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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 20-F
(Mark One)
/ / REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: November 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-19152
AUTOMATED SECURITY (HOLDINGS) PLC
(Exact name of Registrant as specified in its charter)
ENGLAND AND WALES
(Jurisdiction of Incorporation or Organization)
The Clock House, The Campus, Spring Way, Hemel Hempstead, Hertfordshire. HP2 7TL
England
(Address of Principal Executive Offices)
Securities Registered or to be Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
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American Depositary Shares New York Stock Exchange
Ordinary Shares of 10p each* New York Stock Exchange*
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* Not for trading but only in connection with the registration of American
Depositary Shares representing such Ordinary Shares, pursuant to the
requirements of the Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the
Act: NONE
Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act: NONE
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:
Ordinary Shares of 10p each............................................................. 119,571,953
5% Convertible Cumulative Redeemable Preference Shares of B.P.1 each.................... 7,867,442
6% Convertible Cumulative Redeemable Preference Shares of B.P.1 each.................... 40,761,578
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO / /
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Indicate by check mark which financial statement item the registrant has
elected to follow.
ITEM 17 / / ITEM 18 X
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TABLE OF CONTENTS
PAGE
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PART I. Item 1. Description of Business.......................................... 1
General........................................................ 1
Recent Developments............................................ 2
UK Operations.................................................. 3
US Operations.................................................. 4
TVX............................................................ 5
Discontinued Operations........................................ 5
Investments.................................................... 5
Suppliers...................................................... 5
Sales and Marketing............................................ 6
Competition.................................................... 6
Research and Development....................................... 6
Trademarks..................................................... 6
Government Regulation.......................................... 6
Employees...................................................... 7
Item 2. Description of Property.......................................... 7
Item 3. Legal Proceedings................................................ 7
Item 4. Control of Registrant............................................ 7
Item 5. Nature of Trading Market......................................... 8
Item 6. Exchange Controls and Other Limitations
Affecting Security Holders....................................... 9
Item 7. Taxation......................................................... 9
Item 8. Selected Consolidated Financial Data............................. 12
Item 9. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................... 15
Item 10. Directors and Officers of Registrant............................. 19
Item 11. Compensation of Directors and Officers........................... 21
Item 12. Options to Purchase Securities from Registrant or Subsidiaries... 21
Item 13. Interest of Management in Certain Transactions................... 22
PART III Item 15. Defaults upon Senior Securities.................................. 22
Item 16. Changes in Securities and Changes in Security for
Registered Securities............................................ 22
PART IV Item 18. Financial Statements............................................. 23
Item 19. Financial Statements and Exhibits................................ 23
Signature........................................................ 24
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Omitted Items are not applicable.
PART I
Automated Security (Holdings) PLC (the "Company" and, together with its
consolidated subsidiaries, "ASH" or the "Group") publishes its consolidated
financial statements in pounds sterling. In this Annual Report on Form 20-F
("Form 20-F"), references to "US dollars", "dollars" or "$" are to the currency
of the United States; references to "pounds sterling", "B.P.", "pence" or "p"
are to the currency of the United Kingdom; and references to "FFr" are to the
currency of France. Merely for the convenience of the reader, this Form 20-F
contains the translations of certain pound sterling amounts into US dollar
amounts at specified rates. These translations should not be construed as
representations that the pound sterling amounts actually represent such US
dollar amounts or could be converted into US dollars at the rates indicated.
Unless otherwise stated, the translations of pounds sterling into US dollars
have been made at B.P.1.00 = $1.53, the noon buying rate in New York City for
cable transfers in pounds sterling as certified for customs purposes by the
Federal Reserve Bank of New York (the "Noon Buying Rate") on November 30, 1995.
The Noon Buying Rate differs from the rates used in the preparation of the
Group's Consolidated Financial Statements. See page F-2 of Consolidated
Financial Statements. On April 30, 1996 the Noon Buying Rate was B.P.1.00 =
$1.505. Unless the context otherwise indicates, references herein to a
particular year are to the Company's fiscal year ending on November 30 of that
year.
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
ASH is a leading international electronic security group, primarily engaged
in the rental, sales, installation and servicing of electronic security systems
and equipment to safeguard property from a wide range of hazards. The Group's
principal markets are the United Kingdom, where it is headquartered, and the
United States.
ASH is structured in two operational units: the UK (including
Eire) and the US. The Group's current strategy is to focus its three core
businesses, Modern Security Systems and TSL in the UK and API and the Sonitrol
network in the United States. The Group's growth will be dependent on achieving
prudent financing and balancing expansion within the Group's strategy of
reducing the present high level of gearing. ASH sees opportunities for growth
not only in the traditional intruder alarm market by providing technological
upgrades, such as alarm monitoring or acoustic or visual alarm verification
systems, but also providing other security and loss prevention equipment
products, particularly in the fast growing CCTV market. During 1995 the Group
disposed of a number of peripheral businesses so as to reduce debt and enable
the Group to focus on its core businesses, ensure positive trading cash flows
and increase shareholders' funds. The Board continues to address the Group's
high level of gearing as a priority and will continue to do so until this
problem is resolved.
In the UK and Eire, ASH provides intruder alarms, various central station
monitoring services and other detection systems to customers in the commercial,
industrial, residential and public sectors. In 1995, the UK and Eire continuing
operations accounted for approximately 73% (1994: 72%) of the Group's net sales
of continuing operations. Existing customers account for a significant
percentage of both recurring and new business in the UK. On February 7, 1993,
ASH acquired Telecom Security Limited ("TSL") for B.P.6 million ($9 million)
plus a contingent deferred payment of up to B.P. 1.4million ($2 million).
Since 1989, ASH has operated in the US under the name of API Security Inc.
("API"), a company based in California which provides intruder alarms, central
station monitoring, guarding and fire alarm services. In September 1992, ASH's
US operations were expanded through the purchase of Sonitrol Corporation
("Sonitrol") and Sonitrol Management Corporation ("SMC") for $42 million in
cash. Sonitrol is the franchisor of the Sonitrol audio alarm verification
system throughout North America and the UK. In 1995, the US operations
accounted for approximately 27% (1994: 28%) of the Group's net sales from
continuing operations.
The Company is the successor to Modern Automatic Alarms Limited, which was
established in 1964. By 1979, ASH had established itself as the market leader in
the intruder alarms business in the United Kingdom. Since that time, the Group
has broadened the extent and scope of its operations. In the years 1993 through
1995, ASH spent an aggregate of approximately B.P.10.6 million (excluding
liabilities assumed of approximately B.P.6.2 million) on acquisitions and
investments in related companies. On August 31, 1994 ASH acquired certain assets
of Sonitrol of Eugene in Oregon, U.S. for an initial consideration of $2.1
million plus a deferred payment of $0.4 million.
1
The Company, incorporated in England and Wales, is the holding company of
the Group, with direct and indirect interests in subsidiaries and related
companies. Its principal executive offices are located at The Clock House, The
Campus, Spring Way, Hemel Hempstead, Hertfordshire, HP2 7TL England (telephone:
44 1442 60008).
The following table shows, for each of ASH's last three full fiscal years,
net sales and income before interest, exceptional items and taxation
attributable to continuing operations, by geographical region, and to
discontinued operations:
YEAR ENDED NOVEMBER 30,
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1993 1994 1995
B.P.'000 B.P.'000 B.P.'000
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Net Sales
United Kingdom............................................... 95,687 106,771 108,191
United States................................................ 43,515 43,503 41,864
Continental Europe and Ireland............................... 3,934 4,029 3,678
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Total from continuing operations............................... 143,136 154,303 153,733
Discontinued operations........................................ 17,639 11,768 9,616
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160,775 166,071 163,349
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------- ------- -------
Income before Interest, Exceptional items and Taxation
United Kingdom............................................... 15,387 18,252 15,398
United States................................................ 7,315 6,628 5,583
Continental Europe and Ireland............................... 579 (635) (741)
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Total from continuing operations............................... 23,281 24,245 20,240
Discontinued operations........................................ (3,638) (308) 1,439
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Total 19,643 23,937 21,679
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Discontinued operations for UK GAAP purposes, as shown above, comprise
Modern Vitalcall Limited and the Modern Integrated Systems businesses, and two
related companies, Microtech Security (UK) Limited and Compagnie Generale de
Protection et Securite SA.
RECENT DEVELOPMENTS
On December 21, 1995, the Group reached agreement with its principal
bankers to extend the majority of the Group's committed facilities of
B.P. 83.4 million through January 2, 1998. This new facility consolidates the
B.P. 66.3 million previously available under the Group's Multiple Option Loan
facility and the majority of the B.P. 17.1 million previously available from
bilateral facilities. Additionally, the Group had uncommitted overdraft and
working capital lines at November 30, 1995 totaling in excess of B.P. 5.6
million. The terms of the 8.28% Senior Notes were also amended by agreement
with the Prudential Insurance Company of America on December 21, 1995. The
maturity date of the Senior Notes has also been amended to January 2, 1998 and
the terms of the Senior Notes and the bank facilities are treated on an
equivalent basis. As part of the aforementioned agreement with the Group's
principal bankers and the Prudential Insurance Company of America, the Group's
indebtedness to its principal bankers and the holders of the Senior Notes is
secured by pledges over the majority of the assets of the Group.
The Directors have not recommended payment of a dividend in respect of the
Ordinary Shares for 1995 or 1994. All of the dividends on the 5% Preference
Shares and 6% Preference Shares were paid for 1994, but in 1995 only the
interim dividends have been paid on the due date. The balance of the unpaid
dividends, B.P. 1,223,000 ($1,871,190) and B.P. 197,000 ($301,410) on the 6%
Preference Shares and 5% Preference Shares, respectively have been accrued.
The Company is unlikely to be in a position to pay dividends on its Ordinary
or 5% and 6% Preference Shares to shareholders for the time being.
2
UK OPERATIONS (INCLUDING EIRE)
In the UK, ASH provides intruder alarms, various central station monitoring
services and other detection systems. The UK operations consist principally of
the Group's businesses in intruder alarms (Modern Security Systems, formerly
Modern Alarms, Sonitrol and TSL). ASH has a leading share of the monitored alarm
market in the UK.
Through Modern Security Systems, Sonitrol and TSL, ASH specializes in the
rental, installation and central station monitoring of intruder alarms,
primarily for commercial, industrial and residential customers in the United
Kingdom and Eire. Alarm systems installed on a customer's premises include
control and detection devices that respond to preset conditions such as
intrusion, various hazards, environmental conditions and industrial processes.
Alarm systems provide an audible warning at the premises. In addition, alarm
systems may be connected to one or more of ASH's central stations where alarm
and supervisory signals are received and recorded by means of either a digital
communicator using a standard telephone line, long range radio transmission or
private wire circuits that are rented from the telephone company. Depending upon
the type of service, central station personnel react by either relaying alarm
information to the local police or fire departments or to specialist response
agencies, or notifying the subscriber or taking other appropriate action.
Modern Security Systems is one of the UK's market leaders in security
systems catering primarily for the industrial and commercial market, although
approximately 25% of its systems are installed for residential customers. Some
two thirds of these systems are monitored by one of the central stations which
are located in Manchester and Glasgow. The majority of TSL's systems are also
monitored and are in the residential sector. Recurring revenues from these
installations in 1995 amounted to approximately B.P.53.5 million.
In order to focus more effectively on the two main activities of customer
acquisition and customer retention, the Company devised plans which were
implemented on December 1, 1995 to reorganize Modern Security Systems into an
Upstream business concerned with sales and installation (customer acquisition)
and a Downstream business concerned with customer call receipt, customer
engineering service and alarm monitoring (customer retention). The basic Hub or
area office structure established in 1992 has been retained and the lower levels
of the organization have also largely been unchanged, so preserving the existing
links between local manager and team leader, and between team leaders and their
groups of service engineers, installation engineers or salesmen respectively.
The previous structure helped to bring on a new cadre of experienced management;
but it left spans of control too wide, giving insufficient emphasis both to
customer acquisition and customer retention. The benefits of the new structure
have already been realized in increasing focus on functional excellence, leading
to improved customer service.
As part of the reorganization, the opportunity has been taken to establish a
separate salesforce within the Upstream business, focusing on CCTV and access
control sales and marketing itself as Modern Visual. After a healthy performance
in 1995, the new Modern Visual division expects to achieve improvements in
sales in the fast growing CCTV market.
Within the Upstream business there continues to be a special team
serving our major national accounts. The marketing function supports the
Upstream business with lead generation reports, product development and market
surveys.
ASH management believe that the existing installed base presents
opportunities for growth within the present constraints of the Group's balance
sheet, especially in the form of technological upgrades from bell-only to
monitored systems and from monitored systems to acoustic or visual verification.
3
To provide its services in the UK, ASH has a field organization of
installers, supervisors and maintenance personnel and central station operators
in excess of 1,000 staff. ASH has 10 operational hubs across the United Kingdom.
US OPERATIONS
ASH's US operations consist of two businesses: API Security and Sonitrol.
Together they represent one of the larger networks of electronic security
systems in the US market with approximately 220,000 systems (including franchise
operations).
API Security was purchased by ASH in 1989 and is the leading intruder alarm,
central station monitoring and fire alarm services business in Southern
California. API is one of the largest providers of security systems in Southern
California with approximately 27,500 systems and an estimated 18% share of the
industrial/commercial market based on number of systems installed in Southern
California.
Ninety eight percent of the total security systems installed and serviced by
API are for commercial customers. Over the past four years, API has extended its
activities into Northern California, principally San Francisco, as well as the
northern region of Mexico. At the same time API has consolidated its seven
central stations in California into one central monitoring superstation in Los
Angeles which has both conventional and Sonitrol monitoring capacity.
API also provides alarm response, patrol and guard services, which perform
radio-despatch alarm investigations as well as regularly scheduled facility
inspections. These services form one of the largest commercial patrol services
in Southern California.
API made a strategic decision to focus on three markets that have proved to
be profitable, demonstrated relatively low attrition rates and were markets in
which API had the ability to deliver a high level of customer service. These
markets are the upper end commercial, industrial and retail segments, including
warehousing and distribution centres servicing the western states. As part of
this strategy API exited the lower end retail market and sold its residential
portfolio in August 1994.
Customer attrition in 1995 (cancellations) reached the lowest level in more
than 8 years. This is attributable to an overall organizational commitment to
exceeding customer expectations in all aspects of customer contact.
The CCTV and access control aspect of API's business has expanded
significantly since 1990 when, following ASH's acquisition of API in 1989, the
decision was made to pursue the marketing of these products. CCTV and access
control sales now constitute almost half of the company's annual new sales
revenues. In addition API is a market leader in verification technology through
its Sonitrol, Teletrac, and remote CCTV monitoring applications.
API initiated two major programmes in 1995. One is a computer system
conversion which is expected to be complete by August 1996. This covers the all
important central monitoring and service despatch systems as well as a
completely new accounting suite. The second major programme is the relocation of
the corporate offices, monitoring station and customer support centre to a new,
lower cost facility which will be complete before May 31, 1996. The combined
impact of these two projects is expected to result in annual cost savings of
over $2 million.
In September 1992, ASH acquired Sonitrol Corporation and Sonitrol Management
Corporation (SMC) for $42 million in cash. Sonitrol Corporation is the
franchisor of the Sonitrol audio alarm verification system throughout North
America and the UK. Sonitrol Corporation has 170 franchises in North America and
Europe, covering approximately 100,000 proprietary and 90,000 conventional alarm
systems in the commercial, government, and residential sectors. ASH owns and
operates a total of 26 Sonitrol franchises focused on southern California,
Texas, Louisiana and the UK, and collects royalties generated from the other
144 Sonitrol franchises that operate in the United States and Canada.
4
Sonitrol offers an audio verified alarm monitoring detection system,
considered by industry experts and law enforcement agencies to be among the
highest quality systems available. In addition to its Signature audio intrusion
system, which is the only completely proprietary security system in the
industry, Sonitrol offers a complete line of CCTV, fire and access control
products.
As franchisor, the primary operations of Sonitrol Corporation involve the
continual review and improvement of the Sonitrol product line and operating
system; development of a national marketing programme; maintenance of a national
accounts marketing team that refers major contracts to its franchisees, and
enforcement of the uniform Sonitrol operating standards.
SMC, also acquired in 1992, owns 17 Sonitrol franchises in 8 states in the
central US. In August 1994 SMC also acquired the account base, but not the
underlying franchise rights for the Sonitrol franchise in Eugene, Oregon. SMC
services approximately 12,700 alarm and non-alarm accounts, largely for
commercial and institutional customers.
In 1995 SMC consolidated its ten monitoring stations into a new superstation
in Dallas, Texas. This provides a solid platform for acquiring and supplying
contract monitoring services to its independent franchise network. The new
facility, which has the capacity to monitor in excess of 20,000 Sonitrol
customers, also allows SMC to provide a higher quality of service to its
existing customers.
TVX OPERATIONS
ASH developed the TVX system, an innovative visual verification product that
transmits a black and white picture of an alarm triggering event to a receiving
central station, allowing verification of the event. TVX is essentially a
miniature camera mounted on a microchip which can be incorporated into any
security system and is activated by a device such as an infrared motion
detector. Images are converted into an electronic pulse and transmitted
instantaneously to a 24-hour monitoring centre where an operator can visually
verify that a burglary is in progress and notify the relevant authorities. TVX
International, a subsidiary of ASH, is responsible for the development,
marketing and sale of TVX.
TVX Inc, a Colorado based joint venture between ASH (40%), Cellular, Inc
(40%) and local management (20%) was formed in 1993 to market the TVX technology
in the US. This joint venture will allow TVX International the opportunity to
market TVX's visual verification technology in conjunction with Cellular Inc's
transmission capabilities.
DISCONTINUED OPERATIONS
In September 1995 ASH concluded the disposal of Modern Vitalcall Limited, a
wholly owned subsidiary, for B.P.1.5 million. In addition, the Group sold its
remaining Integrated Systems business in November 1995 for B.P.2.4 million, ASH
also disposed of its shareholdings in two related companies, Compagnie Generale
de Protection et Securite SA (France) for B.P.4.4 million and Microtech Security
(UK) Limited for B.P.1.0 million. These four disposals realized B.P.9.3 million
but resulted in a charge to the Profit and Loss account of approximately B.P.5.7
million, compensated for by a write back to reserves in respect of goodwill
written off of B.P.8.8 million.
During 1995 these operations produced B.P.1.4 million of operating profit
compared to full year profit in 1994 of B.P.2.1 million which, combined with the
loss on discontinued operations from prior years of B.P.2.4 million, produced a
net loss in 1994 of B.P.0.3 million.
Discontinued operations in 1994 and 1993 also include the operations of
Modern Integrated Systems Limited (MIS) which provided security and protection
for larger systems including fire detection, controlled entry, perimeter
protection and integrated systems.
MIS had net sales in 1993 of B.P.7.2 million and a loss in 1994, including
warranty and contract realization provisions of B.P.2.4 million (1993: loss
B.P.5.1 million).
5
INVESTMENTS
The only remaining investment at November 30, 1995 relates to a loan of
B.P.654,000 (US$1,000,000) to TVX Inc, a related company in the USA.
SUPPLIERS
Other than for Sonitrol operations ASH purchases its equipment from a number
of suppliers. Management believes that ASH is not dependent on any one supplier
for its equipment. Sonitrol operations source products from Advantor Corporation
pursuant to an agreement which is the subject of an arbitration (see Item 3.
Legal Proceedings).
SALES AND MARKETING
ASH provides services and equipment to customers in the commercial,
industrial, residential and public sectors. ASH's top ten customers did not
exceed 5% of net sales, and no single customer accounted for more than 2% of net
sales.
A typical contract provides for a rental of the alarm system with an initial
installation fee and an agreement for monitoring and maintenance services.
Initial contracts are generally for a term of five years, with automatic renewal
on an annual or biannual basis thereafter unless terminated by either party. A
substantial number of these contracts are beyond their original term and are now
rented on an automatic renewal basis. Historically, a high percentage of
customers automatically renew their contracts at the end of the initial five
year contract.
Sales of services and equipment are made by ASH's own sales force, primarily
based on recommendations and referrals made by existing customers and by third
parties, including insurance companies and law enforcement agencies. ASH also
relies on advertizing, trade shows and sponsorship to market its products. In
addition, ASH markets additional products and services to its existing
customers, which account for a significant percentage of recurring and new
business.
COMPETITION
The electronic security systems industry is generally highly competitive and
fragmented. In the intruder alarms market, there are a large number of local
installers offering a limited range of services and smaller systems to customers
in the residential and general retail sectors. In the UK and US there are only a
few large regional or national companies that offer a range of security systems,
comparable to that offered by the Group.
RESEARCH AND DEVELOPMENT
ASH believes that some limited expenditure on Group-sponsored research and
development ("R&D") is prudent in order to maintain its market position. The
principal R&D activities are undertaken in conjunction with third parties. The
Group's main involvement is to identify and specify its requirements to research
centers, original equipment manufacturers and suppliers.
The Group's principal expenditure on R&D is in respect of the TVX miniature
camera, originally developed in conjunction with Edinburgh University. Further
development of this technology has been partly underwritten by the Commission of
the European Community, with ASH and its partners receiving a grant of 3.3
million ECU (B.P.2.3 million) to assist in installing cameras at various sites
in European countries.
ASH's direct R&D expenditure was B.P.0.2 million, B.P.0.4 million and
B.P.1.3 million in 1995, 1994 and 1993 respectively.
6
TRADEMARKS
The Group has several registered trademarks, none of which is of material
importance to the Group taken as a whole.
GOVERNMENT REGULATION
In many of the countries in which they conduct business, Group companies
must obtain approval from appropriate government authorities to market their
systems, primarily because of the use of radio frequency technology. ASH
believes that all of its products are in compliance with currently applicable
governmental requirements. However, there can be no assurance that all products
of the Group subject to regulation will meet the requirements of such
regulations in all countries in which the Group markets its products, nor can
there be any assurance that adverse changes or amendments to existing
regulations will not occur.
EMPLOYEES
During 1995, ASH had an average of approximately 3,006 (1994: 3,009)
employees worldwide. Approximately 2,327, 77%, of the Group's employees are
located in the United Kingdom and Eire and 679, 23%, in the United States.
None of the Group's employees are subject to collective bargaining
agreements. ASH believes that its relations with its employees are generally
satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY
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ASH has several central stations in the United Kingdom, Eire and the
United States. For a discussion of the role of central stations, see Item 1.
"Description of Business--UK Operations". In addition to central stations, the
Group has freehold and leasehold interests in properties in various countries,
none of which is significant to the Group as a whole. See Note 8 of Notes to
Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
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Except as described below, there are no pending legal proceedings involving
the Group the outcome of which the management of ASH believes would have a
material adverse effect on the financial condition or results of operations of
the Group.
Advantor Corporation ("Advantor") commenced a proceeding against Sonitrol
Corporation ("Sonitrol") and ASH, Inc. by filing a demand for commercial
arbitration with the American Arbitration Association. Advantor alleges that
Sonitrol and ASH, Inc. (collectively, the "Companies") have breached the terms
of a Trademark License and Franchise Support Agreement (the "License Agreement")
executed by Advantor and Sonitrol, which License Agreement appoints Advantor
the exclusive supplier of certain products to the Sonitrol network. ASH, Inc.
is not a party to the License Agreement. Advantor seeks damages in excess of $1
million and termination of the License Agreement. The Companies' position is
that the claims are without merit. Moreover, based on discussions with personnel
from the Companies, counsel for the Companies believes that there are good
grounds to support the defenses which may be asserted by the Companies and that
these defenses, if sustained by the evidence at the arbitration hearing, should
be sufficient to defeat recovery against the Companies.
In the ordinary course of its business, ASH receives claims relating to
customer losses incurred as a result of the alleged failure of its security
systems owing to ASH's negligence or otherwise. In its customer contracts, ASH
seeks to limit its liability for such customer losses. These liability
limitation provisions have generally been held enforceable by courts in the
United Kingdom and the United States. Management believes that the Group
maintains insurance sufficient to protect the Group against the risks associated
with claims made in respect of customer contracts or otherwise.
ITEM 4. CONTROL OF REGISTRANT
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(a) As far as is known to the Company, it is not directly or indirectly
owned or controlled by another corporation or by any government.
(b) (i) As of April 30, 1996, there was no person known by the Company to
own more than 10% of the Company's Ordinary Shares. The 5% Convertible
Cumulative Redeemable Preference Shares of B.P.1
7
each are also voting securities and at April 30, 1996 the Company had been
notified of the following interests in the 5% Preference Shares in excess of 10%
of this class of shares:
Co-operative Insurance Society...................................... 18.72%
Lloyds Bank ID Nominees Limited UKAV Continuation Fund Inc.......... 20.34%
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(ii) As of April 30, 1996 , the total amount of the voting securities owned
by the directors and officers of the Company, as a group, was:
AMOUNT PERCENT OF
TITLE OF CLASS OWNED CLASS
- -------------- ------- ----------
Ordinary Shares of 10p each............................ 505,973 0.42%
5% Convertible Cumulative Redeemable Preference Shares
of B.P.1 each.......................................... 3,500 0.04%
(c) The Company does not know of any arrangements the operation of which may
result in a change in its control.
ITEM 5. NATURE OF TRADING MARKET
- --------------------------------
The principal trading market for the Ordinary Shares is The International
Stock Exchange of the United Kingdom and the Republic of Eire Limited (the
"London Stock Exchange"). The London Stock Exchange utilizes a classification of
equity securities based on 12 levels of normal market size, ranging from 200,000
to 500 shares. These levels of normal market size reflect the turnover by value
in each company's shares over the past 12 months. The Company's Ordinary Shares
have been allocated an initial normal market size of 10,000 shares. The normal
market size classification for each equity security is subject to quarterly
review in the light of trading volumes in the previous quarter and to
adjustment, as appropriate. UK market makers are normally required to make a two
way market in sizes of not less than the normal market size and to report all
transactions to the London Stock Exchange within three minutes. In respect of
securities with a normal market size greater than 2,000, transactions of not
more than three times normal market size are published immediately as to size
and price, but transactions in excess of three times normal market size are not
published until after 90 minutes.
The Company has a sponsored American Depositary Receipt ("ADR") facility
with The Bank of New York, as Depositary. The ADR holders hold American
Depositary Shares ("ADSs") representing Ordinary Shares which trade in the US on
the New York Stock Exchange (the "NYSE") under the symbol of ASI. Each ADS
represents two Ordinary Shares.
8
The following table shows, for the fiscal quarters indicated, the highest
and lowest bid prices of the ADSs as reported on the NYSE composite tape.
PENCE PER US DOLLAR PER
ORDINARY SHARE ADS (1)
-------------- --------------
HIGH LOW HIGH LOW
----- ----- ----- -----
1994
First quarter............................................... 140.0 127.0 4.50 3.88
Second quarter.............................................. 130.0 102.0 3.92 3.19
Third quarter............................................... 112.0 93.0 3.63 2.88
Fourth quarter.............................................. 104.0 71.0 3.25 2.13
1995
First quarter............................................... 74.0 59.0 2.38 1.75
Second quarter.............................................. 65.0 49.0 2.50 1.625
Third quarter............................................... 58.0 32.0 1.875 0.938
Fourth quarter.............................................. 44.0 19.0 1.50 0.563
1996
First quarter............................................... 32.0 21.0 1.0 0.563
Second Quarter (through April 30, 1996)..................... 39.0 26.0 1.25 0.813
- ------------
(1) The dollar prices reflect the actual prices per ADS.
At April 30, 1996, there were a total of 2,167 record holders of the
Company's Ordinary Shares, including those represented by the ADSs, of which 665
had registered addresses in the United States and held a total of 41,496,246
Ordinary Shares. At April 30, 1996 there were 41,486,707 ADSs held of record by
651 ADR holders. Since certain of the Company's Ordinary Shares and ADSs are
held by nominees, the number of holders may not be representative of the number
of beneficial owners.
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
- --------------------------------------------------------------------------
There are currently no United Kingdom exchange control restrictions on the
payment of dividends on the Ordinary Shares or the conduct of ASH's operations.
There are no restrictions under the Company's Memorandum and Articles of
Association or under English law that limit the right of non-resident or non-UK
owners to hold or vote the Company's Ordinary Shares.
ITEM 7. TAXATION
- ----------------
The following is a summary of the principal US Federal income and UK tax
consequences of the purchase, ownership and disposition of ADSs by an Eligible
US Holder (as defined below). The summary is (i) based upon tax laws and
practice of the United Kingdom and the United States as in effect on the date of
this Form 20-F, and (ii) based in part upon representations of the Depositary,
and assumes that each obligation in the Deposit Agreement among the Company, the
Depositary and holders of ADRs and any related agreement will be performed in
accordance with its terms. Future legislative, judicial or administrative
changes could modify the conclusions expressed below.
For the purposes of the current United Kingdom-United States double tax
conventions and for the purposes of the United States Internal Revenue Code of
1986, as amended (the "Code"), Eligible US Holders of ADSs will be treated as
owners of the Ordinary Shares underlying such ADSs.
The summary does not address the UK tax consequences to an Eligible US
Holder that is resident (or in the case of an individual, resident or ordinarily
resident) for United Kingdom tax purposes in the United Kingdom or that carries
on business in the United Kingdom through a branch or agency. Such a holder may
be subject to UK tax upon a disposition of Ordinary Shares or ADSs.
GENERAL
When the Company pays a dividend on the Ordinary Shares, the Company is
required to account to the United Kingdom Inland Revenue (the "Inland Revenue")
for advance corporation tax ("ACT"). The ACT rate is one-fourth of any dividend
paid after April 5, 1994 (the equivalent of 20% of the
9
dividend and the ACT). Based on the laws and practice of the United Kingdom,
under the provisions of the income tax convention between the United Kingdom
and the United States (the "Income Tax Convention"), an Eligible US Holder
will be entitled to receive from the Company at the same time as and together
with any dividend paid by the Company on the Ordinary Shares, an ACT-related
tax credit less a withholding tax ("UK Withholding Tax") currently equal to
15% of the aggregate of such credit and such dividend (the amount of such
extra cash payment is referred to herein as a "Tax Treaty Payment"). For
dividends paid after April 5, 1994, the ACT-related tax credit is an amount
equal to 20% of the sum of the dividend plus the ACT-related tax credit.
Thus, for example, receipt by an Eligible US Holder of a dividend of $80
paid after April 5, 1994 will entitle the Eligible US Holder to receive a Tax
Treaty Payment of $5 (an ACT-related tax credit of $20 less a UK withholding Tax
of $15) resulting in a net receipt after UK taxes but before US taxes of $85.
An Eligible US Holder is a record holder of ADRs that (i) is a citizen or
resident of the United States or that otherwise will be subject to US Federal
income tax on a net income basis in respect of the Ordinary Shares, (ii)
qualifies for the benefits provided by the Income Tax Convention for certain
recipients of dividend income and (iii) is entitled to use the arrangement
described below (the "Arrangement") under which the Tax Treaty Payment is paid
together with the associated dividend payment. See "An Arrangement for Direct
Receipt of Tax Treaty Payment".
QUALIFICATION FOR INCOME TAX CONVENTION BENEFITS
A shareholder will be entitled to the benefits of the Income Tax Convention
(and therefore will be entitled to receive Tax Treaty Payments) if it is a
resident of the United States for the purposes of the Income Tax Convention and
it derives and beneficially owns the dividend payable in respect of the Ordinary
Shares, unless:
(i) its holding is effectively connected with either (a) a permanent
establishment situated in the United Kingdom through which the shareholder
carries on business in the United Kingdom or (b) a fixed base in the United
Kingdom from which the shareholder performs independent personal services;
or
(ii) in the case of a shareholder that is a US corporation, the
shareholder (a) is a resident of the United Kingdom or (b) is a US
corporation at least 25% of the capital of which is held, directly or
indirectly, by persons that are not individual residents or nationals of the
United States, and (x) which has imposed on it by the United States in
respect of the dividend a tax substantially less than the tax generally
imposed by the United States on corporate profits, or (y) which receives
more than 80% of its gross income from sources outside the United States as
determined in accordance with the Income Tax Convention.
For these purposes, a partnership, an estate or a trust is a resident of the
United States only to the extent that the income derived by the partnership,
estate or trust is subject to US Federal tax as the income of a resident, either
in its hands or in the hands of its partners or beneficiaries, as the case may
be.
Special rules may apply if the shareholder (i) is exempt from tax in the
United States on dividends paid by the Company, (ii) is a US corporation which
controls, alone or with one or more associated corporations, at least 10% of the
voting stock of the Company or (iii) owns 10% or more of the Ordinary Shares,
and investors subject to those special rules are not Eligible US Holders for
purposes of this discussion.
AN ARRANGEMENT FOR DIRECT RECEIPT OF TAX TREATY PAYMENT
An Arrangement has been entered into with the Inland Revenue (based on the
"H" Arrangement, which is the usual administrative procedure operated in respect
of dividends paid on shares of UK companies represented by ADRs) under which a
shareholder that satisfies the additional requirements set forth in the next
sentence, will receive the Tax Treaty Payment to which it is entitled directly
from the Company rather than from the Inland Revenue at the same time as and
together with the payment of the associated cash dividend, without the need
for any additional action on its part.
10
The additional requirements are that (a) the shareholder must be liable for
US Federal income tax on such dividends, (b) if the shareholder is an estate or
trust, all of the beneficiaries must be resident in the United States, (c) the
shareholder must not be engaged in business or performing independent personal
services through a permanent establishment or fixed base in the United Kingdom
and (d) if a shareholder is a corporation that is an investment or holding
company, 25% or more of its capital must not be owned directly or indirectly by
persons who are not individual residents or nationals of the United States.
The Tax Treaty Payment is payable by the Company to an Eligible US Holder at
the same time as and together with the payment of the associated cash dividend
only pursuant to the Arrangement, and references in this Form 20-F to any Tax
Treaty Payment that may be payable by the Company should be construed
accordingly. A shareholder that is entitled to the Tax Treaty Payment but is not
eligible to receive the Tax Treaty Payment directly from the Company pursuant to
the Arrangement, may obtain the Tax Treaty Payment by making an individual claim
to the tax authorities, within six years of the end of the UK chargeable year in
which the related dividend was paid to the tax authorities for payment of that
amount at a later date. The claim for payment must be made in the manner and at
the times described in US Revenue Procedure 80-18, 1980-1 CB 623, and US Revenue
Procedure 81-58, 1981-2 C.B. 678. The first claim by a US shareholder for a
payment under these procedures is made by sending the appropriate UK form FD 13
in duplicate to the Director of the Internal Revenue Service Center with which
such US shareholder's last US Federal income tax return was filed.
Forms may be obtained from the Foreign Operations District, Internal Revenue
Service, Assistant Commissioner (International), 950 L'Enfant Plaza South, SW,
Washington, DC 20024, Attention: Taxpayers' Service. Because a claim is not
considered made until the UK tax authorities receive the appropriate form from
the Internal Revenue Service, forms should be sent to the Internal Revenue
Service well before the end of the applicable limitation period. Any claim after
the first claim by a US shareholder for payment under these procedures should be
filed directly with the UK Inspector of Foreign Dividends, Fitz Roy House, PO
Box 46, Nottingham, England NG2 1BD.
TAXATION OF DIVIDENDS
An Eligible US Holder will realize dividend income for US Federal income tax
purposes in an amount equal to the sum of any cash dividend paid by the Company
and the ACT-related tax credit, without reduction for the UK Withholding Tax
thereon. Such dividend income will generally not be eligible for the dividends
received deduction. Subject to certain limitations, the UK Withholding Tax will
be treated as a foreign income tax that may be claimed as a credit against the
US Federal income tax liability of an Eligible US Holder. The dividend income
will, for the purposes of computing the foreign tax credit allowable under the
Code, constitute income from sources without the United States, but with certain
exceptions, will be treated separately together with other items of "passive" or
"financial services" income.
TAXATION OF CAPITAL GAINS
Eligible US Holders that are not resident or ordinarily resident in the
United Kingdom for UK tax purposes will not be liable for UK tax on capital
gains realized on the disposition of ADSs unless the holder carries on a trade,
profession or vocation in the United Kingdom through a branch or agency or, in
the case of a trade, a permanent establishment and the Shares are used in or for
the purposes of the trade, profession or vocation or are used, held or acquired
for the purposes of the branch or agency or, in the case of a trade, the
permanent establishment.
An Eligible US Holder will realize a gain or loss for US Federal income tax
purposes on the sale or exchange of an ADS in the amount of the difference
between the amount realized and the Eligible US Holder's adjusted tax basis in
the ADS. Such gain or loss will be a capital gain or loss if the ADS was held as
a capital asset.
UNITED KINGDOM INHERITANCE ACT
Under the current double estate and gift taxation convention between the US
and the UK, Ordinary Shares held by an individual shareholder who for the
purpose of the convention is domiciled in
11
the US and is not domiciled in the UK nor a UK national at the date of death
or disposition, as the case maybe, will not, provided any tax chargeable in
the US is paid, be subject to UK inheritance tax on the disposition of shares
by way of gift or upon the individual's death unless the shares are part of
the business property of a permanent UK establishment of the individual or, in
the case of a shareholder who performs independent personal services, pertain
to a fixed base situated in the UK. In the exceptional case where the shares
are subject both to UK inheritance tax and to US Federal gift or estate tax,
the convention generally provides for double taxation to be relieved by means
of credit relief.
UNITED KINGDOM STAMP DUTY RESERVE TAX AND STAMP DUTY
Provided that the instrument of transfer is not executed in the United
Kingdom and remains at all times outside the United Kingdom, no UK stamp duty
will be payable on the acquisition or transfer of ADSs. Neither will an
agreement to transfer ADSs in the form of ADRs give rise to a liability to stamp
duty reserve tax.
Purchases of Ordinary Shares, as opposed to ADSs, will normally give rise to
UK stamp duty or stamp duty reserve tax at the rate of 50p per B.P.100 (or part
thereof) of the price payable for the Ordinary Shares at the time of the
transfer. This will continue when paperless transfers are introduced under CREST
in July 1996. Where Ordinary Shares are transferred to the Depositary or its
nominee, the only charge will generally be the higher charge of B.P.1.50 per
B.P.100 (or part thereof) of the market value of the Ordinary Shares so
transferred.
ITEM 8. SELECTED CONSOLIDATED FINANCIAL DATA
- --------------------------------------------
The selected consolidated financial data below has been derived from the
audited Consolidated Financial Statements of ASH, which have been examined by
ASH's independent auditors Binder Hamlyn, Chartered Accountants. The selected
consolidated financial data should be read in conjunction with, and are
qualified in their entirety by reference to, the Consolidated Financial
Statements and Notes thereto included elsewhere in this Form 20-F.
ASH's Consolidated Financial Statements are prepared in accordance with
accounting principles generally accepted in the United Kingdom ("UK GAAP"),
which differ in certain significant respects from accounting principles
generally accepted in the United States ("US GAAP"). In making commercial
decisions on various transactions, including acquisitions and dispositions,
management considered the presentation of these transactions in its Consolidated
Financial Statements under UK GAAP. If the Group had reported its financial
results in accordance with US GAAP, management may have made different
commercial decisions on such transactions or may have structured such
transactions differently. A summary of the significant differences between UK
GAAP and US GAAP relevant to ASH, together with reconciliations of net income
and shareholders' equity, are set forth in Note 28 of Notes to Consolidated
Financial Statements.
In October 1993, the UK Accounting Standards Board issued Financial
Reporting Standard No.3 ("FRS3") which prescribed a new format for the profit
and loss account, introduced a new primary statement, "The Statement of Total
Recognized Gains and Losses", and changed the basis of the calculation of
earnings per share. Items previously treated as extraordinary are now generally
treated as exceptional items within profit on ordinary activities before
taxation, resulting in large year on year variations in the level of income.
FRS3 also defines a discontinued business as an operation which is clearly
distinguishable, the disposal or termination of which has a material effect on
the nature and focus of the Group's activities, represents a material reduction
in the Group's operating facilities and is completed prior to the earlier of
three months from the balance sheet date or the date of approval of the UK
financial statements. The financial statements have been prepared in accordance
with FRS3.
UITF Abstract 13 was issued on June 8, 1995 and is effective for financial
statements ending on or after June 22, 1995. This Abstract requires ESOP debtors
to be reclassified as investments and for any permanent diminution in value to
be charged to the profit and loss account. The financial statements have been
prepared in accordance with UITF Abstract 13.
12
ITEM 8. SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
YEARS ENDED NOVEMBER 30,
------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1995(1)
------------- ------------- ------------- ------------- ----- -------
(AS RESTATED) (AS RESTATED) (AS RESTATED) (AS RESTATED)
B.P. B.P. B.P. B.P. B.P. $
IN MILLIONS, EXCEPT PER SHARE AMOUNTS
CONSOLIDATED INCOME STATEMENT DATA
Amounts in accordance with UK GAAP
Net Sales:
Rental and Maintenance income........ 67.7 72.8 84.7 88.5 86.1 131.8
Sales................................ 126.0 100.4 76.1 77.6 77.2 118.1
----- ----- ----- ----- ----- -------
193.7 173.2 160.8 166.1 163.3 249.9
----- ----- ----- ----- ----- -------
----- ----- ----- ----- ----- -------
Sales from Continuing Operations..... 121.5 127.3 143.1 154.3 153.7 235.2
Sales from Discontinued Operations... 72.2 45.9 17.7 11.8 9.6 14.7
----- ----- ----- ----- ----- -------
193.7 173.2 160.8 166.1 163.3 249.9
----- ----- ----- ----- ----- -------
----- ----- ----- ----- ----- -------
Income before Interest and similar
charges, Exceptional Items and
Taxation
Continuing Operations............. 25.4 20.8 23.3 24.2 20.3 31.1
Discontinued Operations........... 0.4 6.1 (3.7) (0.3) 1.4 2.1
----- ----- ----- ----- ----- -------
25.8 26.9 19.6 23.9 21.7 33.2
----- ----- ----- ----- ----- -------
----- ----- ----- ----- ----- -------
Income/(Loss) before Taxation........ (0.6) 40.7 7.3 (11.8) (7.4) (11.3)
Income/(Loss) after Taxation......... (4.2) 31.4 5.5 (12.8) (8.2) (12.6)
Net Income/(Loss).................... (4.4) 31.4 5.5 (12.8) (8.2) (12.6)
Net Income/(Loss) per Ordinary Share
(2).................................. (6.6)p 24.8p 2.3p (13.0)p (9.2)p (14.1)c
Dividends per Ordinary Share......... 4.9p 5.3p 3.05p -- -- --
----- ----- ----- ----- ----- -------
----- ----- ----- ----- ----- -------
Approximate amounts in accordance
with US GAAP:
Sales from Continuing Operations..... 131.8 135.9 160.8 166.1 163.3 249.9
Operating Income from Continuing
Operations (3)....................... (2.0) 12.0 10.9 (6.3) 4.4 6.7
Net Income/(Loss) from:
Continuing Operations............... (17.4) (1.5) (3.5) (23.6) (14.7) (22.4)
Discontinued Operations............. (0.8) 28.4 -- -- --
----- ----- ----- ----- ----- -------
Total Net Income/(Loss).............. (18.2) 26.9 (3.5) (23.6) (14.7) (22.4)
----- ----- ----- ----- ----- -------
Net Income/(Loss) per Ordinary Share:
From Continuing Operations.......... (15.4)p 1.0p (3.0)p (19.7)p (12.3)p (18.8)p
From Discontinued Operations........ (0.8)p 21.5p -- -- -- --
----- ----- ----- ----- ----- -------
Total (4)............................ (16.2)p 22.5p (3.0)p (19.7)p (12.3)p (18.8)p
----- ----- ----- ----- ----- -------
CONSOLIDATED BALANCE SHEET DATA (AT
PERIOD END)
Amounts in accordance with UK GAAP:
Total Assets......................... 336.9 281.3 296.0 275.9 269.4 412.2
Long Term Debt(5).................... 184.1 128.6 152.0 78.7 81.0 123.9
Approximate amounts in accordance
with US GAAP:
Total Assets......................... 494.4 456.1 464.5 436.0 419.6 642.0
Long Term Obligations and Redeemable
Preference Shares.................... 236.0 177.9 200.7 127.3 129.6 198.3
Ordinary Shareholders' Equity (6).... 142.6 166.3 158.3 130.9 117.2 179.3
----- ----- ----- ----- ----- -------
- ------------
(1) For the convenience of the reader, pound sterling amounts have been
translated into US dollars using the Noon Buying Rate on November 30, 1995
of B.P.1.00 = $1.53.
(Footnotes continued on following page)
13
(Footnotes continued from preceding page)
(2) The calculation of net income per Ordinary Share in accordance with UK GAAP
is based on the total net income including discontinued operations and the
weighted average number of Ordinary Shares outstanding during the year, as
adjusted for a one-for-forty eight bonus issue in July 1994 (1991: 112.9
million, 1992: 115.0 million, 1993: 116.5 million, 1994: 119.5 million and
1995: 119.6 million) and after taking account of preference share dividends
(1991:B.P.3,005,000, 1992: B.P.2,874,000, 1993: B.P.2,844,000, 1994:
B.P.2,839,000 and 1995: B.P.2,839,000 million).
(3) Operating income from continuing operations under US GAAP represents income
before net interest expense, including results of related companies,
exceptional items and in 1994 the provision against the investment in Arius
of B.P.20.1 million. See Note 28 of Notes to Consolidated Financial
Statements.
(4) The calculation of net income per Ordinary Share in accordance with US GAAP
is based on the weighted average number of Ordinary Shares outstanding
including common stock equivalents during the year (1991: 112.9 million,
1992: 136.6 million, 1993: 116.5 million, 1994: 119.5 million and 1995 119.6
million) and adjusted to take account of Preference Share dividends and the
one-for-forty eight bonus issue in July 1994. Under US GAAP the net income
(loss) from discontinued operations represents the results of the loss
prevention businesses and the profit on sale of these operations in 1992.
Net income (loss) from continuing operations represents the results of all
other operations. See Note 28 of Notes to Consolidated Financial Statements.
(5) Long Term Debt includes 1991: B.P.57.9 million, 1992: B.P.43.5 million,
1993: B.P.43.6 million, 1994: B.P.43.7 million and 1995: B.P.43.8 million in
respect of the net amount of Convertible Capital Bonds. Long term debt
includes 1991: B.P.33.8 million; 1992: B.P.35.6 million, and 1993: B.P.32.4
million in respect of the Stapled Units, and in 1994: B.P.35.0 million and
1995: B.P.36.7 million in respect of the 8.28% Senior Notes.
(6) Shareholders' funds, calculated in accordance with UK GAAP, include the 5%
and 6% Convertible Cumulative Redeemable Preference Shares which aggregated
B.P.51.9 million in 1991, B.P.49.3 million in 1992, B.P.48.7 million in
1993, B.P.48.6 million in 1994 and B.P.48.6 million in 1995. Ordinary
shareholders' equity, calculated in accordance with US GAAP, does not
include such amounts. See Note 28 of Notes to Consolidated Financial
Statements.
DIVIDENDS
Any interim dividend on the Company's Ordinary Shares is normally declared
by the Board of Directors in July of each year and paid in December. A final
dividend may be recommended by the Board of Directors in March following the end
of the financial year to which it relates and, after approval by the
shareholders at the Annual General Meeting in April, is usually paid in June.
The following table sets forth the amounts of interim, final and total
dividends paid on each Ordinary Share in respect of each financial year
indicated, increased by ACT but before deduction of UK withholding tax (both as
described under Item 7. "Taxation of Dividends"), and translated into US dollars
per ADS (each ADS representing two Ordinary Shares) at the Noon Buying Rate on
each of the respective payment dates.
TRANSLATED INTO
PENCE PER ORDINARY US DOLLARS
SHARES PER ADS
------------------------- --------------
YEAR ENDED NOVEMBER 30, INTERIM FINAL TOTAL INTERIM FINAL TOTAL
----------------------- ------- ----- ----- ------- ----- -----
1991............................................... 2.76 3.77 6.53 0.10 0.14 0.24
1992............................................... 3.00 3.81 6.81 0.10 0.12 0.22
1993............................................... 3.81* -- 3.81 0.12* -- 0.12
1994............................................... -- -- -- -- -- --
1995............................................... -- -- -- -- -- --
- ------------
* In July 1993 the Company announced an interim dividend of 3.05p (net) with an
alternative of an enhanced scrip dividend to the value of 4.575p (net), with
substantial ACT and balance sheet benefits.
14
It is the intention of the Board to adopt a dividend policy which is closely
linked to the future growth of the continuing businesses.
The payment of future dividends will depend upon the Group's earnings,
financial condition and such other factors as the Board of Directors deems
relevant. It should be noted that the Company is unlikely to be in a position to
pay dividends to Preference or Ordinary shareholders for the time being.
EXCHANGE RATES
The following table shows, for the periods and dates indicated, certain
information regarding the exchange rate for the pound sterling, based on the
Noon Buying Rate for pounds sterling expressed in US dollars per B.P.1.00.
PERIOD AVERAGE
YEAR ENDED NOVEMBER 30, END RATE HIGH LOW
- ---------------------------------------------------------- ------ ------- ------ ------
1991...................................................... 1.7655 1.7679 1.9990 1.6015
1992...................................................... 1.5135 1.7849 2.0035 1.5095
1993...................................................... 1.4852 1.4994 1.5975 1.4175
1994...................................................... 1.4995 1.4931 1.5187 1.4615
1995...................................................... 1.5302 1.5797 1.6073 1.5302
1996 (through April 30)................................... 1.5050 1.5307 1.5602 1.5037
- ------------
* The average of the Noon Buying Rates on the last day of each month during the
period.
Fluctuation in the exchange rate between the pound sterling and the US
dollar will affect the dollar equivalent of the pound sterling prices of the
Company's Ordinary Shares on the London Stock Exchange and, as a result, is
likely to affect the market price of ADSs in the United States.
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATIONS
- -------------
The following discussion and analysis is based on the Consolidated Financial
Statements of the Group prepared in accordance with UK GAAP. The principal
differences between UK GAAP and US GAAP as they relate to the Group are
discussed in Note 28 of Notes to Consolidated Financial Statements. In making
commercial decisions on various transactions, including acquisitions and
dispositions, management considered the presentation of these transactions in
its Consolidated Financial Statements under UK GAAP. If the Group had reported
its financial results in accordance with US GAAP, management may have made
different commercial decisions on such transactions or may have structured such
transactions differently.
GROUP OVERVIEW
Over the last three years the results of ASH have been adversely affected by
the difficult trading conditions in both of its primary markets. In 1995 there
has been a gradual improvement in trading conditions in the UK but the economic
climate in California remains difficult.
FISCAL 1995 COMPARED WITH FISCAL 1994
In 1995 the Group reported a reduction in revenues of 1.7% from B.P.166.1
million to B.P.163.3 million. The 1995 results included B.P.9.6 million of
income from discontinued operations compared with B.P.11.8 million from these
operations in 1994. Consequently the underlying movement in revenues from
continuing operations was a slight reduction of 0.4% from B.P.154.3 million in
1994 to B.P.153.7 million in 1995, principally as a result of a 3.6% adverse
impact from the UK sterling to US dollar exchange rate. Within continuing
operations there was a growth in recurring rental and maintenance revenues with
a 1.1% improvement from B.P.81.5 million in 1994 to B.P.82.4 million in 1995.
Recurring revenues of the Group now represent some 54% of total income.
15
In the UK and Eire revenues from continuing operations increased during the
year by 1.0% to B.P.111.9 million. Recurring revenues in the UK and Eire
continue to represent some 50% of total revenues.
In the US, revenues remained constant at $66.2 million. Installation sales
increased by 0.4% to $24.8 million (1994: $24.6 million) with recurring revenues
decreasing by 0.7% to B.P. $41.4 million (1994: $41.8 million).
Income before interest, exceptional items and taxation reduced by
approximately B.P.2.2 million from B.P.23.9 million in 1994 to B.P.21.7 million
in 1995. Discontinued operations reported losses of B.P.0.3 million in 1994 and
profits of B.P.1.4 million in 1995. Income before interest, exceptional items
and taxation from continuing operations consequently reduced by B.P.4.0 million
(16.5%) from B.P.24.2 million in 1994 to B.P.20.2 million in 1995.
Operating profits in UK and Eire reduced by 3.4% to B.P.18.4 million as a
result of trading losses in Telecom Security, Eire and TVX together with a
disappointing first half performance of the UK Sonitrol franchise, which
contributed B.P.0.5 million in 1995 compared with B.P.1.3 million in the
previous year. Results in the core business, Modern Security Systems, improved
by 2.6% to B.P.19.6 million on increased revenues of B.P.91.4 million at a
margin of 21.4%,which is consistent with the prior year.
Operating profits in the US fell by 13.2% to $10.0 million (1994: $11.5
million). Profits in API fell by 9.9% to $6.0 million, primarily due to the sale
of the residential portfolio in the previous year. The result of Sonitrol
Management Corporation was adversely impacted by an indifferent trading
performance together with increased communication facility costs.
Discontinued operations relate to Modern Vitalcall Limited and Integrated
Systems operations in the UK and two related companies, Compagnie Generale de
Protection et Securite SA in France and Microtech Security (UK) Limited in the
UK. During 1995 these operations produced B.P.1.4 million of operating profit
compared to full year profit in 1994 of B.P.2.1 million which, combined with the
loss on discontinued operations from prior years of B.P.2.4 million, produced a
net loss in 1994 of B.P.0.3 million.
The principal components of exceptional items in 1995 were the sale of
discontinued operations, additional charges at API Security, refinancing costs
and amounts written off in respect of the Employee Share Ownership Plan (ESOP).
Details of these exceptional charges are set out as follows.
In September 1995 ASH concluded the disposal of Modern Vitalcall Limited, a
wholly owned subsidiary, for B.P.1.5 million. In addition, the Group sold its
remaining Integrated Systems business in November 1995 for B.P.2.4 million. ASH
also disposed of its shareholdings in two associated undertakings, Compagnie
Generale de Protection et Securite SA (France) for B.P.4.4 million and Microtech
Security (UK) Limited for B.P.1.0 million. These four disposals realised B.P.9.3
million but resulted in a charge to the Profit and Loss account of approximately
B.P.5.7 million, compensated for by a write back to reserves in respect of
goodwill written off of B.P.8.8 million.
To enhance the generation of cash and profit in API Security, the Board
approved a move to smaller and less expensive premises on the expiry of the
present lease in May 1996 and the implementation of enhanced computer monitoring
and business systems. As a consequence the Group has written off the cost of
existing leasehold improvements and computer systems of B.P.2.4 million.
During 1995 the Group has incurred external refinancing costs of
professional advisers relating to assessing the various options to restructure
the Balance Sheet and thus improve shareholder value. In 1995 these costs
amounted to B.P.3.1 million (1994: B.P.1.6 million).
UITF Abstract 13 was issued on June 8, 1995 and is effective for UK
financial statements ending on or after June 22, 1995. This Abstract requires
ESOP receivables to be reclassified as investments and for any permanent
diminution in value to be charged to the Profit and Loss account. The Board
believe that a prudent method of application of this Abstract is to value the
stock held by the ESOP at market price as at November 30, 1995. As a result, the
shortfall between the market value of the ESOP's stock and the amount receivable
from the ESOP has been charged to the Profit and Loss account in 1995. The
16
amount provided in earlier years (1994: B.P.450,000; 1993: B.P.200,000) has also
been reclassified as an exceptional item in the results for those years.
The net charge for exceptional items in 1994 of B.P.23.2 million related to
a write off of B.P.20.2 million in respect of the investment in Arius Inc,
B.P.450,000 in respect of the ESOP, refinancing costs of B.P.1,582,000 and
B.P.993,000 paid to the former Chairman and Chief Executive.
Net interest charges were higher in 1995 at B.P.14.9 million (1994: B.P.12.5
million). This was due to an increase in bank margin and higher interest rates
in the UK and USA.
The tax charge for 1995 was B.P.0.8 million compared to B.P.1.0 million for
the previous year. The tax charge in both 1995 and 1994 comprises mainly Advance
Corporation Tax (ACT) resulting from the preference dividends accrued or paid in
the year. ACT is presently deemed irrecoverable, although it is available for
offset against future UK mainstream corporation tax liabilities. ACT has been
accrued in full even though dividends of B.P.1,233,000 in respect of the 6%
Preference Shares for the six months to November 1995 have not been paid during
the year but have been accrued in these financial statements. Accrued ACT
written off in 1995 amounted to B.P.355,000. Based on current projections no
provision is required for deferred tax under UK accounting practice.
The net loss reduced from B.P.12.8 million in 1994 to B.P.8.2 million in
1995 primarily due to the benefit of a reduction in exceptional items of B.P.9.0
million, from B.P.23.2 million in 1994 to B.P.14.2 million in 1995 offset by a
reduction in operating profits from continuing operations of B.P.4.0 million and
an increase in profits from discontinued operations of B.P.1.7 million. Net
interest charges increased by B.P.2.3 million but taxation charges reduced by
B.P.0.2 million.
After deduction of Preference Share dividends of B.P.2.8 million in 1995 and
1994, the net loss attributable to ordinary shareholders was B.P.11.0 million in
1995 compared to loss of B.P.15.6 million in 1994. The loss per Ordinary Share
in 1995 was 9.2p compared to a loss of 13.0p per share in 1994.
FISCAL 1994 COMPARED WITH FISCAL 1993
- -------------------------------------
In 1994 the Group achieved an overall growth in revenues of 3.3% from
B.P.160.8 million to B.P.166.1 million. The results included income from
discontinued operations of B.P.11.8 million in 1994 compared with B.P.17.6
million in 1993 and consequently the underlying growth in revenues from
continuing operations was 7.8% from B.P.143.1 million in 1993 to B.P.154.3
million in 1994. The growth in recurring rental and maintenance revenues was
significant with a 4.4% improvement from B.P.78.7 million in 1993 to B.P.82.2
million in 1994. Recurring revenues of the Group represented some 53.3% of total
income.
In the UK and Eire revenues from continuing operations increased during the
year by 11.1% to B.P.110.8 million. The growth in recurring revenues of 10.6% to
B.P.54.8 million was helped by the first full year's trading of Telecom Security
("TSL") within the Group. Recurring revenues in the UK and Eire represented
49.5% of total revenues.
In the US, revenues increased by 1.5% from $65.5 million to $66.4 million
but on conversion to sterling revenues remained constant at B.P.43.5 million.
Installation sales increased by 13.8% to $24.7 million (1993: $21.7 million)
with recurring revenues decreasing by 4.7% to $41.8 million (1993: $43.8
million). The fall in recurring revenues reflected the difficult Californian
economic climate and the move by some customers from rental to outright sale.
Income before interest, exceptional items and taxation increased by
approximately B.P.4.3 million from B.P.19.6 million in 1993 to B.P.23.9 million
in 1994. Discontinued operations reported losses of B.P.3.6 million in 1993 and
B.P.0.3 million in 1994. Income before interest, exceptional items and taxation
from continuing operations consequently increased by B.P.0.9 million (4.1%) from
B.P.23.3 million in 1993 to B.P.24.2 million in 1994.
Operating profits of the principal operating companies in the UK and Eire
reduced by 1.9% to B.P.19.0 million. Results in the core business, Modern
Security Systems, continued to improve but the results were adversely affected
by the disappointing results in both Eire and TSL. Management changes have taken
place in both operations in 1995.
17
Operating profits of the principal operating companies in the US increased
by 0.5% from $11.4 million to $11.5 million but fell slightly on conversion to
sterling by 1% to B.P.7.5 million (1993: B.P.7.6 million). The profit on the
sale of the API residential portfolio of B.P.1.0 million was offset by abortive
acquisition costs and the costs of closing the Florida office. The results of
Sonitrol Management Corporation were adversely impacted due to the higher
element of lower margin outright sale business compared with 1993. This was
compensated for by improved margins as a result of reduced operating costs in
API.
Operations discontinued during 1994 relate to Modern Integrated Systems. The
1994 loss of B.P.2.4 million is a result of project overrun costs, increased
provisions for warranty work and a significant downgrade on contract realization
values. In addition, operations discontinued during 1995 have also been restated
as discontinued operations in 1994 and 1993. These businesses produced operating
profits of B.P.2,121,000 in 1994 and B.P.1,332,000 in 1993. Consequently
restated losses from discontinued operations amounted to B.P.0.3 million in 1994
and B.P.3.6 million in 1993.
The final result for 1994 was impacted severely by exceptional items. The
principal component of exceptional items in 1994 relates to the provision
against the investment in Arius Inc, a related company, where the Group had a
significant shareholding. The Board had taken the decision to dispose of this
holding since it was not regarded as part of continuing core activities.
However, the announcement by Arius that it was experiencing a number of serious
financial and trading difficulties caused the Board to feel that, as a matter of
prudence, it was right to provide against the full carrying value of the
investment, together with all potential liabilities and to write off the value
of goodwill with respect to Arius previously taken to non-distributable
reserves. The effect of this decision was to write off B.P.20.2 million ($30.8
million) to the profit and loss account. Arius Inc subsequently filed for
protection under Bankruptcy Code, Chapter 7, on May 8, 1995. Exceptional items
in 1994 also include a payment to the former Chairman and Chief Executive of
B.P.993,000, refinancing costs of B.P.1,582,000 and a provision of B.P.450,000
in respect of the ESOP. The charge for exceptional items in 1993 related to
B.P.1.4 million for the fundamental reorganization and restructuring in the UK
and B.P.200,000 in respect of the ESOP.
Interest charges were higher in 1994 at B.P.12.5 million (1993: B.P.10.7
million). This was due to a significant increase in international interest rates
and a move from US dollar to sterling borrowings to simplify the Group's
currency hedging arrangements.
The tax charge for 1994 was B.P.1.0 million compared to B.P.1.8 million for
the previous year. The tax charge in both 1994 and 1993 comprises mainly Advance
Corporation Tax (ACT) resulting from the payment of preference dividends in 1994
and both preference and ordinary dividends in 1993. ACT is presently deemed
irrecoverable, although it is available for offset against future UK mainstream
corporation tax liabilities. The tax charge for 1993 was reduced due to the
payment of scrip dividends to Ordinary Shareholders. Based on projections no
provision was required for deferred tax.
Net income decreased from B.P.5.5 million in 1993 to a net loss of B.P.12.8
million in 1994 primarily due to the impact of the provision against the
investment in Arius Inc of B.P.20.2 million. After deduction of preference share
dividends of B.P.2.8 million in 1994 and 1993, the net (loss)/income
attributable to ordinary shareholders was a loss of B.P.15.6 million in 1994
compared to a profit of B.P.2.7 million in 1993. The loss per Ordinary Share in
1994 was 13.0p compared to a profit of 2.3p per share in 1993. Adjusted earnings
per Ordinary Share prior to the amount written off the investment in Arius Inc
were 3.8p per share in 1994.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 1995 the Group had three main sources of debt funding: bank
facilities, including a committed Multiple Option Loan Facility (the "MOF"),
Senior Notes and Convertible Capital Bonds.
In May 1989, the Company entered into the MOF with a group of United Kingdom
and international banks led by Lloyds Bank PLC, which was originally fully
underwritten for B.P.90 million
18
until May 1994 and B.P.70 million until May 1995. The acquisition of API
Security in August 1989 for $105 million was funded by drawings under the MOF.
In September 1990, API Security Inc. issued stapled units of 10.73%
Guaranteed Subordinated Serial Notes (the "Stapled Units" issue) to The
Prudential Insurance Company of America for a total consideration of $60 million
(before expenses). The net proceeds of the Stapled Units issue were used to
repay dollar borrowings drawn under the MOF in connection with the acquisition
of API.
In May 1991, the Company, through a finance subsidiary, issued B.P.60
million of 9.5% Convertible Capital Bonds due 2006 in the Euromarkets. The
proceeds of the issue were used to repay a portion of the Group's variable rate
sterling short to medium term borrowings.
In 1992, the loss prevention businesses were sold for B.P.153 million which
enabled bank debt to be largely eliminated on receipt of the proceeds on July
30, 1992. In September 1992 the Company acquired Sonitrol and SMC for B.P.26
million. In addition some B.P.15 million of 9.5% Convertible Capital Bonds were
repurchased.
In 1993 the Company acquired TSL for a consideration net of cash acquired of
B.P.4.7 million and repaid $6 million (B.P.3.9 million) in respect of the
Stapled Units.
On May 27, 1994 the Company issued $60,721,638, 8.28% Senior Notes of which
$5,643,273 was in respect of yield maintenance. The Notes were originally due
for repayment on May 27, 1999. The Notes were issued to the Prudential Insurance
Company of America to replace the Stapled Units previously issued by API
Security Inc.
At November 30, 1994 bank debt (net of cash) was broadly unchanged when
compared with 1993 at B.P.79 million. In addition, the total amount outstanding
under the Loan Notes and the Convertible Capital Bonds at B.P.78.7 million, was
also unchanged.
At November 30, 1995 the Group had available bank facilities totalling
approximately B.P.89.0 million, of which approximately B.P.83.4 million were
committed, including B.P.66.3 million under the MOF. ASH had short term debt of
approximately B.P.83.1 million at November 30, 1995 (1994: B.P.82.6 million) and
long term debt outstanding, excluding the B.P.43.8 million (1994: B.P.43.7
million) of Convertible Capital Bonds, of B.P.0.4 million (1994: B.P.Nil).
On December 21, 1995, the Group reached agreement ("the Credit Agreement")
with its principal bankers to extend the majority of the Group's committed
facilities of B.P.83.4 million through January 2, 1998. This new facility
consolidates the B.P.66.3 million previously available under the MOF facility
and the majority of the B.P.17.1 million previously available from bilateral
facilities. Additionally the Group had uncommitted overdraft and working capital
lines at November 30, 1995 totalling in excess of B.P.5.6 million. The terms of
the 8.28% Senior Notes were also amended by agreement with the Prudential
Insurance Company of America on December 21, 1995. The maturity date of the
Senior Notes has also been amended to January 2, 1998, and the terms of the
Senior Notes and the bank facilities are treated on an equivalent basis. As
part of the aforementioned agreement with the Group's principal bankers and the
Prudential Insurance Company of America, the Group's indebtedness under the
Credit Agreement and to the holders of the Senior Notes is secured by pledges
over the majority of the assets of the Group.
A significant proportion of the Group's assets are held in the United
States. The Group manages its exposure to fluctuations in US dollar exchange
rates by borrowing US dollars. The amount hedged includes all US net assets as
calculated under UK GAAP together with an element of goodwill. Exchange
movements on assets including goodwill and borrowings are offset in reserves.
During 1995 the Group disposed of a number of peripheral businesses so as to
reduce debt and enable the Group to focus on its core businesses, in the UK,
Modern Security Systems and TSL, and in the US, API and Sonitrol, to ensure
positive trading cash flows to reduce debt and increase shareholders' funds.
The Board continues to address the high level of gearing as priority and during
1995 the Group incurred significant costs relating to the various options to
ease the complexities of the balance sheet and thus improve shareholder value.
These activities will continue until this problem is resolved.
19
EFFECT OF INFLATION
For each of the three years ended November 30, 1995, inflation did not have
a significant effect on Group income before interest and taxation.
ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT
The Directors and officers of the Company at May 20, 1996 were:
Lord Lane of Horsell......................... Chairman*
Graeme A Elliot.............................. Director* and Deputy Chairman
Anthony P Dignum............................. Director and Chief Executive
Michael J Hawker............................. Director and Chairman, ASH, UK
Peter M Bertram.............................. Group Finance Director
John P Smith................................. Director & Chief Operating Officer, ASH, UK
Simon H J A Knott............................ Director*
Sir Kenneth Newman........................... Director*
C Dawson Buck................................ Director*
Ronald H Oliver.............................. Director*
Sudhakar A Pandit............................ Director*
Paul D Strudwick............................. Company Secretary
- ------------
* Non-executive directors. Non-executive directors are not full-time employees
of the Group.
LORD LANE OF HORSELL joined the Board in May 1992 and became Chairman in
October 1994. He was formerly senior partner of Binder Hamlyn and holds a number
of other public company directorships.
GRAEME ELLIOT joined the Board in 1993 and became Deputy Chairman in October
1994. He holds a number of additional non-executive directorships, including The
William Hill Group Limited and NSM PLC.
ANTHONY DIGNUM has been Group Chief Executive and a member of the Board
since joining ASH in July 1995. He had previously held a number of senior
positions in retailing, including Retail Group Finance Director of Dixons Group
PLC.
MICHAEL HAWKER has been with the Group since 1965 and was appointed to the
Board in 1981. He is Chairman of the Group's UK operations, having previously
managed its Security Systems division.
PETER BERTRAM joined as Group Finance Director in 1993, and has
responsibility for financial and treasury matters.
JOHN SMITH joined the Board in 1993. He is chief operating officer of ASH,
UK. He has held a variety of positions within the Group since he joined in 1984.
SIMON KNOTT joined the Board in 1976 and is Chairman of Rights and Issues
Investment Trust Plc and is a director of a number of other United Kingdom
public companies.
SIR KENNETH NEWMAN joined the Board in 1987, prior to which he was
Commissioner of the Metropolitan Police from 1982 until his retirement in 1987.
Prior to that appointment he had served as Chief Constable of the RUC and as HM
Inspector of Constabulary for England and Wales.
DAWSON BUCK was formerly Chief Executive Officer of the Group's UK
operations, having previously managed its loss prevention businesses. Following
the sale of the loss prevention businesses to Sensormatic, he became President
of Sensormatic International, and is now a non-executive Director of ASH.
RONALD OLIVER is President of Westport Asset Management Inc, a registered
investment advisor. He was appointed to the Board on May 23, 1995.
SUDHAKAR PANDIT retired from Thorn EMI PLC in March 1995. He was previously
Finance Director of Thorn Security and Electronics. He was appointed to the
Board on May 23, 1995.
20
PAUL STRUDWICK joined the Group in May 1985 and has been Company Secretary
since December 1989.
The Company's Articles of Association provide that at each Annual General
Meeting of the Company one-third (rounded down to the number nearest to
one-third) of the Directors liable to retire by rotation shall retire from
office and then be eligible for re-election by shareholders. No executive is
subject to retirement by rotation. Any new Director appointed between Annual
General Meetings must be elected at the next Annual General Meeting to continue
in office.
In accordance with these provisions Lord Lane of Horsell retires by rotation
at the next Annual General Meeting and being eligible, offers himself for
re-election. Mr R H Oliver, Mr S A Pandit and Mr A P Dignum, having been
appointed directors since the last Annual General Meeting, retire and being
eligible offer themselves for re-election.
The unexpired period of the service contract of Mr A P Dignum is 24 months.
Lord Lane of Horsell, Mr R H Oliver and Mr S A Pandit do not have service
contracts.
Mr M J Hawker, Mr C D Buck, Mr S H J A Knott and Sir Kenneth Newman will be
retiring at the Annual General Meeting.
The business of the Company is managed by the Board of Directors. The
Directors, other than the non-executive Directors, serve as executive officers
of the Company.
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
- -----------------------------------------------
For the year ended November 30, 1995, the aggregate compensation of the
Directors and officers of the Company paid or accrued was B.P.884,000. The
aggregate amount set aside or accrued by the Group for the year ended November
30, 1995 to provide pension, retirement or similar benefits for all Directors
and the officers of the Company was B.P.44,000.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
- -----------------------------------------------------------------------
OPTION SCHEMES
Share Option Scheme. Under the terms of the Share Option Scheme (the
"Scheme"), full time directors and employees of the Company and its subsidiaries
may participate in the Scheme at the discretion of the Board of Directors. The
Scheme involves a participant being granted an option to subscribe for Ordinary
Shares at the higher of the nominal value and the market price of such Ordinary
Shares at the time of grant. Except in certain circumstances, options may not be
exercized before the third or on or after the tenth anniversary of their grant.
A participant may not hold options at any one time such that the aggregate
market value (calculated at the time of grant) of the Ordinary Shares which may
be acquired on the exercise of such options would exceed four times his annual
remuneration. The consideration for the grant of an option may not exceed B.P.1.
As of March 30,1996, a total of 1,804,192 Ordinary Shares were subject to option
under the Scheme at subscription prices between 130p and 269.3p per share,
exercizable by March 29, 2003.
ESOP Executive Share Option Scheme. The ESOP Executive Share Option Scheme
(the "Executive Scheme") is divided into Part A, relating to options approved by
the United Kingdom Inland Revenue, and Part B, relating to unapproved options.
Under the terms of Part A, full time directors and employees of the Company and
its subsidiaries may participate at the discretion of the Board of Directors.
Under the terms of Part B, all directors and employees of the Company and its
subsidiaries may participate at the discretion of the Board of Directors. Part A
options qualify for special tax relief under the UK Income and Corporation Tax
Act of 1988 and may not be exercized before the third or after the tenth
anniversary of their grant. Part B options do not qualify for such tax relief
and may not be exercized before the third or after the seventh anniversary of
their grant. The Part A options are included with the options granted under the
Share Option Scheme when determining the total number of options which may be
held by a participant at any one time as described above. The total number of
Part B options which may be held at any one time are subject to a separate
limit such that the aggregate
21
market value (calculated at the time of grant) of the Ordinary Shares which
may be acquired on the exercise of such options may not exceed four times a
participant's annual remuneration.
As of March 30, 1996, a total of 772,000 Ordinary Shares were subject to
option under the Executive Scheme at subscription prices between 245p and 269.3p
per share, exercizable by April 30, 2000.
Sharesave Scheme 1993. ("The Sharesave Scheme") UK Resident directors and
employees of the Company and its subsidiaries may participate in the Scheme with
the qualifying length of service being at the discretion of the Board of
Directors. The scheme involves the participants entering into an Inland Revenue
approved savings contract with contracted savings of between B.P.10 and B.P.250
per month over 5 years. Options are granted at the time of entry to the
Sharesave Scheme to subscribe for Ordinary Shares at the higher of the nominal
value and 80 per cent of the middle market value of such shares on a specified
date on which invitations to apply for options are issued. Except in certain
circumstances, options may only be exercized during the six month period
commencing on the fifth anniversary of the commencement of the related savings
contract.
As of March 30, 1996 a total of 337,668 Ordinary Shares were subject to
option under the Sharesave Scheme at a subscription price of 128p per share,
exercisable by October 1, 1998.
Executive Share Option Scheme 1993. At the Annual General Meeting held April
29, 1993 the shareholders approved the introduction of the Executive Share
Option Scheme 1993 ("The 1993 Executive Scheme"). The terms of the 1993
Executive Scheme are broadly in line with the terms of the Share Option Scheme
set out above with the exception that under the 1993 Executive Scheme up to one
quarter of the grants made may be at a price which is 85 per cent of the middle
market price on a day shortly before the date of the grant, provided that
certain Inland Revenue conditions are satisfied and that the resultant price is
equal to or exceeds nominal value. At March 30, 1996 no options had been granted
under the 1994 Executive Scheme.
The following options were held by the Directors and officers as at May
20,1996:
NUMBER OF ORDINARY
NAME SHARES UNDER OPTION
---- -------------------
Lord Lane of Horsell..................................... --
M J Hawker............................................... 490,000
P M Bertram.............................................. 150,000
J P Smith................................................ 157,999
S H J A Knott............................................ 40,000
Sir K Newman............................................. 40,000
G A Elliot............................................... --
C D Buck................................................. 463,001
R H Oliver............................................... --
S A Pandit............................................... --
P D Strudwick............................................ 119,999
----------
Directors and officers as a group........................ 1,460,999
----------
----------
WARRANTS
On September 20, 1990, as part of the Stapled Units issue, warrants were
issued in respect of 3,706,680 Ordinary Shares to The Prudential Insurance
Company of America at a price of 300p each, exercizable at any time up to
September 20, 2002.
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
- -------------------------------------------------------
There have been no material transactions during the last three years to
which any Director or officer, or 10% shareholder, or any relative or spouse
thereof was a party. There is no significant outstanding indebtedness to the
Company by any Director or officer or 10% shareholder.
22
PART III
ITEM 15. DEFAULTS UPON SENIOR SECURITIES
- ----------------------------------------
The Company did not pay dividends on the 6% Preference Shares and 5%
Preference Shares which were payable on November 30, 1995 and February 28,
1996, respectively, in the respective amounts of B.P. 1,223,000 ($1,871,190)
and B.P. 197,000 ($301,410).
None.
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES
- --------------------------------------------------------------------------------
None.
PART IV
ITEM 18. FINANCIAL STATEMENTS
- -----------------------------
See pages F-1 through F-46 and page S-1, incorporated herein by reference.
(a) The following financial statements, together with the report of Binder
Hamlyn thereon, are filed as part of this Form 20-F.
PAGE
----
Report of independent chartered accountants of ASH................................... F-1
Consolidated Financial Statements:
Consolidated balance sheets as of November 30, 1994 and 1995....................... F-2
Consolidated statements of income for the years ended November 30, 1993, 1994 and
1995............................................................................. F-4
Consolidated statements of shareholders' equity for the years ended November 30,
1993, 1994 and 1995 F-5
Consolidated statements of cash flows for the years ended November 30, 1993, 1994
and 1995......................................................................... F-8
Consolidated statement of recognized gains and losses for the years ended November
30, 1993, 1994 and 1995.......................................................... F-9
Company balance sheets as of November 30, 1994 and 1995............................ F-10
Notes to Consolidated Financial Statements......................................... F-13
Report of independent chartered accountants relating to schedule..................... S-1
Schedule for the years ended November 30, 1993, 1994 and 1995:
Schedule II -- Valuation and qualifying accounts and reserves...................... S-2
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
(b) The total amount of long-term debt securities of the Group authorized
under any instrument, other than the Credit Agreement dated December 21, 1995
filed as Exhibit 2.4 (a) attached hereto, the Trust Deed, dated May 31, 1991,
filed with the Securities and Exchange Commission on May 29, 1992 as Exhibit
2.1 to the Company's Annual Report on Form 20-F for the year ended November 30,
1991 and incorporated herein by reference, and the Note Agreement, dated as of
May 27, 1994, filed with the Securities and Exchange Commission on May 26, 1995
as Exhibit 2.3 (b) to the Company's Annual Report on Form 20-F for the year
ended November 30, 1994 and incorporated herein by reference, as amended by a
First Amendment agreement dated December 21, 1995, filed as Exhibit 2.4 (b)
attached hereto, and an Inter-Creditor Agreement dated December 21, 1995 filed
as Exhibit 2.4(c) attached hereto does not exceed 10% of the total assets of
the Group on a consolidated basis. ASH agrees to furnish copies of any and all
such instruments to the Securities and Exchange Commission upon request.
23
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant certifies that it meets all of the requirements for filing
this Annual Report on Form 20-F and has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
AUTOMATED SECURITY (HOLDINGS) PLC
(REGISTRANT)
By:
/s/ P.M. BERTRAM
--------------------------------
P.M. BERTRAM
Finance Director
Dated: May 22, 1996
24
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
To the Board of Directors and Shareholders of
Automated Security (Holdings) PLC and subsidiaries
We have audited the accompanying consolidated balance sheets of Automated
Security (Holdings) PLC as of November 30, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended November 30, 1995; which, as described in
Note 1 have been prepared on the basis of accounting principles generally
accepted in the United Kingdom. These financial statements are the
responsibility of the management of Automated Security (Holdings) PLC. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with United Kingdom auditing standards
which do not differ in any significant respect from United States generally
accepted auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements set out on pages F-2 to
F-46, present fairly, in all material respects, the financial position of
Automated Security (Holdings) PLC at November 30, 1995 and 1994 and the results
of its operations and its cash flows for each of the three years in the period
ended November 30, 1995, in conformity with accounting principles generally
accepted in the United Kingdom which differ in certain significant respects from
those generally accepted in the United States.
Binder Hamlyn
London, England Chartered Accountants
May 17, 1996 Registered Auditors
F-1
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30,
-----------------------------
NOTES 1994 1995 1995
----- ------- ------- -------
B.P.'000 B.P.'000 $'000
ASSETS
CURRENT:
Cash........................................... 3,934 5,936 9,082
Accounts and notes receivable, less allowances
for possible losses of B.P.2,637,000 and
B.P.2,230,000.................................. 4(a) 25,818 21,830 33,400
Inventories.................................... 5 8,095 4,600 7,038
Prepayments and accrued income................. 4(b) 3,286 3,195 4,888
------- ------- -------
TOTAL CURRENT ASSETS........................... 41,133 35,561 54,408
------- ------- -------
Long-term accounts and notes receivable, less
allowances for possible losses of B.P.Nil and
B.P.718,000.................................. 4(a) 4,122 5,651 8,646
Investment in related companies................ 6 3,035 (453) (693)
Other investments.............................. 7(a) 646 654 1,001
Investment--own shares......................... 7(b) 3,680 614 939
Property and equipment--net.................... 8 223,255 227,386 347,901
------- ------- -------
TOTAL OTHER ASSETS............................. 234,738 233,852 357,794
------- ------- -------
TOTAL ASSETS................................... 275,871 269,413 412,202
------- ------- -------
------- ------- -------
The figures relating to the year ended November 30, 1995 have been expressed
in US dollars ($), solely for the purpose of convenience using the Noon Buying
Rate in New York City for cable transfers in foreign currencies as announced for
customs purposes by the Federal Reserve Bank of New York in effect on November
30, 1995. This was $1.53 = B.P.1.00.
See accompanying notes to consolidated financial statements.
F-2
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--(CONTINUED)
NOVEMBER 30,
------------------------------
NOTES 1994 1995 1995
----- ------- ------- --------
B.P.'000 B.P.'000 $'000
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt............................... 9 82,568 83,104 127,149
Accounts payable--trade....................... 14,307 13,094 20,034
Other current liabilities..................... 11 32,518 26,618 40,726
Rentals received in advance................... 28,575 27,763 42,477
------- ------- --------
TOTAL CURRENT LIABILITIES..................... 157,968 150,579 230,386
OTHER LIABILITIES:
Long-term debt................................ 12 78,712 80,965 123,876
Non-current liabilities....................... 13 3,908 5,385 8,239
------- ------- --------
TOTAL LIABILITIES............................. 240,588 236,929 362,501
------- ------- --------
COMMITMENTS AND CONTINGENCIES................. 8,12, 21 & 24
SHAREHOLDERS' EQUITY:
Ordinary Shares............................... 21 11,957 11,957 18,294
Redeemable Preference Shares.................. 21 48,631 48,629 74,403
Additional paid-in capital.................... 20 5,729 5,610 8,583
Non-distributable reserves.................... 20 (90,681) (82,432) (126,121)
Retained earnings............................. 20 59,647 48,720 74,542
------- ------- --------
TOTAL SHAREHOLDERS' EQUITY.................... 35,283 32,484 49,701
------- ------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.... 275,871 269,413 412,202
------- ------- --------
------- ------- --------
See accompanying notes to consolidated financial statements.
F-3
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1993 1994
NOTES (AS RESTATED) (AS RESTATED) 1995 1995
----- ------------- ------------- ------- -------
B.P.'000 B.P.'000 B.P.'000 $'000
NET SALES
Continuing operations...................... 143,136 154,303 153,733 235,211
Discontinued operations.................... 17,639 11,768 9,616 14,712
------------- ------------- ------- -------
17 160,775 166,071 163,349 249,923
Cost of sales.............................. 15 105,768 108,235 105,511 161,431
------------- ------------- ------- -------
Gross profit on sales...................... 55,007 57,836 57,838 88,492
General and administrative expenses........ 15 35,776 34,660 36,169 55,339
------------- ------------- ------- -------
OPERATING INCOME/(LOSS)
Continuing operations...................... 17 23,416 24,399 20,826 31,863
Discontinued operations.................... 17 (4,185) (1,223) 843 1,290
------------- ------------- ------- -------
19,231 23,176 21,669 33,153
------------- ------------- ------- -------
Share of related companies' results........ 15 412 761 10 15
Interest income............................ 1,269 181 173 265
Interest expense........................... 17 (12,023) (12,695) (15,035) (23,003)
Exceptional items.......................... 16 (1,578) (23,177) (14,225) (21,764)
------------- ------------- ------- -------
INCOME/(LOSS) BEFORE TAXES ON INCOME....... 17 7,311 (11,754) (7,408) (11,334)
TAXES ON INCOME............................ 18 1,800 1,000 800 1,224
------------- ------------- ------- -------
NET INCOME/(LOSS).......................... 5,511 (12,754) (8,208) (12,558)
------------- ------------- ------- -------
EARNINGS/(LOSS) PER ORDINARY SHARE
Basic...................................... 1 2.3p (13.0)p (9.2)p (14.1)ct.
------------- ------------- ------- -------
------------- ------------- ------- -------
Fully diluted.............................. 1 2.3p (13.0)p (9.2)p (14.1)ct.
ADJUSTED EARNINGS PER ORDINARY SHARE....... 1 2.5p 4.2p (1.9)p (2.9)ct.
------------- ------------- ------- -------
------------- ------------- ------- -------
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic...................................... 116.5m 119.5m 119.6m 119.6m
Fully diluted.............................. 116.5m 119.5m 119.6m 119.6m
------------- ------------- ------- -------
------------- ------------- ------- -------
F-4
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED NOVEMBER 30, 1993, 1994 AND 1995
6% CONVERTIBLE
5% CONVERTIBLE CUMULATIVE CUMULATIVE
REDEEMABLE
REDEEMABLE PREFERENCE SHARES PREFERENCE SHARES
ORDINARY SHARES 10P PAR VALUE B.P.1 PAR VALUE B.P.1 PAR VALUE
-------------------------------- ------------------------------- -------------------
AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED
'000 '000 B.P.'000 '000 '000 B.P.'000 '000 '000
---------- ------- --------- ---------- ------ --------- ---------- ------
BALANCE, NOVEMBER 30, 1992.......... 200,000 113,487 11,349 15,000 8,558 8,558 42,000 40,769
Net income for the year.............
Shares (converted) issued*.......... 3,590 359 (603) (603) (2)
Shares issue expenses...............
Revaluations and realization
adjustments.........................
Goodwill written off................
Goodwill transferred to Profit and
Loss account on disposals..........
Dividends:
on Ordinary Shares.................
less: Paid by bonus issue..........
on 5% Preference Shares (5p).......
on 6% Preference Shares (6p).......
Currency translation adjustments....
Amortization of CCB costs
transferred to additional paid in
capital........................
---------- ------- --------- ----- ------ ----- ------ ------
BALANCE, NOVEMBER 30, 1993.......... 200,000 117,077 11,708 15,000 7,955 7,955 42,000 40,767
---------- ------- --------- ----- ------ ----- ------ ------
---------- ------- --------- ----- ------ ----- ------ ------
ADDITIONAL NON-
PAID-IN DISTRIBUTABLE RETAINED
CAPITAL RESERVES EARNINGS TOTAL
PAR VALUE ---------- ------------- -------- ------
B.P.'000 B.P.'000 B.P.'000 B.P.'000 B.P.'000
--------- ---------- ------------- -------- ------
BALANCE, NOVEMBER 30, 1992.......... 40,769 5,818 (82,269) 72,894 57,119
Net income for the year............. 5,511 5,511
Shares (converted) issued*.......... (2) 600 (321) 33
Shares issue expenses............... (279) (279)
Revaluations and realization
adjustments......................... (38) 38 --
Goodwill written off................ (4,951) (4,951)
Goodwill transferred to Profit and
Loss account on disposals.......... 314 314
Dividends:
on Ordinary Shares................. (3,473) (3,473)
less: Paid by bonus issue.......... 3,038 3,038
on 5% Preference Shares (5p)....... (398) (398)
on 6% Preference Shares (6p)....... (2,446) (2,446)
Currency translation adjustments.... (458) (458)
Amortization of CCB costs
transferred to additional paid in
capital............................. (119) 119 --
--------- ----- ------ -------- ------
BALANCE, NOVEMBER 30, 1993.......... 40,767 6,020 (87,402) 74,962 54,010
--------- ----- ------ -------- ------
--------- ----- ------ -------- ------
- ------------
* Shares converted at prices ranging between 130p and 267p.
See accompanying notes to consolidated financial statements.
F-5
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED NOVEMBER 30, 1993, 1994 AND 1995
5% CONVERTIBLE CUMULATIVE 6% CONVERTIBLE CUMULATIVE
REDEEMABLE PREFERENCE SHARES REDEEMABLE PREFERENCE SHARES
ORDINARY SHARES 10P PAR VALUE
B.P.1 PAR VALUE B.P.1 PAR VALUE
------------------------------ ----------------------------- -----------------------------
AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED PAR VALUE
---------- ------- --------- ---------- ------ --------- ---------- ------ ---------
'000 '000 B.P.'000 B.P.'000 '000 B.P.'000 B.P.'000 '000 '000
BALANCE, NOVEMBER 30, 1993....... 200,000 117,077 11,708 15,000 7,955 7,955 42,000 40,767 40,767
Net loss for the year............
Shares (converted) issued*....... 2,494 249 (87) (87) (4) (4)
Shares issue expenses............
Goodwill written off.............
Goodwill transferred to Profit
and Loss account on Arius Inc...
Dividends:
on 5% Preference Shares (5p).....
on 6% Preference Shares (6p).....
Currency translation
adjustments......................
Transfer from revaluation reserve
to retained earnings............
Amortization of CCB costs
transferred to additional paid
in capital.....................
---------- ------- --------- ------ ----- ----- ----- ------ ---------
BALANCE, NOVEMBER 30, 1994....... 200,000 119,571 11,957 15,000 7,868 7,868 42,000 40,763 40,763
---------- ------- --------- ------ ----- ----- ----- ------ ---------
---------- ------- --------- ------ ----- ----- ----- ------ ---------
ADDITIONAL NON-
PAID-IN DISTRIBUTABLE RETAINED
CAPITAL RESERVES EARNINGS TOTAL
---------- ------------- -------- -------
'000 B.P.'000 B.P.'000 B.P.'000
BALANCE, NOVEMBER 30, 1993....... 6,020 (87,402) 74,962 54,010
Net loss for the year............ (12,754) (12,754)
Shares (converted) issued*....... (157) 1
Shares issue expenses............ (14) (14)
Goodwill written off............. (20,193) (20,193)
Goodwill transferred to Profit
and Loss account on Arius Inc... 17,365 17,365
Dividends:
on 5% Preference Shares (5p)..... (393) (393)
on 6% Preference Shares (6p)..... (2,446) (2,446)
Currency translation
adjustments...................... (293) (293)
Transfer from revaluation reserve
to retained earnings............ (158) 158 --
Amortization of CCB costs
transferred to additional paid
in capital....................... (120) 120 --
----- ------ -------- -------
BALANCE, NOVEMBER 30, 1994....... 5,729 (90,681) 59,647 35,283
----- ------ -------- -------
----- ------ -------- -------
- ------------
* Shares converted at prices ranging between 165p and 267p.
See accompanying notes to consolidated financial statements.
F-6
5% CONVERTIBLE CUMULATIVE 6% CONVERTIBLE CUMULATIVE
REDEEMABLE PREFERENCE SHARES REDEEMABLE PREFERENCE SHARES
ORDINARY SHARES 10P PAR VALUE B.P.1 PAR VALUE B.P.1 PAR VALUE
-------------------------------- ------------------------------- -------------------------------
AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED PAR VALUE
'000 '000 B.P.'000 '000 '000 B.P.'000 '000 '000 B.P.'000
---------- ------- --------- ---------- ------ --------- ---------- ------ ---------
BALANCE, NOVEMBER 30, 1994.. 200,000 119,571 11,957 15,000 7,868 7,868 42,000 40,763 40,763
Net loss for the year......
Shares (converted)
issued*..................... 1 (1) (1) (1) (1)
Shares issue expenses......
Goodwill written off.......
Goodwill transferred to
Profit and Loss
account.....................
Dividends:
on 5% Preference Shares
(5p).......................
on 6% Preference Shares
(6p).......................
Currency translation
adjustments...............
Amortization of CCB costs
transferred to additional
paid in capital..........
---------- ------- --------- ------ ------ ----- ------ ------ ---------
BALANCE, NOVEMBER 30, 1995.. 200,000 119,572 11,957 15,000 7,867 7,867 42,000 40,762 40,762
---------- ------- --------- ------ ------ ----- ------ ------ ---------
---------- ------- --------- ------ ------ ----- ------ ------ ---------
NON-
ADDITIONAL DISTRIBU-
PAID-IN TABLE RETAINED
CAPITAL RESERVES EARMINGS TOTAL
---------- --------- -------- ------
B.P.'000 B.P.'000 '000 '000
---------- --------- -------- ------
BALANCE, NOVEMBER 30, 1994.. 5,729 (90,681) 59,647 35,283
Net loss for the year...... (8,208) (8,208)
Shares (converted)
issued*................... 2 --
Shares issue expenses...... (1) (1)
Goodwill written off....... (232) (232)
Goodwill transferred to
Profit and Loss
account................ 8,843 8,843
Dividends:
on 5% Preference Shares
(5p)....................... (393) (393)
on 6% Preference Shares
(6p)....................... (2,446) (2,446)
Currency translation
adjustments................. (362) (362)
Amortization of CCB costs
transferred to additional
paid in capital.......... (120) 120 --
----- --------- -------- ------
BALANCE, NOVEMBER 30, 1995.. 5,610 (82,432) 48,720 32,484
----- --------- -------- ------
----- --------- -------- ------
- ------------
* Shares converted at prices ranging between 162p and 267p.
See accompanying notes to consolidated financial statements.
F-7
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOWS
YEAR ENDED NOVEMBER 30,
----------------------------------------
1993 1994 1995 1995
------- ------- ------- -------
B.P.'000 B.P.'000 B.P.'000 $'000
Continuing operations................................... 67,475 63,400 50,012 76,519
Reorganization.......................................... (1,793) -- -- --
Discontinued activities and disposal costs.............. (10,484) 1,869 1,027 1,571
------- ------- ------- -------
NET CASH INFLOW FROM OPERATING ACTIVITIES............... 55,198 65,269 51,039 78,090
------- ------- ------- -------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received..................................... 767 164 161 246
Interest paid (including Stapled Unit charges)........ (11,616) (10,662) (14,973) (22,908)
Dividends paid........................................ (9,293) (2,159) (2,839) (4,344)
Dividends from associated undertaking................. -- 106 -- --
Payments on currency hedging instruments.............. -- (5,349) -- --
------- ------- ------- -------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE.................................... (20,142) (17,900) (17,651) (27,006)
------- ------- ------- -------
Taxation
UK (including Advance Corporation Tax)................ (2,769) (1,071) (505) (773)
Overseas.............................................. -- (88) 6 9
------- ------- ------- -------
TAXATION PAID........................................... (2,769) (1,159) (499) (764)
------- ------- ------- -------
INVESTING ACTIVITIES
Purchase of tangible fixed assets..................... (59,020) (43,603) (38,502) (58,908)
Purchase of subsidiary undertakings (net of cash and
cash equivalents acquired).......................... (4,709) (1,480) -- --
Purchase of associated undertakings................... (10) (2,946) (232) (355)
Loans to associated undertakings...................... -- (983) --
Payment on guarantee to associate undertaking......... -- -- (1,921) (2,939)
Purchase of investments............................... (226) (101) -- --
Sale of tangible fixed assets......................... 1,822 1,964 1,108 1,695
Sale of subsidiary and associated undertakings........ 6,962 -- 8,677 13,276
------- ------- ------- -------
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES..... (55,181) (47,149) (30,870) (47,231)
------- ------- ------- -------
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING.............. (22,894) (939) 2,019 3,089
------- ------- ------- -------
FINANCING
Issue of Ordinary Shares.............................. 33 -- -- --
Share issue expenses.................................. (279) (14) (1) (2)
Repayment of Stapled Units............................ (3,940) -- -- --
(Decrease)/increase in borrowings..................... 26,134 5,870 (614) (939)
------- ------- ------- -------
NET CASH INFLOW/(OUTFLOW) FROM FINANCING................ 21,948 5,856 (615) (941)
------- ------- ------- -------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (Note
1)..................................................... (946) 4,917 1,404 2,148
------- ------- ------- -------
Note 1:
INCREASE/(DECREASE) IN CASH EQUIVALENTS................. (1,063) 1,677 (574) (878)
INCREASE/(DECREASE) IN CASH............................. 117 3,240 1,978 3,026
------- ------- ------- -------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS........ (946) 4,917 1,404 2,148
------- ------- ------- -------
See accompanying notes to consolidated financial statements.
F-8
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES
YEAR ENDED NOVEMBER 30,
---------------------------
1993 1994 1995
------ ------- ------
B.P.'000 B.P.'000 B.P.'000
NET INCOME/(LOSS) FOR THE YEAR.................................... 5,511 (12,754) (8,208)
Currency translation differences on foreign currency net
investments excluding goodwill.................................. 911 (2,429) 1,415
Currency translation differences on foreign currency hedging...... (1,369) 2,136 (1,777)
------ ------- ------
TOTAL RECOGNIZED GAINS AND LOSSES FOR THE YEAR.................... 5,053 (13,047) (8,570)
------ ------- ------
------ ------- ------
A note of historical cost profits and losses has not been presented since
the amounts involved are not materially different from those shown on F-4.
F-9
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES
NOVEMBER 30,
------------------
NOTES 1994 1995
----- ------- -------
B.P.'000 B.P.'000
ASSETS
CURRENT:
Cash.............................................................. 2,404 3,194
Amounts owed by subsidiary companies.............................. 153,879 176,180
Other accounts receivable......................................... 500 484
Prepayments and accrued income.................................... 194 218
------- -------
TOTAL CURRENT ASSETS.............................................. 156,977 180,076
------- -------
Investment in subsidiary and related companies.................... 22 188,263 182,847
Other investments................................................. 7(a) 646 654
Investment--own shares............................................ 7(b) 3,680 614
------- -------
TOTAL OTHER ASSETS................................................ 192,589 184,115
------- -------
TOTAL ASSETS...................................................... 349,566 364,191
------- -------
------- -------
See accompanying notes to consolidated financial statements.
F-10
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES--(CONTINUED)
NOVEMBER 30,
------------------
NOTES 1994 1995
----- ------- -------
B.P.'000 B.P.'000
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt......................................... 22 84,735 100,822
Other current liabilities............................... 22 10,698 7,371
------- -------
TOTAL CURRENT LIABILITIES............................... 95,433 108,193
OTHER LIABILITIES:
Long-term debt.......................................... 22 35,019 36,707
Non-current liabilities................................. 22 45,476 45,319
------- -------
TOTAL LIABILITIES....................................... 175,928 190,219
------- -------
COMMITMENTS AND CONTINGENCIES........................... 8, 12, 21 & 24
SHAREHOLDERS' EQUITY:
Ordinary Shares......................................... 21 11,957 11,957
Redeemable Preference Shares............................ 21 48,631 48,629
Additional paid-in capital.............................. 20 5,729 5,610
Non-distributable reserves.............................. 20 105,312 105,312
Retained earnings....................................... 20 2,009 2,464
------- -------
TOTAL SHAREHOLDERS' EQUITY.............................. 173,638 173,972
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............. 349,566 364,191
------- -------
------- -------
See accompanying notes to consolidated financial statements.
F-11
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NATURE OF OPERATIONS
Automated Security (Holdings) PLC is the holding company of a group
operating in the electronic security sector which designs, markets, installs,
maintains and monitors electronic security systems to safeguard life and
property from a wide range of hazards. The Group's principal markets are the
United Kingdom with some 73% of sales and the United States with 27% of sales.
Substantially all of the customers in the US and some 75% of customers in the UK
are in the commercial, industrial and public sectors. The balance of services
are provided in the private, residential sector.
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of financial statements
As in previous accounting periods, the financial statements have been
prepared under United Kingdom generally accepted accounting principles using the
historical cost convention, with the exception that certain property has been
revalued.
Consolidation
The consolidated financial statements incorporate Automated Security
(Holdings) PLC ("Automated Security (Holdings)") and its subsidiaries (the
"Group") for the year ended November 30. When subsidiaries are acquired or
disposed of during an accounting period, unless they are accounted for as a
pooling-of-interest, the consolidated statement of income includes the results
only for that part of the period during which they are subsidiaries.
Goodwill
Goodwill, being the excess of the consideration on the acquisition of
businesses over the fair value of the net assets acquired, is written off direct
to non-distributable reserves at the date of acquisition.
Investments
Fixed asset investments, excluding related companies, are included at cost
less amounts provided where, in the opinion of the directors, there is a
permanent diminution in value.
A company is treated as being a related company if, not being a subsidiary
company, the Group is in a position to exercise significant influence over the
company and the investment is considered to be long-term.
The results and net assets of related companies are accounted for using the
equity method. Accordingly, the consolidated statement of income includes the
Group's share of income before taxes and taxes on income for the part of the
accounting period during which the companies are treated as related. Premiums on
the acquisition of related companies are written off to non-distributable
reserves at the date of acquisition.
The amounts at which investments in related companies are included in the
consolidated balance sheet therefore comprise the cost of the investment less
premium on acquisition together with the Group's share of retained profits or
losses since the date of acquisition less any amounts provided where, in the
opinion of the directors, there is a permanent diminution in value.
Development expenditure and distribution rights
Expenditure on development and distribution rights is written off as it is
incurred.
F-12
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Inventories
Inventories are valued at the lower of cost and net realizable value on the
FIFO basis. Cost of products manufactured and distributed by the Group consists
of direct material and labor costs,
together with appropriate overheads.
Property and equipment
The cost of equipment on contract hire installed by Group companies is
capitalized as an operating lease. Costs comprise materials, labor and
attributable overheads relating to identifiable and recoverable equipment. All
other costs are written off as they are incurred.
Depreciation and amortization
Property and equipment is depreciated on a straight line basis at the
following annual rates:
Equipment on contract hire:
Burglar alarms............................. 7%-10%
Communication centre equipment............. 10%-20%
Freehold buildings......................... 2.5%
Leasehold premises and improvements........ over unexpired period of lease
Motor vehicles............................. 25%
Other assets............................... 10% to 33.3%
No depreciation is provided on freehold land.
Equipment leased to customers
Equipment leased to customers under finance leases is deemed to be sold at
normal selling value which is taken to net sales at the inception of the lease.
Debtors under finance leases represent outstanding amounts due under these
agreements less finance charges allocated to future periods. Finance lease
income is recognized over the primary period of the lease so as to produce a
constant rate of return on the net cash investments.
Equipment leased to customers under operating leases is capitalized in
accordance with the accounting policy on property and equipment (see above).
Operating lease income is accounted for on a straight line basis with any rental
increases recognized during the period to which they relate.
Operating Leases
Rentals paid under operating leases are charged against income on a straight
line basis over the period of the lease.
Deferred taxation
Deferred taxation is provided on the liability method in respect of timing
differences between profits as computed for taxation purposes and profits as
stated in the financial statements except to the extent that it is expected that
the liability will not be payable in the foreseeable future. Timing differences
arise mainly from the excess of tax allowances on property and equipment over
the corresponding depreciation charged in the financial statements.
F-13
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Foreign exchange
Foreign currency assets and liabilities of United Kingdom companies and the
financial statements of overseas subsidiaries and related companies are
translated into sterling at the rates of exchange ruling at the balance sheet
date. The results of overseas subsidiaries and related companies have been
translated at the average exchange rate ruling during the year with the
adjustment between average rates and the rates ruling at the balance sheet date
being taken to reserves. The differences arising from the translation of net
equity interests including goodwill in overseas subsidiaries and related
companies, and of matching foreign currency loans and foreign currency swap
facilities, are dealt with through reserves. All other exchange differences are
dealt with in the profit and loss account.
Pensions
The Group operates a funded defined benefit plan for UK employees, based on
final pensionable salary, with assets held in funds administered by the Trustees
of the plan. The cost of providing pensions is spread on a systematic and
rational basis over the period during which the Group benefits from the members'
services.
The pension costs and any necessary provisions are assessed in accordance
with the advice of an independent qualified actuary. Variations from the regular
cost are spread over the average remaining service lives of current employees.
Outside the UK, the Group in general operates defined contribution plans for
certain executives, the costs of which are recognized on the basis of
contributions payable.
Employees' Share Ownership Plan Trust
The Group operates an Employees' Share Ownership Plan ("ESOP') Trust for
directors and employees. The ESOP Trust holds shares in the Company and is
financed by a loan from the Company. In prior years the net amount due from the
Trust was shown in other debtors but following the publication of UITF Abstract
13 in 1995, this balance is now classified as an investment in "own shares' and
the comparative figures have been restated accordingly.
Provision is made for the diminution in the market value of the shares held
by the ESOP Trust.
Earnings per share
Earnings per ordinary share are calculated on a basic and fully diluted
basis. The basic calculation is based on total net income including discontinued
operations and the weighted average number of ordinary shares in issue during
the year.
Adjusted earnings per ordinary share is calculated by dividing the net
income attributable to ordinary shareholders prior to the charge for the amount
written off fixed asset investments and the loss on sale of subsidiary and
related companies by the weighted average number of ordinary shares in issue
throughout the year. Adjusted earnings have been shown to illustrate the
earnings prior to these exceptional non-recurring charges.
Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
F-14
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. RESTATEMENT OF PRIOR YEAR RESULTS
The results of prior years have been restated in two respects to accord with
current accounting procedures. The results of the operations sold during 1995
have been reclassified as discontinued operations. Revenue from continuing
operations has therefore been reduced by B.P.11,768,000 in 1994 and
B.P.10,394,000 in 1993 and operating profit from continuing operations has been
reduced by B.P.2,121,000 in 1994 and B.P.1,332,000 in 1993.
The amounts provided in respect of the ESOP of B.P.450,000 in 1994 and
B.P.200,000 in 1993 have also been reclassified in the comparative figures from
general and administrative expenses to exceptional items.
3. ACQUISITIONS
There were no acquisitions of businesses during the year ended November 30,
1995.
During the year ended November 30, 1994 the group acquired certain assets of
Sonitrol of Eugene in the United States for an initial cash consideration of
B.P.1,480,000($2,070,000) and a deferred consideration of B.P.289,000
($452,000).
During the year ended November 30, 1993 the Group acquired Telecom Security
in the UK for an initial cash consideration of B.P.6.9 million and an accrued
future consideration of B.P.1.4 million.
These companies are all in the Security Systems business and the
acquisitions were accounted for as purchases. The results of operations have
been included in the financial statements since their respective dates of
acquisition.
4(A) ACCOUNTS AND NOTES RECEIVABLE
NOVEMBER 30,
--------------------------------------------------------
1994 1995
-------------------------- --------------------------
WITHIN OVER WITHIN OVER
1 YEAR 1 YEAR TOTAL 1 YEAR 1 YEAR TOTAL
------ ------ ------ ------ ------ ------
B.P.'000 B.P.'000 B.P.'000 B.P.'000 B.P.'000 B.P.'000
Trade receivables.......................... 22,511 -- 22,511 19,225 -- 19,225
Finance lease.............................. 3,652 4,122 7,774 2,602 6,136 8,738
------ ------ ------ ------ ------ ------
26,163 4,122 30,285 21,827 6,136 27,963
Provision for doubtful..................... (2,637) -- (2,637) (2,230) (718) (2,948)
------ ------ ------ ------ ------ ------
23,526 4,122 27,648 19,597 5,418 25,015
Other...................................... 2,292 -- 2,292 2,233 233 2,466
------ ------ ------ ------ ------ ------
25,818 4,122 29,940 21,830 5,651 27,481
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
F-15
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4(A) ACCOUNTS AND NOTES RECEIVABLE--(CONTINUED)
Finance lease receivables at November 30, 1995 comprised:
B.P.'000
Future minimum lease payments..................................... 10,233
Maintenance costs................................................. (346)
Provision for doubtful debts...................................... (1,024)
Residual value.................................................... --
Initial direct costs capitalized.................................. --
Unearned income................................................... (1,149)
------
Finance lease receivables......................................... 7,714
------
------
Finance lease interest receivable of B.P.489,000 (1994: B.P.448,000; 1993:
B.P.867,000) is included in turnover and profit before interest. Finance lease
rentals receivable in the year were approximately B.P.3.4 million (1994: B.P.2.9
million; 1993: B.P.3.4 million).
The future minimum lease payments at November 30, 1995 are receivable as
follows:-
B.P.'000
Within one year................................................... 3,439
Between 1-2 years................................................. 2,983
Between 2-3 years................................................. 2,194
Between 3-4 years................................................. 1,259
Between 4-5 years................................................. 358
After more than 5 years........................................... --
------
10,233
------
------
4 (B) PREPAYMENTS AND ACCRUED INCOME
NOVEMBER 30,
--------------
1994 1995
----- -----
B.P.'000 B.P.'000
3,286 3,195
----- -----
----- -----
Included in prepayments is a pension prepayment of B.P.87,000 (1994:
B.P.151,000).
5. INVENTORIES
NOVEMBER 30,
--------------
1994 1995
----- -----
B.P.'000 B.P.'000
Work in progress............................................ 3,388 1,079
Raw materials and components................................ 738 13
Finished goods.............................................. 3,969 3,508
----- -----
8,095 4,600
----- -----
----- -----
F-16
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. INVESTMENT IN RELATED COMPANIES
OTHER SHARE
INVESTMENTS NET ASSETS TOTAL
----------- ---------- ------
B.P.'000 B.P.'000 B.P.'000
At December 1, 1994............................ 327 2,708 3,035
Additions...................................... -- 232 232
Premium on acquisition......................... -- (232) (232)
Exchange adjustments........................... -- (24) (24)
Disposals...................................... -- (3,409) (3,409)
Share net income............................... -- (55) (55)
--- ---------- ------
At November 30, 1995........................... 327 (780) (453)
--- ---------- ------
--- ---------- ------
Share of Net Assets/Liabilities:
PERCENTAGE
HELD INVESTMENT
ACCOUNTS ------------ --------------
PREPARED TO 1994 1995 1994 1995
------------ ---- ---- ----- -----
% % B.P.'000 B.P.'000
TVX Inc............................................ September 30 41 40 (170) (780)
Compagnie Generale de Protection et Securitie SA... -- 40 -- 2,740 --
Microtech Security (UK) Limited.................... -- 25 -- 138 --
Arius Inc.......................................... In Chapter 7 43 43 -- --
----- -----
2,708 (780)
----- -----
----- -----
No share of profits has been incorporated in respect of Arius Inc and full
provision was made in 1994 for all the Group's investment, loans and liabilities
in respect of this company.
Other investments at November 30, 1995 comprise 48.5% of the Redeemable
Preferred Stock par value $0.01, of TVX Inc.
7. OTHER INVESTMENTS
(A) LOANS
B.P.'000
At December 1, 1994................................................. 646
Exchange adjustments................................................ 8
-----
At November 30, 1995................................................ 654
-----
-----
Other investments at November 30, 1995 and November 30, 1994 relate to loans
to TVX Inc.
F-17
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. OTHER INVESTMENTS--(CONTINUED)
(B) OWN SHARES
GROUP AND COMPANY B.P.'000
- -----------------
COST
At December 1, 1994 (as previously stated)......................... --
Transferred from other debtors..................................... 5,930
------
At December 1, 1994 (as restated) and at November 30, 1995......... 5,930
------
PROVISIONS
At December 1, 1994 (as previously stated)......................... --
Transferred from other debtors..................................... (2,250)
------
At December 1, 1994 (as restated).................................. (2,250)
Charge for the year................................................ (3,066)
------
At November 30, 1995............................................... (5,316)
------
NET BOOK VALUE
At November 30, 1995............................................... 614
------
------
At November 30, 1994............................................... 3,680
------
------
Own shares held relate to the ESOP Trust. The Company has loans outstanding
from the Trust of B.P.5.9 million and its principal assets are investments in
the Company's shares. At November 30, 1995 the ESOP Trust held the following
shares in the company:-
MARKET VALUE
AT NOVEMBER 30,
1995
------------------
NO. PER SHARE B.P.'000
----------
Ordinary Shares of 10p each...................................... 2,124,582 24p 510
5% Convertible Cumulative Redeemable Preference Shares of B.P.1
each........................................................... 70,000 38.5p 27
6% Convertible Cumulative Redeemable Preference Shares of B.P.1
each........................................................... 200,000 38.5p 77
-----
614
-----
The ESOP executive share option scheme (the 'Scheme') involves a participant
being granted an option to subscribe for Ordinary Shares of the Company at a
price based on the market price of such Ordinary Shares at the date of the
grant. All directors and employees of the Group may participate in the Scheme at
the discretion of the Board of directors. The maximum number of shares which may
be granted to any recipient is restricted by reference to a formula based upon
the annual remuneration of the individual director or employee. The options are
exercisable during a period between three and ten years after the date of the
grant (and in certain cases between three and seven years from the date of the
grant ) with the last date for such exercise varying between 1996 and 2000. The
prices at which the options are exercisable are in the range of B.P.2.45 per
share to B.P.2.693 per share. At November 30, 1995 there were 722,000 Ordinary
Shares subject to option under the Scheme.
The costs of the ESOP have been met by the Trust and the ESOP has not waived
any dividends due on the Company's shares.
F-18
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
8. PROPERTY AND EQUIPMENT
EQUIPMENT MOTOR
ON VEHICLES,
LAND AND CONTRACT COMMUNICATION FIXTURES
BUILDINGS HIRE CENTRES & PLANT TOTAL
--------- --------- ------------- --------- -------
B.P.'000 B.P.'000 B.P.'000 B.P.'000 B.P.'000
COST OR VALUATION
Balance, November 30, 1992............... 5,126 268,472 -- 15,365 288,963
Transfers................................ -- (8,616) 6,524 2,092 --
Exchange rate adjustment................. 14 128 16 14 172
On acquisition........................... 455 5,145 -- 283 5,883
Additions................................ 532 51,204 2,692 4,592 59,020
Disposals................................ (311) (15,954) (1,091) (5,812) (23,168)
--------- --------- ------ --------- -------
Balance, November 30, 1993............... 5,816 300,379 8,141 16,534 330,870
Exchange rate adjustment................. (69) (2,980) (235) (361) (3,645)
Additions................................ 24 41,090 659 1,830 43,603
Disposals................................ (627) (15,256) (104) (2,800) (18,787)
Other movements (see note (b))........... -- (9,987) -- -- (9,987)
--------- --------- ------ --------- -------
Balance, November 30, 1994............... 5,144 313,246 8,461 15,203 342,054
Exchange rate adjustment................. 50 2,345 3 138 2,536
Reclassification......................... 255 -- (255) -- --
Additions................................ 8 35,919 288 2,287 38,502
Disposals................................ (61) (17,913) (3,830) (5,245) (27,049)
--------- --------- ------ --------- -------
Balance, November 30, 1995............... 5,396 333,597 4,667 12,383 356,043
--------- --------- ------ --------- -------
--------- --------- ------ --------- -------
ACCUMULATED DEPRECIATION
Balance, November 30, 1992............... 69 81,502 -- 6,489 88,060
Transfers................................ -- (2,812) 1,949 863 --
Charged in the year...................... 168 36,804 864 3,099 40,935
Exchange rate adjustment................. (5) (111) 7 9 (100)
Disposals................................ (6) (15,954) (770) (3,486) (20,216)
--------- --------- ------ --------- -------
Balance, November 30, 1993............... 226 99,429 2,050 6,974 108,679
Charged in the year...................... 315 34,361 1,206 3,069 38,951
Exchange rate adjustment................. (2) (795) (75) (187) (1,059)
Disposals................................ (90) (15,256) (103) (2,336) (17,785)
Other movements (see note (b))........... -- (9,987) -- -- (9,987)
--------- --------- ------ --------- -------
Balance, November 30, 1994............... 449 107,752 3,078 7,520 118,799
Charged in the year (see note (a)) 394... 394 28,308 2,514 3,396 34,612
Exchange rate adjustment................. 5 865 6 76 952
Disposals................................ (14) (17,252) (3,828) (4,612) (25,706)
--------- --------- ------ --------- -------
Balance, November 30, 1995............... 834 119,673 1,770 6,380 128,657
--------- --------- ------ --------- -------
--------- --------- ------ --------- -------
NET BOOK VALUE
Balance, November 30, 1993............... 5,590 200,950 6,091 9,560 222,191
--------- --------- ------ --------- -------
--------- --------- ------ --------- -------
Balance, November 30, 1994............... 4,695 205,494 5,383 7,683 223,255
--------- --------- ------ --------- -------
--------- --------- ------ --------- -------
Balance, November 30, 1995............... 4,562 213,924 2,897 6,003 227,386
--------- --------- ------ --------- -------
--------- --------- ------ --------- -------
F-19
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
8. PROPERTY AND EQUIPMENT-- (CONTINUED)
(A) The depreciation provision for the year includes B.P.1,351,000 in
Communication Centres and B.P.997,000 in Motor Vehicles, Fixtures and Plant in
respect of accelerated depreciation leasehold improvements, computer equipment
and business systems at API.
(B) Other movements in equipment on contract hire relate to the elimination
of balances in respect of systems which have been fully depreciated and where
the related contract has been cancelled in previous years.
(C) The net book value of fixed assets includes B.P.Nil (1994: 181,000;
1993: B.P.355,000) in respect of assets held under finance leases. The
depreciation charge in respect of these assets was B.P.82,000 (1994: B.P.99,000;
1993: B.P.174,000).
(D) LAND AND BUILDINGS
1994 1995
----- -----
B.P.'000 B.P.'000
The net book values of land and buildings comprise:
Freehold buildings.......................................... 2,173 2,128
----- -----
Leaseholds over 50 years.................................... 954 1,136
Other leaseholds............................................ 1,568 1,298
----- -----
Total leaseholds............................................ 2,522 2,434
----- -----
Total land and buildings.................................... 4,695 4,562
----- -----
----- -----
The amount attributable to freehold land included above is B.P.709,000
(1994: B.P.709,000).
The analysis of the gross book value is as follows:
Cost........................................................ 3,534 3,786
1992 Valuation.............................................. 1,610 1,610
----- -----
Gross Value................................................. 5,144 5,396
----- -----
----- -----
The net book value of land and buildings, determined by reference to their
historical costs, is as follows:
Cost........................................................ 5,144 5,396
Depreciation................................................ (449) (834)
----- -----
Net book value at historical cost........................... 4,695 4,562
----- -----
----- -----
(E) CAPITAL COMMITMENTS OUTSTANDING ARE AS FOLLOWS:
NOVEMBER 30,
--------------
1994 1995
----- -----
B.P.'000 B.P.'000
Contracts placed............................................. 228 475
----- -----
----- -----
Expenditure authorized but not contracted for................ 706 1,972
----- -----
----- -----
F-20
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
9. SHORT-TERM DEBT
NOVEMBER 30,
----------------
1994 1995
------ ------
B.P.'000 B.P.'000
Bank loans and overdrafts (unsecured) (see note 12)....... 82,278 82,992
Current portion of long-term debt (see note 12)........... 290 112
------ ------
82,568 83,104
------ ------
------ ------
10. DIVIDENDS
The Directors have not recommended payment of a dividend in respect of the
Ordinary Shares for 1995 or 1994. All of the preference dividends were paid for
1994 but in 1995 only the interim dividends have been paid on the due date. The
balance of the preference dividends has been accrued but it should be noted that
the Company is unlikely to be in a position to pay Preference or Ordinary
dividends to shareholders for the time being.
NOVEMBER 30,
--------------
1994 1995
----- -----
B.P.'000 B.P.'000
Interim dividends:
Ordinary Shares: Nil (1994: Nil) per Share.................. -- --
Preference Share dividends.................................. 1,420 1,420
----- -----
1,420 1,420
----- -----
Final Dividends:
Ordinary Shares: Proposed Nil (1994: Nil) per Share......... -- --
Preference Share dividends.................................. 1,419 1,419
----- -----
1,419 1,419
----- -----
Total dividends............................................. 2,839 2,839
----- -----
----- -----
11. OTHER CURRENT LIABILITIES
NOVEMBER 30,
----------------
1994 1995
------ ------
B.P.'000 B.P.'000
Corporation tax payable................................... 2,690 2,797
Other creditors........................................... 9,781 3,684
Accruals.................................................. 16,063 16,868
Other taxes and social security........................... 3,984 3,269
------ ------
32,518 26,618
------ ------
------ ------
F-21
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
12. LONG-TERM DEBT
NOVEMBER 30,
----------------
1994 1995
------ ------
B.P.'000 B.P.'000
8.28% Senior Notes........................................ 35,019 36,707
9.5% Convertible Capital Bonds 2006....................... 43,693 43,813
Unsecured bank loans...................................... -- 409
Obligations under finance lease contracts................. 290 148
------ ------
79,002 81,077
Less: current portion (see note 9)........................ (290) (112)
------ ------
78,712 80,965
------ ------
------ ------
(A) BANK LOANS
At November 30, 1995 the Group had bank facilities totalling approximately
B.P.89.0 million, of which approximately B.P.83.4 million were committed
including B.P.66.3 million under the Multiple Option Facility which was
previously underwritten by the banks concerned until May 14, 1996. All of the
maturity dates of the committed facilities have been extended to January 2, 1998
by a Credit Agreement dated December 21, 1995 which gives security to the banks
over the majority of the assets of the Group. Of these facilities, the Group has
drawn down amounts in both pounds sterling and US dollars. The average rates of
interest charged in 1995 were 7.7% for sterling borrowings and 7.4% for US
dollar borrowings. All other loans are at variable rates of interest ranging
between 7% and 9 %. The average rate of interest paid on short term borrowings
during the year was 7.6% (1994: 5.2%; 1993: 5.0%).
(B) SCHEDULED MATURITIES OF LONG TERM DEBT ARE AS FOLLOWS:
NOVEMBER 30,
----------------
1994 1995
------ ------
B.P.'000 B.P.'000
Repayable:
Within one year (see note 9)............................................. 290 112
Between one and two years................................................ -- 36
Between two and three years.............................................. -- --
]Between three and four years (8.28% Senior Notes--see note (c))......... -- 36,707
Between four and five years (1994: 8.28% Senior Notes, see note (c))..... 35,019 --
After five years (1994: Convertible Capital Bonds, see note (e))......... 43,693 44,222
------ ------
79,002 81,077
------ ------
------ ------
(C) 8.28% SENIOR NOTES
On May 27, 1994 the Company issued $60,721,638, 8.28% Senior Notes of which
$5,643,273 was in respect of yield maintenance. The Notes were due for repayment
on May 27, 1999. The notes were issued to The Prudential Insurance Company of
America to replace the Stapled Units previously issued by API Security Inc, a
subsidiary company. The effective interest rate including yield maintenance is
10.73% per annum. The maturity date of the Senior Notes has been amended to
January 2, 1998 by agreement dated December 21, 1995 when it was agreed that the
Noteholders would share in the security given to the banks.
F-22
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
12. LONG-TERM DEBT-- (CONTINUED)
(D) CONVERTIBLE CAPITAL BONDS
On May 31, 1991 ASH Capital Finance (Jersey) Limited, a subsidiary of
Automated Security (Holdings) issued B.P.60 million 9.5 per cent Convertible
Capital Bonds due 2006, which are guaranteed on a subordinated basis by
Automated Security (Holdings). The Bonds are convertible on and after July 10,
1991 into fully paid 2 per cent Exchangeable Redeemable Preference Shares in ASH
Capital Finance (Jersey) Limited ("Preference Shares"), guaranteed on a
subordinated basis by Automated Security (Holdings). The Preference Shares are
redeemable at their paid-up value of 1p each and are exchangeable for fully paid
Ordinary Shares in Automated Security (Holdings) at a price of 250p per Ordinary
Share, subject to adjustment under certain circumstances.
Under the terms of the issue, Automated Security (Holdings) may require
conversion of any outstanding Bond if 85% of issue has been previously converted
or purchased and cancelled, in which case the bondholders may elect for
redemption in lieu of conversion. In addition, Automated Security (Holdings)
also has the right at any date after May 31, 1996 to require the redemption of
all bonds.
The balance at November 30, 1995 is shown net of unamortized issue costs of
B.P.1,126,000 (1994: B.P.1,246,000) in accordance with FRS4.
13. NON-CURRENT LIABILITIES
------
B.P.'000
Balance, November 30, 1993........................................ 12,769
Exchange adjustments.............................................. (66)
Other creditors................................................... 2,551
Utilized/paid during the year:
- --Arising on acquisitions......................................... (547)
- --Maintenance and warranties...................................... (1,350)
- --Currency hedging payments....................................... (5,349)
Transferred to property and equipment............................. (4,100)
------
Balance, November 30, 1994........................................ 3,908
Exchange adjustments.............................................. 13
Other creditors................................................... 1,774
Utilized/paid during the year:
- --Arising on acquisitions......................................... (33)
- --Maintenance and warranties...................................... (277)
------
Balance, November 30, 1995........................................ 5,385
------
------
The Group had various hedging arrangements to offset any gains or losses on
the translation of net equity interest in overseas subsidiaries, principally in
the United States. These hedging arrangements previously included currency
loans, forward exchange contracts and currency swaps. Throughout 1995 and at
November 30, 1995 hedging arrangements relate only to US$ loans.
As part of the hedging arrangements in previous years the Company entered
into a callable currency swap with a bank whereby the company had a right at
November 30, 1993 to receive some B.P.18.2 million and an obligation to pay US
$35 million. The swap was cancelled on April 20, 1994. Gains and losses on the
translation of net equity interests in overseas subsidiaries and matching
foreign
F-23
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
13. NON-CURRENT LIABILITIES-- (CONTINUED)
currency loans, forward contracts and swap facilities are recorded as a charge
or credit directly to shareholders' equity.
Other non-current liabilities may be analyzed as follows:
NOVEMBER 30,
--------------
1994 1995
----- -----
B.P.'000 B.P.'000
Acquisition reorganization costs............................ 503 470
Future maintenance provisions............................... 854 590
----- -----
Total provisions............................................ 1,357 1,060
Other creditors............................................. 2,551 4,325
----- -----
3,908 5,385
----- -----
----- -----
During 1994 the provision for cancelled contracts was transferred to
depreciation on equipment on contract hire in property and equipment. See note
8. The amounts shown above as provisions of B.P.1,060,000 in 1995 and
B.P.1,357,000 in 1994 are described as "provisions for liabilities and charges"
under UK GAAP.
14. DERIVATIVE FINANCIAL INSTRUMENTS
As part of the Group's currency hedging arrangements discussed above the
company previously used a US dollar currency swap facility to manage its
exposure to fluctuations in US dollar exchange rates. This facility was repaid
in April 1994 and the Group no longer uses any derivative instruments for
currency hedging. US dollar assets are now matched using US currency loans and
the Group has no derivative financial instruments.
F-24
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
15. COST OF SALES AND EXPENSE ANALYSIS
1993 1994 1995
------- ------- -------
B.P.'000 B.P.'000 B.P.'000
COST OF SALES
Continuing Operations.......................................... 89,554 98,739 99,310
Discontinued Operations........................................ 16,214 9,496 6,201
------- ------- -------
105,768 108,235 105,511
------- ------- -------
------- ------- -------
GENERAL AND ADMINISTRATIVE EXPENSES
Continuing Operations.......................................... 30,166 33,740 39,081
Discontinued Operations........................................ 5,610 3,495 2,572
------- ------- -------
35,776 37,235 41,653
------- ------- -------
------- ------- -------
General and administrative expenses comprise:
Continuing operations:
Distribution costs......................................... 13,959 14,592 12,878
Administrative expenses.................................... 16,207 19,148 26,203
------- ------- -------
30,166 33,740 39,081
------- ------- -------
Discontinued operations:
Distribution costs........................................... 1,250 589 267
Administrative expenses...................................... 4,360 2,906 2,305
------- ------- -------
5,610 3,495 2,572
------- ------- -------
Total.......................................................... 35,776 37,235 41,653
------- ------- -------
------- ------- -------
SHARE OF RELATED COMPANIES
Continuing Operations.......................................... (135) (154) (586)
Discontinued Operations........................................ 547 915 596
------- ------- -------
412 761 10
------- ------- -------
------- ------- -------
NET INCOME IS RESTATED AFTER CHARGING/(CREDITING):
Depreciation................................................... 40,935 34,851 34,612
Capitalized in respect of equipment on contract hire........... (51,204) (41,090) (35,919)
Hire of plant and machinery.................................... 843 887 842
Other operating lease and hire charges......................... 6,502 9,243 9,402
(Profit)/loss on disposal property and equipment............... 621 (962) (239)
Auditors' remuneration......................................... 386 410 400
Currency exchange (gains)losses................................ (127) 10 (26)
Development expenditure........................................ 1,250 430 191
EU grant receivable............................................ (287) (356) --
------- ------- -------
------- ------- -------
Finance lease interest receivable of B.P.489,000 (1994: B.P.448,000; 1993:
B.P.867,000) is included in sales and profit before interest. Finance lease
rentals receivable in the year were approximately B.P.3.4 million (1994: B.P.2.9
million; 1993: 3.4 million). Included within cost of sales is the cost of assets
for rental under finance leases of approximately B.P.3.0 million (1994: 3.5
million; 1993: 2.6 million). The remuneration paid to the auditors in respect of
non-audit services during 1995 amounted to B.P.251,000 (1994: B.P.308,000; 1993:
B.P.245,000).
F-25
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
16. EXCEPTIONAL ITEMS
(AS RESTATED) (AS RESTATED)
1993 1994 1995
------------- ------------- -------
B.P.'000 B.P.'000 B.P.'000
Exceptional operating expenses............. -- (2,575) (5,484)
Loss on sale of discontinued operations.... -- -- (5,675)
Restructuring and reorganization costs..... (1,378) -- --
Amounts written off fixed asset
investments................................ (200) (20,602) (3,066)
------ ------------- -------
Analyzed as follows:....................... (1,578) (23,177) (14,225)
------ ------------- -------
------ ------------- -------
Restructuring and reorganization........... (1,378) -- --
Amount paid to former Chairman............. -- (993) --
Refinancing costs.......................... -- (1,582) (3,136)
API Security costs......................... -- -- (2,348)
Amounts written off ESOP................... (200) (450) (3,066)
Amounts written off investments and
loans...................................... -- (862) --
Other provisions........................... -- (1,925) --
Profit on sale of subsidiary and related
companies based on the consolidated
carrying value........................... -- -- 3,168
Less: Goodwill on acquisition of subsidiary
and related companies previously written
off to reserves.......................... -- (17,365) (8,843)
------ ------------- -------
(1,578) (23,177) (14,225)
------ ------------- -------
------ ------------- -------
Exceptional operating expenses in 1995 relate to refinancing costs of
B.P.3,136,000 and costs in API Security of B.P.2,348,000. Refinancing costs
relate to fees to professional advisers and other third parties in connection
with the refinancing of the Group. The additional charges at API Security relate
to the write off of existing computer systems and leasehold improvements of $3.7
million as a result of the Board's decision to move to smaller and less
expensive premises on expiry of the present lease in May 1996 and the
implementation of enhanced computer monitoring and business systems.
The 1995 loss on the sale of discontinued operations relates to the sale of
a subsidiary undertaking, Modern Vitalcall Limited, the business of Modern
Integrated Systems and the Group's investment in two associated undertakings,
Compagnie Gnrale de Protection et Scurit SA and Microtech Security (UK) Limited.
The total consideration receivable amounted to B.P.9.3 million of which B.P.0.1
million is receivable in 1996 and B.P.0.5 million is in the form of Loan Notes.
As part of the Company's share option schemes the group established the
Automated Security (Holdings) PLC Employees' Share Ownership Plan ('ESOP'). The
ESOP has a loan of B.P.5.9 million from the Company and its assets consist
principally of investments in the Company's shares.
In accordance with Urgent Issues Task Force Abstract 13, issued on June 8,
1995, the amount receivable from the ESOP is reclassified as a fixed asset
investment (see note 7b) and any permanent diminution in value is charged to the
profit and loss account. The Board believes that a prudent method of application
of this Abstract is to value the shares held by the ESOP at the market prices as
at November 30, 1995. Consequently the shortfall between the market value of the
ESOP's shares and the amount receivable from the ESOP has been charged to the
profit and loss account in the current year. The provisions made in previous
years (1994: B.P.450,000 and 1993: B.P.200,000) have been reclassified as
exceptional items in the above analysis.
F-26
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
16. EXCEPTIONAL ITEMS-- (CONTINUED)
Exceptional items in 1994 also include B.P.993,000 paid to the former
Chairman on termination of his employment within the Group and B.P.1,582,000 of
refinancing costs.
Exceptional items in 1993 also relate to the refocusing and fundamental
reorganization carried out within the security systems segment, and the closure
of the Group's manufacturing operations.
17. BUSINESS SEGMENT INFORMATION
Set out below is information with respect to the Group's principal business
segments and geographical regions. The Group's principal business relates
entirely to Security Systems. Security Systems provides intruder alarms, various
central station monitoring services, integrated security systems and other
detection systems to customers in commercial, industrial, residential and public
sectors.
1993 1994 1995
------- ------- -------
B.P.'000 B.P.'000 B.P.'000
Business segments
Net sales..................................... 160,775 166,071 163,349
------- ------- -------
------- ------- -------
1993 1994
(AS RESTATED) (AS RESTATED) 1995
------------- ------------- -------
B.P.'000 B.P.'000 B.P.'000
Income before taxes:
Security systems........................... 22,793 25,306 25,506
Corporate.................................. (3,562) (2,130) (3,837)
Share of profits of related companies...... 412 761 10
Net interest............................... (10,754) (12,514) (14,862)
Exceptional items.......................... (1,578) (23,177) (14,225)
------------- ------------- -------
7,311 (11,754) (7,408)
------------- ------------- -------
------------- ------------- -------
Interest payable comprises:
On loans repayable:
--after five years....................... 8,747 6,331 4,389
--wholly within five years............... 3,276 6,364 10,646
------------- ------------- -------
12,023 12,695 15,035
------------- ------------- -------
------------- ------------- -------
Interest receivable........................ 1,269 181 173
------------- ------------- -------
------------- ------------- -------
Business Segments
Identifiable assets:
Security Systems........................... 271,694 267,812 268,505
Related companies and investments.......... 18,905 3,681 201
Corporate.................................. 5,410 4,378 707
------------- ------------- -------
296,009 275,871 269,413
------------- ------------- -------
------------- ------------- -------
Depreciation charged in the year........... 40,935 34,851 34,612
------------- ------------- -------
------------- ------------- -------
Capital expenditure in the year*........... 59,020 43,603 38,502
------------- ------------- -------
------------- ------------- -------
- -------------------
*Capital expenditure includes the cost of equipment rented to customers under
operating leases.
F-27
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
17. BUSINESS SEGMENT INFORMATION-- (CONTINUED)
1993 1994
(AS RESTATED) (AS RESTATED) 1995
------------- ------------- -------
B.P.'000 B.P.'000 B.P.'000
Geographical Analysis
Net Sales:
Continuing operations
UK............................................ 95,687 106,771 108,191
USA........................................... 43,515 43,503 41,864
Eire....................................... 3,934 4,029 3,678
------------- ------------- -------
143,136 154,303 153,733
Discontinued operations....................... 17,639 11,768 9,616
------------- ------------- -------
160,775 166,071 163,349
------------- ------------- -------
------------- ------------- -------
Income Before Taxes:
Continuing operations:
UK............................................ 15,387 18,252 15,398
USA........................................... 7,315 6,628 5,583
Eire....................................... 579 (635) (741)
------------- ------------- -------
23,281 24,245 20,240
Discontinued operations....................... (3,638) (308) 1,439
------------- ------------- -------
19,643 23,937 21,679
Exceptional items............................. (1,578) (23,177) (14,225)
Interest payable (net)........................ (10,754) (12,514) (14,862)
------------- ------------- -------
7,311 (11,754) (7,408)
------------- ------------- -------
------------- ------------- -------
Identifiable Assets:
UK............................................ 199,616 195,994 191,704
USA........................................... 86,075 68,964 69,980
Eire....................................... 10,318 10,913 7,729
------------- ------------- -------
296,009 275,871 269,413
------------- ------------- -------
------------- ------------- -------
18. TAXES ON INCOME
1993 1994 1995
----- ----- -----
B.P.'000 B.P.'000 B.P.'000
The charge of income taxes consists of the following:
Current tax: UK....................................... -- -- --
Overseas................................. 112 (64) 65
Share of tax charge of related companies.............. 45 78 173
Deferred tax.......................................... -- -- --
Advance Corporation Tax written off as presently
irrecoverable......................................... 2,270 710 705
Prior year adjustments................................ (627) 276 (143)
----- ----- -----
1,800 1,000 800
----- ----- -----
----- ----- -----
Advance Corporation Tax (ACT) written off in 1995 includes ACT of
B.P.355,000 in respect of accrued Preference Dividends. No tax is payable in
respect of the sale of discontinued operations in 1995.
F-28
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)
18. TAXES ON INCOME-- (CONTINUED)
A reconciliation of the difference between the statutory UK rate and the
Group's effective tax rate is as follows:
1993 1994 1995
------ ------ ------
B.P.'000 B.P.'000 B.P.'000
"Expected" income tax at UK statutory rate of
33%............................................... 2,413 (3,879) (2,445)
Movement in potential liability for deferred
tax............................................... 44 (558) (354)
Tax reallocation on fair value adjustments........ (314) -- --
Advance Corporation Tax written off............... 2,270 710 705
Adjustments relating to prior periods............. (627) 276 (143)
Permanent differences............................. (1,519) 4,602 2,903
Other differences, individually not significant... (467) (151) 134
------ ------ ------
1,800 1,000 800
------ ------ ------
------ ------ ------
In accordance with the Group's accounting policy no provision for deferred
taxation was required in 1993, 1994 or 1995. Permanent differences principally
related to the results of overseas operations which did not incur a tax charge
under UK GAAP.
The total potential liability for deferred tax under UK GAAP is as follows:-
NOVEMBER 30,
----------------
1994 1995
------ ------
B.P.'000 B.P.'000
Accelerated capital allowances on property and
equipment................................................. 13,137 12,438
Other timing differences.................................. (1,725) (1,456)
------ ------
11,412 10,982
Less: Advance Corporation Tax............................. (6,439) (6,363)
------ ------
Potential deferred tax.................................... 4,973 4,619
------ ------
------ ------
The total potential liability for deferred tax under US GAAP is as follows:-
NOVEMBER 30, NOVEMBER 30,
----------------- -----------------
1994 1994 1995 1995
------ ------- ------ -------
B.P.'000 B.P.'000 B.P.'000 B.P.'000
Deferred tax assets:
Losses.................................. 21,383 24,484
Valuation allowances.................... (7,116) (6,088)
------ ------
14,267 18,396
Short term temporary differences........ 1,725 1,456
Valuation allowance..................... -- --
------ ------
1,725 1,456
Advance Corporation Tax................. 10,500 11,205
Valuation allowance..................... (4,061) (4,842)
------ ------
6,439 6,363
Deferred tax liabilities................ (38,367) (43,041)
------- -------
Net deferred tax liability.............. (15,936) (16,826)
------- -------
------- -------
F-29
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
19. PENSIONS
The Group operates a contributory defined benefits plan (the "Plan")
available for all full-time permanent employees in the UK who have attained the
age of 18. The benefits are related to final pensionable salary and pensionable
service. The amount charged for the Plan in the year ended November 30, 1995 was
B.P.1,181,000 (1994: B.P.1,160,000, 1993: B.P.1,098,000) net of member
contributions. Including member contributions the charge was B.P.1,772,000 in
1995, B.P.1,705,000 in 1994 and B.P.1,654,000 in 1993.
The latest actuarial valuation of the plan was carried out at April 1, 1994
using the Projected Unit method, to assess the finances of the Plan and to
determine pensions costs. For the valuation, certain long term assumptions were
employed, the most important being:
(i) Investment return: 8.5% per annum compound
(ii) Dividend increases: average of 4.0% per annum
(iii) Pensionable salary growth: 6.5% per annum compound
(iv) Increases to pensions in payment in excess of GMP's: 0.7% per annum
compound
(v) Increases to deferred pensions: 5% per annum compound.
At April 1, 1994, the market value of the assets of the UK Pension Fund was
B.P.30.2 million. The actuarial value of the assets amounted to 119% of the
value of the accrued liabilities of the Fund after allowing for the assumed
increases in pensionable salary. The surplus assets in the Fund are being used
to reduce the Group's long-term contributions to the Fund. The effect upon Group
profit is not significant. Overseas, the Group in general operates defined
contribution plans for certain executives, the costs of which are recognised on
the basis of contributions payable. The contributions in the year ended November
30, 1995 were B.P.382,000 (1994: B.P.557,000, 1993: B.P.705,000).
The amount charged to income in respect of all pension plans was
B.P.1,563,000 in 1995, B.P.1,717,000 in 1994 and B.P.1,803,000 in 1993.
Under UK GAAP, the cost of providing pension benefits may be calculated by
the use of any actuarial method which is appropriate and whose assumptions
reflect the long-term nature of the assets and liabilities involved. Under US
GAAP, the cost of providing these benefits are calculated in accordance with
Statement of Financial Accounting Standards No. 87 which requires the use of the
projected unit method and a discount rate (being the rate of interest at which
pension liabilities could effectively be settled) which reflects current market
rates.
Including members' contributions, the pension expense for the UK defined
benefits plan in accordance with US GAAP on this basis is as follows:
NOVEMBER 30,
--------------------------
1993 1994 1995
------ ------ ------
B.P.'000 B.P.'000 B.P.'000
Service costs of benefits earned during the year................... 1,696 2,031 2,207
Interest costs on projected benefit obligations.................... 1,687 2,246 3,079
Actual return on assets............................................ 1,571 (2,919) (4,570)
Deferred asset gain/(loss)......................................... (3,760) 298 1,428
Net amortization................................................... 460 (146) (86)
------ ------ ------
1,654 1,510 2,058
------ ------ ------
------ ------ ------
F-30
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
19. PENSIONS--(CONTINUED)
The actuarial present value of benefit obligations and the funded status of
the UK plan in accordance with US GAAP are as follows:
NOVEMBER 30,
-----------------------------
1993 1994 1995
------- ------- -------
B.P.'000 B.P.'000 B.P.'000
Accumulated benefit obligations:
Vested........................................................ 20,750 28,400 23,700
Non-vested.................................................... -- -- --
------- ------- -------
Total accumulated benefit obligations........................... 20,750 28,400 23,700
------- ------- -------
------- ------- -------
Total projected benefit obligations............................. 24,157 33,378 27,300
Plan assets at fair value....................................... (26,773) (30,848) (36,593)
------- ------- -------
Excess of obligations over assets............................... (2,616) 2,530 (9,293)
Unrecognised transition asset................................... 1,461 1,217 974
Unrecognised prior service cost................................. (779) (681) (1,424)
Unrecognised (loss)/gain........................................ 1,634 (3,412) 9,780
------- ------- -------
Net pension provision/(prepayment).............................. (300) (346) 37
------- ------- -------
------- ------- -------
The main actuarial assumption underlying this valuation is as follows:
NOVEMBER 30,
--------------------
1993 1994 1995
---- ---- ----
% % %
Discount rate............................................................ 9.0 9.0 8.0
---- ---- ----
Return on assets......................................................... 10.0 10.0 8.5
Compensation increases................................................... 8.0 8.0 6.5
---- ---- ----
---- ---- ----
The effect of applying US GAAP in the calculation of the UK pension expense
compared with the results in accordance with UK GAAP is Nil in 1993, a reduction
in 1994 of B.P.195,000 and a charge of B.P.286,000 in 1995. These amounts were
not considered sufficiently material to record as a significant difference
between UK GAAP and US GAAP in note 28.
F-31
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
20. RESERVES
B.P.'000
(A) ADDITIONAL PAID-IN CAPITAL
At November 30, 1994................................................................ 5,729
Share premiums recieved............................................................. 2
Expenses of issue................................................................... (1)
Amortized Convertible Capital Bond issue costs transferred from retained earnings... (120)
-----
At November 30, 1995................................................................ 5,610
-----
-----
GROUP COMPANY
------- -------
B.P.'000 B.P.'000
(B) NON-DISTRIBUTABLE RESERVES
At November 30, 1994..................................................... (90,681) 105,312
Goodwill in the year written off......................................... (232) --
Goodwill of subsidiary and associated undertakings transferred to profit
and loss account....................................................... 8,843 --
Exchange adjustments on:
Net investments including goodwill..................................... 3,387 --
Hedging arrangements................................................... (1,777) --
Goodwill............................................................... (1,972) --
------- -------
At November 30, 1995..................................................... (82,432) 105,312
------- -------
------- -------
Non-distributable reserves of the Company at November 30, 1995 and 1994
comprise Special Reserves of B.P.82,118,000, Merger Reserves of B.P.23,114,000
and Other Reserves of B.P.80,000.
GROUP COMPANY
------- -------
B.P.'000 B.P.'000
(C) RETAINED EARNINGS
At November 30, 1994..................................................... 59,647 2,009
Result for year.......................................................... (11,047) 335
Convertible Capital Bonds issue costs transferred to additional paid in
capital.................................................................. 120 120
------- -------
At November 30, 1995..................................................... 48,720 2,464
------- -------
------- -------
NOVEMBER 30,
------------------
1994 1995
------- -------
B.P.'000 B.P.'000
Amounts transferred to/(from) retained earnings in 1995 originated from:
The Company.............................................................. (13,917) 335
Subsidiary companies..................................................... (2,253) (11,327)
Related companies........................................................ 577 (55)
------- -------
At November 30, 1995..................................................... (15,593) (11,047)
------- -------
------- -------
F-32
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
21. SHARE CAPITAL
1994 1995
------- -------
B.P.'000 B.P.'000
AUTHORISED
ORDINARY SHARES:
200,000,000 Ordinary Shares of 10p each.................................. 20,000 20,000
------- -------
------- -------
REDEEMABLE PREFERENCE SHARES:
15,000,000 5% Convertible Cumulative Redeemable Preference Shares
of B.P.1 each.......................................................... 15,000 15,000
42,000,000 6% Convertible Cumulative Redeemable Preference Shares
of B.P.1 each.......................................................... 42,000 42,000
------- -------
57,000 57,000
------- -------
------- -------
ISSUED
ORDINARY SHARES:
119,571,953, Ordinary Shares of 10p each (1994: 119,571,379)............. 11,957 11,957
------- -------
------- -------
REDEEMABLE PREFERENCE SHARES:
7,867,442, 5% Conv. Cum. Redeemable Pref. Shares of B.P.1 each (1994:
7,867,490)............................................................... 7,868 7,867
40,761,578, 6% Conv. Cum. Redeemable Pref. Shares of B.P.1 each (1994:
40,763,032).............................................................. 40,763 40,762
------- -------
48,631 48,629
------- -------
------- -------
Shares issued during the year:
(i) Holders of 1,454, 6% Preference Shares exercised their conversion
rights on May 31, 1995 and were duly allotted 545 Ordinary Shares of 10p
each (B.P.54.50 nominal value) on the basis of 375p nominal of Ordinary
Shares for every B.P.100 nominal of Preference Shares held.
(ii) Holders of 48, 5% Preference Shares exercised their conversion
rights on May 31, 1995 and were duly allotted 29 Ordinary Shares of 10p each
(B.P.2.90 nominal value) on the basis of one Ordinary Share for every
B.P.1.6196 nominal of Preference Shares held.
(iii) Details of Rights and Share Options are as follows:
(a) The rights attached to the 5% Convertible Cumulative Redeemable
Preference Shares are summarized as follows:
(i) The right to a cumulative preference dividend of 5% per
annum, payable half-yearly on February 28 and August 31 in each year
in respect of the six month periods ended on November 30 and May 31
immediately prior to such dates;
(ii) The right during such period as the conversion rights are
exercisable to one vote per Preference Share but thereafter only in
the event that the cumulative dividend is in arrears or in certain
other limited circumstances;
(iii) The right in the month of May in each of the years 1987 to
1999 (or, if later, on the 28th day after the despatch of the
accounts of the Group in respect of the previous year) to convert
into Ordinary Shares of Automated Security (Holdings) at an effective
conversion price of B.P.1.6196 per Ordinary Share;
F-33
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
21. SHARE CAPITAL--(CONTINUED)
(iv) Redemption at the option of Automated Security (Holdings) by
not later than May 31 in the years 2000 to 2005 and redemption in any
event on May 31, 2005;
(v) There is no premium payable on redemption.
(b) The rights attached to the 6% Convertible Cumulative Redeemable
Preference Shares are summarized as follows:
(i) The rights to a cumulative preference dividend of 6% per
annum, payable half-yearly on May 31 and November 30 in respect of
six month periods ending on those dates;
(ii) The right to vote in the event that the cumulative dividend
is in arrears for six months or more or in certain other limited
circumstances;
(iii) The right on May 31 in each of the years 1991 to 2006
inclusive to convert into Ordinary Shares of Automated Security
(Holdings) at an effective conversion price of B.P.2.67 per share;
(iv) Redemption at the option of Automated Security (Holdings) at
any date after May 31, 2006 and redemption in any event on May 31,
2009;
(v) There is no premium payable on redemption.
(c) The rights of the holders of the 5% Preference Shares to
dividends and capital are in priority to any payment to the holders of
the 6% Preference Shares. The rights of the shareholders of the 5% and 6%
Preference Shares are in priority to any payment to the holders of the
Ordinary Shares.
(d) At November 30, 1995 Automated Security (Holdings) had
outstanding options in respect of the following Ordinary Shares of 10p
each:
PRICE AT WHICH
DATE OF GRANT NUMBER OF SHARES PERIOD OF OPTION EXCERCIZABLE
----------------- ---------------- ---------------- --------------
Share option
scheme: July 10, 1987 159,079 3 to 10 years 256.75p
March 28, 1988 349,329 3 to 10 years 238.15p
July 27, 1988 211,804 3 to 10 years 242.67p
September 8, 1989 411,476 3 to 10 years 269.30p
April 30, 1990 190,000 3 to 10 years 266.00p
March 7, 1991 136,000 3 to 10 years 232.00p
March 23, 1992 183,000 3 to 10 years 130.00p
March 29, 1993 220,000 3 to 10 years 149.00p
---------
1,860,688
---------
---------
Sharesave
scheme: August 23, 1993 355,727 5 years 128.00p
---------
---------
F-34
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
21. SHARE CAPITAL--(CONTINUED)
Changes in the options outstanding for each of the three years in the
period ended November 30, 1995 are summarized as follows:-
SHARE OPTION SHARESAVE
SCHEME SCHEME
SHARES SHARES
------------ ---------
November 30, 1992.................................... 4,309,514 --
Granted.............................................. 220,000 618,710
Excersised........................................... (25,000) --
Lapsed............................................... (928,091) (13,130)
------------ ---------
November 30, 1993.................................... 3,576,423 605,580
Granted.............................................. -- --
Exercised............................................ -- --
Lapsed............................................... (848,341) (73,915)
------------ ---------
November 30, 1994.................................... 2,728,082 531,665
Granted.............................................. -- --
Exercised............................................ -- --
Lapsed............................................... (867,394) (175,938)
------------ ---------
November 30, 1995.................................... 1,860,688 355,727
------------ ---------
(e) On September 20, 1990 as part of the Stapled Unit transaction,
warrants were issued in respect of 3,706,680 Ordinary Shares to The
Prudential Insurance Company of America at a price of 300p each
exercizable at any time up to September 20, 2002.
(f) The Convertible Capital Bonds are capable, in certain
circumstances, of being exchanged into 18 million fully paid Ordinary
Shares in Automated Security (Holdings) at a price of 250p per share (see
note 12 (d)).
22. ADDITIONAL NOTES TO THE COMPANY BALANCE SHEETS
COMPANY
---------------------------------
SHARES IN SHARES IN
SUBSIDIARY RELATED
COMPANIES COMPANIES TOTAL
--------- --------- -------
B.P.'000 B.P.'000 B.P.'000
INVESTMENTS IN SUBSIDIARY AND RELATED COMPANIES
Cost
At November 30, 1994........................................... 182,847 5,416 188,263
Disposals...................................................... -- (5,416) (5,416)
--------- --------- -------
At November 30, 1995........................................... 182,847 -- 182,847
--------- --------- -------
--------- --------- -------
COMPANY
-----------------
NOVEMBER 30,
-----------------
1994 1995
------ -------
B.P.'000 B.P.'000
SHORT TERM DEBT
Bank loans and overdrafts (see note 12)................................... 84,735 100,822
------ -------
------ -------
F-35
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
22. ADDITIONAL NOTES TO THE COMPANY BALANCE SHEETS--(CONTINUED)
Certain Group bank borrowings are held under an offset facility,
consequently the short-term debt of the Company may exceed that of the Group.
LONG-TERM DEBT
8.28% Senior Notes (see note 12)........................................... 35,019 36,707
------ ------
------ ------
COMPANY
---------------
NOVEMBER 30,
---------------
1994 1995
------ -----
B.P.'000 B.P.'000
OTHER CURRENT LIABILITIES
Amounts owed to subsidiary companies........................................ 2,243 1,201
Corporation tax payable..................................................... 355 355
Other creditors............................................................. 3,869 1,937
Accruals.................................................................... 4,231 3,878
------ -----
10,698 7,371
------ -----
------ -----
COMPANY
----------------
NOVEMBER 30,
----------------
1994 1995
------ ------
B.P.'000 B.P.'000
NON-CURRENT LIABILITIES
Provisions................................................................. 277 --
Amounts owed to subsidiary company......................................... 45,199 45,319
------ ------
45,476 45,319
------ ------
------ ------
The amount owed to a subsidiary company by the Company, included in
non-current liabilities, relates to a debenture, net of issue costs, owed to ASH
Capital Finance (Jersey) Limited in respect of the Convertible Capital Bond
issue. The Company's obligations under this debenture are subordinated on a
winding up to its liabilities to its other unsecured creditors. The principal is
scheduled to be repaid in 2006.
F-36
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
23. GOODWILL
COST OF
GOODWILL EXCHANGE
ELIMINATED ADJUSTMENTS TOTAL
---------- ----------- -------
B.P.'000 B.P.'000 B.P.'000
Eliminated to November 30, 1993............................... 196,496 7,482 203,978
Acquisitions in the year
- -- Related companies.......................................... 17,466 -- 17,466
- -- Other businesses acquired.................................. 1,769 -- 1,769
Adjustments to previous year's acquisitions................... 535 -- 535
Share of goodwill movements of related companies.............. 423 -- 423
Transferred to profit and loss account........................ (17,365) -- (17,365)
Exchange adjustments.......................................... -- (4,516) (4,516)
---------- ----------- -------
Eliminated to November 30, 1994............................... 199,324 2,966 202,290
Investment in associated undertaking.......................... 232 -- 232
Transferred to profit and loss account........................ (8,843) -- (8,843)
Exchange adjustments.......................................... -- 1,972 1,972
---------- ----------- -------
Eliminated to November 30, 1995............................... 190,713 4,938 195,651
---------- ----------- -------
---------- ----------- -------
24. COMMITMENTS AND CONTINGENCIES
(a) Automated Security (Holdings) has guaranteed advances by bankers to
subsidiary companies. At November 30, 1995 the net advances subject to these
guarantees totalled B.P.666,000 (1994: B.P.1,525,000). Interlocking guarantees
have been given to the Group's main UK clearing bank by Automated Security
(Holdings) and its UK subsidiary companies.
(b) Automated Security (Holdings) has guaranteed contract bonds and Letters
of Credit on behalf of subsidiary undertakings of B.P.1,492,000 (1994:
B.P.2,693,000).
(c) Automated Security (Holdings) has provided a guarantee in respect of
B.P.44.9 million Convertible Capital Bonds issued by ASH Capital Finance
(Jersey) Limited on May 31, 1991 (see note 12 (d)).
(d) Operating lease commitments at November 30, 1995 are payable as follows:
LAND
AND
BUILDINGS OTHER TOTAL
--------- ------ ------
B.P.'000 B.P.'000 B.P.'000
1996.............................................................. 3,051 8,210 11,261
1997.............................................................. 1,937 2,857 4,794
1998.............................................................. 1,220 758 1,978
1999.............................................................. 1,038 539 1,577
2000.............................................................. 941 186 1,127
Thereafter........................................................ 7,936 300 8,236
--------- ------ ------
16,123 12,850 28,973
--------- ------ ------
--------- ------ ------
F-37
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
24. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
(e) Operating lease payments to be made in the year ending November 30, 1996
are in respect of commitments expiring:
LAND
AND
BUILDINGS OTHER TOTAL
--------- ----- ------
B.P.'000 B.P.'000 B.P.'000
Within one year.................................................... 706 2,984 3,690
Between one and five years......................................... 1,499 5,126 6,625
After more than five years......................................... 846 100 946
--------- ----- ------
3,051 8,210 11,261
--------- ----- ------
--------- ----- ------
The operating lease expense for the years ended November 30, 1995, 1994 and
1993 was B.P.9,402,000, B.P.9,243,000 and B.P.6,502,000 respectively.
The aggregate minimum rentals to be received in the future under non
cancellable sub leases for land and buildings as at November 30, 1995 was
B.P.1.1 million (1994: B.P.1.1 million). The Group has also provided for future
rentals in respect of surplus properties, at November 30, 1995 these provisions
amounted to B.P.1.8 million (1994: B.P.1.8 million).
(f) Finance lease commitments at November 30, 1995 are payable as follows:
B.P.'000
1996................................................................................. 121
1997................................................................................. 37
Thereafter........................................................................... --
-----
Total lease payments................................................................. 158
Less: interest portion of payments................................................... (10)
-----
148
-----
-----
25. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 requires disclosure of
the estimated fair values of financial instruments for which it is practicable
to estimate the value.
With regard to cash and cash equivalents, loans, short term debt, non-trade
accounts receivables and payables and long term bank debt, terms of these
financial instruments are similar to those available in the current market.
Accordingly, carrying values approximate fair values.
The fair value of the Group's long term unlisted investments in related
companies and other investments has been reviewed and the Directors consider
that in total these investments are stated at their approximate fair value based
on this review.
The fair value of the Group's 9.5% Convertible Capital Bonds is based on the
quoted market prices for these bonds at November 30. At November 30, 1995, 1994
and 1993 the restated carrying amount of these bonds was B.P.43.8 million,
B.P.43.7 million and B.P.43.6 million and their fair value was B.P.32.1 million,
B.P.32.3 million and B.P.43.9 million respectively. As mentioned in note 14 the
Group does not use derivative financial instruments to manage its foreign
currency or interest rate risks.
F-38
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
26. CASH FLOWS
(a) Reconciliation of Operating Profit to Net Inflows from Operating
Activities
1993 1994
(AS RESTATED) (AS RESTATED) 1995
------------- ------------- ------
B.P.'000 B.P.'000 B.P.'000
Operating profit............................................. 19,643 21,362 16,195
Disposal costs............................................... -- -- (251)
(Profit)/loss on disposal of fixed assets.................... 673 (962) (239)
Depreciation................................................. 40,935 34,851 34,612
Share of results of associated undertakings.................. (367) (683) (10)
Reorganization............................................... (1,793) -- --
Decrease/(increase) in stocks................................ 3,674 587 1,888
Decrease/(increase) in debtors............................... (3,569) 7,377 433
Increase/(decrease) in creditors and rentals in advance...... (2,963) 4,651 (1,279)
Decrease in provisions....................................... (1,035) (1,914) (310)
------------- ------------- ------
Net cash inflow from operating activities.................... 55,198 65,269 51,039
------------- ------------- ------
------------- ------------- ------
(b) Analysis of changes in cash and cash equivalents during the year
1993 1994 1995
------ ------ -----
B.P.'000 B.P.'000 B.P.'000
At December 1....................................................... (353) (1,312) 3,621
Effect of foreign exchange rate changes............................. (13) 16 (11)
Net cash inflow/(outflow)........................................... (946) 4,917 1,404
------ ------ -----
At November 30...................................................... (1,312) 3,621 5,014
------ ------ -----
------ ------ -----
(c) Analysis of balances of cash and cash equivalents as shown in the balance
sheet
1993 1994 1995
------ ----- -----
B.P.'000 B.P.'000 B.P.'000
Cash at bank and in hand............................................. 716 3,934 5,936
Bank overdrafts and other short term borrowings...................... (2,028) (313) (922)
------ ----- -----
(1,312) 3,621 5,014
------ ----- -----
------ ----- -----
The Group's statement of cash flows is prepared in accordance with UK
Financial Reporting Standard (FRS1), the objectives and principles of which are
substantially consistent with Statement of Financial Accounting Standards No.
95, "Statement of Cash Flows" ("SFAS95"), under US GAAP, and International
Accounting Standard 7 ("IAS 7") . The principal differences between the
standards relate to classification.
Cash flows from taxation and returns from investments and servicing of
finance under FRS1 would be included as operating activities under SFAS95. Under
FRS1, net cash and cash equivalents comprise cash, investments and short-term
deposits which were within 3 months of maturity when acquired and short-term
borrowings repayable within 3 months from the date of their advance. Under
SFAS95, short-term borrowings repayable and overdraft balances would not be
included in cash and cash equivalents, and only investments and short-term
deposits with an original maturity of 3 months or less are included in cash and
cash equivalents.
F-39
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
26. CASH FLOWS--(CONTINUED)
Under US GAAP definitions cash and cash equivalents would therefore be as
follows:
B.P.'000
1993................................................................................ 716
1994................................................................................ 3,934
1995................................................................................ 5,936
-----
-----
(d) Analysis of changes in financing during the year
SHARE CAPITAL CONVERTIBLE LOANS AND
INCLUDING ADDITIONAL CAPITAL OTHER STAPLED SENIOR
PAID IN CAPITAL BONDS BORROWINGS UNITS NOTES
-------------------- ----------- ---------- ------- ------
B.P.'000 B.P.'000 B.P.'000 B.P.'000 B.P.'000
At November 30, 1992................ 66,494 43,455 52,016 39,612 --
Exchange adjustments................ -- -- 815 673 --
Bank overdrafts and other short term
borrowings.......................... -- -- 1,076 -- --
Cash inflows from financing......... 33 -- 26,134 (3,940) --
Share issue expenses................ (279) -- -- -- --
Amortization of issue expenses...... (119) 119 -- 164 --
Other movements..................... 321 -- -- (83) --
------- ----------- ---------- ------- ------
At November 30, 1993................ 66,450 43,574 80,041 36,426 --
Exchange adjustments................ -- -- (1,628) (508) (1,322)
Bank overdrafts and other short term
borrowings.......................... -- -- (1,715) -- --
Cash inflows from financing......... -- -- 5,870 -- --
CCB conversion...................... 1 (1) -- -- --
Share issue expenses................ (14) -- -- -- --
Amortization of issue expenses...... (120) 120 -- 79 66
Transfer to Senior Notes............ -- -- -- (35,903) 35,903
Yield maintenance accrual........... -- -- -- -- 372
Other movements..................... -- -- -- (94) --
------- ----------- ---------- ------- ------
At November 30, 1994................ 66,317 43,693 82,568 -- 35,019
Exchange adjustments................ -- -- 986 -- 854
Bank overdrafts and other short term
borrowings.......................... -- -- 609 -- --
Cash outflows from financing........ -- -- (614) -- --
Share issue expenses................ (1) -- -- -- --
Amortization of issue expenses...... (120) 120 -- -- 120
Yield maintenance accrual........... -- -- -- -- 714
------- ----------- ---------- ------- ------
At November 30, 1995................ 66,196 43,813 83,549 -- 36,707
------- ----------- ---------- ------- ------
------- ----------- ---------- ------- ------
No amount was paid or received in restructuring the Stapled Units into 8.28%
Senior Notes in May 1994.
(e) Acquisitions
There were no acquisitions of business in 1995 but the Group invested a
further B.P.232,000 in TVX Inc, a related company.
F-40
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
26. CASH FLOWS--(CONTINUED)
On August 31, 1994 the Group acquired certain assets of Sonitrol of Eugene
in Oregon for an initial consideration of $2,070,000 and deferred consideration
of $452,000. In addition the Group paid deferred consideration of B.P.1,510,000
in respect of the acquisition of Compagnie Gnrale de Protection et Scurit SA, a
related company, and B.P.1,436,000 in respect of Arius Inc.
In 1993 the Group acquired Telecom Security Limited in the UK for an initial
consideration of B.P.6,980,000 including costs, and additional deferred
consideration of B.P.1,420,000. The Group also made a further minor acquisition
for a total cost of some B.P.200,000.
Assets acquired:
1993 1994 1995
------ ------ ------
B.P.'000 B.P.'000 B.P.'000
At book value
Intangible assets.................................................. -- 1,769 --
Property and equipment............................................. 2,513 -- --
Inventories........................................................ 412 -- --
Accounts receivable................................................ 574 -- --
Cash at bank....................................................... 2,471 -- --
Accounts payable................................................... (4,324) -- --
Long term liabilities.............................................. (406) -- --
------ ------ ------
1,240 1,769 --
FAIR VALUE ADJUSTMENTS:
Intangible fixed assets............................................ -- (1,769) --
Property and equipment............................................. 2,371 --
Inventories........................................................ -- -- --
Accounts receivable................................................ -- -- --
Accounts payable................................................... (1,369) -- --
Long term liabilities.............................................. (64) -- --
------ ------ ------
Fair value of net assets acquired.................................. 2,178 -- --
Consideration
- -cash paid......................................................... (7,180) (1,480) --
- -deferred consideration............................................ (1,420) (289) --
------ ------ ------
Goodwill arising from acquisitions in the current year............. (6,422) (1,769) --
Adjustments in respect of prior year's acquisitions................ 2,155 (535) --
Accrued consideration in respect of prior year's acquisitions...... (684) -- --
------ ------ ------
(4,951) (2,304) --
------ ------ ------
------ ------ ------
Fair value adjustments relate to intangibles eliminated in line with Group
accounting policies, the estimated value of property and equipment, allowances
for obsolete inventories and doubtful accounts receivable, provisions for
maintenance and reorganization costs of businesses acquired. Adjustments in
respect of prior year's acquisitions relate in 1994 to the estimated value of
assets and liabilities in Telecom Security Limited and in 1993 principally to
the estimated value of property and equipment in Sonitrol Management Corporation
in the United States. Apart from the consideration shown above, the acquisitions
had no material effect on the Group's cash flows.
F-41
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
26. CASH FLOWS--(CONTINUED)
(f) Disposals
During 1995 the Group disposed of Modern Vitalcall Limited, a subsidiary
company; the business of Modern Integrated Systems and interests in two related
companies, Compagnie Gnrale de Protection et Scurit SA and Microtech Security
(UK) Limited. The total consideration receivable was B.P.9.3 million of which
B.P.0.1 million is receivable in 1996 and B.P.0.5 million is in the form of Loan
Notes.
There were no disposals of business in 1994. During 1993 the Group disposed
of its interests in Hepburn Technology Limited, a related company.
1993 1994 1995
----- ----- ------
B.P.'000 B.P.'000 B.P.'000
Net assets sold:
Property and equipment............................................... -- -- 474
Investments in related companies..................................... 85 -- 3,409
Inventories.......................................................... -- -- 1,651
Accounts receivable.................................................. -- -- 2,981
Accounts payable..................................................... -- -- (1,499)
Rentals received in advance.......................................... -- -- (1,464)
----- ----- ------
85 -- 5,552
----- ----- ------
----- ----- ------
The businesses sold during 1995 generated B.P.1,278,000 of the Group's net
operating cash flows, paid B.P.1,000 in respect of net returns on investments
and servicing of finance, and utilized B.P.33,000 for investing activities.
F-42
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
27. EMPLOYEES AND DIRECTORS
EMPLOYEES
1993 1994 1995
NUMBER NUMBER NUMBER
------ ------ ------
Employee numbers
Average number of persons employed:
Engineers and sales staff....................................... 2,303 2,202 2,227
Office staff and manaagement.................................... 927 807 779
------ ------ ------
3,230 3,009 3,006
------ ------ ------
------ ------ ------
Employee costs
B.P.'000 B.P.'000 B.P.'000
Wages and salaries................................................ 57,434 59,862 57,117
Social Security................................................... 5,866 4,935 4,875
Pension contributions............................................. 1,803 1,717 1,563
------ ------ ------
65,103 66,514 63,555
------ ------ ------
------ ------ ------
DIRECTORS
1993 1994 1995
------ ------ ------
B.P.'000 B.P.'000 B.P.'000
Directors' emoluments:............................................
Salaries and benefits in kind..................................... 1,378 1,055 775
Pension contributions............................................. 363 38 28
Compensation for loss of office................................... 222 1,231 --
Pension paid to previous director................................. -- -- 9
------ ------ ------
1,963 2,324 812
------ ------ ------
------ ------ ------
Lord Lane of Horsell was Chairman during 1995. In 1994 the office of
Chairman was held by two directors and their emoluments (excluding pension
contributions and compensation for loss of office) during the period they
occupied the position of Chairman were as follows:
1993 1994 1995
------ ------ ------
B.P.'000 B.P.'000 B.P.'000
T V Buffett (until October 18, 1994).............................. 334 279 --
Lord Lane of Horsell (from October 18, 1994)...................... -- 4 50
------ ------ ------
The highest paid director in 1995 received B.P.173,000. The former Chairman
was the highest paid director in 1994 and 1993.
Details of share options granted to executive directors are disclosed in
Part I Item 11. It is not possible to quantify the benefit arising, if any.
F-43
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
27. EMPLOYEES AND DIRECTORS--(CONTINUED)
The number of directors whose total emoluments, excluding pension
contributions, compensation for loss of office and the emoluments of a director
who discharged his duties outside the United Kingdom are as follows:-
1993 1994 1995
NUMBER NUMBER NUMBER
------ ------ ------
B.P. 5,001-B.P. 10,000............................................ -- 1 --
B.P. 10,001-B.P. 15,000............................................ -- -- 2
B.P. 15,001-B.P. 20,000............................................ 3 3 1
B.P. 20,001-B.P. 25,000............................................ 2 1 1
B.P. 25,001-B.P. 30,000............................................ 2 1 2
B.P. 30,001-B.P. 35,000............................................ -- 1 --
B.P. 50,001-B.P. 55,000............................................ -- -- 1
B.P. 90,001-B.P. 95,000............................................ 1 -- --
B.P. 95,001-B.P.100,000............................................ -- -- 1
B.P.100,001-B.P.105,000............................................ 1 -- --
B.P.110,001-B.P.115,000............................................ -- 1 --
B.P.120,001-B.P.125,000............................................ -- 1 --
B.P.160,001-B.P.165,000............................................ -- -- 1
B.P.165,001-B.P.170,000............................................ -- -- 1
B.P.170,001-B.P.175,000............................................ -- 1 1
B.P.215,001-B.P.220,000............................................ 1 -- --
B.P.275,001-B.P.280,000............................................ -- 1 --
B.P.330,001-B.P.335,000............................................ 1 -- --
-- - --
-- - --
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
The consolidated financial statements of the Group are prepared in
conformity with UK generally accepted accounting principles (UK GAAP) which
differs in certain significant respects from US GAAP. Differences which have a
significant effect on consolidated net income or shareholders' equity are
discussed below. While this is not a comprehensive summary of all differences
between UK GAAP and US GAAP, other differences are not likely to have a
significant effect on the consolidated net income or shareholders' equity of the
Group.
Intangible assets
US GAAP requires that intangible assets are amortized over their estimated
useful life which may not exceed 40 years. Under UK GAAP the cost of goodwill,
and other intangible assets, which are considered to be similar in nature to
goodwill, may be written off directly to reserves in the year in which the
assets are acquired. In the tables below the intangible assets which are
substantially comprised of goodwill, subscriber contracts and customer lists,
and franchise contracts are amortized over estimated useful lives which range
from 15 to 40 years. The average useful life of each class of asset is estimated
to be 15 years for subscriber contracts, 30 years for customer lists and 40
years for franchise contracts.
F-44
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP--(CONTINUED)
Deferred income taxes
Under UK GAAP, deferred taxation is provided on the liability method for all
timing differences except where the directors consider that no liability will
arise in the foreseeable future. Following the issuance of Statement of
Financial Accounting Standards No. 109: "Accounting for Income Taxes", US GAAP
provides for the use of the liability method but requires that provisions be
made for all temporary differences. The tables below incorporate adjustments to
shareholders' equity and net income to reflect full provision for deferred
taxation on all temporary differences under the liability method. Temporary
differences arise mainly from the difference between the tax basis of property
and equipment and intangible assets and their corresponding carrying amounts in
the financial statements.
Pensions
Since 1989, as permitted under UK GAAP, the accounting policy of the Group
has been to account for pension costs on a long-term basis spreading the
expected pension costs over the service lives of employees, using assumptions as
advised by an actuary. Under US GAAP, the calculations need to be made using
market rates of interest which were higher than the long-term assumptions made
by the actuary.
A further difference is that under UK GAAP a cost variation is calculated by
spreading the surplus (the difference between the actuarial value of the assets
and the liabilities) over the service lives of the employees, whereas US GAAP
calculates this variation in a particular way--as the expected investment return
on the assets at market value, plus amortization of the surplus (the difference
between the market value of the assets and the actuarial value of the
liabilities), less interest at the market rate on the actuarial value of the
liabilities.
Related companies
In the tables below, estimated adjustments have been made in respect of
related companies accounted for by the Group under the equity method, where such
related companies adopt accounting policies which conform with UK GAAP which
differ significantly from those required under US GAAP. These adjustments relate
primarily to the accounting treatment for goodwill and intangible assets (see
discussion above on intangible assets).
Sale of subsidiary and related companies
Under UK GAAP goodwill on acquisition of subsidiaries and related companies
is written off to reserves. On sale of these companies the goodwill previously
written off is recharged in full to the profit and loss account. Under US GAAP
the goodwill on acquisition is carried in the balance sheet and amortized over
its estimated useful life. On sale of these companies the profit on sale is
therefore higher under US GAAP by the amount of the amortization previously
charged to income.
Discontinued activities
The results of discontinued activities are separated on the profit and loss
account under both UK accounting practice and US GAAP. Under UK GAAP a
discontinued operation refers to an operation that was material and whose sale
or termination has a material effect on the nature and focus of the operations
and represents a material reduction in its operating facilities. Under US GAAP,
only the closure, sale or disposal of a separately identifiable segment of a
business qualifies as a discontinued activity.
F-45
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP--(CONTINUED)
Redeemable Preference Shares
The 5% and 6% Convertible Cumulative Redeemable Preference Shares (the
"Preference Shares") of Automated Security (Holdings) PLC are convertible into
Ordinary Shares, at the option of the holder, in the month of May in each of the
years 1987 to 1999 (for the 5% Preference Shares) and on May 31 in each of the
years 1991 to 2006 ( for the 6% Preference Shares). Automated Security
(Holdings) PLC has the option between May 31, 2000 and May 31, 2005 (for the 5%
Preference Shares) and June 1, 2006 to May 31, 2009 (for the 6% Preference
Shares) to redeem the Preference Shares at par and in any event must redeem on
May 31, 2005 (for the 5% Preference Shares) or May 31, 2009 (for the 6%
Preference Shares). Under UK GAAP the Preference Shares form part of
shareholders' equity whereas under US GAAP they are classified as a separate
non-current liability. Accordingly, for the purposes of the reconciliation the
total amount of the Preference Shares has been excluded from shareholders'
equity and the dividends on the Preference Shares have been deducted to compute
net income attributable to Ordinary Shareholders.
Earnings per share
The earnings per share calculation under UK GAAP is set out in the
accounting policies. Under US GAAP, primary earnings per Ordinary Share is
calculated by dividing the profit attributable to ordinary shareholders by the
weighted average number of shares in issue during the year. The weighted average
number of shares includes common stock equivalents including all convertible
preference shares and convertible unsecured loan stock calculated under the "If
Converted Method" and share options using the "Treasury Stock Method". The
profit attributable to ordinary shareholders comprises the estimated net income
in accordance with US GAAP and the dividends and interest (net of tax) of
preference shares and loan stock which have been included in calculating the
common stock equivalents. Fully diluted earnings per share have not been
presented as they do not vary significantly from primary earnings per share.
Pre-acquisition tax losses
Under UK GAAP contingent tax assets on acquired businesses are recognized at
the date of acquisition only to the extent that their recoverability can be
foreseen with reasonable certainty. Any subsequent benefits which arise are
recognized as a reduction in the tax charge. Under US GAAP such benefits are
treated as a retrospective reduction of the goodwill arising on the acquisition.
Employees' share ownership plan
Automated Security (Holdings) PLC has advanced funds to the Automated
Security (Holdings) PLC Employees' Share Ownership Plan Trust ("ESOP"). Under UK
GAAP following the introduction of UITF Abstract 13 the net balance due from the
ESOP has been shown in investments for both 1994 and 1995; previously these
balances were shown in long term accounts and notes receivable. Under US GAAP
these receivables are shown as a deduction from shareholders' equity.
Recently Issued Accounting Pronouncements
(i) In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of ("SFAS 121"). SFAS
121 provides guidance on when to assess and how to measure impairment of
long-lived assets, certain identifiable intangibles and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiables to be disposed of. This
F-46
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP--(CONTINUED)
Statement is effective for financial statements for fiscal years beginning after
December 15, 1995. The Company has not yet assessed the future impact of
adopting SFAS 121.
(ii) In October 1995 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"). SFAS 123 establishes accounting and disclosure
standards for stock-based employee compensation arrangements. The Statements is
effective for fiscal years beginning after December 15, 1995. The Company has
decided that, upon implementation of SFAS 123, it will continue to account for
stock-based compensation arrangements in accordance with the accounting method
prescribed by APB Opinion No. 25, which is an alternative allowed under SFAS
123.
The following is a summary of the adjustments (gross of tax) to net income
and shareholders' equity which would have been required if the Group had applied
US GAAP instead of UK GAAP.
YEAR ENDED NOVEMBER 30,
--------------------------------------------
1993 1994 1995 1995
------ ------- ------- ----------
(IN THOUSANDS EXCEPT PER SHARE
DATA) US DOLLARS
POUNDS STERLING
NET INCOME
Net income/(loss) under UK GAAP..................... 5,511 (12,754) (8,208) (12,558)
Adjustments:
Amortization of subscriber contracts and customer
lists............................................... (3,588) (3,656) (3,903) (5,972)
Amortization of franchise contracts............... (283) (278) (269) (411)
Amortization of goodwill.......................... (3,488) (3,445) (3,887) (5,947)
Depreciation and sales of revalued assets......... 44 158 --
Deferred income taxes............................. 5 (558) 354 542
------ ------- ------- ----------
Pre-acquisition tax losses........................ (314) -- -- --
Related companies................................. (259) (247) (484) (741)
Effect on profit on disposal and provisions
against subsidiaries and related companies...... 314 -- 2,470 3,779
Employee Share Ownership Plan provisions.......... 200 450 3,066 4,691
Deferred tax effect of above adjustments.......... 1,207 (423) (956) (1,463)
------ ------- ------- ----------
Net loss in accordance with US GAAP............... (651) (20,753) (11,817) (18,080)
Preference Share dividends........................ (2,844) (2,839) (2,839) (4,344)
------ ------- ------- ----------
Net loss in accordance with US GAAP attributable
to Ordinary Shareholders............................ (3,495) (23,592) (14,656) (22,424)
------ ------- ------- ----------
------ ------- ------- ----------
SHAREHOLDERS' EQUITY
Shareholders' equity under UK GAAP............................. 35,283 32,484 49,700
Adjustments:
Goodwill..................................................... 98,598 93,636 143,263
Deferred income taxes........................................ (4,973) (4,619) (7,067)
Subscriber contracts and customer lists...................... 50,088 46,902 71,760
Franchise contracts.......................................... 10,298 10,261 15,699
Related companies............................................ 4,861 -- --
Redeemable Preference Shares................................. (48,631) (48,629) (74,402)
Employee Share Ownership Plan................................ (3,680) (614) (939)
Deferred tax effect of above adjustments..................... (10,963) (12,207) (18,677)
------- ------- --------
Shareholders' equity in accordance with US GAAP................ 130,881 117,214 179,337
------- ------- --------
------- ------- --------
F-47
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP--(CONTINUED)
The gross amount of subscriber contracts and customer lists subject to
amortization at November 30, 1995 was B.P.63.8 million. The gross amount of
franchise contracts subject to amortization at November 30, 1995 was B.P.11.1
million.
The following is a summary of certain income statement captions reported in
the consolidated statements of income as adjusted by the significant adjustments
which would have been required if the Group had applied US GAAP instead of UK
GAAP.
YEAR ENDED NOVEMBER 30,
----------------------------------------------
1993 1994 1995 1995
-------- -------- -------- ----------
(IN THOUSANDS EXCEPT PER SHARE
DATA) US DOLLARS
POUNDS STERLING
CONTINUING OPERATIONS UNDER US GAAP
NET SALES......................................... 160,775 166,071 163,349 249,923
Cost of sales..................................... (105,768) (106,889) (105,511) (161,432)
-------- -------- -------- ----------
Gross profit on sales............................. 55,007 59,182 57,838 88,491
General and administrative expenses............... (38,340) (43,792) (49,712) (76,059)
Share of results of related companies............. 153 933 (474) (725)
Loss on closure of subsidiaries and major
operations........................................ (4,816) (2,429) -- --
Profit/(loss) on sale and provisions against
related companies and investments............... 260 (20,152) (3,205) (4,903)
Exceptional items................................. (1,378) -- -- --
-------- -------- -------- ----------
OPERATING INCOME.................................. 10,886 (6,258) 4,447 6,804
Interest expense, net............................. (10,635) (12,514) (14,862) (22,739)
-------- -------- -------- ----------
INCOME BEFORE TAXES ON INCOME..................... 251 (18,772) (10,415) (15,935)
TAXES ON INCOME................................... (902) (1,981) (1,402) (2,145)
-------- -------- -------- ----------
NET LOSS.......................................... (651) (20,753) (11,817) (18,080)
Preference Share dividends........................ (2,844) (2,839) (2,839) (4,344)
-------- -------- -------- ----------
NET LOSS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS.... (3,495) (23,592) (14,656) (22,424)
-------- -------- -------- ----------
-------- -------- -------- ----------
Net loss per Ordinary Share in accordance with US
GAAP.............................................. (3.0p) (19.7p) (12.3p) (18.8p)
-------- -------- -------- ----------
Weighted average shares outstanding (millions).... 116.5 119.5 119.6 119.6
-------- -------- -------- ----------
F-48
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP--(CONTINUED)
The following is a summary of certain balance sheet captions reported in the
consolidated balance sheets, together with the related amounts as adjusted by
the significant adjustments which would have been required if the Group had
applied US GAAP instead of UK GAAP.
AS REPORTED IN THE AS ADJUSTED
CONSOLIDATED BALANCE TO CONFORM WITH
SHEETS US GAAP
------------------------ ------------------
1994
(AS RESTATED) 1995 1994 1995
------------- ------- ------- -------
B.P.'000 B.P.'000 B.P.'000 B.P.'000
Current assets...................................... 37,453 35,561 37,453 35,561
Intangible assets................................... -- -- 158,984 150,799
Property and equipment.............................. 223,255 227,386 223,255 227,386
Other assets........................................ 15,163 6,466 16,344 5,852
------- ------- ------- -------
Total assets........................................ 275,871 269,413 436,036 419,598
------- ------- ------- -------
------- ------- ------- -------
Current liabilities and deferred income............. 157,968 150,579 157,968 68,100
Liabilities due after more than one year............ 3,908 5,830 19,844 105,135
Convertible Capital Bonds........................... 43,693 43,813 43,693 43,813
Senior Notes........................................ 35,019 36,707 35,019 36,707
Redeemable Preference Shares........................ -- -- 48,631 48,629
------- ------- ------- -------
Total liabilities................................... 240,588 236,929 305,155 302,384
Ordinary Shares..................................... 11,957 11,957 11,957 11,957
Redeemable Preference Shares........................ 48,631 48,629 -- --
Reserves............................................ (25,305) (28,102) 118,924 105,257
------- ------- ------- -------
Total shareholders' equity.......................... 35,283 32,484 130,881 117,214
------- ------- ------- -------
Total liabilities and shareholders' equity.......... 275,871 269,413 436,036 419,598
------- ------- ------- -------
------- ------- ------- -------
The following is an analysis of the change in total shareholders' equity
using US GAAP.
B.P.'000
-------
Balance at November 30, 1993..................................... 158,287
Loss for the year................................................ (23,592)
Currency translation adjustments................................. (3,962)
Share issue expenses............................................. (14)
Shares converted/issued.......................................... 92
Movement in ESOP receivable...................................... 70
-------
Balance at November 30, 1994..................................... 130,881
Loss for the year................................................ (14,656)
Currency translation adjustments................................. 988
Share issue expenses............................................. (1)
Shares converted/issued.......................................... 2
-------
Balance at November 30, 1995..................................... 117,214
-------
-------
F-49
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
29. PRINCIPAL SUBSIDIARY AND RELATED COMPANIES
Subsidiary undertakings
COUNTRY OF
REGISTRATION/ NATURE OF
INCORPORATION BUSINESS
------------- --------
API Security Inc USA Electronic Security
*ASH Capital Finance (Jersey) Limited Jersey Investment
*Automated Security Limited England Holding Company
Modern Security Systems Limited Eire Electronic Security
Modern Security Systems Limited England Electronic Security
Telecom Security Limited England Electronic Security
TVX Limited England Electronic Security
Sonitrol Corporation USA Electronic Security
Sonitrol Management Corporation USA Electronic Security
The Group owns 100% of the Ordinary Share Capital of the above subsidiaries
which operate in their country of incorporation except for ASH Capital Finance
(Jersey) Limited which operates in England.
All are indirect subsidiaries of Automated Security (Holdings) PLC except
where marked*.
RELATED COMPANY
TVX Inc USA Electronic Security
DETAILS OF THE ISSUED CAPITAL AND DEBT SECURITIES OF RELATED COMPANY
TVX Inc--
2,900,000 Shares of Common Stock, par value US $0.01 (39.9% held by the Group).
1,000,000 Shares of Redeemable Preferred Stock, par value US $0.01 (48.5% held
by the Group).
F-50
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
To the Board of Directors of
AUTOMATED SECURITY (HOLDINGS) PLC
London, England
The audit referred to in our report to the Board, dated May 17, 1996
relating to the consolidated financial statements of Automated Security
(Holdings) PLC which is contained in this Form 20-F, included the audit of the
financial statement schedule set out in page S-2 for each of the three years in
the period ended November 30, 1995.
In our opinion, the financial statement schedule presents fairly, in all
material respects, the information set forth therein.
/s/ Binder Hamlyn
Binder Hamlyn
London, England Chartered Accountants
May 17, 1996 Registered Auditors
S-1
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
BALANCE AT ACQUISITION/ RESERVED BALANCE
BEGINNING DISPOSAL OF CHARGED TO ITEMS AT END
OF PERIOD SUBSIDIARIES EXPENSES WRITTEN OFF OF PERIOD
---------- ------------ ---------- ----------- ---------
B.P.'000 B.P.'000 B.P.'000 B.P.'000 B.P.'000
Allowance for doubtful accounts
Period ended:
November 30, 1994........................ 3,611 402 3,102 (3,500) 3,615
November 30, 1994........................ 3,615 -- 1,382 (2,360) 2,637
November 30, 1995........................ 2,637 (119) 1,640 (1,210) 2,948
S-2
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
2.4(a) Credit Agreement dated December 21, 1995, between
the Company, certain subsidiaries of the Company,
Lloyds Bank PLC, Midland Bank PLC and Certain
Banks and Financial Institutions
2.4(b) First Amendment Agreement, dated December 21,
1995 relating to a Note Agreement, dated May 27, 1994,
between the Company and The Prudential Insurance
Company of America.
2.4(c) Inter-Creditor Agreement dated December 21, 1995
between the Company, Lloyds Bank PLC, Certain
Bank and Financial Institutions and U.S. Loan
Note Holders