<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1 to Current Report
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934.
Date of Report: March 29, 1996
CEDAR GROUP, INC.
Delaware 1-10372 23-2577796
State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization Identification)
500 Rue Notre Dame
Lachine, Quebec H9S 2B2
Registrant's Telephone Number: (514) 634-3550
<PAGE> 2
The undersigned Registrant hereby amends the following portion of its
Current report on Form 8-K dated March 29, 1996 and filed on April 15, 1996 as
set forth below:
1. Item 7 is hereby amended and restated as follows:
Item 7 Financial Statements and Exhibits
(a) Financial statements of business acquired Filed as part of
this Amendment for McConnell Dowell Corporation Limited are
the financial statements for the three years ending June 30,
1995, and unaudited financial statements for the nine month
periods ended March 31, 1996 and 1995.
(b) Unaudited consolidated pro forma statements of operations for
the year ended September 30, 1995 and the six month period
ended March 31, 1996.
(c) Exhibits (referenced to Item 501 of Registration S-K)
2.1 Credit Facility Agreement (previously filed)
2.2 Cedar Group, Inc. Guarantee Agreement (previously filed)
2.3 Cedar Group, Inc. Pledge Agreement (previously filed)
2.4 Cedar Group, Inc. Security Agreement (previously filed)
2.5 Cedar Group Canada, Inc. Pledge Agreement (previously
filed)
2.6 Cedar Group Canada, Inc. Security Agreement (previously
filed)
4.1 Certificate of Designation (previously filed)
<PAGE> 3
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
CEDAR GROUP, INC.
DATED: JUNE 12, 1996 By: /s/ Michel L. Marengere
------------------------------------
Michel L. Marengere
Chairman and Chief Executive Officer
<PAGE> 4
MCCONNELL DOWELL CORPORATION LIMITED
1995 FINANCIAL STATEMENTS
ACN 008 444 880
<PAGE> 5
ANNUAL REPORT MCCONNELL DOWELL CORPORATION LIMITED (ACN 008 444 880)
(ACN 008 444 880)
1995 FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Profit and Loss Accounts 1
Balance Sheets 2
Statements of Cashflows 3
Notes to the Financial Statements
Note 1 Summary of Significant Accounting Policies 4
Note 2 Operating Revenue 8
Note 3 Operating Profit 9
Note 4 Abnormal Items 10
Note 5 Taxation 11
Note 6 Extraordinary Items 12
Note 7 Reserves 13
Note 8 Receivables 13
Note 9 Investments 14
Note 10 Inventories 15
Note 11 Other Current Assets 15
Note 12 Property, Plant and Equipment 16
Note 13 Intangibles 16
Note 14 Other Non-Current Assets 17
Note 15 Creditors and Borrowings 17
Note 16 Provisions 18
Note 17 Convertible Notes 18
Note 18 Share Capital 19
Note 19 Commitments & Contingent Liabilities 19
Note 20 Construction Work in Progress 22
Note 21 Particulars in Relation to Controlled Entities 23
Note 22 Remuneration of Auditors 25
Note 23 Deed of Cross Guarantee 26
Note 24 Lease Liabilities 26
Note 25 Remuneration and Retirement Benefits 27
Note 26 Related Parties 29
Note 27 Amounts Payable / Receivable in Foreign Currencies 33
Note 28 Segment Reporting 34
Note 29 Investments in Associated Companies 34
Note 30 Statements of Cashflows 35
Note 31 Earnings per Share 38
Note 32 Investments in Business Undertakings 39
Note 33 Differences between Australian and US Generally Accepted
Accounting Principles 39
Note 34 Reconciliation of Australian GAAP to US GAAP for profit 41
and loss
Note 35 Reconciliation of Australian GAAP to US GAAP for 41
shareholders equity
Report of the Auditors 42
</TABLE>
<PAGE> 6
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 1
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 1995
<TABLE>
<CAPTION>
1995 1994 1993
NOTES $'000 $'000 $'000
<S> <C> <C> <C> <C>
Operating profit before abnormal items and
income tax 2,3 14,317 6,877 6,213
Abnormal Items 4 13,727 (8,833) (7,575)
------ ------ ------
Operating profit(loss) before income tax 28,044 (1,956) (1,362)
Income tax attributable to operating
profit(loss) 5 2,596 1,453 1,101
------ ------ ------
Operating profit(loss) after income tax 25,448 (3,409) (2,463)
Extraordinary items (loss) before income tax 6 0 (3,712) (1,875)
Income tax attributable to loss on
extraordinary items 0 0 0
------ ------ ------
Operating profit(loss) and extraordinary
items after income tax 25,448 (7,121) (4,338)
Outside equity interests in operating profit
and extraordinary items after income tax (302) 291 684
------ ------ ------
Operating profit(loss) and extraordinary
items after income tax attributable to
members of McConnell Dowell Corporation Limited 25,750 (7,412) (5,022)
Amounts transferred from reserves 7 90 112 386
Retained earnings/(accumulated losses) at the
beginning of the financial year (6,699) 601 5,237
------ ------ ------
Retained earnings/(accumulated losses) at the
end of the financial year 19,141 (6,699) 601
====== ====== ======
</TABLE>
The Profit and Loss Accounts are to be read in conjunction with the notes to,
and forming part of, the Financial Statements as set out in pages 4 to 40.
<PAGE> 7
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 2
CONSOLIDATED BALANCE SHEETS
AS AT 30 JUNE 1995
<TABLE>
<CAPTION>
1995 1994
NOTES $'000 $'000
<S> <C> <C> <C>
CURRENT ASSETS
Cash at banks, on hand, and on deposit 30(i) 36,158 8,645
Receivables 8 55,265 65,695
Investments 9 8,129 944
Inventories 10 29,447 35,558
Other 11 936 1,188
------- -------
TOTAL CURRENT ASSETS 129,935 112,030
------- -------
NON-CURRENT ASSETS
Receivables 8 1,466 684
Investments 9 9 1,421
Property, plant and equipment 12 19,397 20,412
Intangibles 13 66 109
Other 14 102 226
------- -------
TOTAL NON-CURRENT ASSETS 21,040 22,852
------- -------
TOTAL ASSETS 150,975 134,882
------- -------
CURRENT LIABILITIES
Creditors and borrowings 15 97,293 110,434
Provisions 16 5,434 7,066
------- -------
TOTAL CURRENT LIABILITIES 102,727 117,500
------- -------
NON-CURRENT LIABILITIES
Creditors and borrowings 15 61 2,029
Provisions 16 2,047 2,009
------- -------
TOTAL NON-CURRENT LIABILITIES 2,108 4,038
------- -------
TOTAL LIABILITIES 104,835 121,538
------- -------
NET ASSETS 46,140 13,344
======= =======
SHAREHOLDERS' EQUITY
Share capital 18 20,787 18,286
Shareholders reserves' 7 5,894 1,141
Retained earnings/(accumulated losses) 19,141 (6,699)
------- -------
SHAREHOLDERS' EQUITY ATTRIBUTABLE TO MEMBERS OF
MCCONNELL DOWELL CORPORATION LIMITED 45,822 12,728
OUTSIDE EQUITY INTEREST IN CONTROLLED ENTITIES
Share capital 353 334
Reserves 202 212
Retained earnings (237) 70
------- -------
TOTAL OUTSIDE INTEREST IN CONTROLLED ENTITIES 318 616
------- -------
TOTAL SHAREHOLDERS' EQUITY 46,140 13,344
Commitments and contingent liabilities 19
</TABLE>
The Balance Sheets are to be read in conjunction with the notes to,
and forming part of the Financial Statements as set out on pages 4 to 40.
<PAGE> 8
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 3
CONSOLIDATED STATEMENTS OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 1995
<TABLE>
<CAPTION>
1995 1994 1993
NOTES $'000 $'000 $'000
<S> <C> <C> <C> <C>
CASHFLOWS FROM OPERATING ACTIVITIES
Receipts from customers 329,780 371,852 220,797
Payments to suppliers and employees (293,874) (370,014) (221,223)
Dividends received 0 0 1
Interest received 2744 119 233
Interest and other costs of finance paid (1,944) (1,569) (736)
Income taxes paid (2,744) (1,312) (551)
-------- -------- --------
NET CASH INFLOW (OUTFLOW) FROM OPERATING
ACTIVITIES 30(iv) 33,962 (924) (1,479)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash balances in entities sold 30(iii) 0 (1,854) 0
Proceeds from sale of property, plant & equipment 791 2,195 2,481
Purchases of property, plant & equipment (6,053) (12,217) (9,051)
Proceeds from sale of controlled entities 30(iii) 15,005 1,281 0
Loans to other entities (7,747) (3,458) 0
Cash placed on deposit with banks for guarantees (6,932) 0 0
Deposits made with other parties (1,044) 0 0
Purchase of investments 0 0 (293)
Proceeds from sale of investments 9 5 98
-------- -------- --------
NET CASH INFLOW (OUTFLOW) FROM INVESTING
ACTIVITIES (5,971) (14,048) (6,765)
======== ======== ========
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from borrowings 0 654 4,083
Repayment of borrowings (961) (2,381) 0
-------- -------- --------
NET CASH OUTFLOW FROM FINANCING ACTIVITIES (961) (1,727) 4,083
-------- -------- --------
NET INCREASE (DECREASE) IN CASH HELD 27,030 (16,699) (4,161)
Cash and cash equivalents held at the beginning of
the financial year
(17,011) 52 4,386
Cash balances no longer controlled 2,297 (307) (42)
Effects of exchange rate changes on balances of
cash held at the beginning of the financial year
(779) (57) (131)
-------- -------- --------
CASH AT THE END OF THE FINANCIAL YEAR 30(i) 11,537 (17,011) 52
-------- -------- --------
</TABLE>
The Statement of Cashflows are to be read in conjunction
with the notes to, and forming part of the Financial
Statements as set out in pages 4 to 40.
<PAGE> 9
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 4
NOTES TO THE FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with applicable
Accounting Standards, other mandatory professional reporting requirements
(Urgent Issues Group Consensus Views) and the applicable disclosure requirements
of Schedule 5 of the Corporations Regulations.
Except for certain assets which, as noted, are at valuation the financial
statements are prepared in accordance with the historical cost convention. The
accounting policies adopted are consistent with those of the previous year.
(a) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements incorporate the assets
and liabilities of all entities controlled by McConnell Dowell
Corporation Limited as at 30 June 1995 and the results of all
controlled entities for the year then ended. The effects of
all transactions between entities incorporated in the
consolidated financial statements are eliminated in full.
Outside equity interests are shown separately in the
consolidated profit and loss account and balance sheet
respectively.
Where control of a controlled entity is obtained during a
financial year, its results are included in the consolidated
profit and loss account from the date on which control
commences. Where control of a controlled entity ceases during
a financial year its results are included for that part of the
year during which control existed.
(b) GOODWILL
Goodwill, representing the excess of the purchase
consideration over the fair value of the identifiable net
assets acquired arising upon the acquisition of a business
entity, is amortised on a straight line basis over a period
not exceeding 20 years.
(c) RECOGNITION OF CONTRACTING PROFIT OR LOSS AND VALUATION OF
CONSTRUCTION WORK IN PROGRESS
Profits on contracts are recognised progressively, over the
period of each contract. The amount included in the profit and
loss account, and the value of construction work in progress,
is established by assessment of individual contracts taking
into account all relevant factors, more particularly the
proportion of work completed, cost analysis and estimated
final results. Losses are provided for, in full, as soon as
they become apparent.
Claims under negotiation or arbitration for the recovery of
extra costs incurred due to unforeseen site conditions are
only taken to account where settlement can be reliably
predicted or estimated.
<PAGE> 10
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 5
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
(d) FOREIGN CURRENCY
Foreign currency transactions are translated to Australian
currency at the rates of exchange, ruling at the dates of the
transactions. Amounts receivable and payable in foreign
currencies are translated at the rates of exchange ruling at
balance date.
Gains and losses on short term and long term balances are
recognised in the results for the period.
The balance sheet of the overseas controlled entities (which
are self-sustaining foreign operations) are translated at the
rates of exchange ruling at balance date. The profit and loss
accounts are translated at the average rate for the year. Any
resulting exchange differences are recognised by an entry made
directly to the exchange translation reserve.
(e) INCOME TAX
The liability method of tax effect accounting is followed
whereby the income tax expense in the profit and loss account
is matched with the accounting result (after allowing for
permanent differences). The future tax benefit relating to tax
losses is not carried forward as an asset unless the benefit
can be regarded as being virtually certain of realisation
within the foreseeable future. Income tax on net cumulative
timing differences is set aside to the deferred income tax and
future tax benefit accounts at the rates which are expected to
apply when those timing differences reverse. The current rates
have been used for this purpose.
No provision is made for additional taxes which could become
payable if certain reserves of overseas controlled entities
were to be distributed as it is not expected that any
substantial amounts will be distributed from these reserves in
the foreseeable future.
(f) INVESTMENTS
The economic entity's interests in listed and unlisted
securities, other than in controlled entities are brought to
account at cost and divided income is recognised in the profit
and loss account when received.
Information determined in accordance with the equity method of
accounting is set out in note 29 in respect of investments in
associated companies. Associated companies are those companies
over which the economic entity exercises significant
influence, but not control.
Where, in the opinion of the directors, there has been a
permanent diminution in the value of any individual
investment, a provision for diminution in value is made.
<PAGE> 11
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 6
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
(g) INVENTORIES
Inventories are valued at the lower of cost or net realisable
value on a first in first out basis.
(h) EMPLOYEE ENTITLEMENTS
Liabilities for wages and salaries, annual leave and sick
leave are recognised, and are measured as the amount unpaid at
the reporting date at current pay rates in respect of
employees' services up to that date.
A liability for long service leave is recognised, and is
measured as the present value of expected future payments to
be made in respect of services provided by employees up to the
reporting date. Consideration is given to expected future wage
and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted
using interest rates on national government guaranteed
securities with terms that match, as closely as possible, the
estimated future cash flows.
(i) NON-CURRENT ASSETS
Fixed Assets Constructed by the Economic Entity
The cost of fixed assets constructed by the economic entity
includes the cost of materials and direct labour and an
appropriate proportion of fixed and variable overheads.
Depreciation of Fixed Assets
Fixed assets, excluding land are depreciated over their
estimated useful lives. Assets are first depreciated in the
year of acquisition or in respect of internally constructed
assets, from the time an asset is held ready for use.
Land and Buildings
Land and buildings are revalued at no more than three yearly
intervals. The Directors make assessments of the fair market
value of land and buildings on an existing use basis. Where
the fair market value is less than the cost or book value this
is reflected in the financial statements. Where the fair
market value exceeds the cost or book value, the revaluation
will be reflected in the financial statements only where the
Directors are of the opinion that the increase is of a
permanent nature.
An assessment of potential capital gains tax liability is made
whenever an asset is revalued above its original cost. This
assessment is taken into account in determining the
revaluation amount. Liabilities for capital gains tax are
provided for when a decision is taken to dispose of the
assets.
<PAGE> 12
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 7
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
Disposal of Revalued Assets
The gain or loss on disposal of revalued assets is calculated
as the difference between the carrying amount of the asset at
the time of disposal and the proceeds of disposal, and is
included in the result of the economic entity in the year of
disposal.
Any realised valuation increment relating to the disposed
asset standing in the asset revaluation reserve at the time of
disposal is transferred to retained earnings.
Recoverable Amounts
Where the carrying value of non-current assets exceeds the
recoverable amount the assets are written down to the
recoverable amount.
The expected net cash flows included in determining
recoverable amounts of non-current assets are not discounted
to their net present value.
(j) LEASED NON-CURRENT ASSETS
A distinction is made between finance leases which effectively
transfer from the lessor to the lessee substantially all the
risks and benefits incidental to ownership of leased
non-current assets, and operating leases under which the
lessor effectively retains all such risks and benefits. Where
a non-current asset is acquired by means of a finance lease,
the minimum lease payments are discounted at the interest rate
implicit in the lease. The discounted amount is established as
a non-current asset at the beginning of the lease term and
amortised on a straight line basis over its expected economic
life. A corresponding liability is also established and each
lease payment is allocated between the principal component and
the interest expense. Operating lease payments are
representative of the pattern of benefits derived from the
leased assets and accordingly are charged to the profit and
loss account in the periods in which they are incurred.
(k) PROVISIONS
Provision for Doubtful Debts
The collectibility of debts is assessed regularly throughout
the year and provision is made for any specific doubtful
accounts.
Other Provisions
Other transactions which have given rise to liabilities the
amount of which cannot be determined accurately are classified
as other provisions. The most likely outcome is included in
the accounts.
<PAGE> 13
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 8
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
(l) PARTNERSHIPS
Controlled entities, as part of their normal contracting
activities, often enter into business arrangements with
outside parties to bid jointly and, if successful, to perform
jointly specific contracting jobs. Although often named as
joint ventures these arrangements usually have the
characteristics of a partnership which is dissolved when the
job is completed. Such partnerships are accounted for by
treating the investment in the partnership as an investment
and bringing to account the economic entity's share of net
sales revenue and income or loss.
(m) EARNINGS PER SHARE
Basic Earnings per Share
Basic earnings per share is determined by dividing the
operating profit after income tax attributable to members of
McConnell Dowell Corporation Ltd by the weighted average
numbers of shares outstanding during the financial year.
Diluted Earnings per Share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share by taking into
account any reduction in earnings per share that will probably
arise from the exercise of options or convertible notes
outstanding during the financial year.
(n) COMPARATIVE FIGURES
Where applicable, comparative figures have been adjusted to
place them on a comparable basis with current year figures.
2. OPERATING REVENUE
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994 1993
$'000 $'000 $'000
Included in operating revenue are the following items
entering into the determination of operating profit(loss):
<S> <C> <C> <C>
Sales revenue 315,986 379,491 238,454
Dividends received/receivable 1 0 1
Interest received/receivable 2,744 119 233
Foreign exchange gains 889 1,027 1,201
Proceeds from sale of non-current assets 791 2,195 2,584
Proceeds from sale of controlled entities 38,691 1,281 0
Other Revenue 1,431 349 0
------- ------- -------
360,533 384,462 242,473
======= ======= =======
</TABLE>
<PAGE> 14
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 9
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
3. OPERATING PROFIT
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994 1993
$'000 $'000 $'000
<S> <C> <C> <C>
Operating profit before abnormal items and income tax is arrived
at after crediting and charging the following specific items:
CREDITS
Dividends received/receivable
Other persons and/or corporations 1 0 1
Interest received/receivable
Other persons and/or corporations 2,744 119 233
Profit on sale of non-current assets 323 452 672
CHARGES
Interest paid/payable
Other persons and/or corporations 1,944 1,789 680
Finance charges relating to finance leases 36 37 56
Loss on sale of non-current assets 211 528 165
Net foreign exchange (loss)/gain (820) (342) 1,201
Depreciation 4,580 5,357 4,184
Amortisation
Goodwill 59 63 41
Plant and equipment under finance leases 36 29 30
------ ------ ------
Total depreciation and amortisation 4,675 5,449 4,255
------ ------ ------
Other charges against assets
Provision for doubtful debts
Trade debtors 373 (240) (417)
Associated Companies 1,307 0 0
Other related parties 3,126 0 0
------ ------ ------
Total other charges against assets 4,806 (240) (417)
------ ------ ------
Total depreciation, amortisation and other charges against assets 9,481 5,209 3,838
------ ------ ------
Other provisions
Employee entitlements 347 55 (134)
Other (206) 890 (1,248)
------ ------ ------
Total other provisions 141 945 (1,382)
------ ------ ------
Rental expense relating to operating leases 2,388 3,464 2,535
Bad debts written off trade debtors 181 239 242
</TABLE>
<PAGE> 15
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 10
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
4. ABNORMAL ITEMS
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994 1993
$'000 $'000 $'000
<S> <C> <C> <C>
Included in operating profit(loss) are the following abnormal
items of income/(expense):
Profit on disposal of Benjamin Development Ltd 13,727 0 0
Loss on disposal of controlled entity (refer note 30(iii)) 0 (287) 0
Write off of prepayment now not expected to be recovered in 0 (675) 0
full
Loss on unexpired property leases 0 (916) (1,131)
Loss on write down of investment in associated company 0 (372) 0
Foreign exchange gain on liability arising from warranties
given as a result of sale of the North Pacific Division in 1992 0 418 0
Restructuring costs 0 (493) (785)
Provision for write down in value of property held for 0 (1,155) (1,250)
disposal
Provision for write down and foreign exchange loss relating
to receivables in associated companies 0 (4,313) 0
Costs included for Tasman Properties litigation 0 (1,040) (582)
Interest in development property write off 0 0 (3,827)
(Tax on the above items is nil)
------- ------ ------
13,727 (8,833) (7,575)
------- ------ ------
</TABLE>
The abnormal item of $13,727,000 represents the net balance from the sale of
Benjamin Developments Ltd after a lump sum settlement payment to the former term
lenders. The sale of Benjamin Developments Limited terminated the dispute with
Tasman Properties Limited over the Coopers & Lybrand Tower, Auckland. In
conjunction with the payment to the term lenders the options formerly held by
them were surrendered and cancelled.
A summary of the transaction is as follows:
<TABLE>
<S> <C>
Gross Proceeds on sale of controlled entity 25,800
Less: Payment to former term lenders 10,384
Less: Legal costs and other write offs 1,689
------
Net Profit 13,727
======
</TABLE>
<PAGE> 16
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 11
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
5. TAXATION
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994 1993
$'000 $'000 $'000
<S> <C> <C> <C>
INCOME TAX EXPENSE
Prima facie income tax calculated at 33% (1994: 33%) on
operating profit(loss) and extraordinary items 9,255 (1,870) (1,262)
------ ------ ------
INCREASE IN INCOME TAX EXPENSE DUE TO:
Tax losses and other timing differences not recognised 4,588 4,763 7,428
Overseas Tax Rate Differential 410 768 (139)
Extraordinary item - contract warranties 0 1,225 731
Other items 1,914 618 1,391
------ ------ ------
6,912 7,374 9,411
------ ------ ------
DECREASE IN INCOME TAX EXPENSE DUE TO:
Recovery of losses and timing differences not previously
brought to account 7,941 3,469 4,935
Abnormal items non-taxable income 4,530 0 0
Other items 1,140 596 2,029
------ ------ ------
13,611 4,065 6,964
INCOME TAX EXPENSE ON OPERATING PROFIT(LOSS) AND
EXTRAORDINARY ITEMS 2,556 1,439 1,185
Add: underprovision for tax in prior years 40 14 (84)
Total income tax expense attributable to operating
profit(loss) and extraordinary items
------ ------ ------
2,596 1,453 1,101
====== ====== ======
INCOME TAX EXPENSE ATTRIBUTABLE TO:
Operating profit(loss) 2,596 1,453 1,101
------ ------ ------
2,596 1,453 1,101
====== ====== ======
Comprising: current taxation provision 2,531 1,416 779
Deferred income tax expense 65 37 322
------ ------ ------
2,596 1,453 1,101
====== ====== ======
Amounts included as part of future income tax benefit
shown in note 14 which are attributable to tax losses 0 0 0
FUTURE INCOME TAX BENEFIT NOT TAKEN TO ACCOUNT
Tax losses carried forward 7,901 8,792 3,867
====== ====== ======
</TABLE>
<PAGE> 17
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 12
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
5 TAXATION (CONT..)
The future income tax benefit which has not been recognised as an asset will
only be obtained if:
1 Various controlled entities derive future assessable income of a nature
and an amount sufficient to enable the benefit to be realised, or the
benefit can be utilised by another entity in the economic entity in
accordance with appropriate income tax legislation;
2 The relevant controlled entities and/or the economic entity continue to
comply with the conditions for deductibility imposed by the laws of the
countries in which they operate; and
3 No changes in tax legislation adversely affect the relevant controlled
entities and/or the economic entity in realising the benefit.
6 EXTRAORDINARY ITEMS
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994 1993
$'000 $'000 $'000
<S> <C> <C> <C>
Contract warranties arising from the sale of North Pacific
operations 0 (3,712) (1,875)
Income tax effect 0 0 0
---- ------ ------
0 (3,712) (1,875)
==== ====== ======
</TABLE>
<PAGE> 18
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 13
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
7. RESERVES
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
SHARE PREMIUM - OPENING BALANCE 5,000 5,000
Issue of shares to controlling entity 2,493 0
------ ------
Closing balance 7,493 5,000
------ ------
ASSET REVALUATION - OPENING BALANCE 0 353
Revaluation of plant and equipment 0 (164)
Transfer to retained earnings 0 (189)
------ ------
Closing balance 0 0
------ ------
EXCHANGE TRANSLATION RESERVE - OPENING BALANCE (3,859) (3,577)
Translation adjustment on accounts of overseas controlled entities 2,350 (359)
Transfer to retained earnings (90) 77
------ ------
Closing balance (1,599) (3,859)
------ ------
TOTAL RESERVES 5,894 1,141
</TABLE>
8 RECEIVABLES
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
CURRENT
Trade debtors 52,245 60,590
Less: Provision for doubtful trade debtors 1,093 537
------ ------
51,152 60,053
------ ------
Owing by associated corporations 0 5,850
Less: Provision for doubtful debts 0 4,041
------ ------
0 1,809
------ ------
Owing by other related parties 545 2,380
Other debtors 3,568 1,453
------ ------
55,265 65,695
====== ======
</TABLE>
<PAGE> 19
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 14
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
8 RECEIVABLES (CONT..)
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
NON-CURRENT
<S> <C> <C>
Owing by other related parties 3,489 620
Less: Provision for doubtful debts 3,126 0
----- ---
363 620
----- ---
Owing by associated corporations 1,887 0
Less: Provision for doubtful debts 848 0
----- ---
1,039 0
----- ---
Other 64 64
----- ---
1,466 684
</TABLE>
9. INVESTMENTS
<TABLE>
<CAPTION>
CONSOLIDATED
NOTE 1995 1994
$'000 $'000
<S> <C> <C> <C>
CURRENT
Interest in business undertakings - partnerships 32 8,110 920
Shares - other corporations - quoted - at market value 19 24
----- -----
8,129 944
===== =====
NON-CURRENT
Interest in business undertakings - partnerships 32 0 1,154
Share - associated corporations 29 9 267
----- -----
9 1,421
----- -----
</TABLE>
<PAGE> 20
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 15
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
10 INVENTORIES
<TABLE>
<CAPTION>
CONSOLIDATED
NOTE 1995 1994
$'000 $'000
<S> <C> <C> <C>
CURRENT
Raw materials and stores 42 62
Finished goods - at cost 0 77
Construction work in progress 20 20,905 26,919
Property held for Disposal - at directors' valuation 8,500 8,500
------ ------
29,447 35,558
====== ======
</TABLE>
Property held for disposal is the subject of security for the borrowing referred
to in note 15.
11 OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Prepayments 933 688
Other 3 500
--- -----
936 1,188
=== =====
</TABLE>
<PAGE> 21
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 16
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
12 PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
LAND
Freehold at directors' valuation - 1993 453 423
------ ------
BUILDINGS
Freehold at directors' valuation - 1993 199 200
Less: accumulated depreciation 27 26
------ ------
Buildings at book value 172 174
------ ------
PLANT, EQUIPMENT, MOTOR VEHICLE
At cost 33,955 35,143
Less: accumulated depreciation 15,228 15,481
------ ------
18,727 19,662
------ ------
LEASED PLANT AND EQUIPMENT CAPITALISED 66 212
Less: accumulated amortisation 21 59
------ ------
45 153
------ ------
TOTAL PROPERTY, PLANT AND EQUIPMENT - NET BOOK VALUE 19,397 20,412
====== ======
</TABLE>
A directors' value of land and buildings was carried out as at 30 June 1993. The
valuation was based on the open market value of the properties concerned in
their existing use.
13 INTANGIBLES
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Goodwill 228 209
Less: accumulated amortisation 162 100
--- ---
66 109
=== ===
</TABLE>
<PAGE> 22
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 17
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
14 OTHER NON-CURRENT ASSETS
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Future income tax benefit 102 53
Prepayment 0 173
--- ---
102 226
=== ===
</TABLE>
15 CREDITORS AND BORROWINGS
<TABLE>
<CAPTION>
CONSOLIDATED
NOTE 1995 1994
$'000 $'000
<S> <C> <C> <C>
CURRENT
Bank overdraft - secured 0 5,814
- unsecured 17,689 19,842
Bank loans - unsecured 1,000 1,900
Borrowing - secured 10,418 8,629
Trade creditors 49,815 60,686
Lease liabilities 24 255 203
Owing to associated corporations 8 318
Owing to controlling entity 806 6,411
Progress billings in advance 17,302 6,502
Other 0 129
------ -------
97,293 110,434
====== =======
NON-CURRENT
Lease liabilities 24 61 179
Borrowing - secured 0 1,850
------ -------
61 2,029
====== =======
</TABLE>
Secured bank overdrafts in 1994 were subject to floating charges over the assets
and undertakings of certain controlled entities. Secured borrowings are secured
by a mortgage over property held for disposal included in note 10.
<PAGE> 23
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 18
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
15 CREDITORS AND BORROWINGS (CONT..)
DEBT DEFEASANCE
Financial statements for 1990/1991, included settlement of term debt due to a
group of banks, partly by providing mortgages to the banks over specific
property and related assets in such a manner that the bank's recourse under the
mortgage is limited to the net proceeds from sale of specific surplus property
and related assets. The banks are responsible for all outgoings in connection
with holding and selling the properties. At 30 June 1995 bank debts of
$20,876,468 (1994: $20,746,719) were defeased against property and related
assets with a book value of $20,876,468 (1994: $20,746,719).
16 PROVISIONS
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
CURRENT
Income tax 1,232 1,623
Employee entitlements 2,477 2,006
Warranties 0 300
Other taxes 258 411
Contract losses 281 1,021
Other 1,186 1,705
----- -----
5,434 7,066
----- -----
NON-CURRENT
Deferred income tax 371 240
Employee entitlements 602 496
Other 1,074 1,273
----- -----
2,047 2,009
----- -----
</TABLE>
17 CONVERTIBLE NOTES
The class C convertible notes were surrended and cancelled during the year. The
notes could have been redeemed and converted if and to the extent the options
held by the former term lenders (refer note 18) were exercised. As the options
were surrended and cancelled in conjunction with a settlement with former term
lenders (note 4) the convertible notes have similarly been surrendered and
cancelled.
<PAGE> 24
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 19
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
18 SHARE CAPITAL
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Authorised capital
500,000,000 ordinary shares of 50c each 250,000 250,000
------- -------
ISSUED AND PAID UP CAPITAL CONSISTS OF:
41,574,298 (1994: 36,572,646)
ordinary shares of 50c each fully paid 20,787 18,286
======= ========
</TABLE>
5,001,652 Ordinary shares were issued on 10 November 1994 to the Controlling
entity at a premium of 49.8 cents per share.
OPTIONS
Options over 10 million ordinary shares in the capital were surrendered and
cancelled during the year (refer Note 4). There are no options outstanding as at
30 June 1995.
19 COMMITMENTS AND CONTINGENT LIABILITIES
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
The estimated maximum amount of commitments and contingent
liabilities not provided for in the accounts of the economic entity
as at 30 June 1995 are set out below:
A. COMMITMENTS
CAPITAL EXPENDITURE
Plant and equipment purchases:
- - not later than one year 363 610
----- -----
OPERATING LEASE RENTAL
Future operating lease rentals of property, plant, equipment and
motor vehicles due:
- - not later than one year 2,507 2,682
- - later than one year but not later than two years 1,449 1,636
- - later than two years but not later than five years 1,435 677
- - later than five years 984 160
----- -----
6,375 5,155
----- -----
</TABLE>
<PAGE> 25
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 20
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
19 COMMITMENTS AND CONTINGENT LIABILITIES (CONT..)
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
B. CONTINGENT LIABILITIES
Details and estimates of maximum amounts of contingent liabilities, classified
in accordance with the party from whom the liability could arise and for which
no provisions are included in the accounts, are as follows:
ASSOCIATED ENTITIES
The parent entity has guaranteed 49% of the debts of an associated company. At
30 June 1995 the associated company has sufficient assets to meet such
liabilities. 4,134 2,667
</TABLE>
CONTROLLED ENTITIES
Under the terms of a class order issued by the Australian Securities Commission,
which relieves certain controlled entities from specified accounting and
financial reporting requirements, the parent entity has entered into a deed of
cross guarantee with each of the following controlled entities. Co-Sel
Superannuation Management Pty Ltd; McConnell Dowell (Australia) Pty Ltd;
McConnell Dowell Holdings Pty Ltd; Hylekite Pty Ltd; McConnell Dowell Group Pty
Ltd; McConnell Dowell Pty Ltd; McConnell Dowell Constructors (Aust.) Pty Ltd;
Macdow Properties Pty Ltd and Putadis Pty Ltd.
Further details are in note 23.
PARTNERSHIPS
Under the provisions of the partnership agreements in which the economic entity
has an interest, it is jointly and severally liable for all the liabilities
incurred by the partnerships. As at 30 June 1995 the assets of the partnerships
were sufficient to meet such liabilities.
<PAGE> 26
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 21
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
19 COMMITMENTS AND CONTINGENT LIABILITIES (CONT..)
OTHER CONTINGENT LIABILITIES
The economic entity is contingently liable for letters of credit, commitments
and performance guarantees arising in the ordinary course of their engineering
and construction activities.
Cash on deposit of $6,932,000 is secured to banks for provision of additional
contract performance guarantees.
Certain claims arising out of engineering and construction contracts have been
made by or against the parent entity and certain of its controlled entities in
the ordinary course of business, some of which involve litigation or
arbitration. Included in these is a claim being pursued against members of the
group in both Thailand and Australia arising out of the Si Chang project, which
the company considers to be without foundation and is vigorously defending.
The parent entity has given various warranties on asset sales and in respect of
taxation to purchases of certain former controlled entities and former equity
interests. A warranty claim from one particular purchaser of a former equity
interest has recently been revived and is being defended. As noted in the
financial statements for earlier years there remains the possibility of other
claims arising from the purchaser as a result of taxation warranties.
The directors have re-evaluated the position of all the foregoing items and
consider that it continues to be unlikely that the parent entity or its
controlled entities will be obligated to meet any consequential liability.
Accordingly, no provision has been made in the financial statements.
There are other relatively minor claims being pursued against the parent entity
or certain controlled entities arising from activities of former controlled
entities which ceased business some time ago and have since been wound up. The
directors do not consider the outcome of these claims will have a material
adverse affect on the financial position of the economic entity.
Legal and other costs arising out of claims are expensed as they are incurred.
The parent entity has issued letters of support to certain controlled entities
to the effect that it will provide sufficient funds to enable the controlled
entities to pay debts as and when they fall due.
<PAGE> 27
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 22
NOTES TO THE FINANCIAL STATEMENTS (CONT..)
19 COMMITMENTS AND CONTINGENT LIABILITIES (CONT..)
SUPERANNUATION COMMITMENTS
Eligible employees are entitled, after serving a qualifying period, to benefits
on retirement, disability or death, from the economic entity's superannuation
funds.
Controlled entities have established a number of accumulation funds to which the
employees contribute up to 5% of their salary or wages and the entities up to
12% of the employees' salary or wages. Being accumulation schemes the funds are
sufficient to meet the obligations. Certain controlled entities are under a
legal obligation to contribute.
The following accumulation funds are operated for the benefit of employees:
McConnell Dowell Superannuation Plan (New Zealand)
McConnell Dowell Superannuation Fund (Australia)
20 CONSTRUCTION WORK IN PROGRESS
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Gross amount 419,130 377,895
Less: Progress billings 398,225 350,976
------- -------
20,905 26,919
======= =======
</TABLE>
<PAGE> 28
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 23
21 PARTICULARS IN RELATION TO CONTROLLED ENTITIES
<TABLE>
<CAPTION>
CONTRIBUTION TO
BOOK VALUE CONSOLIDATED
OF INVESTMENT RESULT
PLACE OF 1995 1994 1995 1994
INCORPORATION $'000 $'000 $'000 $'000
<S> <C> <C> <C> <C> <C>
McConnell Dowell Corporation Ltd Australia 6,985 3,560
McConnell Dowell (Aust.) Pty Ltd Australia 1 1 0 0
McConnell Dowell Holdings Pty Ltd Australia 31,832 14,590 (7,368) (6,339)
McConnell Dowell South East Asia Pte Ltd* Singapore 8,562 6,556 (575) (78)
McConnell Dowell Construction Ltd* Hong Kong 0 0 0 0
McConnell Dowell Construction Pte Ltd* Singapore 1,777 1,777 (13) (36)
McConnell Dowell (Malaysia) Sdn Bhd* Malaysia 0 0 (35) (77)
McConnell Dowell - Kelana Sdn Bhd* Malaysia 67 67 82 (3)
(30%, 1994-30%)
McConnell Dowell (American Samoa) Ltd* American Samo 1,266 1,266 1,173 (507)
McConnell Dowell PDS Sdn Bhd (90%)* Brunei 901 0 27 0
Electrix Pty Ltd* Australia 0 0 56 0
McConnell Dowell Saudi Arabia Ltd# Saudi Arabia 1,740 1,740 (660) (754)
(39%, 1994-39%)
Co-Sel Superannuation Management Pty Ltd Australia 1,721 1,723 (2) (2)
Hylekite Pty Ltd Australia 500 500 0 (25)
PT. McConnell Dowell Indonesia Ltd* Indonesia 399 399 (538) 423
(60%, 1994-60%)
McConnell Dowell (Thailand) Ltd* Thailand 100 100 3,672 806
(100% ords, 0% prefs)
McConnell Dowell Constructors (Aust) Pty Ltd Australia 10,000 10,000 119 2,518
McConnell Dowell Constructors (PNG) Pty Ltd* PNG 0 0 144 151
McConnell Dowell Group Pty Ltd Australia 16,000 16,000 1,138 0
McConnell Dowell Pty Ltd Australia 1,000 1,000 6,517 996
MacDow Properties Pty Ltd Australia 0 0 0 163
E.O.E. (No. 111) Pty Ltd Australia 0 0 (688) (3,479)
Putadis Pty Ltd Australia 0 0 0 0
Monday Investments Ltd* NZ 0 0 (5,459) 0
Orlite Investments Ltd* NZ 0 0 0 0
McConnell Dowell Corporation (NZ) Ltd* NZ 0 0 3,987 (5,267)
Electrix Ltd* NZ 1,036 902 2,079 1,730
McConnell Dowell (Fiji) Ltd* Fiji 0 0 (863) (864)
McConnell Dowell Constructors Ltd* NZ 9,431 8,212 2,715 2,106
Puhinui Quarries Ltd* NZ 0 0 (2) 2
MacDow Properties (1988) Ltd* NZ 0 0 13,319 (2,109)
Lower Hutt Centre City Buildings (1986) Ltd* NZ 384 335 0 0
Group Maintenance (Kawerau) Ltd* NZ 2,500 2,177 0 0
McConnell Dowell House Ltd* NZ 0 0 (60) 1,030
Pryde Corporation Ltd* NZ 4,846 4,220 0 0
</TABLE>
<PAGE> 29
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 24
21 PARTICULARS IN RELATION TO CONTROLLED ENTITIES (CONT..)
<TABLE>
<CAPTION>
CONTRIBUTION TO
BOOK VALUE CONSOLIDATED
OF INVESTMENT RESULT
PLACE OF 1995 1994 1995 1994
INCORPORATION $'000 $'000 $'000 $'000
<S> <C> <C> <C> <C> <C>
Controlled entities liquidated or deregistered
Ferndell Group Ltd Australia 0 27,066 0 (42)
Ferndell Pty Ltd Australia 0 945 0 43
Network Enterprises Ltd* NZ 0 107 0 (92)
McConnell Dowell Corporation Australia Pty Ltd Australia 0 0 0 (12)
Controlled entities disposed of
Benjamin Developments Ltd* NZ 0 0 0 (1,040)
McConnell Dowell Holdings Ltd* Hong Kong 0 3,335 0 (16)
Hawkins Construction Ltd* NZ 0 0 0 (198)
------ -------
25,750 (7,412)
</TABLE>
NOTES:
1. Unless otherwise disclosed next to the name, the controlled entities
are 100% owned (1994: 100%).
2. Unless otherwise stated the controlled entities are audited by Coopers
& Lybrand, Australia. Controlled entities which were subject to a class
order relieving them from producing separate audited accounts, are
identified in note 19B.
3. Companies incorporated outside Australia carry on business in the place
of incorporation.
* Audited by overseas firms of Coopers & Lybrand
# Audited by firms other then Coopers & Lybrand
<PAGE> 30
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 25
21 PARTICULARS IN RELATION TO CONTROLLED ENTITIES (CONT..)
OUTSIDE EQUITY INTEREST IN CONTROLLED ENTITIES
The following controlled entities have issued ordinary shares to outside equity
interests.
<TABLE>
<CAPTION>
DETAILS OF TOTAL ISSUED AND NO. OF SHARES HELD BY EQUITY HOLDERS OF
ISSUED CAPITAL PAID UP CAPITAL OUTSIDE EQUITY OUTSIDE INTERESTS
INTERESTS
1995 1994 1995 1994 1995 1994
$'000 $'000 % %
<S> <C> <C> <C> <C> <C> <C>
McConnell Dowell - Ordinary shares of one 346 319 420,001 420,001 70 70
Kelana Sdn Bhd Malaysian ringgit per
share
McConnell Dowell Ordinary shares of one 752 738 1,220,000 1,220,000 61 61
Saudi Arabia Ltd Saudi riyal per share
PT. McConnell Dowell Ordinary shares of 1000 702 689 170 170 40 40
Indonesia Ltd US dollars per share
McConnell Dowell Preference shares of 100 58 56 10,200 10,200 100 100
(Thailand) Ltd Baht per share
McConnell Dowell Ordinary shares of one 1,011 0 100,000 100,000 10 10
PDS Sdn Bhd Brunei dollar per share
</TABLE>
Control over entities in which an ownership interest of 50% or less is held (as
indicated above) exist by virtue of management agreements.
22 REMUNERATION OF AUDITORS
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Amounts received, or due and receivable by the auditors for:
auditing the accounts and consolidated accounts of McConnell
Dowell Corporation limited and the accounts of each of its
controlled entities:
Coopers & Lybrand
Australia 105 117
International 115 150
Other auditors 16 39
--- ---
236 306
--- ---
Other services:
Coopers & Lybrand
Australia - Paid by the economic entity 78 131
Australia - Paid by other parties 20 176
International 114 63
Other auditors 42 22
--- ---
254 392
=== ===
</TABLE>
<PAGE> 31
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 26
23 DEED OF CROSS GUARANTEE
McConnell Dowell Corporation Limited; Co-Sel Superannuation Management Pty Ltd;
McConnell Dowell (Australia) Pty Ltd; McConnell Dowell Holdings Pty Ltd;
Hylekite Pty Ltd; McConnell Dowell Group Pty Ltd; McConnell Dowell Pty Ltd;
McConnell Dowell Constructors (Aust.) Pty Ltd; Macdow Properties Pty Ltd and
Putadis Pty Ltd were at balance date parties to a deed of cross guarantee which
has been lodged with and approved by the Australian Securities Commission. Under
the deed of cross guarantee, each of the above named companies guaranteed the
debts of the other named companies. The aggregate assets and liabilities of the
above named companies as at 30 June 1995, and their aggregate net profits after
tax for the year then ended (after eliminating intercompany investments and
intercompany transactions) were as follows:
<TABLE>
<CAPTION>
1995 1994
$'000 $'000
<S> <C> <C>
Assets 87,666 69,333
Liabilities 41,526 55,989
Net profits after tax 7,389 944
</TABLE>
24 LEASE LIABILITIES
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Included as lease liabilities are the present values of future rentals
for leased assets capitalised:
CURRENT 255 203
NON-CURRENT 61 179
--- ---
316 382
=== ===
Lease commitments in respect of capitalised finance leases are
payable as follows:
Not later than one year 278 238
Later than one year but not later than two years 65 138
Later than two years but not later than five years 4 66
--- ---
347 442
Deduct: Future finance charges 31 60
--- ---
316 382
=== ===
</TABLE>
<PAGE> 32
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 27
25 REMUNERATION AND RETIREMENT BENEFITS
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Income received, or due and receivable, by directors from the
parent entity and related bodies corporate
- - Directors of the parent entity 847 632
- - Directors of other entities within the economic entity 653 1,519
----- -----
1,500 2,151
----- -----
</TABLE>
The number of parent entity directors whose income from the parent entity or
related bodies corporate was within the specified bands are as follows:
<TABLE>
<CAPTION>
$'000 $'000
<S> <C> <C> <C>
0 - 10 6 10
10 - 20 1 3
30 - 40 1 0
40 - 50 0 1
100 - 110 1 0
280 - 290 1 0
390 - 400 1 0
530 - 540 0 1
</TABLE>
No remuneration was paid by the economic entity to 6 (1994-10) non resident
directors employed by the company's foreign controlling entity. Remuneration due
and receivable by those directors from the company's foreign controlling entity
are excluded from the above.
Remuneration paid to a resident director by a subsidiary of the company's
foreign controlling entity and who is employed by that subsidiary is included in
the above.
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Income received, or due and receivable, from the entities in the economic entity
by executive officers employed in Australia (including executive directors)
whose income as at least $100,000:
Executive officers of the parent entity 599 595
Executive officers of other entities in the economic entity 376 721
--- ---
975 1,316
--- -----
</TABLE>
<PAGE> 33
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 28
25 REMUNERATION AND RETIREMENT BENEFITS (CONT...)
The number of executive officers employed in Australia (including executive
directors) whose income from entities in the economic entity was within the
specified bands are as follows:
<TABLE>
<CAPTION>
$'000 $'000 1995 1994
<S> <C> <C> <C>
100 - 110 0 1
110 - 120 0 1
130 - 140 0 1
170 - 180 0 1
180 - 190 1 0
190 - 200 1 2
200 - 210 1 0
390 - 400 1 0
400 - 410 0 1
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
RETIREMENT BENEFITS
Amounts paid to the economic entity's superannuation fund in
connection with the retirement of:
Directors 0 0
Principle executive officers 0 0
----- -----
0 0
Amounts paid directly to directors and principal executive officers of
controlled entities in connection with the retirement of those officers 0 0
----- -----
0 0
----- -----
</TABLE>
The company has applied a class order issued by the Australian Securities
Commission dated 22 June 1994 which provides relief from compliance with the
disclosure requirements of AASB 1017: "Related Party Disclosures" relating to
directors remuneration and retirement benefits. The above noted disclosures are
made in compliance with Schedule 5 of the Corporations Regulations. Comparative
information has been restated, where necessary, to comply with Schedule 5.
The directors believe that the provision of full details would be unreasonable.
<PAGE> 34
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 29
26 RELATED PARTIES
DIRECTORS
The names of persons who were directors at any time during the financial year
are as follows: SR Grant; PH Cary; WJ Agee; CR Colbourne; JH Dowell; RM King; AM
McConnell; JD Trevenen; AW Young; TF Kealey; TWG Morgan; JD Trevenen (alternate
for TF Kealey).
REMUNERATION AND RETIREMENT BENEFITS
Information on remuneration of directors, amounts paid to superannuation funds
in connection with the retirement of directors and service agreements with
directors is disclosed in note 25 in accordance with schedule 5 of the
Corporations Regulations. The economic entity has applied Australian Securities
Commission class order 94/947 which provides relief from compliance with
paragraphs 11 to 18 of Accounting Standard AASB 1017.
LOANS TO DIRECTORS AND DIRECTOR RELATED ENTITIES
Loan to a company in which Mr Anggara Suryawan, a director of a controlled
entity has a relevant interest.
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Advanced and outstanding 42 41
</TABLE>
The loan is secured by a pledge of shares, is interest free and has no fixed
terms of repayment.
OTHER TRANSACTIONS OF DIRECTORS AND DIRECTOR RELATED ENTITIES
1. A director, AW Young, is a partner in the firm of Chapman Tripp
Sheffield Young, solicitors. The firm has provided legal services to
McConnell Dowell Corporation Limited and certain controlled entities
for several years on normal commercial terms and conditions.
2. A director of an entity within the economic entity, Abdul Mohsen
Al-Mousheghah, rents office space to the entity on normal commercial
terms and conditions.
3. A director of an entity within the economic entity, Pg Hjh Khahijah Pg
Data Paduka Seri Laila Jasa Hj Mohd Sepiuddin, rents office space to
the entity, and provides consultancy and other services on normal
commercial terms and conditions.
<PAGE> 35
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 30
26 RELATED PARTIES (CONT..)
4. A relation of a former director, the late Mr AM McConnell, has
significant influence in companies which have provided marketing and
consulting services to McConnell Dowell Corporation Limited and certain
of its controlled entities on normal commercial terms and conditions.
Aggregate amounts of each of the above types of other transactions with
directors and their director controlled entities were as follows:
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
1. Legal fees 340 722
2. Rent of office space 25 25
3. Rent of office space and consultancy 32
4. Marketing and consulting services 82 271
Aggregate amounts payable to directors and their director related
entities at balance date:
Current Liabilities 91 163
</TABLE>
WHOLLY OWNED GROUP
Details of interests in wholly controlled entities are set out in note 21.
Transactions between the company and related parties in the wholly owned group
during the years ended 30 June 1995 and 30 June 1994 consisted of:
(a) loans advanced to and from the company. Interest, where payable was at
normal commercial rates. Most loans do not have fixed repayment terms;
(b) payment of dividends to the company;
(c) purchase of plant and equipment at market value;
(d) transfer of group tax losses without consideration;
(e) allocation of management fees at cost; and
(f) provision of guarantees and bonding facilities on normal commercial
terms.
<PAGE> 36
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 31
26 RELATED PARTIES (CONT..)
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
Aggregate amounts included in the determination of operating profit (loss) and
extraordinary items and other amounts brought to account that resulted from
transactions with each class of other related parties were as follows:
CONTROLLING ENTITY
Guarantee fee expense 186 1,225
Recharge of sundry expense 0 120
Purchase of motor vehicle 0 65
Provision for North Pacific Warranties 0 3,712
The controlling entity (Morrison Knudsen Corporation) has provided financial
support which included guarantees of banking facilities for general operations
and special offshore projects
ASSOCIATED COMPANIES
Management fee income 35 35
Interest income 37 0
Net advances to/(from):
McConnell Dowell Middle East Ltd 2,275 1,796
Krisi-Macdow Sdn Bhd (1,815) 938
Other (151) (2)
------ ------
309 2,736
------ ------
Net purchase of fixed assets from:
McConnell Dowell Middle East Ltd 0 1,573
Net recharge of sundry expenses to:
McConnell Dowell Middle East Ltd 159 935
Other 102 (2)
------ ------
261 933
------ ------
Services purchased 43 30
PARTNERSHIPS
Costs incurred by the economic entity recharged to:
McConnell Dowell PII JV 5,757 2,690
MUC JV 488 111
McConnell Dowell/Obayashi JV 1,600 994
McConnell Dowell Spie Capag JV 54 146
McConnell Dowell/UDL JV 728 0
Sale of equipment to McConnell Dowell/Obayashi JV 0 328
Purchase of equipment from McConnell Dowell Spie Capag JV 0 451
</TABLE>
<PAGE> 37
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 32
26 RELATED PARTIES (CONT..)
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
TERMS AND CONDITIONS
Transactions referred to above were made on normal commercial terms and
conditions, except that generally no interest is charged and there are no fixed
terms for the repayment of loans between the various parties.
Aggregate amounts received from, and payable to, each class of other related
parties at balance date were as follows:
Current receivables
Partnerships 545 2,886
Associated companies 0 5,850
Provision for write down 0 (4,041)
------ ------
545 4,695
------ ------
Non current receivables
Partnerships 363 0
Associated companies 1,887 601
Provision for write down (848) 0
------ ------
1,402 601
------ ------
Current payables
Controlling entity 806 6,411
Associated companies 8 316
------ ------
814 6,727
------ ------
</TABLE>
CONTROLLING ENTITY
The controlling entity in the wholly owned group is McConnell Dowell Corporation
Limited. The ultimate controlling entity is Morrison Knudsen Corporation
(incorporated in Delaware USA) which at 30 June 1995 owned 62.8% (1994: 51.9%)
of the issued ordinary shares of the company.
OWNERSHIP INTERESTS IN RELATED PARTIES
Interests held in the following classes of related parties are set out in the
following notes:
(a) controlled entities - note 21; and
(b) associated companies - note 29.
PARTNERSHIPS
Revenue from, and investments in, partnerships are disclosed in note 32.
<PAGE> 38
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 33
27 AMOUNTS PAYABLE/RECEIVABLE IN FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
$'000 $'000
<S> <C> <C>
The Australian dollar equivalent of amounts payable or receivable in
foreign currencies, calculated at year end exchange rates are as follows:
AMOUNTS PAYABLE
CURRENT
Fiji dollars 679 968
Hong Kong dollars 87 75
Indonesia rupiahs 50 854
New Zealand dollars 13,449 12,782
Saudi Arabian riyals 776 11,121
Singapore dollars 26,721 28,183
Thailand baht 3,436 5,437
United States dollars 7,889 9,167
Malaysian ringgits 4,021 898
Western Samoa tala 1,354 96
Other currencies 187 399
------ ------
58,649 69,980
------ ------
NON-CURRENT
New Zealand dollars 61 75
Malaysian ringgit 182 0
Other currencies 0 104
------ ------
243 179
------ ------
AMOUNTS RECEIVABLE
CURRENT
Fiji dollars 583 712
Hong Kong dollars 607 45
Indonesia rupiahs 44 29
New Zealand dollars 8,704 8,334
Saudi Arabian riyals 1,602 7,506
Singapore dollars 16,618 15,158
Thailand baht 7,503 13,238
United States dollars 4,890 15,393
Malaysian ringgits 6,455 810
Western Samoa tala 637 218
Other currencies 1,413 1,859
------ ------
49,056 63,302
------ ------
NON-CURRENT
New Zealand dollars 64 64
------ ------
64 64
------ ------
</TABLE>
<PAGE> 39
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 34
28 SEGMENT REPORTING
<TABLE>
<CAPTION>
OPERATING REVENUE OPERATING TOTAL ASSETS
PROFIT/(LOSS) BEFORE
TAX
1995 1994 1995 1994 1995 1994
$'000 $'000 $'000 $'000 $'000 $'000
<S> <C> <C> <C> <C> <C> <C>
INDUSTRY SEGMENTS
Construction 332,402 383,391 15,475 3,580 141,747 125,035
Discontinued operations* 28,131 1,071 12,569 (5,536) 9,228 9,847
------- ------- ------- -------- ------- -------
360,533 384,462 28,044 (1,956) 150,975 134,882
------- ------- ------- -------- ------- -------
GEOGRAPHICAL SEGMENTS
Australia 141,786 82,800 6,794 1,147 52,403 24,239
New Zealand and Pacific Islands 97,882 109,955 17,063 (6,397) 25,849 22,112
South East Asia 120,643 148,669 4,847 4,048 70,534 76,652
Middle East 222 43,038 (660) (754) 2,189 11,879
------- ------- ------- -------- ------- -------
360,533 384,462 28,044 (1,956) 150,975 134,882
------- ------- ------- -------- ------- -------
</TABLE>
* Discontinued operations include mainly property operations.
29 INVESTMENTS IN ASSOCIATED COMPANIES
<TABLE>
<CAPTION>
NAME OF COMPANY PRINCIPAL OWNERSHIP CARRYING EQUITY ACCOUNTED DIVIDENDS
ACTIVITY INTEREST AMOUNT AMOUNT RECEIVED/RECEIVABLE
1995 1994 1995 1994 1995 1994 1995 1994
% % $'000 $'000 $'000 $'000 $'000 $'000
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NON-CURRENT
Geothermal Energy NZ Ltd Consulting 0 40 0 115 0 (266) 0 0
Electrix Asplundh Ltd Construction 50 50 9 9 114 82 0 0
Krisi Macdow Sdn Bhd Construction 0 40 0 143 0 143 0 0
Blue Mountains Tunnel Financing 50 50 0 0 0 0 0 0
Co Pty Ltd
McConnell Dowell Middle Construction 49 49 0 0 429 1,229 0 0
East Ltd
- --- --- ----- - -
9 267 543 1,188 0 0
= === === ===== = =
</TABLE>
<PAGE> 40
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 35
29 INVESTMENTS IN ASSOCIATED COMPANIES (CONT..)
<TABLE>
<CAPTION>
EQUITY ACCOUNTED
AMOUNT
1995 1994
$'000 $'000
<S> <C> <C>
RESERVES ATTRIBUTABLE TO ASSOCIATED COMPANIES
Share of operating profit after income tax (768) 1,155
Less: Dividends received under and
receivable from associated companies 0 0
---- ----
(768) 1,155
Retained profits attributable to associated
companies at the beginning of the financial
year 921 (234)
---- ----
Less: Share of retained profits of associates
disposed of or liquidated (381) 0
Retained profits attributable to associated
companies at the end of the financial year 534 921
---- ----
Share of associated companies asset
revaluation reserves not brought to account
in the consolidated accounts 0 0
---- ----
Total of associated companies reserves 534 921
---- ----
</TABLE>
30 STATEMENTS OF CASHFLOWS
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994 1993
$'000 $'000 $'000
<S> <C> <C> <C>
(i) RECONCILIATION OF CASH
For the purpose of the Statements of Cash Flows, cash includes cash on
hand and at banks and call deposits net of outstanding bank overdrafts.
Cash at the end of the financial year as shown in the statements of
cash flows is reconciled to the related items in the balance sheets as
follows:
Cash at banks, on hand, and on deposit per balance sheet 36,158 8,645 7,448
Deduct bank overdrafts per balance sheet 17,689 25,656 7,396
Deduct cash deposits secured and not available at call 6,932 0 0
------ ------ -----
11,537 (17,011) 52
------ ------ -----
</TABLE>
<PAGE> 41
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 36
30 STATEMENTS OF CASHFLOWS (CONT...)
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994 1993
$'000 $'000 $'000
<S> <C> <C> <C>
(ii) STANDBY ARRANGEMENTS AND CREDIT FACILITIES, THAT
ENTITIES IN THE ECONOMIC ENTITY HAVE ACCESS TO:
Total Facilities
Bank Overdraft Facilities 18,650 33,180 9,866
Bank loans and standby lines of credit 1,000 21,820 6,515
------ ------ ------
19,650 55,000 16,381
------ ------ ------
Used at balance date
Bank Overdraft Facilities 17,682 25,656 7,396
Bank loans and standby lines of credit 1,000 2,544 4,083
------ ------ ------
18,682 28,200 11,479
------ ------ ------
Unused at balance date
Bank Overdraft Facilities 968 7,524 2,470
Bank loans and standby lines of credit 0 19,276 2,432
------ ------ ------
968 26,800 4,902
------ ------ ------
</TABLE>
Subject to continued satisfactory credit ratings the bank loans may be drawn
down at any time. The Bank overdraft facilities may be drawn at any time and may
be terminated without notice. Interest rates on all facilities are variable.
Certain bank facilities have restrictions on their usage and are limited for use
on specific projects.
(iii) ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES
<TABLE>
<CAPTION>
EFFECTIVE DATE OF
DISPOSAL
<S> <C>
The following entities were disposed of during the year ended 30 June 1995
McConnell Dowell Holdings Ltd - 100% 1 July 1994
Benjamin Developments Ltd - 100% 23 January 1995
The following entity was disposed of during the year ended 30 June 1994
Hawkins Construction Ltd - 100% 31 March 1994
</TABLE>
<PAGE> 42
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 37
30 STATEMENT OF CASHFLOWS (CONT..)
Details of the aggregate cash flows and consideration relating to these
disposals and aggregate assets and liabilities at the date of disposals were as
follows:
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994 1993
$'000 $'000 $'000
<S> <C> <C> <C>
Consideration
Cash 25,800 1,281 --
Distribution of proceeds to other parties per prior agreement (10,379) 0 --
Proceeds not yet received as at 30 June (416) 0 --
------- ------- -----
Net proceeds received 15,005 1,281 --
Other 12,891 0 --
------- ------- -----
27,896 1,281 --
------- ------- -----
Assets/liabilities disposed of:
Receivables 12,891 8,521 --
Inventories 0 394 --
Property, plant and equipment 0 4,280 --
Creditors and borrowings 0 (13,481) --
Provisions 0 (287) --
------- ------- -----
Net assets disposed of (excluding cash) 12,891 (573) --
Cash balances in entities disposed of 0 1,854 --
------- ------- -----
Net assets disposed of 12,891 1,281 --
Consideration 28,312 1,281 --
Costs of sale and other associated charges (1,694) (287) --
------- ------- -----
Profit/(loss) on disposal 13,727 (287) --
------- ------- -----
</TABLE>
No material acquisitions or disposals of controlled entities occurred for the
year ended 30 June 1993.
<PAGE> 43
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 38
30 STATEMENTS OF CASHFLOWS (CONT..)
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994 1993
$'000 $'000 $'000
<S> <C> <C> <C>
(iv) RECONCILIATION OF NET CASH FLOWS FROM OPERATING
ACTIVITIES TO OPERATING PROFIT/(LOSS) AFTER TAX
Operating profit/(loss) after tax 25,448 (3,409) (2,463)
Depreciation and amortisation 4,580 5,449 4,184
Provision for doubtful debts 556 (599) (417)
Other provisions 41 763 (1,132)
(Profit)/loss on disposal of controlled entity (15,416) 287 0
Loss on sale of non-current assets 211 528 0
Profit on sale of non-current assets (323) (452) (508)
Write down of non-current assets 0 0 4,827
Net change in operating assets and liabilities net of effects
of disposal of controlled entities
Decrease (increase) in receivables 13,883 (11,981) (17,125)
Decrease (increase) in investments (6,619) 0 0
Decrease (increase) in inventories 7,922 (13,307) (10,933)
Decrease (increase) in other assets 425 1,740 622
Increase (decrease) in creditors and borrowings 3,564 20,174 20,288
Decrease (increase) in future income tax benefit (49) (155) 166
Increase (decrease) in provision for deferred income tax 130 189 156
Increase (decrease) in provision for income tax (391) 107 228
Other 0 (258) 628
------- ------- -------
Net cash inflow/(outflow) from operating activities 33,962 (924) (1,479)
------- ------- -------
</TABLE>
31 EARNINGS PER SHARE
<TABLE>
<CAPTION>
CONSOLIDATED
1995 1994
CENTS CENTS
<S> <C> <C>
BANK EARNINGS PER SHARE 64.8 (10.1)
Weighted average number of ordinary shares outstanding during
the year used in the calculation of basic earnings per share 39,751,778 36,572,646
DILUTED EARNINGS PER SHARE 64.8 (5.3)
</TABLE>
<PAGE> 44
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 39
31 EARNINGS PER SHARE
INFORMATION CONCERNING THE CLASSIFICATION OF SECURITIES
(a) OPTIONS
Options are considered to be potential ordinary shares and have been
included in the determination of diluted earnings per share. The
options have not been included in the determination of basic earnings
per share. Details relating to the options are set out in note 18.
(b) CLASS C CONVERTIBLE NOTES
Class C convertible notes are considered to be potential ordinary
shares and have been included in the determination of diluted earnings
per share. The Class C convertible notes have not been included in the
determination of basic earnings per share. Details relating to the
class C convertible notes are set out in note 17.
32 INTERESTS IN BUSINESS UNDERTAKINGS
<TABLE>
<CAPTION>
NAME OF UNDERTAKING PRINCIPAL NATURE OF INTEREST CONTRIBUTION TO AMOUNT OF REVENUE
ACTIVITY INTEREST OPERATING PROFIT INVESTMENT ATTRIBUTABLE
1995 1994 1995 1994 1995 1994 1995 1994
% % $'000 $'000 $'000 $'000 $'000 $'000
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
McConnell Dowell /Obayashi JV Construction Partnership 50 50 5,447 1,154 6,601 1,154 14,176 13,749
McConnell Dowell Spie Capag JV Construction Partnership 50 50 0 (146) 0 92 0 92
McConnell Dowell PII JV Construction Partnership 50 50 (4,658) (1,419) 0 0 3,609 5,660
McConnell Dowell UDL JV Construction Partnership 50 0 384 0 420 0 3,458 0
MUC JV Construction Partnership 50 50 941 876 1,089 828 5,242 12,352
------ ------ ----- ----- ------ ------
2,114 465 8,110 2074 26,485 31,853
</TABLE>
33 DIFFERENCES BETWEEN AUSTRALIAN AND US GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES
The accounting policies and accounting standards under which the financial
statements of the Group are prepared are in accordance with Australian Generally
Accepted Accounting Procedures (GAAP). The major differences between Australian
GAAP and US GAAP are summarised below:
(a) INCOME TAX
The calculation of deferred tax assets and liabilities should be made
using the appropriate tax rate at which the timing difference and
losses are expected to be realised. Under Australian GAAP an
announcement by the Federal Treasurer as to a change in the tax rate is
sufficient for deferred taxes to be restated at the new tax rate. Under
US GAAP, legislation has to be passed for the new rate to be used.
<PAGE> 45
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 40
33 DIFFERENCES BETWEEN AUSTRALIAN AND US GAAP (CONT...)
(b) MINORITY INTERESTS
Under US GAAP minority interests are not included as shareholders'
funds and are deducted in determining the net assets of the company.
Under Australian GAAP minority interests are included as part of
shareholders' funds.
(c) CASH FLOW
Bank overdrafts are not considered to be part of the net cash
equivalent and so changes in bank overdrafts (net) are included in cash
flows financing activities under US GAAP. Under Australian GAAP bank
overdrafts form part of the cash equivalents.
(d) PRIOR PERIOD ADJUSTMENTS
Adjustments are permitted under US GAAP to the previous year's
financial statements where they relate to the correction of errors in
the previous year. Retrospective adjustments to opening retained
earnings are only permitted under Australian GAAP where they result
from a change in accounting policy which was necessary in order to
comply with a statutory requirement or a new accounting standard.
(e) SEGMENT REPORTING
US GAAP requires disclosure of the identity of any customer that
represents 10% or more of total revenue and the amount of sales to that
customer.
(f) INTANGIBLE ASSETS
Under US GAAP, intangible assets (other than goodwill) must be
amortised over the estimated economic lives, which should not exceed 40
years. There is no specific requirement to amortise intangible asset,
other than goodwill in Australia. The period of amortisation is to be
over the period of expected benefit and is not to exceed 20 years.
There is an overriding requirement that such assets are not carried at
an amount in excess of their recoverable amount.
(g) EQUITY ACCOUNTING
The use of equity accounting for investments in associates in the main
financial statements is not permitted but rather included as a
supplementary note to the financial statements for Australian GAAP
purposes. Under US GAAP the equity share in the results of associates
(net of dividends received) forms part of the reported income and
investment carrying value in the financial statements rather than
supplementary information.
<PAGE> 46
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 41
34. RECONCILIATION OF AUSTRALIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES TO US GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES FOR PROFIT AND LOSS
Reconciliation of profit and loss for the year ended June 30, 1995.
<TABLE>
<CAPTION>
1995 1994 1994
$'000 $'000 $'000
<S> <C> <C> <C>
Profit and loss in accordance with Australian GAAP 25,750 (7,412) (5,022)
Less: Adjustments - - -
------ ------ ------
Profit and loss in accordance with US GAAP 25,750 (7,412) (5,022)
====== ====== ======
</TABLE>
Our review highlighted that there was no material differences in relation to
income recognition between the two GAAP policies.
35. RECONCILIATION OF AUSTRALIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES TO US GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES FOR SHAREHOLDERS EQUITY
Reconciliation of Australian GAAP shareholder's equity to US GAAP as at June 30,
1995.
<TABLE>
<CAPTION>
1995 1994
$'000 $'000
<S> <C> <C>
Shareholders Equity in accordance with 46,140 13,344
Australian GAAP
Less: Outside Equity Interests (315) (616)
------ ------
Shareholders Equity in accordance with US GAAP 45,825 12,728
====== ======
</TABLE>
<PAGE> 47
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES 42
REPORT OF INDEPENDENT ACCOUNTS
We have audited the accompanying consolidated balance sheet of McConnell Dowell
Corporation Limited and Controlled Entities as of June 30, 1995, and the related
consolidated profit and loss accounts and cash flows for the year ended June 30,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in Australia, which are substantially similar to 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 a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McConnell Dowell Corporation
Limited and Controlled Entities as of June 30, 1995, and the results of their
respective operations and their respective cash flows for the year ended June
30, 1995, in conformity with generally accepted accounting principles in
Australia.
Accounting principles generally accepted in Australia differ from those
principles generally accepted in the United States to the extent described in
Note 33 in the consolidated financial statements.
/s/ Coopers & Lybrand
Coopers & Lybrand
Melbourne, Australia
May 1996.
<PAGE> 48
McCONNELL DOWELL CORPORATION LIMITED
INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31,1996 AND 1995
(AUSTRALIAN DOLLARS)
<PAGE> 49
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES
INTERIM UNAUDITED CONSOLIDATED BALANCE SHEET, PAGE 1
As at March 31, 1996 and 1995 (Australian Dollars)
<TABLE>
<CAPTION>
=========================================================================
1996 1995
- -------------------------------------------------------------------------
$000 $000
<S> <C> <C>
Current assets
Cash at banks, on hand and on deposit $ 9,294 $ 50,132
Receivables 55,033 51,095
Investments 11,424 11,154
Inventories 64,388 33,316
Other - 1,433
----------------------------------------------------------------------
Total Current Assets 140,139 147,130
----------------------------------------------------------------------
Non-current assets
Investments - 5,003
Property, plant and equipment 17,812 18,109
Intangibles 63 86
----------------------------------------------------------------------
Total non-current assets 17,875 23,198
- -------------------------------------------------------------------------
Total assets $158,014 $170,328
=========================================================================
</TABLE>
See accompanying notes to the interim consolidated financial statements.
<PAGE> 50
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES
INTERIM UNAUDITED CONSOLIDATED BALANCE SHEET, PAGE 2
As at March 31, 1996 and 1995 (Australian Dollars)
<TABLE>
<CAPTION>
===============================================================================
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
$000 $000
Current liabilities
Creditors and borrowings $ 98,312 $119,707
Provisions 5,934 5,875
----------------------------------------------------------------------------
Total current liabilities 104,246 125,582
----------------------------------------------------------------------------
Non-current liabilities
Creditors and borrowings 1,500 2,756
Provisions 4,267 2,150
----------------------------------------------------------------------------
Total non-current liabilities 5,767 4,906
- -------------------------------------------------------------------------------
Total liabilities 110,013 130,488
- -------------------------------------------------------------------------------
Shareholders' equity
Share capital 20,787 20,787
Shareholders' reserves 2,966 4,532
Retained earnings 23,930 14,313
----------------------------------------------------------------------------
Shareholders' equity attributable to members
of McConnell Dowell Corporation Limited 47,683 39,632
----------------------------------------------------------------------------
Outside equity interest in controlled entities
Share capital 353 353
Reserves 202 150
Retained earnings (237) (295)
----------------------------------------------------------------------------
Total outside interest in controlled entities 318 208
- -------------------------------------------------------------------------------
Total shareholders' equity 48,001 39,840
- -------------------------------------------------------------------------------
Total liabilities and shareholders' equity $158,014 $170,328
===============================================================================
</TABLE>
See accompanying notes to the interim consolidated financial statements.
<PAGE> 51
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES
INTERIM UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
Nine months ended March 31, 1996 and 1995 (Australian Dollars)
<TABLE>
<CAPTION>
==============================================================================
1996 1995
- ------------------------------------------------------------------------------
$000 $000
(9 months) (9 months)
<S> <C> <C>
Contract revenue $248,011 $227,063
Cost of contracts 225,978 202,737
- ------------------------------------------------------------------------------
Gross margin 22,033 24,326
Other income (loss)
Sundry income 304 2,466
Foreign exchange gains (losses) 397 (72)
----------------------------------------------------------------------------
701 2,394
- ------------------------------------------------------------------------------
Expenses
Selling, general and administrative 15,557 13,369
Interest 331 1,005
----------------------------------------------------------------------------
15,888 14,374
- ------------------------------------------------------------------------------
Earnings before income taxes 6,846 12,346
Income tax provisions 2,057 3,185
- ------------------------------------------------------------------------------
Operating profit after income tax 4,789 9,161
Extraordinary items net of income tax - 11,491
- ------------------------------------------------------------------------------
Net income before minority interest 4,789 20,652
Minority interest - (360)
- ------------------------------------------------------------------------------
Net income 4,789 21,012
Retained earnings (deficit), beginning of period 19,141 (6,699)
- ------------------------------------------------------------------------------
Retained earnings, end of period $ 23,930 $ 14,313
==============================================================================
</TABLE>
See accompanying notes to the interim consolidated financial statements.
<PAGE> 52
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES
INTERIM UNAUDITED CONSOLIDATED STATEMENT OF CASHFLOWS
Nine months ended March 31, 1996 and 1995 (Australian Dollars)
<TABLE>
<CAPTION>
===================================================================================
1996 1995
- -----------------------------------------------------------------------------------
$000 $000
<S> <C> <C>
Cash flows from operating activities
Receipts from customers $ 176,228 $ 239,886
Payments to suppliers and employees (182,321) (193,283)
Interest received 527 871
Interest and other costs of finance paid (429) (1,521)
Income taxes paid (2,071) (2,984)
------------------------------------------------------------------------------
Net cash inflow (outflow) from operating activities (8,066) 42,969
------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 148 593
Purchases of property, plant and equipment (2,709) (4,162)
Proceeds from sale of controlled entities - 15,005
Loans to other entities - (5,810)
Cash placed on deposit with other parties - (6,805)
Secured cash becoming available 6,932 -
Proceeds from sale of investments - 9
---------------------------------------------------------------------------------
Net cash inflow (outflow) from investing activities 4,371 (1,170)
---------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from borrowings - -
Repayment of borrowings (9,568) (961)
---------------------------------------------------------------------------------
Net cash outflow from financing activities (9,568) (961)
---------------------------------------------------------------------------------
Net increase (decrease) in cash held (13,263) 40,838
Cash and cash equivalents at the beginning of the period 11,537 (17,011)
- -----------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period $ (1,726) $ 23,827
===================================================================================
Cash and cash equivalents consists of:
- -----------------------------------------------------------------------------------
Cash at banks, on hand and on deposit $ 9,294 $ 50,132
Deduct cash deposits secured and not available at call - (6,805)
Bank indebtedness, unsecured (11,020) (19,500)
- -----------------------------------------------------------------------------------
$ (1,726) $ 23,827
===================================================================================
</TABLE>
See accompanying notes to the interim consolidated financial statements.
<PAGE> 53
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES
NOTES TO THE INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996 and 1995 (Australian Dollars)
================================================================================
Note 1
These interim consolidated financial statements have not been audited, however,
they have been prepared on a basis generally consistent with the audited
financial statements and in accordance with Australian generally accepted
accounting practice.
Note 2
DIFFERENCES BETWEEN AUSTRALIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The accounting policies and accounting standards under which the financial
statements of the Group are prepared are in accordance with Australian Generally
Accepted Procedures (GAAP).
RECONCILIATION OF AUSTRALIAN INCOME TO U.S. GAAP INCOME FOR THE NINE MONTHS
ENDED MARCH 31, 1996 AND 1995
In management's opinion, there are no material differences in relation to income
recognition between the two GAAP policies.
RECONCILIATION OF AUSTRALIAN GAAP SHAREHOLDER'S EQUITY TO U.S. GAAP AS AT MARCH
31, 1996 AND 1995
<TABLE>
<CAPTION>
===============================================================================
1996 1995
- -------------------------------------------------------------------------------
$'000 $'000
<S> <C> <C>
Shareholders Equity in accordance with Australian GAAP $48,001 $39,840
Less: Outside Equity Interests (318) (208)
- -------------------------------------------------------------------------------
Shareholders Equity in accordance with U.S. GAAP $47,683 $39,632
===============================================================================
</TABLE>
<PAGE> 54
MCCONNELL DOWELL CORPORATION LIMITED AND CONTROLLED ENTITIES NOTES TO THE
INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, PAGE 2
March 31, 1996 and 1995 (Australian Dollars)
================================================================================
Note 3
EARNINGS PER SHARE
<TABLE>
<CAPTION>
====================================================================================================
Consolidated
1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Basic earnings per share (cents) 11.6 53.0
Weighted average number of ordinary shares outstanding
during the year used in the calculation of basic earnings per share 41,574,298 38,991,027
Diluted Earnings per Share 11.6 53.0
====================================================================================================
</TABLE>
Note 4
Reconciliation of net cash flows from operating activities to operating profit
(loss) after tax
<TABLE>
<CAPTION>
====================================================================================================
1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
$'000 $'000
Operating profit (loss) after tax $ 4,789 $20,652
Depreciation and amortization 3,562 3,435
Provision for doubtful debts - 556
Other provisions 457 41
(Profit) loss on disposal of controlled entity - (15,416)
Loss on sale of non-current assets - 157
Profit on sale of non-current assets - (258)
Net change in operating assets and liabilities net of effects of disposal of
controlled entities:
Decrease (increase) in receivables 1,698 20,410
Decrease (increase) in investments 5,205 2,761
Decrease (increase) in inventories (43,441) 547
Decrease (increase) in other assets 936 1,188
(Increase) decrease in creditors and borrowings 18,140 9,273
Decrease (increase) in future income tax benefits - (226)
(Increase) decrease in provision for deferred income tax - -
(Increase) decrease in provision for income tax 588 107
Other - (258)
- ----------------------------------------------------------------------------------------------------
Net cash inflow (outflow) from operating activities $ (8,066) $ 42,969
====================================================================================================
</TABLE>
<PAGE> 55
Unaudited Consolidated Pro Forma Statement of Operations
CEDAR GROUP, INC.
Year ended September 30, 1995
<PAGE> 56
CEDAR GROUP, INC.
Unaudited Consolidated Pro Forma Statement of Operations
<TABLE>
<CAPTION>
Year ended September 30, 1995 $US'000
=====================================================================================================
McConnell Pro Forma
Cedar Dowell Consolidated
Group, Inc. Corporation Pro Forma Cedar
Audited Unaudited Adjustments Group, Inc.
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $155,750 $ 215,709 $371,459
Cost of sales 139,407 192,371 331,778
- ------------------------------------------------------------------------------------------------------
Gross profit 16,343 23,338 39,681
Income from joint ventures 2,165 - 2,165
Selling, general
and administration expenses (15,433) (13,928) (6)(375) (29,736)
Other income 1,236 2,642 3,878
- ------------------------------------------------------------------------------------------------------
Income before interest and
income taxes 4,311 12,052 (375) 15,988
Interest income (expense) (406) 22 (3)(3,000)
(5)(3,000)
(11) (79) (6,463)
- ------------------------------------------------------------------------------------------------------
Income before income taxes
and minority interest 3,905 12,074 (6,454) 9,525
Income taxes (1,693) (2,057) (7) 2,453 (1,298)
- ------------------------------------------------------------------------------------------------------
Net income before
minority interest 2,212 10,016 (4,001) 8,227
Minority interest
- Common shares (122) (338) (8)(2,208)
(11) 224 (2,444)
- Preferred shares (70) - (12)(1,449) (1,519)
- ------------------------------------------------------------------------------------------------------
Net income $ 2,020 $(10)9,678 $ (7,434) $ 4,264
======================================================================================================
<CAPTION>
Weighted average number of Common shares and common share equivalents:
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Primary 14,929,000 (4) 5,680,418 20,609,418
Fully diluted 17,688,000 (4) 5,680,418
(13)(2,107,633) (9)20,260,785
======================================================================================================
<CAPTION>
Net income per Common share and common share equivalent
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Primary $0.14 $0.28
Fully diluted $0.11 $0.27
======================================================================================================
</TABLE>
<PAGE> 57
CEDAR GROUP, INC.
Notes to the Unaudited Consolidated Pro Forma Statement of Operations
Year ended September 30, 1995
================================================================================
This unaudited consolidated pro forma statement of operations is presented to
reflect the March 29, 1996 purchase of 77.19% of McConnell Dowell Corporation
Ltd. ("MDC") by Cedar Group, Inc. ("Cedar") as if the transaction had been
consummated October 1, 1994.
The unaudited consolidated pro forma statement of operations has been prepared
by management of Cedar and should be read in conjunction with the historical
consolidated financial statements of Cedar and the historical financial
statements of MDC, which are included elsewhere in this form 8K/A. The unaudited
consolidated pro forma statement of operations is based on certain assumptions
and preliminary estimates which are subject to change. This statement does not
purport to be indicative of the results of operations of Cedar that might have
occurred, nor are they indicative of future results.
The pro forma presentation combines the Cedar results as reported in their
audited financial statements for its year ended September 30, 1995 and the
results for MDC for the twelve month period ended September 30, 1995. As MDC
reports its financial results on a fiscal year end basis of June 30, 1995, the
annual audited results have been adjusted to include the quarter ended September
30, 1995 and to exclude the quarter ended September 30, 1994.
There are no material differences in the computation of net income under
Australian generally accepted accounting principles (GAAP) and U.S. GAAP.
1. Acquisition of 77.19% of MDC effective October 1,1994 for total cost of
$US41.4 million. Acquisition financed by bank credit facility ($30 million)
and issuance of additional Cedar Group (TCI) Ltd. ("Cedar TCI") Preferred
shares ($13.8 million) convertible into Cedar Common shares.
2. Financing fees of $3.0 deducted from proceeds of loan issuance.
3. Interest cost on credit facility commencing October 1,1994 calculated as
follows: $US 30 Million * 12 months * 10% = $US 3.0 Million deducted from
Pro Forma results to September 30, 1995.
4. Reflects the issuance of 5,680,418 shares of Common Stock upon conversion
of certain outstanding shares of Preferred Stock Cedar Group (TCI) Inc.
LLC. (The "TCI Preferred Shares") based upon an assumed conversion price of
U.S.$4.25 per share. The TCI Preferred Shares were issued in a private
transaction with institutional investors to finance a portion of the
purchase price of MDC and are convertible into Cedar Common Stock at an
discount from the trading price of the Common Stock on the five trading
days prior to conversion. Cedar is engaged in discussions with the
investors regarding the terms of the TCI Preferred Shares, and has reached
preliminary agreement with certain of the investors to amend the terms of
the TCI Preferred Shares to provide a minimum conversion price of
U.S.$4.25. However, unless a definitive agreement to this effect can be
reached the number of shares of Cedar Common Stock to be issued will
fluctuate with the trading price of Cedar Common Stock.
5. Amortization of financing fees ($3 Million) over one year charged to
interest expense commencing October 1, 1994.
6. Amortization of purchased goodwill ($15.0 Million based on March 31, 1996
book value), amortized over 40 years, charged to S.G.&A. expense commencing
October 1,1994.
<PAGE> 58
CEDAR GROUP, INC.
Notes to the Unaudited Consolidated Pro Forma Statement of Operations
Year ended September 30, 1995
================================================================================
7. Tax effect of above-mentioned interest and issuance costs recorded at Cedar
statutory rate of 38%.
8. Minority interest in MDC income at 22.81% commencing October 1, 1994.
Previously reported minority interest in MDC earnings related to outside
interests in MDC operating subsidiaries which survive the Cedar acquisition
of MDC.
9. Cedar fully diluted E.P.S. calculated based on September 30, 1995 share
structure, adjusted for Cedar TCI shares (See Note 4) and purchase of
Dominion Bridge preferred Class A shares (see Note 13).
10. MDC results for twelve months ended September 30, 1995 exclude abnormal
items relating to non-recurring gains on real estate settlement (Tasman
Properties - $U.S. 9.45 Million after tax).
11. Second step acquisition of remaining 25% of Steen Contractors Limited
("Steen") given effect as if purchase was made October 1,1994. Acquisition
was funded by Steen cash, therefore foregone interest income (at 5%) on
purchase price ($1,571) charged to annualized net income. This charge is
offset by elimination of the minority interest in Steen's income.
12. A 6% preferred dividend on face value of $24,141,776 of Cedar TCI shares is
accrued commencing October 1, 1994 in computing net income to common
shareholders. This preferred dividend is added back to net income in
computing earnings per share as the Cedar TCI shares are considered common
share equivalents.
13. Proceeds of original Cedar TCI preferred shares were partially used to
repurchase Class A convertible preferred shares of Dominion Bridge, Inc.
The repurchase of the Class A convertible preferred shares eliminated a
potential dilution of 2,107,633 Cedar Group common shares.
<PAGE> 59
Unaudited Consolidated Pro Forma Statement of Operations
CEDAR GROUP, INC.
Six months ended March 31, 1996
<PAGE> 60
CEDAR GROUP, INC.
Unaudited Consolidated Pro Forma Statement of Operations
<TABLE>
<CAPTION>
Six months ended March 31, 1996 $US'000
=============================================================================================================
McConnell Pro Forma
Cedar Dowell Consolidated
Group, Inc. Corporation Pro Forma Cedar
Unaudited Unaudited Adjustments Group, Inc.
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $104,958 $ 147,535 $252,493
Cost of sales 89,525 135,588 225,113
- -------------------------------------------------------------------------------------------------------------
Gross profit 15,433 11,947 27,380
Income from joint ventures 732 - 732
Selling, general
and administration expenses (9,350) (8,756) (6) (188) (18,294)
Other income 234 339 593
- -------------------------------------------------------------------------------------------------------------
Income before interest and
income taxes 7,049 3,530 (188) 10,391
Interest income (expense) 43 (158) (3)(1,500)
(5)(1,500)
(11) (39) (3,154)
- -------------------------------------------------------------------------------------------------------------
Income before income taxes
and minority interest 7,092 3,372 (3,227) 7,237
Income taxes (2,717) (1,106) (7) 1,226 (2,597)
- -------------------------------------------------------------------------------------------------------------
Net income before
minority interest 4,375 2,266 (2,001) 4,640
Minority interest
- Common shares (11) - (8) (517) (528)
- Preferred shares (205) - (12) (520) (725)
- -------------------------------------------------------------------------------------------------------------
Net income $ 4,159 $(10)2,266 $ (3,038) $ 3,387
=============================================================================================================
<CAPTION>
Weighted average number of Common shares and Common share equivalents:
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Primary 16,320,488 (4)5,680,418 22,000,906
Fully diluted 17,334,599 (4)5,680,418 (9)23,015,017
=============================================================================================================
<CAPTION>
Net income per Common share and Common share equivalent
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Primary $0.22 $0.19
Fully diluted $0.22 $0.18
=============================================================================================================
</TABLE>
<PAGE> 61
CEDAR GROUP, INC.
Notes to the Unaudited Consolidated Pro Forma Statement of Operations
Six months ended March 31, 1996
================================================================================
This unaudited consolidated pro forma statement of operations is presented to
reflect the March 29, 1996 purchase of 77.19% of McConnell Dowell Corporation
Ltd. ("MDC") by Cedar Group, Inc. ("Cedar") as if the transaction had been
consummated October 1, 1995.
The unaudited consolidated pro forma statement of operations has been prepared
by management of Cedar and should be read in conjunction with the historical
consolidated financial statements of Cedar and the historical financial
statements of MDC, which are included elsewhere in this form 8K/A. The unaudited
consolidated pro forma statement of operations is based on certain assumptions
and preliminary estimates which are subject to change. This statement does not
purport to be indicative of the results of operations of Cedar that might have
occurred, nor are they indicative of future results.
The pro forma presentation combines the Cedar results as reported in their
unaudited financial statements for its six months ended March 31, 1996 and the
unaudited results for MDC for the six month period ended March 31, 1996.
There are no material differences in the computation of net income under
Australian generally accepted accounting principles (GAAP) and U.S. GAAP.
1. Acquisition of 77.19% of MDC effective October 1,1995 for total cost of
$US41.4 million. Acquisition financed by bank credit facility ($30 million)
and issuance of additional Cedar Group (TCI) Ltd. ("Cedar TCI") Preferred
shares ($13.8 million) convertible into Cedar Common shares.
2. Financing fees of $3.0 deducted from proceeds of loan issuance.
3. Interest cost on credit facility commencing October 1,1995 calculated as
follows: $US 30 Million * 6 months * 10% = $US 1.5 Million deducted from
Pro Forma results to March 31, 1996.
4. Reflects the issuance of 5,680,418 shares of Common Stock upon conversion
of certain outstanding shares of Preferred Stock Cedar Group (TCI) Inc.
LLC. (The "TCI Preferred Shares") based upon an assumed conversion price of
U.S.$4.25 per share. The TCI Preferred Shares were issued in a private
transaction with institutional investors to finance a portion of the
purchase price of MDC and are convertible into Cedar Common Stock at an
discount from the trading price of the Common Stock on the five trading
days prior to conversion. Cedar is engaged in discussions with the
investors regarding the terms of the TCI Preferred Shares, and has reached
preliminary agreement with certain of the investors to amend the terms of
the TCI Preferred Shares to provide a minimum conversion price of
U.S.$4.25. However, unless a definitive agreement to this effect can be
reached the number of shares of Cedar Common Stock to be issued will
fluctuate with the trading price of Cedar Common Stock.
5. Amortization of financing fees ($3 Million) over one year charged to
interest expense commencing October 1, 1995.
6. Amortization of purchased goodwill ($15.0 Million based on March 31, 1996
book value), amortized over 40 years, charged to S.G.&A. expense commencing
October 1,1995.
7. Tax effect of above-mentioned interest and issuance costs recorded at Cedar
statutory rate of 38%.
<PAGE> 62
CEDAR GROUP, INC.
Notes to the Unaudited Consolidated Pro Forma Statement of Operations
Six months ended March 31, 1996
================================================================================
8. Minority interest in MDC income at 22.81% commencing October 1, 1995.
9. Cedar fully diluted E.P.S. calculated based on March 31, 1996 share
structure, adjusted for Cedar TCI shares (See Note 4) and purchase of
Dominion Bridge preferred Class A shares (see Note 13).
10. MDC results for six months ended March 31, 1996 exclude any abnormal items
relating to non-recurring gains or losses.
11. Second step acquisition of remaining 25% of Steen Contractors Limited
("Steen") given effect as if purchase was made October 1,1995. Acquisition
was funded by Steen cash, therefore foregone interest income (at 5%) on
purchase price ($1,571) charged to six months of net income. The negotiated
settlement of the outstanding balance of the 25% minority interest resulted
in no charges to net income for minority interest in Steen's income for the
results as reported for the six months ended March 31, 1996.
12. The actual dividend accrued to March 31, 1996 is reversed and the full 6%
preferred dividend on face value of $24,141,776 of Cedar TCI shares is
accrued commencing October 1, 1994 in computing net income to common
shareholders. This preferred dividend is added back to net income in
computing earnings per share as the Cedar TCI shares are considered common
share equivalents.
13. Proceeds of original Cedar TCI preferred shares were partially used to
repurchase Class A convertible preferred shares of Dominion Bridge, Inc.
The repurchase of the Class A convertible preferred shares eliminated a
potential dilution of 2,107,633 Cedar Group common shares. The impact of
this purchase was given effect in the March 31, 1996 Cedar results so no
further Pro Forma adjustment is required for the six month period.
