical procedures to the underlying financial data, assessing
whether accounting policies have been consistently applied, and
making enquiries of management responsible for financial and
accounting matters. The review excluded audit procedures such as
tests of controls and verification of assets and liabilities, and
was therefore substantially less in scope than an audit performed
in accordance with Auditing Standards. Accordingly, we do not
express an audit opinion on the interim financial information.
On the basis of our review:
i)in our opinion the interim financial information has been
prepared using accounting policies consistent with those adopted
by Goldshield Group plc in its financial statements for the year
ended 31 March, 1998, and;
ii) we are not aware of any material modifications that should
be made to the interim financial information as presented.
GRANT THORNTON
REGISTERED AUDITORS
Goldshield Group PLC
1998 Interim Results
END
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