RNS Number:0485O
Goldshield Group PLC
3 December 2001
FOR IMMEDIATE RELEASE: 07.00, Monday 3 December 2001
GOLDSHIELD GROUP PLC
Interim Results for the six months ended 30 September 2001
Goldshield Group plc, the profitable, marketing-led, emerging British
pharmaceutical company, has pleasure in reporting its interim results for the
six months ended 30 September 2001.
HIGHLIGHTS
- Turnover up by 54% to #50m (2000: #32.6)
- Profit before tax increased by 34% to #7.3m (2000: #5.5m)
- Diluted earnings per share up 33% to 12.5p (2000: 9.4p)
- Interim dividend 1.45p per share (2000: 1.1p per share)
- Sales in US in line with internal expectations:
- Some disruption being experienced in 2H 2002 in US business
following September 11 attacks and the anthrax scares
- Final #4 million payment made to GlaxoSmithKline plc for product
licences and trademarks
- Successful US acquisitions of both products and distributor lists
within US, Canada and UK
- Following the period under review the strengthening of injectable
portfolio through acquisition of Antigen assets - announced post period
under review
Commenting on the results, Ajit Patel, Executive Chairman of Goldshield Group,
said:
" The first half of this year has been excellent with progress made in product
development - operational consolidations in both US and UK head office has set
the tone for further growth in years to come. Despite the unexpected events in
the US, which we expect to temporarily slow market development until the
anthrax situation is resolved, the recent Antigen acquisition will keep the
Group on track to deliver another successful set of results for the year."
For further information, please contact:
Goldshield Group plc Tel on 03.12.01: +44 (0) 20 7466 5000
Ajit Patel, Executive Chairman Thereafter: +44 (0) 20 8649 8500
Rakesh Patel, Finance Director
Buchanan Communications Tel: +44 (0) 20 7466 5000
Nicola How / Louise Bolton
Chairman's Statement
Overview
The Goldshield Group sells a large range of healthcare products as well as
branded and generic pharmaceuticals to a well-defined customer base using a
range of direct to consumer techniques. Today the Group announces another set
of strong results for the six months ended 30 September 2001. Sales in all the
geographic regions across both the pharmaceutical and the healthcare products
have continued to perform in line with expectations.
Group turnover has increased by 54% to #50.0 million (30 Sep. 2000: #32.6
million) and profit before tax by 34% to #7.3 million (30 Sep. 2000: #5.5
million). Diluted earnings per share have increased by 33% to 12.5 pence (30
Sept. 2000: 9.4 pence) enabling Goldshield to continue its payment of an
interim dividend. A dividend of 1.45 pence (30 Sep. 2000: 1.1 pence) is due
to be paid on 21 January 2002 to those shareholders on the Register on 14
December 2001.
The increase in turnover seen above is due to the impact of acquisitions,
including that of Changes International of the US acquired earlier this year,
and increases in pharmaceutical sales through dispensing doctors, of generics
and within Europe.
Sales of the pharmaceutical products grew by 21.6% to #19.2 million (30 Sep.
2000: #15.8 million) while sales in the healthcare division grew even more
strongly to #30.8 million (30 Sep. 2000: #16.8 million). Sales in Western
Europe accounted for approximately 65% of total sales and were split equally
between pharmaceutical products and healthcare at #16.9 million and #15.7
million respectively. Elsewhere in the world, the USA and Canada saw a growth
of 717% in sales of healthcare products with turnover for the period being #
14.8 million (30 Sep. 2000: #1.8 million). Revenue received from sales to
the Rest of the World was only slightly ahead of last year, reflecting the
Management's current focus on expansion within the world's largest healthcare
market, the US. Rest of World sales for the period under review were #2.6
million (30 Sep. 2000: #2.3 million) and made up 5.2% of overall sales.
As announced in August this year, Goldshield fulfilled its commitments to
GlaxoSmithKline plc with the third and final installment of consideration
relating to the acquisition of product licenses and trademarks announced in
1999. The payment of approximately #4 million reflected a reimbursement from
GlaxoSmithKline plc of approximately #1.5 million as referred to in the Report
and Accounts for the year ended 31 March 2001.
Operating Review
During the period under review the Group acquired the following significant
products and businesses:
In April 2001, Goldshield Group plc announced the acquisition from Twinlab
Corporation ('Twinlab') of two operating divisions, Changes International ('
Changes') and PR Nutrition ('PR') for a cash consideration of $5 million
including stock and tangible assets.
Based in Long Island, New York, Twinlab is a nutritional supplement company
and hence has products that complement the Goldshield range. Changes develops,
markets and sells a range of health products using direct selling methods
while PR is a mail order provider of nutritional products for weight loss and
sports within the US marketplace. As a result of this acquisitions Goldshield
has gained immediate access to both divisions' extensive lists of US, Canadian
and UK distributors.
After the end of the period under review, Goldshield announced the acquisition
of assets from Irish based Antigen Holdings Limited ('Antigen'). Antigen is a
privately owned pharmaceutical company which specialises in the production of
sterile injectable products. The three subsidiaries and their related assets
were acquired for an aggregate consideration of up to #IR12 million (#9.4
million) subject to a post completion audit.
Marketing and Sales Review
Pharmaceutical Products
Goldshield operates in three segments within this sector - branded generic
products, niche pharmaceuticals and volume generics. In the UK and Eire the
sales and marketing of these products is carried out using a small field based
sales force targeted at dispensing doctors, an offshore telemarketing
operation based in India and selective mail marketing. Overall sales of
pharmaceutical products grew by 21.7% to #19.2 million (30 Sep. 2000 #15.8
million). The increases in sales were as a result of new generic product
introductions and earlier acquisitions. Sales within the generics business
were #3.0 million.
In the UK the dispensing doctor business continues to grow steadily and is
currently annualised at around #3.0 million. With new product introductions
over the next few months we expect the growth to continue. Despite heavy
pricing pressures within the UK generics market our business is growing at
about 15% helped by three new product introductions. With several new products
coming on line over the next eighteenth months we expect a similar trend.
Sales in mainland Europe increased by 52% over the period under review to #2.8
million helped mainly by product acquisitions, while sales in the Rest of the
World amounted to #2.6 million - again a significant improvement over the same
period last year.
With the recent post period end acquisition of Antigen assets we have gained a
significant marketing and selling base within the niche hospital injectables
market. Antigen markets niche injectable products to the hospital market in
the UK and Ireland. It currently holds 115 product licenses in Ireland, 78 in
the UK and 129 in international markets, including 20 in Europe. Most of these
products are within the areas of anesthesia, pain management, psychiatry and
cardiovascular.
With such extensive assets, many of which have not been developed
commercially, these licences provide considerable growth potential. The UK and
Irish market for these group of products is around #70 million and the
developing mainland European market is estimated at around #320 million. Over
the coming months significant resources will be allocated to gaining market
authorisations in Europe for as many existing products as possible, whilst at
the same time developing more injectables with the above mentioned therapeutic
areas.
Healthcare Products
Goldshield's healthcare products include analgesics, skincare products and in
particular vitamins, minerals, herbal products and other nutritional
supplements. Sales of these products have grown by 83% over the period under
review to #30.8 million (30 Sep. 2000: #16.8 million). This is predominantly
due to sales of our acquired product assets in the US plus the use of new
methods to encourage sales in the near-saturated UK market place.
UK and Europe
Due to the maturing nature of the UK market, in which the Goldshield has an
estimated overall market share of above 10% selling exclusively through mail
order, the Management has spent considerable time devising ways to stimulate
sales growth. This work has been done in parallel with the more usual methods
of product advertising and awareness raising through educational promotions.
One of the more successful employed has been the development of new
combinations of existing products, as well as further extending a product's
life, through different drug delivery techniques e.g. a once-a-day sustained
release formulation. Additionally, the team at Goldshield has introduced a
number of new products to the market, such as a TENS device for pain control
for arthritis relief.
As a result of imaginative new sales initiatives healthcare sales in the UK
and Europe continue to grow by 8.9% compared to the same period last year.
North America
This region performed in line with Managements' expectations over the period
under review. However a short term effect is likely to be seen in the second
half of the year due to the horrific events of September 11 and the subsequent
anthrax scares throughout the US postal system. Three of the Groups' US
marketing offices are based in Florida, Maryland and New Jersey - the only
states affected by anthrax problems - causing severe problems with inbound and
outbound mail.
Goldshield has made a range of acquisitions over the past 18 months which have
provided the Group with a broad base of direct marketing operations, ranging
from mail order, direct telesales and network marketing. The latest, Changes
International and PR Nutrition, were made in April 2001 from Twinlab
Corporation of the US. There was strong growth in US sales from #1.8 million
to #14.8 million led by the two latest acquisitions. The operating profit
before goodwill amortisation was up to #0.8 million
The last few months have been spent on consolidating most of the
infrastructure into Florida and hence there has been a significant level of
integration costs. In October 2001 most of the transaction was completed and
new marketing, sales and financial systems, linked to our central systems in
London, were installed. As a result we would expect efficiencies to start
impacting our profit and loss from the last quarter this financial year.
However, US healthcare sales in the second half are expected to be lower than
those in the first as Changes International was acquires with declining sales
which we believe will bottom out in December this year. The horrific events of
September 11 and the anthrax scares have led to the postponement of several
marketing initiatives.
Once US consumer confidence is restored, we will resume our efforts to grow
sales and profits in this significant healthcare market. We believe that we
should at the latest, be in a position to resume marketing initiatives in the
second quarter of next calendar year.
Product Development
We are continuing very satisfactorily with product development projects
previously announced. We are currently evaluating new areas of product in -
licensing and development to complement the Antigen acquisition and the Board
looks forward to announcing these at the end of the year.
Cash Flow
At 30 September 2001 cash balances were #3.4 million overdrawn (31 Mar.. 2001:
#3.4 million credit).
Net current liabilities at 30 September 2001 were #2.7 million (31 Mar. 2001 :
#4.5 million) of which #3.5 million related to the financing of intangible
asset additions. Long term liabilities were #8.1 million (31 Mar. 2001 : #12.2
million) comprising #4.5 million relating to earn-outs payable on the North
American acquisitions (31 Mar. 2001 : #9.5 million). The balance of long term
liabilities relates to bank loans payable on more than one year.
The Directors are confident that all current and future liabilities can be met
when they fall due out of the Group's operating cash flow. In addition the
Group's bankers have indicated that funds' would be made available in
appropriate circumstances.
Future Prospects
Save for the US businesses, down by around 15%, since September 11 and the
anthrax scares, the Board is very satisfied with current trading. Continuing
stability in the UK healthcare business, several new pharmaceutical products
introductions, the growth of prospects for our current European and
International pharmaceutical businesses and the recent acquisition of the
injectable business of Antigen should provide sufficient growth prospects to
more than offset the temporary difficulties faced in US.
Ajit Patel
Executive Chairman
30 November 2001
Summarised Consolidated Profit and Loss Account
for the six months ended 30 September 2001
Six months Six months Year
Ended Ended Ended
30 September 30 September 31 March
Notes 2001 2000 2001
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover
Continuing operations 40,282 32,547 70,513
Acquisitions 1 9,720 - -
2 50,002 32,547 70,513
Operating profit/(loss)
Continuing operations 7,576 5,344 12,421
Acquisitions 1 (131) - -
2 7,445 5,344 12,421
The operating profit is stated after charging the following items: -
Research and development expenditure 445 512 1,004
Amortisation of intangible assets 3,906 3,003 6,644
Shares issued at a discount (UITF 17) - 63 124
Net Interest (101) 145 137
Profit on ordinary activities
before taxation 7,344 5,489 12,558
Tax on profit on ordinary activities 3 (2,619) (1,950) (4,572)
Profit on ordinary activities
after taxation 4,725 3,539 7,986
Minority interest (37) - -
Profit for the financial period 4,688 3,539 7,986
Equity dividends 4 (533) (398) (1,249)
Profit Retained for the period 4,155 3,141 6,737
Earnings per share
Basic (pence) 5 12.9 9.8 22.1
Diluted (pence) 5 12.5 9.4 21.2
Dividend per share (pence) 4 1.45 1.10 3.45
Consolidated Balance Sheet as at
30 September 2001
As at As at As at
30 30 31 March
September September
2001 2000 2001
Notes
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Goodwill 6 27,088 28,780 27,328
Other intangible assets 6 30,914 30,437 32,704
Intangible assets 6 58,002 59,217 60,032
Tangible assets 1,929 1,756 1,674
59,931 60,973 61,706
Current assets
Stocks 9,796 6,771 8,201
Debtors 10,443 7,517 7,209
Cash at bank and in hand 2,742 2,535 6,707
22,981 16,823 22,117
Creditors: amounts falling due within
one year (25,649) (27,629) (26,576)
Net current liabilities (2,668) (10,806) (4,459)
Total assets less current liabilities 57,263 50,167 57,247
Creditors: amounts falling due after
more than one year (8,091) (9,745) (12,207)
Provisions for liabilities and charges (2,582) (2,043) (2,487)
46,590 38,379 42,553
Capital and reserves
Share capital 1,837 1,810 1,811
Share premium account 20,931 20,821 20,858
Profit and loss account 23,644 15,748 19,743
Shareholders' funds 46,412 38,379 42,412
Minority interest 178 - 141
Total capital employed 46,590 38,379 42,553
Consolidated Cash Flow Statement for the
six months ended 30 September 2001
Six months Six months Year
Ended Ended Ended
30 September 30 September 31 March
Notes
2001 2000 2001
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Net cash inflow from operating 7 7,786 7,095 17,955
activities
Returns on investments and servicing of
finance
Interest received 101 145 229
Interest paid (202) - (92)
Net cash (outflow)/inflow from returns
on investments and servicing of financing (101) 145 137
Taxation
UK Corporation tax paid (1,665) (145) (2,052)
Capital expenditure and financial
investment
Purchase of intangible fixed assets (6,355) (13,731) (14,329)
Purchase of tangible fixed assets (102) (1,545) (248)
Proceeds on disposal of tangible fixed - - 4
assets
Net cash outflow from capital
expenditure and financial investment (6,457) (15,276) (14,573)
Acquisitions and disposals
Purchase of businesses (5,630) - (8,592)
Equity dividends paid (851) (652) (1,050)
Proceeds of investment by minority - - 141
interest
Net cash outflow before financing (6,918) (8,833) (8,034)
Financing
New bank loan 3,450 - 3,500
Bank loan payments (596) - (165)
Issue of shares 99 15 53
Decrease in cash 9 (3,965) (8,818) (4,646)
Statement of Total Recognised Gains and Losses and Reconciliation of Movements
in Shareholders' Funds for the six months ended 30 September 2001
Six months Six months Year
Ended Ended Ended
30 September 30 September 31 March
Notes
2001 2000 2001
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Profit for the financial period 4,688 3,539 7,986
Currency differences on foreign
currency net Investments 8 (254) 51 389
Total recognised gains and losses for
the period and total gains and losses
recognised since last financial statements 4,434 3,590 8,375
Reconciliation of movements in shareholders' funds
Six months Six months Year
Ended Ended Ended
30 30 31 March
September September
Notes
2001 2000 2001
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Profit for the financial period 4,688 3,539 7,986
Equity dividends (533) (398) (1,249)
Issue of shares 99 15 53
Share option accrued costs - 63 124
Currency difference on foreign currency
net Investments 8 (254) 51 389
Net increase in shareholders' funds 4,000 3,270 7,303
Shareholders' funds at 1 April 2001 42,412 35,109 35,109
Shareholders' funds at 30 September 46,412 38,379 42,412
2001
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Acquisitions
Acquisitions in the period comprise the subsidiary businesses acquired in the
period, namely Changes and PR Nutrition.
2. 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
2001 2000 2001
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover by destination:
United Kingdom 29,821 26,015 53,098
Western Europe excluding the United 2,772 2,455 5,413
Kingdom
North America 14,812 1,763 7,473
Rest of the World 2,597 2,314 4,529
50,002 32,547 70,513
Turnover by origin:
United Kingdom 35,190 30,784 63,040
North America 14,812 1,763 7,473
50,002 32,547 70,513
Operating profit/(loss):
United Kingdom 7,955 5,263 12,692
North America (510) 81 (271)
7,445 5,344 12,421
3. Tax on profit on ordinary activities
The tax charge for the six months has been calculated at an effective rate of
35.7%.
4. Equity dividends
The Directors have declared an interim dividend of 1.45 pence per share (2000/
01 interim dividend: 1.1 pence, 2000/01 final dividend: 2.35 pence). The
dividend will be paid on 21 January 2002 to those shareholders on the Register
on 14 December 2001.
5. Earnings per share
Basic earnings per share Diluted Earnings per share
Earnings attributable Dilutive effect
to ordinary of securities Adjusted
shareholders - share options earnings
6 months to 30 September 2001
Earnings (#000) 4,688 4,688
Weighted average number
of shares ('000) 36,471 1,004 37,475
Per Share amount (pence) 12.9 12.5
6 months to 30 September 2000
Earnings (#000) 3,539 3,539
Weighted average number of
shares ('000) 36,203 1,381 37,584
Per Share amount (pence) 9.8 9.4
12 months to 31 March 2001
Earnings (#000) 7,986 7,986
Weighted average number of
shares ('000) 36,208 1,441 37,649
Per Share amount (pence) 22.1 21.2
6. Intangible fixed assets
Brand names Goodwill Total
know-how
licences and
trade marks
#'000 #'000 #'000
Cost
At 1 April 2001 39,163 32,968 72,131
Additions 330 2,010 2,340
Disposals (100) (43) (143)
Differences on exchange - (512) (512)
At 30 September 2001 39,393 34,423 73,816
Amortisation
At 1 April 2001 6,459 5,640 12,099
Provided for the period 2,040 1,866 3,906
Disposals (20) (9) (29)
Differences on exchange - (162) (162)
At 30 September 2001 8,479 7,335 15,814
Net book amount
At 30 September 2001 30,914 27,088 58,002
Net book amount
At 31 March 2001 32,704 27,328 60,032
7. Net cash inflow from operating activities
Six months Six months Year
Ended Ended Ended
30 30
September September 31 March
Notes
2001 2000 2001
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating profit 7,445 5,344 12,421
Depreciation 394 125 319
Amortisation 3,906 3,003 6,644
Currency differences on foreign
currency net Investments 99 51 398
Profit on disposed of fixed assets
- Intangible - - (233)
-Tangible - - (4)
(Increase) in stocks (491) (1,418) (1,633)
(Increase) in debtors (3,234) (1,108) (800)
(Decrease)/increase in creditors (333) 1,035 719
Share option accrued costs - 63 124
Net cash inflow from operating 7,786 7,095 17,955
activities
8. Currency differences on foreign currency net investments
The #254,000 currency difference on foreign currency net investments relates
to the unrealised loss made on translating the assets and liabilities of the
US subsidiaries at the period-end date (September 2000:51,000 gain).
9. Reconciliation of net cash flow to movement in net funds
Six months Six months Year
Ended Ended Ended
30 30 31 March
September September
Notes
2001 2000 2001
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Decrease in cash for the period (3,965) (8,818) (4,646)
Decrease in financing (2,854) - (3,335)
Changes in net funds arising from (6,819) (8,818) (7,981)
cashflows
Net funds at 31 March 2001 3,372 11,353 11,353
Net (debt)/funds at 30 September 2001 (3,447) 2,535 3,372
10. Preparation of interim statements
The interim financial statements have been prepared in accordance with
applicable accounting standards and under the historical cost convention. The
principal accounting policies of the Group are set out in the Group's 2001
annual report and financial statements. The policies have remained unchanged
from the previous annual report other than from the implementation of FRS19
and deferred taxation. The effects of these changes have not had a significant
impact on the profit for the period or the statement of total recognised gains
and losses.
The interim statements are unaudited but have been reviewed by the auditors.
The comparative figures for the financial year ended 31 March 2001 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 30 November
2001. 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.
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 September 2001 which comprise the Summarised
Consolidated Profit and Loss Account, Consolidated Balance Sheet, Consolidated
Cash Flow Statement, Statement of Total Recognised Gains and Losses,
Reconciliation in Movements in Shareholders Funds and the related notes. We
have read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies
with the financial information.
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 2001.
GRANT THORNTON
CHARTERED ACCOUNTANTS
LONDON
30 November 2001
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