RNS Number:7579Z
Goldshield Group PLC
15 June 2004
For Immediate Release 15 June 2004
GOLDSHIELD GROUP plc
Preliminary Results for the year ended 31st March 2004
Goldshield Group plc (LSE: GSD), the marketing-led pharmaceutical company, has
pleasure in reporting its Preliminary Results for the year ended 31st March
2004.
BUSINESS HIGHLIGHTS
* Restructuring creating platform for future growth
* Profit centres created with highly-motivated and incentivised teams
* Cost base and talent pool radically improved through expansion in
India
- Headcount in India now over 500, expected to reach 700 by end of
2004
* No further information on SFO investigation or DoH litigation
FINANCIAL HIGHLIGHTS
* Bank debt reduced to #5.5 million from #13.7 million.
* Group revenues of #87.5 million (2003: #105 million)
* Profit before interest, tax, amortisation and exceptional costs of
#13.8 million (2003: #19.9 million)
* Loss per share down at (1.6p) ( 2003: (3.9p)) after high tax losses
in US
* Net cash inflow from operations of #18.4 million (2003: #11.2
million)
* Final dividend 2.5p per share making 3.5p for the year, up 21%
* Peter Brown appointed Non-Executive Chairman in August 2003
Commenting on the results, Peter Brown, Chairman of Goldshield Group, said:
"It has been a difficult 24 months, but Goldshield is now on a firm footing with
a structure that will be able to support sustained growth in the future. We are
profitable and will soon be debt-free. Restructuring has left us with
highly-motivated teams tightly focused on their markets. We still have much to
do during the current year, but we are back on course to create shareholder
value."
For further information, please contact:
Goldshield Group plc
Ajit Patel, Chief Executive Officer Today: +44 (0) 20 7466 5000
Rakesh Patel, Finance Director Thereafter: +44 (0) 20 8649 8500
Buchanan Communications +44 (0) 20 7466 5000
Tim Anderson, Mark Court, Mary-Jane Johnson
Chairman's Overview
Your Company is recovering from a very difficult twenty four months. We have
successfully moved virtually all support operations to Mumbai in India,
reorganised the sales units in Europe and America and intend soon to be selling
products in India.
Your executive team has significantly improved cashflow with the result that we
have reduced our borrowings by #8.2 million.
Despite the fact that operating profits have fallen, current trading is as
expected.
Under the leadership of Ajit Patel the Company is moving towards a focused style
of entrepreneurial business units that is already bringing benefits to
shareholders. On your behalf I would like to thank directors, executives and
all our staff for their hard and effective work over the last year.
Russell Race, who has served you as an independent director since July 1998 is
retiring from the board at the AGM as his other business responsibilities have
increased. We are actively recruiting a new Independent Director to fill this
vacancy.
Full details of the Company's activities are contained in the Chief Executive's
review and the Finance Director's report and I hope you will be pleased that
your Board feel confident in recommending a final dividend of 2.5 pence which,
with the 1 pence already paid, represents an increase of 21% over the previous
year.
Finally, you will be pleased to know that your company has donated surplus
drugs, worth over #200,000, to the Bulgarian Red Cross and, for Jordan and
surrounding territories, to the Jordanian Red Crescent for immediate
distribution to families in these countries.
Peter M Brown
Chairman
14 June 2004
Chief Executive Officer's Operating Review
Overview
A year ago Goldshield embarked on a radical restructuring of its business.
During many years of rapid growth, group infrastructure played catch-up as we
recruited and adapted to try to cope with ever greater business demands. This ad
hoc approach had to stop and we needed to rethink our structure and systems.
Our Interims in December were also the occasion for the first statement from our
non-executive Chairman, Peter Brown, another very important step in the
development of Goldshield.
Another top priority during the year was the reduction in our debt. I am pleased
to report that our total bank debt and deferred acquisition costs have been
reduced to #5.6 million at 31 March from #21.6 million a year ago. In order to
achieve this we reduced marginal activities, drove operational efficiencies and
concentrated on better cash management. Financially, the group is now in a much
better position to build for the future.
I am pleased to announce our results for the year ended March 2004. Overall
sales are #87.1 million (2003: #104.9 million). They are a touch better than
previously anticipated. Pre-exceptional earnings before interest, tax and
amortisation (EBITA) were #13.8 million (2003: #19.9 million). The exceptional
costs for the year were #1.2 million (2003: #1.0 million). I am pleased to
announce that the board is recommending a final dividend of 2.5 pence (2003:
1.45 pence) bringing the total for the year to 3.5 pence (2003: 2.9 pence).
As part of our ongoing efforts to integrate businesses and provide them with
focus, we have reorganised them into smaller Strategic Units with a clearly
defined cost structure and grouped by Channels of Distribution. The channels
through which we distribute our products and services are: Direct to Consumer,
Retail, Hospital, Country Distributors and the yet to be established Out-
Licensing. We have also rescaled our operation in the USA giving us a better
platform to build a profitable business in this lucrative market.
All units, whether they are product or service led, are now profit centres. All
support units are working with a clear understanding of generating revenues over
and above servicing internal clients and contributing to the group bottom line.
The Group is introducing new performance pay systems based on parameters that
are scientifically measurable in terms of quality and quantity deliverable. The
focus is on lifetime learning teams of entrepreneurs with the purpose of
recruiting, retaining and enhancing the customer base. This coupled with a new
system of profit accountability will have a significant impact on staff
motivation.
Plans for developing a Goldshield Academy to enhance technical and management
skills at all levels have started. We are committed to recruit and develop
people for both our immediate and our future business competencies and as such
this initiative is very high on our strategic agenda.
Our Indian operation, initiaily set up to handle outsourced processes from our
operations in both the US and Europe, has created a number of new opportunities
. Our operations here have seen a substantial expansion with over 500 staff
located in Mumbai.We have been able to access high quality staff at much lower
cost than in the UK and US, taking advantage of the large numbers of well
educated people , experienced in business and fluent in English. We have
recruited people with many competencies other than call centres. These include
medicine, commerce, IT and inventory control. A significant effort is being made
to train these new staff, making sure they are well versed in corporate goals,
capable of operating with a focus on profit and able to adapt to a system that
rewards well those staff able to achieve internal targets.
Our focus is to build a successful telemarketing business to serve Goldshield
customers in Europe and the USA and leverage this knowledge by assisting in the
expansion of call centres owned by other companies. The total space available
there will provide over 400 call centre, 250 managerial and over 160 training
seats. In addition Goldshield is accessing the increasing numbers of FDA and
MHRA approved pharmaceutical plants in India. We will leverage these low cost
manufacturing capabilities by contract manufacturing our porducts for sale in
India, Europe, United States and other international markets which include the
Middle East, South Africa and Australasia .
Marketing and Sales Review
Direct to Consumer - Europe
Sales declined to #18.0 million (2003: #22.1million). Much of the decline is
attributed to a maturing of the market and a shortage of new customers. However
we have made good progress in the last six months in this important channel of
distribution. Sales here have stabilised and the decline halted.
A new telemarketing Centre was established in India in May 2003. Since this time
we have enhanced our customer relationship approach, resulting in increased
customer values and loyalty. We have now undertaken a strategic review of the
business and as a result have become more customer orientated. We have also
established a more focused customer recruitment group to enhance our database.
The Internet business continues to grow and now represents over 10% of all
orders processed. More initiatives are being developed to maximise the returns
from the Internet. The French business continues to grow and during this period
doubled its income through mailing and advertising activity. At the end of this
year we moved our French Call Centre to France in order to move closer to our
customers and optimise service levels.
During the year, gross margins have increased through improved purchasing on key
lines, selective introduction of price increases and the introduction of premium
high margin products.
Retail Generic - Europe
The UK generics market has became increasing competitive. We are still primarily
UK led in this distribution channel, however our European options are being
evaluated. Despite tough competition, our generic business grew 11% over the
previous year with sales of #8.8 million (2003: #7.9 million).
Inventory management issues and lower selling prices limited growth. Better
focus on the product mix, coverage and customer loyalty plan helped increase
sales. New product launches, improvement in customer service levels and better
management of cost will drive this business in the future.
Hospital - Europe
The hospital business in Europe has achieved sales of #12.7 million (2003: #11.1
million), an increase of 14% over the previous year. The core of this business
remains the Antigen injectables product range in the UK and Ireland accounting
for some 80% of its turnover. This element of our business was up 8% on the
previous year with growth mainly due to extension of some existing NHS contracts
and award of some new ones.
Remodulin, prescribed for pulmonary arterial hypertension on a 'named patient'
basis (due to not having completed registration in the UK), was subject to
pricing negotiations with the NHS, resulting in a doubling of patients treated.
Following the recent granting of European marketing rights to Goldshield by
Indigo Orb Inc. USA of their spring loaded Autodetect Syringe for Epidural
Procedures, a pilot study is planned in the UK prior to an autumn launch. This
is the first step in developing a total hospital service provision extending
beyond just injectable pharmaceutical products.
The European business has seen the biggest growth with sales up 91% to #0.9
million. The supply problems with controlled drugs, particularly pethidine, has
impacted similarly on this business with delays of orders which would have
pushed the sales up further. Whilst many of these issues have now been resolved,
we are focused on putting safeguards in place to prevent a reoccurrence in the
future.
The Goldshield oncology business was up 9% to #1.6 million. This growth was due
to Methotrexate contract awards for both injectable and solid dose
presentations. As reported in the Interim Statement, this year also saw the
first award for an in-house developed oncology product complementing the
products acquired from Wyeth. Within the coming year we will launch two further
in house developed oncology products into the UK market, with introductions into
other markets outside the UK planned.
Direct to Consumer - North America
During the period, we have reorganised our business in North America into two
business units, Goldshield Elite which focuses on multilevel marketing and
Goldshield Direct which carries out mailing and telemarketing activities. As
reported earlier, we undertook considerable consolidation here and our total
operations here have been trimmed down significantly. We had earlier in the year
sold our products containing Ephedra, which together with rationalisation of
other peripheral activities had a marked impact on our sales which closed at
#10.9 million. (2003: #26.8 million). The sales are now stable in the last 3
months and we have started the recovery process. We are determined to build our
presence here.
Since inception in June 2003, Goldshield Elite's membership crossover from
Changes International, Golden Pride International/W.T. Rawleigh and Achievers
Unlimited was slower than anticipated. However, it increased during the first
quarter of 2004 due to various enrolment campaigns offered to current members.
Elite is in the process of consolidating all companies into one. We expect to
complete this by the end of June 2004.
Elite has adopted a new Corporate Customer Creation campaign to enrol new
members. An outbound sales campaign originating from India and a mini-web page
email campaign originating from the US will form the basis of this recruitment
drive which aims to enrol 500,000 new Members by 2010. Both campaigns were
released on 1 June 2004.
Goldshield Direct, which was formed after merging PR Nutrition and Advanced
Nutritional Products, has started on recruiting new customers through outbound
telemarketing campaigns from India. This business is about a third of the size
of Goldshield Elite.
Retail Brands - Europe
Sales in Retail Brands Europe reached #32.6 million this year, almost level with
the previous year at #32.9 million. Sales in the UK increased from #22.2 million
to #22.4 million, whilst in Europe, sales declined from #10.7 million to #10.2
million.The majority of this decline is due to a combination of delays in
technical transfers and out-of-stock situations.
In the UK, the Dispensing Doctor sales operation grew by 15% over the previous
year. In January, the Representatives started promoting Flexeze, a Glucosamine/
Chondroitin product to General Practitioners. The changes in the NHS resulted in
more work focusing on Nurses, now an important source of influence, who
prescribe several Goldshield products. The Own Label business has shown an
increase in sales of 62% from #1.6 million to #2.6 million. In Ireland,
traditional Goldshield products have shown a 9% growth.
In Europe, we have obtained a registration for Flexeze Capsules in Hungary and
sales are expected shortly. In Poland, we have submitted a registration for
Flexeze Gel and in Kosovo, 8 registrations were submitted for a variety of
pharmaceutical products. As a result of Malta joining the EU, we have had to
register our products and we submitted 26 registrations. During the year, we
have identified many opportunities in the retail sector throughout Europe, which
we will capitalise on.
Over the last year, the major change in the business has been the move away from
a purely prescription product business to one which markets a wider range of the
Group's products actively through the retail channel and secondly to focus the
unit on being a European wide business ready for the expansion of the EU.
Country Distributors - Rest of World
This part of our portfolio saw a 3% decline in sales at #3.8million (2003: #3.9
million). Whilst the Smith Kline Beecham (SKB) acquired products, which still
account for more than 50% of this Channel's sales, grew by 11% it did not
compensate for the downward sales trend in the Antigen and Regina product sales.
South Africa was a source of excellent growth of over 63% over last year with
Ecotrin (enteric coated aspirin) remaining the leading product in its class for
preventative use post-myocardial infarction, coupled with the launch into the GP
sector of various Flexeze (glucosamine) formulations. Sales in Pakistan were up
34% fuelled by local sales growth across the SKB product range. Australia/New
Zealand saw a 15% growth attributable to the Goldshield product range and the
last quarter saw preparations being finalized for the re-launch of Ecotrin in
the New Year. Thailand, which last year saw sales restricted due to product
availability, recovered as soon as supplies recommenced.
Regina business, which is mostly dependent on Duty Free Sales in the Far East,
was down 18% despite increased sales resulting from product inclusion with Thai
Airways. The sales continued to be hit by lower passenger air traffic post the
SARS epidemic and compounded during the year by world-wide shortages in supply
of raw material.
Services - Global
This is a very new area of business for us. During the last 18 months of
consolidation, management restructure and the move of some of our back office
functions to India, we have developed many competencies in the service sector.
Most of these are simply an extension of what is required for better functioning
of our internal operations. Since all our service functions have been broken
down into smaller profit centre units, it makes sense to offer these services
externally from our low cost base in India. In addition to incremental revenues,
it will bring in better learning and provide benchmarking against standards of
others.
Whilst this is not our core business, we expect revenues to increase in the
coming months.
Product Development
As part of the overall reorganisation, we have taken a fresh look at how Product
Development functions within the group. In order to fully maximize the potential
of our acquired and own developed products, we have created two product groups.
Both of these are focused on their core competencies which centre around the
ability to get product registered and approved for sale. The unlicensed product
group focuses on products that require minimum registrations and are a lot
quicker to market, whilst the licensed product group manages the traditional
prescription product portfolio.
Both these groups will not only aim to maximize sales through all the internal
Business Units but also form relationships with external customers and promote
out-licensing and sales of Goldshield products under 'own label' supply. These
groups are responsible for researching and developing new products, increasing
existing product leverage and developing marketing plans for all new and
selected existing products to be implemented by the internal Business Units.
Within the unlicensed product group, we already have several exciting products
in the pipeline, focusing less on 'me too' and more on innovative and unique
formulations, several of which will be selected to undergo clinical evaluation
in the coming months.
The focus for the Group with respect to Product Development for Licensed
products over the last 12 months has been to consolidate the large number of
product acquisitions made prior to March 2002. Effort has largely been concerned
with transferring production into new manufacturing sites to ensure long term
continuity of supplies. This has involved the co-ordination of Technical and
Regulatory activity for these transfers especially on the significant number of
injectable licenses acquired through the purchase of Antigen Pharmaceuticals.
Despite the focus on product transfers, the licensed product group has over the
last 12 months, submitted product license applications for 12 new molecules each
representing a number of different presentations.
A number of new product licenses have also been granted within European and some
International markets. The number of approvals achieved was less than our
target, mainly as a result of internal problems within the authorities.
Current Trading and Future Prospects
This year we will conclude the restructuring of the Group. We can then return to
organic growth and acquisitions. We now have a high-quality, highly-motivated
team whose remuneration is closely linked to their performance. Each business
unit is tightly focused on its products and markets. Our goal still remains that
of better cash management. We expect to be debt free during the current year.
There is a great temptation to focus on immediate and short term results.
Nevertheless it is right to continue with the process of change started last
year. I am confident that with a better balance sheet, a more organised and
efficient infrastructure and a better quality and motivated team, sales growth
will resume during 2005/06 financial year.
There is nothing new to report on either the SFO investigation or the DoH
litigation. An update on the changes in the legal matters arising from our Irish
acquisitions is set out in note 26 to the financial statements. We expect to
continue defending our position until a proper and satisfactory resolution has
been achieved.
Ajit Patel
Chief Executive Officer
14 June 2004
Consolidated Profit and Loss Account
for the year ended 31 March 2004
Before
Notes exceptional Exceptional Total Total
items items 2004 2003
(Note 3)
#000 #000 #000 #000
Turnover 2 87,063 - 87,063 104,920
Cost of sales (34,878) - (34,878) (30,838)
Gross profit 52,185 - 52,185 74,082
Other operating income 3 418 - 418 -
Distribution costs (5,253) - (5,253) (11,092)
Impairment losses - - - (4,864)
Exceptional legal and professional - (1,154) (1,154) (951)
costs
Other administrative expenses (42,320) - (42,320) (52,903)
Administrative expenses (42,320) (1,154) (43,474) (58,718)
Operating profit 5,030 (1,154) 3,876 4,272
Net interest 4 (561) - (561) (744)
Profit on ordinary activities 3 4,469 (1,154) 3,315 3,528
before taxation
Tax on profit on ordinary 6 (3,917) - (3,917) (5,004)
activities
Profit/(Loss) on ordinary 552 (1,154) (602) (1,476)
activities after taxation
Equity minority interests 20 - 20 24
Profit/(Loss) for the financial 572 (1,154) (582) (1,452)
year
Equity dividends 8 (1,295) - (1,295) (1,069)
(Loss) transferred from reserves 19 (723) (1,154) (1,877) (2,521)
Earnings per share
Basic (pence) 9 (1.6) (3.9)
Diluted (pence) 9 - -
Dividend per share (pence) 8 3.5 2.9
All operations are continuing.
A statement of movement of reserves is given in note 19.
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Statement of Total Recognised Gains
and Losses for the year ended 31 March 2004
Group
2004 2003
#000 #000
(Loss) for the financial year (582) (1,452)
Currency differences on foreign currency net investments (2,513) (1,118)
Total recognised gains and losses for the year and total gains and (3,095) (2,570)
losses recognised since the last financial statements
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Balance Sheet at 31 March 2004
Notes 2004 2003
#000 #000
Fixed assets
Goodwill 10 21,456 26,744
Other intangible assets 10 27,300 32,620
Intangible assets 10 48,756 59,364
Tangible assets 11 1,333 1,258
50,089 60,622
Current assets
Stocks 13 13,991 15,444
Debtors: due within one year 14 13,426 16,648
Cash at bank and in hand 24 186 2,433
27,603 34,525
Creditors: amounts falling due within one year 15 (33,658) (36,770)
Net current (liabilities) (6,055) (2,245)
Total assets less current liabilities 44,034 58,377
Creditors: amounts falling due after more than one year 16 - (7,500)
Provisions for liabilities and charges 17 (589) (3,186)
43,455 47,691
Capital and reserves
Called up share capital 18 1,851 1,846
Share premium account 19 21,234 21,075
Profit and loss account 19 20,254 24,644
Shareholders' funds 20 43,339 47,565
Equity minority interests 21 106 126
Total capital employed 43,445 47,691
The financial statements were approved by the Board of Directors on 14 June
2004, and signed on their behalf by:
Ajit Patel, Chief Executive Officer
R V Patel, Finance Director
The accompanying accounting policies and notes form an integral part of these
financial statements.
Company Balance Sheet at 31 March 2004
Notes 2004 2003
#000 #000
Fixed assets
Investments 12 7,274 5,642
Current assets
Debtors: due after more than one year 14 22,332 11,444
Debtors: due within one year 14 7,361 21,591
29,693 33,035
Creditors: amounts falling due within one year 15 (9,562) (5,183)
Net current assets 20,131 27,852
Total assets less current liabilities 27,405 33,494
Creditors: amounts falling due after more than one year 16 - (7,500)
27,405 25,994
Capital and reserves
Called up share capital 18 1,851 1,846
Share premium account 19 21,234 21,075
Profit and loss account 19 4,320 3,073
Shareholders' funds 27,405 25,994
The financial statements were approved by the Board on 14 June 2004 and signed
on their behalf by:
A R Patel, Chief Executive Officer
R V Patel, Finance Director
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Cash Flow Statement
for the year ended 31 March 2004
Notes 2004 2003
#000 #000
Net cash inflow from operating activities 22 18,397 11,232
Returns on investments and servicing of finance
Interest received 32 81
Interest paid (593) (825)
Net cash outflow from returns on investments and servicing of (561) (744)
finance
Taxation
Corporation tax paid (3,098) (4,582)
Capital expenditure and financial investment
Purchase of tangible fixed assets (703) (1,177)
Purchase of intangible fixed assets - (2,626)
Proceeds on disposal of tangible fixed assets - 106
Net cash outflow from capital expenditure and financial investment (703) (3,697)
Acquisitions and disposals
Purchase of businesses and deferred consideration (7,207) (5,917)
Equity dividends paid (905) (1,605)
Net cash outflow before financing 5,923 (5,313)
Financing
New bank loan - 1,234
Bank loan payment (8,180) (2,838)
Issue of shares 10 30
Cash(outflow) from financing (8,170) (1,574)
(Decrease) in cash 23 (2,247) (6,887)
The accompanying accounting policies and notes form an integral part of these
financial statements.
Notes to the Financial Statements
1 PRINCIPAL ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with applicable United
Kingdom accounting standards and under the historic cost convention. The
Directors have reviewed the principal accounting policies and consider they
remain the most appropriate for the Group. The principal accounting policies of
the Group have remained unchanged from the previous year and are set out below.
Basis of consolidation
The Group financial statements consolidate those of the Company and of its
subsidiary undertakings drawn up to 31 March 2004. 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 and is amortised on
a straight line basis over its estimated useful economic life.
Investments
Investments in subsidiary undertakings in the balance sheet of the Company are
included at the cost of the shares held less amounts written off.
Turnover
Turnover is the total amount receivable by the Group for goods supplied and
services provided, excluding value added tax and trade discounts. Turnover is
recognised as the delivery of goods and services to customers.
Intangible fixed assets
Brand names, know-how, licences, trademarks and similar intangible items are
capitalised at historical cost net of any provision for impairment and amortised
on a straight line basis over their estimated useful economic lives, which range
between seven and ten years.
Depreciation
Depreciation is calculated to write down the cost, less estimated residual
value, of all tangible fixed assets other than freehold land over their expected
useful economic lives.
The rates generally applicable are:
Freehold buildings 4% p.a. straight line
Office equipment 20% p.a. straight line
Plant and equipment 15% p.a. straight line
Motor vehicles 20% p.a. straight line
Depreciation commences in the month of purchase and is calculated on a pro rata
basis in the year of acquisition.
Stocks
Stocks are stated at the lower of cost and net realisable value.
Deferred taxation
Deferred tax is recognised on all timing differences where the transactions or
events that give the group an obligation to pay more tax in the future, or a
right to pay less tax in the future have occurred by the balance sheet date.
Deferred tax assets are recognised when it is more likely than not that they
will be recovered. Deferred tax is measured using rates of tax that have been
enacted or substantially enacted by the balance sheet date.
Pensions
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.
Leased assets
Payments made under operating leases are charged to the profit and loss account
on a straight line basis over the period of the lease.
Foreign currencies
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. The financial statements of foreign subsidiaries are translated at the
rate of exchange ruling at the balance sheet date. The exchange differences
arising from the re-translation of the opening net investment in subsidiaries
are taken directly to reserves. Where exchange differences result from the
translation of foreign currency borrowings raised to acquire foreign assets
(including equity investments) they are taken to reserves and offset against the
differences arising from the translation of those assets. All other exchange
differences are dealt with through the profit and loss account. This accounting
policy is as prescribed by Statement of Standard Accounting Practice 20.
Research and development expenditure
All research and development expenditure is written off to the profit and loss
account in the period in which it is incurred.
Financial instruments
Financial assets are recognised in the balance sheet at the lower of cost or net
realisable value. Provision is made for diminution in value where appropriate.
Interest receivable is accrued and credited to the profit and loss account in
the period to which it relates.
Share options
The estimated cost of share options granted (being the difference between
exercise price and market rate on the date of grant) are accrued over the period
to which the benefit relates.
2 SEGMENTAL REPORTING
Turnover and profit on ordinary activities before taxation are attributable to
the principal activity of the Group.
2004 2003
#000 #000
Turnover by destination:
United Kingdom 59,294 61,440
Western Europe Excluding the United Kingdom 11,062 11,108
North America 10,851 26,845
Rest of the World 5,856 5,527
87,063 104,920
Turnover by origin:
United Kingdom 62,798 65,802
North America 10,851 26,844
Ireland 12,598 12,274
India 816 -
87,063 104,920
Operating profit:
United Kingdom 1,758 7,513
North America (3,191) (6,123)
Ireland 4,679 2,882
India 630 -
3,876 4,272
Net assets:
United Kingdom 35,917 59,216
North America (3,778) (1,022)
Ireland 16,654 3,177
India 152 -
Unallocated (5,500) (13,680)
43,445 47,691
3 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
The profit on ordinary activities is stated after charging/(crediting):
2004 2003
#000 #000
Auditors' remuneration:
- Audit services 133 147
- Non audit services (see below) 109 74
Depreciation and amortisation:
- Intangible fixed assets 8,734 9,828
- Tangible fixed assets 514 477
Hire of plant and machinery 76 60
Loss on disposal of tangible fixed assets: - 40
Impairment losses - 4,864
Exceptional legal and professional costs 1,154 951
Operating lease rentals 706 894
Other operating Income 418 -
Foreign exchange gains (52) (61)
Research and development:
- current year expenditure 613 969
Auditors remuneration for non audit services principally consists of the review
and reporting on the Group's interim results, compliance work for corporation
taxes and sales taxes in jurisdictions in which the Group has a presence.
Exceptional legal and professional costs relate to fees in connection with the
Serious Fraud Office investigation, Department of Health claim and issues
arising out of the Irish operations, detailed in note 26.
Other operating Income relates to income arising from the disposal of assets in
respect of the right to the sale of products containing Ephedra.
4 NET INTEREST
2004 2003
#000 #000
Interest payable on bank loans and overdrafts (593) (825)
Interest receivable and similar income 32 81
(561) (744)
5 DIRECTORS AND EMPLOYEES
Employees
Staff costs during the year were as follows:
2004 2003
#000 #000
Wages and salaries 7,907 11,060
Social security costs 677 1,056
Other pension costs 100 340
8,684 12,456
The average number of employees is analysed below:
2004 2003
Administration 161 121
Marketing and Selling 418 227
Management 25 24
Warehouse 44 35
648 407
The Group contributes to employee money pension schemes at a precentage of pay
(depending on grade)
Directors' Remuneration
The emoluments of the Directors were as follows:
2004 2003
#000 #000
Emoluments 1,193 1,107
Payments to third parties for consultancy services 28 28
Gain on exercise of share options 26 -
Pension contributions to money purchase pension schemes 71 95
1,318 1,230
During the year five Directors (2003: five Directors) participated in money
purchase pension schemes.
The amounts set out above include remuneration in respect of the highest paid
Director as follows:
2004 2003
#000 #000
Emoluments 350 347
Pension contributions to money purchase pension schemes 8 31
358 378
6 TAX ON PROFIT ON ORDINARY ACTIVITIES
2004 2003
#000 #000
United Kingdom corporation tax at 30% (2003: 30%) 6,033 3,624
Adjustment in respect of prior periods 447 (393)
Overseas taxation 34 1,098
Total current tax 6,514 4,329
Origination and reversal of timing differences (2,597) 239
Adjustment to estimated recoverable amount of deferred tax assets - 436
Total deferred tax (2,597) 675
Tax on profit on ordinary activities 3,917 5,004
The tax assessed for the year is higher than the standard rate of corporation
tax in the United Kingdom at 30% (2003: 30%). The differences are explained as
follows:-
2004 2003
#000 #000
Profit on ordinary activities before tax 3,315 3,528
Profit on ordinary activities multiplied by the standard rate of 994 1,058
corporation tax in the United Kingdom of 30% (2003: 30%)
Effect of
Expenses not deductible for tax purposes 2,260 1,175
Impairment provision not qualifying for tax relief - 1,459
Capital allowances for the year in excess of depreciation (81) (209)
Utilisation of tax losses - (3)
Tax losses carried forward 1,139 1,242
Other short term timing differences 1,755 -
Adjustments to tax charge in respect of prior periods 447 (393)
Total current tax 6,514 4,329
7 PROFIT FOR THE FINANCIAL YEAR
The Parent Company has taken advantage of Section 230 of the Companies Act 1985
and has not included its own profit and loss account in these financial
statements. The profit after tax for the year of the Company was #1,247,000
(2003: #1,128,000) which is dealt with in the financial statements of the
Company.
8 EQUITY DIVIDENDS
2004 2003
#000 #000
Ordinary shares - interim dividend of 1.00p per share paid 20 January 2004 370 534
(2003: 1.45p paid 20 January 2003)
Ordinary shares - proposed final dividend of 2.50p per share payable on 15 925 535
October 2004 (2003: 1.45p paid 17 October 2003)
1,295 1,069
9 EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the year.
The calculation of diluted earnings per share is based on the basic earnings per
share, adjusted to allow for the issue of shares and the post tax effect of
dividends, on the assumed conversion of all dilutive options. There is no
diluted earnings per share as share options would not have a dilutive effect on
the loss for the year.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below.
2004 2003
Weighted Weighted
average average
number Per share number Per share
Earnings of shares amount Earnings of shares amount
#000 000 pence #000 000 pence
(Loss) attributable to (582) 36,936 (1,452) 36,879
shareholders
Basic earnings per share (1.6) (3.9)
10 INTANGIBLE FIXED ASSETS
Group Brand names
know-how
licences and
trade marks Goodwill Total
#000 #000 #000
Cost
At 1 April 2003 50,299 43,059 93,358
Exchange differences (14) (2,406) (2,420)
Additions 3 - 3
Adjustment to purchase consideration (550) - (550)
At 31 March 2004 49,738 40,653 90,391
Amortisation
At 1 April 2003 17,679 16,314 33,993
Exchange differences (12) (1,080) (1,092)
Provided in the year 4,771 3,963 8,734
At 31 March 2004 22,438 19,197 41,635
Net book amount
At 31 March 2004 27,300 21,456 48,756
Net book amount
At 31 March 2003 32,620 26,744 59,365
The Board has reviewed the value of all of the intangible assets and is of this
view that there is no need to provide for impairment losses against the
intangible assets.
In considering the value of goodwill attaching to the US business, a future
growth rate of 15% has been assumed, which exceeds the average growth rate for
that territory. The Board considers this appropriate in view of their future
plans for the recently restructured business.
The Board has considered the useful economic life for significant acquisitions
and concluded in each case that the useful economic life ranges between 8 and 10
years.
11 TANGIBLE FIXED ASSETS
Group Freehold land Office Plant & Motor
& buildings equipment equipment vehicles Total
#000 #000 #000 #000 #000
Cost
At 1 April 2003 32 1,586 408 63 2,089
Exchange differences (7) (145) (7) (2) (161)
Additions 45 471 187 - 703
At 31 March 2004 70 1,912 588 61 2,631
Depreciation
At 1 April 2003 - 661 144 28 832
Exchange differences - (56) 10 (2) (48)
Charge for the year 6 456 24 28 514
At 31 March 2004 6 1,060 178 54 1,298
Net book amount
At 31 March 2004 64 852 410 7 1,333
Net book amount
At 31 March 2003 32 926 264 35 1,258
12 FIXED ASSET INVESTMENTS
Company
2004 2003
#000 #000
Investments in Group undertakings at cost 7,274 5,642
Company
2004
#000
Cost
At 1 April 2003 5,642
Additions 1,632
At 31 March 2004 7,274
Amounts written off in year ended 31 March 2004 -
Net book amount at 31 March 2004 7,274
Shares in Subsidiary undertakings
At 31 March 2004 the Group held more than 20% of the allotted share capital of
the following significant undertakings:
Name Country of Class of share Proportion Nature of
registration or capital held held business
incorporation
Goldshield Pharmaceuticals England and Wales #1 ordinary 100% Marketing, and distribution of
Limited shares pharmaceutical products
Goldshield Limited England and Wales #1 ordinary 100% Marketing and distribution of
shares vitamins and health supplements
Goldshield Management England and Wales #1 ordinary 100% Management services
Services Limited shares
Vitamins Direct Limited England and Wales #1 ordinary 100% Marketing and distribution of
shares vitamins and health supplements
Regina Health Limited England and Wales #1 ordinary 100% Marketing and distribution of
shares vitamins and health supplements
B&S House of Health England and Wales #1 ordinary 100% Marketing and distribution of
Limited shares vitamins and health supplements
Natural Essentials Limited England and Wales #1 ordinary 100% Marketing and distribution of
shares vitamins and health supplements
One World Supplements Jersey #1 ordinary 100% Marketing and distribution of
Limited shares vitamins and health supplements
Forley Generics Limited England and Wales #1 ordinary 100% Marketing of pharmaceutical
shares products
Goldshield USA, Inc USA Ordinary shares 100% Intermediate holding company
Golden Pride, Inc USA Ordinary shares 100% Marketing and distribution of
vitamins and health supplements
WT Rawleigh, Co Canada Ordinary shares 100% Marketing and distribution of
vitamins and health supplements
Achievers Unlimited, Inc USA Ordinary shares 100% Marketing and distribution of
vitamins and health supplements
Changes International, Inc USA Ordinary shares 100% Marketing and distribution of
vitamins and health supplements
PR Nutritional, Inc USA Ordinary shares 100% Marketing and distribution of
vitamins and health supplements
Advance Nutritional USA Ordinary shares 100% Marketing and distribution of
Products, Inc vitamins and health supplements
Vitamins Direct, Inc USA Ordinary shares 100% Marketing and distribution of
vitamins and health supplements
Goldshield Services Pvt India Ordinary shares 100% Management Services
Limited
Goldshield Teleservices USA Ordinary shares 100% Telemarketing Management
Inc Services
Health & Beauty Direct England and Wales #1 ordinary 70% Marketing and distribution by
Limited shares mail order
Antigen Pharmaceuticals Ireland Ordinary shares 100% Intermediate holding company
Limited
Antigen International Ireland Ordinary shares 100% Marketing and distribution of
Limited pharmaceutical products
Antigen Overseas Limited Ireland Ordinary shares 100% Marketing and distribution of
pharmaceutical products
Anpharm Limited Ireland Ordinary shares 100% Marketing and distribution of
pharmaceutical products
Goldshield (Australia) Australia Ordinary shares 100% Marketing and distribution of
(Pty) Limited pharmaceutical products
Goldshield (Hong Kong) Hong Hong Ordinary shares 100% Marketing and distribution of
Limited pharmaceutical products
13 STOCKS
Group
2004 2003
#000 #000
Finished goods and goods for resale 13,991 15,444
14 DEBTORS
Debtors due after more than one year Group Company
2004 2003 2004 2003
#000 #000 #000 #000
Amounts owing by subsidiary undertakings - - 22,332 11,444
Debtors due within one year Group Company
2004 2003 2004 2003
#000 #000 #000 #000
Trade debtors 12,755 14,499 - -
Amounts owing by subsidiary undertakings - - 7,308 21,538
Prepayments and accrued income 671 2,149 53 53
13,426 16,648 7,361 21,591
15 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Group Company
2004 2003 2004 2003
#000 #000 #000 #000
Bank overdraft - - 1,159 600
Bank loan 5,500 6,180 5,500 4,000
Trade creditors 7,374 7,642 - -
Deferred purchase consideration 110 7,898 - -
Current taxation 6,093 2,618 1,596 -
Social security and other taxes 1,302 1,383 - -
Other creditors 1,878 1,429 - -
Accruals 10,474 9,085 382 48
Dividends payable 925 535 925 535
33,658 36,770 9,562 5,183
16 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Group Company
2004 2003 2004 2003
#000 #000 #000 #000
Bank loan - 7,500 - 7,500
Bank borrowings are secured by a fixed and floating charge over current and
future assets of the Group. Interest is charged at up to 2.4% above the Royal
Bank of Scotland plc base rate on bank loans and overdraft borrowings.
17 PROVISIONS FOR LIABILITIES AND CHARGES
Group
2004 2003
#000 #000
Deferred taxation 589 3,186
Deferred taxation provided for in the financial statements is set out below.
Group
2004 2003
#000 #000
Accelerated capital allowances 3,079 3,426
Other short term timing differences (2,250) -
Tax losses (240) (240)
Total 589 3,186
Group
2004 2003
#000 #000
At 1 April 2003 3,186 3,426
Movement in the year (2,597) (240)
At 31 March 2004 589 3,186
The Group has not recognised deferred tax assets amounting to #5,200,000 (2003:
#2,286,000) in respect of tax losses available for offset against future
profits.
18 CALLED UP SHARE CAPITAL
Group
2004 2003
#000 #000
Authorised
100,000,000 ordinary shares of 5 pence each (2003: 100,000,000) 5,000 5,000
Group
2004 2003
#000 #000
Allotted, called up and fully paid
37,017,738 ordinary shares of 5 pence each (2003: 36,921,989) 1,851 1,846
During the year 95,749 shares were issued under the unapproved employee share
option scheme and the employee share save scheme. The difference between the
total consideration of #163,348 and the nominal value of #4,787 has been
credited to the share premium account.
Share options
The market price at 31 March 2004 was 232 pence and the range during the year
ended 31 March 2004 was 137.5 pence to 245 pence.
The following share options which have been granted by the Company were
outstanding at the year end:
Earliest Latest
Date of date of date of 2004 2003
grant exercise exercise Number Number
The 'existing scheme'
5p Ordinary shares at 13.75 pence 1 Apr 1998 1 Apr 2001 31 Mar 2005 - 39,176
The 'unapproved scheme'
5p Ordinary Shares at 180 pence 3 Jun 1998 3 Jun 2001 2 Jun 2008 735,000 785,000
5p Ordinary Shares at 480.5 pence 11 Aug 1999 11 Aug 2002 10 Aug 2009 37,982 60,893
5p Ordinary Shares at 640 pence 11 Jan 2000 11 Jan 2003 10 Jan 2010 181,183 267,213
5p Ordinary Shares at 871 pence 10 July 2000 10 Jul 2003 9 Jul 2010 18,179 161,517
5p Ordinary Shares at 775 pence 18 Dec 2000 18 Dec 2003 17 Dec 2010 6,751 47,629
5p Ordinary Shares at 686 pence 18 Jul 2001 18 Jul 2004 17 Jul 2011 145,394 344,511
5p Ordinary Shares at 586.5 pence 3 Dec 2001 3 Dec 2004 2 Dec 2011 17,094 173,792
5p Ordinary Shares at 366 pence 23 Jul 2002 3 Jul 2005 22 Jul 2012 426,320 506,303
5p Ordinary Shares at 196 pence 04 Aug 2003 04 Aug 2006 04 Aug 2013 209,462 -
INDIA
The 'unapproved scheme'
5p Ordinary Shares at 157.5 pence 04 Aug 2003 04 Aug 2006 04 Aug 2013 188,298 -
The employee share save scheme
5p Ordinary Shares at 180 pence 9 Oct 1998 1 Dec 2005 31 May 2006 17,766 23,515
5p Ordinary Shares at 375 pence 24 Aug 1999 1 Oct 2004 31 Mar 2005 1,800 10,113
5p Ordinary Shares at 696 pence 23 Aug 2000 1 Oct 2007 31 Mar 2008 1,056 1,667
5p Ordinary Shares at 620 pence 15 Feb 2001 1 Apr 2004 30 Sep 2006 482 4,538
5p Ordinary Shares at 555 pence 10 Aug 2001 1 Oct 2004 31 Mar 2007 2,308 5,662
5p Ordinary Shares at 436 pence 7 Feb 2002 1 Apr 2005 30 Sep 2005 1,307 4,339
5p Ordinary Shares at 275.2 pence 2 July 2002 1 Aug 2005 31 Jan 2010 45,327 125,902
5p Ordinary Shares at 266 pence 10 Jan 2003 1 Feb 2006 31 Jul 2008 6,940 13,333
5p Ordinary Shares at 126 pence 15 Aug 2003 1 Sep 2006 28 Feb 2009 94,443 -
5p Ordinary Shares at 174 pence 2 Feb 2004 1 Mar 2007 31 Aug 2009 28,827 -
19 SHARE PREMIUM ACCOUNT AND RESERVES
Group &
Group Company Company
Profit Profit Share
& loss & loss premium
account account account
#000 #000 #000
At 1 April 2003 24,644 3,073 21,075
Retained (loss)/profit for the year (1,877) 1,247 -
Premium on allotment during the year - - 159
Currency difference on foreign currency net investments (2,513) - -
At 31 March 2004 20,254 4,320 21,234
20 RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
Group
2004 2003
#000 #000
(Loss) for the financial year after taxation (582) (1,452)
Dividends (1,295) (1,069)
Issue of shares 164 30
Currency difference on foreign currency net investments (2,513) (1,118)
Net (decrease) in Shareholders' funds (4,226) (3,609)
Shareholders' funds at 1 April 2003 47,565 51,174
Shareholders' funds at 31 March 2004 43,339 47,565
21 EQUITY MINORITY INTERESTS
Equity minority interests represent a holding of 30% in Health and Beauty Direct
Limited and the holders of these shares have no other rights against any other
Group undertaking.
22 NET CASH INFLOW FROM OPERATING ACTIVITIES
Group
2004 2003
#000 #000
Operating profit 3,876 4,272
Depreciation 514 477
Amortisation 8,734 9,828
Impairment losses - 4,864
Decease/(increase) in stocks 1,453 (3,214)
Loss on disposal of fixed assets:
- Tangible fixed assets - 40
Decrease/(increase) in debtors 3,221 (2,794)
Increase/(decrease) in creditors 599 (2,241)
Net cash inflow from operating activities 18,397 11,232
23 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Group
2004 2003
#000 #000
(Decrease) in cash for the year (2,247) (6,887)
Cash outflow from debt financing 8,180 1,604
Change in net debt arising from cash flows 5,933 (5,283)
Net debt at 1 April 2003 (11,247) (5,964)
Net debt at 31 March 2004 (5,314) (11,247)
24 ANALYSIS OF CHANGES IN NET DEBT
Group
2004 Cash flow 2003
#000 #000 #000
Cash in hand and at bank 186 (2,247) 2,433
Bank loan (5,500) 8,180 (13,680)
(5,314) 5,933 (11,247)
25 LEASING COMMITMENTS
Operating lease payments amounting to #909,000 (2003: #1,186,000) are due within
one year. The leases to which these amounts relate expire as follows:
Group Group
2004 2003
Land & Land &
buildings Other buildings Other
#000 #000 #000 #000
In one year or less 195 1 252 38
Between one and five years 553 102 712 126
In five years or more 58 - 58 -
806 103 1,022 164
The Company did not have any operating leases at 31 March 2004 (31 March 2003:
nil).
26 CONTINGENT LIABILITIES
Indemnities and guarantees
At 31 March 2004, the Company had undertaken to provide support to certain
subsidiary undertakings.
There is a contingent liability in respect of bank borrowings of all companies
within the Group which are secured by an inter company cross guarantee. The
aggregate Group liability at 31 March 2004 amounted to #5,500,000 (2003:
#13,680,000).
The Group has given indemnities in respect of advance payments, deferred
purchase consideration and import duty guarantees issued on its behalf in the
normal course of business. The indemnities given at 31 March 2004 were #331,540
(2003: #535,156).
Irish Operations
On 28 November 2001 the Group acquired the sales, marketing and distribution
rights for the Antigen brand from Antigen Holdings Limited. The companies and
assets were acquired at an estimated cost of #9.4 million. The estimated
consideration was to be settled in two parts, firstly by the payment of #5.2
million and secondly by an obligation to discharge the wider scheme of
arrangement covering all Antigen companies (including those not acquired by the
Group). The directors obtained legal opinion that the Group's exposure to the
debts covered by the scheme was restricted to the debts borne by the companies
it acquired.
On 29 October 2002, Miza Ireland Limited and each of its Irish subsidiaries,
parties to the wider scheme of arrangement, were placed into examinership.
During the current year the liquidator of Miza Ireland Limited claimed the sum
of Euro20.8 million although no grounds for claim have been specified in detail.
Liability for the claim has been denied. The Directors have received legal
opinion that no basis for claim has been presented by the liquidator which could
result in a liability on the part of the company and that the subsidiaries
concerned have grounds for defending the claim.
Serious Fraud Office (SFO) Investigation
On 10 April 2002 the Group's premises and those of the Chief Executive were
visited by the SFO and certain documentation taken away. A press statement
issued by the SFO stated that its operations formed part of an investigation
into suspected conspiracy to defraud the National Health Service (NHS)
concerning the prices charged for penicillin based antibiotics and Warfarin
between 1 January 1996 and 31 December 2000.
The Directors do not believe the Group has acted in an unlawful or improper
manner, nor has it at any time conspired to defraud the NHS and no provision has
been made accordingly. Until any formal charges are made against the Group, its
maximum potential exposure under relevant legislation for the alleged offences
cannot be quantified.
Legal and professional costs in this matter are expensed as incurred.
Department of Health (DoH) claim
On 20 December 2002, the DoH issued a legal claim against the Group and three
other companies (Norton Healthcare Limited, Norton Pharmaceuticals Limited and
Regent - GM Laboratories Limited) amounting to #28.6 million for alleged
anti-competitive practices involving the fixing of selling prices and
controlling the market and production of Warfarin between January 1997 and
September 2000.
The Directors believe the Group is free from wrong-doing in respect of these
allegations. A defence has been filed and no provision has been made for amounts
potentially due under this claim. The expected legal and professional costs for
this action have been accrued.
US operations
Changes Inc , which was acquired by Goldshield from Twinlabs Inc, has been named
in a legal action brought by the estate of a deceased customer of Twinlabs Inc
for a sum of around $ 8 milllion. The action relates to a period prior to the
acquisition of Changes . Goldshield only acquired the assets of Changes Inc. The
Directors have received US legal advice to the effect that the prospects of
success against Changes are remote.
There were no other material contingent liabilities at 31 March 2004 or 31 March
2003.
27 FINANCIAL INSTRUMENTS
The Group uses financial instruments, comprising cash, short term borrowings,
trade debtors and trade creditors, which arise directly from its operations. The
main purpose of these financial instruments is to raise finance for the Group's
operations.
Short term debtors and creditors
Short term debtors and creditors have been excluded from the following
disclosures except those relating to currency risk.
Interest rate risk
The Group finances its operations through a mixture of retained profits and bank
facilities. Bank borrowings are made using variable interest rates.
Liquidity risk
The Group seeks to manage financial risk, to ensure sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably.
Short-term flexibility is achieved through overdraft facilities and short/medium
term borrowings.
Maturity of financial liabilities
The Group financial liabilities analysis at 31 March 2004 was as follows:
Group Company
2004 2003 2004 2003
#000 #000 #000 #000
In less than one year or on demand
Bank and other borrowings payable by instalments 5,500 6,180 5,500 4,600
Deferred purchase consideration 110 7,898 - -
In more than two years but less than five years
Bank and other borrowings - 7,500 - 7,500
5,610 21,578 5,500 12,100
Borrowing facilities
The Group has undrawn facilities available of #250,000 expiring within one year
(2003: #500,000).
Currency risk
The Group is exposed to translation and transaction foreign exchange risk. In
relation to translation risk the proportion of assets held in the foreign
currency are matched to an appropriate level of borrowings in the same currency.
Transaction exposures are hedged when known, mainly using the forward exchange
hedge market.
The Group seeks to hedge its exposure using a variety of financial instruments,
with the objective of minimising the impact of fluctuations in exchange rates on
future transactions and cash flows.
The Group has overseas subsidiaries operating in Ireland where reserves and
expenses are denominated in Euros. The Group has funded the acquisition cost and
working capital by a Euro loan. As the Group receives net cash inflows in Euros
this loan is being reduced and replaced, as necessary, by funding denominated in
Sterling.
#16.9 million (2003: #16.6 million) of the sales of the Group's business is to
customers in continental Europe/foreign
markets excluding North American operations. The majority of these sales are
invoiced in the currencies of the customers involved. The Group policy is to
minimise all currency exposures on any balance not expected to mature within 30
days of its arising through the use of forward currency contracts. All other
sales of UK business are denominated in sterling.
The tables below show the extent to which Group companies have monetary assets
and liabilities in currencies other than their local currency.
Functional currency of operation Net foreign currency monetary assets/(liabilities)
Other
US Dollar Euro currencies Total
#000 #000 #000 #000
2004
Sterling 1,611 2,619 901 5,131
Dollar 1,134 - 298 1,432
Euro (94) 11,950 178 12,034
2,651 14,569 1,377 18,597
2003
Sterling (227) (3,992) 692 (3,527)
Dollar 1,477 - 22 1,499
Euro 334 974 (132) 1,176
1,584 (3,018) 582 (852)
Fair values
The fair values of the Group's financial instruments are considered equal to the
book value.
28 RELATED PARTY TRANSACTIONS
Golden Pride, Inc. occupy a building owned by First Sunrise LLC (previously
Hersey Family Limited Partnership), in which Harry Hersey Jr. a member of the
group senior management team has a beneficial interest. In the year ended 31
March 2004 net payments of #136,000 (2003: #127,000) were paid to the related
parties.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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