23rd Oct 2006 07:01
Multi Group PLC23 October 2006 Multi Group Plc ("Multi" or the "Company") Preliminary unaudited results for the 15 month period to 31 March 2006 Highlights: Acquisitions / Disposals - Berry Recruitment Holdings Limited Acquired March '05- Grays Personnel Limited Business and assets acquired June '05- 1st For Locums Limited 90% interest acquired October '05- Global Medics Limited Acquired February '06 "This was the largest acquisition made to date and was intended to be thecornerstone upon which the future development of the Group would be based. Thetransaction was in effect the floatation of Global via Multi." - Berry Recruitment Limited Sold March '06 "At this stage the directors were of the opinion that a solid, profitable, cashgenerative base had been established upon which to continue to develop theGroup." Post period-end announcements: July '06 Global's performance likely to be significantly below expectations. "The immediacy and scale of the underperformance was such that rather thancontributing significantly to the Group's profitability and cash generation ashad been anticipated the acquisition posed a threat to the ongoing viability ofthe Group" October '06 Conditional agreement signed for sale of Global back to original owners. Results: "The £7.88 million provision against the value of goodwill, which is explainedin greater detail in note 4(c) to the preliminary results, has had a majoradverse impact on the reported results for the period." Total turnover £15.98 millionGross profit £4.02 million (25.2%) Operating loss (before depreciation, amortisation and goodwill impairmentprovision) incurred whilst directors continued the assembly of the Group: £780k,which sum includes £158k of costs associated with investigating otheracquisition opportunities. Operating loss (before depreciation and amortisation) associated with thegeneral recruitment business sold in March '06: £459k. Provision made against the carrying value of Global Medics' goodwill: £7.88million. Aggregate reported loss before taxation and minority interests: £9.48 million. Executive Chairman's Statement The period under review has been one of intense activity and the Board hasworked hard to build the Group by completing a number of acquisitions. Despitethis activity, Multi has reported a significant loss for the period which isclearly disappointing. The directors believed that there was considerable scope to build a profitablegroup and to achieve economies from bringing together a number of smalleroperators within the highly fragmented staffing and recruitment industry. Thestrategy was to use Multi as a vehicle to consolidate existing operators withinselected sectors. It was also a part of the strategy to create an efficientcentral back office function, which initially would enable operators withinbusinesses acquired to focus on the generation of new business and would in timeenable the Group to derive benefits from economies of scale. Later the strategy was refined to focus on the specialist health and caresectors which were seen to benefit from positive market forces such as an ageingpopulation within the UK and an increasing public expectation that each yeargreater levels of healthcare and other care services would be delivered to them. In March 2005 the directors announced the Group's first step into therecruitment sector with the acquisition of Berry Recruitment Holdings Limited, aprivate company providing both general staff and of more interest to thedirectors, personnel to the medical and care sectors. In June 2005 the directors announced the acquisition of the business and assetsof Grays Personnel, principally because its four branches were geographicallycomplimentary to and filled gaps in Berry's existing branch network. Thisbusiness was then fully integrated into Berry Recruitment and became a part ofthat business. In October 2005 the directors announced the acquisition of a ninety percentinterest in 1st 4 Locums Limited, trading as The Locum Partnership ("TLP"), withan option to acquire the remaining ten percent on an agreed valuation basis atany time during the next three years. TLP was a private company operating from asingle branch in Ilford, supplying a range of allied health professionals on acontract basis to the NHS and to the private sector. In February 2006 the directors announced the acquisition of Global MedicsLimited, together with its newly acquired subsidiary, Doctors on Call Limited.Global Medics was a private company trading from offices in London and inYorkshire, supplying consultants and senior grade doctors on locum orsubstantive contracts to the NHS and to the private sector. Doctors on Callprovided a similar service and was an approved supplier under the recentlyintroduced National Framework Agreement. Historically both businesses were fastgrowing and highly profitable. This was the largest acquisition made to date andwas intended to be the cornerstone upon which the future development of theGroup would be based. The transaction was in effect the floatation of Global viaMulti and as such involved an even higher degree of scrutiny than usual by allconcerned. In March 2006 the directors announced that the Group had disposed of BerryRecruitment Limited, the Berry Group's loss making general recruitment business,to that company's management team as its continued ownership was not consistentwith the Group's focus on the health and care sectors. The turnover in theperiod attributable to this business was some £8.49 million on which the Companyreported an operating loss before depreciation of £459,000. The enterprise valueof this transaction to Multi was £1.51 million, which figure includes the cashconsideration of £550,000 and the £1.01 million of net debt assumed by thepurchasers. The results for this business are shown under "discontinuedoperations" in the profit and loss account. In addition to the acquisitions made the directors investigated and pursued tovarying degrees a number of other opportunities, including a potential bid for asubstantial IT resourcing services group, which did not come to fruition. As aconsequence of this activity one-off costs amounting to some £158,000 have beenincurred and these have been written off to the profit and loss account in theperiod. At this stage the directors were of the opinion that a solid, profitable, cashgenerative base had been established upon which to continue to develop theGroup. However in July 2006, after the end of the period under review, the directorswere obliged to announce to the London Stock Exchange that it had becomeapparent that Global Medics' performance for the year to March 2007 was likelyto be significantly below the level portrayed to the Company by the GlobalVendors at the time of the Acquisition. It was also announced that JustynRandall, who had been appointed to the Board as Managing Director Medical uponcompletion of the acquisition, had resigned with immediate effect. The immediacyand scale of the underperformance was such that rather than contributingsignificantly to the Group's profitability and cash generation as had beenanticipated the acquisition instead posed a threat to the ongoing viability ofthe Group. Having considered in detail the various commercial and legal options open tothem the Board subsequently concluded that it would be in the best interests ofthe Group if the Global Vendors were to repurchase the entire issued sharecapital of Global Medics together with its various subsidiaries includingDoctors on Call. Terms were then negotiated and agreed with the original vendorsand a circular detailing the terms of the disposal and giving notice of an EGMat which shareholders consent for the disposal will be sought has been sent toshareholders. As a consequence the directors have concluded that the carrying value on theCompany's balance sheet at 31 March 2006 of the goodwill associated with theacquisition of Global Medics should be substantially reduced. The £7.88 million provision against the value of goodwill, which is explained ingreater detail in note 4(c) to the preliminary results, has had a major adverseimpact on the reported results for the period. Within this preliminary announcement shareholders will find a pro-forma balancesheet for the Group as at 31 March 2006 which shows the position as it wouldhave been had the proposed disposal been completed prior to that date. The results for the period under review can be broken into four main parts; theoperating loss incurred as the directors continued the assembly of the Group,the one off costs associated with the investigation of acquisitionopportunities, the losses incurred by the general recruitment business prior toits disposal in March 2006 and the significant provision that has been made toreduce the carrying value of goodwill. Results for the period During the fifteen months to 31 March 2006, with only partial revenuecontributions from companies acquired or sold in the period, the Group reportedturnover of £15.98 million on which it achieved gross profit of £4.02 million or25.2%. Of this £7.48 million relates to the turnover of continuing businesses,including Global, on which it achieved gross profit of £2.02 million or 27%.Comparison with previous years is not considered meaningful as the Company wasthen operating in a different industry sector. The operating loss, prior to depreciation, amortisation and a provision of £7.88million against the carrying value of the goodwill associated with theacquisition of Global Medics Limited, incurred during the period as thedirectors continued the assembly of the Group amounted to £780k.This sumincludes the aggregate cost of £158k of investigating other acquisitionopportunities. The losses, before depreciation and amortisation, associated withthe general recruitment business sold in March 2006 were £459k. Thus inaggregate the Group has reported an operating loss of £9.50 million. FRS 25 Financial Instruments: Disclosure and Presentation In preparing the preliminary announcement the Group has adopted for the firsttime the presentation requirements of FRS 25. The principal impact of this hasbeen for the £2.6 million of preference shares issued to the vendors of GlobalMedics to be shown on the Group's balance sheet under the heading of "Creditors:amounts falling due after more than one year" rather than under Capital andreserves. In addition £700k of contingent consideration payable in equity sharesrelating to the acquisition of TLP has been included within "Creditors: amountsfalling due within one year" rather than under Capital and reserves. On this basis at 31 March 2006 the Group had net assets of £1.34 million. HadFRS 25 not been adopted the net asset position of the Group would have been some£3.3 million higher. Change of accounting reference date Following the disposal of the general recruitment business in March 2006 and theacquisition of Global Medics in February 2006, Multi changed its accountingreference date from 31 December to 31 March. This change was to ensure thatfuture results will more accurately reflect the composition and focus of theGroup. The future Following the severe set back resulting from the acquisition of Global Medicsand to ensure the Group's survival the directors, and in particular the Group'srecently appointed Operations Director Janet Barn, intend to focus on improvingthe performance of the Group's remaining businesses. They will also focus onreducing the Group's central cost base so as to enable Multi to return toprofitability as soon as possible. It is also intended that in due course the role currently fulfilled by theCompany's Executive Chairman will be split into two roles, being those ofChairman and of Chief Executive and that a new Chairman will be appointed to theBoard. Once this has been achieved the directors' focus will turn once again to thedevelopment of the Group. Oliver CookeExecutive Chairman23 October 2006 Pro forma statement of the net assets of the Group at 31 March 2006 The pro forma statement set out below has been prepared for illustrativepurposes only, to provide information about how the proposed disposal of GlobalMedics might have affected the financial information presented. Due to thenature of the pro forma statement it may not give the true picture of what theGroup's financial position would have been if the proposed disposal of GlobalMedics had in fact occurred on 31 March 2006. Unaudited Unaudited Proposed pro forma net net assets as disposal of assets as at 31 at 31 March Global Medics March 2006 2006 £'000 £'000 £'000Fixed assetsIntangible assets 6,277 (828) 5,449Tangible assets 285 (107) 178 6,562 (935) 5,627Current assetsDebtors 2,778 (961) 1,817Cash at bank and in hand 530 302 832 3,308 (659) 2,649 Creditors: amounts falling due within one year (5,836) 2,664 (3,172) Net current liabilities (2,528) 2,105 (523) Total assets less current liabilities 4,034 1,070 5,104 Creditors: amounts falling due after more than oneyear (2,600) 2,600 - Provisions (37) - (37) (2,637) 2,600 (37) Minority interests (55) - (55) Net assets 1,342 3,670 5,012 Notes: 1. The net assets of the Group have been extracted without materialadjustment from the preliminary announcement. 2. The pro forma statement of the Group does not reflect the Group'strading or investment activities in the period since 31 March 2006. 3. The pro forma statement has been prepared on the basis that thedisposal is completed in accordance with the details set out in note 4c to thepreliminary announcement. Consolidated profit and loss accountFor the period ended 31 March 2006 15 months to 31 15 months to 31 15 months to Year ended March 2006 March 2006 31 March 2006 31 December 2004 Continuing Discontinued Operations Operations Total Total Note £'000 £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) (audited) Turnover 7,482 8,497 15,979 5,744Cost of sales 5,461 6,496 11,957 926 Gross profit 2,021 2,001 4,022 4,818Other operating expenses 11,003 2,523 13,526 6,158 Operating loss before goodwillamortisation, goodwill impairmentand depreciation (780) (459) (1,239) (450)Depreciation and amortisation (326) (63) (389) (890)Goodwill impairment (note 4c) (7,876) - (7,876) - Operating loss (8,982) (522) (9,504) (1,340) Profit on disposal of businesses - 3,305 (Loss)/profit on ordinaryactivities before interest (9,504) 1,965Interest receivable and similarincome 146 109Interest payable and similarcharges (121) (38) (Loss)/profit on ordinary (9,479) 2,036activities before taxation Taxation (5) (239) (Loss)/profit on ordinaryactivities after taxation (9,484) 1,797 Minority interests (23) -(Loss)/profit for the financialperiod (9,507) 1,797 (Loss)/earnings per share: Pence PenceFrom continuing and discontinuedoperations- Basic 2 (2.75) 0.69- Diluted 2 (2.75) 0.67From continuing operations- Basic 2 (2.60) 0.92- Diluted 2 (2.60) 0.89 All the above amounts under continuing and discontinued operations relate tooperations acquired in the period. Recognised gains and losses for the periodare wholly represented by the above consolidated profit and loss account. Consolidated balance sheetAt 31 March 2006 31 December 31 December 31 March 2006 31 March 2006 2004 2004 £'000 £'000 £'000 £'000 Note (unaudited) (unaudited) (audited) (audited)Fixed assetsIntangible assets 6,277 -Tangible assets 285 119 6,562 119Current assetsDebtors 2,778 418Cash at bank and in hand 530 5,120 3,308 5,538Creditors: amounts falling due withinone year (5,836) (1,300) Net current (liabilities)/assets (2,528) 4,238 Total assets less current liabilities 4,034 4,357 Creditors: amounts falling due aftermore than one year (2,600) (20) Provisions (37) (35) (2,637) (55) Minority interests (55) - Net assets 1,342 4,302 Capital and reservesCalled up share capital 585 2,541Share premium account 5,682 3,095Capital redemption reserve 2,276 -Merger reserve 800 -Profit and loss account (8,001) (1,334) Shareholders' funds 3 1,342 4,302 Consolidated cash flow statementFor the period ended 31 March 2006 15 months Year ended 31 ended 31 December 2004 March 2006 £'000 £'000 (unaudited) (audited)Reconciliation of operating loss to net cash outflow from operatingactivitiesOperating loss (9,504) (1,340)Depreciation and amortisation charges 389 890Loss on disposal of fixed assets 2 93Goodwill impairment 7,876 -Increase in stocks - (30)(Increase)/decrease in debtors (87) 2,512Increase/(decrease) in creditors and provisions 352 (3,064) Net cash outflow from operating activities (972) (939) Cash flow statementNet cash outflow from operating activities (972) (939)Returns on investments and servicing of finance 25 71Taxation (paid)/recovered (176) 46Capital expenditure and financial investment (136) (977)Acquisitions and disposals (5,887) 7,980 Cash (outflow)/inflow before financing (7,146) 6,181Financing 1,651 (155) (Decrease)/increase in cash in the period/year (5,495) 6,026 Reconciliation of net cash flow to movement in net debt(Decrease)/increase in cash in the period/year (5,495) 6,026Cash (outflow)/inflow from decrease in debt and lease financing - 929 Change in net debt resulting from cash flows (5,495) 6,955Debt issued on acquisition (5,240) -New finance leases - (144) Movement in net debt in the period/year (10,735) 6,811Net funds/(debt) at start of the period/year 5,008 (1,803) Net (debt)/funds at 31 March 2006/31 December 2004 (5,727) 5,008 Notes forming part of the financial statementsFor the period ended 31 March 2006 1 Basis of preparation The preliminary financial information incorporates the unaudited results ofMulti Group PLC and all its subsidiary undertakings for the period ended 31March 2006. The financial information set out in the announcement does not constitute theGroup statutory accounts for the period ended 31 March 2006 or for the yearended 31 December 2004. The financial information for the year ended 31 December2004 is derived from the statutory accounts for that period which have beendelivered to the Registrar of Companies. The auditors reported on thoseaccounts; their report was unqualified and did not contain a statement unders237(2) or (3) Companies Act 1985. The statutory accounts for the period ended31 March 2006 will be finalised on the basis of the financial informationpresented by the directors in this preliminary announcement and will bedelivered to the Registrar of Companies following the Company's annual generalmeeting. The preliminary financial information has been prepared under the accountingpolicies set out in the financial statements for the year ended 31 December2004, except for the following: New accounting pronouncements The Group has adopted for the first time FRS 22 'Earnings per share' and thepresentation requirements of FRS 25 'Financial Instruments: Disclosure andpresentation'. As a consequence of adopting FRS 25, convertible redeemable preference shareshave been classified as a liability as the holder has the option to convert thepreference shares into a variable number of equity shares if they are notredeemed by the redemption date. In addition, contingent consideration payablein equity shares has been classified as a liability as the amount of shares tobe issued is variable. Where the impact is material, these financial liabilities have been discountedto their present value with the discount being unwound over the redemptionperiod as an interest expense. The effect of adopting this accounting policy has no impact on the comparativeinformation as all the relevant instruments were issued in the period. However,had FRS 25 not been adopted, under the Group's previous accounting policy thecurrent period net assets would have been £3,300,000 higher. Going concern On 28 July 2006 the Company announced that it had become apparent that GlobalMedics' performance for the year to March 2007 was likely to be significantlybelow the level portrayed to the Company by the Global Vendors at the time ofthe Acquisition. It was also announced that Justyn Randall, who had beenappointed to the Board as Managing Director Medical upon completion of theacquisition, had resigned with immediate effect. Having considered in detail the various options open to them the Boardsubsequently concluded that it would be in the best interests of the Group ifthe Global Vendors were to repurchase the entire issued share capital of GlobalMedics together with its various subsidiaries including Doctors on Call. Agreement has now been reached for the sale of the entire issued share capitalof Global Medics Limited back to the original vendors and a circular givingdetails of the disposal and seeking their consent has been sent to shareholders. Of the disposal proceeds, the cash element amounts to £520,000 of which £350,000is to be paid on completion with the balance of £170,000 being paid in May 2007.These funds will be used to provide working capital for the remaining Group. At the time of approving the preliminary announcement, the proposed disposal ofGlobal Medics Limited remains subject to shareholder approval. Shouldshareholder approval not be obtained and the disposal not proceed or followingdisposal should trading conditions deteriorate significantly, the Group wouldneed to raise additional working capital in order to fund its operations. As theCompany has received irrevocable undertakings to vote in favour of the disposalfrom certain of its larger shareholders the directors have a reasonableexpectation that the necessary shareholder approval will be obtained. Thedirectors have therefore formed a judgment that it is appropriate to adopt thegoing concern basis in preparing the preliminary announcement. Goodwill Goodwill arising on the acquisition of a subsidiary undertaking is thedifference between the fair value of the consideration payable and the fairvalue of the assets and liabilities acquired. It is capitalised and amortisedthrough the profit and loss account over the directors' estimate of its usefuleconomic life. The Board reviews the amortisation period of goodwill arising oneach acquisition and allocates the most appropriate period based upon theBoard's estimate of the useful life of that acquisition. Impairment tests on thecarrying value of goodwill are undertaken at the end of the first financial yearfollowing acquisition and in other periods if events or circumstances indicatethat the carrying value may not be recoverable. With the exception of Global Medics, where goodwill has been subject to asignificant impairment provision as detailed in note 4c, the goodwill arising inthe period is being amortised evenly over its presumed useful economic life of20 years. Turnover Turnover represents the total amount receivable for the provision of services tocustomers net of value added tax. Income from temporary placements is recognisedat the end of a period of work. Income from permanent placements is recognisedat the point of acceptance by both parties when the Group's contractualobligations have been fulfilled. Invoice discounting The Group operates invoice discounting facilities on its trade debtors. Advancesof between 85% and 90% of the agreed balances can be drawn down in advance.Interest is payable at varying commercial rates on balances drawn. Financial liability and equity Financial liabilities and equity are classified according to the substance ofthe financial instrument's contractual obligations, rather than the financialinstrument's legal form. 2 (Loss)/earnings per share The calculation of (loss)/earnings per share for the period ended 31 March 2006is based on a weighted average number of shares in issue during the year of: Dilutive effect of share options and shares to be issued Basic Diluted 31 March 2006 345,698,375 - 345,698,37531 December 2004 260,192,656 9,300,018 269,492,674 The loan notes, convertible redeemable preference shares and part of thedeferred consideration payable have been excluded from the diluted loss pershare calculation for the period ended 31 March 2006 as they are anti-dilutive. The above same number of shares are used in all of the (loss)/earnings per sharecalculations. 3 Reconciliation of movements in equity shareholders' funds Group Group 15 months to 31 Year ended 31 March 2006 December 2004 £'000 £'000 (unaudited) (audited) (Loss)/profit for the period/year (9,507) 1,797Ordinary shares issued, net of expenses 6,547 150 Net movement in shareholders' funds (2,960) 1,947Opening shareholders' funds 4,302 2,355 Closing shareholders' funds 1,342 4,302 4 Major acquisitions (a) Berry Recruitment Holdings Limited On 30 March 2005 the Group acquired 100% of the issued share capital of BerryRecruitment Holdings Limited ("Berry") for a total potential consideration of£2,275,000 satisfied by an initial issue of 15,000,000 ordinary 0.1p shares at3.5p each and a contingent consideration of potentially 50,000,000 ordinary 0.1pshares at 3.5p. The contingent consideration was dependent on Berry achievingcertain agreed financial performance targets in each of the years ended 31December 2005, 2006 and 2007. As part of the acquisition, £676,577 of Berry'sexisting long term debt was repaid by Multi Group PLC on completion and thebalance, amounting to £1,070,829, was converted to 30,595,114 ordinary 0.1pshares at 3.5p each. Analysis of the acquisition of Berry: Book and fair valueNet assets at date of acquisition: £'000 (unaudited) Tangible fixed assets 127Debtors 1,469Cash 5Invoice discounting facility (1,097)Creditors due within one year (951)Creditors due after more than one year (1,728) Net liabilities (2,175) Goodwill arising on acquisition 3,036 Consideration payable 861 Discharged by:Shares issued 525Costs associated with the acquisition 336 Fair value of consideration payable 861 The contingent consideration has not been included within the above as it wassubsequently waived as part of the Berry Recruitment Limited disposal agreement. (b) 1st 4 Locums Limited On 7 October 2005 the Group acquired 90% of the issued share capital of 1st 4Locums Limited for a total potential consideration of £3,600,000 satisfied by aninitial cash payment of £2,160,000, an initial issue of 9,887,936 ordinary 0.1pshares at 3p each, a contingent cash consideration of £440,000 and a contingentconsideration of shares up to the value of £700,000 at the then market price.The contingent consideration is dependent on 1st 4 Locums Limited achievingcertain agreed financial performance targets in the year ending 30 April 2006. Analysis of the acquisition of 1st 4 Locums Limited: Book and fair valueNet assets at date of acquisition: £'000 (unaudited) Tangible fixed assets 29Debtors 1,018Cash 36Invoice discounting facility (583)Creditors due within one year (187) Net assets 313Minority interests (31)Goodwill arising on acquisition 3,421 Consideration payable 3,703Discharged by:Cash 2,160Shares issued 300Contingent cash 440Contingent shares to be issued 700Costs associated with the acquisition 103 Fair value of consideration payable 3,703 (c) Global Medics Limited On 16 February 2006 the Group acquired 100% of the issued share capital ofGlobal Medics Limited ("Global") for a total potential consideration of£13,700,000 satisfied by initial cash payments of £1,500,000, a deferred cashpayment of £500,000, the issue of 160,000,000 ordinary 0.1p shares at 1.875peach, the issue of 2,600,000 convertible redeemable £1 preference shares at par,loan notes of £1,000,000 and contingent consideration comprising 2,600,000convertible redeemable £1 preference shares and loan notes of £2,500,000. Thecontingent consideration is dependant on Global achieving certain agreedfinancial performance targets in the year ending 31 May 2007. On 28 July 2006, after the period end, the Group issued an announcement that ithad become apparent that Global's financial performance was likely to besignificantly below the level portrayed to the Group by the original Globalshareholders at the time of the acquisition. Having considered in detail the various commercial and legal options availableto them, the Board subsequently concluded that it would be in the best interestof the Group if the original Global shareholders were to repurchase the entireissued share capital of Global Medics Limited. Agreement was subsequentlyreached with the original Global shareholders and a circular has been sent toshareholders seeking their consent for the disposal. A newly formed company controlled by the original Global shareholders is toacquire the share capital of Global Medics Limited for a cash consideration of£520,000, of which £350,000 is to be paid on completion and £170,000 will besatisfied by the issue to Multi of guaranteed loan notes which are repayable nolater than 31 May 2007. In addition, the original Global shareholders will convert the 160,000,000ordinary shares held by them into Deferred Shares; convert the 2,600,000 ofpreference shares held by them into Deferred Shares; waiver their entitlement toreceive the further cash consideration of £500,000; convert the £1,000,000nominal value loan notes held by them into Deferred Shares; and waive all rightsto receive further consideration. The Deferred Shares will have very limited rights rendering them of minimalvalue and it is intended that they will be repurchased by Multi for an aggregateconsideration of £1 and cancelled. The commercial reality of the proposed transaction is that the Group will incura loss comprised of the difference between the cash paid at the time of purchaseand the cash received upon disposal, together with the reduction in the marketvalue of the ordinary shares issued to the vendors as a part of the originalconsideration and the associated transaction costs. However for accounting purposes, the conversion of the £3 million of ordinaryshares, the £2.6 million of preference shares and the capitalisation of the £1million of loan notes into Deferred Shares and their subsequent repurchase andcancellation by the Company are deemed to be of no intrinsic value to the Groupand cannot therefore form part of the disposal proceeds. Thus for accountingpurposes the loss on the proposed transaction will amount to some £7.88 million. As a consequence of the proposed disposal, the carrying value of the investmenthas been written down by £7,876,000 to reflect the value of the considerationdue to be received by the Company and the carrying value of goodwill has beenimpaired by the same amount to reflect the value of the consideration due to bereceived by the Group. Analysis of the acquisition of Global Medics Limited: Book and fair valueNet assets at date of acquisition: £'000 (unaudited) Tangible fixed assets 110Debtors 1,099Cash 117Bank overdraft (272)Creditors due within one year (890) Net assets 164 Goodwill arising on acquisition 8,712 Consideration payable 8,876 Discharged by:Cash 1,500Deferred cash 500Ordinary shares issued 3,000Preference shares issued 2,600Loan notes issued 1,000Costs associated with the acquisition 276 Total consideration payable 8,876 The contingent consideration has not been included within the above analysis asthe directors are of the opinion that the likelihood of this becoming payable isremote. 5 Disposals On 21 March 2006, the Group disposed of 100% of the issued share capital ofBerry Recruitment Limited for a total consideration of £550,000 satisfied by aninitial cash payment of £300,000 and a deferred cash payment of £250,000. The details of the disposal are as follows: £'000 £,000 (unaudited) (unaudited) Cash proceeds 300Deferred cash 250 550Net liabilities disposed of:Tangible fixed assets 110Intangible fixed assets 364Debtors 1,563Bank overdraft and invoice discounting facility (1,012)Creditors (1,291) 266 816Cost of disposal (50)Unamortised goodwill (766) Profit on disposal - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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