22nd Dec 2006 10:49
Multi Group PLC22 December 2006 Multi Group Plc Interim results for six months ended 30 September 2006 Chairman's Statement At the start of the period under review the directors were of the opinion thatthe acquisitions made to date had created a solid, profitable, cash generativebase upon which to continue the development of the Group. However in July we were obliged to announce to the London Stock Exchange that ithad become apparent that the performance of Global Medics, the most recent andthe largest acquisition made to date, for the year to March 2007 was likely tobe significantly below the level portrayed to the Company by the vendors at thetime of the acquisition. The immediacy and scale of the underperformance wassuch that rather than contributing significantly to the Group's profitabilityand cash generation as had been anticipated the acquisition instead posed athreat to the ongoing viability of the Group. Consequently the resolution ofthis situation became the directors' prime focus during the remainder of theperiod. Having taken advice and considered the various commercial and legal options opento them the board concluded that the least damaging option was to sell thisbusiness back to the original vendors as this would release the Group from whathad then become onerous future obligations. This transaction was completed inNovember and the interim results have been adversely impacted by the losses madeby this business during the period as well as by £298k of provisions for certaincosts associated with its acquisition and the costs associated with itsdisposal. Having become aware of the Global Medics situation the Company was obliged toimmediately withdraw from the acquisition of another business. This transactionwas at an advanced stage and as a consequence the Company incurred some £52k ofcosts which have been written off to the profit and loss account in the period. Results for the period During the six months to 30 September 2006, the Group reported turnover of £7.56million (2005: £5.98 million) on which it achieved gross profit of £1.82 millionor 24.1% (2005: £1.59 million, 26.6%). Of this turnover, £4.18 million relatedto continuing operations on which it achieved gross profit of £1.06 million or25.4%. The operating loss, prior to depreciation, amortisation and one off costsincurred during the period amounted to £269k (2005: £556k). The reported lossbefore taxation was £943k (2005: £778k). FRS 25 Financial Instruments: Disclosure and Presentation In preparing the unaudited interim accounts the Group has applied thepresentational requirements of FRS 25 which it did for the first time in theaudited accounts for the fifteen month period to 31 March 2006. The principalimpact of this has been for the £2.6 million of preference shares issued to thevendors of Global Medics as a part of the initial consideration to be shown onthe Group's balance sheet under the heading of "Creditors: amounts falling dueafter more than one year" rather than under Capital and Reserves. In addition£700k of contingent consideration payable in equity shares to the vendors of 1st4 Locums Limited (TLP) has been included within "Creditors: amounts falling duewithin one year" rather than under Capital and Reserves. On this basis at 30 September 2006 the Group had net assets of £385k. Withoutthe impact of FRS 25 the net asset position of the Group would have been some£3.3 million higher. On 12 December agreement was reached with the vendors of TLP regarding theirentitlement to receive additional consideration based upon the performance ofthat business during the 12 months to April 2006. The Company has agreed to paythem additional consideration of £650,000 to be satisfied in full by the issueto them of 65 million new ordinary shares in Multi of 0.1p each at an issueprice of 1p per share. At the same time agreement was reached for Multi to acquire the remaining 10% ofthe equity of that company held by them for an aggregate consideration of£50,000 to be satisfied in full by the issue to them of a further 5 million newordinary shares in Multi of 0.1p each at an issue price of 1p per share. On 19 December 2006, after the balance sheet date, the Company raised anadditional £250,000 of working capital through a placing of 50 million newordinary shares of 0.1p each with Southwind Ltd at an issue price of 0.5p pershare. The group's balance sheet as at 30 September 2006 is shown after the pro-formastatement of net assets for the Group as at 30 September 2006. This is detailedbelow and shows the position as it would have been had the disposal of GlobalMedics, the subscription for shares by Southwind, the settlement of the TLPdeferred consideration and the acquisition of the final 10% of TLP all havetaken place by that date. The future Having now resolved the principal issues that resulted from the acquisition ofGlobal Medics, the directors' focus is on improving the performance of theGroup's remaining businesses, on reducing the central cost base and on buildingcritical mass through further acquisitions which will enable the Group to returnto profitability as soon as possible. Oliver CookeExecutive Chairman21 December 2006 Pro Forma Statement Of The Net Assets Of The Group At 30 September 2006 The pro forma statement set out below has been prepared for illustrativepurposes only, to provide information about how the disposal of Global Medics,the subscription for shares by Southwind, the settlement of the TLP deferredconsideration and the acquisition of the final 10% of TLP would have impactedthe net assets had they in fact occurred prior to 30 September 2006. 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 post balance sheet events hadin fact occurred on 30 September 2006. Unaudited net Unaudited assets as at 30 Impact of post pro forma net September 2006 balance sheet assets as at 30 events September 2006 £'000 £'000 £'000Fixed assetsIntangible assets 6,164 (1,349) 4,815Tangible assets 362 (97) 265 6,526 (1,446) 5,080Current assetsDebtors 2,872 (1,158) 1,714Cash at bank and in hand 250 616 866 3,122 (542) 2,580 Creditors: amounts falling due within one year (6,557) 4,033 (2,524) Net current (liabilities)/assets (3,435) 3,491 56 Total assets less current liabilities 3,091 2,045 5,136 Creditors: amounts falling due after more than oneyear (2,600) 2,600 - Provisions (37) - (37) (2,637) 2,600 (37) Minority interests (69) 69 - Net assets 385 4,714 5,099 Notes: 1. The net assets of the Group have been extracted without material adjustment from the unaudited interim report. 2. The pro forma statement of the Group does not reflect the Group's trading or investment activities in the period since 30 September 2006. 3. The pro forma statement has been prepared in accordance with the details set out in note 5 to the interim report. Consolidated Profit And Loss Account For the period ended 30 September 2006 Six months ended Six months ended Fifteen months 30 September 2006 30 September ended 31 2005 March (unaudited) (unaudited) 2006 (audited) Note £'000 £'000 £'000 Turnover - continuing 4,178 1,885 6,845 - discontinued 3,383 4,090 9,134 7,561 5,975 15,979Cost of sales 5,745 4,386 11,957 Gross profit 1,816 1,589 4,022 Selling and distribution costs 1,346 1,270 3,151Administrative expenses 1,343 1,124 10,375 Operating loss before depreciation,amortisation and goodwill impairment (269) (556) (1,081)Abortive acquisition and restructuring costs (350) (82) (158)Depreciation and amortisation (254) (167) (389)Goodwill impairment - - (7,876) Operating loss - continuing (766) (435) (8,939) - discontinued (107) (370) (565) (873) (805) (9,504)Interest receivable and similar income 2 77 146Interest payable and similar charges (72) (50) (121) Loss on ordinary activities before taxation (943) (778) (9,479)Taxation - - (5) Loss on ordinary activities after taxation (943) (778) (9,484)Minority interests (14) - (23) Loss for the financial period (957) (778) (9,507) Loss per share:- Basic 3 (0.16)p (0.25)p (2.75)p- Diluted 3 (0.16)p (0.25)p (2.75)p Recognised gains and losses for the above periods are wholly represented by theabove consolidated profit and loss account. Consolidated Balance SheetAt 30 September 2006 As at 30 September As at 30 As at 31 March 2006 September 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000Fixed assetsIntangible assets 6,164 4,937 6,277Tangible assets 362 270 285Investments - 300 - 6,526 5,507 6,562Current assetsDebtors 2,872 2,093 2,778Cash at bank and in hand 250 2,764 530 3,122 4,857 3,308 Creditors: amounts falling due within one year (6,557) (4,626) (5,836) Net current (liabilities)/assets (3,435) 231 (2,528) Total assets less current liabilities 3,091 5,738 4,034Creditors: amounts falling due after more thanone year (2,600) (700) (2,600) Provisions (37) (37) (37) 454 5,001 1,397 Minority interests (69) - (55) Net assets 385 5,001 1,342 Capital and reservesCalled up share capital 585 315 585Share premium account 5,682 4,650 5,682Capital redemption reserve 2,276 2,276 2,276Merger reserve 800 - 800Profit and loss account (8,958) (2,240) (8,001) Shareholders' funds 385 5,001 1,342 Consolidated Cash Flow StatementFor The Period Ended 30 September 2006 Six months ended Six months ended Fifteen months 30 September 2006 30 September ended 31 March 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000Reconciliation of operating loss to net cash outflowfrom operating activitiesOperating loss (873) (805) (9,504)Depreciation and amortisation charges 254 167 389Loss on disposal of fixed assets - - 2Goodwill impairment - - 7,876Increase in debtors (93) (266) (87)Increase in creditors 389 (256) 352 Net cash outflow from operating activities (323) (1,160) (972) Consolidated cash flow statementNet cash outflow from operating activities (323) (1,160) (972)Returns on investments and servicing of finance (70) 27 25Taxation paid (208) - (176)Capital expenditure (132) (386) (136)Acquisitions and disposals (86) (386) (5,887) Cash outflow before financing (819) (1,905) (7,146)Financing 9 (3) 1,651 Decrease in cash in the period (810) (1,908) (5,495) Reconciliation of net cash outflow to (increase)/decrease in net debtDecrease in cash in the period (810) (1,908) (5,495)Cash outflow from decrease in debt and leasefinancing - 3 - Change in net debt resulting from cash flows (810) (1,905) (5,495)Debt issued on acquisition - - (5,240)New finance leases (9) - - Movement in net debt (819) (1,905) (10,735)Net (debt)/funds at start of the period (5,727) 2,985 5,008 Net (debt)/funds at end of period (6,546) 1,080 (5,727) Notes Forming Part Of The Financial InformationFor The Period Ended 30 September 2006 1 Accounting periods The accounting reference date of the Group is 31 March. The current interimresults are for the six months ended 30 September 2006. The comparative period'sresults are for the fifteen months ended 31 March 2006.The comparative interimresults are for the six months ended 30 September 2005. The financial information for the periods ended 30 September 2006 and 30September 2005 are unaudited. The comparatives for the fifteen months ended 31March 2006 are not the full statutory accounts for that period. A copy of thestatutory accounts for that period has been delivered to the Registrar ofCompanies. The auditors' report on those accounts was unqualified and did notcontain a statement under section 237(2)-(3) of the Companies Act 1985. 2 Financial information The interim financial information for the six months ended 30 September 2006does not constitute statutory accounts as defined in Section 240 of theCompanies Act 1985. The interim financial information has been prepared on thebasis of the accounting policies set out in the Annual Report for the periodended 31 March 2006, with the exception of: Share options - The Group has adopted FRS 20 "Share based payment" during theperiod. FRS 20 requires share based payments to be fair valued at the date ofgrant and charged to the profit and loss account over the vesting period of theoption. In accordance with the transitional provisions of FRS 20, the standardwas applied retrospectively to all grants of share options after 7 November 2002that had not vested by 1 April 2006, being the 500,000 of share options grantedon 8 November 2004. Having performed the necessary calculations, in the opinionof the directors, the charge required in respect of options granted by thecompany is not material and thus no adjustment has been made. 3 Loss per share The calculation of loss per share for the period ended 30 September 2006 isbased on a loss after taxation and minority interests of £957,000 (2005 interim:loss of £778,000, 2006 final: loss of £9,507,000). The calculation of the loss per share for each period is based on a weightedaverage number of shares in issue during that period of: Dilutive effect of potential shares Basic Diluted 30 September 2006 584,704,820 - 584,704,82030 September 2005 314,816,884 - 314,816,88431 March 2006 345,698,375 - 345,698,375 Additional disclosure is given below in respect of basic loss per share beforedepreciation, amortisation and goodwill impairment, as the directors believethis gives a more accurate presentation of maintainable earnings. Six months ended 30 Six months ended 30 Fifteen months September 2006 September ended 31 March (unaudited) 2005 2006 (unaudited) (audited) Pence Pence Pence Basic and diluted loss per share (0.16) (0.25) (2.75)Depreciation, amortisation and goodwillimpairment 0.04 0.06 2.39 Basic and diluted loss per share beforedepreciation, amortisation and goodwillimpairment (0.12) (0.19) (0.36) 4 Post balance sheet events On 14 November 2006, the Company completed the sale of the entire issued sharecapital of Global Medics Limited to that company's original shareholders. Underthe terms of the sale, Multi will receive cash consideration of £520,000, ofwhich £350,000 was received on completion and a further £170,000 is receivableon or before 31 May 2007. In addition, as part of the terms of the sale, theoriginal shareholders of Global Medics: • waived their entitlement to receive further cash consideration of £500,000 due to them under the original acquisition agreement; • converted their 160,000,000 ordinary shares of 0.1p each in Multi into deferred shares; • converted their 2,600,000 of convertible redeemable preference shares of £1 each in Multi into deferred shares; • converted their £1,000,000 nominal value loan notes issued by Multi into deferred shares; • waived all rights to further consideration and all other rights against the Company resulting from the original acquisition of Global Medics Limited. Immediately following completion, the Company bought back all of the deferredshares then held by the original shareholders of Global Medics for an aggregateconsideration of £1. These shares were then cancelled. On 12 December the Company agreed to pay £650k to the vendors of TLP insettlement of all contingent performance related consideration due to them. Thiswas settled by the issue to them of 65 million new ordinary shares of 0.1 penceeach at an issue price of 1 pence per share. Also on 12 December the Company also agreed to acquire the remaining 10% ofTLP's equity held by the original vendors for a consideration of £50k. This wassettled by the issue to them of a further 5 million new ordinary shares of 0.1pence each at an issue price of 1 pence per share. On 19 December the Company raised an additional £250,000 of working capitalthrough a placing to Southwind Limited of 50 million new ordinary shares in theCompany of 0.1 pence each at an issue price of 0.50 pence per share. Independent review report Introduction We have been instructed by the company to review the financial information forthe six month period ended 30 September 2006 which comprises the consolidatedprofit and loss account, the consolidated balance sheet, the consolidated cashflow statement and the related notes. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. Our report has been prepared in accordance with the terms of our engagement toassist the company in meeting the requirements of the rules of the London StockExchange for companies trading securities on the Alternative Investment Marketand for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely upon this report by virtue of and forthe purpose of our terms of engagement or has been expressly authorised to do soby our prior written consent. Save as above, we do not accept responsibility forthis report to any other person or for any other purpose and we hereby expresslydisclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the rules of theLondon Stock Exchange for companies trading securities on the AlternativeInvestment Market which require that the half-yearly report be presented andprepared in a form consistent with that which will be adopted in the company'sannual accounts having regard to the accounting standards applicable to suchannual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom by auditorsof fully listed companies. A review consists principally of making enquiries ofgroup management and applying analytical procedures to the financial informationand underlying financial data and based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly we do not express an auditopinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthperiod ended 30 September 2006. BDO Stoy Hayward LLPChartered AccountantsEpsom, Surrey 21 December 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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