UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934
Report for Event: February 7, 1996
INDENET, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-18034 68-0158367
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
1640 N. Gower Street, Los Angeles, CA 90028
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213)
466-6388
Not applicable
(Former name and address)
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Enterprise Systems Group
Limited.
Audited Consolidated Balance Sheets of Enterprise
Systems Group Limited and subsidiaries as of March 31,
1996 and 1995 and related consolidated statements of
profit and loss accounts, cash flow statements and
reconciliation of movements in consolidated
shareholders' funds for each of the years in the two
year period ended March 31, 1996. (Financial
statements prepared in accordance with Item 17 of Form
20-F)
(b) Pro Forma financial information.
Previously filed with the Company's 10-KSB for year
ended March 31, 1996
(c) Exhibits
Not applicable
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.
INDENET, INC.
Date: August 2, 1996 By: /s/Richard J. Parent
Richard J. Parent
Its: Chief Financial Officer
and Secretary
Enterprise Systems Group Limited
& Subsidiary Undertakings
Financial statements
31 March 1996 and 1995
Registered number 2365375
(Financial statements prepared in
accordance with Item 17 of Form 20-F)
<PAGE>
Financial statements
Contents Page
Auditors' report 1
Consolidated profit and loss accounts 2
Consolidated balance sheets 3
Consolidated cash flow statements 4
Reconciliation of movements in shareholders' funds 5
Notes to consolidated financial statements 6 - 26
PO Box 486
1 Puddle Dock
Blackfriars
London EC4V 3PD
Report of independent auditors
To the Board of Directors and Shareholders of Enterprise
Systems Group Limited
We have audited the accompanying consolidated balance sheets of
Enterprise Systems Group Limited and subsidiaries as of 31 March
1996 and 1995 and the related consolidated statements of profit
and loss accounts, cash flow statements and reconciliation of
movements in consolidated shareholders' funds for each of the
years in the two year period ended 31 March 1996. These
Consolidated Financial Statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these Consolidated Financial Statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards in the United States. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the Consolidated Financial Statements referred to
above present fairly, in all material respects, the financial
position of Enterprise Systems Group Limited and subsidiaries as
of 31 March 1996 and 1995, and the results of their operations
and their cash flows for each of the years in the two year period
ended 31 March 1996, in conformity with generally accepted
accounting principles in the United Kingdom.
Generally accepted accounting principles in the United Kingdom
vary in certain significant respects from generally accepted
accounting principles in the United States. Application of
generally accepted accounting principles in the United States
would have affected results of operations for each of the
years in the two year period ended 31 March 1996, and
shareholders' funds as of 31 March 1996 and 1995 to the extent
summarised in Note 24 of Notes to the Consolidated Financial
Statements.
KPMG 23 May 1996
Chartered Accountants
Registered Auditors
Consolidated profit and loss accounts
for the years ended 31 March 1996 and 1995
Note As restated
1996 1995
British British
Pounds Pounds
Turnover 2 11,766,907 12,627,507
Cost of sales (6,611,418) (7,342,627)
___________ ____________
Gross profit 5,155,489 5,284,880
Development costs (242,631) (342,159)
Distribution costs (1,318,454) (1,532,908)
Administrative expenses (2,141,698) (2,140,208)
___________ ____________
Operating profit 1,452,706 1,269,605
Interest receivable 6 111,312 100,130
Interest payable and
similar charges 7 (214,932) (159,450)
___________ ____________
Profit on ordinary
activities before
taxation 3 1,349,086 1,210,285
Tax on profit
on ordinary activities 8 (541,620) (159,450)
___________ __________
Profit for the financial year 807,466 1,050,810
Dividends paid and proposed
on equity and non-equity
shares 9 (359,648) -
Appropriation of finance
cost of non-equity shares 9 103,820 (155,728)
___________ ____________
Profit retained for equity
shareholders 551,738 895,082
Appropriation from equity to
non-equity included therein (103,820) 155,728
_____________ ___________
Retained profit for the
financial year 19 447,918 1,050,810
In both the current and preceding years the group made no
material acquisitions and had no discontinued operations.
The group has no significant recognised gains and losses other
than those included in the profits above, and therefore no
separate statement of total recognised gains and losses has been
presented.
A statement of movements on reserves is given in note 19.
Consolidated balance sheets
at 31 March 1996 and 1995
Note As restated
1996 1995
British British
Pounds Pounds
Fixed assets
Tangible assets 10 8,009,574 7,263,690
__________ _________
Current assets
Work in progress 711 10,523
Debtors 12 1,983,399 1,746,915
Cash at bank and in hand 1,935,721 2,110,475
_________ __________
3,919,831 3,867,913
Creditors: amounts falling
due within one year 13 (3,061,443) (2,640,275)
___________ __________
Net assets 858,388 1,227,638
_________ _________
Total assets less current
liabilities 8,867,962 8,491,328
Creditors: amounts falling
due after more than one
year 14 (937,128) (651,719)
Provisions for liabilities
and charges
Deferred tax 15 (833,159) (694,515)
Deferred income 16 (1,427,633) (1,888,670)
___________ ___________
(3,197,920) (3,234,904)
___________ ____________
Net assets 5,670,042 5,256,424
__________ __________
__________ __________
Capital and reserves
Called up share capital 17 65,315 65,315
Share premium account 3,038,833 3,038,833
Capital redemption reserve 50 50
Profit and loss account 19 2,565,844 2,152,226
_________ _________
5,670,042 5,256,424
__________ __________
__________ __________
Shareholders' funds
Equity 2,810,708 2,293,270
Non-equity 2,859,334 2,963,154
_________ __________
5,670,042 5,256,424
__________ __________
__________ __________
Net cash inflow from
operating activities
(note 21) 1,421,990 1,928,917
_________ _________
Return on investments and
servicing of finance
Interest received 106,721 75,530
Interest paid (113,777) (136,149)
Interest element of
finance lease rental
payments (71,275) (49,950)
Dividends paid (259,548) -
__________ _________
Net cash outflow from returns on
investment and
servicing of finance (337,879) (110,569)
Taxation
UK and overseas tax paid (168,239) (114,494)
Investing activities
Purchase of tangible fixed assets (1,044,309) (683,737)
Sale of tangible fixed assets 110,223 107,442
__________ __________
Net cash outflow from
investing activities (934,086) (576,295)
__________ __________
Net cash (outflow)/inflow
before financing (18,214) 1,127,559
____________ _________
Financing (note 23)
Bank loan 500,000 -
Loan repayments (200,000) (150,000)
Capital element of finance
lease rental payments (328,275) (290,746)
__________ ___________
Net cash outflow from financing (28,275) (440,746)
(Decrease)/increase in cash
and cash equivalents (note 22) (46,489) 686,813
___________ __________
Reconciliation of movements in consolidated shareholders' funds
for the years ended 31 March 1996 and 1995
1996 As restated
1995
Equity Non-Equity Equity Non-Equity
British British British British
Pounds Pounds Pounds Pounds
Profit
retained for
equity
shareholders 551,738 - 895,082 -
Appropriation
of finance
cost of non-
equity
shares - (103,820) - 155,728
Exchange
adjustments (34,300) 8,654
________ _________ _________ _________
Net addition
to (deduction
from) share-
holders' funds 517,438 (103,820) 903,736 155,728
Opening
share-
holders'
funds as
restated
(note 1a) 2,293,270 2,963,154 1,389,534 2,807,426
_________ _________ _________ _________
Closing
share-
holders'
funds
(note 1a) 2,810,708 2,859,334 2,293,270 2,963,154
_________ _________ _________ _________
Notes
(forming part of the financial statements)
I. Accounting policies
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation
to the group's financial statements.
Basis of preparation
The financial statements have been prepared in accordance with
applicable accounting standards in the United Kingdom and under
the historical cost accounting rules.
Basis of consolidation
The group financial statements consolidate the financial
statements of Enterprise Systems Group Limited and all its
subsidiary undertakings. These financial statements are made up
to 31 March 1996.
Goodwill arising on consolidation (representing the excess of the
fair value of the consideration given over the fair value of the
separable net assets acquired) is written off against reserves on
acquisition. Any excess of the aggregate of the fair value of
the separable net assets acquired over the fair value of the
consideration given (negative goodwill) is credited directly to
reserves.
Fixed assets and depreciation
Depreciation is provided to write off the cost less the estimated
residual value of tangible fixed assets by equal instalments over
their estimated useful economic lives as follows:
Improvements to leasehold properties - 10 years
Motor vehicles - 4 years
Computer room - 10 years
Computer equipment - 5 years
Office equipment - 5 years
Foreign currencies
Transactions in foreign currencies are recorded using the
average rate during the year and the exchange gains or
losses are included within operating costs. Monetary assets and
liabilities denominated in foreign currencies are translated
using the rate of exchange ruling at the balance sheet date
and the gains or losses on translation are included in the profit
and loss account.
For consolidation purposes, the assets and liabilities of
overseas subsidiary undertakings are translated at the
closing exchange rates. Profit and loss accounts of such
undertakings are consolidated at the average rates of
exchange during the year. Exchange differences arising on
these translations are taken to reserves, except where there is a
related foreign currency borrowing when the net of the
exchange differences arising on these translations and on the
related foreign currency borrowing is taken to the profit and
loss account.
Leases
Leases entered into which entail taking substantially all
the risks and rewards of ownership of an asset, are treated
as "finance leases". The asset is recorded in the balance sheet
as a tangible fixed asset and is depreciated over its
estimated useful life or the term of the lease, whichever is
shorter. Future instalments under such leases, net of finance
charges, are included within creditors. Rentals payable are
apportioned between the finance element, which is charged to
the profit and loss account, and the capital element which
reduces the outstanding obligation for future instalments.
All other leases are accounted for as "operating leases".
Expenditure on operating leases is written off as incurred
except where, in the opinion of the directors, prudent accounting
practice necessitates such costs to be recognised in earlier
accounting periods.
Pension costs
The group operates a defined contribution pension scheme.
The assets of the scheme are held separately from those of
the group in an independently administered fund. The amount
charged against profits represents the contributions payable
to the scheme in respect of the accounting period.
Product development costs
Costs incurred in product development are capitalised if, in
the opinion of the directors, the conditions for so doing
stated in Statement of Standard Accounting Practice 13 (SSAP13)
are satisfied. Such capitalised costs are amortised over 5
years from the date of the first commercial sale of the
resulting product.
In cases where the criteria set out in SSAP 13 are satisfied
the directors have not included capitalised development
costs as a realised loss for distribution purposes. Otherwise
development costs on products are written off against profits as
incurred.
Taxation
The charge for taxation is based on the profit for the year
and takes into account taxation deferred because of timing
differences between the treatment of certain items for taxation
and accounting purposes. Provision is made for deferred tax
only to the extent that it is probable that an actual
liability will crystallise.
Capital Instruments
Capital instruments are accounted for and classified as
equity and non-equity share capital in accordance with FRS4.
The finance costs of non-equity share capital is recognised over
the term of the investment at a constant rate on the carrying
value.
Turnover
Turnover represents the amounts (excluding value added tax)
invoiced to customers in respect of goods and services
provided by the group during the year.
1a Prior year adjustment
The group has adopted the accounting requirements of FRS4 in
respect of non-equity shares. Accordingly prior year amounts in
the financial statements have been restated to include
equity and non-equity interests as follows:
1995 1995
As restated As stated in
the last
annual report
British British
Pounds Pounds
Profit retained
for equity
shareholders 895,082
Appropriation of
profit for
non-equity
shareholders 155,728 -
_________ ____________
Retained profit
for the financial
year 1,050,810 1,050,810
_________ ____________
Equity shareholders'
funds 2,293,270 -
_________ ____________
Non-equity
shareholders' funds
- - share capital
including share
premium 2,651,698 -
- - appropriation
of profit
relating
to years ending
31 March 1995 and
31 March 1994 311,456 -
_________ _________
2,963,154 -
Total
shareholders'funds 5,256,424 5,256,424
_________ _________
2 Segmental information
The table below sets out information for each of the group's
trading areas.
1996 1995
British British
Pounds Pounds
Turnover by Trading Area
Europe/Africa 5,754,549 6,836,620
America 4,843,085 4,306,751
Australasia 1,169,273 1,484,136
__________ ___________
Total 11,766,907 12,627,507
___________ ___________
3 Profit on ordinary activities before taxation
1996 1995
British British
Pounds Pounds
Profit on ordinary activities before taxation is stated after
charging
Depreciation of
tangible fixed assets:
Owned 517,696 378,196
Leased 211,588 186,997
Depreciation of
purchased software 9,469 66,928
Hire of equipment 61,333 161,222
Rental of buildings 320,484 294,099
Amortisation of
development costs 17,908 8,433
Hire purchase and
finance lease charges 71,275 61,186
Auditors' remuneration
Audit 49,156 51,419
Other services 21,123 32,549
_________ _________
after crediting
Profit on sale of
fixed assets 28,768 41,643
The total amount charged to revenue for the hire of plant and
machinery amounted to 344,196 British pounds (1995: 409,405
British pounds). This comprises rentals payable under operating
leases as well as depreciation on plant and machinery held under
finance leases together with the related finance charges.
4 Remuneration of directors
1996 1995
British British
Pounds Pounds
Directors' emoluments:
As directors 43,498 43,498
Remuneration as executives 366,527 366,535
_________ _________
410,025 410,033
Included within remuneration above are pension contributions made
by the company amounting to 22,910 British pounds (1995: 21,108
British pounds) and benefits in kind amounting to 29,007 British
pounds (1995: 39,686 British pounds). Benefits provided to the
directors include motor vehicles, life assurance, health and
medical insurance.
The emoluments, excluding pension contributions, of the chairman
were 12,250 British pounds (1995: 12,250 British pounds) and
those of the highest paid director in the UK were 119,111 British
pounds (1995: 116,506 British pounds). The emoluments, excluding
pension contributions, of the directors (including the chairman
and highest paid director) were within the following ranges:
Number of directors
1996 1995
10,001 - 15,000 British pounds 4 4
15,001 - 80,000 British pounds 1 1
115,001 - 120,000 British pounds 1 1
145,001 - 150,000 British pounds 1 -
150,001 - 155,000 British pounds 0 1
____ ____
Services were provided to the company and its subsidiaries during
the year by Thames Business Services, a partnership in which Mr
GR Jenner has a controlling interest, amounting to 65,000 British
pounds (1995: 51,250 British pounds).
5 Staff numbers and costs
The average number of persons employed by the group (including
directors) during the year, analysed by category, was as follows:
Number of employees
1996 1995
Professional Services 187 183
Administration 19 18
___ ___
206 201
The aggregate payroll costs of these persons were as follows:
1996 1995
British British
Pounds Pounds
Wages and Salaries 5,189,492 5,413,830
Social Security Costs 576,062 581,829
Other pension costs 226,997 281,946
_________ _________
5,992,551 6,277,605
_________ _________
6 Interest Receivable and Similar Income
1996 1995
British British
Pounds Pounds
Interest Receivable 111,312 75,530
Foreign Exchange Gain - 24,600
_________ __________
111,312 100,130
7 Interest Payable and Similar Charges
1996 1995
British British
Pounds Pounds
On bank loans, overdrafts,
and other loans wholly
repayable within 5 years 124,767 109,500
Finance charges payable
in respect of finance
leases and hire purchase
contracts 71,275 49,950
Exchange loss on foreign
currency borrowings 18,890 -
___________ _________
214,932 159,450
8 Taxation
1996 1995
British British
Pounds Pounds
Current year
UK Corporation tax at 33%
(1995: 33%, 1994:33%)
on the profit for the year
on ordinary activities 149,598 96,641
Overseas tax 266,643 96,641
Less double tax relief (149,598) (96,641)
Deferred taxation 138,644 66,130
Irrecoverable ACT 64,886 -
__________ __________
470,173 162,771
__________ __________
Prior year
Under/(over) provision
in prior years 43,705 (3,296)
Irrecoverable ACT 27,742 -
___________ ___________
71,447 (3,296)
__________ ___________
541,620 159,475
__________ ___________
__________ ___________
9 Dividends and Appropriations
1996 1995
British British
Pounds Pounds
Dividends
Paid at 10p per
'A' ordinary share 259,548 -
Proposed, declared and
approved at approx-
imately 2.75p per
ordinary share 100,000 -
_________ __________
359,548 -
__________ __________
Appropriations
As restated
1996 1995
British British
Pounds Pounds
Finance cost of non-
equity shares 155,728 155,728
Less dividend paid (259,548) -
___________ ___________
Net appropriation
of finance cost of
nonequity shares (103,820) 155,728
___________ ___________
10 Tangible Fixed Assets
Lease- Product
hold Computer Deve-
Improve- Motor Room and Office lopment
ments Vehicles Equipment Equipment Costs Total
British British British British British British
Pounds Pounds Pounds Pounds Pounds Pounds
Cost
April 1, 1996
174,272 639,008 4,287,907 404,117 7,563,903 13,069,207
Additions
379 179,253 411,980 62,237 877,973 1,531,822
Disposals
(24,918) (247,745) (2,215,661) - - (2,488,324)
Exchange Movement
1,873 17,007 76,035 12,486 115,480 222,881
_______ _______ _________ _______ _________ __________
March 31, 1996
151,606 587,523 2,560,261 478,840 8,557,356 12,335,586
_______ _______ _________ _______ _________ __________
Depreciation
April 1, 1996
138,215 320,679 3,322,276 296,115 1,728,232 5,805,517
Charge for Year
20,212 127,388 548,390 42,763 17,908 756,661
Disposals
(24,918) (166,883) (2,212,295) - - (2,404,096)
Exchange Movement
1,140 6,227 39,263 5,820 115,480 167,930
_______ _______ _________ _______ _________ ___________
March 31, 1996
134,649 287,411 1,697,634 344,698 1,861,620 4,326,012
_______ _______ __________ _______ _________ __________
Net book value
March 31, 1996
16,957 300,112 862,627 134,142 6,695,736 8,009,574
_______ _______ __________ _______ _________ ___________
March 31, 1995
36,057 318,329 965,631 108,002 5,835,671 7,263,690
_______ _______ __________ _______ _________ ___________
_______ _______ __________ _______ _________ ___________
_______ _______ __________ _______ _________ ___________
Included in group tangible assets are the following held under
finance leases and hire purchase agreements:
Computer Motor Office
Equipment Vehicles Equipment Total
British British British British
Pounds Pounds Pounds Pounds
Cost 848,160 328,778 180,762 1,357,700
Accumulated
Depreciation (399,092) (90,230) (90,348) (579,670)
_________ ________ ________ __________
Net book
value at
31 March 1996 449,068 238,548 90,414 778,030
________ ________ _______ _________
Depreciation
charged in
the year 126,777 60,228 24,583 211,588
11 Investments
The company had the following wholly owned subsidiaries at 31
March 1996.
Country of
Subsidiary registration or Principal
Undertakings incorporation activity
Enterprise Broadcast England and Wales Intermediate holding
Systems Ltd company
Enterprise Air England and Wales Computer products
Time Systems Ltd and services to the
broadcasting
industry
Enterprise Systems USA Computer products
Group, Inc. and services to the
broadcasting
industry
Enterprise Systems Australia Computer products
Group (Australia) and services to the
Pty Limited broadcasting
industry
The share capital of Enterprise Systems Group, Inc.
comprises both ordinary and preference shares. The share
capital of all other companies is made up solely of ordinary
shares.
12 Debtors
1996 1995
British British
Pounds Pounds
Amounts falling due within one year
Trade debtors 1,697,270 1,222,142
Other debtors 49,117 74,245
Prepayments and
accrued income 218,256 382,582
Corporation tax - 40,199
Other taxes 18,756 -
_________ _________
1,983,399 1,719,168
Amounts falling due after more than one year
Advance corporation
tax recoverable - 27,747
_________ _________
1,983,399 1,746,915
13 Creditors: amounts falling due within one year
1996 1995
British British
Pounds Pounds
Bank loans and overdrafts 1,151,621 948,036
Obligations under
finance leases and
hire purchase contracts
(note 14) 282,273 250,949
Trade creditors 533,012 590,601
Other creditors including
taxation and social security
Other taxes 126,869 14,172
Social security 88,617 91,965
Other creditors 25,900 110,307
Dividend payable 100,000 -
Accruals 753,151 634,245
__________ _________
3,061,443 2,640,275
__________ _________
A group bank loan of 851,621 British poounds (1995:798,036
British pounds) is secured by a fixed charge over a cash deposit
of the same amount.
A group bank loan of 787,500 British pounds (1995:487,500 British
pounds) is secured by a fixed and floating charge over the
assets of the group. Group bankers also hold a fixed and
floating charge over the assets of the group in respect of any
net aggregate UK bank overdraft. At year end there was no net
aggregate overdraft. Such an overdraft would carry interest at
2% over bank base rate. Group bankers also operate a set-off of
account balance for interest, which is calculated on the net
balance of the UK companies.
Information relating to the maturity of bank borrowings is set
out in note 14.
13 Creditors: amounts falling due after more than one year
1996 1995
British British
Pounds Pounds
Bank loans 487,500 337,500
Obligations under
finance leases and
hire purchase contracts 391,530 293,774
Other creditors 58,098 20,445
__________ __________
937,128 651,719
__________ __________
The maturity of obligations under finance leases and hire
purchase contracts is as follows:
1996 1995
British British
Pounds Pounds
Within one year 348,243 284,518
In the second to fifth years 411,200 328,439
__________ __________
759,443 612,957
Less future finance charges (85,640) (68,234)
__________ __________
673,803 544,723
__________ __________
Falling due within one year 282,273 250,949
Falling due after one year 391,530 293,774
__________ __________
673,803 544,723
__________ __________
Bank borrowings are repayable over the following periods:
1996 1995
British British
Pounds Pounds
Amounts due after more
than one year 487,500 337,500
__________ __________
Two to five years 137,500 187,500
One to two years 350,000 150,000
__________ __________
487,500 337,500
__________ __________
15 Provisions for deferred taxation
The amounts provided for deferred taxation and the amounts not
provided are set out below:
1996 1995
Provided Unprovided Provided Unprovided
British British British British
Pounds Pounds Pounds Pounds
Difference between
accumulated
depreciation and
amortization and
capital allowances 835,984 - 822,332 -
Other timing
differences (2,825) - (127,817) -
_________ ________ _________ _______
833,159 - 694,515 -
The movements in the deferred taxation balances are made up as
follows:
British
Pounds
Provision at 1 April 1995 694,515
Charge to the profit and loss account 138,644
_______
Provision at 31 March 1996 833,159
_______
16 Deferred income
Deferred income represents amounts received in respect of
products and services not yet supplied at the balance sheet
date.
17 Called up share capital
1996 1995
British British
Pounds Pounds
Authorised
Ordinary shares of
1p each 40,020 40,020
"A" Ordinary share
of 1p each 25,955 25,955
"B" Ordinary shares 3,330 3,330
______ ______
69,305 69,305
Preference
shares of 1
British pound each 1,500,000 1,500,000
_________ _________
1,569,305 1,569,305
_________ _________
Allotted, called up and fully paid
Equity shares
Ordinary shares
of 1p each 36,260 36,260
_________ _________
Non-equity shares
"A" Ordinary shares 25,955 25,955
of 1p each
"B" Ordinary shares
of 1p each 3,100 3,100
_________ _________
29,055 29,055
_________ _________
65,315 65,315
_________ _________
_________ _________
Class rights
The following class rights apply to classes of issued share
capital.
Dividends:
'A' ordinary - fixed cumulative dividend of 10p per share
accruing from 1 April 1995.
'B' ordinary - have no dividend entitlement.
Ordinary - dividends as determined by the company after
payment of 'A' ordinary share dividend and
any arrears of such.
Redemption:
"A" ordinary - redeemable at 95 pence per share plus any
arrears of dividend at any time after 1 April
1998.
"B" ordinary and Ordinary shares are non-redeemable.
Conversion: "A" ordinary and "B" ordinary shares convert on a
one for one basis to ordinary shares on public
listing, acquisition or merger of the company.
Priority on The priority of distribution of surplus assets
winding up: of the company after payment of liabilities on
winding up is to holders of "A" ordinary shares
to an amount of their subscription, then to the
holders of "B" ordinary shares to an amount of
their subscription, with any balance divided
equally amongst the holders of the "A" ordinary,
"B" ordinary and Ordinary shares pari passu.
Voting rights: "A" ordinary and Ordinary shares carry one vote
each ranking equally at general meetings of the
company. "B" ordinary shares carry no voting
rights.
18 Goodwill
Cumulative goodwill arising on past acquisitions amounts to
4,230,128 British pounds. This has been treated as follows:
British
Pounds
Amounts written off against merger reserve 2,379,000
Amounts written off against profit and loss
account reserve 1,851,128
__________
4,230,128
__________
19 Profit and loss account
At 1 April 1995 2,152,226
Profit for the year 447,918
Exchange adjustments (34,300)
__________
At 31 March 1996 2,565,844
__________
__________
20 Commitments
(i) Capital commitments at the end of the financial year
for which no provision has been made are as follows:
1996 1995
British British
Pounds Pounds
Authorised but not contracted 715,811 750,656
(ii) Annual commitments under non-cancellable operating
leases are as follows:
1996 1995
Land Other Land Other
and and
buildings buildings
British British British British
Pounds Pounds Pounds Pounds
Operating leases
which expire:
in the second to
fifth years
inclusive 99,774 15,456 108,904 15,456
Over five years 192,000 - 189,500 -
________ _______ _______ ______
291,774 15,456 298,404 15,456
________ _______ _______ ______
21 Reconciliation of operating profit to net cash inflow from
operating activities
1996 1995
British British
Pounds Pounds
Operating profit 1,452,706 1,269,605
Depreciation charges 756,662 640,554
Profit on the sale of
tangible fixed assets (28,768) (41,643)
Decrease/(increase)
in stocks 9,812 (10,523)
(Increase)/decrease
in debtors (285,674) 528,714
(Decrease) in creditors (21,711) (297,632)
(Decrease) in deferred
income (461,037) (160,158)
__________ __________
Net cash inflow from
operating activities 1,421,990 1,928,917
__________ __________
22 Analysis of changes in cash and cash equivalents
during the year
1996 1995
British British
Pounds Pounds
Balance at 1 April 1995 1,312,439 528,134
Net cash (outflow)/inflow
before adjustments for
the effect of exchange
rate movements (46,489) 686,813
Effect of exchange
rate movements (181,850) 97,492
__________ __________
Balance at 31 March 1996 1,084,100 1,312,439
__________ __________
The movements in cash and cash equivalents comprise the
following:
Cash at bank Short term
and in hand bank loans Total
British British British
Pounds Pounds Pounds
Balance at
1 April 1994 1,403,791 (875,657) 528,134
Movement in year 706,684 77,621 784,305
_________ _________ _________
Balance at
1 April 1995 2,110,475 (798,036) 1,312,439
Movement in year (174,754) (53,585) (228,339)
_________ _________ _________
Balance at
31 March 1996 1,935,721 (851,621) 1,084,100
_________ _________ _________
The bank loans and overdrafts above comprise a foreign currency
loan having an original maturity of less than three months.
23 Analysis of changes in financing during the year
Share capital Bank loans Finance lease
(including Obligations
share premium)
British British British
Pounds Pounds Pounds
Balance at
1 April 1994 3,104,148 637,500 553,270
New borrowing
in year - - 282,199
Repayments - (150,000) (290,746)
_________ _________ _________
Balance at
1 April 1995 3,104,148 487,500 544,723
New borrowing
in year - 500,000 457,335
Repayments - (200,000) (328,275)
_________ _________ _________
Balance at
31 March 1996 3,104,148 787,500 673,803
_________ _________ __________
The inception of finance lease obligations are non-cash
transactions.
24 Summary of differences between UK and US Generally Accepted
Accounting Principles
The consolidated Financial Statements are prepared in
accordance with UK GAAP, which differs in certain respects
from US GAAP. These differences relate principally to the
following items and the necessary adjustments are shown in
the tables set out below.
(a) Current assets and liabilities
Current assets under UK GAAP include amounts which fall due
after more than one year. Under US GAAP such assets would
be reclassified as non-current assets. Borrowings under UK GAAP
are classified according to the maturity of the financial
instrument, while under US GAAP, certain borrowings would be
classified according to the maturity of the available back-up
facility. Provisions for liabilities and charges under UK
GAAP include amounts due within one year which would be
reclassified to current liabilities under US GAAP.
(b) "A" Ordinary Shares
Under UK GAAP the "A" Ordinary Shares of 0.01 British pounds are
recorded in shareholders' funds as non- equity shares. Under US
GAAP these shares together with their redemption premium are not
classified as shareholders' funds, as they have a redemption
feature which is outside the control of the Company.
(c) Cash flows
Under UK GAAP the Group complies with the Financial Reporting
Standard No 1 "Cash Flow Statements" (FRS1). Its objective and
principles are similar to those set out in SFAS No 95 "Statement
of Cash Flows". The principal difference between the standards is
in respect of classification. Under FRS1, the Group presents its
cash flows for (a) operating activities; (b) returns on
investments and servicing of finance; (c) taxation; (d) investing
activities; and (e) financing activities. SFAS No 95 requires
only three categories of cash flow activity (a) operating; (b)
investing; and (c) financing.
Cash flows arising from taxation and returns on investments
and servicing of finance under FRS 1 would be included as
operating activities under SFAS No 95. In addition, under FRS 1,
cash and cash equivalents include short term borrowings with
original maturities of less than 90 days. SFAS No 95
requires movements on such short term borrowings to be included
in financing activities.
Approximate effect on net income of differences between UK
and US GAAP:
Note Year Ended 31 March
1996 1995
British British
Pounds Pounds
'000 '000
Net income in
accordance with
UK GAAP 807 1,051
US GAAP adjustments - -
_____ _____
Approximate net
income in accordance
with US GAAP 807 1,051
Approximate cumulative effect on shareholders' funds of
differences between UK and US GAAP:
Note As at 31 March
1996 1995
British British
Pounds Pounds
'000 '000
Shareholders' funds in
accordance with UK GAAP 5,670 5,256
'A' Ordinary Shares
including share premium (b) (2,466) (2,466)
_______ _______
Approximate shareholders'
funds in accordance
with US GAAP 3,204 2,790
_______ _______
25 Companies Act 1985
The consolidated financial statements do not constitute
"statutory accounts" within the meaning of the Companies Act
1985 of Great Britain for any of the two years ended March 31,
1996. Statutory accounts for 1995 have been filed with the
United Kingdom's Registrar of Companies; the statutory
accounts for 1996 will be filed following the Company's Annual
General Meeting. The auditors have reported on these accounts.
Their reports were unqualified and did not contain statements
under Section 237(2) or (3) of that Act.
26 Subsequent events - unaudited
On 24 May 1996 the entire share capital of the company was
acquired by IndeNet, Inc. a company listed on the Nasdaq
national market. In accordance with the Articles of Association
of the company, upon acceptance of the offer by IndeNet Inc the
1p 'A' ordinary shares and 1p 'B' ordinary shares converted one
for one to 1p ordinary shares ranking pari passu and are
classified under UK and US GAAP as equity shares.
