RNS Number:8940I
Healthcare Enterprise Group PLC
30 November 2007
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE
UNITED STATES, CANADA, JAPAN, AUSTRALIA OR SOUTH AFRICA
30 November 2007
Healthcare Enterprise Group PLC
Interim results
Healthcare Enterprise Group plc (AIM: HCEG, "HCEG", the "Group", the "Company"),
the international healthcare products group, today reports its results for the
six months ended 31 August 2007.
Interim highlights
* Turnover from continuing operations #4.3m (2006: #7.6m)
* Net operating expenses, before exceptional items, reduced by 17% to
#3.3m (2006: #4.0m)
* Operating loss before exceptional items #1.54m (2006: Loss #0.95m)
* Non cash goodwill impairment of #13.6m
* Net loss for the period #15.4m (2006: Loss #0.1m)
* #1.5m raised in cash in new 8% Loan Notes on 26 October 2007
Mark Tompkins, Group Chairman, said:
"This has been a very disappointing six months for HCEG culminating in the
Group's bankers seeking an early repayment on their facilities, leading to the
share suspension and refinancing package.
"The Board continues to believe in the underlying value of the Group's
businesses as demonstrated by the implied value of over #4.8m in aggregate for
two of the subsidiaries and the investments made by existing and past directors.
However, we are clearly focussed on a programme to realise as much value for
shareholders as possible and are on course to make some initial disposals
shortly."
Enquiries:
Healthcare Enterprise Group PLC 01925 898 200
Mark Tompkins, Chairman
Lyndon Gaborit, Executive Deputy Chairman
Numis 020 7260 1000
David Poutney
College Hill 020 7457 2020
Adrian Duffield / Jon Davies
Interim Results
The overall performance of the Group was behind expectations with turnover in
the half year to 31 August 2007 of #4.3m (2006: #7.6m). The operating
subsidiaries sustained losses and the Group reported an operating loss before
exceptional items of #1.54m (2006: loss #0.95m), although net operating
expenses, before exceptional items, were reduced 17% to #3.3m (2006: #4.0m).
The Board also carried out a detailed impairment review of the carrying value of
all the assets which resulted in non-cash goodwill write off of #13.6m. This
reduces the carrying value of goodwill in the balance sheet to #7.4m.
The loss before tax and after goodwill impairment and other exceptional
expenses, was #15.4m (2006: loss #0.1m). The Group's loss per share was 5.07p
(2006: loss per share 0.05p). Net debt decreased in the period by #0.2m to
#1.6m.
Share suspension
As previously announced the Group's shares were suspended on 28 September 2007
pending clarification of the Company's financial position. Coupled with the
poor trading performance outlined above, the Group's planned sale of non-core
assets had been slower than expected. This put undue financial pressure on the
Company, which was advised by its bankers, Barclays Bank plc ("Barclays"), that
the bank wanted repayment of the outstanding term loan prior to the scheduled
repayment date of 31 December 2007.
Subsequently, trading the in Group's shares recommenced on 26 October 2007 at
the same time as a new #1.5m refinancing package was arranged.
Refinancing Package
The refinancing package comprised:
o The issue of #1.5m of Notes with interest of 8% per annum and a five
year final repayment date. The Company committed to propose the necessary
facilitating resolutions to Shareholders to permit the Notes to be convertible
into 120m new Ordinary Shares at a conversion price of 1.25 pence each should
the Noteholders elect to do so. Accordingly, such convertibility will depend on
the Resolutions being passed by the requisite majority of Shareholders. To the
extent they are not converted into New Ordinary Shares, the Notes will become
repayable by the Company on 5 November 2012.
o Options granted to the Noteholders for an aggregate exercise price of
#1,285,715 in cash over 38.57% of the equity of Ebiox Limited ("Ebiox"), a
wholly owned subsidiary of the Company. This implied a valuation of Ebiox of
#3.3m.
o Options granted to the Noteholders for an aggregate exercise price of up
to #642,857 over 43.71% of the equity of Reproductive Sciences Limited ("RSL"),
a wholly owned subsidiary of the Company (which is proposed to be the holding
company for the Group's 19.8% holding in Fertiligent Limited ("Fertiligent"),
HCEG's option to acquire the majority of Fertiligent, and the entitlement to
Fertiligent's sales and marketing rights). This implied a total
valuation of RSL of #1.47m.
The options over the equity in Ebiox and RSL are exercisable between one and
three years after the date of grant but exercise can be accelerated on the
occurrence of certain triggering events, such as the realisation of the
Company's holding in these companies.
Also, as part of the Term Loan repayment schedule agreed with Barclays, the
Company has granted unlisted warrants to Barclays over 3% of the share capital
of the Company, exercisable at 2.5 pence per share. The issue of these warrants
negates the need to pay over #170,000 in fees and penalties to Barclays.
Crest Medical
Crest distributes products primarily to the occupational health, first aid and
medical markets from a warehouse facility in Warrington. Crest generated
turnover during the period of #3.6m (2006: #6.7m). The disappointing fall in
sales was a continuation of problems experienced in the previous year. Sales and
purchasing functions had both proved weak and steps were taken in the previous
six month period to recruit new sales and purchasing teams. Whilst this was
achieved, the business continued to suffer from increased competitive pressure
and loss of volume from major customers. The introduction of self employed sales
agents from January 2007 increased direct sales, but sales to distributors and
major accounts suffered. This resulted in an operating loss of #0.8m (2006: loss
#0.1m) for the six month period.
Crest management made significant reductions in overheads, staffing levels and
capital expenditure in an attempt to compensate for falling revenues. Revenues
fell at a faster rate than predicted and monthly operating losses were incurred.
Staff numbers were reduced as sales volumes fell and further reductions are
planned in line with the reduced level of operations, which has now stabilised.
During the period Crest also secured additional supply arrangements in the Far
East and elsewhere, but the additional funding required to finance overseas
orders and the banker's refusal to provide letter of credit facilities has
resulted in a requirement for additional working capital.
The Board continues to evaluate a number of potential corporate actions for the
business.
Ebiox
Ebiox sales in the period were #0.4m (2005: #0.4m). This resulted in an
operating loss of #0.3m (2006: loss #0.1m) for the six month period.
The agreement with Sultan Healthcare Inc in January 2007 resulted in preliminary
work to service that contract and the particular products for its branded "Solo"
range. Sales commenced in the period under review. The Group's divestment of its
Thailand subsidiary, Alpha Trading (Asia) Limited to its management was
completed in July 2007 and included an ongoing distribution agreement for Ebiox
products. Ebiox also signed a distribution agreement with Medtradex in the
Benelux.
In April 2007 the Company announced that its wholly-owned subsidiary, Ebiox
Limited, has secured U.S. Environment Protection Agency ('EPA') approval for its
patented TruKleen surface wipes. This approval followed an earlier announcement
in February 2007 of approval for its patented concentrate and spray
disinfectants. Approvals for individual U.S. states have now been secured. These
approvals will allow Ebiox to distribute TruKleen products in a wide range of
markets in the United States.
Optiscope
The Group has concluded that the risks associated with the continued development
of this product outweigh the benefits of further investment and are actively
seeking a suitable exit from the investment. Since Optiscope is in a pre
commercialisation phase of development, no revenues were recorded and a loss of
#0.03m (2006: #0.06m) incurred.
Women's Reproductive Health
The Group has restricted its focus to just two product groups in women's health,
Fertiligent, a high quality, low cost intra-uterine sperm pump to help assist
infertile couples conceive and Medilator, which has developed a platform for
single-use, disposable cervical dilatation devices.
Continuing trial results for Fertiligent in Israel and Germany have been
positive and trials continue in Turkey. The final prototype was approved and
manufacturing is expected to start shortly. The grant of an option in RSL,
above, indicates a valuation of the business' investment in excess of book
value.
Medilator has been the subject of a recapitalisation and the Group's 2.5%
interest is regarded as a passive investment of insignificant value.
Other
The CICS dental business continued to perform well with revenues of #0.4m (2006:
#0.4m) and operating profits of #0.1m (2006: #0.1m). The business is considered
non core and has been offered for sale.
The investment in Ridgecrest Healthcare Inc. is considered non core and is to be
realised.
Current trading and outlook
Whilst Crest's operations have in the view of the Board been stabilised and
structured to facilitate corporate action, the trading period after 1 September
2007 started slowly following the liquidity issues faced by the Group and the
associated effect on continuity of product supplies from suppliers. The
management was also distracted by the requirements of refinance package
following the banks action. Competitor action also had a negative effect on
operations. The Group expects second half revenues to be in line those recorded
in the first half of the year as the sales and order levels have stabilised.
The Board expects to continue to record a loss for the second half of the year
at the operating level, although it is anticipated that this will be lower than
the first half loss as the benefits of further cost reductions are experienced.
With Crest moving towards a breakeven trading position, subject to further
reductions in staff costs, the Board is considering additional short term
funding and continuing its work on an orderly disposal of all of the Group's
assets in order to maximise value for shareholders.
Notice of General Meeting and Warrant holders' Meeting
Further to the issue of unsecured loan stock announced in October 2007, the
Group will call a General Meeting for shareholders to consider the proposals. A
circular containing full details of a proposed capital reorganisation, proposed
increase in the directors' authority to allot equity securities and
dis-application of statutory pre-emption rights, approval of a substantial
property transaction and amendment to the terms of the warrants currently in
issue will be posted to shareholders of the Company and warrant holders in the
near future. Included within the circular will be a notice convening a General
Meeting of the Company and the associated proxy card. In addition, a notice
convening a Warrantholders' Meeting and their associated proxy card will also be
posted to all warrant holders.
Healthcare Enterprise Group Plc
Consolidated Income Statement
For the 6 months ended 31 August 2007 (unaudited)
Notes Six months Six months ended Year ended
ended 31 Aug 2006 28 Feb 2007
31 Aug 2007
#'000 #'000 #'000
Revenue - continuing 3 4,274 7,614 12,667
activities
Cost of sales (2,504) (4,533) (7,149)
Gross profit 1,770 3,081 5,518
Net operating expenses - (3,310) (4,031) (7,850)
normal
Net operating expenses - 4 (13,731) 927 (1,688)
exceptional
Total net operating expenses (17,041) (3,104) (9,538)
Operating loss (15,271) (23) (4,020)
Finance expense (86) (101) (113)
Loss before taxation (15,357) (124) (4,133)
Taxation (7) - (5)
Loss after taxation (15,364) (124) (4,138)
Minority interests (7) 27 7
Loss for the period (15,371) (97) (4,131)
Operating loss before (1,540) (950) (2,332)
exceptional items
Basic (loss) per share 5 (5.07)p (0.05)p (1.93)p
Consolidated Statement of Recognised Income and Expense
For the 6 months ended 31 August 2007 (unaudited)
Six months ended Six months ended Year ended
31 Aug 2007 31 Aug 2006 28 Feb 2007
#'000 #'000 #'000
Income and expenses recognised
directly in equity
Exchange differences on (7) - (58)
retranslation of foreign
operations
Loss for the period (15,371) (97) (4,131)
Total recognised income and (15,378) (97) (4,189)
expenses for the period
Consolidated Balance Sheet
As at 31 August 2007(unaudited)
As at 31 Aug 2007 As at 31 Aug 2006 As at 28 Feb 2007
#'000 #'000 #'000
Non-current assets
Goodwill 7,410 21,210 20,959
Other intangible assets 827 788 843
Property, plant and equipment 389 496 428
Other investments 696 1,592 682
9,322 24,086 22,912
Current assets
Inventories 1,546 1,866 1,834
Trade and other receivables 1,448 2,391 3,311
Cash and short term deposits 286 201 690
3,280 4,458 5,835
Total assets 12,602 28,544 28,747
Current liabilities
Trade and other payables (2,596) (2,851) (3,266)
Financial liabilities (1,923) (552) (2,095)
(4,519) (3,403) (5,361)
Non-current liabilities
Trade and other liabilities (14) (245) (33)
Financial liabilities - (1,500) -
Deferred shares (746) (746) (746)
Warrants issued (357) (364) (357)
(1,117) (2,855) (1,136)
Total liabilities (5,636) (6,258) (6,497)
Net assets 6,966 22,286 22,250
Capital and reserves
Equity
Share capital 7,601 4,726 7,555
Share premium account 42,065 40,814 42,065
Shares to be issued 312 620 271
Merger reserve (2,293) (2,293) (2,293)
Other reserves 728 728 728
Share option reserve 305 - 305
48,718 44,595 48,631
Retained earnings (41,816) (22,346) (26,438)
Minority interests 64 37 57
Total equity 6,966 22,286 22,250
Consolidated Cash Flow Statement
For the six months ended 31 August 2007(unaudited)
As at 31 Aug As at 31 Aug As at 28 Feb
2007 2006 2007
#'000 #'000 #'000
Operating activities
Loss for the period (15,371) (97) (4,131)
Adjustments to reconcile loss for the period to net cash flow from
operating activities
Depreciation of property, plant and equipment 67 83 149
Amortisation of intangible fixed assets 30 35 89
Loss on disposal of property, plant and equipment - - 55
Impairment of goodwill 13,623 - -
Amortisation adjustment in respect of Alpha Trading (Asia) Limited - - 35
Loss on disposal of Alpha Trading ( Asia ) Limited 10 - -
Decrease in inventories 288 230 262
Decrease (increase) in trade and other receivables 1,864 790 (130)
Decrease in creditors and other payables (687) (1,792) (1,533)
FRS 20 share option provision - - 305
Investments written off - - 856
Exchange differences (7) - (58)
Cash generated from operating activities (183) (751) (4,101)
Tax paid - - (19)
Net cash (outflow) from operations (183) (751) (4,120)
Investing activities
Payments to acquire property, plant and equipment (28) (35) (87)
Development costs capitalised subsidiary undertakings (17) (100) (149)
Distribution agreement costs capitalised - - (100)
Purchase of fixed asset investments (14) (54) -
Purchase of subsidiary undertakings - - (93)
Net cash (outflow) from investing activities (59) (189) (429)
Financing activities
Interest paid (85) (101) (113)
Proceeds from issue of share capital 46 2,172 6,581
Share issue costs - - (337)
Decrease in long term borrowings - (1,125) (1,125)
Repayment of short term borrowings (111) (272) (222)
Repayment of capital element of finance leases (12) (22) (34)
Net cash (outflow) from financing activities (162) 652 4,750
Decrease in cash and cash equivalents (404) (288) 201
Cash and cash equivalents at beginning of period 690 489 489
Cash and cash equivalents at end of period 286 201 690
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 31 August 2007
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The consolidated financial statements of Healthcare Enterprise Group plc for the
six months ended 31 August 2007 were authorised for issue by the Directors on 29
November 2007.
The interim financial information contained in this interim financial statement
is unaudited and has been prepared in accordance with the Group's accounting
policies, based on IFRS as adopted by the European Union, and which are expected
to apply for the year ending 28 February 2008. IFRS remains subject to amendment
and interpretation by the International Accounting Standards Board (IASB) and
there is an ongoing process of review and endorsement by the European
Commission.
The interim financial information has not been audited and does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The Company's statutory accounts for the year ended 28 February 2007, prepared
under UK GAAP, have been delivered to the Registrar of Companies and were
subject to an Emphasis of Matter paragraph in the Audit Report dated 26 June
2007.
Emphasis of Matter - Going Concern
In forming our opinion on the financial statements, which is not qualified, we
have considered the adequacy of the disclosure made in Note 1 to the financial
statements concerning the uncertainty over the Group's ability to continue as a
going concern. The financial statements are prepared on a going concern basis,
which is dependent on the Group managing its cashflows in the foreseeable future
by achieving its sales forecasts and realising certain asset and equity inflows.
There can be no certainty that the outcome of these assumptions, along with the
other matters explained in note 1 to the financial statements, will be as
forecast by the Directors. In view of the significance of these uncertainties,
we consider that they should be drawn to your attention. The financial
statements do not include any adjustments that would result if the Group was
unable to continue as a going concern.
These consolidated interim financial statements are presented in Sterling and
all values are rounded to the nearest thousand (#'000) except when otherwise
indicated.
Prior to 2007 the Group prepared its audited financial statements under UK GAAP.
For the year ended 28 February 2008, the Group is required to prepare its annual
consolidated financial statements in accordance with International Financial
Reporting Standards as adopted in the European Union ('IFRS'). IFRS 1 'First
time adoption of International Financial Reporting Standards', requires an
entity to comply with each IFRS effective at the reporting date for its first
IFRS financial statements. The accompanying financial information has been
prepared based on the current status of IFRS or Interpretations issued by the
International Financial Reporting Interpretations Committee ('IFRIC') effective
or expected to be effective at 28 February 2008, the first reporting date for
consolidated financial statements under IFRS.
As a general rule, IFRS 1 requires the standards effective at the reporting date
to be applied retrospectively. However retrospective application is prohibited
in some areas, particularly where retrospective application would require
judgment by management about past conditions after the outcome of the particular
transaction is already known. A number of optional exemptions from full
retrospective application of IFRS are granted where the cost of compliance is
deemed to exceed the benefits to users of the financial statements. Where
applicable, the options selected by management are set out in note 9 below. As
required by IFRS 1, the effect of transition from UK GAAP to IFRS on the Group's
equity and profit has been explained in note 10.
Principal Accounting Policies
Accounting policies detailed below have been adopted and these comply with IFRS.
Basis of consolidation
The consolidated accounts incorporate the financial statements of Healthcare
Enterprise Group plc and all of its subsidiary undertakings made up to 31 August
2007. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group, and deconsolidated from the date that control ceases.
The financial statement of subsidiaries used in the preparation of the
consolidated financial statements are prepared for the same reporting period of
the parent company and are based on consistent accounting policies.
Inter-company transactions, balances and unrealised gains on transactions
between group companies are eliminated, including unrealised profits or losses.
Revenue
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received, excluding
discounts, rebates, VAT and other sales taxes or duty. The following criteria
must also be met before revenue is recognised on the sale of goods: revenue from
sale of goods is recognised when the significant risks and rewards of ownership
of the goods have passed to the buyer, usually on dispatch of the goods.
Goodwill and business combinations
Business combinations on or after 1 March 2006 are accounted for under IFRS3
using the purchase method. Any excess of the cost of the business combination
over the Group's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities is recognised in the balance sheet as
goodwill and is not amortised. To the extent that the net fair value of the
acquired entity's identifiable assets, liabilities and contingent liabilities is
greater than the cost of the investment, a gain is recognised immediately in the
income statement. Goodwill recognised as an asset at 1 March 2006 is recorded
at its carrying amount under UK GAAP and is not amortised.
After initial recognition goodwill is stated at cost less any accumulated
impairment losses, with the carrying value being reviewed for impairment
annually and whenever events or changes in circumstances indicate that the
carrying value may be impaired.
Where the recoverable amount of the business is less than its carrying amount,
including goodwill, an impairment loss is recognised in the consolidated income
statement.
Development costs
These are capitalised only if a project satisfies all of the six specified
criteria in accordance with IAS 38.
Associates
Entities (other than subsidiary undertakings) in which the Group has a
participating interest and over whose operating and financial policies the Group
exercises significant influence are treated as associates. In the Group
financial statements, associates are accounted for using the net equity method.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and any impairment in value.
Depreciation is provided on a straight line basis to write off the cost, less
estimated residual values, of all tangible fixed assets over their expected
useful lives. It is calculated using the following rates:
Freehold land not depreciated
Buildings 2% per annum
Short leasehold improvements equally over the lease period
Plant and equipment 15-33% per annum
Fixtures and fittings 20-33% per annum
Annual reviews are performed on the expected useful lives and estimated residual
values of the individual assets. The carrying values of tangible fixed assets
are reviewed for impairment if events or changes in circumstances indicate the
carrying value may not be recoverable. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with their
carrying amount and are included in the consolidated income statement.
Financial instruments
The Group has adopted both IAS32, Financial Instruments: Disclosure and
Presentation and IAS 39, Financial Instruments: Recognition and Measurement.
Financial assets and liabilities are recognized on the Group's balance sheet
when the Group becomes party to the contractual provisions of the instrument.
Operating leases
Costs in respect of operating leases are charge to the Group income statement on
a straight line basis over the term of the lease.
Hire purchase contracts
Assets obtained under hire purchase contracts, which transfer to the Group
substantially all of the risks and rewards of ownership of the assets are
capitalised as property, plant and equipment and depreciated over their
estimated useful life. Obligations under such contracts are included in
financial liabilities net of finance charges allocated to future periods. The
interest element is charged to the Consolidated Income Statement.
Foreign currencies
Transactions in foreign currencies are recorded at the date of exchange at the
date of the transaction. Assets and liabilities expressed in foreign currency
are translated into sterling at the rates of exchange ruling at the balance
sheet date.
The results of overseas subsidiary undertakings are translated into sterling at
the rates of exchange ruling at the balance sheet date. Any exchange differences
arising on opening net assets are taken directly to reserves.
All other foreign exchange differences are taken to the Consolidated Income
Statement.
Investments
Investments are stated at cost less provision for impairment.
Pensions
Certain subsidiaries of the Company operate defined contribution schemes for
their employees and directors. The assets of the schemes are held separately
from those of the Group. The annual contributions are charged to the
Consolidated Income Statement. The Company provides no other post-retirement
benefits to its employees and directors.
Share based payments
The Group grants share options to directors, employees and certain consultants.
Equity settled share based options are measured at fair value at the date of
grant and expenses in line with the vesting conditions, based on the estimated
number of options that will eventually vest. The fair value is measured using
the Black Scholes model as there are no complex market performance criteria to
be considered.
Inventories
Inventories are valued at the lower of cost and net realisable value. Provisions
are made for obsolete, slow moving and defective stock where appropriate. Net
realisable value is based on estimated selling price less further costs to
completion and disposal.
2. Critical accounting policies, judgements and estimates
The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported for assets and liabilities as
at the balance sheet date and the amounts reported for revenues and expenses
during the year. The nature of estimation means that actual outcomes could
differ from those estimates. Key sources of estimation uncertainty and
critical accounting judgements are as follows:
Deferred taxation:
In the preparation of the financial statements, the Group estimates the income
taxes as well as any deferred taxes based on temporary differences. Deferred tax
assets relating to tax loss carry-forwards and temporary differences are
recognised in those cases when future taxable income is expected to permit the
recovery of those tax assets. Changes in assumptions in the projections of
future taxable income as well as changes in tax rates could result in
significant differences in the valuation of deferred taxes.
Goodwill and intangibles:
The measurement and impairment of indefinite life intangible assets (including
goodwill) are key sources of estimation uncertainty and carry a risk of causing
adjustment to the carrying amounts of assets and liabilities within the next
financial year.
The measurement of intangible assets other than goodwill on a business
combination involves estimation of future cash flows and the selection of a
suitable discount rate. The Group determines whether indefinite life intangible
assets are impaired on an annual basis and this requires an estimation of the
value in use of the businesses to which the intangible assets are allocated.
This involves estimation of future cash flows and choosing a suitable discount
rate.
Share-based payments:
The estimation of share-based payment costs requires the selection of an
appropriate valuation model, consideration as to the inputs necessary for the
valuation model chosen and the estimation of the number of awards that will
ultimately vest, inputs for which arise from judgements relating to the
continuing participation of employees.
3. REVENUE ANALYSIS
An analysis of revenue type is given below:
Six months ended 31 Six months ended 31 Year ended 28
Aug 2007 Aug 2006 Feb 2007
#'000 #'000 #'000
Product revenue 4,274 7,614 12,667
An analysis of turnover by geographical destination is given below:
Six months ended 31 Six months ended 31 Year ended 28
Aug 2007 Aug 2006 Feb 2007
#'000 #'000 #'000
United Kingdom 3,866 6,642 10,418
Continental Europe 118 274 1,079
North America 218 162 166
Far East 33 277 523
Middle East 14 4 437
Rest of World 25 255 44
4,274 7,614 12,667
4. NET OPERATING EXPENSES - EXCEPTIONAL
Six months ended 31 Six months ended 31 Year ended 28
Aug 2007 Aug 2006 Feb 2007
#'000 #'000 #'000
Impairment of goodwill on acquisition 13,623 - -
Compensation for loss of office - - 293
Reorganisation costs 98 373 1,593
Write down of Ridgecrest Healthcare Group 762
Inc.
Amortisation adjustment in respect of Alpha - - 35
Trading ( Asia ) Ltd
Loss on disposal of Alpha Trading ( Asia ) 10 - -
Ltd
Amortisation of goodwill (1,300) (1,300)
FRS 20 share option charge - - 305
13,731 (927) 1,688
5. EARNINGS PER SHARE
The basic loss earnings per share has been calculated by dividing the loss for
the period/year, by the weighted average number of shares in existence for the
period/year.
The loss and weighted average number of shares for the purpose of calculating
the diluted loss per share are identical to those used for the loss per share at
31 August 2007, 31 August 2006 and 28 February 2007 as the exercise of share
options would have the effect of reducing the loss per share and is therefore
not dilutive.
Six months ended 31 Six months ended 31 Year ended 28
Aug 2007 Aug 2006 Feb 2007
BASIC AND DILUTED EPS
Net Loss (#'000) (15,371) (97) (2,501)
Weighted average number of shares 303,471,137 185,010,495 213,698,645
Basic and diluted loss per share (5.07)p (0.05)p (1.93)p
6. FINANCIAL LIABILITIES - Current Liabilities
Six months ended 31 Aug Six months ended 31 Aug Year ended 28 Feb
2007 2006 2007
#'000 #'000 #'000
Bank loans and overdrafts 1,923 535 2,084
Net obligations under hire purchase - 17 11
contracts
1,923 552 2,095
7. FINANCIAL LIABILITIES - Non- Current Liabilities
Six months ended 31 Six months ended 31 Year ended 28 Feb
Aug 2007
Aug 2006 2007
#'000 #'000 #'000
Bank loans and overdrafts - 1,500 -
- 1,500 -
8. RECONCILIATIONS OF MOVEMENTS IN EQUITY
Equity Share Capital Retained Earnings Minority Interests
#'000 #'000 #'000
At 1 March 2006 42,431 (22,249) 64
Total recognised income and expense - (97) -
Shares issued net of issue costs 2,164 - -
Minority interest - - (27)
At 31 August 2006 44,595 (22,346) 37
Total recognised income and expense - (4,092) -
Shares issued net of issue costs 4,036 - -
Minority interest - - 20
At 28 February 2007 48,631 (26,438) 57
Total recognised income and expense - (15,378) -
Shares issued net of issue costs 46 - -
Shares to be issued 41 - -
Minority Interest - - 7
At 31 August 2007 48,718 (41,816) 64
9. TRANSITION TO IFRS
Application of IFRS 1 - First Time Adoption of IFRS
For all periods up to and including the year ended 28 February 2007, the Group
prepared its financial statements in accordance with UK GAAP.
The Group's financial statements for the year ended 28 February 2008 will be the
first annual financial statements that comply with IFRS. These interim
financial statements have been prepared as described in note 1 and in accordance
with the accounting policies outlined in note 1. The Group's date of transition
to IFRS is 1 March 2006 and all comparative information in the financial
statements is restated to reflect the Group's adoption of IFRS except where
otherwise required or permitted under IFRS 1.
In preparing these interim financial statements in accordance with IFRS 1, the
Group has taken advantage of certain optional exemptions from full retrospective
application of IFRS as detailed below.
a) Business combinations
IFRS 3 'Business Combinations' has not been applied to acquisition of
subsidiaries that occurred before 1 March 2006;
b) Cumulative translation differences
Cumulative foreign exchange translation differences have been set to zero as at
1 March 2006;
An explanation of the effect of how the transition from UK GAAP to IFRS has
affected the Group's financial position is set out in the following notes.
10. Reconciliation of UK GAAP balance sheet to IFRS balance sheet at 1 March
2006 (unaudited)
UK GAAP in IFRS Effect of transition IFRS
format to IFRS
#'000 #'000 #'000
Non-current assets
Goodwill 21,250 - 21,250
Other intangible assets 683 - 683
Property, plant and equipment 545 - 545
Other investments 1,538 - 1,538
24,016 - 24,016
Current assets
Inventories 2,096 - 2,096
Trade and other receivables 3,181 - 3,181
Cash and short term deposits 489 - 489
5,766 - 5,766
Total assets 29,782 - 29,782
Current liabilities
Trade and other payables (4,387) - (4,387)
Financial liabilities (1,219) - (1,219)
(5,606) - (5,606)
Non-current liabilities
Trade and other liabilities (2,827) - (2,827)
Financial liabilities - - -
Deferred shares (746) - (746)
Warrants issued (357) - (357)
(3,930) - (3,930)
Total liabilities (9,536) - (9,536)
Net assets 20,246 - 20,246
Capital and reserves
Equity
Share capital 4,298 - 4,298
Share premium account 39,078 - 39,078
Shares to be issued 620 - 620
Merger reserve (2,293) - (2,293)
Other reserves 728 - 728
Share option reserve - - -
42,431 - 42,431
Retained Earnings (22,249) (22,249)
Minority interests 64 - 64
Total equity 20,246 - 20,246
11. Reconciliation of UK GAAP balance sheet to IFRS balance sheet at 28 February
2007 (unaudited) (date of last UK GAAP Financial Statements)
UK GAAP in IFRS Effect of transition IFRS
format to IFRS
#'000 #'000 #'000
Non-current assets
Goodwill 20,959 - 20,959
Other intangible assets 843 - 843
Property, plant and equipment 428 - 428
Other investments 682 - 682
22,912 - 22,912
Current assets
Inventories 1,834 - 1,834
Trade and other receivables 3,311 - 3,311
Cash and short term deposits 690 - 690
5,835 - 5,835
Total assets 28,747 - 28,747
Current liabilities
Trade and other payables (2,977) - (2,977)
Financial liabilities (2,095) (2,095)
Income tax payable (289) (289)
(5,361) - (5,361)
Non-current liabilities
Trade and other liabilities (33) - (33)
Financial liabilities - - -
Deferred shares (746) - (746)
Warrants issued (357) - (357)
(1,136) - (1,136)
Total liabilities (6,497) - (6,497)
Net assets 22,250 - 22,250
Capital and reserves
Equity
Share capital 7,555 - 7,555
Share premium account 42,065 - 42,065
Shares to be issued 271 - 271
Merger reserve (2,293) - (2,293)
Other reserves 728 - 728
Share option reserve 305 - 305
48,631 - 48,631
Retained earnings (26,438) (26,438)
Minority interests 57 - 57
Total equity 22,250 - 22,250
12. Reconciliation of UK GAAP balance sheet to IFRS balance sheet at 31 August
2006(unaudited)
UK GAAP in IFRS Effect of transition IFRS
format to IFRS
#'000 #'000 #'000
Non-current assets
Goodwill 21,210 - 21,210
Other intangible assets 788 - 788
Property, plant and equipment 496 - 496
Other investments 1,592 - 1,592
24,086 - 24,086
Current assets
Inventories 1,866 - 1,866
Trade and other receivables 2,391 - 2,391
Cash and short term deposits 201 - 201
4,458 - 4,458
Total assets 28,544 - 28,544
Current liabilities
Trade and other payables (2,851) - (2,851)
Financial liabilities (552) (552)
(3,403) - (3,403)
Non-current liabilities
Trade and other liabilities (245) - (245)
Financial liabilities (1,500) - (1,500)
Deferred shares (746) - (746)
Warrants issued (364) - (364)
(2,855) - (2,855)
Total liabilities (6,258) - (6,258)
Net assets 22,286 - 22,286
Capital and reserves
Equity
Share capital 4,726 - 4,726
Share premium account 40,814 - 40,814
Shares to be issued 620 - 620
Merger reserve (2,293) - (2,293)
Other reserves 728 - 728
Share option reserve 0 - 0
44,595 - 44,595
Retained Earnings (22,346) (22,346)
Minority interests 37 - 37
Total equity 22,286 - 22,286
13. Reconciliation of UK GAAP balance sheet to IFRS balance sheet at 31 August
2007(unaudited)
UK GAAP in IFRS Effect of transition IFRS
format to IFRS
#'000 #'000 #'000
Non-current assets
Goodwill 7,410 - 7,410
Other intangible assets 827 - 827
Property, plant and equipment 389 - 389
Other investments 696 - 696
9,322 - 9,322
Current assets
Inventories 1,546 - 1,546
Trade and other receivables 1,448 - 1,448
Cash and short term deposits 286 - 286
3,280 - 3,280
Total assets 12,602 - 12,602
Current liabilities
Trade and other payables (2,596) - (2,596)
Financial liabilities (1,923) (1,923)
(4,519) - (4,519)
Non-current liabilities
Trade and other liabilities (14) - (14)
Financial liabilities - - -
Deferred shares (746) - (746)
Warrants issued (357) - (357)
(1,117) - (1,117)
Total liabilities (5.636) - (5.636)
Net assets 6.966 - 6.966
Capital and reserves
Equity
Share capital 7,601 - 7,601
Share premium account 42,065 - 42,065
Shares to be issued 312 - 312
Merger reserve (2,293) - (2,293)
Other reserves 728 - 728
Share option reserve 305 - 305
48,718 - 48,718
Retained earnings (41,816) (41,816)
Minority interests 64 - 64
Total equity 6,966 - 6,966
This information is provided by RNS
The company news service from the London Stock Exchange
END
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