<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8 - K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): June 14, 1996 (April 3, 1996)
BUILDERS WAREHOUSE ASSOCIATION, INC.
EXACT NAME OF REGISTRANT, AS SPECIFIED IN ITS CHARTER
Colorado 0-2108-2 84-1090968
-------- -------- ----------
(STATE OR JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION FILE NUMBER) IDENTIFICATION NO.)
2800 28th STREET, #100, SANTA MONICA, CALIFORNIA 90405
- - ------------------------------------------------ -----
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (310) 453-4371
--------------
<PAGE> 2
ITEM 7. - FINANCIAL STATEMENTS
(a) The financial statements for the six months ended March 31, 1996
and the year ended September 30, 1995.
(b) Pro forma financial information at February 29, 1996 and for the
nine months then ended and for the period from July 1, 1994 (inception)
to May 31, 1995.
<PAGE> 3
ITEM 7 (b) Pro Forma Financial Information
The following pro forma financial information presents the effects of
the acquisition of Uni Precision Industrial Limited ("UNI") by the registrant
as if the acquisition had been completed as of February 29, 1996. The unaudited
pro forma financial information has been compiled by management. All amounts
have been converted to United States dollars at the rate of 1 HK$=US $.1293.
The pro forma consolidated income statement is based on the average monthly
activity for the 24 months ended September 30, 1995.
The pro forma financial information is not necessarily indicative of
the results of operations and financial position which will be attained in the
future. The pro forma information should be read in conjunction with the
historical consolidated financial statements of Builders Warehouse Association,
Inc. as reported on Forms 10-QSB and 10-KSB for the nine months and the year
ended February 29, 1996 and May 31, 1995 respectively.
Builders Warehouse Association, Inc.
Pro Forma Condensed Consolidated Balance Sheet
February 29, 1996
<TABLE>
<CAPTION>
Company
before Pro forma Pro forma
acquisition UNI adjustments consolidated
----------- --- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Cash $6,562,103 $ 3,459,084(a) ($6,000,000) $ 4,021,187
Accounts receivable 503,953 3,103,200 3,607,153
Inventories 193,322 5,081,490 5,274,812
Due from subsidiary 113,525 113,525
Due from associated companies 1,305,930 1,305,930
Due from related companies 762,870 762,870
Marketable securities 254,546 0 254,546
Prepaid expenses 10,950 483,582 492,532
Other current assets 583,435 0 583,435
---------- ----------- ----------- -----------
Total current assets 8,108,309 14,309,681 (6,000,000) 16,417,990
Investment in joint venture 155,160 155,160
Investment in Uni
Property and equipment - net 30,932 6,115,890 6,146,822
Goodwill 299,999 0(b) 6,551,647 6,851,646
Other investments 269,415 49,134 318,549
Other assets 9,268 27,412 36,680
---------- ----------- ----------- -----------
TOTAL ASSETS $8,717,923 $20,657,277 $ 551,647 $29,926,847
========== =========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 708,711 $10,108,803 $10,817,514
Notes payable 11,041 4,756,430(a) 4,000,000 8,767,471
Capital lease obligations-current 179,210 179,210
Dividends payable 1,255,762 1,255,762
---------- ------------ ---------- -----------
Total current liabilities 719,752 16,300,205 4,000,000 21,019,957
---------- ------------ ---------- -----------
Capital lease obligations - long term 660,594
Deferred taxation 248,127
---------- ------------ ---------- -----------
TOTAL LIABILITIES 719,752 17,208,925 4,000,000 21,928,677
---------- ------------ ---------- -----------
Preferred stock 6,176,239 0 6,176,239
Common stock 23,575 62,840(b) (62,840) 23,575
Additional paid-in-capital 2,218,211 1,802,701(b) (1,802,701) 2,218,211
Retained earnings (Accumulated deficit) (242,361) 1,582,812(b) (1,582,812) (242,361)
Treasury stock (177,493) 0 (0) (177,493)
---------- ------------ ---------- -----------
TOTAL STOCKHOLDERS' EQUITY 7,998,171 3,448,353 (3,448,353) 7,998,171
---------- ------------ ---------- -----------
TOTAL LIABILITIES AND EQUITY $8,717,923 $20,657,277 $ 551,647 $29,926,847
========== ============ ========== ===========
</TABLE>
- - -------------------
(a) To record cash payments due on closing and accrue balance of purchase
price due.
(b) To eliminate Uni equity and record excess of cost over net assets acquired
as goodwill.
<PAGE> 4
ITEM 7 (b) Pro Forma Financial Information (continued)
BUILDERS WAREHOUSE ASSOCIATION, INC.
Pro Forma Condensed Consolidated Income Statements
For the Nine Months Ended February 29, 1996
and July 1, 1994 (inception) to May 31, 1995
<TABLE>
<CAPTION>
Company
before
pro forma Pro forma
adjustments Uni consolidated
----------- --- ------------
<S> <C> <C> <C>
NINE MONTHS ENDED FEBRUARY 29, 1996
Net Sales $4,987,688 $36,750,000 $41,737,688
Cost of Sales 4,310,839 33,000,000 37,310,839
---------- ----------- -----------
Gross Profit 676,849 3,750,000 4,426,849
Selling, General & Administrative Expenses $ 772,421 $ 3,588,000 $ 4,360,421
Unrealized losses in marketable securities (72,728) (72,728)
Interest Income 6,959 6,959
---------- ----------- -----------
Net earnings (loss) ($161,341) $ 162,000 $ 659
========== =========== ===========
PRIMARY EARNINGS (LOSS) PER COMMON SHARE
Total earnings (loss) per share ($0.10) $.10 ($0.02)
Weighted average shares used in computation 1,678,512 1,678,512 1,678,512
FOR THE PERIOD JULY 1, 1994 (inception) TO MAY 31, 1995
Net sales $6,693,731 $44,900,000 $51,593,731
Cost of sales 5,699,274 40,300,000 45,999,274
---------- ----------- -----------
Gross profit 994,457 4,600,000 5,594,457
Selling, general & administrative expenses 1,077,935 4,385,000 5,462,935
Unrealized losses in marketable securities
Interest Expense 1,418
Interest Income 3,876 3,876
---------- ----------- -----------
Net earnings (loss) ($81,020) $ 215,000 $ 133,980
========== =========== ===========
PRIMARY EARNINGS (LOSS) PER COMMON SHARE
Total earnings (loss) per share ($0.05) $0.13 $0.08
Weighted average shares used in computation 1,678,512 1,678,512 1,678,512
</TABLE>
<PAGE> 5
Signature
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 duly authorized.
Builders Warehouse Association, Inc.
------------------------------------
(Registrant)
Date: June 14, 1996 By: /s/ Barry Witz
---------------------------------
Barry Witz
Chief Executive Officer
<PAGE> 6
[LETTER HEAD]
ARTHUR ANDERSEN & CO, SC
___________________________
Arthur Andersen & Co.
Certified Public Accountants
AUDITORS' REPORT TO THE SHAREHOLDERS OF
UNI PRECISION INDUSTRIAL LIMITED ___________________________
25/F., Wing On Centre
(INCORPORATED in HONG KONG WITH LIMITED LIABILITY) 111 Connaught Road Central
Hong Kong
We have audited the financial statements on pages 4 to 25 which have been
prepared in accordance with accounting principles generally accepted in Hong
Kong.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Companies Ordinance requires the directors to prepare financial statements
which give a true and fair view. In preparing financial statements which give
a true and fair view it is fundamental that appropriate accounting policies are
selected and applied consistently.
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 Statements of Auditing Standards
issued by the Hong Kong Society of Accountants. An audit includes examination,
on a test basis, of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the significant
estimates and judgments made by the directors in the preparation of the
financial statements, and of whether the accounting policies are appropriate to
the circumstances of the Company, 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 as to whether the financial
statements are free from material misstatement. In forming our opinion we also
evaluated the overall adequacy of the presentation of information in the
financial statements. We believe that our audit provides a reasonable basis
for our opinion.
OPINION
In our opinion the financial statements give a true and fair view of the state
of affairs of the Company as of March 31, 1996 and of the profit and cash flows
of the Company for the period from October 1, 1995 to March 31, 1996 and have
been properly prepared in accordance with the Companies Ordinance.
[SIG]
- - -----------------------------
Hong Kong,
May 10, 1996.
- 3 -
<PAGE> 7
UNI PRECISION INDUSTRIAL LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD FROM OCTOBER 1, 1995 TO MARCH 31,1996
<TABLE>
<CAPTION>
Note 6 months ended 3/31/1996 12 months ended 9/30/1995
---- ------------------------------ ------------------------------
(Note 24)
HK$ US$ HK$ US$
<S> <C> <C> <C> <C> <C>
TURNOVER 3 224,479,521 29,040,042 410,188,708 53,064,516
COST OF SALES 3 (193,394,097) (25,018,641) (359,130,103) (46,459,263)
------------- ------------ ------------- ------------
Gross profit 31,085,424 4,021,401 51,058,605 6,605,253
OPERATING EXPENSES 3 (19,975,464) (2,584,148) (37,428,039) (4,841,920)
------------- ------------ ------------- ------------
Profit before taxation and
exceptional item 11,109,960 1,437,253 13,630,566 1,763,333
EXCEPTIONAL ITEM 11 1,795,845 232,321 (1,795,845) (232,321)
------------- ------------ ------------- ------------
Profit before taxation 4 12,905,805 1,669,574 11,834,721 1,531,012
TAXATION 5 (1,699,000) (219,793) - -
------------- ------------ ------------- ------------
Net profit 11,206,805 1,449,781 11,834,721 1,531,012
RETAINED EARNINGS,
beginning of
period/year 16,060,068 2,077,628 4,225,347 546,616
------------- ------------ ------------- ------------
27,266,873 3,527,409 16,060,068 2,077,628
DIVIDENDS 6 (11,813,433) (1,528,258) - -
------------- ------------ ------------- ------------
RETAINED EARNINGS,
end of period/year 15,453,440 1,999,151 16,060,068 2,077,628
============= ============ ============= ============
</TABLE>
Translation of amounts from Hong Kong dollars (HK$) into United States dollars
(US$) for the convenience of the reader has been made at the exchange rate
US$1=HK$7.73. No representation is made that the Hong Kong dollar amounts could
have been, or could be, converted into United States dollars at that rate or at
any other certain rate.
- 4 -
<PAGE> 8
UNI PRECISION INDUSTRIAL LIMITED
BALANCE SHEET AS OF MARCH 31,1996
<TABLE>
<CAPTION>
Note 6 months ended 3/31/1996 12 months ended 9/30/1995
---- ------------------------------- -------------------------------
(Note 24)
HK$ US$ HK$ US$
<S> <C> <C> <C> <C> <C>
Fixed assets, net 7 47,284,272 6,116,982 46,350,213 5,996,147
Investment in associated
companies 8 1,400,000 181,113 350,000 45,278
Investment in subsidiaries 9 379,861 49,141 219,860 28,442
Investment in a joint venture 10 1,200,000 155,239 1,200,000 155,239
Short-term investment 11 - - - -
Other non-current assets 212,129 27,442 282,838 36,590
Current assets 12 112,487,278 14,552,041 100,028,394 12,940,284
Current liabilities 13 (126,054,385) (16,307,165) (111,786,206) (14,461,346)
Hire purchase payable -
long-term portion 16 (5,109,072) (660,941) (5,824,407) (753,481)
Deferred taxation 17 (1,919,000) (248,253) (940,000) (121,604)
------------- ------------ ------------- ------------
29,881,083 3,865,599 29,880,692 3,865,549
============= ============ ============= ============
Representing -
Share capital 18 11,114,583 1,437,850 10,507,564 1,359,323
Share premium 486,500 62,937 486,500 62,937
Revaluation reserve 19 2,826,560 365,661 2,826,560 365,661
Retained earnings 15,453,440 1,999,151 16,060,068 2,077,628
------------- ------------ ------------- ------------
Shareholders' equity 29,881,083 3,865,599 29,880,692 3,865,549
============= ============ ============= ============
</TABLE>
Approved by the Board of directors on May 10, 1996.
Directors: [SIG] [SIG]
------------------------- ------------------------------
Transaction of amounts from Hong Kong dollars (HK$) into United States dollars
(US$) for the convenience of the reader has been made at the exchange rate
US$1=HK$7.73. No representation is made that the Hong Kong dollar amounts could
have been, or could be, converted into United States dollars at that rate or at
any other certain rate.
- 5 -
<PAGE> 9
UNI PRECISION INDUSTRIAL LIMITED
CASH FLOW STATEMENT
FOR THE PERIOD FROM OCTOBER 1, 1995 TO MARCH 31,1996
<TABLE>
<CAPTION>
Note 6 months ended 3/31/1996 12 months ended 9/30/1995
---- --------------------------- -----------------------------
(Note 24)
HK$ US$ HK$ US$
<S> <C> <C> <C> <C> <C>
Net cash inflow from operating
activities 22 19,730,683 2,552,481 20,690,072 2,676,594
Returns on investments and
servicing of finance
Interest received 762,535 98,646 1,364,293 176,493
Interest paid (2,677,369) (346,361) (5,176,061) (669,606)
Interest paid on hire purchase
loans (373,208) (48,280) (182,518) (23,612)
Dividend paid (2,101,513) (271,864) - -
----------- ---------- ----------- ----------
Net cash outflow from returns on
investments and servicing of
finance (4,389,555) (567,859) (3,994,286) (516,725)
----------- ---------- ------------ -----------
Investing activities
Purchase of fixed assets (4,874,938) (630,652) (17,779,899) (2,300,116)
Investment in subsidiaries (160,001) (20,699) - -
Investment in associated
companies (1,050,000) (135,834) (350,000) (45,278)
Proceed from disposal of fixed
assets - - 52,132 6,744
Decrease in other non-current
assets - - 425,491 55,044
----------- ---------- ------------ -----------
Net cash outflow from investing
activities (6,084,939) (787,185) (17,652,276) (2,283,606)
----------- ---------- ------------ -----------
Net cash inflow (outflow) before
financing activities 9,256,189 1,197,437 (956,490) (123,737)
Financing activities
Repayment of loan to a director - - 1,771,400 229,159
Repayment of loan from a
director - - (3,635,653) (470,330)
Issue of share capital 607,019 78,527 - -
Increase in hire purchase loans - - 7,356,651 951,701
Repayment of hire purchase
loans (649,639) (84,041) (757,585) (98,006)
----------- ---------- ------------ -----------
Net cash (outflow) inflow from
financing activities (42,620) (5,514) 4,734,813 612,524
----------- ---------- ------------ -----------
Increase in cash and cash
equivalents 9,213,569 1,191,923 3,778,323 488,787
Cash and cash equivalents,
beginning of period/year (17,376,367) (2,247,913) (21,154,690) (2,736,700)
------------ ----------- ------------ -----------
Cash and cash equivalents, end of
period/year (8,162,798) (1,055,990) (17,376,367) (2,247,913)
============ =========== ============ ===========
Analysis of cash and cash
equivalents
Cash and bank deposits 28,623,610 3,7O2,924 26,397,033 3,414,881
Short-term borrowings (36,786,408) (4,758,914) (43,773,400) (5,662,794)
------------ ----------- ------------ -----------
(8,162,798) (1,055,990) (17,376,367) (2,247,913)
============ =========== ============ ===========
</TABLE>
Translation of amounts from Hong Kong dollars (HK$) into United States dollars
(US$) for the convenience of the reader has been made at the exchange rate
US$1=HK$7.73. No representation is made that the Hong Kong dollar amounts could
have been, or could be, converted into United States dollars at that rate or at
any other certain rate.
- 6 -
<PAGE> 10
UNI PRECISION INDUSTRIAL LIMITED
NOTES TO THE FINANCIAL STATEMENT'S
MARCH 31,1996
(Amounts expressed in Hong Kong dollars)
1. ORGANIZATION AND OPERATIONS
The Company was incorporated in Hong Kong with limited liability on April
3,1985.
The Company was principally engaged in the manufacture and sale of electronic
products.
Its wholly-owned subsidiary, Uni Precision Mould Limited, was principally
engaged in the manufacture and sale of plastic moulds.
2. PRINCIPAL ACCOUNTING POLICIES
a. Group accounts
Group accounts are not prepared as the directors are of the opinion that
consolidated financial statements would be of no real value to the
members of the Company and the impact of non-consolidation is
immaterial.
b. Turnover
Turnover comprises sales revenue and other related revenues which is
recognized when the goods are delivered and title has passed.
C. Taxation
The Company provides for Hong Kong profits tax on the basis of its
profit for financial reporting purposes, adjusted for income and expense
items which are not assessable or deductible for taxation purposes.
Deferred taxation is provided under the liability method in respect of
significant timing differences between profit as computed for taxation
purposes and profit as stated in the financial statements except when it
is considered that no liability will arise in the foreseeable future.
Deferred tax assets are not recognized unless it is certain that such
assets will be crystallized in the foreseeable future.
- 7 -
<PAGE> 11
2. PRINCIPAL ACCOUNTING POLICIES (Cont'd)
d. Inventories
Inventories are stated at the lower of cost and net realizable value.
Cost is calculated using the weighted average basis and includes costs
incurred in bringing the goods to their present locations and
conditions. Net realizable value is based on estimated normal selling
price, less further costs expected to be incurred to completion and
disposal. Provision is made for obsolete, slow moving or defective
items where appropriate.
e. Fixed assets and depreciation
Leasehold land and buildings are stated at original historical cost or
subsequent valuation as set out in Note 7. Other fixed assets are stated
at cost less accumulated depreciation. Depreciation is provided at
rates estimated to write off the cost or the revalued amount of each
asset, on a reducing balance basis over its expected useful life. The
annual rates of depreciation are as follows:
<TABLE>
<S> <C>
Leasehold land Nil
Leasehold buildings 2%
Plant and machinery 20%
Furniture, office equipment and motor vehicles 15%-20%
Moulds and small tools 20%
</TABLE>
Fixed assets held under hire purchase contracts are initially recorded at
the present value of the minimum payments at the inception of the
contracts, with an equivalent liability categorized as appropriate under
current or non-current liabilities. Such assets are depreciated on the
same basis as described above. Interest expenses, which represent the
difference between the minimum payments and the present value of the
minimum payments at the inception of the contracts, are allocated to
accounting periods over the period of the relevant hire purchase
contracts to produce a constant rate of charge on the outstanding
balances.
Leasehold land and buildings are held for the long term and are included
in the balance sheet at their open market value on the basis of valuation
by independent qualified valuers. AU changes in the value of leasehold
land and buildings are dealt with in the revaluation reserve. Any
revaluation surplus/ deficit should be charged directly to the
revaluation reserve to the extent that the deficit of a particular asset
does not exceed the amount held in the revaluation reserve in respect of
that same asset; in which case the excess of the deficit should be
charged to the profit and loss account.
- 8 -
<PAGE> 12
2. PRINCIPAL ACCOUNTING POLICIES (Cont'd)
f. Investment in subsidiaries
A subsidiary is a company in which the Company holds, directly or
indirectly, more than 50% of the issued share capital.
Investment in subsidiaries is stated at cost less provision for
permanent diminution in value, if any.
g. Investment in associated companies
An associated company is a company, not being a subsidiary company, in
which the Company has an attributable equity interest of more than 20%
and can exercise significant influence over its operating and
financial policies.
Investment in associated companies is stated at cost less, if any, (i)
provision for permanent diminution in value and (ii) for an associated
company that has a shareholders' deficit and one that the Company has
undertaken to provide continuing financial support, the Company's
share of the associated company's shareholders' deficit, to the extent
of the Company's equity interests in the associated company and not
otherwise provided as permanent diminution in value.
h. Investment in a joint venture
A joint venture is an entity established between the Company and one
or more other parties, with the rights and obligations of the joint
venture partners governed by a contract.
Investment in a joint venture is stated at cost less provision for any
permanent diminution in value, if any. Income from the joint venture
is recorded to the extent of dividends received and receivable.
i. Operating leases
Leases where substantially all the rewards and risks of ownership of
assets remain with the lessor are accounted for as operating leases.
Rentals applicable to such operating leases are charged to the profit
and loss account on a straight-line basis over the period of the
relevant leases.
j. Foreign currency translation
The Company maintains its books and records in Hong Kong dollars.
Monetary assets and liabilities denominated in other currencies are
translated into Hong Kong dollars at the applicable rates of exchange
in effect at the balance sheet date; non-monetary assets and
liabilities denominated in other currencies are translated at
historical rates. Transactions in other currencies during the year
are translated into Hong Kong dollars at the applicable rates of
exchange prevailing at the time of the transactions. Exchange gains
or losses are dealt with in the profit and loss account.
- 9 -
<PAGE> 13
2. PRINCIPAL ACCOUNTING POLICIES (Cont'd)
k. Related companies
Related companies are companies, other than associated companies and
subsidiary companies, in which one or more of the directors or
shareholders of the Company have direct or indirect beneficial interest.
3. RELATED PARTY TRANSACTIONS
a. In the ordinary course of business, the Company entered into business
transactions with associated companies, a joint venture, a subsidiary
and certain related companies as follows:
<TABLE>
<CAPTION>
6 months 2 months
ended ended
3/31/1996 9/30/1995
--------------- ---------------
<S> <C> <C>
Sales to a subsidiary $1,288,754 $ -
Sales to associated companies 7,098,145 32,735,321
Sales to a joint venture 52,653 3,019,655
Sales to related companies 322,154 13,862,783
Purchases from a subsidiary 766,000 2,585,000
Purchases from associated companies 1,702,755 42,185,145
Purchases from a related company - 306,476
=============== ===============
</TABLE>
b. During the period, the Company charged a subsidiary and certain
associated companies rental expenses of approximately $179,000 and
$185,000 respectively (year ended 9/30/1995 - $357,000 and $162,000) for
sharing of office and factory premises.
C. During the period, the Company paid marketing research service fee of
approximately $3,000,000 to an associated company (year ended 9/30/1995
$10,200,000).
- 10 -
<PAGE> 14
3. RELATED PARTY TRANSACTIONS (Cont'd)
d. During the period, the Company provided administrative and management
service to a subsidiary in return for a fee of approximately $77,000
(year ended 9/30/1995 - $259,000). Also, the Company paid management
and service fees of approximately $2,250,000 (year ended 9/30/1995 -
$1,896,000) to related companies for management services provided.
Moreover, no service fee was paid (year ended 9/30/1995 - $387,000) to a
related company for collection service.
e. During the period, the Company purchased fixed assets of approximately
$553,000 (year ended 9/30/1995 - $708,000) from a subsidiary.
f. During the period, the Company paid legal and professional fees of
approximately $4,000, $47,000 and $38,000 (year ended 9/30/1995 -
$11,000, nil and nil) for services provided to the subsidiaries, an
associated company and certain related companies respectively.
g. A director and shareholder of an associated company and a related
company has undertaken to provide continuing financial support to the
associated company and the related company. The director and
shareholder has also guaranteed, subject to the following conditions, to
indemnify the Company against any loss if the outstanding balances of
approximately $9,595,000 and $4,963,000 owed by the associated company
and the related company respectively to the Company as of March 31, 1996
are not fully settled by May 30, 1996:
(i) completion of the sale of the shares ("Sale of Shares") of the
Company to a third party by the shareholders of the Company on
or before May 15, 1996 (refer to Note 11 for details); and
(ii) receipt of US$6 million by the shareholders of the Company
from the third party in return for Sale of Shares on or before
May 15, 1996.
h. All outstanding balances with the subsidiaries, joint venture,
associated companies and related companies resulted from normal business
activities and, were unsecured, non-interest bearing and had no fixed
repayment dates.
i. Certain of the Company's banking facilities were secured, among others,
by (i) personal guarantees given by certain directors of the Company,
(h) two directors of an associated company, and (iii) a corporate
guarantee given by an associated company.
- 11 -
<PAGE> 15
4. PROFIT BEFORE TAXATION
Profit before taxation was determined after charging and crediting the
following:
<TABLE>
<CAPTION>
6 months 12 months
ended ended
3/31/1996 9/30/1995
--------- ---------
<S> <C> <C>
After charging -
Auditors' remuneration $550,000 480,800
Directors' emoluments for
- services as directors - -
- other services 1,326,625 2,142,748
Depreciation on
- fixed assets held under hire purchase
contracts 882,358 961,875
- owned fixed assets 3,058,521 5,656,648
Interest expenses on
- bank overdrafts and loans wholly repayable
within five years 2,677,369 5,176,061
- hire purchase contracts 373,208 182,518
Rental expense in respect of land and buildings
under operating leases 2,883,143 5,977,763
Provision for loss on disposal of other non-current
assets - 13,163
Net loss on disposals of fixed assets - 54,281
========= =========
After crediting -
Interest income on bank deposits $762,535 1,364,293
Net exchange gain 229,739 247,412
Writeback of provision for permanent diminution
in value of investments (Note 11) 1,795,845 -
========= =========
</TABLE>
- 12 -
<PAGE> 16
5. TAXATION
Taxation for the period comprised:
<TABLE>
<CAPTION>
6 months 12 months
ended ended
3/31/1996 9/30/1995
-------------- --------------
<S> <C> <C>
Hong Kong profits tax $ 720,000 $ -
Deferred taxation (Note 17) 979,000 -
-------------- --------------
$1,699,000 $ -
============== ==============
</TABLE>
Hong Kong profits tax has been provided at the rate of 16.5% (year ended
9/30/1995 16.5%) on the estimated assessable profit for the period.
6. DIVIDENDS
<TABLE>
<CAPTION>
6 months 12 months
ended ended
3/31/1996 9/30/1995
--------------- ---------------
<S> <C> <C>
Interim, paid of $0.20 per ordinary share (year
ended 9/30/1995 - nil) $ 2,101,513 $ -
Final, declared of $0.8738 per ordinary share (year
ended 9/30/1995 - nil) 9,711,920 -
--------------- ---------------
$11,813,433 $ -
=============== ===============
</TABLE>
- 13 -
<PAGE> 17
7. FIXED ASSETS
a. The movements in fixed assets were as follows:
<TABLE>
<CAPTION>
12 months
ended
6 months ended 3/31/1996 9/30/1995
------------------------------------------------------------------- -----------
Furniture,
office
Leasehold equipment
land and Plant and and motor Moulds and
buildings machinery vehicles small tools Total Total
<S> <C> <C> <C> <C> <C>
Cost
Beginning of
period/year $ 5,400,000 $ 33,951,330 $ 23,101,706 $ 8,488,543 $ 70,941,579 $ 53,380,071
Additions - 780,588 1,745,222 2,349,128 4,874,938 17,779,899
Disposals - - - - (218,391)
----------- ------------ ------------ ----------- ------------ ------------
End of
period/year 5,400,000 34,731,918 24,846,928 10,837,671 75,816,517 70,941,579
----------- ------------ ------------ ----------- ------------ ------------
At cost - 34,731,918 24,846,928 10,837,671 70,416,517 65,541,579
At professional
valuation 5,400,000 - - - 5,400,000 5,400,000
----------- ------------ ------------ ----------- ------------ ------------
5,400,000 34,731,918 24,846,928 10,837,671 75,816,517 70,941,579
----------- ------------ ------------ ----------- ------------ ------------
Accumulated
depreciation
Beginning of
period/year 211,910 12,281,292 9,258,084 2,840,080 24,591,366 18,084,821
Provision for the
period/year 51,665 2,127,064 1,076,944 685,206 3,940,879 6,618,523
Written back on
disposals - - - - - (111,978)
----------- ------------ ------------ ----------- ------------ ------------
End of
period/year 263,575 14,408,356 10,335,028 3,525,286 28,532,245 24,591,366
----------- ------------ ------------ ----------- ------------ ------------
Net book value
End of
period/year $ 5,136,425 $ 20,323,562 $ 14,511,900 $ 7,312,385 $ 47,284,272 $ 46,350,213
=========== ============ ============ =========== ============ ============
Beginning of
period/year $ 5,188,090 $ 21,670,038 $ 13,843,622 $ 5,648,463 $ 46,350,213 $ 35,295,250
=========== ============ ============ =========== ============ ============
</TABLE>
b. The leasehold land and buildings were situated in Hong Kong and were
held under long leases. The leasehold land and buildings were valued
by independent professional valuers on an open market value basis as
of March 31, 1996. Their reports indicated no significant change in
the value of the leasehold land and buildings since the previous
revaluation. The leasehold land and buildings were pledged to secure
the Company's banking facilities (see Note 20).
- 14 -
<PAGE> 18
7. FIXED ASSETS (Cont'd)
C. Certain fixed assets included in the above were purchased under hire
purchase contracts. The details of these assets were as follows:
<TABLE>
<CAPTION>
3/31/1996 9/30/1995
----------------------------------------------- -------------
Furniture,
office
equipment
Plant and and motor
machinery vehicles Total Total
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Cost $ 11,538,466 $550,000 $ 12,088,466 $ 12,088,466
Accumulated
depreciation (3,435,411) (336,984) (3,772,395) (2,890,037)
------------ -------- ------------ ------------
Net book value $8,103,055 $213,016 $8,316,071 $9,198,429
============ ======== ============ ============
</TABLE>
8. INVESTMENT IN ASSOCIATED COMPANIES
Details of the associated companies were as follows:
<TABLE>
<CAPTION>
Percentage of
Place of ordinary shares
incorporation held by the
Name and operation Company Principal activities
------------------------------ -------------------- -------------------- -----------------------
<S> <C> <C> <C>
Co-Time Technology Limited Hong Kong 40% Trading and sourcing
of electronic
products
Suning Mings Company Hong Kong 20% Dormant
Limited
Spectra Electronic Systems Hong Kong 35% Trading of electronic
Limited products
</TABLE>
- 15 -
<PAGE> 19
8. INVESTMENT IN ASSOCIATED COMPANIES (Cont'd)
Investment in associated companies comprised the following:
<TABLE>
<CAPTION>
3/31/1996 9/30/1995
---------- ----------
<S> <C> <C>
(i) Suning Mings Company Limited
Unlisted shares, at cost $200,000 200,000
---------- ----------
Provision for permanent diminution in
value (Note 2.g) (200,000) (200,000)
- -
---------- ----------
(ii) Spectra Electronic Systems Limited
Unlisted shares, at cost 1,400,000 350,000
---------- ----------
Total of (i) and (ii) $1,400,000 $350,000
---------- ----------
</TABLE>
Investment in Co-Time Technology Limited has been reclassified as short-term
investment in the current period. Refer to Note 11 for details.
- 16 -
<PAGE> 20
9. INVESTMENT IN SUBSIDIARIES
Details of the subsidiaries were as follows:
<TABLE>
<CAPTION>
Percentage of
Place of ordinary
incorporation shares held by
Name and operation the Company Principal activities
---- ------------- -------------- --------------------
<S> <C> <C> <C>
Uni Precision Mould Hong Kong 100% Manufacture and
Limited sale of plastic
moulds
Uni Pak Limited Hong Kong 90% Dormant
Uni Technology Limited Hong Kong 80% Trading of electronic
products
</TABLE>
Investment in subsidiaries comprised the following:
<TABLE>
<CAPTION>
3/31/1996 9/30/1995
--------- ---------
<S> <C> <C>
(i) Uni Precision Mould Limited
Unlisted shares, at cost $219,860 $219,860
Provision for permanent diminution in
value - -
-------- --------
219,860 219,860
-------- --------
(ii) Uni Pak Limited
Unlisted shares, at cost 1 -
Provision for permanent diminution in -------- --------
value 1 -
-------- --------
(iii) Uni Technology Limited
Unlisted shares, at cost 160,000 -
Provision for permanent diminution in
value - -
-------- --------
160,000 -
-------- --------
Total of (i), (ii) and (iii) $379,861 $219,860
======== ========
</TABLE>
- 17 -
<PAGE> 21
9. INVESTMENT IN SUBSIDIARIES (Cont'd)
As of March 31, 1996, the net aggregate post-acquisition profit (loss) of the
subsidiaries attributable to the Company was as follows:
<TABLE>
<CAPTION>
Brought
forward from
previous
financial year
For current since
period acquisition Total
----------- -------------- --------
<S> <C> <C> <C>
Dealt with in the Company's
financial statements $ $ $
Not dealt with in the
Company's financial
statements (198,790) 275,699 76,909
---------- --------- --------
Total $(198,790) $275,699 $76,909
========== ========= ========
</TABLE>
10. INVESTMENT IN A JOINT VENTURE
The equity joint venture was incorporated in the People's Republic of China in
May 1994. Details of the joint venture as of March 31, 1996 were as follows:
<TABLE>
<CAPTION>
Name of Authorized Contractual Contribution Contribution
joint Joint venture party Principal share investment of capital by of capital by
venture ("JV party") activities capital sum the Company the JV party
--------- ------------------- ------------ ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shenzhen Shenzhen Sang Xia Manufacture $2 million $2.8 million 60% 40%
ACT Computer and and sale of
Electronic Artificial electronic
Industrial Intelligence products
company Development Co.
Limited Zhuhai Co.
</TABLE>
Under the joint venture agreement, the joint venture period is 20 years up to
May 2014 and, upon consent of both parties, an application for an extension of
the joint venture period could be made six months prior to the expiration date.
The Company shares the net profit/ loss of the joint venture with the TV party
according to the percentage of capital contribution.
The value of the investment in a joint venture was, in the opinion of the
Company's directors, not less than the Company's carrying value as of March 31,
1996.
- 18 -
<PAGE> 22
11. SHORT-TERM INVESTMENT
Short-term investment comprised the following:
<TABLE>
<CAPTION>
3/31/1996 9/30/1995
----------- -----------
<S> <C> <C>
Investment in Co-Time Technology Limited
("Co-Time")
Unlisted shares, at cost $1,750,000 $1,750,000
----------- -----------
Provision for permanent diminution in
value (Note 2.g) (1,750,000) (3,545,845)
----------- -----------
- (1,795,845)
- -----------
Excess of provision made over investment
cost, included under accounts payable
and accruals (Note 13) $ - $1,795,845
=========== ===========
</TABLE>
During the period, the shareholders of the Company have entered into a Stock
Purchase Agreement (the "Agreement") with a third party for the sale of the
shares of the Company to that third party. Under the terms of the Agreement,
the Company shall dispose of its 40% interest in Co- Time to one of the
shareholders and directors of the Company at a nominal consideration on or
before May 15,1996. In addition, the Company will withdraw its continuing
financial support provided to Co-Time following the disposal. Accordingly, the
investment in Co-Time was reclassified as a short-term investment as of March
31, 1996. The excess of provision made over investment cost in prior year of
approximately $1,796,000 has been written back in the current period profit and
loss account as an exceptional item.
12. CURRENT ASSETS
Current assets comprised the following:
<TABLE>
<CAPTION>
Note 3/31/1996 9/30/1995
- - ---- --------- ---------
<S> <C> <C> <C>
Cash and bank deposits 20 $ 28,623,610 $ 26,397,033
Accounts receivable, net 23,879,051 22,236,335
Inventories, net 14 39,349,427 35,565,981
Amount due from a subsidiary 3 878,396 -
Amount due from associated companies 3 10,125,939 5,644,770
Amount due from related companies 3 5,890,219 7,398,388
Prepayments and other current assets 3,740,636 2,785,887
--------- ---------
$ 112,487,278 $ 100,028,394
============= =============
</TABLE>
- 19 -
<PAGE> 23
13. CURRENT LIABILITIES
Current liabilities comprised the following:
<TABLE>
<CAPTION>
Note 3/31/1996 9/30/1995
---- --------- ---------
<S> <C> <C> <C>
Short-term bank borrowings 15 $ 36,786,408 $ 43,773,400
Accounts payable and accruals 11 76,582,547 66,265,316
Amount due to a subsidiary 3 336,915 352,164
Amount due to a joint venture 3 530,577 75,004
Hire purchase payable - current portion 16 1,386,018 1,320,322
Provision for taxation 720,000 -
Dividends payable 6 9,711,920 -
------------- -------------
$ 126,054,385 $ 111,786,206
============= =============
</TABLE>
14. INVENTORIES
Inventories comprised the following:
<TABLE>
<CAPTION>
3/31/1996 9/30/1995
--------- ---------
<S> <C> <C>
Raw materials $ 23,919,523 $ 26,849,748
Work-in-progress 12,415,941 8,701,919
Finished goods 6,082,930 2,284,281
------------ ------------
42,418,394 37,835,948
Less: Provision for obsolescence (3,068,967) (2,269,967)
------------ ------------
$ 39,349,427 $ 35,565,981
============ ============
</TABLE>
Certain of the inventories were subject to floating charges in respect of the
Company's trust receipt loans (Note 20).
- 20 -
<PAGE> 24
15. SHORT-TERM BANK BORROWINGS
Short-term bank borrowings comprised:
<TABLE>
<CAPTION>
3/31/1996 9/30/1995
--------- ---------
<S> <C> <C>
Bank overdrafts $10,253,913 $13,518,472
Trust receipt loans 26,532,495 30,254,928
----------- -----------
$36,786,408 $43,773,400
=========== ===========
</TABLE>
Refer to Note 20 for details of banking facilities.
16. HIRE PURCHASE PAYABLE
Hire purchase payable comprised:
<TABLE>
<CAPTION>
3/31/1996 9/30/1995
--------- ---------
<S> <C> <C> <C>
Amount repayable within a period
- not exceeding one year $1,386,018 $1,320,322
- more than one year but not exceeding five
years 5,109,072 5,824,407
- exceeding five years - -
---------- ----------
6,495,090 7,144,729
Less: Amount repayable within one year included
under current liabilities (Note 13) (1,386,018) (1,320,322)
----------- -----------
$5,109,072 $5,824,407
========== ==========
</TABLE>
17. DEFERRED TAXATION
Movements in deferred taxation were as follows:
<TABLE>
<CAPTION>
6 months 12 months
ended ended
3/31/1996 9/30/1995
--------- ---------
<S> <C> <C>
Beginning of period/ year $940,000 $940,000
Provision for the period/year (Note 5) 979,000 -
---------- --------
End of period/year $1,919,000 $940,000
========== ========
</TABLE>
- 21 -
<PAGE> 25
17. DEFERRED TAXATION (Cont'd)
The components of deferred taxation were:
<TABLE>
<CAPTION>
3/31/1996 9/30/1995
--------- ---------
<S> <C> <C>
Accelerated depreciation for taxation purposes $2,154,000 $1,729,000
Cumulative tax losses - (662,000)
Others (235,000) (127,000)
---------- ----------
Total $1,919,000 $ 940,000
========== ==========
</TABLE>
There was no significant unprovided deferred taxation as of March 31, 1996.
18. SHARE CAPITAL
<TABLE>
<CAPTION>
3/31/1996 9/30/1995
<S> <C> <C>
Authorized, issued and fully paid -
11,114,583 (1995 - 10,507,564)
ordinary shares of $1 each $ 11,114,583 $ 10,507,564
============ ============
</TABLE>
By an ordinary resolution passed on March 26,1996, the authorized ordinary
share capital of the Company was increased from $10,507,564 to $11,114,583 by
the creation OF 607,019 shares of $1.00 each, ranking pari passu with the then
existing shares. By another ordinary resolution passed on March 26, 1996,
607,019 ordinary shares were issued at par and were fully paid up.
19. REVALUATION RESERVE
Movements in revaluation reserve were as follows:
<TABLE>
<CAPTION>
6 months 12 months
ended ended
3/31/1996 9/30/1995
--------- ---------
<S> <C> <C>
Beginning of period/year $2,826,560 $2,826,560
Revaluation of fixed assets - -
- -
End of period/year $2,826,560 $2,826,560
========== ==========
</TABLE>
- 22 -
<PAGE> 26
20. BANKING FACILITIES
As of March 31,1996, the Company had aggregate facilities of approximately $97
million (9/30/1995 - $77 million) from various banks for overdrafts, loans and
trade financing. Unused facilities as of the same date amounted to
approximately $38 million (9/30/1995 $9 million). These facilities were
secured by:
a. first legal charges over the Company's leasehold land and buildings (see
Note 7);
b. pledge of the Company's fixed deposits amounting to approximately $27
million (see Note 12);
C. floating charges on the Company's inventories released under trust
receipt loans (see Note 14);
In connection with certain of the aforementioned facilities, the Company has
made the undertaking that its tangible net worth would not be less than $29
million.
21. COMMITMENTS AND CONTINGENT LIABILITIES
a. As of March 31,1996, the Company had significant commitments and
contingent liabilities for open letters of credit, discounted bills
and shipping guarantees executed in favour of various banks totalling
approximately $24,992,000 (9/30/1995 - $23,747,000).
b. The Company also entered into a provisional agreement for the purchase
of new office premise. Refer to Note 23 for details.
- 23 -
<PAGE> 27
22. NOTE TO THE CASH FLOW STATEMENT
<TABLE>
<CAPTION>
6 months 12 months
ended ended
3/31/1996 9/30/1995
------------ ------------
<S> <C> <C>
Operating activities
Profit before taxation $ 12,905,805 $ 11,834,721
Interest income (762,535) (1,364,293)
Interest expense 3,050,577 5,358,579
Depreciation of fixed assets 3,940,879 6,618,523
Amortization of other non-current assets 70,709 141,420
Writeback of provision for permanent
diminution in value of investments (1,795,845) -
Loss on disposal of fixed assets - 54,281
Increase in account receivable, net (1,642,716) (2,625,684)
Increase in inventories, net (3,783,446) (5,217,839)
Increase in amount due from a subsidiary, net (893,645) -
Increase in amount due from associated
companies (4,481,169) (2,955,890)
Decrease(Increase) in amount due from related
companies 1,508,169 (2,125,973)
Increase in prepayments and other current
assets (954,749) (1,442,374)
Increase in accounts payable and accruals 12,113,076 10,961,749
Increase in amount due to a subsidiary, net - 341,634
Increase in amount due to a joint venture 455,573 75,004
Decrease in amount due from a corporate
director - 1,036,214
------------ ------------
Net cash inflow from operating activities $ 19,730,683 $ 20,690,072
============ ============
</TABLE>
23. POST BALANCE SHEET EVENT'S
a. On April 1, 1996, the Company purchased a new office premise at a
consideration of $13.7 million. The new office premise was situated
in Hong Kong and was held under long lease. The purchase was financed
by bank loans, which were secured by, among others, (i) a first legal
charge over the property, and (ii) a corporate guarantee given by an
associated company.
b. On May 9,1996, the Company disposed of its 40% interest in Co-Time to
one of its shareholders and directors at a nominal consideration.
Refer to Note 11 for details.
24 -
- 24 -
<PAGE> 28
24. PRIOR YEAR COMPARATIVES
Certain figures included in the accompanying financial statements for the year
ended September 30, 1995 had been reclassified to conform to the current period
presentation.
- 25 -
