EXHIBIT 99.1
DAXBOURNE LIMITED
FINANCIAL STATEMENTS
30/TH/ APRIL 1997
Company Registration Number 1320298
F.L.R. LININGTON FAPA, ATII
----------------------------
Registered Auditor
83 High Street
Caterham
Surrey CR3 5UF
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
FINANCIAL ACCOUNTS
FOR THE YEAR ENDED 30/TH/ APRIL 1997
CONTENTS
1. & 2. Report of the Director
Statement of Director's Responsibilities
3. Report of the Auditor to the Shareholders
4. Consolidated Profit and Loss Account
5. Consolidated Balance Sheet
6. Balance Sheet
7. Consolidated Cash Flow Statement
8. Notes to the Accounts
DAXBOURNE LIMITED
DIRECTOR'S REPORT FOR THE YEAR ENDED 30/TH/ APRIL 1997
The Director has pleasure in submitting the Annual Report and Financial
Statements for the year ended 30/th/ April 1997.
RESULTS AND DIVIDEND
- --------------------
The Results of the year are stated in the Financial Statements. A dividend of
(Pounds)160 per share was paid during the year.
ACTIVITIES
- ----------
The activities of the Group are of importing and distributing a range of
products.
FIXED ASSETS
- ------------
Information relating to changes in Tangible Fixed Assets is given in Note 7 to
the Financial Statements.
CHARITABLE AND POLITICAL CONTRIBUTIONS
- --------------------------------------
During the year the Company made no political contributions (1996 -
(Pounds)nil). Donations to the U.K. Charities amounted to Nil (1996 -
(Pounds)350).
DIRECTOR
- --------
The Director of the Company during the year, together with his shareholdings,
was as follows:
30.4.97 30.4.96
------- -------
M.J. STANNARD 500 500
TAX STATUS
- ----------
The Director is of the Opinion that the Company is a close Company as defined by
the S414 Income and Corporation Taxes Act 1988.
DIRECTORS RESPONSIBILITIES
- --------------------------
Company law requires the director to prepare financial statements for each
financial year which give true and fair view of the state of affairs of the
company at the end of the year and of the profit and loss for the year ended.
In preparing those financial statements, the director is required to select
suitable accounting policies, as described on page 8, and then apply them on a
consistent basis, making judgements and estimates that are prudent and
reasonable. The director must also prepare the financial statements on the
going concern basis unless it is inappropriate to presume that the company will
continue in business.
The director is responsible for keeping proper accounting records which disclose
with reasonable accuracy at any time the financial position of the company and
enable him to ensure that the financial statements comply with the
1
DAXBOURNE LIMITED
DIRECTOR'S REPORT FOR THE YEAR ENDED 30/TH/ APRIL 1997
(CONTINUED)
Companies Act 1985. The director is 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.
POST BALANCE SHEET EVENT
- ------------------------
There have been significant events which have occurred since the year end and
these are covered in note 19 of the financial statements.
AUDITOR
- -------
A resolution to re-appoint F.L.R. Linnington FAPA ATII, as auditor for the
ensuing year will be proposed at the annual general meeting in accordance with
section 385 of the Companies Act 1985.
Registered Office: Signed on behalf of the Director
9 Fenning Street
London
SE1 9QR /s/ R R Searle
--------------------------
R R Searle
Company Secretary
Approved by the director on 5/th/ September 1997
2
REPORT OF THE AUDITOR TO THE MEMBERS OF
DAXBOURNE LIMITED
I have audited the Financial Statements on pages 4 to 14 in accordance with
approved auditing standards.
RESPECTIVE RESPONSIBILITIES OF DIRECTOR AND AUDITOR
As described in the director's report, the director of the company is
responsible for the preparation of financial accounts. It is my responsibility
to form an independent opinion, based on my audit, on those statements and to
report my opinion to you.
BASIS OF OPINION
I conducted my audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial accounts. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial accounts, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
I planned and performed my audit so as to obtain all the information and
explanations which I considered necessary in order to provide me with sufficient
evidence to give reasonable assurance that the financial accounts are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming my opinion I also evaluated the overall adequacy of the presentation
of information in the financial statements.
In my opinion the Financial Statements, which have been prepared under the
historical cost convention, give a true and fair view of the state of affairs of
the Company and the Group at the 30/th/ April 1997 and of its Profit and Loss
results and Cash Flows for the year then ended and have been properly prepared
in accordance with the Companies Act 1985 applicable to small companies.
/s/ F.L.R. Linington
-----------------------------------------
F.L.R. LININGTON, F.A.P.A., A.T.I.I.
Registered Auditor
------------------
83 High Street
Caterham
Surry
CR3 5UF
22/nd/ October 1997
3
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
FOR THE YEAR ENDED 30/TH/ APRIL 1997
NOTES 1997 1996
---- ---- ----
Turnover 2 (Pounds)3,081,397 (Pounds)3,345,291
Cost of sales (991,350) (1,191,592)
--------- -----------
Gross profit 2,090,047 2,153,699
Non-operating expenses
- ----------------------
Distribution costs (83,802) (128,156)
Administration costs (1,400,973) (1,717,677)
----------- -----------
Operating profit 3 605,272 307,866
Other operating income
- ----------------------
Interest receivable 4 12,097 10,220
------ ------
617,369 318,086
Interest payable 5 (6,259) (30,703)
------ -------
Profit on ordinary activities before taxation 611,110 287,383
Taxation 6 (182,468) (139,553)
-------- --------
428,642 147,830
Dividends (80,000) ---
-------- --------
(Pounds)348,642 (Pounds)147,830
=============== ===============
Profit in the year in -
- -----------------------
The Company (Pounds)142,607 (Pounds)50,841
Subsidiaries 206,035 96,989
------- ------
(Pounds)348,642 (Pounds)147,830
=============== ===============
4
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
AS AT 30/TH/ APRIL 1997
NOTES 1997 1996
----- ---- ----
Fixed Assets
- ------------
Tangible assets 7 (Pounds)313,631 (Pounds)304,268
=============== ===============
Current Assets
- --------------
Stocks 9 393,886 399,854
Debtors 10 329,485 279,035
Cash at bank and in hand 561,122 330,995
------- -------
1,284,493 1,009,884
Current Liabilities
- -------------------
Amounts falling due within one year 11 (545,014) (608,382)
--------- ---------
Net Current Assets (Pounds)739,479 (Pounds)401,502
================ ================
Total Assets Less Liabilities 1,053,110 705,770
Creditors due after more than one year 12 (2,279) (3,581)
------- -------
(Pounds)1,050,831 (Pounds)702,189
================== ================
Capital Reserves
- ----------------
Share capital 13 500 500
Reserves 14 1,050,331 701,689
--------- -------
(Pounds)1,050,831 (Pounds)702,189
================= ===============
5
DAXBOURNE LIMITED
BALANCE SHEET
AS AT 30/TH/ APRIL 1997
NOTES 1997 1996
----- ---- ----
Fixed Assets
- ------------
Tangible assets 7 (Pounds)309,450 (Pounds)291,494
Investments 8 70,500 70,500
--------------- ---------------
(Pounds)379,950 (Pounds)361,994
=============== ===============
Current Assets
- --------------
Stocks 9 393,886 399,854
Debtors 10 331,594 296,727
Cash at bank and in hand 538,324 309,966
--------------- ---------------
1,263,804 1,006,547
Current Liabilities
Amounts falling due within one year 11 (1,227,927) (1,094,019)
-------------- ---------------
Net Current Assets (Pounds)35,877 (Pounds)(87,472)
============== ===============
Total Assets Less Liabilities 415,827 274,522
Creditors due after more than one year 12 (2,279) (3,581)
--------------- ---------------
(Pounds)413,548 (Pounds)270,941
=============== ===============
Capital Reserves
- ----------------
Share capital 13 500 500
Reserves 14 413,048 270,441
--------------- ---------------
(Pounds)413,548 (Pounds)270,941
=============== ===============
6
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30/TH/ APRIL 1997
1997 1996
---------------- ----------------
NET CASH INFLOW FROM OPERATING ACTIVITIES (Pounds)487,998 (Pounds)387,199
TAXATION
Corporation tax paid (130,509) (182,351)
INVESTING ACTIVITIES
Receipts from sale of fixed assets 8,200 5,585
--------------- ---------------
NET CASH INFLOW BEFORE FINANCING 365,689 210,433
FINANCING
Purchase of fixed assets (55,562) (35,083)
Dividend (80,000) ---
--------------- ---------------
NET CASH OUTFLOW FROM FINANCING (135,562) (35,083)
--------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS (Pounds)230,127 (Pounds)175,350
=============== ===============
RECONCILIATION OF OPERATING PROFIT TO NET CASH
INFLOW FROM OPERATING ACTIVITIES:
Operating profit (Pounds)611,110 (Pounds)287,383
Depreciation 37,997 165,271
(Increase)/decrease in debtors (50,450) (31,416)
Increase/(decrease) in creditors (116,627) (87,895)
(Increase)/decrease in stocks 5,968 53,856
--------------- ---------------
NET CASH INFLOW FROM OPERATING ACTIVITIES (Pounds)487,998 (Pounds)387,199
=============== ===============
ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS
DURING THE YEAR
Balance brought forward (Pounds)330,995
Net cash inflow 230,127
---------------
Balance carried forward (Pounds)561,122
===============
7
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997
FORMING PART OF THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
-------------------
BASIS OF ACCOUNTING
The accounts have been prepared under the historical cost convention and in
accordance with applicable accounting standards.
The historical cost convention has been modified to include revaluation of
land and buildings.
CONSOLIDATION
The Consolidated Financial Statements incorporate the Accounts of the
Company and all its subsidiaries being made up to 30/th/ April 1997 in
accordance with the Companies Act 1985. A separate Profit and Loss Account
for Daxbourne Limited is not presented as the result of the Company are
disclosed in the consolidated Profit and Loss Account.
The effect of events related to the year ended 30/th/ April 1997 which
occurred before 5/th/ September 1997, the date of approval of the Financial
Statements by the Board of Directors have been included in the Statements
to the extent required to show a true and fair view of the state of affairs
at 30/th/ April 1997 and the results for the year ended on that date.
TAXATION
The charge for taxation is based on the Profit for the year and takes into
account taxation deferred because of timing differences between the
treatment of certain items for taxation and accounting purposes. No
provision for deferred taxation is made if there is reasonable evidence
that such deferred taxation will not be payable in the foreseeable future.
TURNOVER
Turnover represents the net invoiced sale of goods, excluding VAT.
TANGIBLE FIXED ASSETS
No depreciation is provided on freehold property which is maintained such
that its estimated residual value is in excess of the book value in these
financial statements.
Depreciation is provided on other fixed assets at the following annual
rates in order to write off each asset over its estimated useful life:
Motor Vehicles 25% on net book value
Plant and Equipment 10% on cost
Computer Equipment 20% on cost
INTANGIBLE FIXED ASSETS
Costs have been capitalized and are amortized over the estimated life of
the asset as follows:
Goodwill: in equal installments over three years
STOCKS
Stocks are valued at the lower of cost and net realizable value after
making due allowance for obsolete and slow-moving items. There has been an
amendment during the year to the basis used for stock from FIFO to average
cost. In valuing stock the Company has continued with its policy of
applying a fixed exchange rate for the US Dollar of $1.50/(Pounds)1.
8
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
HIRE PURCHASE AGREEMENTS
Assets held under hire purchase agreements are capitalized and disclosed
under tangible fixed assets at their fair value. The capital element of
the future payments is treated as a liability and the interest is charged
to the profit and loss account.
OPERATING LEASE AGREEMENTS
Rentals applicable to operating leases where substantially all of the
benefits and risks of ownership remain with the lessor are charged against
profits as incurred.
PENSION COSTS
The Company operates a defined contribution pension scheme. Contributions
payable for the year are charged in the profit and loss account. The level
of contributions is calculated with actuarial advice. Independent
actuarial valuations of the scheme are made every three years.
2. TURNOVER
--------
The Turnover and Profit (1996 - Profit) before taxation for the year is
attributable to the principal activity of the Company which is importing
and distributing a range of products.
In the opinion of the Director's, 5% of the company's turnover is
attributable to geographical markets outside of the UK. (1996 - 5%).
3. OPERATING PROFIT
----------------
1997 1996
---- ----
Operating profits is stated after charging:
Directors Emoluments (Pounds)85,389 (Pounds)57,153
Directors Pension 26,250 17,500
Depreciation of Fixed Tangible Assets 37,993 30,271
Depreciation of Intangible Assets --- 135,000
Auditors Renumeration 36,000 24,650
4. INTEREST RECEIVABLE
-------------------
1997 1996
---- ----
Interest from Bank Deposits (Pounds)12,097 (Pounds)10,220
9
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
5. INTEREST PAYABLE
----------------
1997 1996
---- ----
Finance Charges (Pounds)656 (Pounds)711
Other interest and similar charges 5,603 29,992
----- ------
(Pounds)6,259 (Pounds)30,703
============= ==============
6. TAXATION
--------
1997 1996
---- ----
UK Corporation Tax on profits for the year (Pounds)192,649 (Pounds)140,700
Prior Year's Adjustment (10,181) (1,147)
------ -----
(Pounds)182,468 (Pounds)139,553
=============== ===============
7. FIXED TANGIBLE ASSETS
---------------------
FREEHOLD PLANT &
Group PROPERTY MACHINERY TOTAL
----- -------- --------- -----
At 1/st/ May 1996 (Pounds)200,000 (Pounds)273,705 (Pounds)473,705
Additions --- 55,563 55,563
Disposals --- (64,108) (64,108)
--- ------ ------
At 30/th/ April 1997 (Pounds)200,000 (Pounds)265,160 (Pounds)465,160
=============== =============== ===============
Depreciation
------------
At 1/st/ May 1996 (Pounds)--- (Pounds)169,437 (Pounds)169,437
Charge for year --- 31,153 31,153
Disposals --- (49,061) (49,061)
--- ------ ------
At 30/th/ April 1997 (Pounds)--- (Pounds)151,529 (Pounds)151,529
=========== =============== ===============
Net 30/th/ April 1997 (Pounds)200,000 (Pounds)113,631 (Pounds)313,631
=============== =============== ===============
Net 30/th/ April 1996 (Pounds)200,000 (Pounds)104,268 (Pounds)304,268
=============== =============== ===============
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
8. FIXED TANGIBLE ASSETS (continued)
---------------------
FREEHOLD PLANT &
Company PROPERTY MACHINERY TOTAL
------- -------- --------- -----
At 1/st/ May 1996 (Pounds)200,000 (Pounds)214,120 (Pounds)414,120
Additions --- 55,365 55,365
Disposals --- (21,113) (21,113)
--- ------ ------
At 30/th/ April 1997 (Pounds)200,000 (Pounds)248,372 (Pounds)448,372
=============== =============== ===============
Depreciation
------------
At 1/st/ May 1996 (Pounds)--- (Pounds)122,627 (Pounds)122,627
Charge for year --- 29,493 29,493
Disposals --- (13,198) (13,198)
--- ------ ------
At 30/th/ April 1997 (Pounds)--- (Pounds)138,922 (Pounds)138,922
=========== =============== ===============
Net 30/th/ April 1997 (Pounds)200,000 (Pounds)109,450 (Pounds)309,450
=============== =============== ===============
Net 30/th/ April 1996 (Pounds)200,000 (Pounds)91,494 (Pounds)291,494
=============== ============== ===============
9. FIXED ASSET INVESTMENTS
-----------------------
1997 1996
---- ----
Subsidiary Companies Shares at cost (Pounds) 70,500 (Pounds) 70,500
=============== ===============
GROUP ACCOUNTS AND SUBSIDIARIES
The Company's subsidiaries are:
Registered Number
& Country of Holding of Share Capital Profit/(Loss) for
Subsidiary Companies Incorporation Ordinary shares and Reserves the Year
-------------------- ----------------- --------------- ------------- -----------------
Postinstant Limited 1559076, England 100% 688,111 186,288
M.C. Hairways Limited 2758010, England 100% (82,827) 19,748
Stock purchases by subsidiaries from Daxbourne Limited were conducted at an
appropriate transfer price.
M.C. Hairways Limited ceased to trade during the year ended 30/th/ April
1997.
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
10. STOCKS
------
1997 1996
---- ----
Group Company Group Company
----- ------- ----- -------
Goods for resale (Pounds)393,886 (Pounds)393,886 (Pounds)399,854 (Pounds)399,854
=============== =============== =============== ===============
11. DEBTORS
-------
1997 1996
---- ----
Due within one year: Group Company Group Company
----- ------- ----- -------
Trade Debtors (Pounds)264,891 (Pounds)245,530 (Pounds)221,658 (Pounds)180,113
Prepayments & accrued income 64,594 71,889 57,377 20,100
Intergroup --- 14,175 --- 96,514
--- ------ --- ------
(Pounds)329,485 (Pounds)331,594 (Pounds)279,035 (Pounds)296,727
=============== ============== =============== ===============
12. CREDITORS
---------
1997 1996
---- ----
Group Company Group Company
----- ------- ----- -------
Amounts falling due within one year:
------------------------------------
Due to Subsidiaries (Pounds)--- (Pounds)847,833 (Pounds)--- (Pounds)579,787
Trade Creditors 72,224 56,930 77,594 69,185
Hire Purchases 1,302 1,302 1,342 1,342
Other Creditors 471,488 321,862 529,446 443,705
Bank Overdrafts (See note 15) --- --- --- ---
--- --- --- ---
(Pounds)545,014 (Pounds)1,227,927 (Pounds)608,382 (Pounds)1,094,019
=============== ================= =============== =================
12
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
13. CREDITORS
---------
1997 1996
---- ----
Group Company Group Company
----- ------- ----- -------
Amounts falling due after more than one year:
---------------------------------------------
Other Creditors (Pounds)2,279 (Pounds)2,279 (Pounds)3,581 (Pounds)3,581
` ============= ============= ============= =============
14. SHARE CAPITAL
-------------
Authorized 1997 1996
---------- ---- ----
1,000 Ordinary Shares of (Pounds)1 each (Pounds)1,000 (Pounds)1,000
============= =============
Issued
------
500 Ordinary Shares (Pounds)500 (Pounds)500
=========== ===========
15. RESERVES
--------
Capital
Redemption
Profit & Loss Reserve Total
------------- ------- -----
Group
-----
As at 1/st/ May 1996 (Pounds)701,189 (Pounds)500 (Pounds)701,689
Transfer from Profit & Loss A/c 348,642 --- 348,642
------- --- -------
As at 30/th/ April 1997 (Pounds)1,049,831 (Pounds)500 (Pounds)1,050,331
================= =========== ================
Company
-------
As at 1/st/ May 1996 (Pounds)269,941 (Pounds)500 (Pounds)270,441
Transfer from Profit & Loss A/c 142,607 --- 142,607
------- --- -------
As at 30/th/ April 1997 (Pounds)412,548 (Pounds)500 (Pounds)413,048
=============== =========== ===============
16. CONTINGENT LIABILITY AND GUARANTEES
-----------------------------------
The Company has guaranteed the Bank by way of a fixed and floating charge
over the undertaking and assets of the Company to a maximum of
(Pounds)200,000.
13
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
17. COMMITMENTS UNDER HIRE PURCHASE AGREEMENTS
------------------------------------------
Future commitments under hire purchase agreements are as follows:
1997 1996
---- ----
Amounts payable within 1 year (Pounds)1,998 (Pounds)1,998
Amounts payable between 2 to 5 years 3,497 5,495
----- -----
5,495 7,493
Interest and finance charges relating to
future periods (1,914) (2,570)
------- -------
(Pounds)3,581 (Pounds)4,923
============== ==============
18. COMMITMENTS UNDER OPERATING LEASES
----------------------------------
At 30/th/ April 1997 the Company had annual commitments under non-
cancellable operating leases as set out below.
1997 1996
---- ----
ASSETS OTHER THAN LAND AND BUILDINGS
Operating leases (Pounds)17,850 (Pounds)17,495
============== ==============
19. POST BALANCE SHEET EVENTS
-------------------------
Several events having significant impact on an understanding of the
accounts have occurred between the year end and the date of the auditor's
signature. These are:
OFFER FOR THE COMPANY
An offer has been made for the entire share capital of the Company.
Amounts stated for provisions are calculated on the basis that neither
party will seek to restructure the Company in the short to medium term.
CHANGE IN SHARE OWNERSHIP
The majority of the issued share capital of the Company has been
transferred to a trust.
DIVIDENDS
On 19 June 1997 a dividend of (Pounds)280,000 was declared and paid.
14
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
(Unaudited)
The Historical Daxbourne Limited Financial Statements are presented using
generally accepted accounting principles of the United Kingdom. In
management's opinion, there are no material variations in the accounting
principles, practices and methods used in preparing these financial
statements from the principles, practices and methods accepted in the
United States.
15