14th Mar 2006 07:03
Medical Solutions PLC14 March 2006 Medical Solutions plc ("Medical Solutions" or "the Group") Settlement of amounts owed to and owed by Welcare Hospital ("Welcare")/Welcare World Health Systems Limited ("Welcare World"; together "Welcare Parties") Medical Solutions (LSE: MLS) today announces that it has reached agreement withWelcare Parties to settle all outstanding deferred consideration owing toWelcare Parties and amounts owing to Medical Solutions by Welcare. In May 2003, Medical Solutions entered into agreements with Welcare, WelcareHospitals Management Company Limited (a pre-cursor company to Welcare World) andMr S Varkey to acquire the Welcare pathology laboratory ("the WelcareLaboratory") and to supply pathology services to Welcare over a 20-year period.The consideration for the transaction comprised an upfront payment of £7 million(made up of £5 million in cash and £2 million in shares in Medical Solutions)together with further deferred consideration of up to £5 million. The deferredconsideration was payable in three annual instalments of £1 million, provided anagreed profit threshold for the Welcare Laboratory was met in each financialyear, together with additional payments of 50% of any excess profit above theagreed threshold in each year, capped at a maximum of £2 million in total. As at 13 March 2006, the total deferred consideration which remained outstandingwas £2.5 million. At the same time, Welcare owed Medical Solutions approximately£0.9 million in respect of the trading activities of the Welcare Laboratory. In full and final settlement of the remaining deferred consideration of £2.5million, Medical Solutions has agreed to transfer a 16.7% equity stake inMedical Solutions FZ LLC, a 100% owned subsidiary of Medical Solutions toWelcare Parties. Medical Solutions FZ LLC carries on the trading of the WelcareLaboratory and acts as the intermediate holding company for the Group's othertrading entities in Dubai, being Histopathology and Speciality Laboratory("HSL"), Specialised Clinical Laboratory ("SCL") (both 100% owned) and DubaiMedical Laboratory ("DML") (80% owned). Medical Solutions FZ LLC and itssubsidiary entities offer a variety of histopathology and general pathologyservices to a wide variety of customers in the United Arab Emirates. Welcarewill pay Medical Solutions the outstanding £0.9 million in cash. The transfer ofshares will need to be ratified by the Dubai Healthcare City authorities. For the year ended 31 December 2005, Medical Solutions FZ LLC generated a netprofit of £1.6 million and had gross assets of £16.4 million (including goodwillof £14.2 million relating to Medical Solutions FZ LLC and its subsidiaryentities). The effect of the transaction will to be increase the Group's cash position by£0.9 million and reduce the Group's liabilities by £2.5 million. The transactionis expected to have a broadly neutral effect upon the Group profit and lossaccount. Upon completion, the profits attributable to equity holders in MedicalSolutions from profits generated by Medical Solutions FZ LLC will be reduced by16.7%. Note: all figures are unaudited. For further information: Medical SolutionsCharles Green/Neil Johnston 0115 973 9010 Bell PottingerGeoff Callow/Chris Hamilton 020 7861 3232 Notes to EditorsMedical Solutions is an international healthcare business, providing specialistdiagnostic pathology and cytology services and products to the healthcare andpharma/biotech sectors. The Group employs advanced technology in image analysisand high throughput quantitative protein expression and biomarker determinationfrom its state of the art reference laboratories in the UK and Dubai This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SBS.L