RNS Number:0351G
Goldshield Group PLC
06 December 2004
GOLDSHIELD INTERIM RESULTS
Goldshield Group plc ("Goldshield"), the emerging pharmaceuticals company
responsible for the development and distribution of ethical pharmaceuticals and
other health care products, today announces its interim results for the six
months to 30 September 2004.
*Earnings before interest, tax, amortisation, impairment losses and
exceptional costs #7.2 million (2003: #5.8 million)
*Turnover #40.8 million (2003: #42.7 million)
*Pre-tax loss post exceptional item and impairment of #1.5 million
*Interim dividend 1.5p (2003: 1.0p)
*Successful development of new Knowledge Management tool and Performance
Pay programme
*The relocation of backroom staff to India beginning to bear fruit
Commenting on the results, Ajit Patel, Chief Executive, said,
" The last six months has seen Goldshield emerge from a phase of re-organisation.
We have emerged a stronger company. We can now look forward to the benefits of
our hard work paying off. We have split some of the larger businesses into
smaller ones from which we hope to extract significant efficiency gains. We have
also introduced a number of new initiatives which I hope will improve efficiencies
dramatically in the long-run."
" The Board is confident that we will continue our progress and that we can look
forward to an improving outlook as our strategy for growth allows us to deliver
an improving financial performance."
Date: 6 December 2004
For further information contact:
Goldshield Group PLC City Profile Group
Ajit Patel, Chief Executive Simon Courtenay
Rakesh Patel, Finance Director James Cooper
020-8649-8500 020-7448-3244
www.goldshieldplc.com
Chairman's Statement
Overview
It gives me great pleasure to introduce the Chief Executive's Report showing
significant progress in the company's strategy to restore its profits and
establish itself on a much lower cost base through moving most of its support
operations to its new facility in Mumbai.
The non-executives support the Board in their preparation for a vigorous defence
of the case brought by the Department of Health and are disappointed that the
Department is spending significant sums of taxpayer's money on legal costs.
Peter M Brown
Chairman
3 December 2004
Chief Executive's Statement
Operating Review
I am pleased to report that the total income for the Group for the first half of
the current year was #40.8 million (2003: # 42.7 million) and earnings before
interest, tax, amortisation, impairment losses and exceptional costs were #7.2
million (2003: # 5.8 million). As a result the Board is recommending an interim
dividend of 1.5p (2003:1.0p) payable to the shareholders on the register on 14
December 2004.
The reorganisation of our businesses into smaller strategic units with a clearly
defined cost structure and specific channels of distribution has resulted in
greater efficiencies besides giving focus to the operations. All support units
are working with a clear goal of generating external revenues as well as
servicing internal clients and thus contributing to the Group bottom line.
During this period we have unveiled new initiatives as part of the ongoing
reorganisation of the Group. Of these, the new Knowledge Management tool and the
new Performance Pay programme are expected to have the biggest positive impact
on our results going forward. I am confident that in the next financial year
beginning April 2005, I will be able to report benefits from these new
initiatives. Already, the new performance pay system coupled with profit
accountability of each unit is having a significant impact on staff motivation.
On the litigation front with the Department of Health ("DOH"), the SFO and the
administrators of Miza in Ireland, there is nothing significant to report,
except that we continue to make full and careful preparations to defend our
position vigorously.
The restructuring, which started some eighteen months ago with the move of some
of our back office functions to India, is beginning to bear fruit due to
availability of high quality staff at a much lower cost. Despite sales declining
slightly, our operational efficiencies are reflected in the Group's bottom line
profitability. As promised in our annual results, I am pleased to report that
our total bank debt and deferred acquisition costs have been reduced to #2.2
million at 30 September 2004 from #5.6 million at 31 March 2004. As a result, we
are on target to repay our outstanding bank debts before the close of the
current financial year.
Hospital - Europe
The Hospital unit in Europe has delivered an encouraging performance; it
achieved sales of #6.2 million for the first six months of the year. This
compares with a figure of #5.7 million for the half year to September 2003,
representing a growth of 9 %. The successful integration of the former Antigen
UK Sales operation into the new Goldshield Hospital Europe unit has resulted in
significant cost savings and improved operational efficiencies.
Regulatory delays, by far the biggest challenge of the year to date, have
postponed the reintroduction of products from new supply sources in mainland
Europe and have also delayed the launch of new products in the UK. These include
additions to our oncology range and 'Zapain Adult' paracetamol suspension, which
will be an important pharmacy addition for pain treatment in geriatric and
hospice settings. The CE marking on our in-licensed spring loaded Auto-detect
Syringe for Epidural Procedures has been granted, and this unique product is now
scheduled for launch in the beginning of 2005.
Despite the above challenges, the UK injectable sales have grown by 17% to #4.8
million (2003: #4.1 million) and the oncology sales by 25% to #1.0 million
(2003: #0.8 million).
Remodulin, prescribed for pulmonary arterial hypertension, on a named patient
basis, has experienced a doubling in patient numbers and the current business,
in partnership with United Therapeutics Inc, USA, has shown a 98% increase in
sales and is annualising at #1.2 million.
Looking to the future, the outlook remains positive with second half sales
anticipated through a recovery of the European business, new product
introductions and a return into stock of remaining UK items.
Direct to Consumer - Europe
The unit has achieved sales of #8.2 million as against #9.3 million in the
corresponding period last year.
During the period, this unit has been concentrating on a consolidation and
investment drive. The focus has been on harvesting higher returns from existing
customers through better data mining strategies and investment in infrastructure
to sustain future growth.
We have focused on the reactivation of dormant customers by implementing new
marketing strategies and at the same time continuing with strategies to recruit
new customers. In addition, new initiatives on internet marketing have yielded
positive results and a roll out is planned for the last quarter of 2004,
targeting a new and younger group of customers.
The unit continues to implement its vigorous mailing programmes whilst looking
at new business opportunities such as affinity partners and affiliations in
order to drive the business forward.
Retail Brands - Europe
Within this unit, sales at the end of September 2004 were #15.8 million, an
increase of 9% over sales of the corresponding period of the previous year
(#14.5 million).
In the UK, sales increased to #10.5 million from #10.3 million in the same
period last year. Growth came from two main areas: restocking of products not
available last year, and real growth as a result of promotion. This growth has
offset the decline seen in some of the older products. Opportunities in the UK
will result in closer relations with key influencers from Primary Care Trusts,
nursing community and pharmacists under the new contract.
The OTC business has remained steady. The major launch to take place through
this unit was Dymotil. This is a new product resulting from Lomotil, a
previously acquired product, which has been switched from prescription to the
OTC category. The initial reaction to the product has been encouraging and it is
now available in 320 distribution points, including a listing with national
retail group Superdrug. The Flexeze range is also being promoted using a third
party sales force, but the key challenge remains wholesaler stocking of
products. Growth is expected from the OTC area and we are paying considerable
attention to all major grocery accounts and national pharmacy chains.
In Europe, the major increase in sales resulted from re-stocking, continuity of
supply, and product growth. Major challenges continue to be linked with
regulatory issues, especially in relation to our German and Nordic Licences. The
last six months has seen the launch in September of Flexeze Capsules in Hungary
and Flexeze Gel in Poland. Other products which are to follow soon will further
help sales growth in these markets.
In Ireland, sales have grown in both the Goldshield and Antigen ranges. Key
challenges faced have been recalls of Diamox and parallel importing of a range
of products. The introduction of Solid Dose products will contribute towards
future sales. We have been granted a price increase on several products by the
DOH, which will increase revenue.
Services - Global
This relatively new unit has been on a steep learning curve in recent months. We
have improved our service delivery for our inbound process and better attrition
management of our staff. Managing our existing clients and meeting service level
requirements have been the focus during this period. We have negotiated
successfully the first domestic outbound telemarketing project, which will be in
operation soon.
This unit generated revenues of #470,000 in the first six months.
Global Services have developed a healthy pipeline of quality prospects. We
expect some of these to materialise into revenues in the second half of this
year. In addition we have agreed a ramp up with one of our major existing
clients who wants to outsource their customer service process. The new
opportunities identified are from diverse industries and include various revenue
models, including pay by performance and compensation on a fixed hour basis.
Country Distributors - Rest of World
This unit recorded sales of #2.1 million as against #1.7 million in the
corresponding period of last year - an encouraging growth of 24%.
One area of focus has been redefining distributor partnerships based on products
and the necessary strengths of our partners. This has made a significant
contribution to the unit in terms of growth. Pricing adjustments have been
carried out to enable us to increase profitability and also to address the
necessary payment periods.
There is however an issue with the supplies of the Antigen product as a result
of changes in the manufacturing site, longer lead times for products and the new
protocol introduced by the Irish Regulators. The unit is pursuing registration
of new products in various countries vigorously, the results of which will be
seen in the next eighteen months.
Retail Generics - Europe
The sales for this unit for the period were up 5% at #4.2 million against #4.0
million for the same period last year. Overall the generics market has remained
flat in the past couple of months as competition has been intense and prices
have been at an all time low. Despite this adverse market place and consequent
margin pressure, the unit has managed to increase its bottom line contribution.
To improve on the performance, the unit has been focusing on improving
efficiencies and balancing its basket of products with a thrust on higher margin
products. In the period we have also managed to secure new business from the NHS
Tendering process with a value close to #600,000 - the biggest tender award for
the unit.
We have developed a programme of partnering with other major generic companies
which allows us to extend our portfolio in other European territories.
Direct to Consumer - North America
The North American business is organised into two business units, Goldshield
Elite which focuses on multilevel marketing and Goldshield Direct which manages
the mail order activities. We have achieved sales of $6.4 million as against
$11.3 million for the corresponding period last year. The overall sales are
lower as a result of the discontinuation of Ephedra based products in August of
last year. When compared with the second half of last year, the sales are flat.
Elite's growth for the six months under review has been positive with the
consolidation of the three acquisition companies. However, this rate of growth
has not been commensurate with the carrying value of goodwill attributable to
this business, and we have therefore taken a prudent view by way of an
impairment adjustment of US $ 7.2 million.
The Corporate Customer Creation programme is now up and running and has gained
momentum. While this programme is still in its infancy, it has the opportunity
to grow Elite. While we face many challenges we are introducing new products and
programs that benefit our members and our organisation and we expect an increase
in sales by February 2005.
The two hurricanes that we experienced in September disrupted our sales for the
month as our systems and ability to process orders were affected. We are happy
to report that this is now behind us and business is improving.
Goldshield Direct is continuing its restructuring activities, and although the
first six month period is under budget; we look forward to a better 2005
calendar year.
The unit in the coming months will concentrate on the management of active
customers and the recruitment of customers through telemarketing, extensive
sampling and a health assessment programme. As the On-Line market in North
America is already significant and growing, we have initiated test programmes
for customer recruitment using search engine optimisation, affiliate marketing
and pay-per-click campaigns.
Product Development
The two units created to maximise the potential of our acquired and in house
developed products, have started giving us the desired results. Both of these
are focused on their core competencies of product registration and approval
processes.
The number of new products launched by the Unlicensed Product group has not met
our initial objectives. This is due mainly to the start up of this newly formed
unit. However, the number of exciting new products in the pipeline means that
the roll out of new products will soon meet the demand of the business units and
their customers.
Some of the opportunities which the Unlicensed Product group has identified and
will be pursuing are the development of an Ayurvedic range of products. The
latter has a good market potential in Europe, North America and India. This
group has also initiated development of service products on the back of the
initial success of the Health Assessment programme.
During the period the unit faced many challenges developing products which
comply with the EU Directives, and which can be sold in a variety of markets.
The principle challenge has been coordinating the global logistics involved in
product development.
The focus with respect to the Licensed Product Group has changed from focusing
on the consolidation of the previous year's product acquisitions to identifying
and implementing new development and licensing opportunities.
This period has seen the unit undergo significant reorganisation to best exploit
the key therapeutic areas of focus, namely cardiovascular, oncology, central
nervous system, pain management, dermatology and endocrinology. Activity will
centre not only on adding new products to the existing basket but also
maximising sales through each distribution channel and across new territories.
The number of new licenses granted within European and International markets has
been restricted due to the regulatory environment within each authority. This
will be closely monitored in the coming months. European applications for key
markets using the Mutual Recognition Procedure (MRP) are well under way and a
pipeline of products for new registrations has been identified. Opportunities
are being identified with the reclassification of certain products from
prescription to pharmacy and General Sales List (GSL).
Current Trading and Future Prospects
During this period we have continued with the consolidation and rationalisation
started some eighteen months ago. I am pleased with the progress that the Group
has made and now that this phase of our recovery is complete, we will be
focusing on growth strategies. As stated earlier, I do not expect the rest of
the year to be significantly different. The current trading continues in line
with the Board's expectations.
Our current financial position combined with good cash flow gives me the
confidence to deal with the challenges facing the business, at the same time
allowing us to invest in future growth.
Ajit Patel
Chief Executive Officer
3 December 2004
Note: Earnings before interest, tax and amortisation (EBITA) figures, discussed
above, are calculated as follows:-
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2004 2003 2004
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover 40,841 42,663 87,063
========= ========= ========
Operating profit (1,440) 461 3,876
Amortisation 4,292 4,451 8,734
--------- --------- --------
EBITA 2,852 4,912 12,610
Impairment losses 4,000 - -
Exceptional Legal and Professional costs 378 924 1,154
--------- --------- --------
Earnings before interest, tax, amortisation
exceptional costs and impairment 7,230 5,836 13,764
========= ========= ========
Summarised Consolidated Profit and Loss Account for the six months ended 30 September 2004
Notes Before Six months Six months Year
goodwill ended ended ended
impairment 30 September 30 September 31 March
and exceptional Exceptional Goodwill 2004 2003 2004
items items impairment (unaudited) (unaudited) (audited)
#000 #000 #000 #000 #000 #000
Turnover 1 40,841 - - 40,841 42,663 87,063
---------- -------- -------- -------- -------- --------
Operating (loss)/ Profit 1 2,938 - - (1,440) 461 3,876
The operating (loss)/profit is
stated after charging the
following items:-
Impairment losses 5 - - (4,000) (4,000) - -
Research & development
expenditure (406) - - (406) (664) (613)
Exceptional legal &
professional costs - (378) - (378) (924) (1,154)
Amortisation of
intangibles (4,292) - - (4,292) (4,451) (8,734)
Net interest (102) - - (102) (365) (561)
---------- -------- -------- -------- -------- --------
(Loss)/profit on ordinary
activities before taxation 2,836 (378) (4,000) (1,542) 96 3,315
Tax on profit on
ordinary activities 2 (1,175) - - (1,175) (2,099) (3,917)
---------- -------- -------- -------- -------- --------
(Loss)/ profit on ordinary
activities after taxation 1,661 (378) (4,000) (2,717) (2,033) (602)
Equity minority interests - - - - 20 20
---------- -------- -------- -------- -------- --------
(Loss)/profit for the
financial year 1,661 (378) (4,000) (2,717) (1,983) (582)
Equity dividends (556) - - (556) (369) (1,295)
---------- -------- -------- -------- -------- --------
(Loss)/ profit retained
for the year transferred
(from)/to reserves 1,105 (378) (4,000) (3,273) (2,352) (1,877)
========== ======== ======== ======== ======== ========
Earnings per share
Basic (pence) 4 (7.3) (5.4) (1.6)
======== ======== ========
Diluted (pence) 4 - - -
======== ======== ========
Dividend per share (pence) 3 1.5 1.0 3.5
======== ======== ========
The accompanying accounting policies and notes from an integral part of these financial statements.
Consolidated Balance Sheet as at 30 September 2004
Notes As at As at As at
30 September 30 September 31 March
2004 2003 2004
(unaudited) (unaudited) (audited)
#000 #000 #000
Fixed Asset
Goodwilll 5 15,864 20,972 21,456
Other intangible assets 5 24,937 31,193 27,300
--------- --------- --------
Intangible assets 5 40,801 52,165 48,756
Tangible assets 1,476 1,402 1,333
--------- --------- --------
42,277 53,567 50,089
Current assets
Stocks 13,575 11,109 13,991
Debtors: due after more than
one year - 2,648 -
Debtors: due within one year 13,459 14,694 13,426
Cash at hand and in bank 1,286 4,496 186
--------- --------- --------
28,320 32,947 27,603
Creditors: Amounts falling
due within one year (28,126) (33,928) (33,658)
--------- --------- --------
Net current assets/(liabilities) 194 (981) (6,055)
--------- --------- --------
Total assets less current
liabilities 42,471 52,586 44,034
Creditors: Amounts falling due
after more than one year - (4,402) -
Provisions for liabilities
and charges (1,934) (4,122) (589)
--------- --------- --------
40,537 44,062 43,445
========= ========= ========
Capital and reserves
Share capital 1,852 1,846 1,851
Share premium account 21,285 21,075 21,234
Profit and loss account 17,294 21,035 20,254
--------- --------- --------
Shareholders' funds 40,431 43,956 43,339
Minority interest 106 106 106
--------- --------- --------
Total capital employed 40,537 44,062 43,445
========= ========= ========
Consolidated Cash Flow Statement for the six months ended 30 September 2004
Notes Six months Six months Year
ended ended ended
30 September 30 September 31 March
2004 2003 2004
(unaudited) (unaudited) (audited)
#000 #000 #000
Net cash inflow from operating activities 6 7,226 10,186 18,397
--------- --------- --------
Returns on investments and servicing of
finance
Interest received 3 4 32
Interest paid (105) (132) (593)
--------- --------- --------
Net cash outflow from returns on
investments and servicing of financing (102) (128) (561)
--------- --------- --------
Taxation
Corporation tax paid (net) (2,462) (1,602) (3,098)
--------- --------- --------
Capital expenditure and financial investment
Purchase of tangible fixed assets (398) (611) (703)
--------- --------- --------
Net cash outflow from capital
expenditure and financial investment (398) (611) (703)
--------- --------- --------
Acquisitions and disposals
Purchase of businesses (36) (2,504) (7,207)
Equity dividends paid - - (905)
--------- --------- --------
Net cash inflow before financing 4,228 5,341 (5,923)
Financing
Bank loan payments (3,250) (3,278) (8,180)
Issue of shares 122 - 10
--------- --------- --------
Increase/(decrease) in cash 8 1,100 2,063 (2,247)
========= ========= ========
Statement of Total Recognised Gains and Losses and Reconciliation of Movements
in Shareholders' Funds for the six months ended 30 September 2004
Statement of Total Recognised Gains and Losses
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Notes 2004 2003 2004
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
(Loss)for the financial
period (2,717) (1,983) (582)
Currency differences on
foreign currency net
investments 7 313 (1,257) (2,513)
Total recognised gains and
losses for the period and
total gains and losses
recognised since last -------- -------- -------
financial statements (2,404) (3,240) (3,095)
======== ======== =======
Reconciliation of movements in the equity shareholders' funds
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Notes 2004 2003 2004
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
(Loss)for the financial
period after taxation (2,717) (1,983) (582)
Equity dividends (556) (369) (1,295)
Issue of shares 52 - 164
Currency difference on
foreign currency net
investment 7 313 (1,257) (2,513)
Net (decrease) in
shareholders' funds (2,908) (3,609) (4,226)
Shareholders' funds at 1
April 2004 43,339 47,565 47,565
-------- -------- -------
Shareholders' funds at 30
September 2004 40,431 43,956 43,339
======== ======== =======
Notes to the Interim Financial Statements
1. Segmental reporting
Turnover, profit on ordinary activities before taxation are attributable to the
principal activity of the Group.
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2004 2003 2004
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover by destination:
United Kingdom 28,182 27,135 59,294
Western Europe excluding the United Kingdom 3,848 4,892 11,062
North America 3,661 7,382 10,851
Rest of the World 5,150 3,254 5,856
-------- -------- -------
40,841 42,663 87,063
======== ======== =======
Turnover by origin:
United Kingdom 30,758 29,807 62,798
North America 3,661 7,382 10,851
Ireland 5,801 5,474 12,598
India 621 - 816
-------- -------- -------
40,841 42,663 87,063
======== ======== =======
Operating profit/(loss):
United Kingdom 2,295 2,015 1,758
North America (5,095) (1,440) (3,191)
Ireland (27) (114) 4,679
India 1,387 - 630
-------- -------- -------
(1,440) 461 3,876
======== ======== =======
2. Tax on profit on ordinary activities
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2004 2003 2004
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Tax on ordinary activities 1,175 2,099 3,917
========= ========= =======
The tax assessed for the period is higher than the standard rate of corporation
tax in the United Kingdom of 30%. The differences are explained below
(Loss)/profit on ordinary activities (1,542) 96 3,315
--------- --------- -------
Profit on ordinary activities multiplied by
the standard rate of corporation tax in
the United Kingdom of 30% (463) 29 994
Effect of:
Expenses not deductible for tax purposes 267 1,087 2,260
Tax losses not available for utilisation and
carried forward 1,371 983 1,139
Adjustments to tax charge in respect of
prior periods - - 447
Other timing differences - - (923)
--------- --------- -------
Tax on ordinary activities 1,175 2,099 3,917
========= ========= =======
3. Equity dividends
The Directors have declared an interim dividend of 1.50 pence per share (2003/04
interim dividend: 1.00 pence, 2003/04 final dividend: 2.50 pence). The dividend
will be paid on 17 January 2005 to those shareholders on the register on 14
December 2004.
4. Earnings per share
Basic earnings per share
Earnings attributable to
ordinary shareholders
6 months to 30 September 2004
Earnings (#000) (2,717)
Weighted average number
of shares ('000) 37,029
Per Share amount (pence) (7.3)
========
6 months to 30 September 2003
Earnings (#000) (1,983)
Weighted average number of
shares ('000) 36,922
Per Share amount (pence) (5.4)
========
12 months to 31 March 2004
Earnings (loss) (#000) (582)
Weighted average number of
shares ('000) 36,936
Per Share amount (pence) (1.6)
========
Note: There is no diluted earnings per share as share options would not have a
diluted effect on the result for the period
5. Intangible fixed assets
Brand names Goodwill Total
know-how
licences and
trade marks
#'000 #'000 #'000
Cost
At 1 April 2004 49,738 40,653 90,391
Differences on exchange 14 520 534
--------- -------- --------
At 30 September 2004 49,752 41,173 90,925
--------- -------- --------
Amortisation
At 1 April 2004 22,438 19,197 41,635
Provided for the period 2,363 1,929 4,292
Differences on exchange 14 183 197
Impairment loss - 4,000 4,000
--------- -------- --------
At 30 September 2004 24,815 25,309 50,124
--------- -------- --------
Net book amount
At 30 September 2004 24,937 15,864 40,801
========= ======== ========
Net book amount
At 31 March 2004 27,300 21,456 48,756
========= ======== ========
Note: The Board has reviewed the carrying value of the goodwill attributable to
the North American Business and has provided for impairment losses relating to
its underperformance.
6. Net cash inflow from operating activities
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2004 2003 2004
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating (loss)/profit (1,440) 461 3,876
Depreciation 260 265 514
Amortisation 4,292 4,451 8,734
Impairment losses 4,000 - -
Decrease in stocks 416 4,335 1,453
(Increase)/decrease in debtors (32) (454) 3,221
(Decrease)/increase in creditors (270) 1,128 599
-------- --------- --------
Net cash inflow from operating activities 7,226 10,186 18,397
======== ========= ========
7. Currency differences on foreign currency net investments
The #313,000 currency differences on foreign currency net investments relates to
the unrealized gain made on translating the assets and liabilities of the US and
Irish subsidiaries at the period end date (September 2003: #1,257,000 loss).
8. Reconciliation of net cash flow to movement in net debt
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2004 2003 2004
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Increase/(decrease) in cash for the period 1,100 2,063 (2,247)
Cash outflow from debt financing 3,250 3,278 8,180
-------- -------- --------
Changes in net funds arising from cashflows 4,350 5,341 5,933
Net (debt) at 31 March 2004 (5,314) (11,247) (11,247)
-------- -------- --------
Net (debt) at 30 September 2004 (964) (5,906) (5,314)
======== ======== ========
9. Contingent liabilities
Indemnities and guarantees
At 30 September 2004, the Company had undertaken to provide support to certain
subsidiary undertakings.
There is a contingent liability in respect of bank borrowings of all the
companies within the Group which are secured by an inter company cross
guarantee. The aggregate Group liability at 30 September 2004 amounted to
#2,250,000 (30 September 2003: #10,402,000).
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 30 September 2004 were
#720,300 (30 September 2003: #318,000).
Irish Operations
On 28 November 2001 the Group acquired the sales, marketing and distribution
rights for the Antigen brand from Antigen Holdings Limited. The companies and
assets were acquired at an estimated cost of #9.4 million. The estimated
consideration was to be settled in two parts, first 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 have 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 11 December 2002, Miza Ireland Limited and each of its Irish subsidiaries,
parties to the wider scheme of arrangement, went into liquidation. The
liquidator has claimed the sum of Euro20.8 million arising out of the Group's
acquisition of the Antigen companies. The Directors have received legal opinion
that no basis for a 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 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 1996 and
December 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 million. The action relates to a period prior to the
acquisition of Changes Inc. 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 30 September 2004.
10. Preparation of interim statements
The interim financial statements have been prepared in accordance with
applicable United Kingdom accounting standards and under the historical cost
convention. The principal accounting policies of the Group are set out in the
Group's 2004 annual report and financial statements. The policies have remained
unchanged from the previous annual report.
The interim statements are unaudited but have been reviewed by the auditors and
their report is set out on page 16. The comparative figures for the financial
year ended 31 March 2004 are based on the Company's statutory accounts for that
year and have been reported on by the Company's auditors and delivered to the
Registrar of Companies. The report of the auditors was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.
The interim statements do not constitute statutory accounts within the meaning
of section 240 of the Companies Act 1985.
11. Approval of interim statement
The interim statement was approved by the Board of Directors on 3 December 2004.
Copies of this statement will be available to members of the public, free of
charge, from the Company at NLA Tower, 12-16 Addiscombe Road, Croydon, Surrey,
CR0 0XT.
Independent review report to
Goldshield Group plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 September 2004 which comprise the Summarised
Consolidated Profit and Loss Account, Consolidated Balance Sheet, Consolidated
Cash Flow Statement, Statement of Total Recognised Gains and Losses,
Reconciliation of Movements in Shareholders' Funds and the related notes 1 to
11. We have read the other information contained in the interim report which
comprises only the Chairman's Statement and the Chief Executive's Statement and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information. Our responsibilities do not
extend to any other information.
This report is made solely to the company, in accordance with guidance contained
in the APB Bulletin 1999/4 'Review of Interim Financial Information'. Our review
work has been undertaken so that we might state to the company those matters we
are required to state to it in a review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company for our review work, for this report or the
conclusion we have formed.
Directors' responsibilities
The interim report including the financial information contained therein is the
responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists primarily of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2004.
GRANT THORNTON UK LLP
CHARTERED ACCOUNTANTS
LONDON
3 December 2004
Note:
The maintenance and integrity of the Goldshield website is the responsibility of
the directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of
the financial statements may differ from legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FSSFUISLSEDE
Goldshield (LSE:GSD)
Historical Stock Chart
From Jun 2024 to Jul 2024
Goldshield (LSE:GSD)
Historical Stock Chart
From Jul 2023 to Jul 2024
