1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 3, 1997
Commission file number 0-26368
-------
TRANSMEDIA ASIA PACIFIC, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3760219
-------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
11 ST. JAMES'S SQUARE, LONDON SW1Y 4LB, ENGLAND
-------------------------------------------------------
(Address of principal executive offices) (zip code)
U.K. 011-44-171-930-0706
-------------------------------------
(Registrant's telephone number,
including area code)
2
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
In accordance with Rule 210.3-05(b) of Regulation S-X, the audited consolidated
financial statements and independent auditor's report for Countdown Holdings
Limited ("Countdown") covering the years ended August 31, 1996, 1995 and 1994
are attached to this report.
(b) Pro forma Financial Information
On April 3, 1997, Transmedia Asia Pacific, Inc. (the "Company") purchased from
Mr C.E.C. Radbone approximately 50% of the outstanding capital stock of
Countdown. Countdown, through its wholly-owned operating subsidiary, Countdown
Plc, is an international provider of membership discount services. The balance
of the outstanding capital stock was simultaneously purchased by Transmedia
Europe, Inc. ("Transmedia Europe") on terms similar to the terms of the
Company's purchase.
In payment of the purchase price, the Company issued 1,330,524 shares of its
common stock, $0.00001 par value per share ("Common Stock") and paid pound
sterling500,000 (approximate U.S. Dollar equivalent as of April 3, 1997 was
$800,000) in cash. In addition, the Company granted Mr Radbone an option to
purchase up to 277,193 shares of Common Stock at a purchase price of $0.9019 per
share.
The cash portion of the purchase price was funded by a $1,000,000 loan from a
director and stockholder of the Company. The loan matures on September 27, 1997,
bears interest at the rate of 12% per annum, and is collateralized by a pledge
of all of the shares purchased by the Company from Mr Radbone. In connection
with the loan, the Company issued to the director and stockholder five-year
warrants to purchase up to 138,596 shares of Common Stock at $1.13 per share.
In connection with the acquisition, the Company and Transmedia Europe each
agreed to pay $125,000 in cash to TMNI International Incorporated ("TMNI") and
each agreed to issue TMNI a promissory note in the principal amount of $250,000,
payable on April 2, 1998 and bearing interest at the rate of 10% per annum. The
promissory notes are to be convertible at the holder's option into common stock
of the issuer at the rate of $1.20 per share. The Company agreed to pay such
amounts in order to obtain the consent to the Countdown acquisition, which
consent was required by the terms of the master license agreement from TMNI
under which the Company operates its discount restaurant charge card business.
A more detailed explanation of the transaction can be found under Item 2 -
Acquisition or Disposition of Assets within the original filing of this Form
8-K filed by the Company dated April 3, 1997.
The following pro forma unaudited consolidated balance sheet is presented as if
the Countdown acquisition had occurred on March 31, 1997. The pro forma
unaudited consolidated statements of operations for the year ended September 30,
1996 and the six month period ended March 31, 1997 have been presented as if the
Countdown acquisition had occurred on October 1, 1995. The pro forma data is
presented for informational purposes only and may not be indicative of the
results of operations and the future financial position of the Company or what
the results of operations and financial position would have been if the
Countdown acquisition had occurred on the dates set forth. These pro forma
consolidated balance sheet and pro forma statements of operations should be read
in conjunction with the historical consolidated financial statements and notes
thereto of the Company.
The pro forma balance sheet presents the investment in Countdown under the
equity method of accounting since the Company has acquired approximately 50% of
the ordinary share capital of Countdown and does not have overall control of
Countdown.
2
3
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
Pro forma
March 31, Pro forma March 31,
1997 adjustments Note 1997
(Unaudited)
---------- ----------- ------- ----------
ASSETS
CURRENT ASSETS
Cash $ 653,251 $ 54,350 (1) (2) $ 707,601
Trade accounts receivable 25,016 - 25,016
Restaurant credits 497,241 - 497,241
Amounts due from related parties 334,428 - 334,428
Prepaid expenses and other current assets 57,446 - 57,446
----------- ----------- -----------
TOTAL CURRENT ASSETS 1,567,382 54,350 1,621,732
NON-CURRENT ASSETS
Investment in affiliated companies - 2,682,487 (1) (3) (4) 2,682,487
Property and equipment 148,620 - 148,620
Intangible assets 1,534,805 - 1,534,805
Other assets 406,952 (264,006) (4) 142,946
----------- ----------- -----------
TOTAL ASSETS $ 3,657,759 $ 2,472,831 $ 6,130,590
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short term loan $ - $ 1,000,000 (2) $ 1,000,000
Trade accounts payable 236,968 - 236,968
Deferred membership fee income 81,804 - 81,804
Accrued liabilities 236,414 - 236,414
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 555,186 1,000,000 1,555,186
----------- ----------- -----------
NON-CURRENT LIABILITIES
Long term loan - 250,000 (3) 250,000
----------- ----------- -----------
Total liabilities 555,186 1,250,000 1,805,186
----------- ----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock - - -
Common stock 139 13 (1) 152
Additional paid in capital 8,568,244 1,222,818 (1) 9,791,062
Accumulated deficit (5,525,345) - (5,525,345)
Cumulative foreign currency translation adjustment 59,535 - 59,535
----------- ----------- -----------
Total stockholders' equity $ 3,102,573 $ 1,222,831 $ 4,325,404
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,657,759 $ 2,472,831 $ 6,130,590
=========== =========== ===========
See accompanying notes to the pro forma condensed consolidated financial
statements.
3
4
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Pro forma
Year ended Year ended
September 30, Pro forma September 30,
1996 Adjustments Note 1996
------------ ----------- ------- -----------
Revenues $1,659,515 $ - $1,659,515
Membership fees 230,961 - 230,961
----------- --------- -----------
Total revenues and fees 1,890,476 - 1,890,476
Cost of sales (1,098,666) - (1,098,666)
----------- --------- -----------
Gross profit 791,810 - 791,810
Selling, general and administrative expenses (2,819,073) (185,003) (5) (3,004,076)
----------- --------- -----------
Loss from operations (2,027,263) (185,003) (2,212,266)
Share of losses of affiliated companies - (176,445) (6) (176,445)
Interest income 21,005 - 21,005
Interest expense - (145,000) (7) (145,000)
----------- --------- -----------
Loss before income tax (2,006,258) (506,448) (2,512,706)
Income taxes - - -
----------- --------- -----------
Net loss $(2,006,258) $(506,448) $(2,512,706)
----------- --------- -----------
Loss per common share $ (0.16) $ (0.18)
Weighted average number of common
shares outstanding 12,618,400 13,948,924
----------- -----------
See accompanying notes to the pro forma consolidated financial statements.
4
5
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Pro forma
Six months ended Six months ended
March 31, Pro forma March 31,
1997 Adjustments Note 1997
(Unaudited)
------------ ----------- ------- -----------
Revenues $ 1,054,735 $ - $ 1,054,735
Membership fees 99,940 - 99,940
----------- ---------- -----------
Total revenues and fees 1,154,675 - 1,154,675
Cost of sales (688,036) - (688,036)
----------- ---------- -----------
Gross profit 466,639 - 466,639
Selling, general and administrative expenses (1,664,282) (92,501) (5) (1,756,783)
----------- ---------- -----------
Loss from operations (1,197,643) (92,501) (1,290,144)
Share of losses of affiliated companies - (35,602) (6) (35,602)
Interest income 18,494 - 18,494
Interest expense - (72,500) (7) (72,500)
----------- ---------- -----------
Loss before income tax (1,179,149) (200,603) (1,379,752)
Income taxes - - -
----------- ---------- -----------
Net loss $(1,179,149) $ (200,603) $(1,379,752)
----------- ---------- -----------
Loss per common share $ (0.09) $ (0.09)
Weighted average number of common
shares outstanding 13,695,586 15,026,110
----------- -----------
See accompanying notes to the pro forma consolidated financial statements.
5
6
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) To record the acquisition of approximately 50% of the outstanding capital
stock of Countdown Holdings Limited as follows:
Payment in cash $ 820,650
Fair value of 1,330,524 shares issued
- Common stock 13
- Additional paid in capital 1,222,818
Cost of Countdown option and related legal fees 264,006
Payment in cash to TMNI 125,000
TMNI promissory note 250,000
-----------
Total consideration $ 2,682,487
===========
The fair value of the shares issued for the Countdown acquisition has been
calculated as $0.91906 per share. This was based on an average of the average
prices for the five trading days from April 1, 1997 to April 7, 1997 reduced by
a 15% discount. The average of the five day period was taken to eliminate share
price volatility and the 15% discount reflects the fact that the shares are
unregistered and as such cannot be traded on the Nasdaq SmallCap Market.
(2) To record the $1,000,000 loan received from a director and stockholder.
(3) To record the $250,000 promissory note payable to TMNI International
Incorporated. This has been accounted for as a loan repayable in more than year
in the pro forma balance sheet as it is payable on April 2, 1998.
(4) To record the transfer of the cost of $264,006 of the Countdown option
together with related legal costs from other assets to investment in affiliated
companies.
(5) To record amortisation of goodwill over a fifteen year period resulting from
the acquisition of Countdown as follows:
Total consideration $ 2,682,487
Share of Countdown pro forma net liabilities acquired
-Net assets at August 31, 1996 $ 189,449
-Less goodwill on Countdown's balance sheet (246,291)
-Less loss for period to February 28, 1997 (35,711)
--------
(92,553)
92,553
-----------
Goodwill $ 2,775,040
-----------
Pro forma charge for year to September 30, 1996 $ 185,003
Pro forma charge for six month period to March 31, 1997 $ 92,501
(6) To record the equity in losses of Countdown as follows:
Year ended Six months ended
August 31, February 28,
1996 1997
----------- --------------
Losses for the period $ (352,891) $ (71,204)
----------- --------------
Company's share of losses $ (176,445) $ (35,602)
----------- --------------
(7) To record the interest expense on the $1,000,000 loan at 12% per annum
and on the $250,000 promissory note at 10% per annum.
6
7
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
(c) Exhibits
2.1 Acquisition Agreement, dated as of April 3, 1997, among
C.E.C. Radbone, the Company and Transmedia Europe, Inc.
(previously filed).
7
8
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorised.
TRANSMEDIA ASIA PACIFIC, INC.
By /s/ William H. Price
- -----------------------
WILLIAM H. PRICE
Chief Financial Officer and Duly Authorised Representative
June 16, 1997
8
9
Registered number : 2741762
COUNTDOWN HOLDINGS LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31ST AUGUST 1996
Pages 1 - 2 Report of the Directors
3 Report of the Auditor
4 Consolidated Profit & Loss Account
5 Consolidated Balance Sheet
6 Balance Sheet
7 Consolidated Cash Flow Statement
8 - 19 Notes to the Consolidated Financial
Statements
10
Page 1
COUNTDOWN HOLDINGS LIMITED
REPORT OF THE DIRECTORS
The directors present their report with the financial statements of the
group for the year ended 31st August 1996.
REVIEW OF BUSINESS
The principal activity of the group, which has remained unchanged in
the year under review, is that of a discount buying organisation.
A summary of the results of the year's trading is given on page 4 of
the financial statements.
The year's results were disappointing. Considerable volumes of new
business were expected during the year, and did not transpire. Most new business
was delayed until the next year rather than cancelled but, nevertheless,
effective measures were taken to reduce overhead expenses, and a new, realistic
budget was adopted for the 1996/97 financial year. Further savings have been
achieved by closing the loss-making joint venture, RSVP Publishing Ltd.
We are now confident that the company will return a worthwhile profit
on increased turnover, despite the expense and time involved in acquiring its
Joint Marketing Venture partner of five years standing, I.D.C. Card Ltd. This
acquisition greatly increases the merchant network by providing coverage in all
the major Mediterranean resort areas.
The directors consider the result for the year and the year end
financial position to be satisfactory.
POST BALANCE SHEET EVENTS
On 3rd April 1997, the entire Share Capital of the Company was acquired
by Transmedia Europe, Inc. and Transmedia Asia Pacific, Inc.
DIVIDENDS
The directors do not recommend the payment of a dividend.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Company law requires the directors to prepare financial statements for
each financial year which give a true and fair view of the state of affairs of
the company and of the group and of the profit or loss of the group for that
period. In preparing those financial statements, the directors are required to :
- - select suitable accounting policies and then apply them consistently;
- - make judgements and estimates that are reasonable and prudent;
- - state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements;
- - prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the group will continue in business.
Continued>>>
11
Page 2
COUNTDOWN HOLDINGS LIMITED
REPORT OF THE DIRECTORS
CONTINUED
STATEMENT OF DIRECTORS' RESPONSIBILITIES (Continued)
The directors are responsible for keeping proper accounting records
which disclose with reasonable accuracy at any time the financial position of
the group and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the group and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
DIRECTORS
The director in office in the year and his beneficial interest in the
Issued Ordinary Share Capital, which has remained unchanged in the year under
review, was as follows :
ORDINARY SHARES OF POUND STERLING 1 EACH
C. E. C. Radbone 500,000
On 3rd April 1997, P.L. Harrison and E.J. Guinan III were appointed
directors of the company.
POLICY ON PAYMENT OF CREDITORS
For all trade creditors, it is the group's policy to :
- - agree the terms of payment at the start of business with that supplier;
- - ensure that suppliers are aware of the terms of payment; and
- - pay in accordance with its contractual and other legal obligations.
FIXED ASSETS
Acquisitions and disposals of fixed assets during the year are recorded
in notes 11, 12 and 13 to the financial statements.
TAX STATUS
The company was a 'close company' within the terms of the Income and
Corporation Taxes Act 1988, throughout the year under review.
AUDITORS
Following the change in ownership of the Company on 3rd April 1997, the
incumbent auditors of the Company, Rhodes & Rhodes, have agreed to resign at the
date that these financial statements are approved in the Annual General Meeting.
It will be proposed by the directors that KPMG, the auditors of the ultimate
holding company, are appointed at the Annual General Meeting.
BY ORDER OF THE BOARD
C. RADBONE
C. E. C. Radbone
Dated this 28th day of May 1997 DIRECTOR
- -------------------------------
12
Page 3
COUNTDOWN HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Countdown Holdings Limited
We have audited the accompanying consolidated balance sheets of
Countdown Holdings Limited and subsidiaries as of 31st August 1996 and 1995, and
the related consolidated profit and loss accounts, and consolidated cash flow
statements for the years then ended. These consolidated financial statements are
the responsibility of the management of Countdown Holdings Limited. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom and the United States of America. 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 referred to above
present fairly, in all material respects, the financial position of Countdown
Holdings Limited and subsidiaries as of 31st August 1996 and 1995, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles in the United Kingdom.
Accounting principles generally accepted in the United Kingdom vary in
certain respects from accounting principles generally accepted in the United
States of America. Application of accounting principles generally accepted in
the United States of America would have affected the net loss for the year ended
31st August 1996 and 1995, and equity shareholders' funds as of 31st August 1996
and 1995 to the extent summarised in note 32 to the consolidated financial
statements.
The accompanying consolidated financial statements have been prepared
assuming that Countdown Holdings plc will continue as a going concern. As
discussed in Note 1a to the consolidated financial statements, the Company has
suffered recurring losses from operations and has a working capital deficiency
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1a. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
RHODES & RHODES
42 Doughty Street, Signed ---------------------
London, WC1N 2LY. RHODES & RHODES
REGISTERED AUDITOR
Dated this 29th day of May 1997
- --------------------------------
13
Page 4
COUNTDOWN HOLDINGS LIMITED
CONSOLIDATED PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31ST AUGUST 1996
1995
NOTE POUND STERLING POUND STERLING POUND STERLING POUND STERLING
Turnover : 1(c) & 3
Continuing operations 4,942,714 5,333,742
Acquisitions 12,572 -
------------ -----------
4,955,286 5,333,742
Cost of sales 2,988,184 3,132,881
------------ -----------
GROSS PROFIT 1,967,102 2,200,861
Net operating expenses 4 2,171,398 2,206,176
----------- -----------
OPERATING LOSS 5(a)
Continuing operations (201,127) (5,315)
Acquisitions (3,169) -
-------- ------
(204,296) (5,315)
Share of associated
undertaking's loss (21,500) (11,632)
Interest receivable 8 157 1,749
-------- -------
(21,343) (9,883)
----------- -----------
(225,639) (15,198)
Interest payable and similar
charges 9 (27,311) (19,280)
----------- -----------
LOSS ON ORDINARY
ACTIVITIES BEFORE TAXATION (252,950) (34,478)
Tax on loss on ordinary
activities 10 26,738 (1,562)
----------- -----------
LOSS FOR THE YEAR 23 (226,212) (36,040)
=========== ===========
TOTAL RECOGNISED GAINS AND LOSSES
The group had no recognised gains or losses other than the loss for the
above financial years.
14
Page 5
COUNTDOWN HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEET AT 31ST AUGUST 1996
1995
NOTE POUND STERLING POUND STERLING POUND STERLING POUND STERLING
FIXED ASSETS
Intangible Assets 1(g) & 11 300,355 110,508
Tangible assets 1(d) & 12 512,341 551,795
Investment 13(a) - -
-------- ----------
812,696 662,303
CURRENT ASSETS
Stocks 1(e) & 14 138,175 189,977
Debtors 15 538,396 451,348
Cash at bank and in hand 71,443 207,027
--------------- -------
748,014 848,352
CREDITORS : AMOUNTS
FALLING DUE WITHIN ONE
YEAR 16 1,246,440 924,880
--------------- -------
NET CURRENT LIABILITIES (498,426) ( 76,528)
-------- ----------
TOTAL ASSETS LESS CURRENT 314,270 585,775
LIABILITIES
CREDITORS : AMOUNTS
FALLING DUE AFTER MORE
THAN ONE YEAR 17 ( 83,235) ( 128,528)
-------- ----------
NET ASSETS 231,035 457,247
======== ==========
Financed by :
CAPITAL AND RESERVES
Called up share capital 22 500,000 500,000
Profit & Loss Account 23 (268,965) ( 42,753)
-------- ---------
EQUITY SHAREHOLDERS' FUNDS 231,035 457,247
======== =========
15
Page 6
COUNTDOWN HOLDINGS LIMITED
BALANCE SHEET AT 31ST AUGUST 1996
1995
NOTE POUND STERLING POUND STERLING POUND STERLING POUND STERLING
FIXED ASSETS
Investments 13(b) 499,998 499,998
CURRENT ASSETS
Dividend receivable 15 3,000
Cash at bank 1,715 1,099
------- -------
1,715 4,099
CREDITORS : AMOUNTS
FALLING DUE WITHIN ONE
YEAR 16 4,113 2,350
------- -------
NET CURRENT (LIABILITIES)/
ASSETS (2,398) 1,749
--------- --------
NET ASSETS 497,600 501,747
========= ========
Financed by :
CAPITAL AND RESERVES
Called up share capital 22 500,000 500,000
Profit & Loss Account 23 (2,400) 1,747
--------- -------
EQUITY SHAREHOLDERS' FUNDS 497,600 501,747
========= =======
16
Page 7
COUNTDOWN HOLDINGS LIMITED
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST AUGUST 1996
1995
NOTE POUND STERLING POUND STERLING POUND STERLING POUND STERLING
NET CASH INFLOW FROM
OPERATING ACTIVITIES 5(b) 10,304 29,671
RETURN ON INVESTMENTS
AND SERVICING OF
FINANCE:
Interest received 157 1,749
Interest paid (23,632) (15,943)
Interest element of finance
lease rental payments (3,679) (3,337)
------- --------
NET OUTFLOW FROM RETURNS
ON INVESTMENTS AND
SERVICING OF FINANCE (27,154) (17,531)
TAXATION
Corporation tax paid (2,631) (3,356)
INVESTING ACTIVITIES
Purchases of tangible
fixed assets (37,246) (208,928)
Sale of tangible fixed assets 20,832 8,900
Purchase of investment in
associated undertaking (21,500) -
Acquisition of subsidiary
undertaking 25(b) 90,492 -
------- --------
NET CASH INFLOW/(OUTFLOW)
FROM INVESTING ACTIVITIES 52,578 (200,028)
-------- --------
NET CASH INFLOW/(OUTFLOW)
BEFORE FINANCING 33,097 (191,244)
Financing:
Capital element of finance
lease rental payments 26 (21,272) (1,414)
-------- --------
Increase/(Decrease) in cash 24 11,825 (192,658)
Net cash brought forward 24 (319,352) (126,694)
-------- --------
Net cash carried forward 24 (307,527) (319,352)
======== ========
17
Page 8
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The group's major trading company sustained a net loss for the year as
well as for the two preceding years, and as a consequence, net assets
have been depleted. Furthermore, the group had net current liabilities
at the Balance Sheet date and has incurred losses subsequently.
During the year, the group acquired I.D.C. Card Ltd. and subsequently,
the entire group was acquired by Transmedia Europe Inc. and Transmedia
Asia Pacific, Inc.
The financial statements have been prepared on the going concern basis
which assume that the company will continue in operational existence
for the foreseeable future.
The validity of this assumption depends upon the financial support of
Transmedia Europe, Inc. and Transmedia Asia Pacific, Inc., the
continued support of the group's bankers and a return to profitable
trading, which the directors foresee as a result of the acquisition of
I.D.C. Card Ltd. and the group's acquisition by Transmedia Europe,
Inc. and Transmedia Asia Pacific, Inc., which will widen the group's
markets.
Whilst the directors are presently uncertain as to the outcome of the
matters mentioned above, they believe that it is appropriate for the
financial statements to be prepared on the going concern basis.
(b) COMPLIANCE WITH ACCOUNTING STANDARDS
The financial statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards.
(c) TURNOVER
Turnover, which excludes Value Added Tax and intra group transactions,
represents (1) the invoiced value of goods and services supplied, and
(2) subscriptions, which have been accounted for on a receipts basis
and, therefore, no account has been taken of any liability arising in
respect of the unexpired portions of subscriptions received.
(d) DEPRECIATION
Depreciation is provided so as to write off the cost of fixed assets
over their expected useful economic lives. The principal annual rates
used for this purpose are:
Freehold Property : 2% on cost.
Plant and Machinery : 25% on written down value
Leasehold Property : Over the life of the lease
(e) STOCKS
Stocks are valued at the lower of cost and net realisable value.
Continued>>>
18
Page 9
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
1. ACCOUNTING POLICIES (Continued)
(f) DEFERRED TAXATION
Deferred taxation arises in respect of items where there is a timing
difference between their treatment for accounting purposes and their
treatment for taxation purposes. Provision is made at current rates for
deferred taxation to the extent that it is considered the liability or
asset will arise in the foreseeable future.
(g) GOODWILL
Goodwill arising on consolidation is shown in the Balance Sheet under
Intangible Assets and is amortised on a straight line basis over its
expected economic life of 20 years.
(h) LEASING AND HIRE PURCHASE
The cost of assets held under finance leases and hire purchase
agreements is included under tangible assets, and depreciation is
provided in accordance with the company's accounting policy for the
class of asset concerned. Interest calculated on the reducing balance
basis is charged as interest payable over the period of the lease or
hire purchase agreement, and the capital element of future lease and
hire purchase payments is included in creditors. The cost of operating
leases is charged as incurred.
(i) PENSIONS
The Group operates a defined contribution pension scheme for a director
and certain employees. The cost of contributions to the scheme is
charged to the Profit & Loss Account in the year in which they fall
due.
(j) INVESTMENTS
Fixed asset investments are stated at cost less provision for any
permanent diminution in value.
(k) BASIS OF CONSOLIDATION
The group financial statements consolidate the financial statements of
the company and all its subsidiary undertakings made up to 31st August
1996.
(l) FOREIGN CURRENCIES
Assets and liabilities expressed in foreign currencies are translated
into sterling at the rates of exchange ruling at the Balance Sheet
date. Transactions in foreign currencies are translated into sterling
at the rate of exchange ruling at the date of the transaction. Exchange
differences are taken into account in arriving at the operating profit.
2. HOLDING COMPANY PROFIT & LOSS ACCOUNT
The Company has taken advantage of the exemption in the Companies Act
1985, Section 230, not to present its own Profit & Loss Account.
Included in the group loss for the financial year is a loss of the
company of pound sterling 4,147 (1995: profit pound sterling 481).
19
Page 10
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3. TURNOVER
The turnover and loss before taxation is attributable to the one
principal activity of the group. A geographical analysis of turnover
has been omitted as, in the opinion of the director, disclosure would
be seriously prejudicial to the interests of the group.
4. NET OPERATING EXPENSES
Net operating expenses are made up as follows:
1996 1995
POUND STERLING POUND STERLING
Distribution costs 302,327 344,309
Administration expenses 1,724,354 1,721,498
Other costs and expenses 144,717 140,369
------------- ------------
2,171,398 2,206,176
============= ============
The total figure of net operating expenses for 1996 includes pound
sterling 8,115 in respect of acquisitions (namely administration
expenses of pound sterling 7,713 and other costs and expenses of pound
sterling 402).
5. OPERATING LOSS
(a) The operating loss is stated after charging/(crediting):
Amortisation of goodwill 6,995 6,375
Depreciation of tangible assets: Owned 77,492 60,084
Leased 15,744 21,239
Director's emoluments (Note 6) including
pension contributions 114,269 150,942
Auditor's remuneration: Audit fee 19,660 17,735
Non-audit fee 33,745 5,315
(Profit)/Loss on disposal of fixed assets (15,056) 21,959
Hire of equipment 3,464 1,884
Operating leases: land and buildings 114,782 158,311
======= =======
(b) Reconciliation of operating loss to net cash inflow from operating
activities:
Operating loss (204,296) (5,315)
Adjustment in respect of pre-acquisition results (23,461) -
Depreciation and amortisation 100,231 87,698
(Profit)/Loss on disposal of fixed assets (15,056) 21,959
Exchange difference - (149)
Decrease/(Increase) in stock 67,320 (91,612)
Decrease/(Increase) in debtors 40,707 (27,792)
Increase in creditors 44,859 44,882
-------- --------
10,304 29,671
======== ========
20
Page 11
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
6. DIRECTORS' EMOLUMENTS 1996 1995
POUND STERLING POUND STERLING
Director's emoluments, excluding pension contributions
of pound sterling 1,794 (1995: pound sterling 41,886)
were as follows:
Emoluments of the Chairman and highest
paid director 112,475 109,056
=============== ================
7. EMPLOYEE INFORMATION
Wages and salaries 964,709 906,567
Social security costs 90,459 78,701
Pension contributions 17,914 57,672
--------------- ----------------
1,073,082 1,042,940
=============== ===============
The average monthly number of employees during the year
was as follows:
Administration 45 43
=============== ===============
8. INTEREST RECEIVABLE AND SIMILAR INCOME 1996 1995
POUND STERLING POUND STERLING
Bank deposit interest receivable 157 1,749
=============== ===============
9. INTEREST PAYABLE AND SIMILAR CHARGES
Interest payable on bank overdrafts wholly
repayable within five years - not by instalments 14,176 6,781
Interest payable on all other loans 9,456 9,162
Interest payable on finance leases and hire
purchase contracts 3,679 3,337
--------------- ---------------
27,311 19,280
=============== ===============
10. TAXATION
The tax credit/(charge) on loss on ordinary activities
for the year was as follows:
Corporation tax at 25% and 33% (1995 - 25%) 26,759 (4,000)
Overseas taxation (21) (492)
Deferred taxation computed at current rates (Note 21) - 2,930
---------------- ----------------
26,738 (1,562)
================ ================
21
Page 12
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
11. INTANGIBLE FIXED ASSETS GOODWILL ON
CONSOLIDATION
GROUP POUND STERLING
Cost
At 1st September 1995 127,508
Addition 196,842
-------
At 31st August 1996 324,350
=======
Amortisation
At 1st September 1995 17,000
Charge for year 6,995
-------
At 31st August 1996 23,995
=======
Net Book Value
At 31st August 1996 300,355
=======
At 31st August 1995 110,508
=======
12. TANGIBLE FIXED ASSETS SHORT
FREEHOLD LEASEHOLD PLANT AND TOTAL
PROPERTY PROPERTY MACHINERY
GROUP POUND STERLING POUND STERLING POUND STERLING POUND STERLING
Cost
At 1st September 1995 257,612 43,676 877,454 1,178,742
Additions - on acquisition of
subsidiary - 24,975 116,045 141,020
Additions - 2,730 45,232 47,962
Disposals - (24,975) (112,142) (137,117)
-------- ------------ ------------- -------------
At 31st August 1996 257,612 46,406 926,589 1,230,607
======== ============ ============= ==============
Depreciation
At 1st September 1995 33,421 1,091 592,435 626,947
On acquisition of subsidiary - 15,957 100,680 116,637
On disposals - (15,957) (102,597) (118,554)
Charge for year 5,152 2,184 85,900 93,236
-------- ------------ ------------- -------------
At 31st August 1996 38,573 3,275 676,418 718,266
======== ============ ============= ==============
Net Book Value
At 31st August 1996 - Owned 219,039 43,131 201,587 463,757
- Leased - - 48,584 48,584
-------- ------------ ------------- -------------
219,039 43,131 250,171 512,341
======== ============ ============= ==============
At 31st August 1995 - Owned 224,191 42,585 222,340 489,116
- Leased - - 62,679 62,679
-------- ------------ ------------- -------------
224,191 42,585 285,019 551,795
======== ============ ============= ==============
22
Page 13
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
13. FIXED ASSET INVESTMENTS 1996 1995
(a) GROUP SHARE OF ASSETS
Associated Undertakings
Cost of shares and loan stock at 1st September 30,000 30,000
Addition at cost 21,500 -
---------------- ----------------
51,500 30,000
Share of losses, retained by associated undertaking (51,500) (30,000)
---------------- ----------------
Shares and loan stock at 31st August - -
================ ================
(b) COMPANY
Investment in subsidiary undertakings at cost 499,998 499,998
================ ================
At the year end, the company held more than 10% of the share capital of
the following companies:
COUNTRY OF CLASS SHARES HELD HELD
INCORPORATION %
Subsidiary Undertakings
Countdown plc. England Ordinary 100 Directly
and Deferred
I.D.C. Card Limited England Ordinary 100 Indirectly
Countdown International Inc. USA Common 100 Indirectly
Stock
Associated Undertakings
RSVP Publishing Ltd. England Ordinary 50 Indirectly
The principal activity of the subsidiaries is that of discount buying
organisations. The principal activity of the associated undertaking is
that of publishing and retailing of coupon books; however, it has
remained dormant since February 1996.
14. STOCKS 1996 1995
POUND STERLING POUND STERLING
GROUP
Cards and books 75,596 95,677
Store discount vouchers 62,579 94,300
------------- -------------
138,175 189,977
============= =============
23
Page 14
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
15. DEBTORS AMOUNTS FALLING DUE WITHIN ONE YEAR
GROUP COMPANY
1996 1995 1996 1995
POUND STERLING POUND STERLING POUND STERLING POUND STERLING
Trade debtors 350,581 353,097 -- --
Other debtors 56,318 32,340 -- 3,000
Amount due from
associated undertaking 952 -- -- --
Taxation recoverable 28,763 -- -- --
Prepayments and
accrued income 101,782 65,911 -- --
------- ------- ----- -----
538,396 451,348 -- 3,000
======= ======= ===== =====
16. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loan and overdrafts
(Note 18) 378,970 417,311 -- --
Obligation under finance
leases and hire
purchase agreements
(Note 19) 19,703 19,034 -- --
Trade creditors 356,883 264,251 -- --
Amounts owed to
associated companies -- 17,695 -- --
Other creditors including
taxation and social
security (see note below) 490,884 206,589 4,113 2,350
--------- ------- ----- -----
1,246,440 924,880 4,113 2,350
========= ======= ===== =====
NOTE: "Other creditors including taxation and social security is made up as
follows:
Corporation tax -- 2,800 -- --
Overseas taxation -- 324 -- --
Social security and PAYE 95,296 46,065 -- --
Other creditors and
accruals 395,588 157,400 4,113 2,350
------- ------- ----- -----
490,884 206,589 4,113 2,350
======= ======= ===== =====
24
Page 15
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
17. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
GROUP COMPANY
1996 1995 1996 1995
POUND STERLING POUND STERLING POUND STERLING POUND STERLING
Bank Loan (Note 18) - 109,068 - -
Obligations under finance
leases and hire purchase
agreements (Note 19) 8,235 19,460 - -
Other creditor 75,000 - - -
------------ ------------- ----------- ----------
83,235 128,528 - -
============ ============= =========== ==========
18. BANK LOANS AND OVERDRAFTS
The aggregate amount of bank loans and overdrafts is as follows:
Falling due within one year:
Bank overdraft 269,902 408,311 - -
Bank loan current portion 109,068 9,000 - -
-------- ------- ------- --------
378,970 417,311 - -
Falling due after more than
one year:
Bank loan - repayable by
instalments:
- between two and five
years - 36,000 - -
-------- ------- ------- --------
- after five years - 73,068 - -
-------- ------- ------- --------
Aggregate amounts 378,970 526,379 - -
======== ======= ======= ========
The bank loan which amounts to pound sterling109,068 is being paid in
monthly instalments of pound sterling750. The loan is due for repayment
by 31st December 2008; however, this loan is repayable on demand. The
rates of interest on the overdrafts and loan are 4% and 2% (respectively)
over bank's base rate. The loan is secured by a fixed charge over the
freehold property. The bank overdrafts are secured by a fixed charge over
the book debts and a floating charge on the other assets of the group.
25
Page 16
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
19. OBLIGATIONS UNDER FINANCE LEASES 1996 1995
POUND STERLING POUND STERLING
The minimum finance lease payments to which the group is committed are
as follows:
Under one year 21,788 22,388
In the second to fifth year inclusive 8,537 21,087
--------- ---------
30,325 43,475
Less: Amount representing future finance charges (2,387) (4,981)
--------- ---------
27,938 38,494
========= ========
20. OPERATING LEASES
The group had annual commitments under non-cancellable operating leases
as follows: LAND AND BUILDINGS
Expiry date: Between two and five years 5,320 5,320
Over five years 100,000 100,000
------------- ---------
105,320 105,320
============= =========
GROUP COMPANY
1996 1995 1996 1995
POUND STERLING POUND STERLING POUND STERLING POUND STERLING
21. PROVISIONS FOR LIABILITIES AND CHARGES
Deferred Tax
At 1st September - 2,930 - -
Transfer to Profit & Loss
Account - (2,930) - -
----------- ------------ ------------- --------------
At 31st August - - - -
=========== ============= ============= ==============
The amount provided is the total potential liability and relates to
Accelerated Capital Allowances.
22. CALLED UP SHARE CAPITAL 1996 1995
POUND STERLING POUND STERLING
Authorised, Issued, Called Up and Fully Paid:
500,000 Ordinary shares of pound sterling 1 each 500,000 500,000
========= ========
26
Page 17
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
23. PROFIT & LOSS ACCOUNT GROUP COMPANY
POUND STERLING POUND STERLING
At 1st September 1995 (42,753) 1,747
Retained Loss (226,212) (4,147)
--------- -------
At 31st August 1996 (268,965) (2,400)
========= =======
24. CASH AND CASH EQUIVALENTS
Analysis of balances as shown in the group Balance Sheet and changes
during the year:
CHANGE IN
1996 1995 YEAR
POUND STERLING POUND STERLING POUND STERLING
Cash at bank and in hand 71,443 207,027 (135,584)
Bank overdraft and loan (378,970) (526,379) 147,409
-------- --------- --------
(307,527) (319,352) 11,825
========= ========= =======
25. ACQUISITION OF SUBSIDIARY UNDERTAKINGS
On 9th August 1996, Countdown plc. acquired the entire share capital of
I.D.C. Card Ltd. No accounts were prepared at the date of acquisition
and these accounts have been prepared by apportioning the results of
I.D.C. Card Ltd. for the period 1st June 1996 to 31st August 1996
between pre- and post-acquisition profits.
1996
(a) Net assets acquired (book value at 1st June 1996): POUND STERLING
Tangible fixed assets 24,861
Stocks 15,518
Debtors 98,992
Cash at bank and in hand 127,618
Taxation recoverable 2,518
Creditors (96,709)
Pre-acquisition losses (36,726)
----------
Total, being fair value of assets acquired 136,072
Goodwill (Note 11) 196,842
----------
332,914
==========
Satisfied by:
Cash 37,126
Creditors - Payable within one year 220,788
Payable after one year by quarterly
instalments of pound sterling 25,000 75,000
----------
332,914
==========
27
Page 18
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
25. ACQUISITION OF SUBSIDIARY UNDERTAKINGS (Continued)
(b) Analysis of net inflow of cash in respect of the acquisition of
subsidiary undertaking
POUND STERLING
Cash consideration 332,914
Cash at bank and in hand acquired (127,618)
Adjustment for non-cash transaction - creditor (295,788)
---------
Net cash inflow (90,492)
=========
1996 1995
POUND STERLING POUND STERLING
26. ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR
FINANCE LEASES
Balance at 1st September 38,494 16,889
New capital leases 10,716 23,019
Cash outflow from financing (21,272) (1,414)
------- ------
Balance at 31st August 27,938 38,494
====== ======
27. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
GROUP COMPANY
1996 1995 1996 1995
POUND STERLING POUND STERLING POUND STERLING POUND STERLING
(Loss)/Profit for the
financial year (226,212) (36,040) (4,147) 481
Shareholders' funds at
1st September 457,247 493,287 501,747 501,266
-------- ------- ------- -------
Shareholders' funds at
31st August 231,035 457,247 497,600 501,747
======== ======= ======= =======
28. RELATED PARTY TRANSACTION
A subsidiary company has acquired a twenty year lease in respect of a
property from The Countdown plc. Self-administered Scheme. The
director, Mr. C.E.C. Radbone, is the only member of this pension
scheme. The current rent is pound sterling 100,000 per annum.
29. CAPITAL COMMITMENTS
1996 1995
POUND STERLING POUND STERLING
Authorised but not contracted - 32,650
====== ======
28
Page 19
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
30. PENSION COMMITMENTS
The group operates a defined contribution pension scheme. The assets of
the scheme are held separately from those of the company. The cost of the
contributions to the scheme are charged to the Profit and Loss Account in the
year in which they fall due. There were no amounts due at the Balance Sheet date
(1995 Nil).
31. ULTIMATE HOLDING COMPANY
On 3rd April 1997, the entire share capital of Countdown Holdings
Limited was acquired in an equal share by Transmedia Europe, Inc. and
Transmedia Asia Pacific, Inc., companies incorporated in the USA. A
copy of each of the holding companies accounts is available from the
Companies' registered office.
32. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES OF AMERICA
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES:
The group's consolidated financial statements are prepared in
conformity with generally accepted accounting principles applicable in
the United Kingdom (UK GAAP), which differ in certain significant
respects from those applicable in the United States of America (US
GAAP). A significant difference as it relates to the group that may
affect net loss and equity shareholders' funds is set out below.
Deferred Taxation: UK GAAP requires that provision for deferred
taxation should be made only if there is reasonable evidence that
such taxation will be payable in the foreseeable future. Under US
GAAP, deferred taxation is recognised under the full liability
method and deferred tax assets are recognised if their
realisation is considered more likely than not. The group has
incurred losses in recent years and has net operating loss
carryforwards for tax purposes. As the realisation of these loss
carryforwards is uncertain, no difference between UK GAAP and US
GAAP exist.
Equity shareholders' funds at 31st August 1996 and 1995 and net loss
for the years then ended in conformity with UK GAAP are not materially
different than those in conformity with US GAAP.
33. COMPANIES ACT 1985
These consolidated financial statements do not comprise the Company's
statutory accounts within the meaning of Section 240 of the Companies
Act 1985 of Great Britain. Statutory accounts have been prepared for
each of the years ended 31st August 1996 and 31st August 1995, on which
the auditors' reports were unqualified. The statutory accounts for the
years ended 31st August 1996 and 31st August 1995 have been delivered
to the Registrar of Companies for England and Wales.
29
Registered number : 2741762
COUNTDOWN HOLDINGS LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31ST AUGUST 1995
Pages 1 - 2 Report of the Director
3 Report of the Auditor
4 Consolidated Profit & Loss Account
5 Consolidated Balance Sheet
6 Balance Sheet
7 Consolidated Cash Flow Statement
8 - 18 Notes to the Consolidated Accounts
------------------------------------------
30
Page 1
COUNTDOWN HOLDINGS LIMITED
REPORT OF THE DIRECTOR
The director presents his report with the accounts of the group for the
year ended 31st August 1995.
REVIEW OF BUSINESS
The principal activity of the group, which has remained unchanged in the
year under review, is that of a discount buying organisation.
A summary of the results of the year's trading is given on page 4 of the
accounts.
Trading conditions continued to be difficult, both in the UK market and
overseas. However, significant investment in developing the business was made
during the period. It is hoped that this investment will produce better results
next year.
The director considers the result for the year and the year end financial
position to be satisfactory.
DIVIDENDS
The director does not recommend the payment of a dividend.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Company law requires the Directors to prepare financial statements for
each financial year which give a true and fair view of the state of affairs of
the company and of the group and of the profit or loss of the group for that
period. In preparing those financial statements, the Directors are required to:
- select suitable accounting policies and then apply them
consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
- prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the group will continue in
business.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
group and to enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
31
Page 2
COUNTDOWN HOLDINGS LIMITED
REPORT OF THE DIRECTOR
CONTINUED
DIRECTOR
The director in office in the year and his beneficial interest in the
Issued Ordinary Share Capital, which has remained unchanged in the year under
review, was as follows:
ORDINARY SHARES OF POUND STERLING 1 EACH
C. E. C. Radbone 500,000
FIXED ASSETS
Acquisitions and disposals of fixed assets during the year are recorded in
the notes to the accounts.
TAX STATUS
The company is a 'close company' within the terms of the Income and
Corporation Taxes Act 1988.
AUDITOR
The auditor, Messrs. Rhodes & Rhodes, will be proposed for reappointment
in accordance with Section 384 of the Companies Act 1985.
BY ORDER OF THE BOARD
C. RADBONE
C. E. C. Radbone
DIRECTOR
Dated this 20th day of May 1996
32
Page 3
COUNTDOWN HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Countdown Holdings Limited
We have audited the accompanying consolidated balance sheets of Countdown
Holdings Limited and subsidiaries as of 31st August 1995 and 1994, and the
related consolidated profit and loss accounts, and consolidated cash flow
statements for the years then ended. These consolidated financial statements are
the responsibility of the management of Countdown Holdings Limited. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom and the United States of America. 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 referred to above
present fairly, in all material respects, the financial position of Countdown
Holdings Limited and subsidiaries as of 31st August 1995 and 1994, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles in the United Kingdom.
Accounting principles generally accepted in the United Kingdom vary in
certain respects from accounting principles generally accepted in the United
States of America. Application of accounting principles generally accepted in
the United States of America would have affected the net loss for the year ended
31st August 1995 and 1994, and equity shareholders' funds as of 31st August 1995
and 1994 to the extent summarised in note 28 to the consolidated financial
statements.
42 Doughty Street, Signed RHODES & RHODES
London, WC1N 2LY. .........................
RHODES & RHODES
REGISTERED AUDITOR
Dated this 4th day of June 1996
33
Page 4
COUNTDOWN HOLDINGS LIMITED
CONSOLIDATED PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31ST AUGUST 1995
1994
NOTE POUND STERLING POUND STERLING POUND STERLING POUND STERLING
Turnover 1c & 3 5,333,742 4,521,384
Cost of sales 3,132,881 2,707,538
---------- ----------
GROSS PROFIT 2,200,861 1,813,846
Net operating expenses 4 2,206,176 1,814,025
---------- ----------
OPERATING LOSS 5a (5,315) (179)
Share of associated
undertakings loss (11,632) (18,368)
Interest receivable 8 1,749 111
---------- ----------
(9,883) (18,257)
---------- ----------
(15,198) (18,436)
Interest payable 9 (19,280) (19,321)
---------- ----------
LOSS ON ORDINARY
ACTIVITIES BEFORE (34,478) (37,757)
TAXATION
Tax on Loss on Ordinary
Activities 10 (1,562) 2,837
---------- ----------
LOSS ON ORDINARY 23 (36,040) (34,920)
ACTIVITIES AFTER TAXATION
========== ==========
CONTINUING OPERATIONS
None of the group's activities were acquired or discontinued during the
year.
TOTAL RECOGNISED GAINS AND LOSSES
The group had no recognized gains or losses other than the profit or loss
for the above financial years.
34
Page 5
COUNTDOWN HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEET AT 31ST AUGUST 1995
1994
NOTE POUND POUND POUND POUND
STERLING STERLING STERLING STERLING
FIXED ASSETS
Intangible Assets 1g & 11 110,508 116,883
Tangible assets 1d & 12 551,795 431,881
Investments 13 - 11,632
----------- ----------
662,303 560,396
CURRENT ASSETS
Stocks 1e & 14 189,977 98,365
Debtors 15 451,348 423,556
Cash at bank and in hand 207,027 102,001
----------- -----------
848,352 623,922
CREDITORS : AMOUNTS
FALLING DUE WITHIN ONE
YEAR 16 924,880 560,255
----------- -----------
NET CURRENT (LIABILITIES)/
ASSETS (76,528) 63,667
----------- ----------
TOTAL ASSETS LESS CURRENT 585,775 624,063
LIABILITIES
CREDITORS : AMOUNTS
FALLING DUE AFTER MORE
THAN ONE YEAR 17 128,528 127,846
PROVISION FOR LIABILITIES
AND CHARGES 21 - 2,930
----------- -----------
128,528 130,776
----------- ----------
NET ASSETS 457,247 493,287
=========== ==========
Financed by:
CAPITAL AND RESERVES
Called up share capital 22 500,000 500,000
Profit & Loss Account
- (Adverse) 23 (42,753) (6,713)
----------- ----------
SHAREHOLDERS' FUNDS 457,247 493,287
=========== ==========
35
Page 6
COUNTDOWN HOLDINGS LIMITED
BALANCE SHEET AT 31ST AUGUST 1995
1994
NOTE POUND POUND POUND POUND
STERLING STERLING STERLING STERLING
FIXED ASSETS
Investments 13 499,998 499,998
CURRENT ASSETS
Dividend receivable 3,000 3,000
Cash at bank 1,099 618
------------ ------------
4,099 3,618
CREDITORS : AMOUNTS
FALLING DUE WITHIN ONE
YEAR 16 2,350 2,350
------------ ------------
NET CURRENT ASSETS 1,749 1,268
------------ -----------
NET ASSETS 501,747 501,266
============ ===========
Financed by:
CAPITAL AND RESERVES
Called up share capital 22 500,000 500,000
Profit & Loss Account 23 1,747 1,266
------------ -----------
SHAREHOLDERS' FUNDS 501,747 501,266
============ ===========
36
Page 7
COUNTDOWN HOLDINGS LIMITED
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST AUGUST 1995
1994
NOTE POUND POUND POUND POUND
STERLING STERLING STERLING STERLING
NET CASH INFLOW FROM
OPERATING ACTIVITIES 5b 51,276 331,046
RETURN ON INVESTMENTS
AND SERVICING OF
FINANCE:
Interest received 1,749 111
Interest paid (15,943) (17,458)
Interest element of
finance lease rental
payments (3,337) (1,863)
------------ ------------
NET OUTFLOW FROM RETURNS
ON INVESTMENTS AND
SERVICING OF FINANCE (17,531) (19,210)
TAXATION
Corporation tax paid (3,356) (35,662)
INVESTING ACTIVITIES
Purchases of tangible
fixed assets (231,947) (53,680)
Sale of fixed assets 8,900 6,472
Purchase of investment in
associated undertaking - (30,000)
------------ ------------
NET CASH OUTFLOW FROM
INVESTING ACTIVITIES (223,047) (77,208)
---------- -------------
NET INCREASE IN CASH
INFLOWS 24 (192,658) 198,966
Net cash and cash
equivalent brought
forward 24 (126,694) (325,660)
---------- -------------
Net cash and cash
equivalents carried 24 (319,352) (126,694)
forward
========== =============
37
Page 8
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
1. ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The accounts have been prepared under the historical cost convention.
(b) COMPLIANCE WITH ACCOUNTING STANDARDS
The financial statements have been prepared in accordance with applicable
accounting standards.
(c) TURNOVER
Turnover, which excludes Value Added Tax and intra group transactions,
represents (1) the invoiced value of goods and services supplied, and (2)
subscriptions, which have been accounted for on a receipts basis and,
therefore, no account has been taken of any liability arising in respect
of the unexpired portions of subscriptions received.
(d) DEPRECIATION
Depreciation is provided so as to write off the cost of fixed assets over
their expected useful economic lives. The principal annual rates used for
this purpose, are :
Freehold Property : 2% on cost.
Plant and Machinery : 25% on written down value
Leasehold Property : Over the life of the lease
(e) STOCKS
Stocks are valued at the lower of cost and net realisable value.
(f) DEFERRED TAXATION
Deferred taxation arises in respect of items where there is a timing
difference between their treatment for accounting purposes and their
treatment for taxation purposes. Provision is made at current rates for
deferred taxation to the extent that it is considered the liability or
asset will arise in the foreseeable future.
(g) GOODWILL
Goodwill arising on consolidation is shown in the Balance Sheet under
Intangible Assets and is amortised on a straight line basis over its
expected economic life of 20 years.
(h) LEASING AND HIRE PURCHASE
The cost of assets held under finance leases and hire purchase agreements
is included under tangible assets, and depreciation is provided in
accordance with the company's accounting policy for the class of asset
concerned. Interest calculated on the reducing balance basis is charged as
interest payable over the period of the lease or hire purchase agreement,
and the capital element of future lease and hire purchase payments is
included in creditors. The cost of operating leases is charged as
incurred.
Continued >>>
38
Page 9
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
CONTINUED
1. ACCOUNTING POLICIES (Continued)
(i) PENSIONS
The company operates a defined contribution pension scheme for a director
and certain employees. The cost of contributions to the scheme is charged
to the Profit & Loss Account in the year in which they fall due.
(j) INVESTMENTS
Fixed asset investments are stated at cost less provision for permanent
diminution in value.
(k) BASIS OF CONSOLIDATION
The group financial statements consolidate the financial statements of the
company and all its subsidiaries.
(l) FOREIGN CURRENCIES
Assets and liabilities expressed in foreign currencies are translated into
sterling at the rates of exchange ruling at the Balance Sheet date.
Transactions in foreign currencies are translated into sterling at the
rate of exchange ruling at the date of the transaction. Exchange
differences are taken into account in arriving at the operating profit.
2. HOLDING COMPANY PROFIT & LOSS ACCOUNT
The company has taken advantage of the exemption in the Companies Act
1985, Section 230, not to present its own Profit & Loss Account. Included
in the group loss for the financial year is a profit of pound sterling 481
(1994 : pound sterling 266) which has been dealt with in the accounts of
the parent company.
3. TURNOVER
The turnover and loss before taxation is attributable to the one principal
activity of the group. A geographical analysis of turnover has been
omitted as, in the opinion of the director, disclosure would be seriously
prejudicial to the interests of the group.
4. NET OPERATING EXPENSES
1995 1994
POUND STERLING POUND STERLING
Net operating expenses are made up as follows :
Distribution costs 344,309 310,053
Administration expenses 1,721,498 1,404,685
Other costs and expenses 140,369 99,287
--------- ---------
2,206,176 1,814,025
========= =========
39
Page 10
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
CONTINUED
5. OPERATING LOSS
1995 1994
(a) The operating loss is stated after charging : POUND STERLING POUND STERLING
Amortisation of goodwill 6,375 6,375
Depreciation of tangible assets : Owned 60,084 58,550
Leased 21,239 13,995
Director's emoluments (Note 6) including
pension contributions 150,942 110,969
Auditor's remuneration : Audit fee 17,735 17,735
Non-audit fee 5,315 4,846
Loss on disposal of fixed assets 21,959 3,128
Hire of equipment 1,884 1,984
======== ========
(b) Reconciliation of operating loss to net cash inflow from operating
activities :
Operating loss (5,315) (179)
Depreciation and amortisation 87,698 78,920
Loss on disposal of fixed assets 21,959 3,128
Exchange difference (149) (238)
(Increase)/Decrease in stock (91,612) 27,154
(Increase)/Decrease in debtors (27,792) 86,674
Increase in creditors 66,487 135,587
-------- --------
51,276 331,046
======== ========
6. DIRECTOR'S EMOLUMENTS
Director's emoluments, excluding pension contributions of pound
sterling 41,886 (1994 : pound sterling 1,236) were as follows :
Emoluments of the chairman 109,056 109,733
========= =======
7. EMPLOYEE INFORMATION
Wages and salaries 906,567 828,193
Social security costs 78,701 66,179
Pension contributions 57,672 16,600
--------- -------
1,042,940 910,972
========= =======
The average weekly number of employees during the year was as follows:
Administration 43 44
========= =======
40
Page 11
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
CONTINUED
8. INTEREST RECEIVABLE AND SIMILAR INCOME
1995 1994
POUND STERLING POUND STERLING
Bank deposit interest receivable 1,749 111
======= =======
9. INTEREST PAYABLE
Interest payable on bank overdrafts wholly
repayable within five years - not by instalments 6,781 7,606
Interest payable on all other loans 9,162 9,852
Interest payable on finance leases and hire
purchase contracts 3,337 1,863
------- -------
19,280 19,321
======= =======
10. TAXATION
The tax (charge)/credit on loss on ordinary activities for the year was as
follows :
Corporation tax at current rates based on the
adjusted results of the year (4,000) (533)
Overseas taxation (492) (42)
Deferred taxation computed at current rates 2,930 3,412
------- -------
(1,562) 2,837
======= =======
11. INTANGIBLE FIXED ASSETS
GOODWILL ON
CONSOLIDATION
GROUP POUND STERLING
Cost
At 1st September 1994 and
31st August 1995 127,508
========
Amortisation
At 1st September 1994 10,625
Charge for year 6,375
========
At 31st August 1995 17,000
========
Net Book Value
At 31st August 1995 110,508
========
At 31st August 1994 116,883
========
41
Page 12
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
CONTINUED
12. TANGIBLE FIXED ASSETS
FREEHOLD LEASEHOLD PLANT AND TOTAL
PROPERTY PROPERTY MACHINERY
GROUP POUND STERLING POUND STERLING POUND STERLING POUND STERLING
Cost
----
At 1st September 1994 257,612 -- 760,857 1,018,469
Additions -- 43,676 188,271 231,947
Exchange adjustment -- -- 267 267
Disposals -- -- (71,941) (71,941)
------- ------- -------- ----------
At 31st August 1995 257,612 43,676 877,454 1,178,742
======= ======= ======== ==========
Depreciation
At 1st September 1994 28,269 -- 558,319 586,588
On disposals -- -- (41,082) (41,082)
Exchange adjustment -- -- 118 118
Charge for year 5,152 1,091 75,080 81,323
------- ------- -------- ----------
At 31st August 1995 33,421 1,091 592,435 626,947
======= ======= ======== ==========
Net Book Value
At 31st August 1995 - Owned 224,191 42,585 222,340 489,116
- Leased -- -- 62,679 62,679
------- ------- -------- ----------
224,191 42,585 285,019 551,795
======= ======= ======== ==========
At 31st August 1994 - Owned 229,343 -- 163,248 392,591
- Leased -- -- 39,290 39,290
------- ------- -------- ----------
229,343 -- 202,538 431,881
======= ======= ======== ==========
13. FIXED ASSET INVESTMENTS
1995 1994
SHARE OF ASSETS
(a) GROUP
Associated Undertakings
Cost of shares and loan stock 30,000 30,000
Share of losses, retained by associated undertaking (30,000) (18,368)
-------- --------
-- 11,632
======== ========
(b) COMPANY
Investment in subsidiary undertakings at cost 499,998 499,998
======== ========
Continued >>>
42
Page 13
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
CONTINUED
13. FIXED ASSET INVESTMENTS (Continued)
(c) HOLDING OF MORE THAN 10%
At the year end, the company held more than 10% of the share capital of
the following companies:
COUNTRY OF SHARES HELD HELD
INCORPORATION %
Subsidiary Undertakings
-----------------------
Countdown plc. England 100 Directly
Countdown International Inc. USA 100 Indirectly
Associated Undertakings
-----------------------
RSVP Publishing Ltd. England 50 Indirectly
The principal activity of the subsidiaries is that of discount buying
organisations. The principal activity of the associated undertaking is
that of publishing and retailing of coupon books.
14. STOCK
1995 1994
POUND STERLING POUND STERLING
GROUP
Cards and books 95,677 47,044
Store discount vouchers 94,300 51,321
------- ------
189,977 98,365
======= ======
15. DEBTORS
GROUP COMPANY
1995 1994 1995 1994
POUND STERLING POUND STERLING POUND STERLING POUND STERLING
AMOUNTS FALLING DUE
WITHIN ONE YEAR
Trade debtors 353,097 337,863 -- --
Other debtors 32,340 11,788 3,000 3,000
Prepayments and
accrued income 65,911 73,905 -- --
------- ------- ----- -----
451,348 423,556 3,000 3,000
======= ======= ===== =====
43
Page 14
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
CONTINUED
GROUP COMPANY
1995 1994 1995 1994
POUND STERLING POUND STERLING POUND STERLING POUND STERLING
16. CREDITORS : AMOUNTS FALLING
DUE WITHIN ONE YEAR
Bank loan and overdrafts
(Note 18) 417,311 110,627 -- --
Obligation under finance
leases and hire
purchase agreements
(Note 19) 19,034 7,111 -- --
Trade creditors 264,251 275,148 -- --
Amounts owed to
associated companies 17,695 -- -- --
Other creditors including
taxation and social
security (see note below) 206,589 167,369 2,350 2,350
------- ------- ----- -----
924,880 560,255 2,350 2,350
======= ======= ===== =====
NOTE : "Other creditors including taxation and social security is made up
as follows :
Corporation tax 2,800 -- -- --
Overseas taxation 324 1,988 -- --
Social security and PAYE 46,065 22,328 -- --
Other creditors and
accruals 157,400 143,053 2,350 2,350
------- ------- ----- -----
206,589 167,369 2,350 2,350
======= ======= ===== =====
17. CREDITORS : AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Bank Loan (Note 18) 109,068 118,068 -- --
Obligations under finance
leases and hire purchase
agreements (Note 19) 19,460 9,778 -- --
------- ------- ------- -------
128,528 127,846 -- --
======= ======= ======= =======
44
Page 15
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
CONTINUED
GROUP COMPANY
1995 1994 1995 1994
POUND STERLING POUND STERLING POUND STERLING POUND STERLING
18. BANK LOANS AND OVERDRAFTS
The aggregate amount of bank loans
and overdrafts is as follows:
Falling due within one year:
Bank overdraft 408,311 101,627 -- --
Bank loan current portion 9,000 9,000 -- --
------- ------- ---- ----
417,311 110,627 -- --
Falling due after more than
one year:
Bank loan - repayable by
instalments:
- within five years 36,000 36,000 -- --
- after five years 73,068 82,068 -- --
------- ------- ---- ----
Aggregate amounts 526,379 228,695 -- --
======= ======= ==== ====
The bank loan which amounts to (pound sterling) 118,068 is repayable in
monthly instalments of (pound sterling) 750. The rates of interest on the
overdrafts and loan are 2.75% and 2% (respectively) over bank's base rate,
minimum being 6.75% and 6% per annum. The loan is secured by a fixed
charge over the freehold property. The bank overdrafts are secured by a
charge over the book debts and a floating charge on the other assets of
the company.
19. OBLIGATIONS UNDER FINANCE LEASES 1995 1994
POUND STERLING POUND STERLING
The minimum finance lease payments to which
the group is committed are as follows:
Under one year 22,388 8,191
In the second to fifth year inclusive 21,087 10,239
------- -------
43,475 18,430
Less: Amount representing future finance charges (4,981) (1,541)
------- -------
38,494 16,889
======= =======
45
Page 16
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
CONTINUED
20. OPERATING LEASES 1995 1994
POUND STERLING POUND STERLING
The group had annual commitments under non-cancellable operating leases as
follows :
LAND AND BUILDINGS
Expiry date : Within one year - 50,418
Between two and five years 5,320 -
Over five years 100,000 -
-------------- --------------
105,320 50,418
============== ==============
GROUP COMPANY
1995 1994 1995 1994
POUND STERLING POUND STERLING POUND STERLING POUND STERLING
21. PROVISIONS FOR LIABILITIES AND CHARGES
Deferred Tax
At 1st September 1994 2,930 6,342 - --
Transfers to Profit & Loss
Account (2,930) (3,412) - --
------ ------ ------ ------
At 31st August 1995 -- 2,930 - --
====== ====== ====== ======
The amount provided is the total potential liability and relates to
Accelerated Capital Allowances.
22. CALLED UP SHARE CAPITAL 1995 1994
POUND STERLING POUND STERLING
Authorised, Issued, Called Up and Fully Paid:
500,000 Ordinary shares of pound sterling 1 each 500,000 500,000
============== ==============
23. PROFIT & LOSS ACCOUNT GROUP COMPANY
At 1st September 1994 (6,713) 1,266
Retained Loss (36,040) 481
-------------- --------------
At 31st August 1995 (42,753) 1,747
============== ==============
46
Page 17
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
CONTINUED
24. CASH AND CASH EQUIVALENTS
Analysis of balances as shown in the group Balance Sheet and changes
during the year :
1995 1994 CHANGE IN
YEAR
Cash at bank and in hand 207,027 102,001 105,026
Bank overdraft and loan (526,379) (228,695) (297,684)
----------- ---------- -----------
(319,352) (126,694) (192,658)
=========== ========== ===========
1995 1994
POUND STERLING POUND STERLING
25. RECONCILIATION OF MOVEMENTS IN
SHAREHOLDERS FUNDS
Loss for the financial year (36,040) (34,920)
Shareholders' funds at 1st September 1994 493,287 528,207
-------------- --------------
Shareholders' funds at 31st August 1995 457,247 493,287
============== ==============
26. RELATED PARTY TRANSACTION
A subsidiary company has acquired a twenty year lease in respect of a
property from The Countdown plc. Self-administered Scheme. The current
rent is (pound sterling) 100,000 per annum.
27. CAPITAL COMMITMENTS
Authorised but not contracted 32,650 -
============== ==============
47
Page 18
COUNTDOWN HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED ACCOUNTS
CONTINUED
28. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES OF AMERICA GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES:
The group's consolidated financial statements are prepared in conformity
with generally accepted accounting principles applicable in the United
Kingdom (UK GAAP), which differ in certain significant respects from those
applicable in the United States of America (US GAAP). A significant
difference as it relates to the group that may affect net loss and equity
shareholders' funds is set out below.
Deferred Taxation: UK GAAP requires that provision for deferred
taxation should be made only if there is reasonable evidence that
such taxation will be payable in the foreseeable future. Under US
GAAP, deferred taxation is recognised under the full liability
method and deferred tax assets are recognised if their realisation
is considered more likely than not. The group has incurred losses in
recent years and has net operating loss carryforwards for tax
purposes. As the realisation of these loss carryforwards is
uncertain, no difference between UK GAAP and US GAAP exist.
Equity shareholders' funds at 31st August 1995 and 1994 and net loss for
the years then ended in conformity with UK GAAP are not materially
different than those in conformity with US GAAP.
29. COMPANIES ACT 1985
These consolidated financial statements do not comprise the Company's
statutory accounts within the meaning of Section 240 of the Companies Act
1985 of Great Britain. Statutory accounts have been prepared for each of
the years ended 31st August 1995 and 31st August 1994, on which the
auditors' reports were unqualified. The statutory accounts for the years
ended 31st August 1995 and 31st August 1994 have been delivered to the
Registrar of Companies for England and Wales.