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Previous: BOTTOMLINE TECHNOLOGIES INC /DE/, 8-K/A, EX-23.3, 2000-11-13 |
Next: BOTTOMLINE TECHNOLOGIES INC /DE/, 8-K/A, EX-99.02, 2000-11-13 |
<PAGE>
Exhibit 99.01
REPORT OF INDEPENDENT AUDITORS
To: The Board of Directors
Checkpoint (Holdings) Limited
We have audited the consolidated balance sheets of Checkpoint (Holdings) Limited
as at April 30, 2000 and 1999, and the related consolidated profit and loss
accounts, reconciliation of movements in shareholders' funds and cash flow
statements for the year ended April 30, 2000 and the period January 11, 1999
(inception) to April 30, 1999 and the consolidated profit and loss account,
reconciliation of movements in shareholders' funds and cash flow statement of
Checkpoint Security Services Limited for the period May 1, 1998 to March 10,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with United Kingdom auditing standards and
United States generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Checkpoint (Holdings) Limited at April 30, 2000 and 1999 and the consolidated
results of its operations and its consolidated cash flows for the year ended
April 30, 2000 and the period January 11, 1999 (inception) to April 30, 1999 and
the consolidated results of operations and consolidated cash flows of Checkpoint
Security Services Limited for the period May 1, 1998 to March 10, 1999, in
conformity with accounting principles generally accepted in the United Kingdom
which differ in certain respects from those generally accepted in the United
States (see Note 24 of Notes to the Accounts).
/s/ Ernst & Young
Reading, England
November 10, 2000
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To: The Board of Directors
Checkpoint (Holdings) Limited
We refer to the accompanying profit and loss account, cash flow statement and
reconciliation of movements in shareholders' funds for the year ended 30 April
1998.
We were statutory auditors to the company for the year ended 30th April 1998 and
issued an unqualified opinion on the financial statements for that year. Those
financial statements were prepared in conformity with accounting policies
generally accepted in the United Kingdom.
We conducted our audit in accordance with Auditing Standards generally accepted
in the United Kingdom. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements.
It also includes an assessment of the significant estimates and judgments made
by the directors in the preparation of the financial statements and of whether
the accounting policies are appropriate to the company's circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
In our opinion the financial statements gave a true and fair view of the profits
and cash flows of the company for the year ended 30 April 1998 in conformity
with accounting policies generally accepted in the United Kingdom.
The company changed its method of accounting for the recognition of certain
revenue in the year ended 30 April 1999 which resulted in a restatement of the
comparative figures in the 30 April 1999 accounts as required by United Kingdom
accounting standards. This is further explained in note 2.
GUILDFORD /s/ SMITH & WILLIAMSON
ENGLAND
10 November 2000 CHARTERED ACCOUNTANTS
REGISTERED AUDITOR
2
<PAGE>
Checkpoint (Holdings) Limited and predecessor
---------------------------------------------------
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
<TABLE>
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 1999 11 Jan. 1999 1 May 1998 1 May 1997
to 30 April to 30 April to 10 March to 30 April
2000 1999 1999 1998
Note (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C> <C>
TURNOVER 3 20,670 2,838 15,821 15,183
Continuing operations 20,186 2,838 15,821 15,183
Discontinued operations 484 - - -
Cost of sales 8,101 1,124 5,995 5,845
Continuing operations 7,928 1,124 5,995 5,845
Discontinued operations 173 - - -
------ ------ ------- ------
GROSS PROFIT 12,569 1,714 9,826 9,338
Administrative expenses 13,836 1,808 9,057 8,400
Redundancy costs - continuing
activities 322 - - -
------ ------ ------- ------
14,158 1,808 9,057 8,400
------ ------ ------- ------
Continuing activities 13,853 1,808 9,057 8,400
Discontinued activities 305 - - -
OPERATING (LOSS)/PROFIT 4 (1,589) (94) 769 938
Loss on sale of subsidiaries
- discontinued activities 12 (338) - - -
Interest receivable 23 7 - 1
Interest payable 5 (1,447) (195) (212) (154)
------ ------ ------- ------
(LOSS)/PROFIT FOR THE
FINANCIAL PERIOD (3,351) (282) 557 785
Taxation on ordinary activities 8 - - 316 380
------ ------ ------- ------
(LOSS)/PROFIT FOR THE FINANCIAL
PERIOD (3,351) (282) 241 405
Dividends 9 - - 50 250
------ ------ ------- ------
RETAINED (LOSS)/PROFIT FOR THE
FINANCIAL PERIOD (3,351) (282) 191 155
====== ====== ======= ======
</TABLE>
There were no recognised gains or losses other than the results of the group
reported above.
A reconciliation to US GAAP is presented in note 24.
The accompanying notes form an integral part of these financial statements.
3
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
as at 30 April 2000 and 30 April 1999
<TABLE>
<CAPTION>
Checkpoint (Holdings)
Limited
30 April 30 April
2000 1999
Note (Pounds)000 (Pounds)000
<S> <C> <C> <C>
FIXED ASSETS
Intangible fixed assets 10 9,446 11,466
Tangible fixed assets 11 1,737 2,140
Investments 12 33 6
------ ------
11,216 13,612
CURRENT ASSETS
Stocks 13 1,235 1,420
Debtors 14 4,562 4,420
Cash at bank and in hand 1,351 773
------ ------
7,148 6,613
CREDITORS: amounts falling due 15 6,370 5,441
within one year ------ ------
NET CURRENT ASSETS 778 1,172
------ ------
TOTAL ASSETS LESS CURRENT
LIABILITIES 11,994 14,784
CREDITORS: amounts falling due
after more than one year
Loans 16 13,233 12,744
Obligations under hire purchase
contracts and finance leases 17 34 301
------ ------
13,267 13,045
------ ------
(1,273) 1,739
====== ======
CAPITAL AND RESERVES
Called up share capital 18 222 207
Share premium account 19 1,946 1,814
Profit and loss account 19 (3,441) (282)
------ ------
EQUITY SHAREHOLDERS' FUNDS (1,273) 1,739
====== ======
</TABLE>
A reconciliation to US GAAP is presented in note 24.
The accompanying notes form an integral part of these financial statements.
-------------------------------------------------------------------------------
4
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the periods from 1 May 1997 to 30 April 2000
<TABLE>
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 11 January 1 May 1 May
1999 to 1999 to 1998 to 1997 to
30 April 30 April 10 March 30 April
2000 1999 1999 1998
Note (Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C> <C> <C>
NET CASH INFLOW/(OUTFLOW)
FROM OPERATING ACTIVITIES a 2,238 (129) 717 964
RETURNS ON INVESTMENT AND
SERVICING OF FINANCE
Interest received 23 7 - 1
Interest paid (614) (54) (165) (154)
Interest element of finance
lease rental payments (35) (8) (47) -
Issue costs of new loans - (250) - -
------ ------ ------ ------
(626) (305) (212) (153)
------ ------ ------ ------
TAXATION
Corporation tax (paid)/received (159) 17 (61) (201)
------ ------ ------ ------
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire tangible
fixed assets (404) (33) (980) (791)
Payments to acquire intangible
fixed assets (50) - - -
Payments to acquire investment - - (6) -
Receipts from sale of tangible
fixed assets 6 7 104 70
Receipts from sale of investment 94 - - -
------ ------ ------ ------
(354) (26) (882) (721)
------ ------ ------ ------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertaking - (11,535) - -
Net cash acquired with subsidiary undertaking - (945) - -
Net cash disposed of with subsidiary undertaking (293) - - -
------ ------ ------ ------
(293) (12,480) - -
------ ------ ------ ------
EQUITY DIVIDENDS PAID - - (203) (128)
FINANCING
Finance lease repayments (315) (62) 243 77
New long term loans - 5,325 - (66)
New ordinary shares issued 114 2,071 1 44
Share issue costs - (50) - -
New loan stock - 6,412 - -
Repayment of long term loans (46) - (91) -
------ ------ ------ ------
(247) 13,696 153 55
------ ------ ------ ------
INCREASE/(DECREASE) IN CASH b 559 773 (488) (184)
====== ====== ====== ======
</TABLE>
Cash flows under US GAAP are summarised in note 24.
The accompanying notes form an integral part of these financial statements.
--------------------------------------------------------------------------------
5
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
for the periods from 1 May 1997 to 30 April 2000
a. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING ACTIVITIES
<TABLE>
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 11 January 1 May 1 May
1999 to 1999 to 1998 to 1997 to
30 April 30 April 10 March 30 April
2000 1999 1999 1998
(Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C> <C>
Operating (loss)/profit (1,589) (94) 769 938
Exchange adjustments - - - (1)
Amortisation 2,070 279 - -
Depreciation 684 109 619 600
Profit on sale of fixed assets (7) (2) (55) (30)
Decrease/(Increase) in stocks 121 (160) (85) (337)
Increase in debtors (230) 38 (1,089) (1,025)
Increase in creditors 997 (299) 558 819
Employee share scheme charge 192 - - -
---------- ---------- ---------- ----------
Net cash inflow from operating activities 2,238 (129) 717 964
========== ========== ========== ==========
</TABLE>
b. ANALYSIS OF NET DEBT
Checkpoint Security
Services Limited
<TABLE>
<CAPTION>
At Cash At Cash At
1 May flow 30 April flow 10 March
1997 1998 1999
(Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C> <C> <C>
Cash at bank and in hand 143 (100) 43 138 181
Bank overdraft (414) (84) (498) (626) (1,124)
------ ------ ------ ------ ------
Cash (271) (184) (455) (488) (943)
Debt due after one year (1,067) 101 (966) 21 (945)
Debt due within one year (274) (112) (386) (28) (414)
------ ------ ------ ------ ------
(1,612) (195) (1,807) (495) (2,302)
====== ====== ====== ====== ======
</TABLE>
-------------------------------------------------------------------------------
6
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
for the periods from 1 May 1997 to 30 April 2000
b. ANALYSIS OF NET DEBT (continued)
Checkpoint (Holdings)
Limited
<TABLE>
<CAPTION>
Cash Acquisitions/ At Cash Other At
flow Disposals 30 April flow non-cash 30 April
1999 movement 2000
(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 773 - 773 578 - 1,351
Bank overdraft - - - (19) - (19)
------ ------ ------ ------ ------ ------
Cash 773 - 773 559 - 1,331
Loans (11,487) (2,038) (13,525) 46 (932)* (14,411)
Finance lease obligations 62 (638) (576) 315 - (261)
------ ------ ------ ------ ------ ------
(10,652) (2,676) (13,328) 920 (932) (13,340)
====== ====== ====== ====== ====== ======
</TABLE>
* Relates to interest paid in the form of additional loan notes issued.
c. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
<TABLE>
<CAPTION>
1 May 1999 11 Jan 1999 1 May 1998 1 May 1997
to 30 April to 30 April to 10 March to 30 April
2000 1999 1999 1998
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Increase/(decrease) in cash in the period 559 773 (488) (184)
Cash inflow/(outflow) from increase in loans 361 (11,675) (7) (11)
Issue costs of new loans - 250 - -
------ ------ ------ ------
Change in net debt arising from cash flows 920 (10,652) (495) (195)
Loans and finance leases acquired with
subsidiaries - (1,359) - -
Loan stock issued on acquisition of subsidiary - (1,317) - -
------ ------ ------ ------
Change in net debt arising from cash flows 920 (13,328) (495) (195)
Other non-cash movement (932) - - -
------ ------ ------ ------
Movement in net debt (12) (13,328) (495) (195)
Net debt at beginning of period (13,328) - (1,807) (1,612)
------ ------ ------ ------
Net debt at end of period (13,340) (13,328) (2,302) (1,807)
====== ====== ====== ======
</TABLE>
-------------------------------------------------------------------------------
7
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
1. ACCOUNTING POLICIES
Accounting convention
The accounts are prepared under the historical cost convention in accordance
with applicable United Kingdom accounting standards.
Basis of consolidation
The accounts present the consolidated financial position for Checkpoint
(Holdings) Limited as at its last two accounting reference dates and the
results of operations and cash flows of Checkpoint (Holdings) Limited and its
predecessor Checkpoint Security Services Limited for the three years to its
last accounting reference date.
The results and cash flows are presented for the following periods:
1 May 1997 to 30 April 1998;
1 May 1998 to 10 March 1999 (date of acquisition of Checkpoint Security
Services Limited by Checkpoint (Holdings) Limited);
11 January 1999 to 30 April 1999 (date of incorporation of Checkpoint
(Holdings) Limited to accounting reference date); and
1 May 1999 to 30 April 2000.
Checkpoint Security Services Limited has been included in the group accounts
using the acquisition method of accounting.
Depreciation and amortisation
Depreciation and amortisation are calculated on the straight line basis so as
to write off the cost of intangible and tangible fixed assets over their
estimated useful lives which are as follows:
Short leasehold improvements - over the length of the lease
Freehold buildings - 50 years
Office equipment - 3 to 10 years
Motor vehicles - 4 to 5 years
Advance royalty - 3 years
Goodwill - 5 years
Deferred Taxation
Deferred taxation is provided using the liability method on all timing
differences, including those relating to pensions and other post-retirement
benefits, to the extent that they are expected to reverse in the future
without being replaced, calculated at the rate at which it is anticipated the
timing differences will reverse. Advance corporation tax which is expected to
be recoverable in the future is deducted from the deferred taxation balance.
Deferred taxation assets are only recognised if recovery without replacement
by equivalent debit balances is reasonably certain.
Stocks
Stocks are valued at the lower of cost and net realisable value. Cost
includes all costs included in bringing each product to its present location
and condition.
Net realisable value is based on established selling price less any further
costs expected to be incurred to completion and disposal.
--------------------------------------------------------------------------------
8
<PAGE>
Checkpoint (Holdings) Limited and predecessor
--------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
1. ACCOUNTING POLICIES (continued)
Research and development
Research and development expenditure is written off as incurred.
Goodwill
Goodwill is valued as the difference arising on acquisition between the
purchase price paid and the fair value of separately identifiable tangible
and intangible assets acquired. Positive goodwill arising on acquisitions
since 1 January 1998 is carried on the balance sheet and is amortised over
its useful life on a straight line basis. It is reviewed for impairment at
the end of the first full financial year following the acquisition.
Goodwill arising on acquisitions prior to 31 December 1997 was set off
directly against reserves. Goodwill previously eliminated against reserves
has not been reinstated on implementation of FRS 10.
Leases and hire purchase commitments
Assets held under finance leases and hire purchase contracts are capitalised
at their fair value on the inception of the leases and depreciated over their
estimated useful lives. The finance charges are allocated over the period of
the lease in proportion to the capital amount outstanding.
Rentals payable under operating leases are charged in the profit and loss on
a straight line basis over the lease term.
Service contracts
Turnover relating to service contracts is recognised evenly over the period
of the contract.
Employee share award scheme
Where share options or shares are granted to employees the company recognises
as a charge in the profit and loss account the difference between the fair
value of the shares at the date the award is made and the amount of the
consideration the participants may be required to pay for the shares. This
charge is spread evenly over the period in which the share options vest or
immediately if shares are issued.
2. PRIOR YEAR ADJUSTMENT
In periods prior to 30 April 1999 the company recognised turnover for service
contracts at the start of the contract.
As from 1 May 1998 the company now recognises the turnover evenly over the
period of the contract in order to match the revenue with the incidence of
costs.
The effect of this change in policy was to reduce the operating profit before
taxation by (Pounds)333,678 in the year to 30 April 1999 and to create an
accrual for deferred revenue of (Pounds)1,598,631 at 30 April 1999.
The prior period comparatives have been adjusted accordingly.
The change in policy has no effect on the cashflow reported.
--------------------------------------------------------------------------------
9
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
3. TURNOVER
Turnover is attributable to the principal activities of the group which are
the design, development, sale and support of secure payment and documentation
management solutions and services.
Geographical analysis of turnover is as follows:
<TABLE>
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 1999 11 Jan 1999 1 May 1998 1 May 1997
to 30 April to 30 April to 10 March to 30 April
2000 1999 1999 1998
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
UK 18,818 2,420 13,380 12,512
Overseas 1,852 418 2,441 2,671
------ ----- ------ -----------
20,670 2,838 15,821 15,183
------ ----- ------ -----------
</TABLE>
4. OPERATING PROFIT ON ORDINARY ACTIVITIES
Profit on ordinary activities is stated after charging:
<TABLE>
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 1999 11 Jan 1999 1 May 1998 1 May 1997
to 30 April to 30 April to 10 March to 30 April
2000 1999 1999 1998
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Amortisation 2,070 279 - -
Depreciation charge - owned assets 518 71 402 379
- assets under hire
purchase contracts 167 37 217 221
Profit on disposal of fixed assets (7) (2) (55) (30)
Auditor's remuneration - audit services (UK) 26 4 21 13
- audit services (Overseas) - - 3 3
- non-audit services 5 1 5 16
Research & development
costs (inclusive of salary
costs) 767 146 861 1,030
Operating lease costs - land and buildings 197 28 186 172
- other 298 43 246 151
------ ----- ------ -----------
</TABLE>
In addition to the amounts disclosed above, the auditors received
(Pounds)347,640 for non-audit services in relation to the disposal of Checkpoint
Security Services Limited on 11 March 1999.
--------------------------------------------------------------------------------
10
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
5. INTEREST PAYABLE
<TABLE>
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 1999 11 Jan 1999 1 May 1998 1 May 1997
to 30 April to 30 April to 10 March to 30 April
2000 1999 1999 1998
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
On bank loans and overdrafts 450 70 163 82
On other loans 962 117 2 37
Hire purchase interest 35 8 47 35
------- ------- ---------- -------
1,447 195 212 154
======= ======= ========== =======
</TABLE>
6. STAFF COSTS
<TABLE>
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 1999 11 Jan 1999 1 May 1998 1 May 1997
to 30 April to 30 April to 10 March to 30 April
2000 1999 1999 1998
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Wages and salaries 7,267 888 5,520 5,084
Social security costs 735 84 524 541
Pension contributions 70 12 78 86
------- ------- ---------- -------
8,072 984 6,122 5,711
======= ======= ========== =======
The average number of persons employed
during the period was as follows:
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 1999 11 Jan 1999 1 May 1998 1 May 1997
to 30 April to 30 April to 10 March to 30 April
2000 1999 1999 1998
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
No. No. No. No.
Finance and administration 26 7 17 18
Sales and marketing 70 31 75 67
Customer support and engineering 102 39 94 60
Research, development and technology 42 14 35 34
------- ------- ---------- -------
240 91 221 179
======= ======= ========== =======
</TABLE>
--------------------------------------------------------------------------------
11
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
7. DIRECTORS' REMUNERATION
<TABLE>
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 1999 11 Jan 1999 1 May 1998 1 May 1997
to 30 April to 30 April to 10 March to 30 April
2000 1999 1999 1998
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Aggregate emoluments (including benefits in kind) 635 92 696 793
Aggregate contributions to individual money purchase
pension scheme - - 78 86
------------- ----------- ---- -----------
635 92 774 879
------------- ----------- ---- -----------
The highest paid director was remunerated as follows:
Emoluments (including benefits in kind) 160 23 94 114
Contribution to money purchase pension scheme - - - -
------------- ----------- ---- -----------
160 23 94 114
------------- ----------- ---- -----------
</TABLE>
8. TAXATION
<TABLE>
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 1999 11 Jan 1999 1 May 1998 1 May 1997
to 30 April to 30 April to 10 March to 30 April
2000 1999 1999 1998
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
UK corporation tax - - 185 228
(Over)/under provision in previous period - - (64) 152
ACT recoverable written off - - 51 -
Overseas tax - - 144 -
------------- ----------- ---- -----------
- - 316 380
------------- ----------- ---- -----------
</TABLE>
At 30 April 2000 the Checkpoint (Holdings) Limited group had an unrecognised
deferred tax asset of (Pounds)272,000 (30 April 1999: (Pounds)78,000). This
related to taxation losses carried forward of (Pounds)132,000 (30 April 1999:
(Pounds)50,000), depreciation charged in advance of capital allowances of
(Pounds)64,000 (30 April 1999: (Pounds)28,000) and a capital loss of
(Pounds)76,000 (30 April 1999: (Pounds)nil) relating to the disposals of the
subsidiaries in the period.
At 10 March 1999 the Checkpoint Security Services Limited group had an
unrecognised deferred taxation asset of (Pounds)28,000 which related to
depreciation charged in advance of capital allowances.
--------------------------------------------------------------------------------
12
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
9. DIVIDENDS
<TABLE>
<CAPTION>
Checkpoint (Holdings) Checkpoint Security
Limited Services Limited
1 May 1999 11 Jan 1999 1 May 1998 1 May 1997
to 30 April to 30 April to 10 March to 30 April
2000 1999 1999 1998
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C>
Paid:
On `A' Ordinary shares - - 11 22
On Ordinary shares - - 39 74
Proposed:
On `A' Ordinary shares - - - 35
On Ordinary shares - - - 119
---- ----- -------- -----------
- - 50 250
---- ----- -------- -----------
</TABLE>
10. INTANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Checkpoint (Holdings) Limited
11 January 1999 to 30 April 2000
Advance royalty Goodwill Total
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
COST:
On incorporation 11 January 1999 - - -
Additions - 11,745 11,745
----- -------- -----------
At 30 April 1999 - 11,745 11,745
Additions 50 - 50
----- -------- -----------
At 30 April 2000 50 11,745 11,795
----- -------- -----------
AMORTISATION:
On incorporation 11 January 1999 - - -
Charge in the period - 279 279
----- -------- -----------
At 30 April 1999 - 279 279
Charge in the year - 2,070 2,070
----- -------- -----------
At 30 April 2000 - 2,349 2,349
----- -------- -----------
NET BOOK VALUE:
At 30 April 2000 50 9,396 9,446
===== ======== ===========
At 30 April 1999 - 11,466 11,466
===== ======== ===========
</TABLE>
--------------------------------------------------------------------------------
13
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
11. TANGIBLE FIXED ASSETS
Checkpoint (Holdings) Limited
11 January 1999 to 30 April 2000
<TABLE>
<CAPTION>
Short Freehold
leasehold land & Office Motor
improvements buildings equipment vehicles Total
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C> <C>
COST:
On incorporation 11 January 1999 - - - - -
Acquisition of subsidiary
undertaking 82 791 2,792 619 4,284
Additions - - 33 - 33
Disposals - - - (67) (67)
------- ------ ------ ------ ------
At 30 April 1999 82 791 2,825 552 4,250
Additions 10 6 388 - 404
Disposals - - (819) (371) (1,190)
Disposal of subsidiary
undertaking - - (74) - (74)
------- ------ ------ ------ ------
At 30 April 2000 92 797 2,320 181 3,390
------- ------ ------ ------ ------
DEPRECIATION:
On incorporation 11 January 1999 - - - - -
Acquisition of subsidiary
undertaking 18 54 1,604 388 2,064
Charge for the period - 2 86 20 108
On disposals - - - (62) (62)
------- ------ ------ ------ ------
At 30 April 1999 18 56 1,690 346 2,110
Charge for the period 17 12 578 78 685
On disposals - - (807) (296) (1,103)
Disposal of subsidiary
undertaking - - (39) - (39)
------- ------ ------ ------ ------
At 30 April 2000 35 68 1,422 128 1,653
------- ------ ------ ------ ------
NET BOOK VALUE:
At 30 April 2000 57 729 898 53 1,737
======= ====== ====== ====== ======
At 30 April 1999 64 735 1135 206 2,140
======= ====== ====== ====== ======
</TABLE>
--------------------------------------------------------------------------------
14
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
11. TANGIBLE FIXED ASSETS (continued)
Included in freehold land and buildings is land valued at (Pounds)200,000 which
is not depreciated.
Included in the above are assets held under hire purchase and finance leases
contracts as follows:
<TABLE>
<CAPTION>
Office equipment Motor vehicles
(Pounds)000 (Pounds)000
<S> <C> <C>
Cost at 30 April 2000 612 134
======= =======
Accumulated depreciation at 30 April 2000 367 73
======= =======
Cost at 30 April 1999 779 245
======= =======
Accumulated depreciation at 30 April 1999 304 98
======= =======
</TABLE>
12. INVESTMENTS
<TABLE>
<CAPTION>
Checkpoint (Holdings)
Limited
30 April 30 April
2000 1999
(Pounds)000 (Pounds)000
<S> <C> <C>
Own shares 33 -
Subsidiary - Checkpoint International SA de CV - 6
------- -------
33 6
======= =======
</TABLE>
The `own shares' are held by Checkpoint (Holdings) Limited Employee Benefit
Trust.
On 11 March 1999, the group acquired the Checkpoint Security Services Limited
group of companies for consideration of (Pounds)12,000,000 satisfied by cash of
(Pounds)10,682,903, the issue of loan notes of (Pounds)800,000 and the issue of
loan stock of (Pounds)517,097. Goodwill arising on the acquisition has been
capitalised and is being amortised over five years. The investment in
Checkpoint Security Services Limited has been included in the company's balance
sheet at its fair value at the date of acquisition.
--------------------------------------------------------------------------------
15
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
12. INVESTMENTS (continued)
Analysis of the acquisition of Checkpoint Security Services Limited group of
companies:
<TABLE>
<CAPTION>
Net assets at date of acquisition:
Book value and fair value
to group
(Pounds)000
<S> <C>
Tangible fixed assets 2,226
Stock 1,260
Debtors 4,617
Cash (943)
Creditors due within one year (4,552)
Creditors due after one year (1,501)
--------
1,107
Goodwill arising on acquisition 11,745
--------
12,852
========
Discharged by:
Cash 10,683
Loan notes 800
Loan stock 517
Costs associated with acquisition 852
========
12,852
========
</TABLE>
The Checkpoint Security Services Limited group of companies contributed
(Pounds)1,938,533 to the group's net operating cash flows, paid (Pounds)43,378
in respect of net returns on investments and servicing of finance, and utilised
(Pounds)386,474 for capital expenditure and financial investment.
The Checkpoint Security Services Limited group of companies earned a profit
after tax of (Pounds)432,701 in the year ended 30 April 1999 (1998:
(Pounds)404,598), of which (Pounds)328,856 arose in the period 1 May 1998 to 11
March 1999. The summarised profit and loss account for the period from 1 May
1998 to the effective date of acquisition is as follows:
<TABLE>
<CAPTION>
(Pounds)000
<S> <C>
Turnover 15,821
=======
Profit before tax 569
Taxation (240)
-------
329
=======
</TABLE>
There were no gains or losses in the period from 1 May 1998 to 11 March 1999
other than the profit of (Pounds)328,856 above.
--------------------------------------------------------------------------------
16
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
12. INVESTMENTS (continued)
On 22 February 2000, the group completed the sale of Compagnie Nationale des
Machines de Bureau SA (`CNMB'), a subsidiary of Checkpoint Security Services
Limited. The sale was made to J Shore, a director of Checkpoint Security
Services Limited. The disposal is analysed as follows:
<TABLE>
<CAPTION>
Net assets disposed of: (Pounds)000
<S> <C>
Fixed assets 36
Stock 62
Debts 193
Cash 293
Other creditors (301)
---------
283
Loss on disposal (283)
=========
Satisfied by:
Cash -
=========
</TABLE>
The profit attributable to members of the parent company include profits of
(Pounds)14,518 made by CNMB up to its date of disposal.
The cashflow relating to the disposal of CNMB was an outflow of (Pounds)293,284.
During the year CNMB contributed (Pounds)30,368 of the group's net operating
cash flows and utilised (Pounds)22,602 for capital expenditure and financial
investment.
On 7 January 2000, the group completed the sale of Checkpoint International SA
de CV ("CISA"), a subsidiary of Checkpoint Security Services Limited. CISA had
net assets of (Pounds)55,300 at the date of disposal for which (Pounds)1 cash
was received, resulting in a loss on disposal of (Pounds)55,299.
13. STOCKS
<TABLE>
<CAPTION>
Checkpoint (Holdings)
Limited
30 April 30 April
2000 1999
(Pounds)000 (Pounds)000
<S> <C> <C>
Raw materials 350 449
Stocks of finished goods and goods for resale 885 971
----- -----
1,235 1,420
===== =====
</TABLE>
The replacement value of stock is not significantly different from the amounts
disclosed above.
--------------------------------------------------------------------------------
17
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
14. DEBTORS
<TABLE>
<CAPTION>
Checkpoint (Holdings) Limited
30 April 30 April
2000 1999
(Pounds)000 (Pounds)000
<S> <C> <C>
Trade debtors 3,916 3,920
Other debtors 76 61
Amount due from related undertakings - 44
Prepayments and accrued income 349 333
Corporation tax receivable 221 62
----- -----
4,562 4,420
===== =====
</TABLE>
15. CREDITORS: (amounts falling due within one year)
<TABLE>
<CAPTION>
Checkpoint (Holdings) Limited
30 April 30 April
2000 1999
(Pounds)000 (Pounds)000
<S> <C> <C>
Bank overdraft 19 -
Current instalments due on bank loans (see note 16) 1,178 781
Obligations under HP and finance leases (see note 17) 227 275
Trade creditors 976 1,116
Other taxes and social security costs 712 738
Other creditors 2 20
Accruals 1,396 912
Deferred revenue 1,860 1,599
Corporation tax - -
----- -----
6,370 5,441
===== =====
</TABLE>
--------------------------------------------------------------------------------
18
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
16. LOANS
<TABLE>
<CAPTION>
Checkpoint
Checkpoint (Holdings) Services
Limited Limited
30 April 30 April 10 March
2000 1999 1999
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Amounts falling due:
In one year or less or on demand 1,225 800 112
In more than one year but not more than two years 1,175 1,225 112
In more than two years but not more than five years 6,487 4,025 263
In more than five years 5,774 7,794 234
------ ------ ------
14,661 13,844 721
Less: issue costs (250) (319) -
------ ------ ------
Less: included in creditors: amounts falling 14,411 13,525 721
due within one year (note 14) (1,178) (781) (112)
------ ------ ------
13,233 12,744 609
====== ====== ======
Details of loans not wholly repayable within five years are as follows:
Checkpoint
<CAPTION>
Security
Checkpoint (Holdings) Services
Limited Limited
30 April 30 April 10 March
2000 1999 1999
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Bank Mortgage - - 364
Bank Loan 1 - - 77
Fixed rate 11% to 14% Loan Stock 2004 to 2007 7,483 7,044 -
Less: issue costs (132) (148) -
Bank loan 2 6,000 6,000 -
Less: issue costs (118) (152) -
------ ------ ------
13,233 12,744 441
====== ====== ======
</TABLE>
The Bank Mortgage bears interest at 2% over Nat West Bank base rate for a term
of 25 years from October 1992 repayable in equal instalments from November 1995.
Bank Loan 1 bears interest at 2% over Nat West Bank base rate for a term of 10
years from September 1995 repayable in equal monthly instalments from September
1997.
The loan stock is repayable in 6 equal half yearly instalments starting on 31
October 2004.
Bank loan 2 is repayable in 6 equal half yearly instalments starting on 31
October 2004.
--------------------------------------------------------------------------------
19
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
17. OBLIGATIONS UNDER HIRE PURCHASE CONTRACTS AND FINANCE LEASES
<TABLE>
<CAPTION>
30 April 30 April
2000 1999
(Pounds)000 (Pounds)000
<S> <C> <C>
In one year or less (note 15) 227 275
In two to five years 34 301
---- ----
261 576
==== ====
</TABLE>
18. SHARE CAPITAL
Checkpoint Security Services Limited
<TABLE>
<CAPTION>
10 March 30 April
1999 1998
(Pounds)000 (Pounds)000
<S> <C> <C>
AUTHORISED
213,200 Ordinary shares of 5p each 11 11
85,731 "A" Ordinary shares of 5p each 4 4
500,000 11% Redeemable Preference shares of (Pounds)1 each 500 500
---- ----
515 515
==== ====
ALLOTTED, CALLED UP AND FULLY PAID
213,200 (1998: 213,135) Ordinary shares of 5p each 11 11
63,170 "A" Ordinary shares of 5p each 3 3
---- ----
14 14
==== ====
</TABLE>
During the period ended 10 March 1999, 65 Ordinary shares of 5p each were issued
at (Pounds)15.75 each as part of an executive share scheme.
During the year ended 30 April 1998, 2,795 Ordinary shares of 5p each were
issued at (Pounds)15.75 each as part of an executive share scheme.
The "A" Ordinary shareholders are entitled to a preferential dividend of 17.4133
pence per share each six months and then participate in any dividend declared to
Ordinary shareholders in excess of that amount.
--------------------------------------------------------------------------------
20
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
18. SHARE CAPITAL (continued)
On a return of Capital the "A" Ordinary shareholders have a right to receive in
preference to payments to Ordinary shareholders (Pounds)3.166 per share plus any
accrued dividend and then participate in any amount above this paid to Ordinary
shareholders.
"A" Ordinary and Ordinary shareholders have equal voting rights.
Checkpoint (Holdings) Limited
<TABLE>
<CAPTION>
30 April 30 April
2000 1999
Number (pounds)000 Number (pounds)000
<S> <C> <C> <C> <C>
A Ordinary Shares
of 10p each 1,608,000 161 1,608,000 161
B Ordinary Shares
of 10p each 240,000 24 240,000 24
Ordinary Shares
of 10p each 552,000 55 552,000 55
------ ------
240 240
====== ======
ALLOTTED, CALLED UP AND FULLY PAID
<CAPTION>
30 April 30 April
2000 1999
Number (pounds)000 Number (pounds)000
<S> <C> <C> <C> <C>
A Ordinary Shares
of 10p each 1,608,000 161 1,608,000 161
B Ordinary Shares
of 10p each 240,000 24 240,000 24
Ordinary shares
of 10p each 370,570 37 223,200 22
------ ------
222 207
====== ======
</TABLE>
All allotted shares detailed above were allotted for (Pounds)1.
The company's Employee Benefit Trust held 32,732 Ordinary Shares of 10p each at
30 April 2000.
The rights attaching to each class of share are as follows:
. As regards dividends:
All classes rank pari passu until 1 May 2004.
. As regards capital:
On a return of assets the capital available for distribution shall
pay firstly the A ordinary shareholders the amount credited as paid up on
the A Ordinary Shares and secondly pay the B ordinary shareholders and
ordinary stockholders (as if they were one class) the amounts paid up on
their respective shares. Thereafter, all classes rank pari passu.
. As regards voting:
All classes rank pari passu.
--------------------------------------------------------------------------------
21
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
19. RECONCILIATION OF SHAREHOLDERS' FUNDS AND MOVEMENT ON RESERVES
Checkpoint Security Services Limited
1 May 1997 to 10 March 1999
<TABLE>
<CAPTION>
Called up Share Other Profit and
share capital premium Reserve loss account Total
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C> <C>
At 1 May 1997 14 294 400 8 716
Profit for the year - - - 405 405
Dividends - - - (250) (250)
New shares issued - 44 - - 44
----- ----- ----- ----- ------
At 30 April 1998 14 338 400 163 915
New shares issued - 1 - - 1
Profit for the period - - - 241 241
Dividends - - - (50) (50)
----- ----- ----- ----- ------
At 10 March 1999 14 339 400 354 1,107
===== ===== ===== ===== ======
Checkpoint (Holdings) Limited
11 January 1999 to 30 April 2000
<CAPTION>
Called up Share Profit and
share capital premium loss account Total
(Pounds)000 (Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C> <C> <C>
Loss for the period - - (282) (282)
New shares issued 207 1,864 - 2,071
Share issue expenses - (50) - (50)
------ ----- ------ ------
At 30 April 1999 207 1,814 (282) 1,739
Loss for the period - - (3,351) (3,351)
Share award scheme - - 192 192
New shares issued 15 132 - 147
------ ---- ------ ------
At 30 April 2000 222 1,946 (3,441) (1,273)
====== ===== ====== ======
</TABLE>
--------------------------------------------------------------------------------
22
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
20. FINANCIAL COMMITMENTS
The group has annual commitments under operating leases as follows.
<TABLE>
<CAPTION>
Land and buildings
Checkpoint
Security
Checkpoint (Holdings) Services
Limited Limited
30 April 30 April 10 March
2000 1999 1999
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Leases which expire within one year 38 - 9
Lease which expire in two to five years 11 58 54
Leases which expire after more than five years 112 104 104
---- ---- ----
161 162 167
==== ==== ====
Other operating leases
Leases which expire within one year 80 35 66
Lease which expire in two to five years 162 230 218
Leases which expire after more than five years - - -
---- ---- ----
242 265 284
==== ==== ====
</TABLE>
21. RELATED PARTY TRANSACTIONS
During the year ended 30 April 2000 Checkpoint Security Services Limited
sold its shareholding in its subsidiary CNMB to J C Shore, a director of
Checkpoint Security Services Limited (note 12).
22. ULTIMATE PARENT COMPANY
Checkpoint (Holdings) Limited
At 30 April 2000 and 30 April 1999, the company's immediate parent
undertaking was Mercury Asset Management Limited. Copies of the company's
accounts are available from 33 King William Street, London, EC4R 9DU.
In the directors opinion the company's ultimate parent undertaking and
controlling party was Merrill Lynch & Co. Inc., which is incorporated in
the United States. Copies of its group accounts are available from The
World Trade Center, New York, New York, 10080, United States.
--------------------------------------------------------------------------------
23
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
23. POST BALANCE SHEET EVENTS
The entire share capital of Checkpoint (Holdings) Limited has been
purchased by Bottomline Technologies Inc., a company incorporated in the
United States. As part of the terms of the acquisition, the group has
divested itself of its electromechanical business.
24. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The consolidated accounts are prepared in accordance with accounting
principles generally accepted in the United Kingdom ("UK GAAP") which
differ from United States generally accepted accounting principles ("US
GAAP"). The differences that are significant to the group relate to the
following items.
Revenue recognition
The group's product range includes a number of items that have a software
element to them. Under UK GAAP, revenue for these products was recognised
in accordance with the terms of the contracts. These terms were typically
for payment on delivery. Installation of the product is considered
perfunctory and therefore, for any contracts where revenue had been booked
but installation not completed, the costs of installation were accrued for.
Under US GAAP, the rules for recognition of revenue are more stringent. As
a result of not being able to provide Vendor-Specific Objective Evidence
for all elements of the sale of products with a software element to them
revenue is deferred until all elements of the contract have been completed.
The cost of sales associated with the revenue is also deferred to `Other
debtors'.
Dividends
In the consolidated accounts, final dividends and the related advance
corporation tax ("ACT") are provided for in the year in respect of which
they are proposed by the Board of Directors for approval by the
shareholders. Under U.S. GAAP, dividends and the related ACT are not
provided for until the dividends are declared.
The following is a summary of the significant adjustments to income and
shareholders' funds which would be required if U.S. GAAP were to be applied
instead of U.K. GAAP:
--------------------------------------------------------------------------------
24
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
24. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)
<TABLE>
<CAPTION>
INCOME
Checkpoint
Security
Checkpoint (Holdings) Services
Limited Limited
1 May 1999 11 Jan 1999 1 May 1998
to 30 April to 30 April to 10 March
2000 1999 1999
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
(Loss)/profit on ordinary activities as reported in the group
profit and loss account (3,351) (282) 241
Adjustments:
Revenue (205) (147) (741)
Cost of goods sold 37 38 256
------ ------ ------
Net income as adjusted to accord with US GAAP (3,519) (391) (244)
====== ====== ======
Shareholders' Funds
<CAPTION>
Checkpoint
Security
Checkpoint (Holdings) Services
Limited Limited
30 April 30 April 10 March
2000 1999 1999
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Shareholders' funds as reported in the group balance sheets (1,273) 1,739 1,107
Adjustments:
Current assets
Other debtors 607 570 532
ACT recoverable - - (38)
Creditors: amounts falling due within one year
Deferred revenue (2,448) (2,243) (2,096)
Dividends payable - - 153
ACT payable - - 38
------ ------ ------
Shareholders' funds as adjusted to accord with US GAAP (3,114) 66 (304)
====== ====== ======
</TABLE>
--------------------------------------------------------------------------------
25
<PAGE>
Checkpoint (Holdings) Limited and predecessor
-------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
for the periods from 1 May 1997 to 30 April 2000
24. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)
GROUP STATEMENT OF CASH FLOWS
The group cash flow statement prepared under U.K. GAAP presents
substantially the same information that is required under U.S. GAAP but may
differ, however, with regard to classification of some items within the
statements and as regards the definition of cash under U.K. GAAP and cash
and cash equivalents under U.S. GAAP.
Under U.S. GAAP, cash and cash equivalents include short-term highly liquid
investments but do not include bank overdrafts. Under U.K. GAAP cash flows
are presented separately for operating activities, returns on investments
and servicing of finance, taxation, capital expenditure and financial
investment, acquisitions, equity dividends and management of liquid
resources and financing. U.S. GAAP, however, requires only three categories
of cash flow to be reported: operating, investing and financing. Cash flows
from and returns on investments, taxation and servicing of finance shown
under U.K. GAAP would be included as operating activities under U.S. GAAP.
The payment of dividends would be included as a financing activity under
U.S. GAAP. Under U.K. GAAP all interest is treated as part of returns on
investments and servicing of finance. Under U.S. GAAP capital expenditure
and financial investment and acquisitions are reported within investing
activities.
The categories of cash flow activity under U.S. GAAP can be summarised as
follows:
<TABLE>
<CAPTION>
Checkpoint
Security
Checkpoint (Holdings) Services
Limited Limited
1 May 1999 11 Jan 1999 1 May 1998
to 30 April to 30 April to 10 March
2000 1999 1999
(Pounds)000 (Pounds)000 (Pounds)000
<S> <C> <C> <C>
Cash inflow/(outflow) from operating activities 1,453 (417) 444
Cash outflow from investing activities (647) (12,506) (882)
Cash (outflow)/inflow from financing activities (228) 13,696 576
----- ------- ----
Increase in cash and cash equivalents 578 773 138
Cash and cash equivalents
At beginning of period 773 - 43
----- ------- ----
At end of period 1,351 773 181
===== ======= ====
</TABLE>
26
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