EXHIBIT 99.2
DAXBOURNE LIMITED
FINANCIAL STATEMENTS
30/TH/ APRIL 1996
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 1996
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 1996
The Director has pleasure in submitting the Annual Report and Financial
Statements for the year ended 30/th/ April 1996.
RESULTS AND DIVIDEND
- --------------------
The Results of the year are stated in the Financial Statements.
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 (1995 -
(Pounds)nil). Donations to the U.K. Charities amounted to (Pounds)350 (1995 -
(Pounds)1,375).
DIRECTOR
- --------
The Director of the Company during the year, together with his shareholdings,
was as follows:
30.4.96 30.4.95
------- -------
M.J. STANNARD 500 500
AUDITOR
- -------
The Auditor, F.L.R. Linnington, is willing to continue in Office and a
Resolution concerning his re-appointment will be submitted to the Annual General
Meeting.
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.
BY ORDER OF THE BOARD
Secretary
---------
1
DAXBOURNE LIMITED
STATEMENT OF DIRECTOR'S RESPONSIBILITIES
I am required under company law to prepare financial accounts for each financial
year which give a true and fair view of the state of the affairs of the company
and of the profit and loss of the company for that period. In preparing those
financial accounts I am required to:
- select suitable accounting policies and then apply them consistently:
- make judgements and estimates that are reasonable and prudent:
- prepare the financial accounts 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
to enable him to ensure that the financial accounts comply with the Companies
Act 1985. He 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.
By Order of the Board
30/th/ August 1996
2
REPORT OF THE AUDITOR TO THE MEMBERS OF
DAXBOURNE LIMITED
I have audited the Financial Statements on pages 4 to 13 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 1996 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 1996
NOTES 1996 1995
----- ---- ----
Turnover 2 (Pounds)3,345,291 (Pounds)2,706,177
Cost of sales (1,191,592) (1,535,795)
--------- ---------
Gross profit 2,153,699 1,170,382
Non-operating expenses
- ----------------------
Distribution costs (128,156) (104,769)
Administration costs (1,717,677) (580,039)
--------- -------
Operating profit 3 307,866 485,574
Other operating income
- ----------------------
Leasing --- 138
Interest receivable 4 10,220 7,517
------ -----
318,086 493,229
Interest payable 5 (30,703) (182)
------ ---
Profit on ordinary activities before taxation 287,383 493,047
Taxation 6 (139,553) (182,312)
------- -------
(Pounds)147,830 (Pounds)310,735
============== ==============
Profit in the year in -
- -----------------------
The Company 50,841 73,663
Subsidiaries 96,989 237,072
------ -------
(Pounds)147,830 (Pounds)310,735
============== ==============
4
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
AS AT 30/TH/ APRIL 1996
NOTES 1996 1995
----- ---- ----
Fixed Assets
- ------------
Tangible assets 7 (Pounds)304,268 (Pounds)305,042
Intangible assets 8 --- 135,000
------- -------
304,268 440,042
------- -------
Current Assets
- --------------
Stocks 10 399,854 453,710
Debtors 11 279,035 247,619
Cash at bank and in hand 330,995 163,908
------- -------
1,009,884 865,237
Current Liabilities
- -------------------
Amounts falling due within one year 12 (608,382) (533,420)
------- -------
Net Current Assets (Pounds)401,502 (Pounds)331,817
============== ==============
Total Assets Less Liabilities 705,770 771,859
Creditors due after more than one year 13 (3,581) (217,500)
----- -------
(Pounds)702,189 (Pounds)554,359
============== ==============
Capital Reserves
- ----------------
Share capital 14 500 500
Reserves 15 701,689 553,859
------- -------
(Pounds)702,189 (Pounds)554,359
============== ==============
5
DAXBOURNE LIMITED
BALANCE SHEET
AS AT 30/TH/ APRIL 1996
NOTES 1996 1995
----- ---- ----
Fixed Assets
- ------------
Tangible assets 7 (Pounds)291,494 (Pounds)301,177
Intangible assets 8 --- 135,000
Investments 70,500 70,500
------ ------
(Pounds)361,994 (Pounds)506,677
============== ==============
Current Assets
- --------------
Stocks 9 399,854 453,710
Debtors 10 296,727 214,651
Cash at bank and in hand 309,966 154,677
------- -------
1,006,547 823,038
Current Liabilities
- -------------------
Amounts falling due within one year 11 (1,094,019) (825,617)
--------- -------
Net Current Assets (Pounds)(87,472) (Pounds)(2,579)
============== =============
Total Assets Less Liabilities 274,522 504,098
Creditors due after more than one year 12 (3,581) (217,500)
----- -------
(Pounds)270,941 (Pounds)286,598
============== ==============
Capital Reserves
- ----------------
Share capital 13 500 500
Reserves 14 270,441 286,098
------- -------
(Pounds)270,941 (Pounds)286,598
============== ==============
6
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30/TH/ APRIL 1996
1996 1995
---- ----
NET CASH INFLOW FROM OPERATING ACTIVITIES (Pounds)387,199 (Pounds)433,139
TAXATION
Corporation tax paid (182,351) (186,811)
Investing activities
Receipts from sale of fixed assets 5,585 21,168
Short term loan --- 17,500
--- ------
5,585 38,668
----- ------
NET CASH INFLOW BEFORE FINANCING 210,433 284,996
FINANCING
Purchase of fixed assets (35,083) (77,816)
Purchase of Trade --- (202,500)
--- -------
NET CASH OUTFLOW FROM FINANCING (35,083) (280,316)
------ -------
INCREASE IN CASH AND CASH EQUIVALENTS (Pounds)175,350 (Pounds)4,680
============== ============
RECONCILIATION OF OPERATING PROFIT TO NET CASH
INFLOW FROM OPERATING ACTIVITIES:
Operating profit (Pounds)287,383 (Pounds)493,047
Depreciation 165,271 101,324
(Increase)/decrease in debtors (31,416) (18,145)
Increase/(decrease) in creditors (87,895) 27,823
(Increase)/decrease in stocks 53,856 (170,910)
------ -------
NET CASH INFLOW FROM OPERATING ACTIVITIES (Pounds)387,199 (Pounds)433,139
============== ==============
ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS
DURING THE YEAR
Balance brought forward (Pounds)155,645
Net cash inflow 175,350
-------
Balance carried forward (Pounds)330,995
==============
7
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996
FORMING PART OF THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
-------------------
BASIS OF ACCOUNTING
The accounts have been prepared under the historical cost convention as
modified to incorporate the revaluation of certain fixed assets.
CONSOLIDATION
The Consolidated Financial Statements incorporate the Accounts of the
Company and all its subsidiaries being made up to 30/th/ April 1996 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 1996 which
occurred before 30/th/ August 1996, 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 1996 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 and work in progress are valued at the lower of cost and net
realizable value after making due allowance for obsolete and slow-moving
items. Cost includes all direct expenditures and an appropriate proportion
of fixed and variable overheads.
8
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
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 (1995 - 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. (1995 - 5%).
3. OPERATING PROFIT
----------------
1996 1995
---- ----
Operating profits is stated after charging:
Directors Emoluments (Pounds)57,153 (Pounds)56,687
Directors Pension 17,500 17,500
Depreciation of Fixed Tangible Assets 30,271 33,823
Depreciation of Intangible Assets 135,000 67,500
Auditors Renumeration 24,650 23,250
4. INTEREST RECEIVABLE
-------------------
1996 1995
---- ----
Interest from Bank Deposits (Pounds)10,220 (Pounds)7,517
============== =============
5. INTEREST PAYABLE
----------------
1996 1995
---- ----
Finance Charges (Pounds)711 (Pounds)---
Other interest and similar charges 29,992 182
------ ---
(Pounds)30,703 (Pounds)182
============== ===========
9
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
6. TAXATION
--------
1996 1995
---- ----
UK Corporation Tax on profits for the (Pounds)140,700 (Pounds)183,500
year
Prior Year's Adjustment (1,147) (1,188)
----- -----
(Pounds)139,553 (Pounds)182,312
=============== ===============
7. FIXED TANGIBLE ASSETS
---------------------
FREEHOLD PLANT &
Group PROPERTY MACHINERY TOTAL
----- --------- --------- -----
At 1/st/ May 1995 (Pounds)200,000 (Pounds)250,019 (Pounds)450,019
Additions --- 35,083 35,083
Disposals --- (11,397) (11,397)
--- ------- -------
At 30/th/ April 1996 (Pounds)200,000 (Pounds)273,705 (Pounds)473,705
=============== =============== ===============
Depreciation
------------
At 1/st/ May 1995 --- (Pounds)144,977 (Pounds)144,977
Charge for year --- 29,738 29,738
Disposals --- (5,278) (5,278)
--- ----- -----
At 30/th/ April 1996 --- (Pounds)169,437 (Pounds)169,437
=== =============== ===============
Net 30/th/ April 1996 (Pounds)200,000 (Pounds)104,268 (Pounds)304,268
=============== =============== ===============
Net 30/th/ April 1995 (Pounds)200,000 (Pounds)105,042 (Pounds)305,042
=============== =============== ===============
10
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
8. FIXED TANGIBLE ASSETS(continued)
--------------------------------
FREEHOLD PLANT &
Company PROPERTY MACHINERY TOTAL
------- -------- --------- -----
At 1/st/ May 1995 (Pounds)200,000 (Pounds)202,169 (Pounds)402,169
Additions --- 23,348 23,348
Disposals --- (11,397) (11,397)
--- ------ ------
At 30/th/ April 1996 (Pounds)200,000 (Pounds)214,120 (Pounds)414,120
=============== =============== ===============
Depreciation
------------
At 1/st/ May 1995 --- (Pounds)100,992 (Pounds)100,992
Charge for year --- 26,913 26,913
Disposals --- (5,278) (5,278)
--- ----- -----
At 30/th/ April 1996 --- (Pounds)122,627 (Pounds)122,627
=== =============== ===============
Net 30/th/ April 1996 (Pounds)200,000 (Pounds)91,494 (Pounds)291,494
=============== =============== ===============
Net 30/th/ April 1995 (Pounds)200,000 (Pounds)101,177 (Pounds)301,177
=============== =============== ===============
9. FIXED INTANGIBLE ASSETS
-----------------------
Group 1996 1995
----- ---- ----
Goodwill (Pounds)--- (Pounds)135,000
=========== ===============
Company
-------
Goodwill (Pounds)--- (Pounds)135,000
=========== ===============
10. FIXED ASSET INVESTMENTS
-----------------------
1996 1995
---- ----
Subsidiary Companies Shares at cost (Pounds)70,500 (Pounds)70,500
============== ==============
The Companies in which the Company's interest is more than
10% are as follows:
Class and Percentage of
Subsidiary Companies Country of Incorporation Shares Held by Company
-------------------- ------------------------ -----------------------
Postinstant Limited England Ordinary 100%
M.C. Hairways Limited England Ordinary 100%
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
11. STOCKS
------
1996 1995
---- ----
Group Company Group Company
----- ------- ----- -------
Goods for resale (Pounds)399,854 (Pounds)399,854 (Pounds)453,710 (Pounds)453,710
=============== =============== =============== ===============
12. DEBTORS
-------
1996 1995
---- ----
Due within one year: Group Company Group Company
----- ------- ----- -------
Trade Debtors (Pounds)221,658 (Pounds)180,113 (Pounds)211,560 (Pounds)174,039
Prepayments & accrued income 57,377 20,100 36,059 16,807
Intergroup --- 96,514 --- 23,805
--- ------ --- ------
(Pounds)279,035 (Pounds)296,727 (Pounds)247,619 (Pounds)214,651
=============== =============== =============== ===============
13. CREDITORS
---------
1996 1995
---- ----
Group Company Group Company
----- ------- ----- -------
Amounts falling due within one year:
------------------------------------
Due to Subsidiaries (Pounds)--- (Pounds)579,787 (Pounds)--- (Pounds)495,523
Trade Creditors 77,594 69,185 18,567 35,169
Hire Purchases 1,342 1,342 --- ---
Other Creditors 529,446 443,705 514,853 286,778
Bank Overdrafts (See note 16) --- --- --- 8,147
--- --- --- -----
(Pounds)608,382 (Pounds)1,094,019 (Pounds)533,420 (Pounds)825,617
=============== ================= =============== ===============
14. CREDITORS
---------
1996 1995
---- ----
Group Company Group Company
Amounts falling due after more than one year:
---------------------------------------------
Directors Loan Account (Pounds)--- (Pounds)--- (Pounds)200,000 (Pounds)200,000
Other Creditors 3,581 3,581 17,500 17,500
----- ----- ------ ------
(Pounds)3,581 (Pounds)3,581 (Pounds)217,500 (Pounds)217,500
============= ============= =============== ===============
12
DAXBOURNE LIMITED
AND SUBSIDIARY COMPANIES
NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996
FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)
15. SHARE CAPITAL
Authorized 1996 1995
---------- ---- ----
1,000 Ordinary Shares of (Pounds)1 each (Pounds)1,000 (Pounds)1,000
============= =============
Issued
------
500 Ordinary Shares (Pounds)500 (Pounds)500
=========== ===========
16. RESERVES
--------
Capital
Redemption
Profit & Loss Reserve Total
------------- ------- -----
Group
-----
As at 1/st/ May 1995 (Pounds)553,359 (Pounds)500 (Pounds)553,859
Transfer from Profit & Loss A/c 147,830 --- 147,830
------- --- -------
As at 30/th/ April 1996 (Pounds)701,189 (Pounds)500 (Pounds)701,689
=============== =========== ===============
Company
-------
As at 1/st/ May 1995 (Pounds)285,598 (Pounds)500 (Pounds)286,098
Transfer from Profit & Loss A/c (15,657) --- (15,657)
-------- --- --------
As at 30/th/ April 1996 (Pounds)269,941 (Pounds)500 (Pounds)270,441
================ =========== ===============
17. 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
(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.
14