SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________________________ FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 13, 1999 ----------------- NTL (TRIANGLE) LLC - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 0-24792 13-4086747 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation File Number) Identification No.) 110 East 59th Street, New York, New York 10022 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including area code (212) 906-8440 -------------- - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets The registrant hereby amends its Current Report on Form 8-K dated December 28, 1999 by filing financial statements of the acquired business, Cablelink Limited, and certain pro forma financial information for the registrant. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits Page ---- (a) Financial Statements of Businesses Acquired Cablelink Limited and Subsidiaries Consolidated Financial Statements, Year Ended 31 March 1999 ....... 4 Consolidated Financial Statements, Year Ended 2 April 1998 ........ 30 Consolidated Financial Statements, Year Ended 3 April 1997 ........ 51 (b) Pro Forma Financial Information NTL (Triangle) LLC and Subsidiaries Unaudited Pro Forma Financial Statements .......................... 72 - 2 - 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 authorized. NTL (TRIANGLE) LLC By: NTL Group Limited, Its Managing Member By: /s/ Robert Mackenzie -------------------------------- Name: Robert Mackenzie Title: Secretary Dated: January 28, 2000 - 3 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 - 4 - REPORT OF INDEPENDENT ACCOUNTANTS The Board of Directors of Cablelink Limited and Subsidiaries:- We have audited the accompanying balance sheets of Cablelink Limited and Subsidiaries as at 31 March 1999 and 2 April 1998 and the related profit and loss accounts, cash flow statements and reconciliation of movements in shareholders' funds for the three years ended 31 March 1999, all expressed in Irish pounds. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the Republic of Ireland, which are substantially the same as those followed in the United States. 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cablelink Limited and Subsidiaries at 31 March 1999 and 2 April 1998 and the results of its operations and its cash flows for each of the three years ended 31 March 1999, in conformity with generally accepted accounting principles in Ireland. Accounting principles generally accepted in Ireland vary in certain significant respects from accounting principles generally accepted in the United States. Application of accounting principles generally accepted in the United States would have affected results of operations for each of the three years in the period ended 31 March 1999 and movements in shareholders' funds at 31 March 1999, 2 April 1998 and 31 March 1997, to the extent summarised in Note 30 to the financial statements. PricewaterhouseCoopers Chartered Accountants and Registered Auditors Dublin, Republic of Ireland 13 May 1999, except as to Note 30 which is as of January 27, 2000 - 5 - CABLELINK LIMITED AND SUBSIDIARIES ACCOUNTING POLICIES YEAR ENDED 31 MARCH 1999 The significant accounting policies adopted by the company are as follows:- A. BASIS OF ACCOUNTING The financial statements are prepared under the historical cost convention. B. BASIS OF CONSOLIDATION The consolidated profit and loss account and balance sheet include the financial statements of the parent company and its subsidiaries made up to 31 March 1999. C. TURNOVER Turnover comprises: (i) Service revenue from subscribers, net of value added tax which is accounted for on an earnings basis. Deferred income (which is included under the balance sheet category "Creditors: Amounts falling due within one year") represents the proportion of service revenue received which relates to future periods. (ii) Revenues in respect of charges for connecting customers to the relay systems, net of value added tax, is accounted for on a cash receipts basis. However, in instances where connection revenue from an applicant exceeds (IR Pound) 30 it is deducted from the capitalised connection cost rather than included in revenue. D. TANGIBLE FIXED ASSETS Additions to the relay systems, including the costs of connecting subscribers for the first time, are capitalised. The costs of disconnection and reconnection of subscribers are charged to the profit and loss account. Connection and reconnection fees are credited to the profit and loss account in the period in which they are received where they are less than (IR Pound) 30. Where they exceed (IR Pound) 30, they are deducted from the capitalised connection costs. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset, other than freehold land, on a straight line basis, over its expected useful life, as follows: Freehold Property 60 years Relay Systems 5 to 12 years Test Equipment 5 years Furniture & Fittings 5 years Computers 3/4 years Motor Vehicles 4/5 years Improvements to Leasehold Premises 5 years - 6 - CABLELINK LIMITED AND SUBSIDIARIES ACCOUNTING POLICIES YEAR ENDED 31 MARCH 1999 E. STOCKS Consumable stores are valued at cost, less a provision for obsolescence where appropriate. Cost consists of the invoiced price of supplies. F. TAXATION Corporation tax payable is provided on taxable profits at the current rate. Advance corporation tax payable on dividends paid and provided for in the period is written off except when recoverability against corporation tax payable is considered to be reasonably assured. Credit is taken for advance corporation tax written off in previous years when it is recoverable against a corporation tax liability. Tax deferred or accelerated is accounted for in respect of all material timing differences only to the extent that it is probable that a liability or asset will crystallise in the foreseeable future. Timing differences arise from the inclusion of items of income and expenditure in tax computations in periods different from those in which they are included in the financial statements. Provision is made at the rate which is expected to be applied when the liability or asset is expected to crystallise. Where this is not known the latest estimate of the long-term tax rate applicable has been adopted. G. BAD DEBTS All balances due for over 12 months, together with all balances on disconnected accounts are provided against in full. A provision of 20% is made against amounts due for more than 6 months and less than 12 months. H. FOREIGN CURRENCIES Normal trading activities denominated in foreign currencies are recorded in Irish pounds at actual exchange rates as of the date of transaction. Monetary assets and liabilities denominated in foreign currencies are reported at the rates of exchange prevailing at the balance sheet date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is reported as an exchange gain or loss in the profit and loss account. I. PENSIONS Pension costs are accounted for on the basis of charging the expected cost of providing pensions over the period during which the company benefits from employees' services. The effects of variations from regular cost are spread over the expected average remaining service lives of the members of the scheme. - 7 - CABLELINK LIMITED AND SUBSIDIARIES ACCOUNTING POLICIES YEAR ENDED 31 MARCH 1999 (CONTINUED) J. LEASES Expenditure on leases which are operating leases is charged to the profit and loss account on a basis representative of the benefit derived from the asset, normally on a straight line basis, over the lease period. - 8 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED PROFIT AND LOSS ACCOUNT YEAR ENDED 31 MARCH 1999 NOTES 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) TURNOVER 1 40,498,348 36,647,492 Operating Expenses (net) (35,957,246) (31,810,487) ---------- ---------- OPERATING PROFIT 4,541,102 4,837,005 Investment Income 2 545,143 746,627 Interest Payable and Similar Charges 3 - (129,075) ---------- ---------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 4 5,086,245 5,454,557 Tax on Profit on Ordinary Activities 6 (1,259,834) (1,646,939) ---------- ---------- PROFIT FOR THE YEAR AFTER TAXATION 7 3,826,411 3,807,618 Dividends 8 (10,500,000) - ---------- ---------- (LOSS)/PROFIT FOR THE YEAR RETAINED (6,673,589) 3,807,618 ========== ========== In arriving at the results for the financial year, all amounts above relate to continuing operations. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES The company has no recognised gains and losses other than those included in the profits above and, therefore, no separate statement of total recognised gains and losses has been presented. NOTE OF HISTORICAL COST PROFITS There is no difference between the profit on ordinary activities before taxation and the retained profit for the year stated above and their historical cost equivalents. STATEMENT OF MOVEMENT IN RETAINED PROFITS 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) RETAINED PROFIT AT 2 APRIL 1998 24,496,970 20,689,352 (LOSS)/PROFIT FOR THE YEAR RETAINED (6,673,589) 3,807,618 ---------- ---------- RETAINED PROFIT AT 31 MARCH 1999 17,823,381 24,496,970 ========== ========== ON BEHALF OF THE BOARD A Kane ) ) DIRECTORS K J Windle ) The notes on pages 6 to 8 and 13 to 28 form part of these Financial Statements Auditors' Report page 5. - 9 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 1999 NOTES 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) (IR POUND) (IR POUND) FIXED ASSETS Tangible Fixed Assets 9 40,906,716 36,871,721 CURRENT ASSETS Stocks 11 2,651,595 2,881,359 Debtors 12 2,947,606 2,207,929 Cash at Bank and in Hand - 12,044,841 ---------- ---------- 5,599,201 17,134,129 CREDITORS Amounts falling due within one year 13 (18,500,775) (19,575,119) ---------- ---------- NET CURRENT (LIABILITIES) (12,901,574) (2,440,990) ---------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES 28,005,142 34,430,731 Provisions for Liabilities and Charges 16 (2,707,000) (2,459,000) ---------- ---------- NET ASSETS 25,298,142 31,971,731 ========== ========== CAPITAL AND RESERVES Called up Share Capital 17 86,980 86,980 Share Premium Account 18 7,124,448 7,124,448 Other Reserves 18 263,333 263,333 Profit & Loss Account 17,823,381 24,496,970 ---------- ---------- SHAREHOLDERS' FUNDS - EQUITY 22 INTERESTS 25,298,142 31,971,731 ========== ========== ON BEHALF OF THE BOARD A Kane ) ) DIRECTORS K J Windle ) The notes on pages 6 to 8 and 13 to 28 form part of these Financial Statements Auditors' Report page 5. - 10 - CABLELINK LIMITED AND SUBSIDIARIES COMPANY BALANCE SHEET AS AT 31 MARCH 1999 NOTES 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) (IR POUND) (IR POUND) FIXED ASSETS Tangible Fixed Assets 9 34,108,002 30,521,911 Financial Assets 10 601,100 601,100 ---------- ---------- 34,709,102 31,123,011 CURRENT ASSETS Stocks 11 2,152,804 2,390,302 Debtors: amounts due after one year 12 5,426,425 5,080,174 amounts due within one year 12 2,593,756 1,917,114 Cash at Bank and in Hand - 12,036,403 ---------- ---------- 10,172,985 21,423,993 CREDITORS Amounts falling due within one year 13 (17,498,368) (18,365,104) ---------- ---------- NET CURRENT (LIABILITIES)/ASSETS (7,325,383) 3,058,889 ---------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES 27,383,719 34,181,900 Provisions for Liabilities and Charges 16 (2,240,000) (2,000,000) ---------- ---------- NET ASSETS 25,143,719 32,181,900 ========== ========== CAPITAL AND RESERVES Called up Share Capital 17 86,980 86,980 Share Premium Account 18 7,124,448 7,124,448 Other Reserves 18 263,333 263,333 Profit & Loss Account 17,668,958 24,707,139 ---------- ---------- SHAREHOLDERS' FUNDS - EQUITY INTERESTS 25,143,719 32,181,900 ========== ========== ON BEHALF OF THE BOARD A Kane ) ) DIRECTORS K J Windle ) The notes on pages 6 to 8 and 13 to 28 form part of these Financial Statements Auditors' Report page 5. - 11 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT YEAR ENDED 31 MARCH 1999 NOTES 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) CASH FROM OPERATING ACTIVITIES 19A 9,851,680 13,665,358 RETURNS ON INVESTMENT AND SERVICING OF FINANCE 19B 545,143 617,552 TAXATION (1,325,834) (1,775,939) EQUITY DIVIDEND PAID 8 (10,500,000) - CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 19C (10,753,901) (12,000,041) ---------- ---------- Cash (Outflow)/Inflow Before Use of Liquid Resources (12,182,912) 506,930 MANAGEMENT OF LIQUID RESOURCES 19D 11,914,193 390,255 ---------- ---------- (DECREASE)/INCREASE IN CASH IN YEAR (268,719) 897,185 ========== ========== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS (Decrease)/Increase in Cash in Year (268,719) 897,185 Cash (Inflow) from (Decrease) in Liquid Resources (11,914,193) (390,255) ---------- ---------- Movement in Net Funds in Year (12,182,912) 506,930 Net Funds at Start of Year (12,044,841) 11,537,911 ---------- ---------- NET FUNDS AT END OF YEAR 20 (138,071) 12,044,841 ========== ========== The notes on pages 6 to 8 and 13 to 28 form part of these Financial Statements Auditors' Report page 5. - 12 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 1. TURNOVER Turnover is represented by revenue from subscribers and is generated in total in the Republic of Ireland. 2. INVESTMENT INCOME 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) Interest Receivable and Similar Income 545,143 746,627 ======= ======= 3. INTEREST PAYABLE AND SIMILAR CHARGES 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) On bank loans, overdrafts and other loans wholly repayable within five years - 129,075 ======= ======= 4. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) Profit on ordinary activities before taxation is stated after charging/(crediting): Directors' emoluments: Fees 23,100 15,500 Other emoluments (including pension contributions) 120,060 108,011 --------- --------- 143,160 123,511 ========= ========= (Profit) on disposal of tangible fixed assets (102,238) (61,907) ========= ========= Depreciation of Tangible Fixed Assets 6,821,144 5,699,558 ========= ========= Auditors' Remuneration 15,000 15,000 ========= ========= - 13 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 5. EMPLOYEES The average number of employees (including executive directors) during the year, analysed by category, was as follows: NUMBERS EMPLOYED 31 MARCH 1999 2 APRIL 1998 Marketing & Customer Service 80 61 Operations 135 154 Administration 55 42 --- --- 270 257 === === The aggregate payroll costs of these employees were as follows: 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) Wages and Salaries 5,754,111 4,984,916 Social Welfare Costs 478,630 424,183 Other Pension Costs 238,716 272,294 --------- --------- 6,471,457 5,681,393 ========= ========= 6. TAX ON PROFIT ON ORDINARY ACTIVITIES 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) Corporation Tax @ 32%/28% 1,011,834 1,333,939 Deferred Tax 248,000 313,000 --------- --------- 1,259,834 1,646,939 ========= ========= 7. PROFIT FOR FINANCIAL YEAR (IR Pound) 3,461,819 (1998: (IR Pound) 3,836,012) of this profit has been dealt with in the profit and loss account of Cablelink Limited, which, as permitted by Section 3 (2) of the Companies (Amendment) Act 1986, is not presented in these financial statements. 8. DIVIDENDS 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) PAID: Interim dividend on ordinary shares of (IR Pound) 120.72 per share 10,500,000 Nil ========== === - 14 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 9. TANGIBLE FIXED ASSETS FURNITURE IMPROVEMENTS RELAY AND MOTOR TO LEASEHOLD FREEHOLD SYSTEMS EQUIPMENT FIXTURES COMPUTER VEHICLES PROPERTY PROPERTY TOTAL GROUP (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) COST At 2 April 1998 61,361,263 868,755 1,379,409 5,324,366 1,307,818 1,004,297 351,306 71,597,214 Additions 8,112,601 44,691 154,378 2,183,968 372,571 38,953 - 10,907,162 ---------- ------- --------- --------- --------- --------- ------- ---------- 69,473,864 913,446 1,533,787 7,508,334 1,680,389 1,043,250 351,306 82,504,376 Less: Disposals (91,835) - - (26,328) (326,819) - - (444,982) ---------- ------- --------- --------- --------- --------- ------- ---------- At 31 March 1999 69,382,029 913,446 1,533,787 7,482,006 1,353,570 1,043,250 351,306 82,059,394 ---------- ------- --------- --------- --------- --------- ------- ---------- DEPRECIATION At 2 April 1998 29,660,839 721,915 964,671 2,251,298 722,408 348,355 56,007 34,725,493 Charge for the Year 5,399,593 61,403 167,272 860,834 284,362 40,437 7,243 6,821,144 ---------- ------- --------- --------- --------- --------- ------- ---------- 35,060,432 783,318 1,131,943 3,112,132 1,006,770 388,792 63,250 41,546,637 Less: Disposals (91,835) - - (1,646) (300,478) - - (393,959) ---------- ------- --------- --------- --------- --------- ------- ---------- At 31 March 1999 34,968,597 783,318 1,131,943 3,110,486 706,292 388,792 63,250 41,152,678 ---------- ------- --------- --------- --------- --------- ------- ---------- NET BOOK AMOUNT AT 31 March 1999 34,413,432 130,128 401,844 4,371,520 647,278 654,458 288,056 40,906,716 ========== ======= ========= ========= ========= ========= ======= ========== 2 April 1998 31,700,424 146,840 414,738 3,073,068 585,410 655,942 295,299 36,871,721 ========== ======= ========= ========= ========= ========= ======= ========== The basis by which depreciation is calculated are stated in accounting policy Note D. - 15 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 9. TANGIBLE FIXED ASSETS FURNITURE IMPROVEMENTS RELAY AND MOTOR TO LEASEHOLD FREEHOLD SYSTEMS EQUIPMENT FIXTURES COMPUTER VEHICLES PROPERTY PROPERTY TOTAL COMPANY (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) Cost At 2 April 1998 50,765,257 746,357 1,285,761 5,118,162 1,173,978 759,327 351,306 60,200,148 Additions 6,513,123 44,190 154,378 2,180,353 314,860 24,243 - 9,231,147 ---------- ------- --------- --------- --------- --------- ------- ---------- 57,278,380 790,547 1,440,139 7,298,515 1,488,838 783,570 351,306 69,431,295 Less: Disposals (43,470) - - - (281,823) - - (325,293) ---------- ------- --------- --------- --------- --------- ------- ---------- At 31 March 1999 57,234,910 790,547 1,440,139 7,298,515 1,207,015 783,570 351,306 69,106,002 ---------- ------- --------- --------- --------- --------- ------- ---------- Depreciation At 2 April 1998 25,046,707 627,891 900,946 2,124,641 657,076 264,969 56,007 29,678,237 Charge for the Year 4,284,574 52,051 157,315 838,241 254,520 25,257 7,243 5,619,201 ---------- ------- --------- --------- --------- --------- ------- ---------- 29,331,281 679,942 1,058,261 2,962,882 911,596 290,226 63,250 35,297,438 Less: Disposals (43,470) - - - (255,968) - - (299,438) ---------- ------- --------- --------- --------- --------- ------- ---------- At 31 March 1999 29,287,811 679,942 1,058,261 2,962,882 655,628 290,226 63,250 34,998,000 ---------- ------- --------- --------- --------- --------- ------- ---------- Net Book Amount at 31 March 1999 27,947,099 110,605 381,878 4,335,633 551,387 493,344 288,056 34,108,002 ========== ======= ========= ========= ========= ========= ======= ========== 2 April 1998 25,718,550 118,466 384,815 2,993,521 516,902 494,358 295,299 30,521,911 ========== ======= ========= ========= ========= ========= ======= ========== The basis by which depreciation is calculated are stated in accounting policy Note D. - 16 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 10. FINANCIAL ASSETS 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) INTEREST IN SUBSIDIARY COMPANIES: Cablelink Construction Limited 600,000 600,000 Cablelink Waterford Limited 100 100 Cablelink Galway Limited 1,000 1,000 ------- ------- 601,100 601,100 ======= ======= In the opinion of the directors, the value of the interest in subsidiary companies is not less than the amounts stated. 11. STOCKS GROUP AND COMPANY Stocks represent goods purchased for the construction and maintenance of the cable systems. The replacement cost of stocks did not exceed the valuation on a FIFO basis by a material amount. 12. DEBTORS: AMOUNTS FALLING DUE AFTER ONE YEAR 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) COMPANY Amounts Due by Group Companies (Note 15) 5,426,425 5,080,174 ========= ========= DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) GROUP Trade Debtors 1,524,763 1,205,789 Prepayments 815,644 609,447 Other Debtors 607,199 392,693 --------- --------- 2,947,606 2,207,929 ========= ========= COMPANY Trade Debtors 1,265,888 1,017,865 Prepayments 768,003 560,758 Other Debtors 559,865 338,491 --------- --------- 2,593,756 1,917,114 ========= ========= - 17 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) GROUP: Trade Creditors 2,340,826 1,700,422 Taxation and Social Welfare (Note 14) 1,552,702 2,239,412 Accruals 5,629,165 6,854,000 Deferred Income 8,840,011 8,781,285 Bank Overdraft 138,071 - ---------- ---------- 18,500,775 19,575,119 ========== ========== COMPANY: Trade Creditors 2,176,540 1,568,637 Taxation and Social Welfare (Note 14) 1,332,241 1,974,738 Accruals 5,257,845 6,367,776 Amounts owed to group companies (Note 15) 618,178 618,178 Deferred Income 7,818,856 7,835,775 Bank Overdraft 294,708 - ---------- ---------- 17,498,368 18,365,104 ========== ========== 14. TAXATION CREDITORS The taxation creditors included in taxation and social welfare are made up as follows: 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) GROUP: Corporation Tax 1,022,000 1,336,000 PAYE 98,270 80,376 PRSI 53,899 46,820 VAT 366,713 631,676 Construction Tax 10,019 23,643 Pension Refund Tax 1,489 3,322 Withholding Tax - Professional Fees 312 117,575 --------- --------- 1,552,702 2,239,412 ========= ========= COMPANY: Corporation Tax 890,000 1,230,000 PAYE 90,817 73,785 PRSI 49,134 43,105 VAT 291,006 493,153 Construction Tax 9,795 14,295 Pension Refund Tax 1,489 3,322 Withholding Tax - Professional Fees - 117,078 --------- --------- 1,332,241 1,974,738 ========= ========= - 18 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 15. INTERCOMPANY BALANCES 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) COMPANY: Receivable: Cablelink Waterford Limited 3,288,341 2,678,785 Cablelink Galway Limited 2,138,084 2,401,389 --------- --------- 5,426,425 5,080,174 ========= ========= Payable: Cablelink Construction Limited 618,178 618,178 ========= ========= 16. PROVISIONS FOR LIABILITIES AND CHARGES 31 MARCH 1999 2 APRIL 1998 FULL FULL POTENTIAL POTENTIAL LIABILITY LIABILITY (IR POUND) (IR POUND) DEFERRED TAXATION: GROUP: Tax impact of timing differences: Capital Allowances/Depreciation 2,707,000 2,459,000 ========= ========= COMPANY: Tax impact of timing differences: Capital Allowances/Depreciation 2,240,000 2,000,000 ========= ========= 17. CALLED UP SHARE CAPITAL 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) AUTHORISED: 1,085,000 Ordinary Shares of (IR Pound) 1 each 1,085,000 1,085,000 ========= ========= ALLOTTED, CALLED UP AND FULLY PAID: 86,980 Ordinary Shares of (IR Pound) 1 each 86,980 86,980 ========= ========= - 19 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 18. CAPITAL RESERVES SHARE CAPITAL PREMIUM REDEMPTION ACCOUNT RESERVE FUND TOTAL (IR POUND) (IR POUND) (IR POUND) At 31 March 1999 7,124,448 263,333 7,387,781 ========= ======= ========= At 2 April 1998 7,124,448 263,333 7,387,781 ========= ======= ========= 19A. RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) Operating Profit 4,541,102 4,837,005 Depreciation Charges 6,821,144 5,699,558 (Profit) on Sale of Tangible Fixed Assets (102,238) (61,907) Decrease in Stocks 229,764 373,435 (Increase) in Debtors (739,677) (409,664) (Decrease)/Increase in Creditors (898,415) 3,226,931 --------- ---------- 9,851,680 13,665,358 ========= ========== 19B. RETURN ON INVESTMENTS AND SERVICING OF FINANCE 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) Interest Received 545,143 746,627 Interest Paid - (129,075) --------- ---------- NET CASH OUTFLOW FOR RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 545,143 617,552 ========= ========== 19C. CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) Purchases of Fixed Assets (10,907,162) (12,074,580) Proceeds from Disposals of Fixed Assets 153,261 74,539 ----------- ----------- (10,753,901) (12,000,041) =========== =========== - 20 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 19D. MANAGEMENT OF LIQUID RESOURCES 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) Decrease in Term Deposits with Banks (11,914,193) (390,255) ----------- -------- (11,914,193) (390,255) =========== ======== 20. ANALYSIS OF THE CHANGES IN NET FUNDS AT AT 2 APRIL 1998 CASH FLOWS 31 MARCH 1999 (IR POUND) (IR POUND) (IR POUND) Cash at Bank and in Hand 125,767 (268,719) (142,952) Term Deposits 11,919,074 (11,914,193) 4,881 ---------- ---------- ------- 12,044,841 (12,182,912) (138,071) ========== ========== ======= 21. COMMITMENTS FUTURE CAPITAL EXPENDITURE NOT PROVIDED FOR: 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) GROUP Contracted for 1,901,000 2,417,000 Authorised but not Contracted for 5,010,000 4,619,000 --------- --------- 6,911,000 7,036,000 ========= ========= COMPANY Contracted for 1,827,000 2,389,000 Authorised but not Contracted for 5,010,000 4,619,000 --------- --------- 6,837,000 7,008,000 ========= ========= - 21 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 21. COMMITMENTS (CONTINUED) OPERATING LEASE COMMITMENTS The group has commitments under operating leases to make payments totalling (IR Pound) 557,500 for the next year (company - (IR Pound) 511,000) (1998: group - (IR Pound) 314,500, company - (IR Pound) 270,500) as follows: LAND AND BUILDINGS GROUP COMPANY (IR POUND) (IR POUND) Expiring: Within one year - - Between two and five years - - More than five years 557,500 511,000 ------- ------- 557,500 511,000 ======= ======= The rentals payable under leases in respect of land and buildings are subject to renegotiation at various intervals specified in the leases. 22. STATEMENT OF MOVEMENTS IN SHAREHOLDERS' FUNDS 31 MARCH 1999 2 APRIL 1998 (IR POUND) (IR POUND) Profit for financial year 3,826,411 3,807,618 Dividend paid (10,500,000) - Opening shareholders' funds 31,971,731 28,164,113 ---------- ---------- CLOSING SHAREHOLDERS' FUNDS 25,298,142 31,971,731 ========== ========== 23. CONTINGENT LIABILITIES (i) The company has given irrevocable guarantees in respect of the liabilities, referred to in Section 5 (c) of the Companies (Amendment) Act 1986, of Cablelink Galway Limited, Cablelink Waterford Limited, Cablelink Construction Limited and Dublin Cablesystems Limited. In the opinion of the directors, no losses are likely to arise in respect of this contingency. (ii) In the past, the company has been required to place certain of its cables underground. No provision has been made in the financial statements for costs which may be incurred in doing similar work in the future. The amount of such costs cannot be estimated with any reasonable accuracy but are not currently expected to be significant. (iii)From time to time the Group is involved in legal cases which arise through the normal course of business. In one such case, the Group is engaged in a dispute with the Irish Revenue Authorities. The Directors are confident that this dispute will be resolved in the Group's favour. - 22 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 24. RELATED PARTY TRANSACTIONS (i) Interest earned on deposits with ITI during the year amounted to (IR Pound) 105k. (ii) During the year, the following related party transactions were undertaken with Telecom Eireann:- Purchase of Fixed Assets (IR Pound) 1,295k Duct Rental (IR Pound) 244k Accommodation (IR Pound) 180k Telephone Charges (IR Pound) 179k Other (IR Pound) 104k (iii)During the year, the following related party transactions were undertaken with RTE: Secondment of Personnel (IR Pound) 101k (iv) During the year, the following related party transactions were undertaken with Eircell: Telephone Charges (IR Pound) 74k 25. ULTIMATE PARENT COMPANY Bord Telecom Eireann, a company incorporated in the Republic of Ireland, is the ultimate parent company. The group in which the results of the company are consolidated is that headed by Bord Telecom Eireann. Copies of the group financial statements of Bord Telecom Eireann are available at 114 St. Stephen's Green West, Dublin 2. 26. GROUP COMPANIES NAME % OWNED PRINCIPAL ACTIVITY Cablelink Limited Cable and MDS Television Systems SUBSIDIARIES: Cablelink Waterford Limited 100% Cable and MDS Television Systems Cablelink Galway Limited 100% Cable and MDS Television Systems Dublin Cablesystems Limited 100% Non-trading Cablelink Construction Limited 100% Non-trading (A) All of the above companies are incorporated and operate in the Republic of Ireland. (B) All of the group's interest in subsidiary companies consist of ordinary share capital. (C) The registered office of the company and its subsidiaries is 10 Pembroke Place, Ballsbridge, Dublin 4. - 23 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 27. SECTION 17 GUARANTEE Each of the Subsidiary companies listed in note 26 and consolidated into these financial statements have availed of the exemption from filing their individual financial statements set out in Section 17 of the Companies (Amendment) Act, 1986. 28. PENSION The group operates a contributory defined benefit pension scheme covering all of its permanent employees. The scheme's funds are administered by trustees and are held separately from those of the group. The total pension cost for the group was (IR Pound) 99,304 (1998: (IR Pound) 90,624). The pension cost is assessed in accordance with the advice of an independent qualified actuary using the aggregate method at triennial intervals. The latest actuarial valuation of the scheme was at 1 May 1998. The primary financial assumption underlying the actuarial valuation was that the scheme's investments will earn a real rate of investment return, over and above salary inflation and pension increases, of 2.0% per annum. The actuarial report is not available for public inspection. At the date of the latest actuarial valuation, the market value of the assets of the scheme was (IR Pound) 4,820,953 and the actuarial value of the assets was sufficient to cover 150% of the benefits which had accrued to members, after allowing for expected future increases in earnings. Contributions to an external pension scheme on behalf of seconded personnel were (IR Pound) 101,622 (1998: (IR Pound) 117,889). 29. APPROVAL OF FINANCIAL STATEMENTS The directors approved the financial statements on 7 May 1999. 30. SUMMARY OF DIFFERENCES BETWEEN IRISH AND UNITED STATES ("US") GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP"): The financial statements of Cablelink Limited and it subsidiaries have been prepared in accordance with Irish GAAP which differs in certain significant respects from US GAAP. The significant differences between Irish and US GAAP and their effect on the financial statements of Cablelink are described below: - 24 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 PENSION AMOUNTS Under Irish GAAP, pension costs are determined in accordance with Statement of Standard Accounting Practice No. 24, costs being expensed over employees' working lives. Under US GAAP, pension costs are determined in accordance with the requirements of Statement of Financial Accounting Standard 87, "Employers Accounting for Pensions". Differences between the amounts under Irish GAAP and US GAAP arise from the requirement to use different actuarial methods and assumptions and the method of amortising surpluses and deficits. Assumptions used in determining the actuarial present value of the projected benefit obligation for the pension plan included weighted average discount rates of 6%, 6% and 7% in 1999, 1998 and 1997, respectively. The rate of return on new investments was assumed to be 7%, 7% and 7.5% in 1999, 1998 and 1997, respectively. This information is provided in addition to that described in note 28 with respect to the pension plans of Cablelink. DEFERRED TAX Under Irish GAAP, deferred tax is accounted for to the extent that it is considered probable that a liability or asset will materialise in the foreseeable future. Under US GAAP, deferred tax is provided on a full liability basis which permits deferred tax assets to be recognised if their realisation is considered more likely than not. Cablelink has provided for deferred tax on a full liability basis and has determined additional deferred tax adjustments are not material. REVENUE RECOGNITION Under Irish GAAP, the Company records revenue for connecting customers to the relay systems, net of value added tax, on a cash receipts basis. Where the connection fees exceed (IR Pound) 30, then the entire fee is deducted from the capitalised cost of the relay systems. Generally, the fees that are taken directly to revenue relate to reconnection and second connection fees. Initial hookup connections are treated as a deduction from the capitalised cost of the systems. - 25 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 Under US GAAP, revenues are recorded under Statement of Financial Accounting Standard 51, "Financial Reporting by Cable Television Companies" which requires hookup revenue to be recognised currently to the extent of direct selling costs. Direct selling costs include those costs that are incurred in obtaining new subscribers. Hookup revenue in excess of direct selling costs is deferred and amortised to revenue over the estimated average subscription period. Additionally, capitalised costs of relay systems should be depreciated over their estimated useful lives. Cablelink has determined that the average subscription period approximates the estimated useful life of the relays systems and corresponding adjustments are not material. Additionally, Cablelink has determined that its direct selling costs approximate (IR Pound) 30 and its policy regarding connection and reconnection fees are consistent with US GAAP. COMPREHENSIVE INCOME US GAAP requires the disclosure of comprehensive income. Comprehensive income is composed of net income and other comprehensive income. Cablelink and its subsidiaries do not have any changes in equity from non-owner sources and as such, comprehensive is comprised solely of "profit for the year after taxation". STATEMENT OF CASH FLOW BASIS Cablelink's Statement of Cash Flow is prepared in accordance with Financial Reporting Standard 1 (Revised) "FRS 1" whose objective and principles are similar to those set out in Statement of Financial Accounting Standard 95 "Statement of Cash Flows"("SFAS 95"). The principal differences between the standards relate to classification. Under FRS 1, the Company presents its cashflows for (a) operating activities, (b) returns on investments and servicing of finance, (c) tax paid, (d) capital expenditure and financial investment and (e) financing. SFAS 95 requires only three categories of cash flow activity being (a) operating, (b) investing and (c) financing. Irish GAAP permits bank indebtedness to be included in the determination of cash and cash equivalents in the consolidated cash flow statement. US GAAP requires that bank indebtedness be reported as financing cash flows. As a result, under US GAAP, the bank indebtedness at the beginning and end of the year as reflected in the consolidated cash flow statement would be reported as cash flows under the heading "Financing" in the statement. Under US GAAP, the funds provided by financing activities in 1999 and 1997 would be increased by (IR Pound) 142,952 and (IR Pound) 771,418, respectively. - 26 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 Under US GAAP, the payment of a dividend is treated as a financing cash flow and thus would be recorded as a financing activity. The following table discloses the sub-totals of operations, investing and financing activities in accordance with US GAAP. Consolidated Cash Flow Statement YEAR ENDED ---------------------------------------------- MARCH 31 APRIL 2, APRIL 3, 1999 1998 1997 Operations 9,070,989 12,506,971 9,920,964 Investing (10,753,901) (12,000,041) (10,645,785) Financing (10,357,048) (771,148) - US GAAP requires the disclosure of interest and taxes paid during each fiscal period. The disclosure for interest paid is included in the footnotes to the financial statements and taxation information is included on the face of the Cash Flow Statement. NEW ACCOUNTING STANDARDS NOT YET ADOPTED Statement of Financial Accounting Standard 133 "Accounting for Derivative Instruments and Hedging Activities" was issued in June 1998 and establishes accounting and reporting standards for derivative instruments and hedging activities. It is effective for fiscal years beginning after 15 June, 2000. The Company does not expect the adoption of SFAS No.133 to have a material impact on its financial statements. The following is a summary of material adjustments to net income and shareholders' equity which would have been reported had the financial statements been prepared in accordance with US GAAP and a reconciliation of shareholders' equity. YEAR ENDED ---------------------------------------------- MARCH 31 APRIL 2, APRIL 3, 1999 1998 1997 Net earnings for the period under Irish GAAP 3,826,411 3,807,618 3,304,613 Pension Expense 167,000 42,000 38,000 --------- --------- --------- Net earnings for the period in accordance with United States GAAP 3,993,411 3,849,618 3,342,613 ========= ========= ========= - 27 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 1999 YEAR ENDED ----------------------------- MARCH 31 APRIL 2, 1999 1998 Shareholder's funds in accordance with Irish GAAP 25,298,142 31,971,731 Adjustments to conform to US GAAP Pension 248,000 81,000 ---------- ---------- Shareholder's funds in accordance with US GAAP 25,546,142 32,052,731 ========== ========== Auditor's Report page 5 - 28 - CABLELINK LIMITED AND SUBSIDIARIES SCHEDULE 1 (NOT COVERED BY THE REPORT OF THE AUDITORS) STATEMENT OF COMPLIANCE REQUIRED BY SECTION 12(1) OF THE PROMPT PAYMENT OF ACCOUNTS ACT, 1997 The Directors have overall responsibility for the company's compliance with the Prompt Payment of Accounts Act 1997 and have delegated this responsibility to the company's management. The company's system of internal control includes accounting and computer controls designed to ensure the identification of invoices and contracts for payment within the prescribed payment dates as defined by the Act. The company's system of internal control is designed to provide reasonable though not absolute assurance against non compliance with the Act. The director's are satisfied that they have complied in all material respects with the provisions of the Prompt Payment of Accounts Act 1997. - 29 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 - 30 - REPORT OF THE AUDITORS TO THE MEMBERS OF CABLELINK LIMITED We have audited the financial statements on pages 32 to 50. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Company's directors are responsible for the preparation of the financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you. BASIS OF OPINION We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the Company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. OPINION In our opinion, the financial statements give a true and fair view of the state of affairs of the group and the company as at 2 April 1998 and of the profit, total recognised gains and cash flows of the group for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 1990 and the European Communities (Companies: Group Accounts) Regulations, 1992. We have obtained all the information and explanations we consider necessary for the purposes of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. The net assets of the company, as stated in the balance sheet on page 11, are more than half the amount of its called up share capital and, in our opinion, on that basis there did not exist at 2 April 1998 a financial situation which, under Section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an Extraordinary General Meeting of the company. Coopers & Lybrand ----------------------- Chartered Accountants and Registered Auditors 11 May 1998 Dublin - 31 - CABLELINK LIMITED AND SUBSIDIARIES ACCOUNTING POLICIES YEAR ENDED 2 APRIL 1998 The significant accounting policies adopted by the company are as follows:- A. BASIS OF ACCOUNTING The financial statements are prepared under the historical cost convention. B. BASIS OF CONSOLIDATION The consolidated profit and loss account and balance sheet include the financial statements of the parent company and its subsidiaries made up to 2 April 1998. C. TURNOVER Turnover comprises: (i) Service revenue from subscribers, net of value added tax which is accounted for on an earnings basis. Deferred income (which is included under the balance sheet category "Creditors: Amounts falling due within one year") represents the proportion of service revenue received which relates to future periods. (ii) Revenues in respect of charges for connecting customers to the relay systems, net of value added tax, is accounted for on a cash receipts basis. However, in instances where connection revenue from an applicant exceeds (IR Pound) 30 it is deducted from the capitalised connection cost rather than included in revenue. D. TANGIBLE FIXED ASSETS Additions to the relay systems, including the costs of connecting subscribers for the first time, are capitalised. The costs of disconnection and reconnection of subscribers are charged to the profit and loss account. Connection and reconnection fees are credited to the profit and loss account in the period in which they are received where they are less than (IR Pound) 30. Where they exceed (IR Pound) 30, they are deducted from the capitalised connection costs. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset, other than freehold land, on a straight line basis, over its expected useful life, as follows: Freehold Property 60 years Relay Systems 5 to 12 years Test Equipment 5 years Furniture & Fittings 5 years Computers 3/4 years Motor Vehicles 4/5 years Improvements to Leasehold Premises 5 years - 32 - CABLELINK LIMITED AND SUBSIDIARIES ACCOUNTING POLICIES YEAR ENDED 2 APRIL 1998 E. STOCKS Consumable stores are valued at cost, less a provision for obsolescence where appropriate. Cost consists of the invoiced price of supplies. F. TAXATION Corporation tax payable is provided on taxable profits at the current rate. Advance corporation tax payable on dividends paid and provided for in the period is written off except when recoverability against corporation tax payable is considered to be reasonably assured. Credit is taken for advance corporation tax written off in previous years when it is recoverable against a corporation tax liability. Tax deferred or accelerated is accounted for in respect of all material timing differences only to the extent that it is probable that a liability or asset will crystallise in the foreseeable future. Timing differences arise from the inclusion of items of income and expenditure in tax computations in periods different from those in which they are included in the financial statements. Provision is made at the rate which is expected to be applied when the liability or asset is expected to crystallise. Where this is not known the latest estimate of the long-term tax rate applicable has been adopted. G. BAD DEBTS All balances due for over 12 months, together with all balances on disconnected accounts are provided against in full. A provision of 20% is made against amounts due for more than 6 months and less than 12 months. H. FOREIGN CURRENCIES Normal trading activities denominated in foreign currencies are recorded in Irish pounds at actual exchange rates as of the date of transaction. Monetary assets and liabilities denominated in foreign currencies are reported at the rates of exchange prevailing at the balance sheet date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is reported as an exchange gain or loss in the profit and loss account. I. PENSIONS Pension costs are accounted for on the basis of charging the expected cost of providing pensions over the period during which the company benefits from employees' services. The effects of variations from regular cost are spread over the expected average remaining service lives of the members of the scheme. - 33 - CABLELINK LIMITED AND SUBSIDIARIES ACCOUNTING POLICIES YEAR ENDED 2 APRIL 1998 J. LEASES Expenditure on leases which are operating leases is charged to the profit and loss account on a basis representative of the benefit derived from the asset, normally on a straight line basis, over the lease period. - 34 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED PROFIT AND LOSS ACCOUNT YEAR ENDED 2 APRIL 1998 NOTES 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) TURNOVER 1 36,647,492 32,938,312 Operating Expenses (net) 31,810,487 28,247,684 ---------- ---------- OPERATING PROFIT 4,837,005 4,690,628 Investment Income 2 746,627 600,055 Interest Payable and Similar Charges 3 (129,075) (122,624) ---------- ---------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 4 5,454,557 5,168,059 Tax on Profit on Ordinary Activities 6 (1,646,939) (1,863,446) ---------- ---------- PROFIT FOR THE YEAR 7 3,807,618 3,304,613 Dividends 8 - - ---------- ---------- PROFIT FOR THE YEAR RETAINED 3,807,618 3,304,613 ========== ========== In arriving at the results for the financial year, all amounts above relate to continuing operations. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES The company has no recognised gains and losses other than those included in the profits above and, therefore, no separate statement of total recognised gains and losses has been presented. NOTE OF HISTORICAL COST PROFITS There is no difference between the profit on ordinary activities before taxation and the retained profit for the year stated above and their historical cost equivalents. STATEMENT OF MOVEMENT IN RETAINED PROFITS 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) RETAINED PROFIT AT 3 APRIL 1997 20,689,352 17,384,739 PROFIT FOR THE YEAR RETAINED 3,807,618 3,304,613 ---------- ---------- RETAINED PROFIT AT 2 APRIL 1998 24,496,970 20,689,352 ========== ========== ON BEHALF OF THE BOARD A Kane ) ) DIRECTORS K J Windle ) The notes on pages 32 to 34 and 39 to 50 form part of these Financial Statements Auditors' Report page 31. - 35 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS AT 2 APRIL 1998 NOTES 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) (IR POUND) (IR POUND) FIXED ASSETS Tangible Fixed Assets 9 36,871,721 30,509,331 CURRENT ASSETS Stocks 11 2,881,359 3,254,794 Debtors 12 2,207,929 1,798,265 Cash at Bank and in Hand 12,044,841 11,537,911 ---------- ---------- 17,134,129 16,590,970 CREDITORS Amounts falling due within one year 13 (19,575,119) (16,790,188) ---------- ---------- NET CURRENT (LIABILITIES) (2,440,990) (199,218) ---------- ---------- TOTAL ASSETS LESS CURRENT Liabilities 34,430,731 30,310,113 Provisions for Liabilities and Charges 16 (2,459,000) (2,146,000) ---------- ---------- NET ASSETS 31,971,731 28,164,113 ========== ========== CAPITAL AND RESERVES Called up Share Capital 17 86,980 86,980 Share Premium Account 18 7,124,448 7,124,448 Other Reserves 18 263,333 263,333 Profit & Loss Account 24,496,970 20,689,352 ---------- ---------- SHAREHOLDERS' FUNDS - EQUITY 22 INTERESTS 31,971,731 28,164,113 ========== ========== ON BEHALF OF THE BOARD A Kane ) ) DIRECTORS K J Windle ) The notes on pages 32 to 34 and 39 to 50 form part of these Financial Statements Auditors' Report page 31. - 36 - CABLELINK LIMITED AND SUBSIDIARIES COMPANY BALANCE SHEET AS AT 2 APRIL 1998 NOTES 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) (IR POUND) (IR POUND) FIXED ASSETS Tangible Fixed Assets 9 30,521,911 25,371,224 Financial Assets 10 601,100 601,100 ---------- ---------- 31,123,011 25,972,324 CURRENT ASSETS Stocks 11 2,390,302 2,807,130 Debtors: amounts due after one year 12 5,080,174 4,127,994 amounts due within one year 12 1,917,114 1,514,395 Cash at Bank and in Hand 12,036,403 11,531,282 ---------- ---------- 21,423,993 19,980,801 CREDITORS Amounts falling due within one year 13 (18,365,104) (15,887,237) ---------- ---------- NET CURRENT ASSETS 3,058,889 4,093,564 ---------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES 34,181,900 30,065,888 Provisions for Liabilities and Charges 16 (2,000,000) (1,720,000) ---------- ---------- NET ASSETS 32,181,900 28,345,888 ========== ========== CAPITAL AND RESERVES Called up Share Capital 17 86,980 86,980 Share Premium Account 18 7,124,448 7,124,448 Other Reserves 18 263,333 263,333 Profit & Loss Account 24,707,139 20,871,127 ---------- ---------- SHAREHOLDERS' FUNDS - EQUITY Interests 32,181,900 28,345,888 ========== ========== ON BEHALF OF THE BOARD A Kane ) ) DIRECTORS K J Windle ) The notes on pages 32 to 34 and 39 to 50 form part of these Financial Statements Auditors' Report page 31. - 37 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT YEAR ENDED 2 APRIL 1998 NOTES 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) CASH FROM OPERATING ACTIVITIES 19A 13,665,358 10,171,179 RETURNS ON INVESTMENT AND SERVICING OF FINANCE 19B 617,552 477,431 TAXATION (1,775,939) (528,630) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 19C (12,000,041) (11,003,617) ---------- ---------- Cash Inflow/(Outflow) Before Use of Liquid Resources 506,930 (883,637) MANAGEMENT OF LIQUID RESOURCES 19D 390,255 158,816 ---------- ---------- INCREASE/(DECREASE) IN CASH IN YEAR 897,185 (724,821) ========== ========== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Increase/(Decrease) in Cash in Year 897,185 (724,821) Cash (Inflow) from (Decrease) in Liquid Resources (390,255) (158,816) ---------- ---------- Movement in Net Funds in Year 506,930 (883,637) Net Funds at Start of Year 11,537,911 12,421,548 ---------- ---------- NET FUNDS AT END OF YEAR 20 12,044,841 11,537,911 ========== ========== The notes on pages 32 to 34 and 39 to 50 form part of these Financial Statements Auditors' Report page 31. - 38 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 1. TURNOVER Turnover is represented by revenue from subscribers and is generated in total in the Republic of Ireland. 2. INVESTMENT INCOME 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) Interest Receivable and Similar Income 746,627 600,055 ======= ======= 3. INTEREST PAYABLE AND SIMILAR CHARGES 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) On bank loans, overdrafts and other loans wholly repayable within five years 129,075 122,624 ======= ======= 4. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) Profit on ordinary activities before taxation is stated after charging/(crediting): Directors' emoluments: Fees 15,500 15,500 Other emoluments (including pension contributions) 108,011 105,643 --------- --------- 123,511 121,143 ========= ========= (Profit) on disposal of tangible fixed assets (61,907) (145,387) ========= ========= Depreciation of Tangible Fixed Assets 5,699,558 5,096,042 ========= ========= Auditors' Remuneration 15,000 15,000 ========= ========= - 39 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 5. EMPLOYEES The average number of employees (including executive directors) during the year, analysed by category, was as follows: NUMBERS EMPLOYED 2 APRIL 1998 3 APRIL 1997 Marketing & Customer Service 61 60 Operations 154 154 Administration 42 39 --- --- 257 253 === === The aggregate payroll costs of these employees were as follows: 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) Wages and Salaries 4,984,916 4,668,610 Social Welfare Costs 424,183 408,100 Other Pension Costs 272,294 244,916 --------- --------- 5,681,393 5,321,626 ========= ========= 6. TAX ON PROFIT ON ORDINARY ACTIVITIES 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) Corporation Tax @ 36%/32% 1,333,939 1,775,446 Deferred Tax 313,000 88,000 --------- --------- 1,646,939 1,863,446 ========= ========= 7. PROFIT FOR FINANCIAL YEAR (IR Pound) 3,836,012 (1997: (IR Pound) 3,236,552) of this profit has been dealt with in the profit and loss account of Cablelink Limited, which, as permitted by Section 3 (2) of the Companies (Amendment) Act 1986, is not presented in these financial statements. 8. DIVIDENDS 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) PAID: Dividend on ordinary shares of (IR Pound) 1 each Nil Nil === === - 40 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 9. TANGIBLE FIXED ASSETS FURNITURE IMPROVEMENTS RELAY AND MOTOR TO LEASEHOLD FREEHOLD SYSTEMS EQUIPMENT FIXTURES COMPUTER VEHICLES PROPERTY PROPERTY TOTAL GROUP (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) COST At 3 April 1997 52,977,127 817,721 1,234,144 2,434,013 1,314,107 945,026 332,031 60,054,169 Additions 8,675,331 52,794 150,218 2,890,353 227,338 59,271 19,275 12,074,580 ---------- ------- --------- --------- --------- --------- ------- ---------- 61,652,458 870,515 1,384,362 5,324,366 1,541,445 1,004,297 351,306 72,128,749 Less: Disposals (291,195) (1,760) (4,953) - (233,627) - - (531,535) ---------- ------- --------- --------- --------- --------- ------- ---------- At 2 April 1998 61,361,263 868,755 1,379,409 5,324,366 1,307,818 1,004,297 351,306 71,597,214 ---------- ------- --------- --------- --------- --------- ------- ---------- DEPRECIATION At 3 April 1997 25,250,252 656,380 821,580 1,780,918 669,869 316,524 49,315 29,544,838 Charge for the Year 4,701,782 67,295 147,741 470,380 273,837 31,831 6,692 5,699,558 ---------- ------- --------- --------- --------- --------- ------- ---------- 29,952,034 723,675 969,321 2,251,298 943,706 348,355 56,007 35,244,396 Less: Disposals (291,195) (1,760) (4,650) - (221,298) - - (518,903) ---------- ------- --------- --------- --------- --------- ------- ---------- At 2 April 1998 29,660,839 721,915 964,671 2,251,298 722,408 348,355 56,007 34,725,493 ---------- ------- --------- --------- --------- --------- ------- ---------- NET BOOK AMOUNT AT 2 April 1998 31,700,424 146,840 414,738 3,073,068 585,410 655,942 295,299 36,871,721 ========== ======= ========= ========= ========= ========= ======= ========== 3 April 1997 27,726,875 161,341 412,564 653,095 644,238 628,502 282,716 30,509,331 ========== ======= ========= ========= ========= ========= ======= ========== The basis by which depreciation is calculated are stated in accounting policy Note D. - 41 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 9. TANGIBLE FIXED ASSETS FURNITURE IMPROVEMENTS RELAY AND MOTOR TO LEASEHOLD FREEHOLD SYSTEMS EQUIPMENT FIXTURES COMPUTER VEHICLES PROPERTY PROPERTY TOTAL COMPANY (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) COST At 3 April 1997 44,352,537 712,008 1,159,705 2,290,036 1,186,885 723,301 332,031 50,756,503 Additions 6,615,220 34,349 131,009 2,828,126 192,920 36,026 19,275 9,856,925 ---------- ------- --------- --------- --------- --------- ------- ---------- 50,967,757 746,357 1,290,714 5,118,162 1,379,805 759,327 351,306 60,613,428 Less: Disposals (202,500) - (4,953) - (205,827) - - (413,280) ---------- ------- --------- --------- --------- --------- ------- ---------- At 2 April 1998 50,765,257 746,357 1,285,761 5,118,162 1,173,978 759,327 351,306 60,200,148 ---------- ------- --------- --------- --------- --------- ------- ---------- DEPRECIATION At 3 April 1997 21,477,403 570,068 766,170 1,674,191 603,517 244,615 49,315 25,385,279 Charge for the Year 3,771,804 57,823 139,426 450,450 248,202 20,354 6,692 4,694,751 ---------- ------- --------- --------- --------- --------- ------- ---------- 25,249,207 627,891 905,596 2,124,641 851,719 264,969 56,007 30,080,030 Less: Disposals (202,500) - (4,650) - (194,643) - - (401,793) ---------- ------- --------- --------- --------- --------- ------- ---------- At 2 April 1998 25,046,707 627,891 900,946 2,124,641 657,076 264,969 56,007 29,678,237 ---------- ------- --------- --------- --------- --------- ------- ---------- NET BOOK AMOUNT AT 2 April 1998 25,718,550 118,466 384,815 2,993,521 516,902 494,358 295,299 30,521,911 ========== ======= ========= ========= ========= ========= ======= ========== 3 April 1997 22,875,134 141,940 393,535 615,845 583,368 478,686 282,716 25,371,224 ========== ======= ========= ========= ========= ========= ======= ========== The basis by which depreciation is calculated are stated in accounting policy Note D. - 42 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 10. FINANCIAL ASSETS 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) INTEREST IN SUBSIDIARY COMPANIES: Cablelink Construction Limited 600,000 600,000 Cablelink Waterford Limited 100 100 Cablelink Galway Limited 1,000 1,000 ------- ------- 601,100 601,100 ======= ======= In the opinion of the directors, the value of the interest in subsidiary companies is not less than the amounts stated. 11. STOCKS GROUP AND COMPANY Stocks represent goods purchased for the construction and maintenance of the cable systems. The replacement cost of stocks did not exceed the valuation on a FIFO basis by a material amount. 12. DEBTORS: AMOUNTS FALLING DUE AFTER ONE YEAR 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) COMPANY Amounts Due by Group Companies (Note 15) 5,080,174 4,127,994 ========= ========= DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) GROUP Trade Debtors 1,205,789 1,201,745 Prepayments 609,447 269,723 Other Debtors 392,693 326,797 --------- --------- 2,207,929 1,798,265 ========= ========= COMPANY Trade Debtors 1,017,865 999,963 Prepayments 560,758 229,901 Other Debtors 338,491 284,531 --------- --------- 1,917,114 1,514,395 ========= ========= - 43 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) GROUP: Trade Creditors 1,700,422 726,871 Taxation and Social Welfare (Note 14) 2,239,412 2,680,482 Accruals 6,854,000 5,533,715 Deferred Income 8,781,285 7,849,120 ---------- ---------- 19,575,119 16,790,188 ========== ========== COMPANY: Trade Creditors 1,568,637 567,941 Taxation and Social Welfare (Note 14) 1,974,738 2,475,221 Accruals 6,367,776 5,134,984 Amounts owed to group companies (Note 15) 618,178 618,178 Deferred Income 7,835,775 7,090,913 ---------- ---------- 18,365,104 15,887,237 ========== ========== 14. TAXATION CREDITORS The taxation creditors included in taxation and social welfare are made up as follows: 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) GROUP: Corporation Tax 1,336,000 1,778,000 PAYE 80,376 107,515 PRSI 46,820 62,355 VAT 631,676 702,914 Construction Tax 23,643 19,952 Pension Refund Tax 3,322 - Withholding Tax - Professional Fees 117,575 9,746 ---------- ---------- 2,239,412 2,680,482 ========== ========== COMPANY: Corporation Tax 1,230,000 1,680,000 PAYE 73,785 99,707 PRSI 43,105 58,236 VAT 493,153 613,879 Construction Tax 14,295 13,653 Pension Refund Tax 3,322 - Withholding Tax - Professional Fees 117,078 9,746 ---------- ---------- 1,974,738 2,475,221 ========== ========== - 44 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 15. INTERCOMPANY BALANCES 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) COMPANY: Receivable: Cablelink Waterford Limited 2,678,785 1,491,942 Cablelink Galway Limited 2,401,389 2,636,052 --------- --------- 5,080,174 4,127,994 ========= ========= Payable: Cablelink Construction Limited 618,178 618,178 ========= ========= 16. PROVISIONS FOR LIABILITIES AND CHARGES 2 APRIL 1998 3 APRIL 1997 FULL FULL POTENTIAL POTENTIAL LIABILITY LIABILITY (IR POUND) (IR POUND) DEFERRED TAXATION: GROUP: Tax impact of timing differences: Capital Allowances/Depreciation 2,459,000 2,146,000 ========= ========= COMPANY: Tax impact of timing differences: Capital Allowances/Depreciation 2,000,000 1,720,000 ========= ========= 17. CALLED UP SHARE CAPITAL 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) AUTHORISED: 1,085,000 Ordinary Shares of (IR Pound) 1 each 1,085,000 1,085,000 ========= ========= ALLOTTED, CALLED UP AND FULLY PAID: 86,980 Ordinary Shares of (IR Pound) 1 each 86,980 86,980 ========= ========= - 45 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 18. CAPITAL RESERVES SHARE CAPITAL PREMIUM REDEMPTION ACCOUNT RESERVE FUND TOTAL (IR POUND) (IR POUND) (IR POUND) At 2 April 1998 7,124,448 263,333 7,387,781 ========= ======= ========= At 3 April 1997 7,124,448 263,333 7,387,781 ========= ======= ========= 19A. RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) Operating Profit 4,837,005 4,690,628 Depreciation Charges 5,699,558 5,096,042 (Profit) on Sale of Tangible Fixed Assets (61,907) (145,387) Decrease/(Increase) in Stocks 373,435 (254,878) (Increase) in Debtors (409,664) (233,064) Increase in Creditors 3,226,931 1,017,838 ---------- ---------- 13,665,358 10,171,179 ========== ========== 19B. RETURN ON INVESTMENTS AND SERVICING OF FINANCE 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) Interest Received 746,627 600,055 Interest Paid (129,075) (122,624) ------- ------- NET CASH OUTFLOW FOR RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 617,552 477,431 ======= ======= 19C. CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) Purchases of Fixed Assets (12,074,580) (11,172,235) Proceeds from Disposals of Fixed Assets 74,539 168,618 ---------- ---------- (12,000,041) (11,003,617) ========== ========== - 46 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 19D. MANAGEMENT OF LIQUID RESOURCES 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) (Increase)/Decrease in Term Deposits with Banks (390,255) 158,816 ------- ------- (390,255) 158,816 ======= ======= 20. ANALYSIS OF THE CHANGES IN NET FUNDS AT AT 3 APRIL 1997 CASH FLOWS 2 APRIL 1998 (IR POUND) (IR POUND) (IR POUND) Cash at Bank and in Hand (771,418) 897,185 125,767 Term Deposits 12,309,329 (390,255) 11,919,074 ---------- ------- ---------- 11,537,911 506,930 12,044,841 ========== ======= ========== 21. COMMITMENTS FUTURE CAPITAL EXPENDITURE NOT PROVIDED FOR: 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) GROUP Contracted for 2,417,000 810,000 Authorised but not Contracted for 4,619,000 2,950,000 --------- --------- 7,036,000 3,760,000 ========= ========= COMPANY Contracted for 2,389,000 796,500 Authorised but not Contracted for 4,619,000 2,950,000 --------- --------- 7,008,000 3,746,500 ========= ========= - 47 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 21. COMMITMENTS (CONTINUED) OPERATING LEASE COMMITMENTS The group has commitments under operating leases to make payments totalling (IR Pound) 314,500 for the next year (company - (IR Pound) 270,500) (1997: group - (IR Pound) 314,500, company - (IR Pound) 270,500) as follows: LAND AND BUILDINGS GROUP COMPANY (IR POUND) (IR POUND) Expiring: Within one year Between two and five years More than five years 314,500 270,500 ------- ------- 314,500 270,500 ======= ======= The rentals payable under leases in respect of land and buildings are subject to renegotiation at various intervals specified in the leases. 22. STATEMENT OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2 APRIL 1998 3 APRIL 1997 (IR POUND) (IR POUND) Profit for financial year 3,807,618 3,304,613 Opening shareholders' funds 28,164,113 24,859,500 ---------- ---------- CLOSING SHAREHOLDERS' FUNDS 31,971,731 28,164,113 ========== ========== 23. CONTINGENT LIABILITIES (i) The company has given irrevocable guarantees in respect of the liabilities, referred to in Section 5 (c) of the Companies (Amendment) Act 1986, of Cablelink Galway Limited, Cablelink Waterford Limited, Cablelink Construction Limited and Dublin Cablesystems Limited. In the opinion of the directors, no losses are likely to arise in respect of this contingency. (ii) In the past, the company has been required to place certain of its cables underground. No provision has been made in the financial statements for costs which may be incurred in doing similar work in the future. The amount of such costs cannot be estimated with any reasonable accuracy but are not currently expected to be significant. (iii)From time to time the Group is involved in legal cases which arise through the normal course of business. In one such case, the Group is engaged in a dispute with the Irish Revenue Authorities. The Directors are confident that this dispute will be resolved in the Group's favour. - 48 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 24. RELATED PARTY TRANSACTIONS (i) Included in cash and bank balances at the year end is (IR Pound) 2,332,176 which is held on deposit with Irish Telecommunications Investments plc ("ITI"). Interest earned on deposits with ITI during the year amounted to (IR Pound) 147k. (ii) During the year, the following related party transactions were undertaken with Telecom Eireann:- Purchase of Fixed Assets (IR Pound) 1,377k Duct Rental (IR Pound) 278k Accommodation (IR Pound) 143k Telephone Charges (IR Pound) 150k Other (IR Pound) 111k (iii)During the year, the following related party transactions were undertaken with RTE: Secondment of Personnel (IR Pound) 88k (iv) During the year, the following related party transactions were undertaken with Eircell: Telephone Charges (IR Pound) 99k 25. ULTIMATE PARENT COMPANY Bord Telecom Eireann, a company incorporated in the Republic of Ireland, is the ultimate parent company. The group in which the results of the company are consolidated is that headed by Bord Telecom Eireann. Copies of the group financial statements of Bord Telecom Eireann are available at 114 St. Stephen's Green West, Dublin 2. 26. GROUP COMPANIES NAME % OWNED PRINCIPAL ACTIVITY Cablelink Limited Cable and MDS Television Systems Subsidiaries: Cablelink Waterford Limited 100% Cable and MDS Television Systems Cablelink Galway Limited 100% Cable and MDS Television Systems Dublin Cablesystems Limited 100% Non-trading Cablelink Construction Limited 100% Non-trading (A) All of the above companies are incorporated and operate in the Republic of Ireland. (B) All of the group's interest in subsidiary companies consist of ordinary share capital. (C) The registered office of the company and its subsidiaries is 10 Pembroke Place, Ballsbridge, Dublin 4. - 49 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 2 APRIL 1998 27. SECTION 17 GUARANTEE Each of the Subsidiary companies listed in note 26 and consolidated into these financial statements have availed of the exemption from filing their individual financial statements set out in Section 17 of the Companies (Amendment) Act, 1986. 28. PENSION The group operates a contributory defined benefit pension scheme covering all of its permanent employees. The scheme's funds are administered by trustees and are held separately from those of the group. The total pension cost for the group was (IR Pound) 90,624 (1997: (IR Pound) 79,411). The pension cost is assessed in accordance with the advice of an independent qualified actuary using the aggregate method at triennial intervals. The latest actuarial valuation of the scheme was at 1 August 1995. The primary financial assumption underlying the actuarial valuation was that the scheme's investments will earn a real rate of investment return, over and above salary inflation and pension increases, of 1.5% per annum. The actuarial report is not available for public inspection. At the date of the latest actuarial valuation, the market value of the assets of the scheme was (IR Pound) 2,227,214 and the actuarial value of the assets was sufficient to cover 129% of the benefits which had accrued to members, after allowing for expected future increases in earnings. Contributions to an external pension scheme on behalf of seconded personnel were (IR Pound) 117,889 (1997: (IR Pound) 108,154). 29. APPROVAL OF FINANCIAL STATEMENTS The directors approved the financial statements on 8 May 1998. Auditors' Report page 31. - 50 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 - 51 - REPORT OF THE AUDITORS TO THE MEMBERS OF CABLELINK LIMITED We have audited the financial statements on pages 53 to 71. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Company's directors are responsible for the preparation of the financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you. BASIS OF OPINION We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the Company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. OPINION In our opinion, the financial statements give a true and fair view of the state of affairs of the group and the company as at 3 April 1997 and of the profit, total recognised gains and cash flows of the group for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 1990 and the European Communities (Companies: Group Accounts) Regulations 1992. We have obtained all the information and explanations we consider necessary for the purposes of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. The net assets of the company, as stated in the balance sheet on page 11, are more than half the amount of its called up share capital and, in our opinion, on that basis there did not exist at 3 April 1997 a financial situation which, under Section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an Extraordinary General Meeting of the company. COOPERS & LYBRAND ----------------------- CHARTERED ACCOUNTANTS AND REGISTERED AUDITORS 9 May 1997 Dublin - 52 - CABLELINK LIMITED AND SUBSIDIARIES ACCOUNTING POLICIES YEAR ENDED 3 APRIL 1997 The significant accounting policies adopted by the company are as follows:- A. BASIS OF ACCOUNTING The financial statements are prepared under the historical cost convention. B. BASIS OF CONSOLIDATION The consolidated profit and loss account and balance sheet include the financial statements of the parent company and its subsidiaries made up to 3 April 1997. C. TURNOVER Turnover comprises: (i) Service revenue from subscribers, net of value added tax which is accounted for on an earnings basis. Deferred income (which is included under the balance sheet category "Creditors: Amounts falling due within one year") represents the proportion of service revenue received which relates to future periods. (ii) Revenues in respect of charges for connecting customers to the relay systems, net of value added tax, is accounted for on a cash receipts basis. However, in instances where connection revenue from an applicant exceeds (IR Pound) 30 it is deducted from the capitalised connection cost rather than included in revenue. D. TANGIBLE FIXED ASSETS Additions to the relay systems, including the costs of connecting subscribers for the first time, are capitalised. The costs of disconnection and reconnection of subscribers are charged to the profit and loss account. Connection and reconnection fees are credited to the profit and loss account in the period in which they are received where they are less than (IR Pound) 30. Where they exceed (IR Pound) 30, they are deducted from the capitalised connection costs. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset, other than freehold land, on a straight line basis, over its expected useful life, as follows: Freehold Property 60 years Relay Systems 5 to 12 years Test Equipment 5 years Furniture & Fittings 5 years Computers 3/4 years Motor Vehicles 4/5 years Improvements to Leasehold Premises 5 years - 53 - CABLELINK LIMITED AND SUBSIDIARIES ACCOUNTING POLICIES YEAR ENDED 3 APRIL 1997 E. STOCKS Consumable stores are valued at cost, less a provision for obsolescence where appropriate. Cost consists of the invoiced price of supplies. F. TAXATION Corporation tax payable is provided on taxable profits at the current rate. Advance corporation tax payable on dividends paid and provided for in the period is written off except when recoverability against corporation tax payable is considered to be reasonably assured. Credit is taken for advance corporation tax written off in previous years when it is recoverable against a corporation tax liability. Tax deferred or accelerated is accounted for in respect of all material timing differences only to the extent that it is probable that a liability or asset will crystallise in the foreseeable future. Timing differences arise from the inclusion of items of income and expenditure in tax computations in periods different from those in which they are included in the financial statements. Provision is made at the rate which is expected to be applied when the liability or asset is expected to crystallise. Where this is not known the latest estimate of the long-term tax rate applicable has been adopted. G. BAD DEBTS All balances due for over 12 months, together with all balances on disconnected accounts are provided against in full. A provision of 20% is made against amounts due for more than 6 months and less than 12 months. H. FOREIGN CURRENCIES Normal trading activities denominated in foreign currencies are recorded in Irish pounds at actual exchange rates as of the date of transaction. Monetary assets and liabilities denominated in foreign currencies are reported at the rates of exchange prevailing at the balance sheet date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is reported as an exchange gain or loss in the profit and loss account. I. PENSIONS Pension costs are accounted for on the basis of charging the expected cost of providing pensions over the period during which the company benefits from employees' services. The effects of variations from regular cost are spread over the expected average remaining service lives of the members of the scheme. - 54 - CABLELINK LIMITED AND SUBSIDIARIES ACCOUNTING POLICIES YEAR ENDED 2 APRIL 1998 J. LEASES Expenditure on leases which are operating leases is charged to the profit and loss account on a basis representative of the benefit derived from the asset, normally on a straight line basis, over the lease period. - 55 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED PROFIT AND LOSS ACCOUNT YEAR ENDED 3 APRIL 1997 NOTES 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) TURNOVER 1 32,938,312 28,477,624 Operating Expenses (net) 28,247,684 24,558,192 ---------- ---------- OPERATING PROFIT 4,690,628 3,919,432 Investment Income 2 600,055 706,853 Interest Payable and Similar Charges 3 (122,624) (111,798) ---------- ---------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 4 5,168,059 4,514,487 Tax on Profit on Ordinary Activities 6 (1,863,446) (1,743,997) ---------- ---------- PROFIT FOR THE YEAR 7 3,304,613 2,770,490 Dividends 8 - - ---------- ---------- PROFIT FOR THE YEAR RETAINED 3,304,613 2,770,490 ========== ========== In arriving at the results for the financial year, all amounts above relate to continuing operations. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES The company has no recognised gains and losses other than those included in the profits above and, therefore, no separate statement of total recognised gains and losses has been presented. NOTE OF HISTORICAL COST PROFITS There is no difference between the profit on ordinary activities before taxation and the retained profit for the year stated above and their historical cost equivalents. STATEMENT OF MOVEMENT IN RETAINED PROFITS 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) RETAINED PROFIT AT 4 APRIL 1996 17,384,739 14,614,249 PROFIT FOR THE YEAR RETAINED 3,304,613 2,770,490 ---------- ---------- RETAINED PROFIT AT 3 APRIL 1997 20,689,352 17,384,739 ========== ========== ON BEHALF OF THE BOARD A Kane ) ) DIRECTORS K J Windle ) The notes on pages 53 to 55 and 60 to 71 form part of these Financial Statements Auditors' Report page 52. - 56 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS AT 3 APRIL 1997 NOTES 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) (IR POUND) (IR POUND) FIXED ASSETS Tangible Fixed Assets 9 30,509,331 24,456,369 CURRENT ASSETS Stocks 11 3,254,794 2,999,916 Debtors 12 1,798,265 1,565,201 Cash at Bank and in Hand 11,537,911 12,421,548 ---------- ---------- 16,590,970 16,986,665 CREDITORS Amounts falling due within one year 13 (16,790,188) (14,525,534) ---------- ---------- NET CURRENT (LIABILITIES) / ASSETS (199,218) 2,461,131 ---------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES 30,310,113 26,917,500 Provisions for Liabilities and Charges 16 (2,146,000) (2,058,000) ---------- ---------- NET ASSETS 28,164,113 24,859,500 ========== ========== CAPITAL AND RESERVES Called up Share Capital 17 86,980 86,980 Share Premium Account 18 7,124,448 7,124,448 Other Reserves 18 263,333 263,333 Profit & Loss Account 20,689,352 17,384,739 ---------- ---------- SHAREHOLDERS' FUNDS - EQUITY 22 INTERESTS 28,164,113 24,859,500 ========== ========== ON BEHALF OF THE BOARD A Kane ) ) DIRECTORS K J Windle ) The notes on pages 53 to 55 and 60 to 71 form part of these Financial Statements Auditors' Report page 52. - 57 - CABLELINK LIMITED AND SUBSIDIARIES COMPANY BALANCE SHEET AS AT 3 APRIL 1997 NOTES 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) (IR POUND) (IR POUND) FIXED ASSETS Tangible Fixed Assets 9 25,371,224 20,310,577 Financial Assets 10 601,100 601,100 ---------- ---------- 25,972,324 20,911,677 CURRENT ASSETS Stocks 11 2,807,130 2,643,376 Debtors: amounts due after one year 12 4,127,994 3,357,639 amounts due within one year 12 1,514,395 1,380,502 Cash at Bank and in Hand 11,531,282 12,415,258 ---------- ---------- 19,980,801 19,796,775 CREDITORS Amounts falling due within one year 13 (15,887,237) (13,949,216) ---------- ---------- NET CURRENT ASSETS 4,093,564 5,847,559 ---------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES 30,065,888 26,759,236 Provisions for Liabilities and Charges 16 (1,720,000) (1,650,000) ---------- ---------- NET ASSETS 28,345,888 25,109,236 ========== ========== CAPITAL AND RESERVES Called up Share Capital 17 86,980 86,980 Share Premium Account 18 7,124,448 7,124,448 Other Reserves 18 263,333 263,333 Profit & Loss Account 20,871,127 17,634,475 ---------- ---------- SHAREHOLDERS' FUNDS - EQUITY INTERESTS 28,345,888 25,109,236 ========== ========== ON BEHALF OF THE BOARD A Kane ) ) DIRECTORS K J Windle ) The notes on pages 53 to 55 and 60 to 71 form part of these Financial Statements Auditors' Report page 52. - 58 - CABLELINK LIMITED AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT YEAR ENDED 3 APRIL 1997 NOTES 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) CASH FROM OPERATING ACTIVITIES 19A 10,171,179 9,975,104 RETURNS ON INVESTMENT AND SERVICING OF FINANCE 19B 477,431 595,055 TAXATION (528,630) (1,681,997) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 19C (11,003,617) (7,355,833) ---------- ---------- Cash (Outflow) / Inflow Before Use of Liquid Resources (883,637) 1,532,329 MANAGEMENT OF LIQUID RESOURCES 19D 158,816 (806,604) ---------- ---------- (DECREASE)/INCREASE IN CASH IN YEAR (724,821) 725,725 ========== ========== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS (DECREASE)/INCREASE IN CASH IN YEAR (724,821) 725,725 Cash (Inflow)/Outflow from (Decrease)/Increase in Liquid Resources (158,816) 806,604 ---------- ---------- Movement in Net Funds in Year (883,637) 1,532,329 Net Funds at Start of Year 12,421,548 10,889,219 ---------- ---------- NET FUNDS AT END OF YEAR 20 11,537,911 12,421,548 ========== ========== The notes on pages 53 to 55 and 60 to 71 form part of these Financial Statements Auditors' Report page 52. - 59 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 1. TURNOVER Turnover is represented by revenue from subscribers and is generated in total in the Republic of Ireland. 2. INVESTMENT INCOME 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) Interest Receivable and Similar Income 600,055 706,853 ======= ======= 3. INTEREST PAYABLE AND SIMILAR CHARGES 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) On bank loans, overdrafts and other loans wholly repayable within five years 122,624 111,798 ======= ======= 4. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) Profit on ordinary activities before taxation is stated after charging/(crediting): Directors' emoluments: Fees 15,500 16,375 Other emoluments (including pension contributions) 105,643 93,839 --------- --------- 121,143 110,214 ========= ========= Depreciation of Tangible Fixed Assets 5,096,042 4,200,474 ========= ========= Auditors' Remuneration 15,000 15,000 ========= ========= - 60 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 5. EMPLOYEES The average number of employees (including executive directors) during the year, analysed by category, was as follows: NUMBERS EMPLOYED 3 APRIL 1997 4 APRIL 1996 Marketing & Customer Service 60 56 Operations 154 140 Administration 39 39 --- --- 253 235 === === The aggregate payroll costs of these employees were as follows: 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) Wages and Salaries 4,668,610 4,454,793 Social Welfare Costs 408,100 376,056 Other Pension Costs 244,916 237,373 --------- --------- 5,321,626 5,068,222 ========= ========= 6. TAX ON PROFIT ON ORDINARY ACTIVITIES 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) Corporation Tax @ 38% 1,775,446 1,742,997 Deferred Tax 88,000 1,000 --------- --------- 1,863,446 1,743,997 ========= ========= 7. PROFIT FOR FINANCIAL YEAR (IR Pound) 3,236,652 (1996: (IR Pound) 2,617,882) of this profit has been dealt with in the profit and loss account of Cablelink Limited, which, as permitted by Section 3 (2) of the Companies (Amendment) Act 1986, is not presented in these financial statements. 8. DIVIDENDS 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) PAID: Dividend on ordinary shares of (IR Pound) 1 each Nil Nil === === - 61 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 9. TANGIBLE FIXED ASSETS FURNITURE IMPROVEMENTS RELAY AND MOTOR TO LEASEHOLD FREEHOLD SYSTEMS EQUIPMENT FIXTURES COMPUTER VEHICLES PROPERTY PROPERTY TOTAL GROUP (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) COST At 4 April 1996 42,968,321 785,006 1,090,465 2,021,276 1,182,768 882,650 319,082 49,249,568 Additions 10,182,551 49,504 145,087 412,737 307,031 62,376 12,949 11,172,235 ---------- ------- --------- --------- --------- ------- ------- ---------- 53,150,872 834,510 1,235,552 2,434,013 1,489,799 945,026 332,031 60,421,803 Less: Disposals (173,745) (16,789) (1,408) - (175,692) - - (367,634) ---------- ------- --------- --------- --------- ------- ------- ---------- At 3 April 1997 52,977,127 817,721 1,234,144 2,434,013 1,314,107 945,026 332,031 60,054,169 ---------- ------- --------- --------- --------- ------- ------- ---------- DEPRECIATION At 4 April 1996 21,261,178 588,255 673,641 1,374,157 565,656 287,314 42,998 24,793,199 Charge for the Year 4,162,819 76,112 148,180 406,761 266,643 29,210 6,317 5,096,042 ---------- ------- --------- --------- --------- ------- ------- ---------- 25,423,997 664,367 821,821 1,780,918 832,299 316,524 49,315 29,889,241 Less: Disposals (173,745) (7,987) (241) - (162,430) - - (344,403) ---------- ------- --------- --------- --------- ------- ------- ---------- At 3 April 1997 25,250,252 656,380 821,580 1,780,918 669,869 316,524 49,315 29,544,838 ---------- ------- --------- --------- --------- ------- ------- ---------- NET BOOK AMOUNT AT 3 April 1997 27,726,875 161,341 412,564 653,095 644,238 628,502 282,716 30,509,331 ========== ======= ========= ========= ========= ======= ======= ========== 4 April 1996 21,707,143 196,751 416,824 647,119 617,112 595,336 276,084 24,456,369 ========== ======= ========= ========= ========= ======= ======= ========== The basis by which depreciation is calculated are stated in accounting policy Note D. - 62 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 9. TANGIBLE FIXED ASSETS FURNITURE IMPROVEMENTS RELAY AND MOTOR TO LEASEHOLD FREEHOLD SYSTEMS EQUIPMENT FIXTURES COMPUTER VEHICLES PROPERTY PROPERTY TOTAL COMPANY (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) (IR POUND) COST At 4 April 1996 35,883,404 685,385 1,019,850 1,895,806 1,069,628 691,397 319,082 41,564,552 Additions 8,469,133 43,412 141,263 394,230 277,993 31,904 12,949 9,370,884 ---------- ------- --------- --------- --------- ------- ------- ---------- 44,352,537 728,797 1,161,113 2,290,036 1,347,621 723,301 332,031 50,935,436 Less: Disposals - (16,789) (1,408) - (160,736) - - (178,933) ---------- ------- --------- --------- --------- ------- ------- ---------- At 3 April 1997 44,352,537 712,008 1,159,705 2,290,036 1,186,885 723,301 332,031 50,756,503 ---------- ------- --------- --------- --------- ------- ------- ---------- DEPRECIATION At 4 April 1996 18,049,686 510,463 625,236 1,287,967 512,715 224,910 42,998 21,253,975 Charge for the Year 3,427,717 67,592 141,175 386,224 240,466 19,705 6,317 4,289,196 ---------- ------- --------- --------- --------- ------- ------- ---------- 21,477,403 578,055 766,411 1,674,191 753,181 244,615 49,315 25,543,171 Less: Disposals - (7,987) (241) - (149,664) - - (157,892) ---------- ------- --------- --------- --------- ------- ------- ---------- At 3 April 1997 21,477,403 570,068 766,170 1,674,191 603,517 244,615 49,315 25,385,279 ---------- ------- --------- --------- --------- ------- ------- ---------- NET BOOK AMOUNT AT 3 April 1997 22,875,134 141,940 393,535 615,845 583,368 478,686 282,716 25,371,224 ========== ======= ========= ========= ========= ======= ======= ========== 4 April 1996 17,833,718 174,922 394,614 607,839 556,913 466,487 276,084 20,310,577 ========== ======= ========= ========= ========= ======= ======= ========== The basis by which depreciation is calculated are stated in accounting policy Note D. - 63 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 10. FINANCIAL ASSETS 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) INTEREST IN SUBSIDIARY COMPANIES: Cablelink Construction Limited 600,000 600,000 Cablelink Waterford Limited 100 100 Cablelink Galway Limited 1,000 1,000 ------- ------- 601,100 601,100 ======= ======= In the opinion of the directors, the value of the interest in subsidiary companies is not less than the amounts stated. 11. STOCKS GROUP AND COMPANY Stocks represent goods purchased for the construction and maintenance of the cable systems. The replacement cost of stocks did not exceed the valuation on a FIFO basis by a material amount. 12. DEBTORS: AMOUNTS FALLING DUE AFTER ONE YEAR 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) COMPANY Amounts Due by Group Companies (Note 15) 4,127,994 3,357,639 ========= ========= DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) GROUP Trade Debtors 1,201,745 966,899 Prepayments 269,723 284,138 Other Debtors 326,797 314,164 --------- --------- 1,798,265 1,565,201 ========= ========= COMPANY Trade Debtors 999,963 838,358 Prepayments 229,901 270,038 Other Debtors 284,531 272,106 --------- --------- 1,514,395 1,380,502 ========= ========= - 64 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) GROUP: Trade Creditors 726,871 1,106,730 Taxation and Social Welfare (Note 14) 2,680,482 2,593,004 Accruals 5,533,715 3,636,435 Deferred Income 7,849,120 7,189,365 ---------- ---------- 16,790,188 14,525,534 ========== ========== COMPANY: Trade Creditors 567,941 1,022,719 Taxation and Social Welfare (Note 14) 2,475,221 2,454,297 Accruals 5,134,984 3,328,956 Amounts owed to group companies (Note 15) 618,178 618,178 Deferred Income 7,090,913 6,525,066 ---------- ---------- 15,887,237 13,949,216 ========== ========== 14. TAXATION CREDITORS The taxation creditors included in taxation and social welfare are made up as follows: 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) GROUP: Corporation Tax 1,778,000 1,751,000 PAYE 107,515 76,980 PRSI 62,355 47,370 VAT 702,914 671,679 Construction Tax 19,952 23,738 Pension Refund Tax - 1,897 Withholding Tax - Professional Fees 9,746 20,340 ---------- ---------- 2,680,482 2,593,004 ========== ========== COMPANY: Corporation Tax 1,680,000 1,730,000 PAYE 99,707 69,980 PRSI 58,236 42,959 VAT 613,879 566,414 Construction Tax 13,653 22,734 Pension Refund Tax - 1,897 Withholding Tax - Professional Fees 9,746 20,313 ---------- ---------- 2,475,221 2,454,297 ========== ========== - 65 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 15. INTERCOMPANY BALANCES 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) COMPANY: Receivable: Cablelink Waterford Limited 1,491,942 832,140 Cablelink Galway Limited 2,636,052 2,525,499 --------- --------- 4,127,994 3,357,639 ========= ========= Payable: Cablelink Construction Limited 618,178 618,178 ========= ========= 16. PROVISIONS FOR LIABILITIES AND CHARGES 3 APRIL 1997 4 APRIL 1996 FULL FULL POTENTIAL POTENTIAL LIABILITY LIABILITY (IR POUND) (IR POUND) DEFERRED TAXATION: GROUP: Tax impact of timing differences: Capital Allowances/Depreciation 2,146,000 2,058,000 ========= ========= COMPANY: Tax impact of timing differences: Capital Allowances/Depreciation 1,720,000 1,650,000 ========= ========= 17. CALLED UP SHARE CAPITAL 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) AUTHORISED: 1,085,000 Ordinary Shares of (IR Pound) 1 each 1,085,000 1,085,000 ========= ========= ALLOTTED, CALLED UP AND FULLY PAID: 86,980 Ordinary Shares of (IR Pound) 1 each 86,980 86,980 ========= ========= - 66 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 18. CAPITAL RESERVES SHARE CAPITAL PREMIUM REDEMPTION ACCOUNT RESERVE FUND TOTAL (IR POUND) (IR POUND) (IR POUND) At 3 April 1997 7,124,448 263,333 7,387,781 ========= ======= ========= At 4 April 1996 7,124,448 263,333 7,387,781 ========= ======= ========= 19A. RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) Operating Profit 4,690,628 3,919,432 Depreciation Charges 5,096,042 4,200,474 (Profit) / Loss on Sale of Tangible Fixed Assets (145,387) 2,862 (Increase) in Stocks (254,878) (1,251,679) (Increase) in Debtors (233,064) (24,879) Increase in Creditors 1,017,838 3,128,894 ---------- --------- 10,171,179 9,975,104 ========== ========= 19B. RETURN ON INVESTMENTS AND SERVICING OF FINANCE 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) Interest Received 600,055 706,853 Interest Paid (122,624) (111,798) ---------- --------- NET CASH OUTFLOW FOR RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 477,431 595,055 ========== ========= 19C. CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) Purchases of Fixed Assets (11,172,235) (7,428,845) Proceeds from Disposals of Fixed Assets 168,618 73,012 ---------- --------- (11,003,617) (7,355,833) ========== ========= - 67 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 19D. MANAGEMENT OF LIQUID RESOURCES 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) Decrease / (Increase) in Term Deposits with Banks 158,816 (806,604) ------- ------- 158,816 (806,604) ======= ======= 20. ANALYSIS OF THE CHANGES IN NET FUNDS AT AT 4 APRIL 1996 CASH FLOWS 3 APRIL 1997 (IR POUND) (IR POUND) (IR POUND) Cash at Bank and in Hand (46,597) (724,821) (771,418) Term Deposits 12,468,145 (158,816) 12,309,329 ---------- ------- ---------- 12,421,548 (883,637) 11,537,911 ========== ======= ========== 21. COMMITMENTS FUTURE CAPITAL EXPENDITURE NOT PROVIDED FOR: 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) GROUP Contracted for 810,000 1,437,300 Authorised but not Contracted for 2,950,000 4,600,000 --------- --------- 3,760,000 6,037,300 ========= ========= COMPANY Contracted for 796,500 1,414,000 Authorised but not Contracted for 2,950,000 4,600,000 --------- --------- 3,746,500 6,014,000 ========= ========= - 68 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 21. COMMITMENTS (CONTINUED) OPERATING LEASE COMMITMENTS The group has commitments under operating leases to make payments totalling (IR Pound) 314,500 for the next year (company - (IR Pound) 270,500) (1996: group - (IR Pound) 262,900, company - (IR Pound) 220,500) as follows: LAND AND BUILDINGS GROUP COMPANY (IR POUND) (IR POUND) Expiring: Within one year - - Between two and five years - - More than five years 314,500 270,500 ------- ------- 314,500 270,500 ======= ======= The rentals payable under leases in respect of land and buildings are subject to renegotiation at various intervals specified in the leases. 22. STATEMENT OF MOVEMENTS IN SHAREHOLDERS' FUNDS 3 APRIL 1997 4 APRIL 1996 (IR POUND) (IR POUND) Profit for financial year 3,304,613 2,770,490 Opening shareholders' funds 24,859,500 22,089,010 ---------- ---------- CLOSING SHAREHOLDERS' FUNDS 28,164,113 24,859,500 ========== ========== 23. CONTINGENT LIABILITIES (i) The company has given irrevocable guarantees in respect of the liabilities, referred to in Section 5 (c) of the Companies (Amendment) Act 1986, of Cablelink Galway Limited, Cablelink Waterford Limited, Cablelink Construction Limited and Dublin Cablesystems Limited. In the opinion of the directors, no losses are likely to arise in respect of this contingency. (ii) In the past, the company has been required to place certain of its cables underground. No provision has been made in the financial statements for costs which may be incurred in doing similar work in the future. The amount of such costs cannot be estimated with any reasonable accuracy but are not currently expected to be significant. - 69 - CABLELINK LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 3 APRIL 1997 24. RELATED PARTY TRANSACTIONS (i) Included in cash and bank balances at the year end is (IR Pound) 2,512,478 which is held on deposit with Irish Telecommunications Investments plc ("ITI"). Interest earned on deposits with ITI during the year amounted to (IR Pound) 159k. (ii) During the year, the following related party transactions were undertaken with Telecom Eireann:- Purchase of Fixed Assets (IR Pound) 1,377k Duct Rental (IR Pound) 268k Accommodation (IR Pound) 142k Telephone Charges (IR Pound) 145k Other (IR Pound) 52k (iii)During the year, the following related party transactions were undertaken with RTE: Secondment of Personnel (IR Pound) 88k (iv) During the year, the following related party transactions were undertaken with Eircell: Telephone Charges (IR Pound) 96k 25. ULTIMATE PARENT COMPANY Bord Telecom Eireann, a company incorporated in the Republic of Ireland, is the ultimate parent company. The group in which the results of the company are consolidated is that headed by Bord Telecom Eireann. Copies of the group financial statements of Bord Telecom Eireann are available at 114 St. Stephen's Green West, Dublin 2. 26. GROUP COMPANIES NAME % OWNED PRINCIPAL ACTIVITY Cablelink Limited Cable and MDS Television Systems SUBSIDIARIES: Cablelink Waterford Limited 100% Cable and MDS Television Systems Cablelink Galway Limited 100% Cable and MDS Television Systems Dublin Cablesystems Limited 100% Non-trading Cablelink Construction Limited 100% Non-trading (A) All of the above companies are incorporated and operate in the Republic of Ireland. (B) All of the group's interest in subsidiary companies consist of ordinary share capital. (C) The registered office of the company and its subsidiaries is 10 Pembroke Place, Ballsbridge, Dublin 4. - 70 - Cablelink Limited and Subsidiaries Notes to the Financial Statements Year Ended 3 April 1997 27. SECTION 17 GUARANTEE Each of the Subsidiary companies listed in note 26 and consolidated into these financial statements have availed of the exemption from filing their individual financial statements set out in Section 17 of the Companies (Amendment) Act, 1986. 28. PENSION The group operates a contributory defined benefit pension scheme covering all of its permanent employees. The scheme's funds are administered by trustees and are held separately from those of the group. The total pension cost for the group was (IR Pound) 79,411 (1996: (IR Pound) 95,468). The pension cost is assessed in accordance with the advice of an independent qualified actuary using the aggregate method at triennial intervals. The latest actuarial valuation of the scheme was at 1 August 1995. The primary financial assumption underlying the actuarial valuation was that the scheme's investments will earn a real rate of investment return, over and above salary inflation and pension increases, of 1.5% per annum. The actuarial report is not available for public inspection. At the date of the latest actuarial valuation, the market value of the assets of the scheme was (IR Pound) 2,227,214 and the actuarial value of the assets was sufficient to cover 129% of the benefits which had accrued to members, after allowing for expected future increases in earnings. Contributions to an external pension scheme on behalf of seconded personnel were (IR Pound) 108,154 (1996: (IR Pound) 107,011). 29. COMPARATIVE FIGURES Certain comparative figures have been restated to ensure consistency with current year presentation. 30. APPROVAL OF FINANCIAL STATEMENTS The directors approved the financial statements on 7 May 1997. Auditors' Report page 52. - 71 - NTL (TRIANGLE) LLC AND SUBSIDIARIES UNAUDITED PRO FORMA FINANCIAL STATEMENTS On November 23, 1999, NTL (Triangle) LLC (formerly NTL (Bermuda) LLC) (the "Company") sold its 50% interest in Cable London PLC ("Cable London") for (UK Pound) 428,018,000 in cash to Telewest Communications plc. The price was established pursuant to the provisions of an agreement between the parties. On December 13, 1999, the Company acquired the entire issued and outstanding participations of Canarias Target S.L. ("Canarias") from its parent, NTL Communications Corp. ("NTL") for a cash payment equal to the UK pounds sterling equivalent of 535,180,000 Irish punts. Canarias is the parent entity of Cablelink Limited ("Cablelink"), Ireland's largest cable television provider, which was acquired by Canarias on July 9, 1999 for 535,180,000 Irish punts. The unaudited pro forma financial statements presented are based on the historical financial statements of the Company and Cablelink. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 1998 gives effect to the sale of Cable London and the acquisition of Cablelink as if these transactions had been consummated on January 1, 1998. In addition, the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 1998 gives effect to the sale by the Company in October 1998 of its 27.5% interest in Birmingham Cable Corporation Limited ("Birmingham") as if the sale occurred on January 1, 1998. The unaudited pro forma condensed consolidated balance sheet as of December 31, 1998 gives effect to the sale of Cable London and the acquisition of Cablelink as if these transactions had been consummated on that date. The unaudited pro forma statement of operations reflects the translation of all Irish punts denominated amounts at the average rate for the year ended March 31, 1999 of (IR Pound) 1.00 = (UK Pound) 0.86841. The unaudited pro forma condensed consolidated balance sheet reflects the translation of all Irish punts denominated amounts at the March 31, 1999 rate of (IR Pound) 1.00 = (UK Pound) 0.8462. The acquisition of Cablelink by the Company from NTL has been accounted for at NTL's historical cost in a manner consistent with a transfer of entities under common control which is similar to that used in a "pooling of interests." NTL accounted for its acquisition of Cablelink using the purchase method of accounting. Accordingly, the assets acquired and the liabilities assumed were recorded at their estimated fair values. The Company is unaware of events other than those disclosed in the unaudited pro forma adjustments that would require a material change to the preliminary purchase price allocation. However, a final determination of necessary purchase accounting adjustments will be made upon the completion of a study to determine the fair value of certain Cablelink assets and liabilities, including intangible assets. The actual financial position and results of operations may differ, perhaps significantly, from the unaudited pro forma amounts as a result of the final purchase accounting adjustments. The pro forma adjustments are based upon available information and assumptions that the Company believes were reasonable at the time made. The unaudited pro forma condensed consolidated financial statements do not purport to present the Company's financial position or results of operations had the sale of Cable London or the acquisition of Cablelink occurred on the dates indicated, nor are they necessarily indicative of the financial position or results of operations that may be achieved in the future. The accompanying unaudited condensed consolidated pro forma financial statements should be read in conjunction with the historical financial statements of the Company and Cablelink. - 72 - NTL (TRIANGLE) LLC AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) DECEMBER 31, 1998 (IN (UK POUND)000'S) NTL TRIANGLE CABLELINK (HISTORICAL) (HISTORICAL)(1) ADJUSTMENTS PRO FORMA ASSETS Current assets Cash and cash equivalents (UK Pound) 103,451 (UK Pound) (117) (UK Pound) (24,851)(F) (UK Pound) 78,483 Other current assets 11,007 2,704 13,711 ----------------------------------------------------------------------------------------- Total current assets 111,458 2,588 (24,851) 92,195 Investments in affiliates 28,080 (28,080)(A) - Property and equipment, net 321,822 36,859 358,681 Goodwill 453,150 (B) 453,150 Deferred charges, net 42,776 42,776 Other assets 5,188 - 5,188 ----------------------------------------------------------------------------------------- (UK Pound) 512,324 (UK Pound) 39,446 (UK Pound) 400,219 (UK Pound) 951,989 ========================================================================================= LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities Current portion of long-term debt (UK Pound) 1,966 - (UK Pound) 1,966 Other current liabilities 37,472 15,539 53,011 ----------------------------------------------------------------------------------------- Total current liabilities Long-term debt 259,104 259,104 Deferred tax 2,291 2,291 Shareholder's equity Acquired company equity 21,617 (21,617)(B) - Common stock 8 8 Additional capital 359,049 21,898 (B) 380,947 Accumulated deficit (145,275) 399,938 (A) 254,663 ----------------------------------------------------------------------------------------- Total shareholders' equity 213,782 21,617 400,219 635,618 ----------------------------------------------------------------------------------------- (UK Pound) 512,324 (UK Pound) 39,446 (UK Pound) 400,219 (UK Pound) 951,989 ========================================================================================= (1) As of March 31, 1999 - 73 - NTL (TRIANGLE) LLC AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE YEAR ENDED DECEMBER 31, 1998 (IN (UK POUND) 000'S) NTL TRIANGLE CABLELINK (HISTORICAL) (HISTORICAL)(1) ADJUSTMENTS PRO FORMA REVENUES (UK Pound) 78,587 (UK Pound) 35,169 (UK Pound) (938)(C) (UK Pound) 112,818 COSTS AND EXPENSES Operating 25,598 13,238 38,836 Selling, general, and administrative 34,971 12,008 46,979 Management fees 2,400 - 2,400 Depreciation and amortization 31,185 5,923 45,315 (D) 82,423 ---------------------------------------------------------------------------------------- 94,154 31,169 45,315 170,638 ---------------------------------------------------------------------------------------- OPERATING LOSS (15,567) 4,000 (46,253) (57,820) OTHER INCOME (EXPENSE) Interest expense (34,898) - 6,714 (E) (28,184) Investment income 9,054 473 (1,243)(F) 8,284 Equity in net losses of affiliates (19,696) - 19,696 (G) - Gain on sale of investments 110,497 - 391,228 (H) 501,725 Exchange losses (gains) and other (6,185) 89 (6,096) ---------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 43,205 4,562 370,142 417,909 Income taxes - (1,094) - (1,094) ---------------------------------------------------------------------------------------- INCOME BEFORE EXTRAORDINARY ITEM (UK Pound) 43,205 (UK Pound) 3,468 (UK Pound) 370,142 (UK Pound) 416,815 ========================================================================================= (1) For the year ended March 31, 1999 - 74 - NTL (TRIANGLE) LLC AND SUBSIDIARIES UNAUDITED PRO FORMA ADJUSTMENTS (IN (UK POUND) 000'S) Pro Forma Condensed Consolidated Balance Sheet A. Sale of Cable London Cash received (UK Pound) 428,018 Investment in Cable London 28,080 ------------------ Gain on sale (UK Pound) 399,938 ================== Since the Company is a pass-through entity for U.S. income tax purposes and is not subject to U.S. income tax, there is no income tax provision included in the pro forma adjustment. B. Purchase of Cablelink Cash paid ((IR Pound) 535,180 at March 31, 1999 exchange rate) (UK Pound) 452,869 Cablelink equity at March 31, 1999 21,617 ------------------ 431,252 NTL additional investment in the Company 21,898 ------------------ NTL historical goodwill (UK Pound) 453,150 ================== Pro Forma Condensed Consolidated Statement of Operations C. Reversal of consulting revenue received prior to the respective sales Birmingham (UK Pound) 531 Cable London 407 -------------- (UK Pound) 938 ============== D. Amortization of goodwill from Cablelink acquisition NTL historical goodwill (UK Pound) 453,150 Assumed amortization period 10 ------------------ (UK Pound) 45,315 ================== The intangible assets arising from NTL's acquisition of Cablelink may include customer lists, license acquisition costs and goodwill. The amount of each individual intangible is not currently determinable. The amounts of each intangible will be determined based on appraisals and other analyses. The amortization period may vary, although it is assumed in Pro Forma Adjustment D, that 10 years is a representative blended amortization period. E. Repayment of the Company's credit facility of (UK Pound) 100 million using a portion of the (UK Pound) 130 million proceeds from the sale of Birmingham Historical interest expense on the credit facility (UK Pound) 6,714 ================ - 75 - F. Interest income reduction to reflect the use of cash to acquire Cablelink Cash paid to acquire Cablelink (UK Pound) 452,869 Cash received from the sale of Cable London 428,018 ------------------ 24,851 Estimated interest rate on the Company's short term investments 5% ------------------ (UK Pound) 1,243 ================== G. Equity in net losses of affiliates prior to the respective sales Birmingham (UK Pound) 7,841 Cable London 11,855 ----------------- (UK Pound) 19,696 ================= H. Gain on sale of Cable London Cash received (UK Pound) 428,018 Investment in Cable London at January 1, 1998 36,790 ------------------ (UK Pound) 391,228 ================== Since the Company is a pass-through entity for U.S. income tax purposes and is not subject to U.S. income tax, there is no income tax provision included in the pro forma adjustment. - 76 -