Exhibit 99.2
Thames McGurk Ltd
Report of the Directors and
Financial Statements for the year ended 31st March 2006
Thames McGurk Ltd
Contents of the Financial Statements
for the year ended 31st March 2006
Page | ||
Company Information | 1 | |
Report of the Directors | 2 | |
Report of the Independent Auditors | 4 | |
Profit and Loss Account | 5 | |
Balance Sheet | 6 | |
Notes to the Financial Statements | 7 | |
Trading and Profit and Loss Account | 11 |
Thames McGurk Ltd
Company Information
for the year ended 31st March 2006
DIRECTORS: | P J Fraine | |||||
Miss J K Martindale | ||||||
P.E. McGurk | ||||||
Miss A.J. Crisp | ||||||
SECRETARY: | P J Fraine | |||||
REGISTERED OFFICE: | Morley House | |||||
6 Nottingham Street | ||||||
London | ||||||
WIU 5EJ | ||||||
REGISTERED NUMBER: | 2836677 (England and Wales) | |||||
AUDITORS: | Sadofskys, Chartered Accountants | |||||
Princes House | ||||||
Wright Street | ||||||
Hull | ||||||
HU2 8HX |
Page 1
Thames McGurk Ltd
Report of the Directors
for the year ended 31st March 2006
The directors present their report with the financial statements of the company for the year ended 31st March 2006.
PRINCIPAL ACTIVITY
The principal activity of the company in the year under review was that of design and artwork studio.
DIRECTORS
The directors during the year under review were:
P J Fraine | ||||
Miss J K Martindale | ||||
P.E. McGurk | ||||
S. J. Marginson FCA | - resigned 6/7/05 | |||
Miss A.J. Crisp |
The beneficial interests of the directors holding office on 31st March 2006 in the issued share capital of the company were as follows:
31/3/06 | 1/4/05 | |||
Ordinary £1 shares | ||||
P J Fraine | 33 | 33 | ||
Miss J K Martindale | 33 | 33 | ||
P.E. McGurk | — | — | ||
Miss A.J. Crisp | 1 | 1 |
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to
• | select suitable accounting policies and then apply them consistently; |
• | make judgements and estimates that are reasonable and prudent; |
• | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit information (as defined by Section 234ZA of the Companies Act 1985) of which the company’s auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company’s auditors are aware of that information.
AUDITORS
The auditors, Sadofskys, Chartered Accountants, will be proposed for re-appointment in accordance with Section 385 of the Companies Act 1985.
Page 2
Thames McGurk Ltd
Report of the Directors
for the year ended 31st March 2006
This report has been prepared in accordance with the special provisions of Part VII of the Companies Act 1985 relating to small companies.
ON BEHALF OF THE BOARD:
P J Fraine - Secretary
31st August 2006
Page 3
Report to the Shareholders of
Thames McGurk Limited
We have examined the financial statements of Thames McGurk Limited for the year ended 31st March 2006 on pages five to ten. These financial statements have been prepared in accordance with the accounting policies set out therein and the requirements of the Financial Reporting Standard for Smaller Entities (effective January 2005).
This report is made solely to the company’s members, as a body. Our work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors’ 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 and the company’s members as a body, for our work, for this report, or for the opinions we have formed.
Respective responsibilities
The directors’ responsibilities for preparing the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out on page two.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Report of the Directors is consistent with the financial statements.
In addition, we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our work, or if information specified by law regarding directors’ remuneration and other transactions is not disclosed.
We read the Report of the Directors and consider the implications for our report if we become aware of any apparent misstatements within it.
Basis of opinion
We conducted our work in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board other than as referred to below. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. The scope of our work was limited in that it was based primarily upon enquiry, analytical procedures and assessing accounting policies in accordance with Generally Accepted Accounting Practice in the UK and the Financial Reporting Standard for Smaller Entities. We also carried out detailed verification work on individual balance sheet and profit and loss items and disclosures in the financial statements to ensure that there was no risk of material misstatement. We have not evaluated the company’s control procedures.
Subject to the above, we planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
• | the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities, of the state of the company’s affairs as at 31st March 2006 and of its loss for the year then ended; |
• | the financial statements have been properly prepared in accordance with the Companies Act 1985; and |
• | the information given in the Report of the Directors is consistent with the financial statements. |
Emphasis of matter
We would further draw attention to the items set out on page 12.
Sadofskys Chartered Accountants
Registered Auditors
Princes House
Wright Street
Hull
HU2 8HX
5th February 2007
Page 4
Thames McGurk Ltd
Profit and Loss Account
for the year ended 31st March 2006
31/3/06 | 31/3/05 | |||||
Notes | £ | £ | ||||
TURNOVER | 2 | 1,980,260 | 1,394,667 | |||
Cost of sales | 1,110,141 | 702,914 | ||||
GROSS PROFIT | 870,119 | 691,753 | ||||
Administrative expenses | 692,448 | 461,288 | ||||
OPERATING PROFIT | 3 | 177,671 | 230,465 | |||
Interest receivable and similar income | 515 | 576 | ||||
178,186 | 231,041 | |||||
Interest payable and similar charges | 1,160 | — | ||||
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION | 177,026 | 231,041 | ||||
Tax on profit on ordinary activities | 4 | 32,242 | 43,422 | |||
PROFIT FOR THE FINANCIAL YEAR AFTER TAXATION | 144,784 | 187,619 | ||||
The notes form part of these financial statements
Page 5
Thames McGurk Ltd
Balance Sheet
31st March 2006
31/3/06 | 31/3/05 | |||||||||||
Notes | £ | £ | £ | £ | ||||||||
FIXED ASSETS | ||||||||||||
Tangible assets | 6 | 158,308 | 101,877 | |||||||||
CURRENT ASSETS | ||||||||||||
Debtors | 7 | 457,340 | 312,735 | |||||||||
Cash in hand | 2,072 | 94 | ||||||||||
459,412 | 312,829 | |||||||||||
CREDITORS | ||||||||||||
Amounts falling due within one year | 8 | 592,375 | 383,188 | |||||||||
NET CURRENT LIABILITIES | (132,963 | ) | (70,359 | ) | ||||||||
TOTAL ASSETS LESS CURRENT LIABILITIES | 25,345 | 31,518 | ||||||||||
CREDITORS | ||||||||||||
Amounts falling due after more than one year | 9 | (12,930 | ) | — | ||||||||
PROVISIONS FOR LIABILITIES | 11 | (10,913 | ) | (10,300 | ) | |||||||
NET ASSETS | 1,502 | 21,218 | ||||||||||
CAPITAL AND RESERVES | ||||||||||||
Called up share capital | 12 | 100 | 100 | |||||||||
Profit and loss account | 13 | 1,402 | 21,118 | |||||||||
SHAREHOLDERS’ FUNDS | 1,502 | 21,218 | ||||||||||
These financial statements have been prepared in accordance with the special provisions of Part VII of the Companies Act 1985 relating to small companies and with the Financial Reporting Standard for Smaller Entities (effective January 2005).
The financial statements were approved by the Board of Directors on 31st August 2006 and were signed on its behalf by:
P.E. McGurk - Director
P J Fraine - Director
The notes form part of these financial statements
Page 6
Thames McGurk Ltd
Notes to the Financial Statements
for the year ended 31st March 2006
1. | ACCOUNTING POLICIES |
Accounting convention
The financial statements have been prepared under the historical cost convention and in accordance with the Financial Reporting Standard for Smaller Entities (effective January 2005).
Turnover
Turnover represents net invoiced sales of goods, excluding value added tax.
Tangible fixed assets
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.
Plant and machinery etc | - 25% on reducing balance |
Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.
Hire purchase and leasing commitments
Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.
The interest element of these obligations is charged to the profit and loss account over the relevant period. The capital element of the future payments is treated as a liability.
Rentals paid under operating leases are charged to the profit and loss account on a straight line basis over the period of the lease.
Pensions
The company operates a defined contribution pension scheme. Contributions payable for the year are charged in the profit and loss account.
2. | TURNOVER |
The turnover and profit before taxation are attributable to the one principal activity of the company. An analysis of turnover by geographical market is given below:
31/3/06 | 31/3/05 | |||
United Kingdom | 97.06% | 100.00% | ||
Asia | 2.94% | 0.00% | ||
100.00% | 100.00% | |||
Page 7 | continued... |
Thames McGurk Ltd
Notes to the Financial Satements - continued
for the year ended 31st March 2006
3. | OPERATING PROFIT |
The operating profit is stated after charging:
31/3/06 | 31/3/05 | |||
£ | £ | |||
Depreciation - owned assets | 45,850 | 33,959 | ||
Depreciation - assets on hire purchase contracts | 442 | — | ||
Pension costs | 15,000 | 7,728 | ||
Directors’ emoluments and other benefits etc | 193,801 | 183,418 | ||
4. | TAXATION |
Analysis of the tax charge
The tax charge on the profit on ordinary activities for the year was as follows:
31/3/06 | 31/3/05 | ||||
£ | £ | ||||
Current tax: | |||||
UK corporation tax | 36,844 | 43,422 | |||
Tax adjustment prior year | (5,215 | ) | — | ||
Total current tax | 31,629 | 43,422 | |||
Deferred tax | 613 | — | |||
Tax on profit on ordinary activities | 32,242 | 43,422 | |||
5. | DIVIDENDS |
31/3/06 | 31/3/05 | |||
£ | £ | |||
Ordinary shares of £1 each | ||||
Interim | 164,500 | 170,000 | ||
Page 8 | continued... |
Thames McGurk Ltd
Notes to the Financial Staments - continued
for the year ended 31st March 2006
6. | TANGIBLE FIXED ASSETS |
Plant and machinery | Motor vehicles | Totals | ||||||
£ | £ | £ | ||||||
COST | ||||||||
At 1st April 2005 | 233,586 | 16,197 | 249,783 | |||||
Additions | 82,308 | 21,200 | 103,508 | |||||
Disposals | (784 | ) | — | (784 | ) | |||
At 31st March 2006 | 315,110 | 37,397 | 352,507 | |||||
DEPRECIATION | ||||||||
At 1st April 2005 | 133,731 | 14,176 | 147,907 | |||||
Charge for year | 45,345 | 947 | 46,292 | |||||
At 31st March 2006 | 179,076 | 15,123 | 194,199 | |||||
NET BOOK VALUE | ||||||||
At 31st March 2006 | 136,034 | 22,274 | 158,308 | |||||
At 31st March 2005 | 99,855 | 2,021 | 101,876 | |||||
The net book value of tangible fixed assets includes £20,758 in respect of assets held under hire purchase contracts.
7. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31/3/06 | 31/3/05 | |||
£ | £ | |||
Trade debtors | 438,823 | 300,593 | ||
Other debtors | 12,142 | 12,142 | ||
Prepayments and accrued income | 6,375 | — | ||
457,340 | 312,735 | |||
8. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31/3/06 | 31/3/05 | |||
£ | £ | |||
Bank loans and overdrafts | 41,539 | 59,281 | ||
Hire purchase contracts | 3,214 | — | ||
Trade creditors | 163,809 | 48,965 | ||
Tax | 36,844 | 48,637 | ||
Social security and other taxes | 66,186 | 44,077 | ||
Other creditors | 280,000 | 180,650 | ||
Accrued expenses | 783 | 1,578 | ||
592,375 | 383,188 | |||
9. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
31/3/06 | 31/3/05 | |||
£ | £ | |||
Hire purchase contracts | 12,930 | — | ||
Page 9 | continued... |
Thames McGurk Ltd
Notes to the Financial Statements - continued
for the year ended 31st March 2006
10. | SECURED DEBTS |
The following secured debts are included within creditors:
31/3/06 | 31/3/05 | |||
£ | £ | |||
Bank overdraft | 7,708 | — | ||
Hire purchase contracts | 16,144 | — | ||
23,852 | — | |||
11. | PROVISIONS FOR LIABILITIES |
31/3/06 | 31/3/05 | |||
£ | £ | |||
Deferred tax | 10,913 | 10,300 | ||
Deferred tax | ||||
£ | ||||
Balance at 1st April 2005 | 10,300 | |||
Deferred tax movement | 613 | |||
Balance at 31st March 2006 | 10,913 | |||
12. | CALLED UP SHARE CAPITAL |
Authorised: | ||||||||
Number: | Class: | Nominal | 31/3/06 | 31/3/05 | ||||
value: | £ | £ | ||||||
1,000 | Ordinary | £1 | 1,000 | 1.000 | ||||
Allotted, issued and fully paid: | ||||||||
Number: | Class: | Nominal | 31/3/06 | 31/3/05 | ||||
value: | £ | £ | ||||||
100 | Ordinary | £1 | 100 | 100 | ||||
13. | RESERVES |
Profit and loss | |||
£ | |||
At 1st April 2005 | 21,118 | ||
Profit for the year | 144,784 | ||
Dividends | (164,500 | ) | |
At 31st March 2006 | 1,402 | ||
Page 10
Thames McGurk Ltd
Trading and Profit and Loss Account
for the year ended 31st March 2006
31/3/06 | 31/3/05 | |||||||
£ | £ | £ | £ | |||||
Sales | 1,980,260 | 1,394,667 | ||||||
Cost of sales | ||||||||
Purchases | 522,668 | 359,175 | ||||||
Wages | 587,473 | 343,739 | ||||||
1,110,141 | 702,914 | |||||||
GROSS PROFIT | 870,119 | 691,753 | ||||||
Other income | ||||||||
Deposit account interest | 515 | 576 | ||||||
870,634 | 692,329 | |||||||
Expenditure | ||||||||
Rent | 82,453 | 31,428 | ||||||
Light and heat | 4,133 | 1,257 | ||||||
Directors’ salaries | 189,583 | 183,418 | ||||||
Directors’ social security | 22,386 | — | ||||||
Directors’ pension contributions | 15,000 | 7,650 | ||||||
Pensions | — | 78 | ||||||
Other operating leases | 13,372 | 14,026 | ||||||
Telephone | 46,480 | 25,126 | ||||||
Post and stationery | 47,967 | 41,515 | ||||||
Advertising | 340 | 8,120 | ||||||
Motor expenses | 96,586 | 53,308 | ||||||
Carriage | 11,624 | 4,839 | ||||||
Staff welfare | 2,067 | 3,389 | ||||||
Insurance | 16,264 | 4,965 | ||||||
Repairs and renewals | 9,841 | 14,138 | ||||||
Entertainment | 17,619 | 15,088 | ||||||
Cleaning | 1,564 | 278 | ||||||
Sundry expenses | 1,332 | 50 | ||||||
Accountancy | 19,513 | 14,083 | ||||||
Legal fees | 36,584 | 2,545 | ||||||
Bad debts | 6,508 | — | ||||||
Bank charges | 4,940 | 2,028 | ||||||
Bank interest | 2 | — | ||||||
Bank loan interest | 1,158 | — | ||||||
Plant and machinery | 45,345 | 33,285 | ||||||
Motor vehicles | 947 | 674 | ||||||
693,608 | 461,288 | |||||||
NET PROFIT | 177,026 | 231,041 | ||||||
This page does not form part of the statutory financial statements
Page 11
Thames McGurk Limited
Summary of potential adjustments not reflected in the accounts on pages 5 to 11
Details | Profit Effect | ||
£ | |||
Hong Kong wages payment not posted | (3,268 | ) | |
Remove internet expenses behind fixed assets | (3,831 | ) | |
Adjust depreciation in respect of the above | 958 | ||
SMP adjustment to closing creditor | (378 | ) | |
Bad debts to write off | (12,089 | ) | |
Provision for post year end credit notes | (22,147 | ) | |
Provision for post year end purchase invoices | (29,763 | ) | |
Hong Kong auditors fees | (1,379 | ) | |
Post year end purchase invoices 2005 | 18,421 | ||
Total profit effect | (53,476 | ) | |
This page does not form part of the statutory financial statements
Page 12