<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 8-K
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 20, 1995
-----------------------------
Alpharel, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
California 0-15935 95-3634089
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission file number) (IRS employer
incorporation) identification no.)
9339 Carroll Park Drive, San Diego, California 92121
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (619) 625-3000
----------------------------
Not applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
A. DESCRIPTION OF PROPOSED TRANSACTION.
Alpharel, Inc., a California corporation (the "Company"), has
entered into a letter of intent dated November 20, 1995 (the "Letter of
Intent") with Jay Tanna, the founder and Managing Director of Trimco Group
plc, a United Kingdom company ("Trimco"), and Document Management Systems
Limited, a company affiliated with Mr. Tanna, providing for the purchase of
all of the outstanding shares of Trimco. Document Management Systems Limited
and another entity affiliated with Mr. Tanna together control approximately
70% of the outstanding shares of Trimco.
Under the Letter of Intent, the Company would acquire the
Trimco shares for an aggregate purchase price of $14,650,000, comprised of
$6,550,000 in cash and shares of Company common stock having a value of
$8,100,000. For this purpose, the value per share of Company common stock
would be deemed to be the lesser of a) the average daily closing price per
share of Company common stock on the Nasdaq National Market for the period
commencing July 17, 1995 and ending on the trading day immediately prior to
the closing date of the acquisition and b) the average daily closing price
per share of Company common stock on the Nasdaq National Market for the 10
trading days immediately preceding the closing date of the acquisition. The
average closing price of Company common stock during the period July 17, 1995
through November 16, 1995 was $4.99. Such price would result in the issuance
of approximately 1,623,000 shares of Company common stock to the Trimco
shareholders. However, further fluctuations in the price of Company common
stock could result in material changes in the number of shares to be issued.
The shares of common stock would be issued to the Trimco shareholders, none
of whom are residents of the United States, in reliance on the exemption set
forth in Regulation S of the Securities and Exchange Commission from the
registration requirements of the Securities Act of 1933.
The principal terms of the Letter of Intent are not legally
binding on the parties. However, Mr. Tanna and Document Management Systems
Limited are subject to a binding covenant prohibiting, through December 31,
1995, discussions or negotiations by them with third parties interested in
acquiring Trimco. Although the parties are not bound by the terms of the
Letter of Intent, the Letter of Intent provides that the proposed purchase of
the Trimco shares would be consummated on terms and conditions substantially
similar to those set forth in a draft purchase and sale agreement attached to
the Letter of Intent (the "Draft Agreement"). Under the Draft Agreement, the
selling shareholders of Trimco would make no representations and warranties
with respect to Trimco. Accordingly, in the event that the acquisition of
Trimco by the Company is consummated and Trimco suffers any loss or claim,
such loss or claim generally would not be subject to any right of recovery or
indemnification from the Trimco shareholders in favor of the Company, unless
the Company prevails on a claim of fraudulent disclosure or willful
concealment of information, in which event a claim may be made against
certain shareholders (in each case limited in amount to the consideration
received by such shareholder).
The Letter of Intent and Draft Agreement contemplate that Mr.
Tanna would remain as managing director of Trimco and would refrain from
engaging in any business competitive with Trimco for a period of two years
after the closing of the acquisition. The Company anticipates that Mr. Tanna
would, in addition, be appointed Executive Vice President and a Director of
the Company. The loss of the services of Mr. Tanna in the future would have
an adverse effect on Trimco's operations and prospects. Entities affiliated
with Mr. Tanna would receive approximately 70% of the shares of Company
common stock to be issued to Trimco shareholders. Mr. Tanna has agreed that
no more than 12.5% of the shares issued to such entities would be sold in
each three-month period after the consummation of the acquisition.
The Company expects the acquisition to be consummated in
December 1995. However, consummation is contingent upon the agreement of all
of the approximately 15 Trimco shareholders to the acquisition on the terms
contemplated by the Letter of Intent, the receipt of financing by the Company
to fund the cash portion of the purchase price and certain other customary
conditions. Although the Company has engaged in preliminary discussions with
potential financing sources, the Company has received no commitment from any
such source to provide such financing. The Company anticipates that such
financing would be obtained through the issuance of common
2
<PAGE>
stock or securities convertible into or exercisable for common stock. The
price per share at which any such common stock is issued may be less than the
current market price per share of Company common stock, thereby resulting in
dilution to Company shareholders. There can be no assurance that the Company
will be successful in obtaining financing for the transaction or that the
acquisition of Trimco will be consummated on the terms contemplated by the
Letter of Intent.
In conjunction with the Letter of Intent, the Company has
agreed to make cash expenditures of approximately $950,000 and to issue shares
of Company common stock having a value of approximately $640,000 (at the time
of closing) to provide incentives to Trimco personnel to remain in Trimco's
employ after the closing and to facilitate the integration of the operations
of the Company and Trimco.
B. DESCRIPTION OF BUSINESS OF TRIMCO GROUP, PLC.
Trimco was incorporated in 1988 in the United Kingdom and has
its principal offices in Ealing, London in the United Kingdom. Trimco has
developed a line of software products for the capture, viewing, mark-up
editing, storage, distribution and workflow management of documents.
Trimco's products focus on applications involving technical documents such as
engineering drawings and blueprints, yet many of Trimco's customers also use
Trimco's products in managing and manipulating office documents and
electronic files. The products are marketed primarily through Value-Added
Resellers, distributors and systems integrators, although Trimco has
successfully pursued direct business with end-user clients, particularly for
larger and more complex installations of its software. The following
business and financial information regarding Trimco was provided to the
Company by Trimco.
MARKETS/PRODUCTS AND SERVICES
Trimco's operations commenced in 1987 and deliveries to Trimco's first customers
were initiated shortly thereafter. Initial sales involved the resale of other
companies' products and the provision of services to convert documents to
electronic format. As Trimco matured, research and development efforts yielded
client software products running on the Microsoft Windows operating system that
allowed Trimco to reduce its dependency upon third party software suppliers.
Trimco sought to differentiate its products from competitors through the speed
of document retrieval, "postage-stamp" overview/preview of documents and
"hot-spot" linkage between the areas of an image being viewed and other
associated documents, among others.
By 1992, Trimco had developed a wide range of client software
products for the technical document management market based on the Trimco
Targeted Image Extraction (TIE) technology working in conjunction with
"commodity" operating systems such as Windows, Macintosh (Apple Computer) OS,
and UNIX. In addition, considerable work had been completed to create
document management and retrieval solutions working in conjunction with
standard industry relational database software from providers such as Oracle,
Sybase and Informix. Expanding upon this new base of software products, the
company initiated sales in the United States, South Africa, continental
Europe, the Middle East, India and Asia through both direct and indirect
sales efforts.
Development efforts have continued to the present and Trimco
offers a range of products resulting from its own research and development
efforts and including solutions for workflow management (routing of documents
and activity according to software-defined rules and paths), product data
management (for the control of documents throughout the lifecycle of product
development, manufacturing and support) and further enhancement of both
client document access tools and server-based document management tools.
Trimco has also entered into resale and integration agreements with certain
other software providers to allow full solutions to be provided to Trimco's
customers.
3
<PAGE>
Trimco's principal product offerings include:
(1) Target/PE (Personal Edition): a software solution for
adding document management capabilities to personal workstations for use by
a single user.
(2) Target/WG (Work Group): a software solution aimed at
the departmental or work group market allowing networking of multiple
target/PE users together, while adding the ability to access relational
database storage for larger numbers of documents.
(3) Trimco/PRO: a suite of software solutions encompassing
the needs of extended enterprises for document management including:
(a) Win-Track: software for document tracking,
indexing, storage, and retrieval to and from large relational
databases.
(b) TIE (Targeted Image Extraction) Document Image
Processing: a set of software modules encompassing the requirements
for viewing, scanning, quality control, annotation, redlining, editing
and file conversion. TIE also provides very rapid retrieval and
viewing of documents over a network.
(c) Workflow: software for establishing routing and
security of documents as they pass through a business process.
(d) Core: software for UNIX servers to provide core
functionality to large document management solutions such as printing,
batch process management and file recovery and enhancement.
(4) Professional services: services for tailoring and
customization of Trimco products to specific customer needs as well as
incorporation of third party software and hardware components to create
complete solutions.
(5) Maintenance Services: provision of help-desk, problem
tracking and resolution, and fixes and patches to customers under either
warranty or maintenance contracts. Trimco provides maintenance both
directly and through Value-Added Resellers and distributors.
Document management solutions for smaller users and departments
range in price from $10,000 to $50,000. Solutions for enterprise customers
range in price from $250,000 to over $2 million. Value-Added Resellers and
distributors provide most of the smaller sales for Trimco, while the larger
sales are generally pursued in partnership with a systems integrator or
through direct sales efforts by Trimco, usually involving senior management.
In the past two years, customer requirements for document
management systems have shifted toward high-speed retrieval, viewing,
manipulation, routing, and aggregating of documents over distributed networks
of powerful server computers and large numbers of desktop workstations and
personal computers. All these tasks are being demanded by customers to
complement and enhance business process management applications such as
manufacturing management, financial management, customer service and product
development and maintenance. Several standards bodies have emerged to
attempt to establish common interface standards between major components of
documents management systems and business applications. Two such standards
bodies are the Workflow Management Coalition and the Document Management
Alliance.
4
<PAGE>
Trimco's research and development efforts have focused on
compliance with proposed standards and customer demand for high-speed
retrieval, viewing and routing over distributed networks of large numbers
of workstations and personal computers. Although the Company and Trimco
historically have both participated in the integrated document management
market, they have generally targeted different industry and geographic
segments. The Company intends to continue to support through its development
efforts and to actively market both the Alpharel and Trimco product sets.
Nevertheless, the Company's and Trimco's research and development efforts in
the past have overlapped to a significant degree. As a result, the Company
anticipates that redirection of the combined research and development
resources of the two companies after the closing would enable them to expand
the development projects that they can pursue jointly in an effort to develop
new products and greater product functionality.
CUSTOMERS
Trimco's customers are primarily large corporations and
governmental agencies. Typical users of Trimco software products and
services are in the petrochemical industry, energy-generating utilities,
railways, construction, financial services, and aerospace. Governmental
users include the European Space Agency and Nirex [U.K.] Ltd.
During the fiscal year ended June 30, 1995, three customers
accounted for 15%, 12% and 10% of Trimco's revenue, respectively. In fiscal
year 1994 sales to one of Trimco's U.S. distributors and one other customer
accounted for 20% and 10%, respectively, of Trimco's revenue. That U.S.
distributor and Trimco have been unable to reach agreement on the terms of a
continuing distribution relationship. Accordingly, the distribution
agreement between them has been terminated, although Trimco expects to
continue to offer its products in the United States in part through this
distributor. Upon consummation of the acquisition, the Company intends to
expand direct sales of Trimco products in the United States through the
Company's existing sales and marketing force working together with Trimco
personnel.
BACKLOG
At June 30, 1995, Trimco's backlog of software and professional services
revenue was L826,000 ($1,312,000) and its maintenance backlog was L311,000
($495,000). Trimco's contract backlog consists of the aggregate anticipated
revenue remaining to be earned at a given time from the uncompleted portions
of its existing contracts. It does not include revenues that may be earned
if customers exercise options to make additional purchases. The amount of
contract backlog is not necessarily indicative of future contract revenues
because short-term contracts, modifications to or terminations of present
contracts and production delays can provide additional revenues or reduce
anticipated revenues. Like the Company's backlog, Trimco's backlog is
typically subject to large variations from time to time when new contracts
are awarded. Consequently, it is difficult to make meaningful comparisons
of backlog.
FACILITIES AND EMPLOYEES
Trimco's main operations are located at a leased facility at 111 Uxbridge
Road, Ealing, London, W5 2TZ, United Kingdom. In addition, Trimco has one
leased office in Florida from which a small number of field sales,
maintenance and research and development personnel operate. As of November
11, 1995, Trimco had 94 employees, of whom 45 were engaged in engineering and
research and development activities, 33 in marketing and program/maintenance
support and 16 in operations and administration.
5
<PAGE>
C. FINANCIAL INFORMATION
For the year ended June 30, 1995, Trimco had revenue of
L5,601,000 ($8,842,000) and net income of L230,000 ($363,000) as compared to
1994 revenue of L4,434,000 ($6,639,000) and net income of L193,000
($288,000). As of June 1995, Trimco's total assets amounted to L2,938,000
($4,674,000), including cash of L316,000 ($503,000) and working capital of
L318,000 ($506,000). For the three months ended September 30, 1995, Trimco
reported revenue of L1,034,000 ($1,611,000) and a net loss of L261,000
($408,000) as compared to the comparable period in 1994, when Trimco reported
revenue of L795,000 ($1,233,000) and a net loss of L337,000 ($523,000).
Traditionally, Trimco's first quarter ending September 30 is characterized by
lower revenues and weaker operating results than other quarters, primarily
due to the effects of the European holiday schedule on July and August
operations.
Financial statements for the three months ended September 30, 1995
have not yet been completed by Trimco and provided to the Company. The audited
consolidated financial statement of Trimco for the years ended June 30, 1993,
1994, and 1995 are attached hereto as Exhibit 99.1.
It is anticipated that the acquisition of Trimco by the Company
would be accounted for using the purchase method. A substantial portion of
the purchase price relates to research and development projects undertaken by
Trimco, thereby resulting in a charge against the Company's operations upon
consummation of the acquisition equal to the amount thereof. In addition,
the Company may incur additional charges associated with the integration of
Trimco's and the Company's existing operations subsequent to the consummation
of the acquisition. The amount of the charges which would result from the
transaction, while substantial, have not been determined at this time.
Because a substantial portion of the purchase price would be charged against
the Company's operations, consummation of the acquisition would likely result
in a material reduction in net tangible book value per share of the Company's
common stock.
Upon consummation of the acquisition a substantial portion of
the Company's consolidated revenues and backlog would be denominated in the
currencies of foreign nations, including principally the United Kingdom.
Accordingly, the Company would become subject to the effects on its results
of operations of fluctuations of the value of such currencies as compared to
the dollar.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits:
99.1 Consolidated Financial Statements of Trimco Group, plc
for the years ended June 30, 1993, 1994 and 1995.
99.2 Consent of Independent Accountants.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 20, 1995
ALPHAREL, INC.
By: /s/ JOHN W. LOW
John W. Low, Chief Financial Officer
7
<PAGE>
EXHIBIT INDEX
- -------------
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ------------
99.1 Financial Statements of Trimco Group, plc for
the years ended June 30, 1993, 1994 and 1995.
99.2 Consent of Independent Accountants
CA953140.005/4+
8
<PAGE>
Company Number 2253256
TRIMCO GROUP PLC
CONSOLIDATED FINANCIAL STATEMENTS
30TH JUNE 1994
Gane Jackson Scott
Chartered Accountants
Holborn Hall,
100 Gray's Inn Road,
London WC1X 8AY.
<PAGE>
TRIMCO GROUP PLC Page 2
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30TH JUNE 1994
Note 1994 1993
L L
TURNOVER 1d&2 4,434,440 3,593,008
Cost of Sales 1,606,153 1,341,926
--------- ---------
GROSS PROFIT 2,828,287 2,251,082
Administrative Expenses 2,554,146 2,086,782
--------- ---------
OPERATING PROFIT 2 274,141 164,300
Interest Receivable 519 -
Interest Payable 4 (18,520) (22,595)
--------- ---------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 256,140 141,705
Taxation 5 (63,142) (79,349)
--------- ---------
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 192,998 62,356
Dividends 6 (62,280) (58,185)
--------- ---------
RETAINED PROFIT FOR THE
FINANCIAL YEAR 15 127,718 4,171
========= =========
The notes from pages 7 to 14 form part of these accounts
There is no material difference between reported profits and the historical
cost profits for 1994 or 1993.
<PAGE>
TRIMCO GROUP PLC Page 3
CONSOLIDATED BALANCE SHEET
AT 30TH JUNE 1994
<TABLE>
<CAPTION>
Note 1994 1993
<S> <C> <C> <C> <C> <C>
FIXED ASSETS L L L L
Tangible Assets 7 441,087 589,682
CURRENT ASSETS
Stock 9 311,432 269,190
Debtors 10 1,843,996 1,088,400
Cash at Bank 4,264 29,103
--------- ---------
2,159,692 1,386,693
CURRENT LIABILITIES
CREDITORS:
Amounts falling due within one year 11 (1,844,933) (1,293,212)
--------- ---------
NET CURRENT ASSETS 314,759 93,481
--------- ---------
TOTAL ASSETS LESS CURRENT
LIABILITIES 755,846 683,163
CREDITORS:
Amounts falling due after more
than one year 12 (12,356) (48,904)
PROVISIONS FOR LIABILITIES
AND CHARGES
Deferred tax 13 22,500 2,300
--------- ---------
765,990 636,559
========= =========
CAPITAL AND RESERVES
Called up Share Capital 14 370,000 370,000
Reserves 15 395,990 266,559
--------- ---------
765,990 636,559
========= =========
</TABLE>
The Financial Statements were approved by the Board of Directors on 3rd
January 1995.
J.V. TANNA - DIRECTOR
The notes on pages 7 to 14 form part of these accounts.
<PAGE>
TRIMCO GROUP PLC Page 4
BALANCE SHEET
AT 30TH JUNE 1994
Note 1994 1993
L L
FIXED ASSETS
Investments 8 914 28,185
CURRENT ASSETS
Debtors 10 953,856 816,665
CREDITORS:
Amounts falling due within one year 11 (198,262) (106,403)
-------- --------
NET CURRENT ASSETS 755,594 710,262
-------- --------
TOTAL ASSETS LESS CURRENT
LIABILITIES 756,508 738,447
CREDITORS:
Amounts falling due after more than
one year 12 - (15,000)
-------- --------
756,508 723,447
======== ========
CAPITAL AND RESERVES
Called up Share Capital 14 370,000 370,000
Reserves 15 386,508 353,447
-------- --------
756,508 723,447
======== ========
The Financial Statements were approved by the Board of Directors on
3rd January 1995.
J.V. TANNA - DIRECTOR
The notes on pages 7 to 14 form part of these accounts.
<PAGE>
TRIMCO GROUP PLC Page 5
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 30TH JUNE 1994
1994 1993
L L
Retained profit for the year 127,718 4,171
Exchange gain on foreign equity investment 1,713 8,883
------- ------
TOTAL RECOGNISED GAINS AND LOSSES RELATING
TO THE YEAR 129,431 13,054
======= ======
The notes on pages 7 to 15 form part of these accounts.
<PAGE>
CONSOLIDATED CASH FLOW STATEMENT Page 6
FOR THE YEAR ENDED 30TH JUNE 1994
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C> <C> <C>
L L L L
NET CASH INFLOW FROM OPERATING
ACTIVITIES 92,666 145,346
RETURN ON INVESTMENTS AND SERVICING
OF FINANCE
Interest received 519 -
Interest paid (12,801) (17,542)
Interest element of finance lease
payments (5,719) (5,053)
Dividends paid (23,482) (13,426)
------- -------
NET CASH OUTFLOW FROM RETURNS ON
INVESTMENTS AND SERVICING OF FINANCE (41,483) (36,021)
TAXATION
Tax paid (79,021) (73,674)
INVESTING ACTIVITIES
Purchase of fixed assets (145,709) (504,687)
Proceeds of sale of fixed assets 34,892 6,000
------- -------
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (110,817) (498,687)
FINANCING
Inception of finance leases and hire
purchase contracts - 51,237
Issue of share capital (net) - 350,000
Repayment of loans (15,000) (15,000)
Capital element of hire purchase
contracts and finance leases (24,673) (27,495)
------- -------
NET CASH (OUTFLOW)/INFLOW FROM
FINANCING (39,673) 358,742
------- -------
(DECREASE) IN CASH AND CASH
EQUIVALENTS (178,328) (104,294)
======= =======
</TABLE>
See note 19 for notes to this statement.
The notes on pages 7 to 14 form part of these accounts.
<PAGE>
TRIMCO GROUP PLC Page 7
NOTES TO THE ACCOUNTS
3OTH JUNE 1994
1. PRINCIPAL ACCOUNTING POLICIES
a) Basis of Accounting
The Financial Statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards.
b) Basis of consolidation
The consolidated financial statements include the results of the
parent company and its trading subsidiaries Trimco America Inc. and
Trimco Enterprises Ltd.
Subsidiaries acquired in the year are consolidated from the date of
acquisition. Net assets at the date of acquisition are incorporated
into the consolidated accounts at their fair values to the Group after
making appropriate reorganisation provisions. Goodwill on consolidation
arising from acquisitions is taken directly to reserves.
The parent company has not presented its own profit and loss account as
permitted by Section 230 of the Companies Act 1985.
c) Foreign Currencies
Subsidiary accounts prepared in foreign currencies are translated into
sterling at the year end exchange rate.
d) Turnover
Turnover represents amounts receivable excluding value added tax, on
the supply of goods and services all in respect of continuing activities.
e) Depreciation
Depreciation of fixed assets is charged at the rates estimated to write
off their cost less any residual value over the expected useful lives
which are as follows:
Premises Improvement up to 10 years
Motor vehicles 3 years
Computer Equipment 3 years
Fixtures and Fittings 4 years
f) Finance Leases
Assets obtained under finance leases are capitalised in the Balance
Sheet and are depreciated over their useful lives. The interest element
of the lease obligation is charged to the Profit and Loss Account so as
to produce a constant periodic rate of charge on the remaining balance
of obligation.
g) Deferred taxation
Deferred taxation is calculated by the liability method on the excess
of taxation allowances claimed on fixed assets over the related
cumulative depreciation charged in the accounts.
h) Stock
Stock is valued at the lower of cost and net realisable value.
i) Developments costs
Development costs are written off as incurred.
<PAGE>
TRIMCO GROUP PLC Page 8
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1994
2. OPERATING PROFIT 1994 1993
a) Operating profit is stated after charging: L L
Auditor's remuneration
- Audit work 9,000 8,000
- Non audit work 6,904 3,028
Depreciation of tangible fixed assets 278,308 215,499
Directors' remuneration 248,825 166,073
b) Geographical Segments
<TABLE>
<CAPTION>
United Kingdom North America Group
1994 1993 1994 1993 1994 1993
Turnover L L L L L L
<S> <C> <C> <C> <C> <C> <C>
By origin 3,792,074 3,079,532 642,366 513,476 4,434,440 3,593,008
Profit before tax 190,967 222,015 65,173 (80,310) 321,140 141,705
Segment net assets/
liabilities 765,078 693,200 912 (56,641) 765,990 636,559
</TABLE>
No geographical analysis of turnover by destination is given in the
accounts.
All activities of the Group are considered to be in relation to a single
class of business.
3. DIRECTORS AND EMPLOYEES 1994 1993
Staff costs including Directors' emoluments: L L
Wages and Salaries 1,303,748 973,926
Social Security costs 100,243 73,075
Other Pension costs 39,930 24,536
--------- ---------
1,443,921 1,071,537
========= =========
1994 1993
Director emoluments: L L
Highest paid director 111,088 60,000
No No
Other directors' emoluments were in the ranges
L 0 - L 5,000 - 1
L10,001 - L15,000 - 1
L25,001 - L30,000 1 -
L40,001 - L45,000 - 1
L45,001 - L50,000 1 -
L50,001 - L55,000 1 -
Pensions
In respect of certain employees, the Company contributes a proportion of
salary into the Personal Pension Scheme of those individuals.
<PAGE>
TRIMCO GROUP PLC Page 9
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1994
<TABLE>
<CAPTION>
4. INTEREST PAYABLE 1994 1993
L L
<S> <C> <C>
Bank and Loan Interest 11,357 15,795
Finance Lease Interest 5,719 5,053
Other 1,444 1,747
------- -------
18,520 22,595
======= =======
5. TAXATION 1994 1993
L L
UK Corportation tax charge on profits for
the year at marginal rates 84,000 70,810
(Under)/over-provision in prior years (658) 1,549
Transfer (from)/to deferred taxation (20,200) 6,990
------- -------
63,142 79,349
======= =======
4. DIVIDENDS 1994 1993
In respect of 1992: L L
'A' Ordinary Shares - 7,878
Ordinary Shares - 12,854
In respect of current year:
11% Preference Shares (11p per share) 5,500 10,676
'A' Ordinary Shares (18.9p per share) 38,992 17,288
Ordinary Shares (18.3p per share) 20,788 9,489
------- -------
65,280 58,185
======= =======
</TABLE>
7. TANGIBLE FIXED ASSETS - GROUP
<TABLE>
<CAPTION>
Premise Motor Computer Fixtures &
Improvements Vehicles Equipment Fittings Total
L L L L L
<S> <C> <C> <C> <C> <C>
Cost
30th June 1993 51,105 187,493 769,577 98,900 1,107,075
Additions 20,700 - 89,863 35,146 145,709
Disposals - (6,916) (22,859) - (29,775)
Exchange differences (155) (266) (2,564) (531) (3,516)
------- ------- ------- ------- ---------
30th June 1994 71,650 180,311 834,017 133,515 1,219,493
------- ------- ------- ------- ---------
Depreciation
30th June 1993 741 81,896 397,921 36,835 517,393
Charge for year 8,053 51,126 192,898 26,231 278,308
Released on disposal - (6,916) (9,442) - (16,358)
Exchange differences (19) (178) (427) (313) (937)
------- ------- ------- ------- ---------
30th June 1994 8,775 125,928 580,950 62,753 778,406
------- ------- ------- ------- ---------
NET BOOK VALUE
30th June 1994 62,875 54,383 253,067 70,762 441,087
======= ======= ======= ======= =========
30th June 1993 50,364 105,597 371,656 62,065 589,682
======= ======= ======= ======= ========
</TABLE>
<PAGE>
TRIMCO GROUP PLC Page 10
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1994
<TABLE>
<CAPTION>
8. INVESTMENTS IN GROUP UNDERTAKINGS 1994
L
<S> <C>
Balance 1.7.93 28,185
Additions -
Provisions (27,271)
-------
Balance 30.6.94 914
=======
Group undertakings comprise the following:
%
Micro Synergy Associates Inc. (Incorporated in the USA) 100
Trimco Enterprises Limited (Registered in England) 100
Trimco America Inc. (Incorporated in the USA) 100
Imagen Enterprises Ltd. (Registered in England) 100
Trimco Document Management Inc. (Incorporated in Canada) 100
</TABLE>
9. STOCKS
<TABLE>
<CAPTION>
Group Company
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Finished goods and
work in progress 311,432 269,190 - -
========= ========= ======= =======
</TABLE>
10. DEBTORS
<TABLE>
<CAPTION>
Group Company
1994 1993 1994 1993
L L L L
<S> <C> <C> <C> <C>
Trade debtors 1,595,686 953,120 - -
Prepayments and accrued income 240,885 120,235 - -
Amounts owed by group undertakings - - 953,856 786,665
Other debtors 7,425 15,045 - 30,000
--------- --------- ------- -------
1,843,996 1,088,400 953,856 816,665
========= ========= ======= =======
</TABLE>
11. CREDITORS
<TABLE>
<CAPTION>
Group Company
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Amounts falling due within one year L L L L
Loans from 3i and Government loan 15,000 15,000 15,000 15,000
Obligations under hire purchase
contracts and finance leases 21,358 24,483 - -
Bank loans and overdrafts 328,850 175,361 - -
Trade creditors 551,147 363,027 - -
Corporation tax 119,205 114,883 91,205 41,144
Dividend payable 92,057 50,259 92,057 50,259
Other creditors including taxation
and social security 84,831 41,219 - -
Accrued and deferred income 632,485 508,980 - -
--------- --------- ------- -------
1,844,933 1,293,212 198,262 106,403
========= ========= ======= =======
</TABLE>
<PAGE>
TRIMCO GROUP PLC Page 11
NOTES TO THE ACCOUNTS (continued)
30th JUNE 1994
12. CREDITORS
<TABLE>
<CAPTION>
GROUP COMPANY
Amounts falling due after more than 1994 1993 1994 1993
one year L L L L
<S> <C> <C> <C> <C>
Loans from 3i & Government loan
schemes -- 15,000 -- 15,000
Obligations under Hire Purchase
Contracts and Finance Leases 12,356 33,904 -- --
------ ------ ------ ------
12,356 48,904 -- 15,000
====== ====== ====== ======
</TABLE>
Included within creditors for the Group are liabilities of L377,564
(1993: L263,748) and L15,000 (1993: L30,000) for the Company which are
secured on the assets of the Group.
13. DEFERRED TAXATION
<TABLE>
<CAPTION>
GROUP COMPANY
1994 1993 1994 1993
L L L L
<S> <C> <C> <C> <C>
Balance brought forward 2,300 9,290 -- --
Transfer to/(from) deferred taxation 20,200 (6,990) -- --
------ ------ ------ ------
Balance carried forward 22,500 2,300 -- --
====== ====== ====== ======
</TABLE>
The above asset is all in respect of accelerated capital allowances and
has been calculated as chargeable to tax at 25%.
14. CALLED UP SHARE CAPITAL
At 1st July 1993 and 30th June 1994
ALLOTTED,
CALLED UP AND
AUTHORISED FULLY PAID
L L
Ordinary Shares of L1 each 131,400 113,400
'A' Ordinary Shares of L1 each 206,600 206,600
------- -------
Equity Share Capital 338,000 320,000
Cumulative Redeemable Preference
Shares of L1 each - non Equity 50,000 50,000
------- -------
388,000 370,000
======= =======
On 20th May 1993 options to acquire 11,100 Ordinary Shares in the Company
at L3.60. per share were granted to staff of the Company. These options
are exercisable at the earliest of the following events:
i) the third anniversary of the date of the grant;
ii) the death of the option holder; and
iii) the option holder ceasing to be a director or employee of
the Company by reason of injury, disability, redundancy or
retirement.
<PAGE>
TRIMCO GROUP PLC Page 12
NOTES TO THE ACCOUNTS (continued)
30th JUNE 1994
14. CALLED UP SHARE CAPITAL - Continued
A summary of the rights of each class of share is as follows:
PREFERENCE SHARES
DIVIDENDS
A fixed cumulative dividend of 11% per annum.
REDEMPTION
In multiples of 25,000 on 31st January 1996 and 31st January 1997 or
immediately upon the company being granted a listing or in the event of a
successful take over.
OTHER
First preference on the return of assets of L1 per share plus any arrears
of dividends.
'A' ORDINARY SHARES
DIVIDENDS
A cumulative preferential dividend equivalent to 12.2% of net profits. An
additional cumulative preferential dividend based on remuneration payable
to the chief executive over and above an index linked figure. To the
extent that Ordinary Share holders receive dividends in excess of the
12.2% dividend referred to above an equivalent further amount is also
payable to the holders of this class of shares.
OTHER
A preference on the return of assets ranking immediately after the
Preference Shareholders, of L1 per share plus any arrears of dividend. A
distribution of any balance in the event of a return of assets,
equivalent per share, to the amount paid to ordinary shareholders. These
shares have the same voting rights in general meeting as the ordinary
shares.
15. RESERVES
<TABLE>
<CAPTION>
GROUP COMPANY
------------------------------- ------------------------------
SHARE PROFIT SHARE PROFIT
PREMIUM AND LOSS PREMIUM AND LOSS
ACCOUNT ACCOUNT TOTAL ACCOUNT ACCOUNT TOTAL
L L L L L L
<S> <C> <C> <C> <C> <C>
Balance brought forward
1st July 1993 200,000 66,559 266,559 200,000 153,447 353,447
Retained profit for the
year -- 127,727 127,718 -- 33,061 33,061
Exchange differences on
consolidation -- 1,713 1,713 -- -- --
------- ------- ------- ------- ------- -------
Balance carried forward
30th June 1994 200,000 195,990 395,990 200,000 186,508 386,508
======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
TRIMCO GROUP PLC Page 13
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1994
16. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
1994 1993
L L
Profit attributable to members of the Group 192,998 62,356
Dividends (65,280) (58,185)
------- -------
127,718 4,171
Other recognised gains and losses for the year 1,713 8,883
New share capital subscribed (net) - 350,000
------- -------
Net additions to shareholders' funds 129,431 363,054
Opening shareholders' funds 636,559 273,505
------- -------
Closing shareholders' funds 765,990 636,559
======= =======
Cumulative goodwill written off at 30th June 1994 amounted to L33,934
(1993: L33,934). Profit for the financial year for the Company was L98,341
(1993: L139,805).
17. TRANSACTIONS INVOLVING DIRECTORS
During the period, management charges of L26,667 were paid to Todays World
Limited. Mr. J.A. Knight has a material interest in this company.
18. OPERATING LEASES
In the year to 30th June 1995 the Group have commitments to make payments
as follows:
Land
and
Building Other Total
L L L
In respect of commitments expiring
in the year - - -
In respect of commitments expiring
between 2 and 5 years 32,050 - 32,050
In respect of commitments expiring
after 5 years 104,480 - 104,480
------- ------- -------
136,530 - 136,530
======= ======= =======
<PAGE>
TRIMCO GROUP PLC Page 14
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1994
19. CASH FLOW STATEMENT
(A) RECONCILIATION OF OPERATING PROFIT TO
NET CASH INFLOW FROM OPERATING ACTIVITIES
1994 1993
L L
Operating profit 274,141 164,300
Depreciation 278,308 215,499
Increase in stock (42,242) (94,058)
Increase in debtors (755,596) (490,663)
Increase in creditors 355,237 331,854
(Profit)/Loss on sale of fixed assets (21,474) 10,960
Exchange differences 4,292 7,454
-------- --------
92,666 145,346
======== ========
(B) ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS IN THE BALANCE SHEET
Change
1994 1993 in year
L L L
Cash at bank 4,264 29,103 (24,839)
Overdraft (328,850) (175,361) (153,489)
-------- -------- --------
CASH AND CASH EQUIVALENTS (324,586) (146,258) (178,328)
======== ======== ========
(C) ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR
<TABLE>
<CAPTION>
1994 1993
Loans and Loans and
Finance Finance
Share Lease Share Lease
Capital Obligations Capital Obligations
L L L L
<S> <C> <C> <C> <C>
Balance 1st July 1993 570,000 88,387 220,000 79,645
Shares issued - - 400,000 -
Shares redeemed - - (50,000) -
Repayment of finance leases - (24,673) - (27,495)
Inception of Finance Lease obligations - - - 51,237
Repayment of loans - (15,000) - (15,000)
------- ------- ------- -------
570,000 48,714 570,000 88,387
======= ======= ======= =======
</TABLE>
<PAGE>
AUDITORS' REPORT TO THE MEMBERS OF Page 15
TRIMCO GROUP PLC
We have audited the financial statements on pages 2 to 14 which have been
prepared under the historical cost convention and the accounting policies set
out on page 7.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described in the directors' report the company's directors are responsible
for the preparation of financial statements. It is our responsibility to form
an independent opinion based on our audit on those statements and to report
our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes an examination, on a test basis,
of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the financial
statements, and of whether the accounting policies are appropriate to the
company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the financial
statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of affairs of the company and the group as at 30th June 1994 and of its
profit for the year then ended and have been properly prepared in accordance
with the Companies Act 1985.
GANE JACKSON SCOTT
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
HOLBORN HALL
100 GRAY'S INN ROAD
LONDON WC1X 8AY
3rd January 1995.
<PAGE>
Company Number 2253256
TRIMCO GROUP PLC
CONSOLIDATED FINANCIAL STATEMENTS
30TH JUNE 1995
Gane Jackson Scott
Chartered Accountants
Holborn Hall,
100 Gray's Inn Road,
London WC1X 8AY.
<PAGE>
Page 1
TRIMCO GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30TH JUNE 1995
<TABLE>
<CAPTION>
Note 1995 1994
L L
<S> <C> <C> <C>
TURNOVER 1d&2b 5,600,943 4,434,440
Cost of Sales (1,735,120) (1,606,153)
---------- ----------
GROSS PROFIT 3,865,823 2,828,287
Administrative Expenses (3,535,643) (2,554,146)
---------- ----------
OPERATING PROFIT 2 330,180 274,141
Interest Receivable 5,157 519
Interest Payable 4 (14,771) (18,520)
---------- ----------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 320,566 256,140
Taxation 5 (90,575) (63,142)
---------- ----------
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 229,991 192,998
Dividends 6 (41,549) (65,280)
---------- ----------
RETAINED PROFIT FOR THE
FINANCIAL YEAR 15 188,442 127,718
---------- ---------
---------- ---------
</TABLE>
The notes from pages 8 to 16 form part of these accounts
There is no material difference between reported profits and the historical
cost profits for 1995 or 1994.
<PAGE>
Page 2
TRIMCO GROUP PLC
CONSOLIDATED BALANCE SHEET
AT 30TH JUNE 1995
<TABLE>
<CAPTION>
Note 1995 1994
L L L L
<S> <C> <C> <C> <C> <C>
FIXED ASSETS
Tangible Assets 7 595,680 441,087
CURRENT ASSETS
Stock 9 78,476 311,432
Debtors 10 1,947,682 1,843,996
Cash at Bank 316,222 68,370
--------- --------
2,342,380 2,223,798
CURRENT LIABILITIES
CREDITORS:
Amounts falling due within
one year 11 (2,024,002) (1,909,039)
---------- ----------
NET CURRENT ASSETS 318,378 314,759
---------- ----------
TOTAL ASSETS LESS CURRENT
LIABILITIES 914,058 755,846
CREDITORS:
Amounts falling due after
more than one year 12 - (12,356)
PROVISIONS FOR LIABILITIES
AND CHARGES
Deferred tax 13 35,000 22,500
--------- -------
949,058 765,990
--------- -------
--------- -------
CAPITAL AND RESERVES
Called up Share Capital 14 370,000 370,000
Reserves 15 579,058 395,990
--------- -------
949,058 765,990
--------- -------
--------- -------
</TABLE>
The Financial Statements were approved by the Board of Directors on
17 November 1995.
J.V. TANNA - DIRECTOR D. BANTIN - DIRECTOR
The notes on pages 8 to 16 form part of these accounts.
<PAGE>
Page 3
TRIMCO GROUP PLC
BALANCE SHEET
AT 30TH JUNE 1995
<TABLE>
<CAPTION>
Note 1995 1994
<S> <C> <C> <C>
FIXED ASSETS L L
Investments 8 63,132 914
CURRENT ASSETS
Debtors 10 843,527 953,856
CREDITORS:
Amounts falling due within
one year 11 (102,691) (198,262)
--------- ---------
NET CURRENT ASSETS 740,836 755,594
--------- --------
TOTAL ASSETS LESS CURRENT LIABILITIES 803,968 756,508
--------- --------
--------- --------
CAPITAL AND RESERVES
Called up Share Capital 14 370,000 370,000
Reserves 15 433,968 386,508
--------- --------
803,968 756,508
--------- --------
--------- --------
</TABLE>
The Financial Statements were approved by the Board of Directors on
17 November, 1995.
J.V. Tanna-Director D Bantin--Director
The notes on pages 8 to 16 form part of these accounts.
<PAGE>
Page 4
TRIMCO GROUP PLC
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 30TH JUNE 1995
<TABLE>
<CAPTION>
1995 1994
L L
<S> <C> <C>
Retained profit for the year 188,442 127,718
Exchange (loss)/gain on foreign
equity investment (5,374) 1,713
------- -------
TOTAL RECOGNISED GAINS AND LOSSES
RELATING TO THE YEAR 183,068 129,431
------- -------
------- -------
</TABLE>
The notes on pages 8 to 16 form part of these accounts.
<PAGE>
Page 5
TRIMCO GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30TH JUNE 1995
<TABLE>
<CAPTION>
1995 1994
L L L L
<S> <C> <C> <C> <C>
NET CASH INFLOW FROM OPERATING
ACTIVITIES 1,160,380 92,666
RETURN ON INVESTMENTS AND SERVICING
OF FINANCE
Interest received 5,157 519
Interest paid (12,395) (12,801)
Interest element of finance
lease payments (2,376) (5,719)
Dividends paid (74,020) (23,482)
-------- --------
NET CASH (OUTFLOW) FROM RETURNS ON
INVESTMENTS AND SERVICING OF FINANCE (83,634) (41,483)
TAXATION
Tax paid (143,088) (79,021)
INVESTING ACTIVITIES
Purchase of fixed assets (482,159) (145,709)
Proceeds of sale of fixed assets 40,566 34,892
-------- -------
NET CASH (OUTFLOW) FROM INVESTING
ACTIVITIES (441,593) (110,817)
-------- --------
NET CASH INFLOW/(OUTFLOW)
BEFORE FINANCING 492,065 (138,655)
FINANCING
Repayment of loans (15,000) (15,000)
Capital element of hire purchase
contracts and finance leases (27,945) (24,673)
-------- --------
NET CASH (OUTFLOW) FROM FINANCING (42,945) (39,673)
------- --------
INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 449,120 (178,328)
------- --------
------- --------
</TABLE>
See note 19 for notes to this statement.
The notes on pages 8 to 16 form part of these accounts.
<PAGE>
Page 6
TRIMCO GROUP PLC
NOTES TO THE ACCOUNTS
30TH JUNE 1995
1. PRINCIPAL ACCOUNTING POLICIES
a) BASIS OF ACCOUNTING
The Financial Statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards.
b) BASIS OF CONSOLIDATION
The consolidated financial statements include the results of the parent
company and its trading subsidiaries Trimco America Inc. and Trimco
Enterprises Ltd.
Subsidiaries acquired in the year are consolidated from the date of
acquisition. Net assets at the date of acquisition are incorporated into
the consolidated accounts at their fair values to the Group after making
appropriate reorganisation provisions. Goodwill on consolidation arising
from acquisitions is taken directly to reserves.
The parent company has not presented its own profit and loss account as
permitted by Section 230 of the Companies Act 1985.
c) FOREIGN CURRENCIES
Subsidiary accounts prepared in foreign currencies are translated into
sterling at the year end exchange rate. Transactions in foreign
currencies are translated into sterling at the rate ruling at the date
of the transaction. Exchange rate adjustments on the opening net assets
of subsidiaries are taken directly to reserves and exchange rate
adjustments on all other items are included in the profit and loss
account.
d) TURNOVER
Turnover represents amounts receivable excluding value added tax, on the
supply of goods and services all in respect of continuing activities.
e) DEPRECIATION
Depreciation of fixed assets is charged at the rates estimated to write
off their cost less any residual value over the expected useful lives
which are as follows:
Premises improvement up to 10 years Computer Equipment 3 years
Motor vehicles 3 years Fixtures and Fittings 4 years
f) FINANCE LEASES
Assets obtained under finance leases are capitalised in the Balance
Sheet and are depreciated over their useful lives. The interest element
of the lease obligation is charged to the Profit and Loss Account so as
to produce a constant periodic rate of charge on the remaining balance
of obligation.
g) DEFERRED TAXATION
Deferred taxation is calculated by the liability method on the excess of
taxation allowances claimed on fixed assets over the related cumulative
depreciation charged in the accounts.
h) STOCK
Stock is valued at the lower of cost and net realisable value.
i) DEVELOPMENT COSTS
Development costs are written off as incurred.
<PAGE>
Page 7
TRIMCO GROUP PLC
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1995
2. OPERATING PROFIT
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
a) Operating profit is stated after charging: L L
Auditor's remuneration
- Audit work 11,978 9,000
- Non audit work 9,025 6,904
Depreciation of tangible fixed assets 296,344 278,308
Operating lease rentals 159,242 123,069
Profit on sale of tangible fixed assets 12,007 21,474
Directors' remuneration 300,161 248,825
------- -------
------- -------
</TABLE>
b) GEOGRAPHICAL SEGMENTS
<TABLE>
<CAPTION>
United Kingdom North America Group
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Turnover L L L L L L
By origin 4,636,938 3,792,074 964,005 642,366 5,600,943 4,434,440
Profit
before tax 124,731 190,967 195,835 65,173 320,566 256,140
Segment
net assets/
liabilities 810,104 765,078 138,954 912 949,058 765,990
</TABLE>
No geographical analysis of turnover by destination is given in the
accounts.
All activities of the Group are considered to be in relation to a single
class of business.
3. DIRECTORS AND EMPLOYEES
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
L L
Staff costs including Directors' emoluments:
Wages and Salaries 1,938,925 1,303,748
Social Security costs 158,629 100,243
Other Pension costs 47,041 39,930
--------- ---------
2,144,595 1,443,921
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
L L
Directors emoluments:
Highest paid director and chairman 71,554 111,088
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
No No
<S> <C> <C>
Other directors' emoluments were in the ranges
L10,001 - L15,000 1 -
L15,001 - L20,000 - 2
L20,001 - L25,000 2 -
L25,001 - L30,000 - 1
L40,001 - L45,000 1 -
L45,001 - L50,000 - 1
L50,001 - L55,000 1 1
L55,001 - L60,000 1 -
</TABLE>
PENSIONS
In respect of certain employees, the Company contributes a proportion of
salary into the Personal Pension Scheme of those individuals.
<PAGE>
Page 8
TRIMCO GROUP PLC
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1995
4. INTEREST PAYABLE
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
L L
Bank and Loan Interest 11,387 11,357
Finance Lease Interest 2,376 5,719
Other 1,008 1,444
-------- --------
14,771 18,520
-------- --------
-------- --------
</TABLE>
5. TAXATION
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
L L
UK Corporation tax charge on profits for the
year at marginal rates 92,700 84,000
(Over)provision in prior years (528) (658)
Transfer (from) deferred taxation (12,500) (20,200)
Overseas taxation 10,903 -
-------- --------
90,575 63,142
-------- --------
-------- --------
</TABLE>
6. DIVIDENDS
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
L L
In respect of 1994:
11% Preference Shares - proposed but not paid (2,750) -
Ordinary Shares - proposed but not paid (20,788) -
In respect of current year:
11% Preference Shares (11p per share) 5,500 5,500
'A' Ordinary Shares (18.6p per share) 38,471 38,992
Ordinary Shares - (18.6p per share) 21,116 20,788
-------- --------
41,549 65,280
-------- --------
-------- --------
Equity Shares 38,799 59,780
Non Equity Shares 2,750 5,500
-------- --------
41,549 65,280
-------- --------
-------- --------
</TABLE>
<PAGE>
Page 9
TRIMCO GROUP PLC
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1995
7. TANGIBLE FIXED ASSETS - GROUP
<TABLE>
<CAPTION>
Premise Motor Computer Fixtures &
Improvements Vehicles Equipment Fittings Total
<S> <C> <C> <C> <C> <C>
L L L L L
Cost
30th June 1994 71,650 180,311 834,017 133,515 1,219,493
Additions 19,774 - 433,120 29,265 482,159
Disposals - (129,231) - (8,791) (138,022)
Exchange differences (214) (315) (3,884) (637) (5,050)
---------- --------- --------- -------- ----------
30th June 1995 91,210 50,765 1,263,253 153,352 1,558,580
---------- --------- --------- -------- ----------
Depreciation
30th June 1994 8,775 125,928 580,950 62,753 778,406
Charge for year 5,232 18,897 243,184 29,031 296,344
Released on disposal - (100,673) - (8,791) (109,464)
Exchange differences (73) (254) (1,603) (456) (2,386)
---------- --------- ---------- -------- ----------
30th June 1995 13,934 43,898 822,531 82,537 962,900
---------- --------- ---------- -------- ----------
Net Book Value
30th June 1995 77,276 6,867 440,722 70,815 595,680
---------- --------- ---------- -------- ----------
---------- --------- ---------- -------- ----------
30th June 1994 62,875 54,383 253,067 70,762 441,087
---------- --------- ---------- -------- ----------
---------- --------- ---------- -------- ----------
</TABLE>
8. INVESTMENTS IN GROUP UNDERTAKINGS
<TABLE>
<CAPTION>
1995
L
<S> <C>
Balance 1.7.94 914
Additions -
Release of provision 62,218
--------
Balance 30.6.95 63,132
--------
--------
</TABLE>
Group undertakings comprise the following:
<TABLE>
<CAPTION>
% Owned
<S> <C>
Micro Synergy Associates Inc. (Incorporated in the USA) 100
Trimco Enterprises Limited (Registered in England) 100
Trimco America Inc. (Incorporated in the USA) 100
Imagen Enterprises Ltd. (Registered in England) 100
Trimco Document Management Inc. (Incorporated in Canada) 100
</TABLE>
<PAGE>
Page 10
TRIMCO GROUP PLC
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1995
<TABLE>
<S> <C> <C> <C> <C> <C>
9. STOCKS Group Company
1995 1994 1995 1994
Finished goods and component parts 78,476 311,432 - -
------ ------- ----- ------
------ ------- ----- ------
10. DEBTORS Group Company
1995 1994 1995 1994
L L L L
Trade debtors 1,360,680 1,595,686 - -
Other debtors 79,797 7,425 494 -
Amounts owed by group undertakings - - 843,033 953,856
Prepayments and accrued income 507,205 240,885 - -
--------- --------- --------- ---------
1,947,682 1,843,996 843,527 953,856
--------- --------- --------- ---------
--------- --------- --------- ---------
11. CREDITORS Group Company
1995 1994 1995 1994
Amounts falling due within one year L L L L
Loan from 3i and Government loan - 15,000 - 15,000*
Obligations under hire purchase
contracts and finance leases 5,769 21,358 - -
Bank loans and overdrafts 191,688 392,956 - -
Trade creditors 1,048,901 561,147 - -
Corporation tax 79,192 119,205 43,104 91,205
Dividend payable 59,587 92,057 59,587 92,057
Other creditors including taxation
and social security 107,123 84,831 - -
Accruals and deferred income 531,742 632,485 - -
--------- --------- --------- ---------
2,024,002 1,909,039 102,691 198,262
--------- --------- --------- ---------
--------- --------- --------- ---------
12. CREDITORS Group Company
Amounts falling due after more 1995 1994 1995 1994
than one year L L L L
Obligations under Hire Purchase -
Contracts and Finance Leases 12,356 - -
--------- --------- --------- ---------
- 12,356 -
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Included within creditors for the Group are liabilities of L191,688 (1994:
L407,956) and LNIL (1994: L15,000) for the Company which are secured on the
assets of the Group.
<PAGE>
Page 11
TRIMCO GROUP PLC
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1995
<TABLE>
<CAPTION>
13. DEFERRED TAXATION Group Company
1995 1995 1994
L L L
<S> <C> <C> <C>
Balance brought forward 22,500 - -
Transfer to deferred taxation 12,500 - -
------ -------- ---------
Balance carried forward 35,000 - -
------ -------- ---------
------ -------- ---------
</TABLE>
The above asset is all in respect of accelerated capital allowances and
has been calculated as chargeable to tax at 25%.
14. CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
At
At At 1 July 1994 &
30 June 1995 1 July 1994 30 June 1995
Authorised Authorised Allotted,
called up and
fully paid
L L L
<S> <C> <C> <C>
Ordinary Shares of L1 each 180,000 131,400 113,400
"A" Ordinary Shares of L1 each 283,014 206,600 206,600
----------- --------- -----------
Equity Share Capital 463,014 338,000 320,000
Cumulative Redeemable Preference Shares
of L1 each - nonequity 135,986 100,000 50,000
----------- --------- ----------
600,000 438,000 370,000
----------- --------- ----------
----------- --------- ----------
</TABLE>
The Authorised Capital of the Company was increased on 7th March 1995.
On 20th May 1992 options to acquire 11,100 Ordinary Shares in the Company
at L3.60. per share were granted to staff of the Company. These options
are exercisable at the earliest of the following events:
i) the third anniversary of the date of the grant;
ii) the death of the option holder; and
iii) the option holder ceasing to be a director or employee of
the Company by reason of injury, disability, redundancy or
retirement.
A summary of the rights of each class of non ordinary shares are as
follows:
PREFERENCE SHARES
Dividends
A fixed cumulative dividend of 11% per annum.
Redemption
In multiples of 25,000 on 31st January 1996 and 31st January 1997 or
immediately upon the company being granted a listing or in the event of
a successful take over.
Other
First preference on the return of assets of L1 per share plus any
arrears of dividends.
<PAGE>
Page 12
TRIMCO GROUP PLC
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1995
14. CALLED UP SHARE CAPITAL - Continued
"A" ORDINARY SHARES
Dividends
A cumulative preferential dividend equivalent to 12.2% of net profits.
An additional cumulative preferential dividend based on remuneration
payable to the chief executive over and above an index linked figure. To
the extent that Ordinary Share holders receive dividends in excess of
the 12.2% dividend referred to above an equivalent further amount is
also payable to the holders of this class of shares.
Other
A preference on the return of assets ranking immediately after the
Preference Shareholders, of L1 per share plus any arrears of dividend. A
distribution of any balance in the event of a return of assets,
equivalent per share, to the amount paid to ordinary shareholders. These
shares have the same voting rights in general meeting as the ordinary
shares.
15. RESERVES
<TABLE>
<CAPTION>
Group Company
---------------------------- ---------------------------------
Share Profit Share Profit
Premium and Loss Premium and Loss
Account Account Total Account Account Total
L L L L L L
<S> <C> <C> <C> <C> <C> <C>
Balance brought forward
1st July 1994 200,000 195,990 395,990 200,000 186,508 386,508
Retained profit for the
year - 188,442 188,442 - 47,460 47,460
Exchange differences on
consolidation - (5,374) (5,374) - - -
------- ------- ------- ------- ------- -------
Balance carried forward
30th June 1995 200,000 379,058 579,058 200,000 233,968 433,968
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
16. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS 1995 1994
L L
<S> <C> <C>
Profit attributable to members of the Group 229,991 192,998
Dividends (41,549) (65,280)
------- -------
188,442 127,718
Other recognised (losses)/gains for the year (5,374) 1,713
------- -------
Net additions to shareholders' funds 183,068 129,431
Opening shareholders' funds 765,990 636,559
------- -------
Closing shareholders' funds 949,058 765,990
------- -------
Equity shareholders funds 899,048 715,990
Non equity shareholders funds 50,000 50,000
------- -------
949,058 765,990
------- -------
------- -------
</TABLE>
Cumulative goodwill written off at 30th June 1995 amounted to L33,934
(1994: L33,934). Profit for the financial year for the Company was
L89,009 (1994:L98,341).
<PAGE>
Page 13
TRIMCO GROUP PLC
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1995
17. TRANSACTIONS INVOLVING DIRECTORS
During the period, management charges of L11,554 were paid to Todays
World Limited. Mr. J.A. Knight has a material interest in this company.
The Group also made car loans of L3,241 to Mr. J. Patel and L5,370 to
Mr. W.A. Turner. At 30th June 1995, the balances were L872 and L1,452
respectively.
18. OPERATING LEASES
In the year to 30th June 1996 the Group have commitments to make
payments as follows:
<TABLE>
<CAPTION>
Land
and
Building Other Total
L L L
<S> <C> <C> <C>
In respect of commitments expiring in the year - - -
In respect of commitments expiring between 2 and
5 years 32,050 - 32,050
In respect of commitments expiring after 5 years 104,480 - 104,480
-------- ------ -------
136,530 - 136,530
-------- ------ -------
-------- ------ -------
</TABLE>
19. CASH FLOW STATEMENT
(A) RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW
FROM OPERATING ACTIVITIES:
<TABLE>
<CAPTION>
1995 1994
L L
<S> <C> <C>
Operating profit 330,180 274,141
Depreciation 296,344 278,308
Decrease/(Increase) in stock 232,956 (42,242)
(Increase) in debtors (103,686) (755,596)
Increase in creditors 419,303 355,237
(Profit) on sale of fixed assets (12,007) (21,474)
Exchange differences (2,710) 4,292
--------- --------
1,160,380 92,666
--------- --------
--------- --------
</TABLE>
(B) ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS DURING THE YEAR:
<TABLE>
<CAPTION>
1995 1994
L L
<S> <C> <C>
Balance at 1 July 1994 (324,586) (146,258)
Net Cash Inflow/(Outflow) 449,120 (178,328)
-------- --------
Balance at 30 June 1995 124,534 (324,586)
-------- --------
-------- --------
</TABLE>
<PAGE>
Page 14
TRIMCO GROUP PLC
NOTES TO THE ACCOUNTS (continued)
30TH JUNE 1995
19. CASH FLOW STATEMENT - Continued
(C) ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS
IN BALANCE SHEET:
<TABLE>
<CAPTION>
Change
1995 1994 in year
L L L
<S> <C> <C> <C>
Cash at bank 316,222 68,370 247,852
Overdraft (191,688) (392,956) 201,268
----------- ----------- -----------
124,534 (324,586) 449,120
=========== =========== ===========
</TABLE>
(D) ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR:
<TABLE>
<CAPTION>
1995 1994
Loans and Loans and
Finance Finance
Share Lease Share Lease
Capital Obligations Capital Obligations
L L L L
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Balance 1st July 1994 570,000 48,714 570,000 88,387
Shares issued -- -- -- --
Shares redeemed -- -- -- --
Repayment of finance leases -- (27,945) -- (24,673)
Incaption of Finance Lease
obligations -- -- -- --
Repayment of loans -- (15,000) -- (15,000)
--------- ----------- --------- -----------
570,000 5,769 570,000 48,714
========= =========== ========= ===========
</TABLE>
<PAGE>
Page 15
TRIMCO GROUP PLC
AUDITORS' REPORT TO THE MEMBERS OF
TRIMCO GROUP PLC
We have audited the financial statements on pages 3 to 16 which have been
prepared under the historical cost convention and the accounting policies set
out on page 8.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described in the directors' report the company's directors are responsible
for the preparation of financial statements. It is our responsibility to
form an independent opinion based on our audit on those statements and to
report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes an examination, on a test basis,
of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the financial
statements and of whether the accounting policies are appropriate to the
company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the financial
statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of affairs of the company and the group as at 30th June 1995 and of its
profit for the year then ended and have been properly prepared in accordance
with the Companies Act 1985.
GANE JACKSON SCOTT
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
HOLBORN HALL
100 GRAY'S INN ROAD
LONDON WD1X 8AY
17th November 1995
<PAGE>
Exhibit 99.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion of our reports dated 17 January 1994,
3 January 1995 and 17 November 1995 related to the consolidated financial
statements of Trimco Group PLC in the Current Report on Form 8-K of Alpharel,
Inc., and the incorporation by reference of such reports into Alpharel Inc.'s
Registration Statement on Form S-3 (Registration No. 33-43223), and into
Alpharel Inc.'s Registration Statements on Form S-8 (Registration Nos.
33-43451, 33-77224 and 33-83330).
GANE JACKSON SCOTT
Chartered Accountants
London
17 November 1995
