<PAGE>
UNITED STATES SECURITES 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): November 25, 1997
Caribiner International, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State of Other Jurisdiction
of Incorporation)
1-14234 13-3466655
(Commission (IRS Employer
File Number) Identification No.)
16 West 61st Street, New York, NY 10023
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 541-5300
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
The Current Report on Form 8-K of Caribiner International, Inc. (the "Company"),
initially filed with the Securities and Exchange Commission (the "Commission")
on December 9, 1997, is hereby amended by this Form 8-K/A so as to comply with
the instructions to Item 7 of Form 8-K and the provisions of Rule 3-05 of
Regulation S-X. The historical financial statements for the most recent three
fiscal years and latest interim period preceding the acquisition of Visual
Action Holdings plc ("VAH") have been included in this Form 8-K/A. The
pro forma effects of the acquisition of VAH, as well as the acquisitions of
Video Supply Company, Inc. d/b/a Projexions Video Supply and Projexions/Video
Supply Company, Blumberg Communications, Inc., D&D Enterprises, Inc. d/b/a
Show Solutions, WCT Live Communication Limited and Bauer Audio Visual, Inc.,
on the Company's financial position at September 30, 1997 and on its results
of operations for the year ended September 30, 1997 are also presented in
this Form 8-K/A.
Item 7 is hereby amended in its entirety to read as follows:
Item 7. Financial Statements and Exhibits
The following financial statements and pro forma financial information are filed
in this report.
(a) Financial Statements of the Business Acquired
Audited 1996 Annual Report of Visual Action Holdings plc
<TABLE>
<S> <C>
(1) Directors' Report
(2) Auditor's Report
(3) Group Profit and Loss Account for the years ended
December 31, 1996 and 1995
(4) Group Balance Sheet as at December 31, 1996 and 1995
(5) Company Balance Sheet as at December 31 1996 and 1995
(6) Group Cash Flow Statement for the years ended
December 31, 1996 and 1995
(7) Notes to the Financial Statements
Audited 1995 Annual Report of Visual Action Holdings plc
(formerly known as Samuelson Group plc)
(1) Directors' Report
(2) Auditor's Report
(3) Group Profit and Loss Account for the year ended December 31, 1994
(4) Group Balance Sheet as at December 31, 1994
(5) Company Balance Sheet as at December 31, 1994
(6) Group Cash Flow Statement the year ended December 31, 1994
(7) Notes to the Financial Statements.
Unaudited Interim Report of Visual Action Holdings plc
(1) Summarized Consolidated Profit and Loss Account for the Six Months
Ended June 30, 1997 and 1996
(2) Summarized Consolidated Balance Sheet as at June 30, 1997 and 1996
(3) Summarized Consolidated Cash Flow Statement for the Six Months
Ended June 30, 1997 and 1996
(4) Notes to the Unaudited Interim Report
<CAPTION>
<S> <C>
(b) Unaudited pro forma financial information:
Unaudited Pro Forma Consolidated Financial Statements of Caribiner
International, Inc.
(1) Unaudited Pro Forma Consolidated Balance Sheet as of
September 30, 1997
(2) Unaudited Pro Forma Consolidated Statement of Operations for the
Year Ended September 30, 1997
(3) Notes to Unaudited Pro Forma Consolidated Financial Statements
</TABLE>
(c) Exhibits:
None.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, Caribiner International, Inc. has caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: February 6, 1998 CARIBINER INTERNATIONAL, INC.
By: /s/ Arthur F. Dignam
-------------------------------------------------
Name: Arthur F. Dignam
Title: Executive Vice President,
Chief Financial and Administrative Officer
3
<PAGE>
Visual Action Holdings plc (formerly, Samuelson Group plc) 1996 Annual Report
Year ended 31 December 1996 and 1995
REPORT OF THE AUDITORS
Report of the auditors to the members of Visual Action Holdings plc
We have audited the financial statements of Visual Action Holdings
plc set out on pages 5 to 32, which are expressed in pounds sterling. These
consolidated financial statements are the responsibility of the Company's
management. Our resppnsibility is to express an opinion on these consolidated
financial statemens based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United Kingdom, which are substantially the same as generally accepted
auditing standards in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statements
presentation. We believe our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements set our on pages 5 to
32 present fairly, in all material respects, the consolidated financial
position of Visual Action Holdings plc as at 31 December 1996 and 1995, and the
consolidated results of its operations and cash flows for each of the two years
in the period ended 31 December 1996 in conformity with gererally accepted
accounting principles in the United Kingdom.
The consolidated finanical statements have been prepared in accorcdance with
generally accepted accounting principles in the United Kingdom, which differ in
certain material respects from generally accepted accounting principles in the
United States. The effects of the significant differences in the determination
of retained profit and equity shareholders' funds are shown in note 37 to the
consolidated financial statements.
/s/ Coopers & Lybrand
Chartered Accountants and
Registered Auditors
London, England
25 February 1997
4
<PAGE>
Consolidated Profit and Loss Account
for the year ended 31 December 1996
<TABLE>
<CAPTION>
Notes 1996 1995
(pounds)000 (pounds)000
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Turnover
Continuing operations 86,415 76,184
Acquisitions 8,720 -
Total turnover 3,4,5 95,135 76,184
Cost of sales 5 (46,894) (35,337)
Gross profit 48,241 40,847
Operating expenses 2,5 (38,771) (32,899)
Operating profit
Continuing operations 8,788 7,948
Acquisitions 682 -
Total operating profit 5 9,470 7,948
Income from interests in associated undertakings 54 92
Interest receivable and similar income 7 62 125
Interest payable and similar charges 8 (1,275) (1,261)
Profit on ordinary activities before taxation 3,4,6 8,311 6,904
Tax on profit on ordinary activities 10 (1,745) (1,442)
Profit for the financial year 6,566 5,462
Dividends 12 (2,005) -
Retained profit for the year 26 4,561 5,462
- --------------------------------------------------------------------------------------------------
Earnings per ordinary share 13 14.3p 13.6p
</TABLE>
There is no material difference between the profit on ordinary activities before
taxation and the retained profit for the year stated above, and their historical
cost equivalents.
<TABLE>
<CAPTION>
Statement of Total Recognised Gains and Losses
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Profit for the financial year 4,561 5,462
Currency translation adjustments on consolidation
of overseas subsidiary undertakings (1,864) 240
Total gains and losses recognised since previous balance sheet date 2,697 5,702
- --------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Consolidated Balance Sheet
as at 31 December 1996
<TABLE>
<CAPTION>
Notes 1996 1995
(pounds)000 (pounds)000 (pounds)000 (pounds)000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed assets
Tangible assets 14 50,223 38,534
Investments 15 203 383
50,426 38,917
Current assets
Stocks 16 2,648 2,261
Debtors 17 19,298 14,023
Investments 18 14 219
Cash at bank and in hand 1,824 443
23,784 16,946
Creditors: amounts falling due within one year 19 (32,075) (21,875)
Net current liabilities (8,291) (4,929)
Total assets less current liabilities 42,135 33,988
Creditors: amounts falling due after
more than one year 20 (4,094) (4,070)
Provisions for liabilities and charges 21 (1,099) (1,067)
Net assets 36,942 28,851
- ---------------------------------------------------------------------------------------------------------------------------
Capital and reserves
Called up share capital 22 10,020 8,000
Share premium account 26 24,444 7,000
Profit and loss account 26 2,478 13,851
Equity shareholders' funds 27 36,942 28,851
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Tne financial statements on pages 5 to 32 were approved by the Board of
Directors on 25 February 1997 and were signed on its behalf by:
R K Ellis
Director
6
<PAGE>
Company Balance Sheet
as at 31 December 1996 and as at 23 February 1996
<TABLE>
<CAPTION>
Notes 31 December 1996 31 December 1995
(pounds)000 (pounds)000 (pounds)000 (pounds)000
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed assets
Tangible assets 14 73 -
Investments 15 32,628 15,000
32,701 15,000
Current assets
Stocks 16 139 -
Debtors 17 13,821 -
Cash at bank and in hand 2 -
13,962 -
Creditors: amounts falling due within one year 19 (10,695) -
Net current assets 3,267 -
Total assets less current liabilities 35,968 15,000
Provisions for liabilities and charges 21 (289) -
Net assets 35,679 15,000
- ----------------------------------------------------------------------------------------------------------------------------
Capital and reserves
Called up share capital 22 10,020 8,000
Share premium account 26 24,444 7,000
Profit and loss account 26 1,215 -
Equity shareholders' funds 35,679 15,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The financial statements on pages 5 to 32 were approved by the Board of
Directors on 25 February 1997 and were signed on its behalf by:
R K Ellis
Director
7
<PAGE>
Consolidated Cash Flow Statement
for the year ended 31 December 1996
<TABLE>
<CAPTION>
Notes 1996 1995
(pounds)000 (pounds)000 (pounds)000 (pounds)000
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash flow from operating activities 28 20,615 17,408
Returns on investments and
servicing of finance 29 (1,213) (1,136)
Taxation (2,607) (1,591)
Capital expenditure and financial investment 29 (20,494) (15,787)
Acquisitions and disposals 29 (18,325) -
Equity dividends paid (552) -
Cash outflow before use of liquid resources
and financing (22,576) (1,106)
Management of liquid resources 29 186 434
Financing - Issue of shares 29 19,464 -
- Increase in debt 29 (900) 390
18,564 390
Decrease in cash in the period (3,826) (282)
- ---------------------------------------------------------------------------------------------------------------------------
Reconciliation of net cash flow to movement in
net debt (see note 30)
Decrease in cash in the period (3,826) (282)
Cash inflow from increase in debt and
lease financing 900 (390)
Cash inflow from decrease in liquid
resources (186) (434)
Change in net debt resulting from cash flows (3,112) (1,106)
Loans and finance leases acquired with subsidiaries (1,832) -
New finance leases (173) (1,250)
Translation difference 530 (113)
Movement in net debt in the period (4,587) (2,469)
Net debt at 1 January 1996 (12,758) (10,289)
Net debt at 31 December 1996 (17,345) (12,758)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
Notes to the Financial Statements
for the year ended 31 December 1996
1 Principal accounting policies
The financial statements have been prepared in accordance with applicable
Accounting Standards in the United Kingdom. A summary of the more important
Group accounting policies is set out below.
Basis of accounting
The financial statements have been prepared in accordance with the historical
cost convention.
Basis of consolidation
The consolidated profit and loss account and balance sheet include the financial
statements of the Company and its subsidiary undertakings. The trading results
of subsidiaries acquired or disposed of during the period are consolidated for
the period of ownership. Intra-group sales and profits are eliminated fully on
consolidation.
On acquisition of a subsidiary, all of the subsidiary's assets and liabilities
that exist at the date of acquisition are recorded at their fair values
reflecting their condition at that date. All changes to those assets and
liabilities, and the resulting gains and losses, that arise after the group has
gained control of the subsidiary are charged to the post acquisition profit and
loss account.
Goodwill
Goodwill arising on consolidation represents the excess of the fair value of
the consideration given over the fair value of the identifiable net assets
acquired. Goodwill arising on the acquisition of subsidiaries and associates
is written off immediately against reserves.
Depreciation
Depreciation is calculated to write off the cost less estimated residual value
of tangible fixed assets by equal annual instalments over their expected useful
economic lives as follows:
Freehold buildings -2.5%
Short leasehold land and buildings -Over the period of the lease
Plant and hire equipment -15-33%
Office equipment, fixtures and fittings -10%
Vehicles -20%
Freehold land is not depreciated.
Profits or losses on the disposal of hire equipment which reflect normal
adjustments to depreciation previously charged are included in operating profit
as part of the normal depreciation charge.
Deferred taxation
Deferred taxation is provided using the liability method in respect of the
taxation effect of all material timing differences to the extent that it is
considered probable that liabilities will crystallise in the foreseeable future.
Finance and operating leases
Costs in respect of operating leases are charged on a straight line basis over
the lease term. Leasing agreements which transfer to the Group substantially all
the benefits and risks of ownership of an asset are treated as if the asset had
been purchased outright. The assets are included in fixed assets and the capital
element of the leasing commitments is shown as obligations under finance leases.
The lease rentals are treated as consisting of capital and interest elements.
The capital element is applied to reduce the outstanding obligations and the
interest element is charged against profit so as to give a constant periodic
rate of charge on the remaining balance outstanding at each accounting period.
Assets held under finance leases are depreciated over the shorter of the lease
terms and the useful lives of equivalent owned assets.
Foreign currencies
Assets and liabilities of subsidiaries in foreign currencies are translated into
sterling at rates of exchange ruling at the end of the financial year and the
results of foreign subsidiaries are translated at the average rate of exchange
for the year. Differences on exchange arising from the retranslation of the
opening net investment in subsidiary companies, and from the translation of the
results of those companies at average rate, are taken to reserves and are
reported in the statement of total recognised gains and losses. All other
foreign exchange differences are taken to the profit and loss account in the
year in which they arise.
Investments
Shares in subsidiary undertakings are stated at cost less provision for any
permanent diminution in the value of the investment.
9
<PAGE>
Stocks and work-in-progress
Stocks and work-in-progress are stated at the lower of cost and net realisable
value. Cost comprises purchase cost of goods, direct labour and those overheads
related to manufacture and distribution based on normal activity levels. Where
necessary provision is made for obsolete, slow moving and defective stocks.
Pension schemes
The company operates two pension schemes for the benefit of employees of the
Group and former employees of Eagle Trust p1c.
Defined benefit scheme
The regular cost of providing retirement pensions is charged to the profit and
loss account over the employees' service lives on the basis of a constant
percentage of earnings. Variations from regular cost, arising from periodic
actuarial valuations, are allocated over the expected remaining service lives of
current employees on the basis of a constant percentage of current and estimated
future earnings. The difference between the charge to the profit and loss
account and the contributions payable is shown as an asset or as a liability in
the balance sheet.
Defined contribution scheme
Contributions are charged to the profit and loss account on a payable basis.
Turnover
Turnover comprises sales of goods and services to external customers excluding
value added tax.
Cost of sales
Cost of sales represent directly attributable cost of sales.
Net operating expenses
Net operating expenses represent the cost of operations and administration,
including depreciation and profits and losses on disposal of hire equipment.
Research and development
Research and development expenditure is written off during the year in which it
is incurred.
2 Changes in accounting
Foreign currencies
Profits and losses of subsidiaries, branches and associates which have
currencies of operation other than sterling are translated into sterling at
average rates of exchange except for material exceptional items which are
translated at rates ruling on the date of transaction. Previously such profits
and losses were translated at the exchange rates ruling at the year end. The
accounting policy has been changed because the directors consider the new policy
gives a fairer presentation of the Group's results and cash flows as they arise
during the course of an accounting period. The effect of this change in
accounting policy on the results for the year ended 31 December 1996 is to
increase operating profit by (pounds)585,000 (1995 (pounds)114,000 decrease),
increase the interest charge by (pounds)69,000 (1995 (pounds)15,000 decrease)
and increase profit before tax by (pounds)516,000 (1995 (pounds)99,000
decrease).
The comparative results for the year ended 31 December 1995 have not been
restated as the effect of this change is not material.
Operating expenses
The nature of the Group's business is such that depreciation and certain other
infrastructure costs represent more of a fixed than a variable cost. Accordingly
the directors consider it more appropriate to disclose these as an element of
operating expenses rather than as cost of sales. The effect of this change in
accounting policy is to restate 1995 cost of sales, gross profit and operating
expenses by (pounds)12,565,000 (decrease), (pounds)12,565,000 (increase) and
(pounds)12,565,000 (increase) respectively.
Share capital and reserves
Share capital and reserves have been restated to reflect the acquisition of
Samuelson Group Plc by Visual Action Holdings plc which has been merger
accounted (see note 25).
10
<PAGE>
Notes to the Financial Statements
3 Segmental analysis by class of business
The analysis by class of business of the Group's turnover, profit before
taxation and net assets is set out below:
<TABLE>
<CAPTION>
Turnover 1996 1995
Inter- Inter-
Total segment External Total segment External
Class of business sales sales sales sales sales sales
(pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C> <C> <C>
Audio-visual 40,303 (213) 40,090 25,866 (53) 25,813
Broadcast video 10,812 (51) 10,761 9,423 (14) 9,409
Film services 44,998 (714) 44,294 41,656 (694) 40,962
96,113 (978) 95,135 76,945 (761) 76,184
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The acquisitions of Film Facilities Limited, Blitz Communications Limited and
S&S Holdings Ltd. during the year had the effect of increasing turnover for Film
services by (pounds)1,898,000 and Audio-visual by (pounds)6,822,000.
<TABLE>
<CAPTION>
Profit before taxation 1996 1995
Group Associated Group Associated
under- under- under- under
Class of business takings takings Total takings takings Total
(pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C> <C> <C>
Audio-visual 4,462 - 4,462 2,321 - 2,321
Broadcast video 2,730 - 2,730 2,561 - 2,561
Film services 3,894 54 3,948 4,366 92 4,458
11,086 54 11,140 9,248 92 9,340
Common costs (1,616) - (1,616) (1,300) - (1,300)
Profit before interest 9,470 54 9,524 7,948 92 8,040
Net interest payable (1,213) - (1,213) (1,136) - (1,136)
8,257 54 8,311 6,812 92 6,904
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The acquisitions of Film Facilities Limited, Blitz Communications Limited and
S&S Holdings Ltd. during the year had the effect of decreasing the profit from
Film services by (pounds)71,000 and increasing the profit from Audio-visual
by (pounds)715,000.
11
<PAGE>
<TABLE>
<CAPTION>
Net assets 1996 1995
Group Associated Group Associated
under- under- under- under
Class of business takings takings Total takings takings Total
(pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C> <C> <C>
Audio-visual 10,333 - 10,333 5,148 - 5,148
Broadcast video 6,711 - 6,711 5,985 - 5,985
Film services 19,898 - 19,898 17,485 233 17,718
36,942 - 36,942 28,618 233 28,851
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The acquisitions of Film Facilities Limited, Blitz Communications Limited and
S&S Holdings Ltd. during the year had the effect of increasing the net assets
attributable to Film services by (pounds)1,653,000 and Audio-visual by
(pounds)2,763,000.
4 Analysis by geographical area
The analysis by geographical area of the Group's turnover, profit before
taxation and net assets is set out below:
<TABLE>
<CAPTION>
Turnover 1996 1995
Sales by Sales by Sales by Sales by
Geographical segment destination origin destination origin
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
United Kingdom 29,504 32,897 24,546 27,071
France 8,312 8,334 7,961 8,146
Rest of Europe 1,103 - 961 -
Middle East 560 - 149 -
United States of America 44,922 44,330 33,605 33,030
Africa 73 - 454 -
Australasia and South East Asia 10,118 10,552 7,246 8,698
Far East 543 - 1,262 -
95,135 96,113 76,184 76,945
Inter-area sales - (978) - (761)
95,135 95,135 76,184 76,184
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The acquisitions of Film Facilities Limited, Blitz Communications Limited and
S&S Holdings Ltd. during the year had the effect of increasing sales by origin
in the United Kingdom by (pounds)3,272,000, in Australasia by (pounds)1,971,000
and in the United States of America by (pounds)3,587,000, and sales by
destination to the United Kingdom by (pounds)3,173,000, to Australasia and South
East Asia by (pounds)1,911,000, to the United States of America by
(pounds)3,731,000, to France by (pounds)11,000 and to the Rest of Europe by
(pounds)4,000.
12
<PAGE>
Notes to the Financial Statements
<TABLE>
<CAPTION>
Profit before taxation 1996 1995
Group Associated Group Associated
under- under- under- under
Geographical segment takings takings Total takings takings Total
(pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C> <C> <C>
United Kingdom 3,904 2 3,906 4,079 4,079
France 795 - 795 549 549
United States of America 4,792 - 4,792 2,951 - 2,951
Australasia and South East Asia 1,595 52 1,647 1,669 92 1,761
11,086 54 11,140 9,248 92 9,340
Common costs (1,616) - (1,616) (1,300) - (1,300)
Profit before interest 9,470 54 9,524 7,948 92 8,040
Net interest payable (1,213) - (1,213) (1,136) - (1,136)
8,257 54 8,311 6,812 92 6,904
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The acquisitions of Film Facilities Limited, Blitz Communications Limited and
S&S Holdings Ltd. during the year had the effect of increasing the profit before
interest and taxation attributable to the United Kingdom by (pounds)502,000,
and to the United States of America by (pounds)213,000 and decreasing the
profit before interest and taxation to Australasia and South East Asia by
(pounds)71,000.
<TABLE>
<CAPTION>
Net assets 1996 1995
Group Associated Group Associated
under- under- under- under
Geographical segment takings takings Total takings takings Total
(pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C> <C> <C>
United Kingdom 30,751 - 30,751 19,298 19,298
France 4,739 - 4,739 5,821 5,821
United States of America 15,381 - 15,381 12,589 - 12,589
Australasia and South East Asia 5,295 - 5,295 4,400 233 4,633
Net operating assets 56,166 - 56,166 42,108 233 42,341
Unallocated net assets/liabilities:
Loans and debentures (16,261) - (16,261) (11,465) - (11,465)
Current and deferred tax (1,510) - (1,510) (2,025) (2,025)
Dividend payable (1,453) - (1,453) - - -
36,942 36,942 28,618 233 28,851
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The acquisitions of Film Facilities Limited. Blitz Communications Limited and
S&S Holdings Ltd. during the year had the effect of increasing the net assets
attributable to the United Kingdom by (pounds)1,388,000, the United States of
America by (pounds)1,375,000 and Australasia and South East Asia by
(pounds)1,653,000.
13
<PAGE>
<TABLE>
<CAPTION>
5. Cost of sales and other operating Income and expenses
1996 1995
Continuing Acquisitions Total Continuing Acqusitions Total
(pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C> <C> <C>
Turnover 86,415 8,720 95,135 76,184 - 76,184
Cost of sales (41,829) (5,065) (46,894) (35,337) - (35,337)
Gross profit 44,586 3,655 48,241 40,847 - 40,847
Net operating expenses (35,798) (2.973) (38,771) (32,899) - (32,899)
Operating profit 8,788 682 9,470 7,948 - 7,948
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
6. Profit on ordinary activities before taxation
Profit on ordinary activities before taxation is stated after charging/(crediting): 1996 1995
(pounds)000 (pounds)000
<S> <C> <C>
Profit on disposal of tangible fixed assets (1,032) (668)
Depreciation:
Tangible owned fixed assets 13,019 10,486
Tangible fixed assets held under finance leases 658 476
Operating lease rentals:
Plant and hire equipment 339 222
Other 2,561 2,606
Research and development expenditure 13 (49)
Auditors' remuneration:
Audit services (Company (pounds)51,000: 1995: (pounds)42,000) 220 180
Other services to the Company and its UK subsidiaries 419 22
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
7. Interest receivable and similar income 1996 1995
(pounds)000 (pounds)000
<S> <C> <C>
Bank interest 17 23
Other 45 102
62 125
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
8. Interest payable and similar charges 1996 1995
(pounds)000 (pounds)000
<S> <C> <C>
On bank loans and overdrafts 1,151 1,144
On other loans 3 8
Finance lease charges 121 109
1,275 1,261
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Notes to the Financial Statements
<TABLE>
<CAPTION>
9. Staff numbers and costs
Staff costs (including executive directors) during the year amounted to: 1996 1995
(pounds)000 (pounds)000
<S> <C> <C>
Wages and salaries 26,274 20,627
Social security costs 3,361 2,919
Other pension costs 456 293
30,091 23,839
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
The average monthly number of persons (including executive directors)
employed by the Group during the year was:
1996 1995
Number Number
<S> <C> <C>
Technical support and maintenance 460 392
Administration 181 155
Distribution and warehouse 171 115
Sales 86 1ll
898 773
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Detailed disclosures of directors' individual remuneration and share options are given in the Report of the Remuneration
Committee on pages 10 to 13.
1996 1995
(pounds)000 (pounds)000
<S> <C> <C>
Fees 94 6
Salary payments (including benefits in kind, pension contributions
and annual incentive payments). 727 593
821 599
Compensation for loss of office* - 94
821 693
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
*1995 compensation included a contribution to pension plan.
Fees and other emoluments (excluding pension contributions) payable to the
chairman and the highest paid director are as follows:
1996 1995
Highest paid Highest paid
Chairman director Chairman director
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Fees and other emoluments 47 440 - 242
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
No director waived emoluments in respect of the year ended 31 December
1996. (1995: (pounds)Nil).
15
<PAGE>
<TABLE>
<CAPTION>
10. Tax on profit on ordinary activities 1996 1995
(pounds)000 (pounds)000
<S> <C> <C>
United Kingdom
Corporation tax at 33% (1995: 33%) 1,016 299
Double taxation relief (1,016) (299)
- -
Overseas taxation
Current 1,573 1,400
Deferred 61 (99)
Share of associated undertakings' taxation 18 43
Irrecoverable ACT 138 -
Prior year adjustment (45) 98
1,745 1,442
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There was no UK tax charge in 1996 due to capital allowances in excess of
depreciation reducing a deferred tax asset which has not been recognised.
To the extent that overseas profits are anticipated to be remitted to the
UK, it is expected that no additional charge to tax will arise
11. Profit/(loss) for the financial period
As permitted by section 230(3) of the Companies Act 1985, the parent
company's profit and loss account has not been included in these financial
statements. The parent company's profit for the financial period was
(pounds)1,215,000 (1 January 1996 to 23 February 1996: (pounds)Nil.
<TABLE>
<CAPTION>
12. Dividends and appropriations 1996 1995
(pounds)000 (pounds)000
<S> <C> <C>
Dividends on equity shares:
Ordinary - Interim paid of 1.2p per share (1995: Nil) 552 -
Ordinary - Final proposed of 2.9p per share (1995: Nil) 1,453 -
2,005 -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13. Earnings per ordinary share
The calculation of earnings per share on the net basis is based on the
profit on ordinary activities after taxation, namely (pounds)6,566,000
(1995: (pounds)5,462,000) and on 45,931,000 (1995: 40,000,000) Ordinary
Shares. The number of Ordinary Shares is calculated using the weighted
average number of Ordinary Shares in issue and ranking for dividend during
the year. 6,000,000 new shares were issued on flotation on 6 March 1996
and 4,098,544 new shares were issued on 4 October 1996 to finance the
acquisition of S&S Holdings Ltd. The number of shares in issue at 31
December 1996 was 50,098,544.
16
<PAGE>
Notes to the Financial Statements
<TABLE>
<CAPTION>
14. Tangible fixed assets Plant and Fixtures
Land and hire and
buildings equipment fittings Total
Group (pounds)000 (pounds)000 (pounds)000 (pounds)000
Cost
<S> <C> <C> <C> <C>
1 January 1996 2,328 94,118 8,488 104,934
Additions 167 21,014 1,331 22,512
Disposals - (3,783) (404) (4,187)
Exchange movement (47) (6,292) (630) (6,969)
Other movements - 190 (307) (117)
In respect of new subsidiaries 164 9,174 668 10,006
31 December 1996 2,612 114,421 9,146 126,179
- ------------------------------------------------------------------------------------------------------------------------------------
Depreciation
1 January 1996 851 60,124 5,425 66,400
Charge for the year 201 12,301 1,175 13,677
Disposals - (3,074) (389) (3,463)
Exchange movement (34) (4,173) (370) (4,577)
Other movements - 184 (300) (116)
In respect of new subsidiaries 78 3,616 341 4,035
31 December 1996 1,096 68,978 5,882 75,956
Net book value
31 December 1996 1,516 45,443 3,264 50,223
31 December 1995 1,477 33,994 3,063 38,534
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Plant and Fixtures
Land and hire and
buildings equipment fittings Total
Company (pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Cost
24 February 1996 - - - -
Additions - 34 - 34
Transfers 63 209 491 763
Disposals - (2) - (2)
31 December 1996 63 241 491 795
- ------------------------------------------------------------------------------------------------------------------------------------
Depreciation
24 February 1996 - - - -
Charge for the year - 22 2 24
Transfers 63 151 485 699
Disposals - (1) - (1)
31 December 1996 63 172 487 722
Net book value
31 December 1996 - 69 4 73
23 February 1996 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
14. Tangible fixed assets (continued)
<TABLE>
<CAPTION>
Analysis of net book amount of land and buildings Group Company
1996 1995 1996 23 February 1996
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Freehold 85 88 - -
Short leasehold 1,431 1,389 - -
1,516 1,477 - -
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Leased assets
Included in fixed assets are the following amounts relating to leased
plant and machinery under finance leases and hire purchase contracts:
Group Company
1996 1995 1996 23 February 1996
Cost (pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
31 December/23 February 4,231 3,976 - -
- ------------------------------------------------------------------------------------------------------------------------------------
Depreciation
31 December/23 February 1,523 2,003 - -
- ------------------------------------------------------------------------------------------------------------------------------------
Depreciation charged in year 658 476 - -
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Capital commitments
Capital expenditure contracted but not provided for: Group Company
1996 1995 1996 23 February 1996
Cost (pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Contracted but not provided for 840 2,158 - -
<CAPTION>
15. Fixed asset investments
Group Associated undertakings Other unlisted
Shares Loans shares Total
(pounds)000 (pounds)000 (pounds)000 (pounds)000
Cost
<S> <C> <C> <C> <C>
1 January 1996 233 150 29 412
Additions - - - -
Share of profit after taxation - -
Transfers (180) - - (180)
31 December 1996 53 150 29 232
- ------------------------------------------------------------------------------------------------------------------------------------
Provisions
1 January 1996 and 31 December 1996 - - 29 29
- ------------------------------------------------------------------------------------------------------------------------------------
Net book value
31 December 1996 53 150 - 203
- ------------------------------------------------------------------------------------------------------------------------------------
31 December 1995 233 150 - 383
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
Notes to the Financial Statements
<TABLE>
<CAPTION>
15. Fixed asset investments(continued) Subsidiary undertakings
Shares Loans Total
Company (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C>
Cost
24 February 1996 15,000 - 15,000
Additions 17,628 - 17,628
31 December 1996 32,628 - 32,628
-----------------------------------------------------------------------------------------------------------------------------
Provisions
24 February 1996 and 31 December 1996 - - -
-----------------------------------------------------------------------------------------------------------------------------
Net book value
31 December 1996 32,628 - 32,628
-----------------------------------------------------------------------------------------------------------------------------
23 February 1996 15,000 - 15,000
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Interests in group undertakings
The directors consider that to give full particulars of all subsidiary and
associate undertakings would lead to a statement of excessive length. The
following information relates to those subsidiary and associate
undertakings whose results or financial position, in the opinion of the
directors, principally affected the figures of the Group:
<TABLE>
<CAPTION>
Proportion of ordinary
shares held
Directly Indirectly Nature of business
Name of company % %
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Companies registered in England and Wales
Cine-Europe Limited 100 Hire of film cameras and ancillary equipment
Cinevideo Limited 100 Hire of broadcast video cameras and other equipment
Cine Holdings Limited 100 Holding company
Samfreight Limited 100 Specialised freight forwarding and travel agents
Samuelson Communications Limited 100 Hire of audio-visual, video, sound and special
equipment
Samuelson Film Service London Limited 100 Hire of film cameras and ancillary equipment
Samuelson Group Limited 100 Holding company
T.P. Sound Services Limited 100 Hire of theatrical and event sound equipment
Grip House Limited 100 Hire of film equipment and studio facilities
2 35 Research Plc 50 Design and manufacture of anamorphic camera lenses
Blitz Communications Limited 100 Holding company
Blitz Vision Limited 100 Hire of audio-visual, video, lighting and sound
equipment
Totem Technology Limited 100 Sales and installation of business communications
and display technology
Interactive Television Limited 100 Provision of multimedia and programming services
(b) Companies incorporated in Australia
John Barry Group Pty Limited 100 Film equipment sales
Samuelson Cases (Australia) Pty Limited 100 Manufacture of custom built equipment cases
Samuelson Film Service (Australia) Pty Limited 100 Hire of film cameras and ancillary equipment
Samuelson Group Pty Limited 100 Australian holding company
</TABLE>
18
<PAGE>
15. Fixed asset investments (continued)
<TABLE>
<CAPTION>
Proportion of ordinary
shares held
Directly Indirectly Nature of business
Name of company % %
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(c) Companies incorporated in France
Samuelson Alga Cinema SA 100 Hire of film cameras and ancillary equipment
Cinecam SARL 100 Hire of film cameras and ancillary equipment
(d) Companies incorporated in the
United States of America
Visual Action Holdings Inc. 100 Holding company
Audio Visual Headquarters Corporation 100 Hire of audio-visual equipment
Victor Duncan Inc. 100 Hire of film cameras, broadcast video cameras
and ancillary equipment
S&S Holdings Ltd. 100 Hire of audio-visual equipment
(e) Company incorporated in Singapore
Samuelson Film Service Pte Limited
Singapore 100 Hire of film cameras and ancillary equipment
(f) Company incorporated in New Zealand
Film Facilities Limited 100 Hire of film cameras and ancillary equipment
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
There is only one class of shares for each subsidiary and associated
undertaking.
All the above companies operated principally in their country of
incorporation or registration.
On 17 May 1996 the Group acquired the 70% it did not already own of Film
Facilities Limited (see note 24).
On 18 June 1996 the Group acquired the whole of the share capital of Blitz
Communications Limited (see note 24).
On 4 October 1996 the Group acquired the whole of the share capital of S&S
Holdings Ltd. (see note 24).
<TABLE>
<CAPTION>
16. Stocks Group Company
1996 1995 1996 23 February 1996
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Finished goods and goods for resale 2,648 2,261 139 -
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
17. Debtors Group Company
1996 1995 1996 23 February 1996
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Trade debtors 15,140 11,102 40 -
Amounts owed by group undertakings - 69 10,084 -
Other debtors 2,237 1,577 949 -
Corporation tax 483 - - -
Prepayments and accrued income 1,438 1,275 18 -
Dividends receivable - - 2,730 -
19,298 14,023 13,821 -
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Other debtors include amounts totalling (pounds)863,000 (31 December
1995: (pounds)525,000 Group; 23 February 1996: (pounds)Nil Company)
which are recoverable after more than one year.
19
<PAGE>
Notes to the Financial Statements
<TABLE>
<CAPTION>
18. Investments held as current assets Group Company
1996 1995 1996 23 February 1996
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Unlisted investments 14 33 - -
Short term deposits - 186 - -
14 219 - -
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
19. Creditors: amounts falling due within one year Group Company
1996 1995 1996 23 February 1996
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Bank loans and overdrafts (note 20) 14,333 8,718 7,481 -
Bills of exchange payable 156 186 - -
Obligations under finance leases and hire purchase
contracts 742 599 - -
Amounts received on account (3) 4 - -
Trade creditors 5,276 4,656 139 -
Corporation tax 1,141 1,278 348 -
Advance corporation tax 501 - 363 -
Other taxation and social security 1,905 1,675 169 -
Other creditors 1,289 1,308 13 -
Accruals and deferred income 5,282 3,451 729 -
Dividends payable 1,453 - 1,453 -
32,075 21,875 10,695 -
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
20. Creditors: amounts falling due after more than one year Group Company
1996 1995 1996 23 February 1996
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Bank loans and overdrafts 3,752 3,418 - -
Obligations under finance leases and hire purchase
contracts 342 652 - -
4,094 4,070 - -
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Group Company
1996 1995 1996 23 February 1996
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Bank loans and overdrafts
Amounts payable:
Within one year 14,333 8,718 7,481 -
Between one and two years 2,560 1,588 - -
Between two and five years 1,192 1,830 - -
18,085 12,136 7,481 -
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
20. Creditors: amounts falling due after more than one year (continued)
Included within creditors: amounts falling due within one year and
creditors: amounts falling due after more than one year at 31 December
1996 is (pounds)6,599,000 of secured bank loans and overdrafts
comprising the following:
<TABLE>
<CAPTION>
Subsidiary undertaking Amount of loan and Interest rate Security
bank overdraft
<S> <C> <C> <C>
Victor Duncan, Inc. US$4,966,000 Prime + 0.5% Floating charge over the fixed assets,
trade debtors and stocks of the company
Audio Visual Headquarters Corporation US$4,424,000 Prime + 0.5% Floating charge over the fixed assets
and trade debtors of the company
S&S Holdings Ltd. US$500,000 Prime + 0.5% Floating charge over the fixed assets
and trade debtors of the company
Film Facilities Limited NZ$1,972,000 10.50% Floating charge over all the assets of
the company
</TABLE>
Included within creditors: amounts falling due within one year and
creditors: amounts falling due after more than one year at 31 December
1995 were bank loans and overdrafts of the Group of (pounds)12,136,000
secured by floating charges over the assets of Samuelson Group Plc and
its subsidiary undertakings.
Obligations under finance leases and hire purchase contracts
<TABLE>
<CAPTION>
The net finance lease obligations to which the Group is
committed are: Group Company
1996 1995 1996 23 February 1996
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Within one year 742 599 - -
Between one and two years 293 478 - -
Between two and five years 49 174 - -
1,084 1,251 - -
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
21. Provisions for liabilities and charges Deferred Other
taxation provisions Total
(pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C>
Group
1 January 1996 747 320 1,067
Exchange adjustments (83) - (83)
Arising on acquisitions 187 - 187
Released/utilised in year (41) (31) (72)
31 December 1996 810 289 1,099
----------------------------------------------------------------------------------------------------------------------------
Company
24 February 1996 - - -
Transferred in - 693 693
Utilised in year - (404) (404)
31 December 1996 - 289 289
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Notes to the Financial Statements
<TABLE>
<CAPTION>
21. Provisions for liabilities and charges (continued) Group Company
1996 1995 1996 23 February 1996
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Other provisions comprise:
Provision for pension scheme funding 184 184 184 -
Provision for rent on leasehold property (see note 34) 105 136 105 -
289 320 289 -
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Deferred taxation
Deferred taxation provided in the financial statements and the amount
unprovided of the total potential liability, are as follows:
<TABLE>
<CAPTION>
Amount provided Amount unprovided
1996 1995 1996 1995
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Deferred taxation comprises:
Accelerated capital allowances and other timing differences 810 747 - -
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Group has an unrecognised deferred tax asset of (pounds)3,400,000
(1995: (pounds)4,800,000). The Company had no liability to deferred
taxation at 31 December 1996 or at 23 February 1996.
22. Called up share capital
<TABLE>
<CAPTION>
31 December 1996 23 February 1996
(pounds)000 (pounds)000
Authorised
<S> <C> <C>
61,000,000 (23 February 1996: 40,005,000) Ordinary Shares of 20p each 12,200 8,001
-----------------------------------------------------------------------------------------------------------------------------
Allotted, called up and fully paid
50,098,544 (23 February 1996: 40,000,000) Ordinary Shares of 20p each 10,020 8,000
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The share capital of the Group has been restated at 31 December 1995 to
reflect the acquisition of Samuelson Group Plc by the Company which has
been merger accounted (see note 25).
On 27 February 1996, the authorised share capital of the Company was
increased for the purpose of the Placing of the Ordinary Shares to the
Official List of the London Stock Exchange to (pounds)12,200,000 by the
creation of 20,995,000 Ordinary Shares of 20p each.
On 6 March 1996, the Company issued 6,000,000 Ordinary Shares of 20p each
by way of Placing. The nominal value of the Ordinary Shares issued was
(pounds)1,200,000 for a cash consideration net of issue expenses of
(pounds)10,968,000.
On 4 October 1996, the Company issued a further 4,098,544 Ordinary Shares
of 20p each by way of Placing. The nominal value of the Ordinary Shares
issued was (pounds)820,000 for a cash consideration net of issue
expenses of (pounds)8,496,000.
23. Options in shares of Visual Action Holdings plc
Options which had been granted upon flotation on 6 March 1996 for 20p
Ordinary Shares and are outstanding at 31 December 1996 are as follows
<TABLE>
<CAPTION>
Number of shares Subscription price per share Period of option
<S> <C> <C>
1,806,877 185p 6 March 1999 to 6 March 2006
--------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
24. Acquistions
On 17 May 1996 the Group acquired the 70% it did not already own of Film
Facilities Limited for a total cash consideration of (pounds)3,197,000.
The acquisition expenses amounted to (pounds)115,000.
On 18 June 1996 the Group acquired the whole of the issued share capital
of Blitz Communications Limited for a total consideration of
(pounds)5,500,000. The consideration was satisfied by cash amounting to
(pounds)5,250,000 and a deferred cash consideration of (pounds)250,000
contingent upon Blitz Communications Limited attaining a pre-agreed gross
profit as reported in the audited financial statements of the company for
the year ended 31 December 1996. The gross profit has been attained by
Blitz Communications Limited and the whole of the contingent cash
consideration has been accounted for in cost of investments and the
payment provided for in creditors due within one year. The expenses of
acquisition amounted to (pounds)92,000.
On 4 October 1996 the Group acquired 100% of the issued share capital of
S&S Holdings Ltd. for a total cash consideration of (pounds)8,500,000.
The consideration was financed by the issue and placing of 4,098,544
Ordinary Shares of 20p each. The expenses associated with the acquisition
amounted to (pounds)223,000.
The Group has used acquisition accounting for each of the above purchases.
Goodwill arising on the above acquisitions during the year has been
written off immediately against reserves.
The net assets of Film Facilities Limited at the date of acquisition are
set out below:
<TABLE>
<CAPTION>
Accounting
Fair value policy
Book value adjustments alignment Fair value
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Tangible fixed assets 1,593 - - 1,593
Current assets
Stocks 371 - - 371
Debtors 405 - - 405
Cash at bank and in hand 50 - - 50
Total assets 2,419 - - 2,419
Liabilities
Short-term creditors 353 - - 353
Bank overdraft 52 - - 52
Long-term creditors and provisions 221 - - 221
Net assets 1,793 - - 1,793
Post acquisition profits previously included in Group accounts (231)
Goodwill 1,853
3,415
----------------------------------------------------------------------------------------------------------------------------
Satisfied by
Cash 3,197
Acquisition expenses 115
3,312
Original investment in company 103
3,415
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
Notes to the Financial Statements
The net assets of Blitz Communications Limited at the date of acquisition are
set out below:
<TABLE>
<CAPTION>
Accounting
Fair value policy
Book value adjustments alignment Fair value
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Tangible fixed assets 1,425 (18) - 1,407
Current assets
Stocks 98 - - 98
Debtors 1,546 - (10) 1,536
Cash at bank and in hand 25 - - 25
Total assets 3,094 (18) (10) 3,066
Liabilities
Short-term creditors 1,359 10 - 1,369
Bank overdraft 392 - - 392
Long-term creditors and provisions 518 - - 518
Net assets 825 (28) (10) 787
Goodwill 4,805
5,592
- --------------------------------------------------------------------------------------------------------------
Satisfied by
Cash 5,250
Deferred contingent cash 250
Acquisition expenses 92
5,592
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Items of plant and equipment were revalued as at 30 June 1996 resulting in a
reduction in book value of (pounds)18,000. Debtors were adjusted to coincide
with the Group policy on the treatment of certain items as expensed when
incurred. Short-term creditors were increased to allow for the provision of
repairs to the company's premises on expiry of the lease.
24
<PAGE>
The net assets of S&S Holdings Ltd. at the date of acquisition are
set out below:
<TABLE>
<CAPTION>
Accounting
Fair value policy
Book value adjustments alignment Fair value
000 000 000 000
(pounds) (pounds) (pounds) (pounds)
<S> <C> <C> <C> <C>
Intangible fixed assets 124 - (124) -
Tangible fixed assets 3,480 (509) - 2,971
Current assets
Debtors 1,548 - - 1,548
Cash at bank and in hand 18 - - 18
Total assets 5,170 (509) (124) 4,537
Liabilities
Short-term creditors 954 146 - 1,100
Bank overdraft 543 - - 543
Long-term creditors and provisions 1,583 - - 1,583
Net assets 2,090 (655) (124) 1,311
Gooowill 7,412
8,723
- ----------------------------------------------------------------------------------------------
Satisfied by
Cash 8,500
Acquisition expenses 223
8,723
- ----------------------------------------------------------------------------------------------
</TABLE>
Intangible assets represent purchased goodwill which has been written off to
reserves to align the accounting policy with that of the Group.
The adjustments to tangible fixed assets represent the revaluation of hire
equipment.
The adjustments to short-term creditors are in respect of provisions for staff
bonuses earned to date of acquisition.
25
<PAGE>
Notes to the Financial Statements
The summarised profit and loss accounts and statements of total recognised gains
and losses for the above acquisitions for the period from the beginning of their
financial year up to the date of acquisition are as follows:
<TABLE>
<CAPTION>
Profit and loss account Film Blitz S&S
Facilities Communications Holdings
Limited Limited Ltd.
1 April 1996 1 January 1996 1 June 1996
to 31 May 1996 to 30 June 1996 to 4 Oct. 1996
(pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C>
Turnover 497 2,385 5,023
- ---------------------------------------------------------------------------------------------------------------
Operating profit 17 394 176
- ---------------------------------------------------------------------------------------------------------------
Exceptional items - - (403)
- ---------------------------------------------------------------------------------------------------------------
Profit/(loss) on sale of fixed assets 1 2 (30)
- ---------------------------------------------------------------------------------------------------------------
Profit/(loss) before tax 18 394 (242)
Taxation (8) (169) 83
Profit/(loss) after tax 10 225 (159)
Minority interests - - (27)
Profit/(loss) after tax and minority interests 10 225 (186)
- ---------------------------------------------------------------------------------------------------------------
Statement of total recognised gains and losses
Profit for the financial period 10 225 (186)
Currency translation differences - - -
Total gains and losses recognised since the last
annual report 10 225 (186)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The exceptional items included in the summarised profit and loss account of S&S
Holdings Ltd relate to bonus payments made to key employees as a result of the
sale of the company to Visual Action Holdings Plc.
The financial statements of Film Facilities Limited for the year ended 31 March
1996 showed profit after taxation and minority interests of (pounds)183,000.
The financial statements of Blitz Communications Limited for the year ended 31
December 1995 showed profit after taxation and minority interests of (pounds)
483,000.
The financial statements of S&S Holdings Ltd. for the year ended 31 May 1996
showed profit after taxation and minority interests of (pounds)577,000.
26
<PAGE>
Impact on cash flows
The above acquisitions' contributions to the Group's cash flows from
their respective dates of acquisition are set out below:
<TABLE>
<CAPTION>
Film Blitz Com- S&S
Facilities munications Holdings
Limited Limited Ltd.
(pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C>
Cash (outflow)/inflow from operating activities (120) 516 610
Returns on investments and servicing of finance - - -
Taxation 26 (242) (1)
Capital expenditure and financial investment (759) (166) (428)
Cash (outflow)/inflow before use of liquid resources and financing (853) 108 181
- --------------------------------------------------------------------------------------------------------------------------
Cash consideration including acquisition expenses 3,312 5,342 8,723
Cash at bank and in hand acquired (50) (25) (18)
Bank overdraft acquired 52 392 543
Net outflow of cash in respect of the purchase 3,314 5,709 9,248
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
25. Group reconstruction
Following a group reconstruction on 22 February 1996, Visual Action
Holdings Plc merged with Samuelson Group Plc and has accounted for
the combination using merger accounting. Consequently, the
consolidated financial statements show the combined companies
results and financial positions as if they had always been combined.
There were no adjustments required to achieve uniformity of
accounting policies. Visual Action Holdings Plc issued 39,999,990
Ordinary Shares of 20p each in consideration of the transfer to the
Company of the entire issued share capital of Samuelson Group Plc.
The fair value of this consideration was (pounds)15,000,000. The
consolidated profit on ordinary activities after taxation of
Samuelson Group Plc from 1 January 1996 to 22 February 1996 was
(pounds)108,000 (year ended 31 December 1995 (pounds)5,462,000).
The restatement of the opening consolidated reserves of Samuelson
Group Plc is shown below:
<TABLE>
<CAPTION>
Called up Share Profit and
share premium Merger loss
capital account reserve account
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
31 December 1995
As previously stated 4,471 8,607 1,006 14,767
Merger adjustments (4,471) (8,607) (1,006) (916)
Visual Action Holdings Plc entity reserves 8,000 7,000 - -
1 January 1996 as restated 8,000 7,000 - 13,851
- --------------------------------------------------------------------------------------------------------------
</TABLE>
26. Share premium account and reserves
Group
<TABLE>
<CAPTION>
Share Profit
premium and loss
account account
(pounds)000 (pounds)000
<S> <C> <C>
At 1 January 1996 as restated (see note 25) 7,000 13,851
Premium on issue of shares 17,687 -
Expenses of share issue (243) -
Exchange differences - (1,864)
Goodwill written off during the year - (14,070)
Retained profit for the year - 4,561
At 31 December 1996 24,444 2,478
- -----------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
Notes to the Financial Statements
26. Share premium account and reserves (contd)
<TABLE>
<CAPTION>
Share Prom
Premium and loss
account account
(pounds)000 (pounds)000
<S> <C> <C>
Company
At 24 February 1996 7,000 -
Premium on issue of shares 17,687 -
Expenses of share issue (243) -
Retained profit for the year - 1,215
At 31 December 1996 24,444 1,215
- -----------------------------------------------------------------------------------------------------------
27. Reconciliation of movement in shareholders' funds 1996 1995
(pounds)000 pounds)000
Profit for the financial year 6,566 5,462
Dividends (2,005) -
4,561 5,462
Other recognised gains and losses relating to the year (net) (1,864) 240
New share capital issued 2,020 -
Premium on issue of shares 17,687 -
Expenses of share issue (243) -
Goodwill acquired during the year (14,070) -
Net addition to shareholders' funds 8,091 5,702
Opening shareholders' funds 28,851 23,149
Closing shareholders' funds 36,942 28,851
- -----------------------------------------------------------------------------------------------------------
28. Reconciliation of operating profit to operating cash flows 1996 1995
(pounds)000 (pounds)000
Operating profit 9,470 7,948
Depreciation charges 13,677 10,962
Profit on disposal of fixed assets (1,032) (668)
(Increase) in stocks (63) (162)
(Increase) in debtors (2,258) (882)
Movements on inter-group balances 69 330
increase/(decrease) in creditors 783 (56)
(Decrease) in other provisions (31) (64)
Net cash inflow from operating activities 20,615 17,408
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
29. Analysis of cash flows for Headings netted In the cash flow statement
<TABLE>
<CAPTION>
1996 1995
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Returns on Investments and servicing of finance
Interest received 62 125
Interest paid (1,154) (1,152)
Interest element of finance lease rental payments (121) (109)
Net cash outflow for returns on Investments
and servicing of finance (1,213) (1,136)
- ----------------------------------------------------------------------------------------------------------------------------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (22,339) (16,864)
Sale of tangible fixed assets 1,845 1,077
Net cash outflow for capital expenditure
and financial investment (20,494) (15,787)
- ----------------------------------------------------------------------------------------------------------------------------------
Acquisitions and disposals
Purchase of subsidiary undertakings (17,385) -
Net overdrafts acquired with subsidiaries (940) -
Net cash outflow for acquisitions and disposals (18,325) -
- ----------------------------------------------------------------------------------------------------------------------------------
Management of liquid resources
Cash withdrawn from short term deposits 186 434
Net cash inflow from management of
liquid resources 186 434
- ----------------------------------------------------------------------------------------------------------------------------------
Financing
Issue of ordinary share capital 19,707 -
Expenses of share issue (243) -
19,464 -
Debt due within a year:
increase in short-term borrowings - 42
repayment of loan (128) (42)
Debt due beyond a year:
new secured loan - 1,086
Capital elements of finance lease rental repayments (772) (696)
(900) 390
Net cash inflow from financing 18,564 390
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
Notes to the Financial Statements
30. Analysis of net debt
<TABLE>
<CAPTION>
At Cash Acquisitions Other Exchange At
1 January Flow (excl. cash non-cash Movement 31 December
1996 and changes 1996
overdrafts)
(pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C> <C> <C>
Cash at bank and in hand 443 1,323 58 1,824
Overdrafrs (6,376) (5,149) (127) (11,652)
(3,826)
Debt due after one year (3,418) 128 (1,325) 339 524 (3,752)
Debt due within one year (2,342) (339) (2,681)
Finance leases (1,251) 772 (507) (173) 75 (1,084)
900
Current asset investments 186 (186)
Total (12,758) (3,112) (1,832) (173) 530 (17,345)
- ----------------------------------------------------------------------------------------------------------------------------------
31. Purchase of subsidiary undertakings
(pounds)000
Net assets acquired
Tangible fixed assets 5,937
Investments 34
Stocks 469
Debtors 3,223
Taxation recoverable 145
Cash at bank and in hand 94
Creditors (2,571)
Taxation payable (434)
Bank overdrafts (987)
Loans and finance leases (1,832)
Deferred taxation (187)
3,891
Post acquisition profits previously included in Group accounts (231)
Goodwill 14,070
17,730
- ----------------------------------------------------------------------------------------------------------------------------------
Satisfied by
Cash 17,377
Deferred contingent cash 250
Original investment in Film Facilities Limited (see note 24) 103
17,730
- ----------------------------------------------------------------------------------------------------------------------------------
30
<PAGE>
32. Contingent liabilities
Visual Action Holdings Plc and its UK subsidiary undertakings have entered
into bank cross guarantees in respect of bank borrowings of Visual Action
Holdings Plc and its UK subsidiary undertakings. At 31 December 1996 these
bank borrowings amounted to (pounds)9,670,000.
At 31 December 1995, Samuelson Group Plc and its UK subsidiary undertakings
had bank guarantees secured by first fixed and floating charges over the
assets of Samuelson Group Plc and its UK subsidiary undertakings in respect
of bank borrowings of Eagle Trust Plc and its UK subsidiary undertakings.
At 31 December 1995 these bank borrowings amounted to (pounds)28,539,000
for the Eagle Trust Plc group.
33. Related party transactions
The following transactions were entered into with related parties:
(a) On 28 February 1996 the Company, the Directors and Eagle Trust Plc
entered into an agreement relating to the placing of 46,000,000 Ordinary
Shares of 20p each in the Company. The agreement provided that Eagle Trust
Plc would be responsible for all the expenses of the placing except a
placing commission of (pounds)111,000 payable by the Company. The expenses of the
placing which Eagle Trust Plc was responsible for amounted to (pounds)3,580,000.
(b) Eagle Trust Plc agreed to fund a bonus of (pounds)1,250,000 in total
which was payable by the Company to certain employees of the Group on 6
March 1996. Of this bonus, (pounds)293,770 was paid to the executive
directors of the Company (as disclosed in the Report of the Remuneration
Committee on page 11) and the balance was paid to other employees of the
Group.
(c) Eagle Trust Plc has agreed to surrender tax losses of approximately
(pounds)4,000,000 to the Group for a consideration of (pounds)150,000. The
agreement was entered into by the Company with Eagle Trust Plc in December
1996.
Eagle Trust Plc, a company registered in England and Wales, was the
Company's ultimate parent undertaking until 6 March 1996. At 31 December
1996, (pounds)150,000 was included in creditors as being payable to Eagle Trust
Plc.
34. Financial commitments
(a) The Group is liable under leases on properties which are no longer
occupied for the Group's business as follows:
</TABLE>
<TABLE>
<CAPTION>
Lease expiry date Annual rental Details
<S> <C> <C> <C>
Lease A 2010 (pounds)126,500 Sublet at rental of (pounds)9O,500 p.a. until 1997
Lease B 2012 (pounds)30,900 Sublet rent free until 1 March 1996
and then at (pounds)27,425 p.a.
Lease C 2010 (pounds)410,000 Sublet on same annual rental until 2010
</TABLE>
Provision of (pounds)105,000 (1995: (pounds)136,000) has been made against Lease
A and Lease B (see note 21).
(b) The annual minimum lease payments under operating leases to which the
Group was committed at 31 December 1996 were as follows:
<TABLE>
<CAPTION>
1996 1995
Property Other Property Other
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Group
Lease expires
Within one year 216 18 196 53
Between two and five years 927 354 1,047 223
After five years 1,363 109 1,458 60
2,506 481 2,701 336
- ----------------------------------------------------------------------------------------------------------------------------------
Company
Lease expires
Within one year - - - -
Between two and five years - 15 - -
After 5 years 525 - - -
525 15 - -
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
Notes to the Financial Statements
35. Pensions
Defined contribution scheme
The Group operates a defined contribution scheme for its executives and UK
employees. The assets of the scheme are held in an independently administered
fund. The pension cost represents contributions payable by the Group to the fund
and amounted to (pounds)324,000 (1995: (pounds)296,000). Included in
prepayments in respect of the scheme are contributions totalling (pounds)Nil
(1995: (pounds)34,000).
Defined benefit scheme
The company operates a defined benefit pension scheme, 'The Samuelson
Group Plc 1991 Pension Plan', providing benefits based on final
pensionable salary. The assets of the scheme are held separately from
those of the Group, being invested with independent fund managers. The
contributions are determined by an independent qualified actuary on the
basis of triennial valuations using the projected unit method. The most
recent valuation was as at 1 May 1995. The assumptions which have the most
significant effect on the valuation are that the annual valuation rate of
interest will be 8.5%, the annual rate of salary increase will be 6.5% and
that present and future pension in excess of the guaranteed minimum
pension will increase at a rate of 4% per annum.
The actuarial valuations as at 1 May 1995 showed that the market value of the
scheme's assets was (pounds)4,785,874 representing 90% of the benefits that had
accrued to members after allowing for expected future increases in earnings. On
the advice of the scheme actuary the Company made contributions amounting to
(pounds)143,000 during the year. The pension charge in the profit and loss
account for the year was (pounds)128,000 (1995: (pounds)120,000) which
represents the regular cost including amortisation of the scheme's funding
deficiency. On a discontinuance basis the deficit amounted to approximately
(pounds)500,000.
36. Major non-cash transactions
During the year the Group entered into finance lease agreements and hire
purchase contracts in respect of fixed assets with a total capital value
at the inception of the leases of (pounds)173,000 (1995: (pounds)1,250,000).
Note 37. Differences between accounting principles generally accepted in the
United Kingdom and the United States.
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United Kingdom (UK GAAP), which
differ in certain material respects from generally accepted accounting
principles in the United States (US GAAP). The effects of the significant
differences in the determination of retained profit and equity shareholders'
funds are set out below.
Goodwill
Under UK GAAP goodwill arising on the acquisition of subsidiaries and associates
is written off immediately against reserves. Under US GAAP goodwill is
capitalised and amortised by charges against income over its estimated useful
economic life, subject to a maximum of forty years. For the purposes of the
reconciliations below, the useful life of goodwill has been taken to be 25
years.
Deferred Taxation
Under UK GAAP deferred taxation is provided using the liability method in
respect of the taxation effect of all material timing differences to the extent
that it is considered probable that liabilities will crystalise in the
foreseeable future. With respect to timing differences giving rise to a
deferred tax asset, under UK GAAP the asset is generally not recognised unless
recovery within the immediate term is certain. Under US GAAP, as set out in
Statement of Financial Accounting Standards No. 109, deferred taxation is
generally provided on a full liability basis and deferred tax assets are
recognised in full having regard to any required valuation allowance.
Proposed Dividends
Under UK GAAP ordinary dividends are provided for in the financial year in
respect of which they are proposed together with the related advance corporation
tax ("ACT") provision. Under US GAAP such dividends and the related ACT payable
thereon are not provided for until formally declared by the board of directors.
Year ended Year ended
31 December 1996 31 December 1995
(pounds)000 (pounds)000
----------------- ----------------
Retained profit under UK GAAP 4,561 5,462
Adjustments:
Goodwill amortisation (188) --
Deferred taxation (481) (166)
Proposed dividends 1,453 --
-------- --------
Net income as adjusted in accordance
with US GAAP 5,345 5,296
======== ========
As at As at
31 December 1996 31 December 1995
(pounds)000 (pounds)000
----------------- ----------------
Equity shareholders' funds under
UK GAAP 36,942 28,851
Adjustments:
Goodwill 13,882 --
Deferred taxation 5,458 5,939
Proposed dividends 1,453 --
-------- --------
Equity shareholders' funds as adjusted
in accordance with US GAAP 57,735 34,790
======== ========
Consolidated Statements of Cash Flows
The consolidated cash flow statements prepared in accordance with UK GAAP
present substantially the same information as that required under US GAAP. UK
GAAP and US GAAP differ, however, with regard to the classification of certain
items within the statements and as regards the definition of cash and cash
equivalents.
The categories of consolidated cash flow activity under US GAAP can be
summarised as follows:
Year ended Year ended
31 December 1996 31 December 1995
(pound)000 (pound)000
---------------- ----------------
Net cash provided by operating actiies 21,944 15,307
Net cash utilised by investing activities (38,633) (15,353)
Net cash provided by financing activities 18,012 390
Currency translation 58 (29)
-------- --------
Net increase in cash and cash equivalents 1,381 315
Cash and cash equivalents at beginning of year 443 128
-------- --------
Cash and cash equivalents at end of period 1,824 443
======== ========
32
<PAGE>
Report of the Remuneration Committee
Remuneration
The remuneration committee is chaired by Brian Smith and its other members are
David James, Shaun Lawson and Michael Guthrie. The committee reviews the
performance of and decides an overall remuneration package for executive
directors in order to attract and retain high quality executives capable of
achieving the Group's objectives. The package consists of basic salary,
benefits, share options, pensions and performance related bonus which is
dependent on the economic value added to the Group. The committee is also
responsible for administering the Executive Share Option Scheme and for
proposing all appointments to the Board.
In determining the remuneration package for 1996, the remuneration committee
has complied with Section A of the best practices provisions annexed to the
Listing Rules of the London Stock Exchange and confirms that it has given full
consideration to Section B of these provisions throughout the accounting period
since listing.
The fees for non-executive directors are determined by the Board within the
limits stipulated in the Articles of Association. The non-executive directors
are not involved in any discussions or decision about their own remuneration.
The individual components of the remuneration package are discussed below:
Basic salary and benefits: The salary and benefits are reviewed annually in the
context of individual and business performance. Benefits principally comprise a
car and private healthcare.
Share options: Options over 337,600 Ordinary Shares were issued to the executive
directors of the Group under the Executive Share Option Scheme on the listing of
the Group at an exercise price equal to the placing price of 185p. These options
are exercisable between March 1999 and March 2006. These options will not
normally be exercised unless, at the proposed date of exercise, the increase in
earnings per share of the Group over the period from the date of the grant of
the option to the date of exercise exceeds inflation over that period plus 3
per cent. for each complete accounting period of the Group during that time.
Pensions: Both executive directors are entitled to pension contributions from
the Group at the discretion of the remuneration committee to be paid into a
personal pension plan of their choice. No elements of remuneration other than
basic salary are pensionable.
Annual bonus scheme: The Group has established, for senior management, with
effect from 1st January 1996, the Visual Action Holdings plc Annual Bonus
scheme. The scheme is administered by the remuneration committee. Both of the
executive directors of the Group, R.K. Ellis and D.J. Fraser, participated in
the Scheme in 1996.
The amount of the bonus depends on the performance of the Group. The bonus is
calculated with reference to the economic value added to the Group (in the case
of the executive directors) or to the relevant operating subsidiary (in the case
of other senior management). Economic value added is determined by comparing the
return (i.e. trading profits) on the trading assets with the national cost of
capital invested in the Group.
Part of the bonus will be paid in cash with the balance being satisfied by an
investment award. For executive directors of the Group, 20 per cent. of the
bonus must be taken as an investment award. In addition, if the bonus exceeds 50
per cent of the executive director's basic salary, the excess over 50 per cent.
must be taken as an investment award. The maximum value of any bonus (including
the value of any related investment award and incentive award) may not exceed 70
per cent. of the participant's basic salary.
An investment award will consist of fully paid Ordinary Shares having a market
value at the time the award is made equal to the amount of bonus to be satisfied
by an investment award. The Committee has power to make an investment award of a
greater amount. The Ordinary Shares are held in trust by the trustee of the
Visual Action Employee Trust for a minimum period of three years. Dividends
paid on the Ordinary Shares during the restricted period will be paid to the
participant.
In addition, the Committee may make incentive awards. These will consist of
fully paid Ordinary Shares having a market value at the time the award is made
equal to 150 per cent. of the investment award. The Committee has power to make
an incentive award of a greater amount. The Ordinary Shares are held in trust by
the trustee of the Visual Action Employee Trust for a minimum period of three
years. Dividends paid on the Ordinary Shares during the restricted period will
be paid to the participant.
The Committee may specify performance targets which must be satisfied before
Ordinary Shares comprised in an incentive award may be released. For those
incentive awards made for 1996, the performance target is as follows. If, at the
end of the restricted period, the total shareholder return of the Group compared
with similar companies (as determined by the Committee) exceeds the median of
the comparator companies, 67 per cent. of the incentive award will be released.
If, at the end of the restricted period, the total shareholder return of the
Group places the Group in the upper quartile of the comparator companies, 100
per cent. of the incentive award will be released. For those purposes, total
shareholder return means the percentage increase in the value of shares assuming
dividends to have been reinvested.
33
<PAGE>
Ordinary Shares comprised in both an investment award and an incentive award
will normally be forfeited if the participant ceases to be employed by the Group
prior to the expiry of the restricted period other than due to retirement.
However, if a participant ceases, before the expiry of the restricted period, to
be employed by the Group by reason of death, injury, illness, redundancy or
disposal of the company or business in which he works, Ordinary Shares comprised
in the investment award and the incentive award will be released to the
participant irrespective of whether any performance targets have been satisfied.
If a participant ceases to be an employee of the Group for any other reason, the
Committee may allow the participant to retain his investment award and, subject
to any performance targets being satisfied, his incentive reward.
In the event of a take-over, reconstruction or winding up, Ordinary Shares
comprised in the investment award and the incentive award will be released to
the participant irrespective of whether any performance targets have been
satisfied.
Visual Action Employee Trust: The Visual Action Employee Trust is an employee
benefit trust established by trust deed, for the benefit of employees and former
employees of the Group and their dependants. The Trustee is independent of the
Group.
The Visual Action Employee Trust will acquire Ordinary Shares by subscription or
purchase to satisfy investment awards and incentive awards (as described above).
The funding for the acquisition of Ordinary Shares by the Trustee will be
provided by the Group.
The maximum number of unallocated Ordinary Shares which the Visual Action
Employee Trust may hold is limited to 5% of the issued share capital of the
Company. There are further restrictions which the Trustee is subject to in
respect of subscriptions for new Ordinary Shares as detailed in the trust deed.
As detailed above, Ordinary Shares comprised in an investment award and an
incentive award will normally be forfeited if the participant ceases to be
employed by the Group prior to the expiry of the restricted period other than
due to retirement, death, injury, illness, redundancy, takeover, reconstruction,
winding up or disposal of the company or business in which he works.
The cost of the Group of investment awards is charged to the profit and loss
account in the period in which the investment awards are earned. The cost to the
Group of incentive awards is recorded as an asset in the period in which the
incentive award is earned and amortised over three years, being the term of the
restricted period.
During the year ended 31 December 1996 no new Ordinary Shares had been
subscribed for by the Trustee and as at 31 December 1996 the Visual Action
Employee Trust held no Ordinary Shares.
Disposal bonus: Eagle Trust plc agreed to fund a disposal bonus totalling
(pounds)1,250,000 which was paid by Visual Action Holdings plc to certain
employees of the Group at listing. Of this bonus, (pounds)293,770 was paid to
the executive directors of the Group.
Directors remuneration
The remuneration is made up as follows:
<TABLE>
<CAPTION>
1996 1995
(pound)000 (pound)000
<S> <C> <C>
Fees 94 6
Other emoluments:
Basic salaries 229 232
Benefits 19 26
Performance related bonuses 129 239
Pension contributions 56 96
Disposal bonus 294 -
Compensation for loss of office - 94
821 693
- -------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
Report of the Remuneration Committee
Executive directors
The remuneration of executive directors is made up as follows:
<TABLE>
<CAPTION>
R.K. Ellis D.J. Fraser P.D. Davies
1996 1995 1996 1995 1996 1995
(pounds) (pounds) (pounds) (pounds) (pounds) (pounds)
<S> <C> <C> <C> <C> <C> <C>
Fees - - - - - 6,000
Basic Salary 130,000 90,000 98,800 95,000 - 47,000
Benefits 9,045 5,365 10,434 9,075 - 11,623
Performance related
bonuses
cash element 52,000 42,000 37,452 111,100 - 86,100
Performance related
bonuses
Investment and
incentive shares
element 39,000 - - - - -
Compensation for
loss of office - - - - 93,611
230,045 137,365 146,686 215,175 - 244,334
Pension contributions 29,500 20,250 26,873 26,842 - 48,717
259,545 157,615 173,559 242,017 - 293,051
Disposal bonus 180,682 - 113,088 - - -
440,227 157,615 286,647 242,017 - 293,051
- -------------------------------------------------------------------------------
</TABLE>
The pension contributions detailed above represent the contributions payable for
the year into a personal pension scheme of the directors' choice. In addition,
as part of the pension arrangements, the directors are entitled to life
assurance cover equal to four times basic salary. The amount of life assurance
premium paid for each director is as follows: RK Ellis - (pound)910 DJ Fraser -
(pound)692
The investment and incentive shares awarded will be held in trust by the trustee
of the Visual Action Employee Trust for a minimum period of three years.
Non-executive directors
<TABLE>
<CAPTION>
Fees Fees
1996 1995
(pound) (pound)
<S> <C> <C>
John Brian Smith 46,667 -
David Noel James 12,500 -
Paul Derek Davies 12,500 6,000
Michael Shaun Lawson 20,833 -
Garth Michael Guthrie - -
John Anthony Herring 1,250 -
93,750 6,000
- -------------------------------------------------------------------------------
35
<PAGE>
Directors' Interests
The interests of the directors and their immediate families and persons
connected with the directors for the purposes of section 346 of the Companies
Act 1985 (all of which are or will be beneficial) in the issued share capital of
the Company which have been notified by each director pursuant to section 325 of
the Companies Act 1985 at 31 December 1996 are as follows:
</TABLE>
<TABLE>
<CAPTION>
Number of Percentage of Issued Number of options over
Ordinary Shares Ordinary Share capital Ordinary Shares
<S> <C> <C> <C>
John Brian Smith 8,000 0.016% --
Robert Keith Ellis 20,000 0.040% 199,600
Donald John Fraser 2,000 0.004% 138,000
David Noel James -- -- --
Paul Derek Davies -- -- --
Michael Shaun Lawson 15,000 0.030% --
Garth Michael Guthrie -- -- --
John Anthony Herring -- -- --
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
There has been no change in the interests set out above between 31 December 1996
and 14 February 1997. No director had any interest in the issued share capital
of the Company at 1 January 1996. The options were granted to the directors on
6 March 1996 and there has been no movement in the number of options since that
date, except that all Mr. D.J. Frasers' options lapsed upon his resignation on
10 January 1997.
Directors' Service Agreements
The following service agreements, letters of appointment and consultancy
agreements have been entered into between the Directors and the Company:
<TABLE>
<CAPTION>
Name Position Term Basic Annual Fee or Salary
<S> <C> <C> <C>
J. Brian Smith Chairman To terminate at the conclusion of the AGM (pounds)40,000 pa
to receive the 1998 report and accounts
Robert K. Ellis Chief Executive Terminable by either party on 12 months' (pounds)130,000 pa
notice to expire on or after 26 March 1998
Donald J. Fraser Finance Terminable by the Company on 12 months (pounds)98,000 pa
Director notice and by Mr. Fraser on 6 months' notice
David N. James Non-executive Term of three years (pounds)15,000 pa
Derek Davies Non-executive To terminate at the conclusion of the AGM (pounds)15,000 pa
to receive the 1995 report and accounts
Shaun Lawson Non-executive Term of three years (pounds)25,000 pa
John A. Herring Non-executive Term of three years (pounds)15,000 pa
C. Michael Guthrie Non-executive Term of three years (pounds)15,000 pa
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The service agreements of Mr. Ellis and Mr. Fraser provide that their salaries
are subject to annual review by the remuneration committee but there is no
contractual entitlement to any increase in basic salary.
Under the terms of his letter of appointment, Mr. Smith is entitled to a daily
fee of (pounds)1,000 in addition to his annual fee if he provides more than 40
days service to the company in each year. Under the terms of their letters of
appointment, each of Mr. James, Mr. Davies, Mr. Guthrie and Mr. Herring is
entitled to a daily fee of (pounds)1,000 in addition to his annual fee if he
provides more than 12 days service to the company in each year. Under the terms
of the consultancy agreement between the Company and Lawson & Partners Limited,
Mr. Lawson's management company, Lawson & Partners Limited is entitled to a
daily fee of (pounds)1,000, in addition to his annual fee, if Mr. Lawson
provides more than 22 days service to the Company in each year. Each
non-executive director's appointment may be terminated early if he resigns as a
director, if he is removed as a director by the Company in general meeting or by
all the other directors or if he is required to retire by rotation in accordance
with the Company's Articles of Association and is not re-elected. No special
compensation arrangements apply if the appointment of any non-executive director
is terminated early.
36
<PAGE>
Visual Action Holdings plc (formerly, Samuelson Group plc)
1995 Annual Report
Year ended 31 December 1994
<TABLE>
<CAPTION>
Pages
<S> <C>
Auditors' report 4
Group profit and loss account 5-6
Group balance sheet 7
Company balance sheet 8
Group cash flow statement 9
Notes to the financial statements 10-37
</TABLE>
37
<PAGE>
Directors' report
for the year ended 31 December 1994
The directors present their report and the audited financial statements for the
year ended 31 December 1994.
Principal activities
The principal activities of the group remain the provision of equipment for hire
and services and sales of equipment to the film, television and presentation
industries.
Results and dividends
The group profit for the year after taxation amounted to (pounds)9,786,000 and
is dealt with on page 5.
The directors do not recommend the payment of a dividend.
Future developments
The directors intend to expand and develop the group.
Post balance sheet events
On 23 February 1996, the whole of the issued share capital of Samuelson Group
plc was acquired by Visual Action Holdings plc. Application has been made by
Visual Action Holdings plc to the London Stock Exchange for the whole of its
ordinary share capital issued and to be issued to be admitted to the Official
List.
Fixed assets
Details of changes in fixed assets are as set out in notes 11 and 12 to the
financial statements.
Research and development
The group has invested in the development of specialised equipment for use in
the film and television industries.
Directors
The following persons were directors during the year:
J B Smith (Chairman)
P D Davies
D J Fraser
D N James CBE
R K Ellis (Appointed 4 May 1995)
38
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Report of the auditors to the members of Visual Action Holdings plc
(formerly, Samuelson Group plc).
We have audited the consolidated financial statements of Visual Action
Holdings plc set out on pages 40 to 72, which are expressed in pounds
sterling. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United Kingdom, which are substantially the same as generally
accepted auditing standards in the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall consolidated financial statement presentation. We believe
our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements set out on pages 40
to 72 present fairly, in all material respects, the consolidated
financial position of Visual Action Holdings plc as at 31 December 1994,
and the consolidated results of its operations and cash flows for the
year then ended in conformity with generally accepted accounting principles in
the United Kingdom.
/s/ Coopers & Lybrand
Chartered Accountants and Registered Auditors
London, England
28 February 1996
39
<PAGE>
Group profit and loss account
for the year ended 31 December 1994
<TABLE>
<CAPTION>
Notes 1994
(pounds)000
<S> <C> <C>
Turnover
Continuing operations 65,604
Discontinued operations 2,270
-------
Total turnover 3,4,5 67,874
Cost of sales (39,830)
-------
Gross profit 28,044
Net operating expenses (20,812)
-------
Operating profit 3,5 7,232
Income from interests in associated undertakings 148
Profit on disposal of discontinued activities 26 1,606
Interest receivable and similar income 7 224
Interest payable and similar charges 8 (960)
-------
Profit on ordinary activities before taxation 6 8,250
Tax (charge)/credit on profit on ordinary activities 10 1,536
Profit on ordinary activities for the financial year 9,786
-------
Retained profit transferred to reserves 20 9,786
=======
</TABLE>
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.
40
<PAGE>
Group statement of total recognised gains and losses
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Profit for the financial year 9,786
Currency translation adjustments on consolidation
of overseas subsidiary undertakings 194
-----
Total gains and losses recognised since previous
balance sheet date 9,980
=====
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Group balance sheet
at 31 December 1994
Notes 1994
(pounds)000
<S> <C> <C>
Fixed assets
Tangible assets 11 31,415
Investments 12 337
-------
31,752
Current assets
Stocks 13 2,102
Debtors 14 13,258
Investments 15 620
Cash at bank and in hand 24 128
-------
16,108
Creditors: amounts falling due within
one year 16 (20,867)
-------
Net current liabilities (4,759)
-------
Total assets less current liabilities 26,993
Creditors: amounts falling due after
more than one year 17 (2,672)
Provisions for liabilities and charges 18 (1,172)
-------
Net assets 23,149
=======
Capital and reserves
Called up share capital 19 4,471
Share premium account 20 8,607
Merger reserve 20 1,006
Profit and loss account 20 9,065
-------
Equity shareholders' funds 21 23,149
=======
</TABLE>
The financial statements on pages 5 to 30 were approved by the board of
directors on 28 February 1996 and were signed on its behalf by:
D J Fraser
Director
42
<PAGE>
<TABLE>
<CAPTION>
Company balance sheet
at 31 December 1994
Notes 1994
(pounds)000
<S> <C> <C>
Fixed assets
Tangible assets 11 55
Investments 12 6,462
-------
6,517
Current assets
Debtors 14 23,060
Cash at bank and in hand 1
-------
23,061
Creditors: amounts falling due within
one year 16 (13,463)
-------
Net current assets 9,598
-------
Total assets less current liabilities 16,115
Creditors: amounts falling due after
more than one year 17 --
Provisions for liabilities and charges 18 (1,001)
-------
Net assets 15,114
=======
Capital and reserves
Called up share capital 19 4,471
Share premium account 20 8,607
Merger reserve 20 1,006
Profit and loss account 20 1,030
-------
Equity shareholders' funds 15,114
=======
</TABLE>
The financial statements on pages 5 to 30 were approved by the board of
directors on 28 February 1996 and were signed on its behalf by:
D J Fraser
Director
43
<PAGE>
<TABLE>
<CAPTION>
Group cash flow statement
for the year ended 31 December 1994
Notes 1994
(pounds)000
<S> <C> <C>
Net cash inflow from operating
activities 22 13,991
Returns on investments and servicing
of finance
Interest received 224
Interest paid (883)
Interest element of finance
lease rentals (89)
Dividend received from associated
undertaking 8
-------
Net cash outflow from returns on
investments and servicing of finance (740)
Taxation
UK corporation tax paid (7)
Overseas tax paid (1,252)
-------
Tax paid (1,259)
Investing activities
Purchase of tangible fixed assets (15,015)
Other acquisitions (81)
Purchase of fixed asset investments (250)
Sales of tangible fixed assets 984
Sale of business 26 4,000
-------
Net cash outflow from investing
activities (10,362)
-------
Net cash (outflow)/inflow 1,630
before financing
Financing:
New loans 1,618
Repayments of amounts borrowed (436)
Capital element of finance lease
repayments (512)
-------
Net cash inflow from financing 25 670
-------
(Decrease)/increase in cash and cash
equivalents 23 2,300
=======
</TABLE>
44
<PAGE>
Notes to the financial statements
for the year ended 31 December 1994
1 Principal accounting policies
The financial statements have been prepared in accordance with applicable
Accounting Standards in the United Kingdom. A summary of the more important
accounting policies, which have been applied consistently, is set out below.
Accounting convention
The financial statements have been prepared under the historical cost
convention.
Consolidation
The consolidated accounts comprise the accounts of the company and its
subsidiary undertakings. The trading results of undertakings acquired or
disposed of during the period are consolidated for the period of ownership.
Goodwill, being the excess of cost of acquisition over the fair value of net
tangible assets acquired, is written off directly to reserves.
Depreciation
Depreciation is calculated to write off the cost less estimated residual value
of tangible fixed assets by equal annual instalments over their expected useful
lives as follows:
Freehold buildings - 2.5%
Short leasehold land and buildings - Over the period of the lease
Plant and hire equipment - 15-33%
Office equipment, fixtures and fittings - 10%
Vehicles - 20%
Freehold land is not depreciated.
Profit or losses on the disposal of hire equipment which reflect normal
adjustments to depreciation previously charged are included in operating profit
as part of the normal depreciation charge.
Deferred taxation
Deferred taxation is provided using the liability method in respect of the
taxation effect of all timing differences to the extent that it is considered
probable that liabilities will crystallise in the foreseeable future.
45
<PAGE>
Leasing and hire purchase commitments
Assets obtained under finance leases and hire purchase contracts are capitalised
in the balance sheet and obligations to make future payments are recognised.
Interest charges are written off to the profit and loss account in the period in
which they are incurred. Rentals paid under operating leases are charged to
income on a straight line basis over the term of the leases.
Foreign currency translation
Assets and liabilities denominated in overseas currencies are translated at the
rates ruling at the balance sheet date. The trading results are also translated
into sterling at the rate of exchange ruling at the balance sheet date. Exchange
differences arising in respect of the revenue transactions in the accounting
period are included in the group profit and loss account. Other exchange
differences arising on retranslation of the opening net assets in the
investments in overseas subsidiaries are taken to reserves.
Investments
Shares in subsidiary undertakings are stated at cost less provision for any
permanent diminution in the value of the investment.
Stocks and work-in-progress
Stocks and work-in-progress have been valued at the lower of cost and net
realisable value. Cost comprises purchase cost of goods, direct labour and those
overheads related to manufacture and distribution based on normal activity
levels.
Pension schemes
The company operates two pension schemes for the benefit of employees of the
company and former employees of Eagle Trust plc.
Defined benefit scheme
The regular cost of providing retirement pensions is charged to the profit and
loss account over the employees' service lives on the basis of a constant
percentage of earnings. Variations from regular cost, arising from periodic
actuarial valuations, are allocated over the expected remaining services lives
of current employees on the basis of a constant percentage of current and
estimated future earnings. The difference between the charge to the profit and
loss account and the contributions payable is shown as an asset or as a
liability in the balance sheet.
Defined contribution scheme
Contributions are charged to the profit and loss account on a payable basis.
46
<PAGE>
Turnover
Turnover comprises sales of goods and services to external customers excluding
VAT.
Cost of sales
Cost of sales represent directly attributable cost of sales.
Net operating expenses
Net operating expenses represent the cost of operations and administration,
including depreciation and profit and loss on disposal of hire equipment.
Research and development
Research and development expenditure is written off during the year in which it
is incurred.
2 Basis of preparation of the accounts
On listing of Visual Action Holdings plc, the bank guarantees and first fixed
and floating charges entered into by the UK members of the Group in respect of
the ultimate parent company, Eagle Trust plc and its subsidiary undertakings
will be released and additional facilities will become available to the Group.
As a result, the directors consider that the Group constitutes a going concern.
Accordingly, the accounts have been prepared on a going concern basis.
3 Analysis of comparatives between continuing and discontinued operations
Continuing Discontinued Total
1994 1994 1994
(pounds)000 (pounds)000 (pounds)000
Turnover 65,604 2,270 67,874
Cost of sales (38,586) (1,244) (39,830)
------- ------- -------
Gross profit 27,018 1,026 28,044
Net operating expenses (20,048) (764) (20,812)
------- ------- -------
Operating profit 6,970 262 7,232
======= ======= =======
47
<PAGE>
4 Turnover
All turnover and profit is in respect of the group's activities in the film,
television and presentation industries. An analysis of turnover by destination
is as follows:
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
United Kingdom 23,333
France 7,093
Rest of Europe 747
Middle East 59
North America 28,285
South America --
Africa 56
Australasia 7,493
Far East 808
------
67,874
======
</TABLE>
An analysis of turnover by origin is as follows:
48
<PAGE>
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
United Kingdom 23,068
France 6,711
United States of America 27,376
Australia and South East Asia 8,449
Discontinued operations 2,270
------
67,874
======
</TABLE>
5 Segmental analysis
An analysis of operating profit by geographical market is as follows:
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
United Kingdom 3,229
France 584
United States of America 2,045
Australia and South East Asia 2,192
Discontinued operations 262
Central costs (1,080)
------
7,232
======
</TABLE>
An analysis of net assets by geographical market is as follows:
49
<PAGE>
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
United Kingdom 15,251
France 3,957
United States of America 10,095
Australia and South East Asia 4,883
-------
34,186
Less borrowings (11,037)
-------
23,149
=======
</TABLE>
An analysis of turnover by class of business is as follows:
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Film services 37,987
Broadcast video 7,776
Audio - visual 19,841
Discontinued operations 2,270
------
Total turnover 67,874
------
</TABLE>
An analysis of operating profit by class of business is as follows:
50
<PAGE>
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Film services 5,074
Broadcast video 1,663
Audio - visual 1,313
Discontinued operations 262
Central costs (1,080)
------
Total operating profit 7,232
------
</TABLE>
An analysis of net assets by class of business is as follows:
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Film services 16,235
Broadcast video 1,766
Audio - visual 5,148
------
Total net assets 23,149
------
</TABLE>
51
<PAGE>
6 Profit on ordinary activities before taxation
Profit on ordinary activities before taxation is stated after
charging/(crediting):
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Profit on disposal of fixed assets (565)
Depreciation:
Tangible owned fixed assets 9,117
Tangible fixed assets held under finance leases 388
Exceptional items included under net operating expenses:
Exceptional depreciation 368
Reorganisation provision released (297)
Hire of plant and machinery 4,016
Operating lease rentals:
Plant and hire equipment 243
Other 2,336
R&D expenditure 90
Rents receivable (net of expenses) (302)
Auditors' remuneration:
Audit services (company (pounds)42,000) 192
Non audit services to the company and its UK subsidiaries 24
=======
</TABLE>
7 Interest receivable and similar income
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Interest from parent undertaking 142
Bank interest 58
Other 24
---
224
===
</TABLE>
8 Interest payable and similar charges
52
<PAGE>
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
On bank loans and overdrafts wholly repayable
within five years 859
On other loans wholly repayable within five years 12
Finance lease charges 89
-----
960
=====
</TABLE>
53
<PAGE>
9 Staff numbers and costs
Staff costs (including executive directors) during the year amounted to:
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Wages and salaries 16,735
Social security costs 2,545
Other pension costs 351
------
19,631
======
</TABLE>
The average number of employees during the year was:
<TABLE>
<CAPTION>
1994
Number
<S> <C>
Technical support and maintenance 330
Administration 161
Distribution and warehouse 158
Sales 80
---
729
===
</TABLE>
Details of directors' remuneration are as follows:
54
<PAGE>
<TABLE>
<CAPTION>
Donald Derek
Fraser Davies Total
(pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C>
Emoluments 289 304 593
Pension contributions 24 30 54
--- --- ---
Total 1994 313 334 647
=== === ===
</TABLE>
The directors received an annual bonus based on a pre-determined target of
profit before tax. The percentage of the target reached determined the
percentage of the salary paid as a bonus.
None of the directors held any share options in Eagle Trust plc or Samuelson
Group plc during the period.
55
<PAGE>
No director waived emoluments in respect of the years ended 31 December 1994.
In the year ended 31 December 1994, Brian Smith and David James were paid by
Eagle Trust plc. In the future their remuneration as directors of the company
will be paid by the company.
10 Taxation
Taxation based on the profit for the year:
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
UK corporation tax at 33% 694
UK deferred tax 123
Overseas tax 1,395
Overseas deferred tax --
Shares of associated undertakings' taxation 76
------
2,288
Adjustment in respect of previous years:
UK corporation tax (3,921)
Overseas tax including deferred tax 97
------
Tax charge/(credit) (1,536)
======
</TABLE>
The UK corporation tax adjustment comprises a reversal of amounts charged in
respect of tax losses ceded by Eagle Trust plc.
56
<PAGE>
11 Tangible fixed assets
<TABLE>
<CAPTION>
Group
Plant and Fixtures
Land and hire and
buildings equipment fittings Total
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Cost
1 January 1994 2,138 67,041 6,696 75,875
Additions 150 14,159 1,286 15,595
Disposals (133) (2,663) (853) (3,649)
Exchange movement (16) (109) (92) (217)
Other movements -- 1,125 90 1,215
-------- -------- -------- --------
31 December 1994 2,139 79,553 7,127 88,819
-------- -------- -------- --------
Depreciation
1 January 1994 588 45,250 4,722 50,560
Charge for the year 173 8,466 854 9,505
Disposals (80) (2,299) (851) (3,230)
Exchange movement (8) (83) (45) (136)
Other movements -- 677 40 705
-------- -------- -------- --------
31 December 1994 673 52,011 4,720 57,404
-------- -------- -------- --------
Net book value
31 December 1994 1,466 27,542 2,407 31,415
======== ======== ======== ========
57
<PAGE>
11 Tangible fixed assets (continued)
Analysis of net book amount of land and buildings
</TABLE>
<TABLE>
<CAPTION>
Group
1994
(pounds)000
<S> <C>
Freehold 92
Short leasehold 1,374
-----
1,466
=====
</TABLE>
Leased assets
Included in the group fixed assets are the following amounts relating to leased
plant and machinery under finance leases and hire purchase contracts:
<TABLE>
<CAPTION>
Group
(pounds)000
<S> <C>
Cost
31 December 1994 3,164
=====
Depreciation
31 December 1994 1,634
=====
Depreciation charged in year 388
=====
</TABLE>
Capital commitments
Capital expenditure contracted but not provided for, and authorised but not
contracted for, for which no provision has been made in these accounts was as
follows:
<TABLE>
<CAPTION>
Group
1994
(pounds)000
<S> <C>
Contracted but not provided for 2,711
Authorised but not contracted for 1,522
=====
</TABLE>
58
<PAGE>
12 Fixed asset investments
Group
<TABLE>
<CAPTION>
Other
Associated undertakings unlisted
Shares Loans shares Total
(pounds)000 (pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C> <C>
Cost
1 January 1994 23 -- 29 52
Additions 25 225 -- 250
Share of profit after taxation 72 -- -- 72
Dividend paid (8) -- -- (8)
---- ---- ---- ----
31 December 1994 112 225 29 366
---- ---- ---- ----
Provisions
1 January 1994 -- -- -- --
---- ---- ---- ----
31 December 1994 -- -- 29 29
---- ---- ---- ----
Net book value
==== ==== ==== ====
31 December 1994 112 225 -- 337
==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Company
Subsidiary undertakings
Shares Loans Total
(pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C>
Cost
31 December 1994 8,361 7,084 15,445
======= ======= =======
31 December 1994 2,091 6,892 8,983
======= ======= =======
Net book value
======= ======= =======
31 December 1994 6,270 192 6,462
======= ======= =======
</TABLE>
59
<PAGE>
12 Fixed asset investments (continued)
The principal subsidiary undertakings and associated undertakings which are
included within the consolidation are as follows:
<TABLE>
<CAPTION>
Proportion of
ordinary shares held
Name of company Directly Indirectly Nature of business
(a) Companies registered in England % %
and Wales
<S> <C> <C> <C>
Cine-Europe Limited 100 16mm film cameras and ancillary
equipment
Cinevideo Limited 100 Broadcast video cameras and other
equipment
Cine Holdings Limited 100 Holding company
Samfreight Limited 100 Specialised freight forwarding agents
and travel service
Samuelson Communications Limited 100 Audio visual, video, sound and special
equipment
Samuelson Film Service London Limited 100 Film cameras and ancillary equipment
* Samuelson Presentations Limited 100 Computer-controlled lighting equipment
T P Sound Services Limited 100 Theatrical and event sound equipment
Grip House Limited 100 Film equipment and studio facilities
*Samuelson Media Limited 100 Staging for major musical events
2.35 Research Plc 50 Design and manufacture of anamorphic
camera lenses
* Company ceased trading from 1 April 1994
(b) Companies incorporated in Australia
John Barry Group Pty Limited 100 Audio visual, video and film equipment
sales
Samuelson Cases Australia Pty Limited 100 Custom built equipment cases
Samuelson Film Service (Australia)
Pty Limited 100 Film cameras and ancillary equipment
Samuelson Group Pty Limited 100 Australian holding company
(c) Companies incorporated in France
Samuelson Alga Cinema SA 100 Film cameras and ancillary equipment
Cinecam SA 100 Film cameras and ancillary equipment
(d) Companies incorporated in the United States of America
Samuelson Group Inc 100 United States holding company
Audio Visual Headquarters Corporation 100 Audio visual equipment
Victor Duncan Inc 100 Film cameras and ancillary equipment
(e) Company incorporated in Singapore
Samuelson Film Service Pte Limited
Singapore 100 Film cameras and ancillary equipment
(f) Company incorporated in New Zealand
Film Facilities Limited 30 Film cameras and ancillary equipment
</TABLE>
There is only one class of shares for each subsidiary and associated
undertaking.
60
<PAGE>
13 Stocks
<TABLE>
<CAPTION>
Group Company
1994 1994
(pounds)000 (pounds)000
<S> <C> <C>
Finished goods and goods for
resale 2,102 --
----- -----
2,102 --
===== =====
</TABLE>
14 Debtors
<TABLE>
<CAPTION>
Group Company
1994 1994
(pounds)000 (pounds)000
<S> <C> <C>
Trade debtors 9,950 26
Amounts owed by parent
undertaking 399 399
Amounts owed by subsidiary
undertakings -- 6,486
Other debtors 1,483 768
Prepayments and accrued income 1,426 78
Dividends receivable -- 15,303
------ ------
13,258 23,060
====== ======
</TABLE>
Other debtors include amounts totalling (pounds)525,000 which are recoverable
after more than one year.
15 Investments held as current assets
<TABLE>
<CAPTION>
1994
(pounds)
<S> <C>
Unlisted investments --
Short term deposits 620
---
620
===
</TABLE>
61
<PAGE>
16 Creditors: amounts falling due within one year
<TABLE>
<CAPTION>
Group Company
1994 1994
(pounds)000 (pounds)000
<S> <C> <C>
Bank loans and overdrafts
(note 17) 7,954 5,525
Current instalments of
other loans (note 17) 42 --
Bills of exchange payable 260 --
Obligations under finance leases
and hire purchase contracts 369 10
Trade creditors 4,693 31
Amounts owed to subsidiary
undertakings -- 6,893
Corporation tax 1,364 --
Other taxation and social security
costs 1,357 179
Other creditors 1,098 48
Accruals and deferred income 3,730 777
------ ------
20,867 13,463
====== ======
</TABLE>
17 Creditors: amounts falling due after more than one year
<TABLE>
<CAPTION>
Group Company
1994 1994
(pounds)000 (pounds)000
<S> <C> <C>
Bank loans 2,329 --
Other loans 45 --
Obligations under finance leases
and hire purchase contracts 298 --
----- ------
2,672 --
===== ======
</TABLE>
Bank loans and overdrafts of the group of (pounds)10,282,000 and the company of
(pounds)5,525,000 are secured by charges over assets of the company and its
subsidiary undertakings.
62
<PAGE>
17 Creditors: amounts falling due after more than one year (continued)
<TABLE>
<CAPTION>
Group Company
1994 1994
(pounds)000 (pounds)000
<S> <C> <C>
Bank loans and overdrafts
Amounts payable:
Within one year 7,954 5,525
Between one and two years 924 --
Between two and five years 1,405 --
------ ------
10,283 5,525
====== ======
Other loans
Amounts payable:
Within one year 42 --
Between one and two years 42 --
Between two and five years 3 --
------ ------
87 --
------ ------
AVHQ landlord loan repayable
in instalments under 5 years
at an interest rate of 10.75% 87 --
====== ======
</TABLE>
Obligations under finance leases and hire purchase contracts
63
<PAGE>
<TABLE>
<CAPTION>
Group Company
1994 1994
(pounds)000 (pounds)000
<S> <C> <C>
Amounts payable:
Within one year 369 10
Between one and two years 228 --
Between two and five years 70 --
----- -----
667 10
===== =====
</TABLE>
18 Provisions for liabilities and charges
<TABLE>
<CAPTION>
Deferred Other
taxation provisions Total
(pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C>
Group
1 January 1994 607 691 1,298
Exchange adjustments 38 -- 38
Utilised in year -- (99) (99)
Released to profit and
loss account -- (297) (297)
Charged to profit and
loss account 143 89 232
------ ------ ------
31 December 1994 788 384 1,172
====== ====== ======
</TABLE>
64
<PAGE>
18 Provisions for liabilities and charges (continued)
<TABLE>
<CAPTION>
Deferred Other
taxation provisions Total
(pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C>
Company
1 January 1994 --
Utilised in year --
------ ------ ------
31 December 1994 -- 1,001 1,001
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Group Company
1994 1994
(pounds)000 (pounds)000
<S> <C> <C>
Other provisions comprise:
Provision for future
support required by -- 617
subsidiaries
Provision for pension scheme
funding 184 184
Provision for rent on
disused property 200 200
----- -----
384 1,001
===== =====
</TABLE>
Deferred taxation
<TABLE>
<CAPTION>
Amount provided Amount unprovided
1994 1994
(pounds)000 (pounds)000
<S> <C> <C>
Deferred taxation comprises:
Accelerated capital allowances
and other timing differences 788 --
===== =====
</TABLE>
The group has an unrecognised deferred tax asset of (pounds)4.8 million.
The company had no liability to deferred taxation at 31
December 1994.
65
<PAGE>
19 Share capital
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Authorised
28,500,000 deferred shares of 20p each 5,700
1,000 ordinary shares of US$1 each 1
-----
5,701
=====
Allotted, issued and fully paid
22,350,694 deferred shares of 20p each 4,470
1,000 ordinary shares of US$1 each 1
-----
4,471
=====
</TABLE>
In 1991 the share capital of the company was reorganised such that the
authorised share capital was increased by US$1,000 and 1,000 shares of US$1 each
were issued for cash to the holders of the ordinary shares of (pounds)1 each.
The ordinary shares of (pounds)1 each were converted into deferred shares. The
deferred shares have the following terms:
o no right to participate in any dividend declared by the company;
o on a liquidation, reduction of capital or otherwise, the right to
receive the amount paid up on the shares after the holders of the
ordinary shares have received the sum of (pounds)40,000 per ordinary
share;
o no right to receive notice of, or attend, or vote at any General
Meeting of the Company; and
o no right to receive any allotment of any shares of the company.
The rights of the US$ shares are the same as the former ordinary shares.
These transactions were recorded in the books of account during 1994.
66
<PAGE>
<TABLE>
<CAPTION>
20 Reserves
Group and Company
1994
(pounds)000
Share premium account 8,607
=====
Group Company
1994 1994
(pounds)000 (pounds)000
<S> <C> <C>
Profit and loss account:
Balance 1 January 1994 (1,010)
Retained profit for the year 9,786
Surplus arising on acquisition
of subsidiary undertaking 95
Currency translation adjustments on
consolidation of overseas
subsidiary undertakings 194 --
------ ------
Balance 31 December 1994 9,065 1,030
====== ======
Merger reserve 1,006 1,006
====== ======
</TABLE>
No profit and loss account is presented for the holding company as allowed by
Section 230 of the Companies Act 1985. A profit of (pounds)16,810,000 has been
dealt with in the financial statements of the holding company.
21 Reconciliation of movement in shareholders' funds
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Profit for the year 9,786
Other recognised gains and losses relating to the year 194
Surplus arising on acquisition of subsidiary undertaking 95
Opening shareholders' funds 13,074
------
Closing shareholders' funds 23,149
======
</TABLE>
67
<PAGE>
22 Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Operating profit 7,232
Depreciation charges 9,505
(Profit) on disposal of fixed assets (565)
Amounts written off investments 29
(Increase) in stocks (10)
(Increase)/decrease in debtors 960
Movements on inter-group balances (1,832)
Decrease) in creditors (1,002)
(Decrease) in other provisions (326)
-------
Net cash inflow from operating activities 13,991
=======
</TABLE>
23 Analysis of changes in cash and cash equivalents during the year
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
1 January 1994 (7,389)
Foreign exchange rate adjustments 87
Net cash inflow/(outflow) 2,300
------
31 December 1994 (5,002)
======
</TABLE>
24 Analysis of balance of cash and cash equivalents
68
<PAGE>
<TABLE>
<CAPTION>
1994
(pounds)000
<S> <C>
Cash at bank and in hand 128
Short term deposits 620
Bank overdrafts (5,750)
------
(5,002)
======
</TABLE>
25 Analysis of changes in financing during the year
<TABLE>
<CAPTION>
HP and
Share finance lease
capital Loans obligations
(pounds)000 (pounds)000 (pounds)000
<S> <C> <C> <C>
1 January 1994 4,471 3,573 685
Foreign exchange rate adjustments -- (135) 13
Cash inflow/(outflow) from financing -- 1,182 (512)
Inception of finance lease contracts -- -- 481
------ ------ ------
31 December 1994 4,471 4,620 667
====== ====== ======
</TABLE>
69
<PAGE>
26 Disposal of discontinued operations
1994
(pounds)000
Net assets disposed of:
Fixed assets (shown as current assets) 2,225
Debtors 169
-----
2,394
Profit on disposal 1,606
-----
Disposal proceeds 4,000
=====
Satisfied by:
Cash 4,000
=====
Discontinued operations disposed of during 1994 contributed (pounds)1,611,000
to the group's net operating cash flows.
27 Contingent liabilities
The company and its United Kingdom subsidiary undertakings have entered into
bank guarantees secured by first fixed and floating charges over assets of the
company and its UK subsidiary undertakings in respect of bank borrowings of the
ultimate parent company and its UK subsidiary undertakings. At 31 December 1994
these bank borrowings amounted to (pounds)44,293,000 for the group and
(pounds)43,679,000 for the company.
70
<PAGE>
28 Financial commitments
(a) During 1994 an overseas subsidiary entered into an agency agreement
requiring minimum commission payments of (pounds)450,000 to be made in
the year to 31 March 1994 increasing to (pounds)503,000 per annum in
the year to 31 March 1995 and (pounds)560,000 per annum in the year to
31 March 1996.
(b) The group is liable under leases on properties which are no longer
occupied for the group's business as follows:
<TABLE>
<CAPTION>
Lease expiry date Annual rental Details
<S> <C> <C> <C>
Lease A 2010 (pounds)126,500 Sublet at rental of (pounds)90,500 until 1997
Lease B 2012 (pounds)30,900 Sublet rent free until 1 March 1996 and
then at (pounds)27,425 pa
Lease C 2010 (pounds)410,000 Sublet on same term until 2010
</TABLE>
Provision of (pounds)136,000 (1994: (pounds)200,000) has been made against
lease A and lease B (see note 17).
(c) The annual minimum lease payments under operating leases to which the
group was committed at 31 December 1994 were as follows:
<TABLE>
<CAPTION>
1994
Property Other
(pounds)000 (pounds)000
<S> <C> <C>
Group
Lease expires:
Within one year 33 55
Between two and five years 1,608 118
After five years 745 33
----- -----
2,386 206
===== =====
Company
Lease expires:
Within one year -- 12
Between two and five years 660 5
After 5 years
----- -----
660 17
===== =====
</TABLE>
29 Pensions
Defined contribution scheme
The group operates a defined contribution scheme for its executives and UK
employees. The assets of the scheme are held in an independently administered
fund. The pension cost represents contributions payable by the group to the fund
and amounted to (pounds)282,000. Included in prepayments in respect of the
scheme are contributions totalling (pounds)55,000.
71
<PAGE>
Defined benefit scheme
The company operates a defined benefit pension scheme, 'The Samuelson Group Plc
1991 Pension Plan' providing benefits based on final pensionable salary. The
assets of the scheme are held separately from those of the group, being invested
with independent fund mangers. The contributions are determined by an
independent qualified actuary on the basis of triennial valuations using the
projected unit method.
The pension charge in the profit and loss account for the year was
(pounds)89,000 which represents the regular cost including amortisation of the
scheme's funding deficiency. It is intended that the deficiency will be
amortised over a period of ten years.
30 Ultimate parent company
Until the listing of the company, the directors regard Eagle Trust plc, a
company registered in England and Wales, as the company's ultimate parent
company.
Eagle Trust plc is the parent undertaking of the largest group of which
Samuelson Group Plc is a member and for which group accounts are drawn up.
Copies of these group accounts are available from Samuelson Group Plc, Unit 27,
12 Taunton Road, The Metropolitan Centre, Greenford, Middlesex, UB6 8UQ.
Samuelson Group Plc, a company registered in England and Wales, is the parent
undertaking of the smallest group for which group accounts are drawn up. Copies
of these group accounts are available from Samuelson Group Plc, Unit 27, 12
Taunton Road, The Metropolitan Centre, Greenford, Middlesex, UB6 8UQ.
72
<PAGE>
VISUAL ACTION HOLDINGS PLC
1997 INTERIM REPORT
73
<PAGE>
Chairman's Statement
Introduction
During the six months to 30 June 1997, Visual Action Holdings plc achieved
successful business growth and made significant developments in its strategy for
the future. The Group reported consolidated turnover for the six months to 30
June 1997 of (pounds)58.03 million ((pounds)43.83 million), an increase of 32%.
Operating profit before exceptional items increased by 34% to (pounds)5.29
million ((pounds)3.96 million).
During the period the Group successfully completed the acquisition of MES
Holdings Limited ("MES") and its subsidiaries for a maximum consideration of
(pounds)23.1 million, and the disposal of the Film Services division for a gross
consideration of (pounds)37.5 million. As previously reported, MES is the UK's
leading independent exhibition services provider and its acquisition complements
the activities of the Group's existing audio-visual businesses. The background
to and the reasons for both the acquisition of MES and the disposal of the Film
Services division were set out in the circular to shareholders, dated 20 May
1997 seeking approval for the transactions, which was obtained on 4 June 1997.
Since the period-end, the Group has announced the acquisition of Hospitality
Resources Incorporated, ("HRI"), a Chicago based provider of hotel audio-visual
outsourcing contracts, for a consideration of $15.5 million ((pounds)9.2
million) plus the refinancing of bank and other loans amounting to approximately
$6 million ((pounds)3.6 million).
As a consequence of the MES acquisition and the Film Services disposal, it is
relevant to concentrate on the comparative performance of the Group's continuing
operations. These reported consolidated turnover for the six months of
(pounds)41.50 million ((pounds)24.85 million), an increase of 67%, which
resulted in operating profit before exceptional items increasing by 41% to
(pounds)4.32 million ((pounds)3.07 million). Earnings per share excluding
exceptional items have risen by 6.3% to 6.7 pence per share, after a 14%
increase in the number of ordinary shares over the weighted average number used
in 1996.
The strength of sterling during the period adversely affected the Group's
results due to the impact on the translation of overseas subsidiary earnings. At
a constant exchange rate, the growth in earnings per share over the
corresponding period last year would have been 12.9%.
The Company plans to pay an interim dividend of 1.7p per share on 10 October
1997 to shareholders registered on 16 September 1997. This compares to the 1996
interim dividend of 1.2p per share, which was pro-rated in respect of the period
from the Company's flotation on 6 March 1996.
Operational Review
Audio-visual
The audio-visual businesses followed their outstanding performance in 1996 with
further improvement. Turnover in the six months to 30 June 1997 was up 70% to
(pounds)33.09 million ((pounds)19.49 million) and operating profit up 50% to
(pounds)4.20 million ((pounds)2.80 million). These results included Blitz
Communications, acquired in late June 1996, which contributed (pounds)3.26
million of turnover and (pounds)0.47 million of operating profit and S & S
Holdings, which was purchased in September 1996 and contributed (pounds)8.26
million and (pounds)0.90 million respectively.
The main driver of the improvement arose in the USA, where the meetings industry
continues to provide both organic growth and new acquisition opportunities.
Excluding the contribution from S & S Holdings, the Group's US audio-visual
business showed revenue growth of 19% and operating profit growth of 14% in
local currency. A further two staging operations were opened in the USA this
year, in addition to the one opened in the second half of 1996. These are now
making positive contributions, although the start-up costs have had a negative
impact on the reported operating profit growth in the six months to 30 June
1997.
Since 30 June 1997, the US business has been successful in obtaining two further
hotel chain audio-visual outsourcing contracts with estimated incremental
annualised revenues in excess of $15.0 million ((pounds)8.7 million), the
benefits of which will flow through in 1998. Together with the recent HRI
acquisition, this means that the Group has over 190 hotel contracts which, with
its growing network of audio-visual staging service offices across the USA,
gives it a strong national position in this developing industry.
Exhibition Services
MES was included in the Group results for the period from the date of
acquisition, 4 June 1997, and its current and expected performance remain in
line with those predicted at the time of acquisition.
74
<PAGE>
The Board continues to expect MES to be earnings enhancing in its first full
year and believes that it will provide further opportunities for expansion. In
addition, its long term order book and stable customer base will improve the
predictability of the Group's future earnings.
Broadcast Video
Broadcast video reported a 9% increase in turnover to (pounds)5.83 million
((pounds)5.36 million) but a 26% decrease in operating profit from (pounds)1.25
million to (pounds)0.93 million. The decrease in operating profit is
attributable to an increase in the cost base which is necessary for the further
development of the business. It includes the opening from September 1996 of a
new branch in Singapore. There was also a 17% increase in depreciation
reflecting further investment in rental inventory in 1996.
Film Services
The sale of the Group's Film Services division generated a profit over the net
book value of assets sold of (pounds)4.64 million after accounting for the
direct and indirect costs of the disposal, and after adjusting for goodwill
previously written off directly to reserves relating to the acquisition of Film
Facilities Limited in May 1996. The resulting cost of restructuring the Group's
continuing operations amounted to (pounds)0.49 million.
Cash Flow
Cash flow from operating activities increased by 28% to (pounds)8.91 million. In
addition, net proceeds of (pounds)32.80 million arose from the sale of the Film
Services division and (pounds)20.00 million was expended on the acquisition of
MES. During the period the Group invested (pounds)9.33 million net in new hire
equipment. On a like for like basis this level of investment will now reduce
because the capital expenditure requirements of MES are significantly less than
those of the Film Services division. Net debt at the end of the period was
(pounds)6.88 million ((pounds)17.10 million) and net interest charges during the
period were covered 7 times (9 times) by operating profit before exceptional
items.
Taxation
The taxation charge for the period of (pounds)3.48 million ((pounds)0.8 million)
includes (pounds)2.30 million arising on the sale of the Film Services division.
Taxation on profit excluding exceptional items has been provided at 26% which is
the expected rate for the full year. The increase over 1996 reflects the higher
proportion of profits being earned outside the UK where the tax rate benefits
from the availability of tax reliefs is limited.
Balance Sheet
Reported tangible net assets of the Group have reduced from (pounds)36.94
million at 31 December 1996 to (pounds)19.34 million at 30 June 1997. This
decrease is due to the write-off of goodwill arising on the MES acquisition of
(pounds)24.10 million, offset by the retained profit for the period of
(pounds)4.36 million. The total amount of goodwill charged to reserves relating
to the subsidiaries of the Group acquired since the flotation is shown on the
face of the balance sheet and this amounts to (pounds)36.32 million at 30 June
1997 ((pounds)1.85 million).
Prospects
The Board believes that the continued focusing of the Group's resources on the
corporate meetings market considerably enhances its ability to generate future
growth. The 1997 Group results will be impacted by a different seasonal pattern
following the disposal of the Film Services division and the acquisition of MES.
MES is biased towards the first half of the year and the Film Services division
towards the second half. The full benefits of the MES acquisition will therefore
arise in 1998.
The audio-visual businesses have already demonstrated their ability to grow in a
significant and developing international market. Since the period end we have
extended our USA interest by the acquisition of HRI and signed two significant
hotel chain outsourcing contracts.
The Board remains confident of the long term growth prospects of the Group.
On behalf of the Board.
J. B. Smith
Chairman
28th August 1997
75
<PAGE>
Summarised Consolidated Profit and Loss Account
for the six months ended 30 June 1997
<TABLE>
<CAPTION>
Unaudited Unaudited Audited
Half year to Half year to Year to
30 June 30 June 31 December
1997 1996 1996
Notes (pounds)000 (pounds)000 (pounds)000
==============================================================================================
<S> <C> <C> <C> <C>
Turnover
Continuing operations 38,925 24,847 53,872
Acquisitions 2,575 -- --
- ----------------------------------------------------------------------------------------------
41,500 24,847 53,872
Discontinued operations 16,529 18,985 41,263
- ----------------------------------------------------------------------------------------------
Total turnover 3 58,029 43,832 95,135
Cost of sales (30,261) (21,317) (46,894)
- ----------------------------------------------------------------------------------------------
Gross profit 27,768 22,515 48,241
Operating expenses (22,475) (18,558) (38,771)
Operating profit
Continuing operations 4,172 3,068 5,393
Acquisitions 152 -- --
- ----------------------------------------------------------------------------------------------
4,324 3,068 5,393
Discontinued operations 969 889 4,077
- ----------------------------------------------------------------------------------------------
Total operating profit before exceptional items 3 5,293 3,957 9,470
Profit on sale of businesses 4,641 -- --
Costs of fundamental restructuring of
continuing operations (485) -- --
- ----------------------------------------------------------------------------------------------
Operating profit after exceptional items 9,449 3,957 9,470
Income from interests in associated undertakings -- 52 54
Interest receivable and similar income 60 61 62
Interest payable and similar charges (823) (514) (1,275)
- ----------------------------------------------------------------------------------------------
Profit on ordinary activities before taxation 8,686 3,556 8,311
Tax on profit on ordinary activities (3,478) (800) (1,745)
- ----------------------------------------------------------------------------------------------
Profit on ordinary activities after taxation 5,208 2,756 6,566
Dividends (852) (552) (2,005)
- ----------------------------------------------------------------------------------------------
Retained profit for the period 4,356 2,204 4,561
- ----------------------------------------------------------------------------------------------
Dividends per ordinary share 1.7p 1.2p 4.1p
Earnings per ordinary share 4
Basic 10.4p 6.3p 14.3p
Basic excluding exceptional items 6.7p 6.3p 14.3p
==============================================================================================
</TABLE>
There is no material difference between the profit on ordinary activities before
taxation and the retained profit for the period stated above, and their
historical cost equivalents.
76
<PAGE>
Summarised Consolidated Balance Sheet
as at 30 June 1997
<TABLE>
<CAPTION>
Unaudited Unaudited Audited
30 June 30 June 31 December
1997 1996 1996
(pounds)000 (pounds)000 (pounds)000
======================================================================================================
<S> <C> <C> <C>
Fixed assets 30,390 47,908 50,223
- ------------------------------------------------------------------------------------------------------
Investments - 210 203
- ------------------------------------------------------------------------------------------------------
Current assets
Stock 1,172 2,684 2,648
Debtors 20,048 19,468 19,312
Cash at bank and in hand 1,217 562 1,824
- ------------------------------------------------------------------------------------------------------
22,437 22,714 23,784
Creditors: amounts falling due within one year (25,225) (29,917) (32,075)
- ------------------------------------------------------------------------------------------------------
Net current liabilities (2,788) (7,203) (8,291)
- ------------------------------------------------------------------------------------------------------
Total assets less current liabilities 27,602 40,915 42,135
Creditors: amounts falling due after more than one year (7,675) (4,278) (4,094)
Provisions for liabilities and charges (587) (958) (1,099)
- ------------------------------------------------------------------------------------------------------
Net assets 19,340 35,679 36,942
- ------------------------------------------------------------------------------------------------------
Capital and reserves
Called up share capital 10,020 9,200 10,020
Share premium account 24,444 16,768 24,444
Purchased goodwill since flotation (36,321) (1,853) (14,070)
Profit and loss account 21,197 11,564 16,548
- ------------------------------------------------------------------------------------------------------
Equity shareholders' funds 19,340 35,679 36,942
======================================================================================================
Summarised Consolidated Statement of Recognised Gains and Losses
for the six months ended 30 June 1997
Unaudited Unaudited Audited
Half year to Half year to Year to
30 June 30 June 31 December
1997 1996 1996
(pounds)000 (pounds)000 (pounds)000
=====================================================================================================
Profit attributable to members of the parent company 4,356 2,204 4,561
Exchange difference on the translation of net assets
of subsidiary undertakings 293 59 (1,864)
- -----------------------------------------------------------------------------------------------------
Total recognised gains and losses relating
to the period 4,649 2,263 2,697
- -----------------------------------------------------------------------------------------------------
</TABLE>
77
<PAGE>
Summarised Consolidated Cash Flow Statement
for the six months ended 30 June 1997
<TABLE>
<CAPTION>
Unaudited Unaudited Audited
Half year to Half year to Year to
30 June 30 June 31 December
1997 1996 1996
(pounds)000 (pounds)000 (pounds)000
=======================================================================================================
<S> <C> <C> <C>
Cash flow from operating activities 8,911 6,981 20,615
Returns on investments and servicing of finance (763) (453) (1,213)
Taxation (106) (1,294) (2,607)
Capital expenditure and financial investment (9,334) (11,530) (20,494)
Acquisitions and disposals
Purchase of subsidiary undertaking (20,002) (8,078) (17,385)
Net overdrafts acquired with subsidiaries - (369) (940)
Sale of businesses 32,798 - -
- -------------------------------------------------------------------------------------------------------
12,796 (8,447) (18,325)
Equity dividends paid (1,453) - (552)
- -------------------------------------------------------------------------------------------------------
Cash inflow/(outflow) before use of liquid
resources and financing 10,051 (14,743) (22,576)
Management of liquid resources - 186 186
Financing - Issue of shares - 10,959 19,464
- - Decrease/(increase) in debt (496) 252 (900)
- -------------------------------------------------------------------------------------------------------
Increase/(decrease) in cash in the period 9,555 (3,346) (3,826)
- -------------------------------------------------------------------------------------------------------
Reconciliation of net cash flow to movement
in net debt (see note 5)
Increase/(decrease) in cash in the period 9,555 (3,346) (3,826)
Cash outflow/(inflow) from movement in debt
and lease financing 496 (252) 900
Cash inflow from decrease in liquid resources - (186) (186)
- -------------------------------------------------------------------------------------------------------
Change in net debt resulting from cash flows 10,051 (3,784) (3,112)
Loans and finance leases disposed/(acquired)
with subsidiaries 394 (507) (1,832)
New finance leases (154) (79) (173)
Translation difference 171 - 530
- -------------------------------------------------------------------------------------------------------
Movement in net debt in the period 10,462 (4,370) (4,587)
Net debt at 1 January 1997 (17,345) (12,758) (12,758)
- -------------------------------------------------------------------------------------------------------
Net debt at 30 June 1997 (6,883) (17,128) (17,345)
- -------------------------------------------------------------------------------------------------------
Reconciliation of operating profit to operating cash flows
Operating profit 9,449 3,957 9,470
Depreciation charges 7,566 6,137 13,677
Profit on disposal of fixed assets (246) (245) (1,032)
Exceptional profit on disposal of businesses (4,641) - -
Exceptional restructuring costs 485 - -
Movement in net current assets (3,702) (2,868) (1,500)
- -------------------------------------------------------------------------------------------------------
Net cash inflow from operating activities 8,911 6,981 20,615
- -------------------------------------------------------------------------------------------------------
</TABLE>
78
<PAGE>
Notes to the Unaudited Interim Report
for the six months ended 30 June 1997
1. Publication of non-statutory accounts
The financial information contained in this interim report does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information for the full preceding year is based on the
statutory accounts for the financial year ended 31 December 1996. Those
accounts, upon which the auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies.
2. Basis of preparation of interim financial information
The interim financial information has been prepared on the basis of
accounting policies set out in the Group's statutory accounts for the year
ended 31 December 1996. Fixed annual charges are apportioned to the interim
period on the basis of time elapsed. Other expenses are accrued in accordance
with the same principles used in the preparation of the annual accounts. The
taxation charge is calculated by applying the directors' best estimate of the
annual tax rate to the profit for the period, adjusted for the tax arising on
the exceptional gain.
3. Segmental analysis
a. An analysis of turnover by class of business is as follows:
Unaudited Unaudited Audited
Half year to Half year Year to
30 June 30 June 31 December
1997 1996 1996
(pounds)000 (pounds)000 (pounds)000
=============================================================================
Audio-visual 33,091 19,492 43,111
Broadcast video 5,834 5,355 10,761
Exhibition services 2,575 -- --
Film services - discontinued 16,529 18,985 41,263
------------------------------------------------------------------------------
Total turnover 58,029 43,832 95,135
==============================================================================
b. An analysis of operating profit before exceptional items by class of
business is as follows:
Audio-visual 4,196 2,795 4,279
Broadcast video 932 1,249 2,730
Exhibition services 152 -- --
Film services - discontinued 969 889 4,077
Common costs (956) (976) (1,616)
------------------------------------------------------------------------------
Total operating profit before exceptional
items 5,293 3,957 9,470
==============================================================================
c. An analysis of turnover by geographical origin is as follows:
United Kingdom 19,626 13,976 32,897
United States of America 30,395 21,587 44,330
Australasia and South East Asia 5,340 4,702 10,552
France 3,327 4,018 8,334
Inter-area sales (659) (451) (978)
------------------------------------------------------------------------------
Total turnover 58,029 43,832 95,135
==============================================================================
d. An analysis of operating profit before exceptional items by geographical
origin is as follows:
United Kingdom 1,614 1,531 3,904
United States of America 3,709 2,680 4,792
Australasia and South East Asia 671 522 1,595
France 255 200 795
Common costs (956) (976) (1,616)
- -------------------------------------------------------------------------------
Total operating profit before
exceptional items 5,293 3,957 9,470
===============================================================================
79
<PAGE>
4. Earnings per ordinary share
Basic
The calculation of the basic earnings per ordinary share is based on the
profit on ordinary activities after taxation and all exceptional items,
namely (pounds)5,208,000 (30 June 1996: (pounds)2,756,000; 31 December 1996:
(pounds)6,566,000) and on 50,098,544 (30 June 1996: 43,857,000; 31 December
1996: 45,931,000) ordinary shares.
Basic excluding exceptional items
The calculation of the basic earnings per ordinary share excluding
exceptional items is based on the profit on ordinary activities after
taxation but before all exceptional items, namely (pounds)3,352,000 (30 June
1996: (pounds)2,756,000; 31 December 1996: (pounds)6,566,000) and on
50,098,544 (30 June 1996: 43,857,000; 31 December 1996: 45,931,000) ordinary
shares.
The number of ordinary shares is calculated using the weighted average number
of ordinary shares in issue and ranking for dividend during the period. The
number of ordinary shares in issue at 30 June 1997 was 50,098,544.
5. Analysis of net debt
<TABLE>
<CAPTION>
At Cash Acquisition Other Exchange At
1 January flow & disposal non-cash movement 30 June
1997 (excl. cash & changes 1997
overdrafts)
(pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000 (pounds)000
=========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Cash at bank and in hand 1,824 (589) (18) 1,217
Overdrafts (11,652) 10,144 20 (1,488)
- ---------------------------------------------------------------------------------------------------------
9,555
Debt due after one year (3,752) 744 71 (2,937)
Debt due within one year (2,681) (640) 75 (3,246)
Finance leases (1,084) 392 394 (154) 23 (429)
- ---------------------------------------------------------------------------------------------------------
496
TOTAL (17,345) 10,051 394 (154) 171 (6,883)
=========================================================================================================
</TABLE>
6. Availability of the interim report
Copies of this interim report are being posted to all shareholders on the
register at 28 August 1997. Copies are available on request from the company
secretary at the registered office of the Group at Spencer House, 23 Sheen
Road, Richmond, Surrey TW9 1BN.
NOTE 7. Differences between accounting principles generally accepted in the
United Kingdom and the United States
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United Kingdom (UK GAAP), which
differ in certain material respects from generally accepted accounting
principles in the United States (US GAAP). The effects of the significant
differences in the determination of retained profit and equity shareholders'
funds are set out below.
Goodwill
Under UK GAAP goodwill arising on the acquisition of subsidiaries and associates
is written off immediately against reserves. Under US GAAP goodwill is
capitalized and amortised by charges against income over its estimated useful
economic life, subject to a maximun of forty years. For the purposes of the
reconciliations below, the useful life of goodwill has been taken to be 25
years.
Under UK GAAP deferred taxation is provided using the liability method in
respect of the taxation effect of all material timing differences to the extent
that it is considered probable that liabilities will crystallise in the
foreseeable future. With respect to timing differences giving rise to a deferred
tax asset, under UK GAAP the asset is generally not recognised unless recovery
within the immediate term is certain. Under US GAAP, as set out in Statement of
Financial Accounting Standards No. 109, deferred taxation is generally provided
on a full liability basis and deferred tax assets are recognised in full having
regard to any required valuation allowance.
Proposed Dividends
Under UK GAAP ordinary dividends are provided for in the financial year in
respect of which they are proposed together with the related advance corporation
tax ("ACT") provision. Under US GAAP such dividends and the related ACT payable
thereon are not provided for until formally declared by the Board of Directors.
80
<PAGE>
<TABLE>
<CAPTION>
Half year to Half year to
30 June 30 June
1997 1996
(pounds) 000 (pounds) 000
-------------- --------------
<S> <C> <C>
Retained profit under UK GAAP 4,356 2,204
Adjustments:
Goodwill amortisation (312) (6)
Deferred taxation (484) (152)
Proposed dividends 852 552
Net Income as adjusted in accordance
-------------- --------------
with US GAAP 4,412 2,598
============== ==============
<CAPTION>
As at As at
30 June 30 June
1997 1996
(pounds) 000 (pounds) 000
-------------- --------------
<S> <C> <C>
Equity shareholders' funds under
UK GAAP 19,340 35,679
Adustments:
Goodwill 35,852 1,847
Deferred taxation 4,317 5,787
Proposed dividends 852 552
Equity shareholders' funds as
adjusted in accordance with US GAAP -------------- ---------------
60,361 43,865
============== ===============
<CAPTION>
Half year to Half year to
30 June 30 June
1997 1996
(pounds) 000 (pounds) 000
-------------- --------------
<S> <C> <C>
Cash flow activity under US GAAP
Net cash (utilised)/provided by
operating activities (2,102) 8,699
Net cash provided/(utilised) by
investing activities 3,462 (19,791)
Net cash (utilised)/provided by
financing activities (1,949) 11,211
Currency translation (18) 0
Net (decrease)/increase in cash -------------- ---------------
and cash equivalents (607) 119
Cash and cash equivalents at start
of period 1,824 443
--------------- ---------------
Cash and cash equivalents at end of
period 1,217 562
=============== ===============
</TABLE>
81
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information of
Caribiner International, Inc. (the "Company") gives effect to (i) the
acquisition of substantially all of the assets and assumption of certain of the
liabilities of Video Supply Company, Inc. d/b/a Projexions Video Supply and
Projexions/Video Supply Company (together, "Projexions") (acquired January,
1997), (ii) the acquisition of all of the outstanding capital stock of Blumberg
Communications, Inc. ("Blumberg") (acquired January, 1997), (iii) the
acquisition of substantially all of the assets and assumption of certain of the
liabilities of D&D Enterprises, Inc. d/b/a Show Solutions ("Show Solutions")
(acquired April, 1997), (iv) the acquisition of all of the outstanding capital
stock of WCT Live Communications Limited ("WCT") (acquired June, 1997), (v) the
acquisition of all of the outstanding capital stock of Bauer Audio Visual, Inc.
("Bauer") (acquired July, 1997), (together with the acquisitions of Projexions,
Blumberg, Show Solutions and WCT, the "Prior Acquisitions"), (vi) the
acquisition of substantially all of the outstanding capital shares of Visual
Action Holdings plc ("VAH") (acquired in November, 1997), (vii) the disposition
by VAH of substantially all of the assets of its Film Services division ("FSD")
(sold in June, 1997), the acquisitions by VAH of all of the outstanding capital
shares of MES Holdings Limited ("MES") (acquired in June, 1997) and all of the
outstanding capital stock of Hospitality Resources Incorporated ("HRI")
(acquired in July, 1997) and the Company's planned disposition of all of the
assets of VAH's Broadcast Video division ("BVD") (collectively, the "VAH
Acquisitions and Disposals"), (viii) the repayment with the proceeds of the
public offering of common stock completed in March, 1997 of the bank borrowings
which would have been incurred in connection with the acquisitions of Projexions
and Blumberg, and (ix) the borrowings under the Company's credit facilities used
to fund the acquisitions of WCT, Bauer and VAH. The Company is in the process of
completing its review and evaluation of the fair value of the assets and
liabilities acquired, as well as finalizing its integration plans. The pro forma
financial information does not reflect any cost savings which are anticipated
from the integration of the operations of VAH with the Company's existing
audio-visual and staging equipment business. Such integration plans remain
subject to finalization.
The Company believes that the accompanying unaudited consolidated pro
forma financial information contains all adjustments necessary to fairly present
its financial position as of September 30, 1997, and the results of its
operations of the year then ended as if, in the case of the Unaudited Pro Forma
Consolidated Balance Sheet, the (i) acquisition of VAH, (ii) acquisition by VAH
of HRI and the Company's planned disposition of VAH's BVD, and (iii) borrowings
under the Company's credit facilities had occurred on September 30, 1997, and
in the case of the Unaudited Pro Forma Consolidated Statement of Operations,
each of the events described above had occurred on October 1, 1996.
The unaudited pro forma consolidated financial information has been
included as required by the rules of the Securities and Exchange Commission and
is provided for comparative purposes only. The unaudited pro forma consolidated
financial information presented herein is based upon the historical
consolidated financial statements of each of the Company and VAH, and should be
read in conjunction with such financial statements and the related notes
thereto, all of which are included elsewhere in this Form 8-K/A or in the
Company's other filings with the Securities and Exchange Commission.
The Unaudited Pro Forma Consolidated Statement of Operations for the
year ended September 30, 1997 includes Projexions' historical results of
operations for the three months ended December 31, 1996, Blumberg's historical
results of operations for the four months ended January 31, 1997, Show
Solutions' historical results of operations for the seven months ended April 30,
1997, WCT's historical results of operations for the eight months ended May 31,
1997, and Bauer's historical results of operations for the nine months ended
June 30, 1997. The Company's historical results of operations for the year ended
September 30, 1997 includes the results of operations of Projexions since
January 9, 1997, the results of operations of Blumberg since February 1, 1997,
the results of operations of Show Solutions since April 30, 1997, the results of
operations of WCT since June 12, 1997 and the results of operations of Bauer
since July 3, 1997, in each instance, representing the effective date of
acquisition. Certain reclassifications have been made to the Company's
Consolidated Statement of Operations for the year ended September 30, 1997.
The results of operations of each of Projexions, Blumberg, Show Solutions,
WCT and Bauer are included in the column, "Prior Acquisitions" in the
accompanying Unaudited Pro Forma Consolidated Statement of Operations for the
year ended September 30, 1997.
The Unaudited Pro Forma Consolidated Statement of Operations for the
year ended September 30, 1997 includes VAH's historical results of operations
for VAH's twelve months ended June 30, 1997. The historical results of
operations of VAH have been adjusted to conform to the generally accepted
accounting principles of the United States and have been translated into United
States dollars based upon the appropriate exchange rates.
The Unaudited Pro Forma Consolidated Statement of Operations for the
year ended September 30, 1997 (i) excludes FSD's historical results of
operations for the eleven months ended May 31, 1997, (ii) includes MES's
historical results of operations for the eleven months ended May 31, 1997 and
HRI's historical results of operations for the twelve months ended June 30, 1997
and (iii) excludes BVD's historical results of operations for the twelve months
ended June 30, 1997. The VAH historical results of operations for the year ended
June 30, 1997 included the results of operations of FSD through June 4, 1997,
the effective date of disposition and the results of operations of MES since
June 6, 1997, the effective date of acquisition. The results of operations of
each of FSD, MES, HRI and BVD are incuded in the column, "VAH Acquisitions and
Dispositions" in the accompanying Unaudited Pro Forma Consolidated Statement of
Operations for the year ended September 30, 1997. The historical results of
operations of the VAH Acquisitions and Dispositions have been adjusted to
conform to the generally accepted accounting principles of the United Sates and
have been translated into United States dollars based upon the appropriate
exchange rates.
The pro forma financial information presented does not purport to be
indicative of the financial position or operating results which would have been
achieved had the transactions described above taken place at the dates indicated
and should not be construed as representative of the Company's financial
position or results of operations for any future date or period.
82
<PAGE>
CARIBINER INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1997
(all amounts, except per share data, in thousands)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Historical Pro Forma
---------------------------------------------------------------------------------
VAH
Caribiner Acquisitions Caribiner
International, VAH and Pro Forma International,
Inc. Disposals Adjustments Inc.
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $10,253 $ 2,020 $ 498 $ 323,048 (a) $12,771
(259,248)(a)
(58,800)(a)
(5,000)(a)
Trade accounts receivable, net 77,780 28,569 (2,302) -- 104,047
Deferred charges 10,229 -- -- -- 10,229
Prepaid expenses and other current assets 9,128 4,331 (256) (189)(b) 13,847
833 (b)
Inventories -- 1,946 (136) 1,810
-------------------------------------------------------------------------------
Total Current Assets 107,390 36,866 (2,196) 644 142,704
Property and equipment-net 45,714 50,447 (15,157) (4,500)(c) 76,504
Intangible assets-net 157,154 59,515 33,163 174,718 (d) 424,550
Other assets 3,619 -- 881 (818)(b) 7,849
4,167 (b)
Deferred tax asset -- 4,317 (1,051) 1,660 (e) 4,927
===============================================================================
Total Assets $313,877 151,145 15,641 175,871 656,534
===============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank line of credit -- 2,470 14,870 -- 17,340
Current portion of long-term debt 1,217 5,388 (2,382) -- 4,223
Trade accounts payable 18,816 10,646 (670) -- 28,792
Accrued expenses and other current
liabilities 23,200 14,271 2,571 8,652 (f) 48,694
Accrued production costs 11,055 -- -- -- 11,055
Taxes payable 4,726 5,182 1,270 -- 11,178
Deferred income 12,225 -- -- -- 12,225
-------------------------------------------------------------------------------
Total Current Liabilities 71,239 37,957 15,659 8,652 133,507
Long-term debt 60,642 4,875 3,489 323,048 (a) 333,254
(58,800)(a)
Deferred income 5,617 -- -- -- 5,617
Deferred tax liability 715 495 375 -- 1,585
Other liabilities 4,230 7,619 (118) -- 11,731
-------------------------------------------------------------------------------
Total Liabilities 142,443 50,946 19,405 272,900 485,694
Common stock 234 16,633 -- (16,633)(g) 234
Additional paid-in capital 159,874 40,577 -- (40,577)(g) 159,874
Translation adjustment 11 -- -- 11
Retained earnings 11,315 42,989 (3,764) (39,225)(g) 10,721
(594)(b)
-------------------------------------------------------------------------------
Total stockholders' equity 171,434 100,199 2,997 (97,029) 170,840
===============================================================================
Total liabilities and stockholders' equity $313,877 $151,145 $15,641 $175,871 $656,534
===============================================================================
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Balance Sheet.
83
<PAGE>
CARIBINER INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended September 30, 1997
(all amounts, except per share data, in thousands)
<TABLE>
<CAPTION>
Historical
-----------------------------------------------------------
VAH
Caribiner Acquisitions
International, Prior and
Inc. Aquisitions VAH Disposals
---------------- ------------- --------- ---------
<S> <C> <C> <C> <C>
Service revenue $ 212,393 $ 19,886 $ 5,186 $ --
Rental revenue 129,865 77,017 171,932 (2,493)
---------- -------- -------- -------
Total revenue 342,258 96,903 177,118 (2,493)
Cost of service revenue 143,002 14,096 4,418 --
Cost of rental revenue 86,512 58,076 112,648 10,734
---------- -------- -------- -------
Total cost of revenue 229,514 72,172 117,066 10,734
Gross Profit 112,744 24,731 60,052 (13,227)
Operating expenses:
Selling, general and
administrative expenses 71,270 20,734 40,022 (9,575)
Depreciation and
amortization 8,432 902 2,521 (835)
---------- -------- -------- -------
Total operating expenses 79,702 21,636 42,543 (10,410)
---------- -------- -------- -------
Operating income 33,042 3,095 17,509 (2,817)
Interest expense, net 2,409 837 2,467 575
---------- -------- -------- -------
Income before income taxes 30,613 2,258 15,042 (3,392)
Income tax expense
(benefit) 12,551 (529) 3,439 1,842
---------- -------- -------- -------
Net income (loss) $ 18,062 2,787 11,603 (5,234)
========== ======== ======== =======
Earnings per share $ 0.83 -- -- --
========== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
-----------------------------
Caribiner
Pro Forma International,
Adjustments Inc.
----------- --------------
<S> <C> <C>
Service revenue $ -- $ 237,465
Rental revenue -- 376,321
-------- ----------
Total revenue -- 613,786
Cost of service revenue -- 161,516
Cost of rental revenue -- 267,970
-------- ----------
Total cost of revenue -- 429,486
Gross Profit -- 184,300
Operating expenses:
Selling, general and
administrative expense -- 122,451
Depreciation and
amortization 7,413 (h) 18,433
-------- ----------
Total operating expenses 7,413 140,884
-------- ----------
Operating income (loss) (7,413) 43,416
Interest expense net 20,636 (i) 26,944
-------- ----------
Income (loss) before income
taxes (28,049) 16,472
Income tax expense
(benefit) (10,714)(j) 6,589
-------- ----------
Net income (17,335) $9,883
======== ===========
Earnings per share -- $ 0.44(k)
======== ===========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statement of Operations.
84
<PAGE>
CARIBINER INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
(amounts in thousands, except per share data)
(a) Adjustments to increase cash resulting from bank borrowings of $323,048, of
which $259,248 was used to finance the acquisition of VAH, $58,800 was used to
repay substantially all of the outstanding indebtedness under the Company's
former credit facilities and $5,000 was used to pay debt issuance costs
associated with the Company's new credit facilities.
(b) Adjustment to write-off an aggregate of $1,007 of unamortized debt issuance
costs relating to the Company's former credit facilities and to capitalize
$5,000 of debt issuance fees relating to the Company's new credit facilities.
In connection thereof, the Company recorded an extraordinary loss (net of taxes
of $413) of $594.
(c) To adjust the net carrying value of certain fixed assets to estimated fair
value.
(d) Adjustment to record additional goodwill of $174,718 resulting from the
acquisition of VAH after allocation of the purchase price to the net tangible
assets, based upon the balance sheet as of June 30, 1997 used for pro forma
purposes only. The final goodwill resulting from the acquisition of VAH will be
based upon the net tangible assets acquired as of the effective date of
acquisition.
(e) To record deferred taxes arising from the resulting purchase accounting
adjustments.
(f) Adjustment to accrue for certain estimated transaction costs which include
professional fees, severance and other costs incurred or to be incurred in
connection with the acquisition of VAH.
(g) Adjustment to eliminate the stockholders' equity accounts of each of VAH
and the VAH Acquisitions and Dispositions upon consummation of the acquisition
of VAH.
(h) Net adjustment to increase depreciation and amortization expense resulting
from the respective acquisitions and disposals based upon the Company's
estimated period of benefit, assuming the acquisitions had occurred on
October 1, 1996.
(i) Adjustment to increase interest expense at an annual interest rate of 7%
as a result of increased debt incurred to complete the acquisitions of WCT,
Bauer and VAH and to repay indebtedness outstanding under the Company's former
credit facilities, assuming the acquisition occured on October 1, 1996 and the
related debt remained outstanding during the entire period presented.
(j) To adjust the tax provision of the Company on a pro forma basis.
(k) Pro forma net income per common share has been calculated using the weighted
average number of shares of common stock outstanding during the period
presented, assuming the issuance and sale of only that number of shares as would
generate net proceeds sufficient to finance the acquisitions of Blumberg and
Projexions, and the application of such proceeds to make such payments as of the
beginning of the period presented.
85
