EX-99.5 6 f29189exv99w5.htm EXHIBIT 99.5 exv99w5
 

Exhibit 99.5
CARDS INC. LIMITED
Financial Statements for the
year ended 31st July 2005
Registered Office
25 School Lane
Bushey
Herts. WD23 1SS
     
Registered Number:
  3329087 (England and Wales)
Director:
  Darren Epstein
Secretary:
  Paul Freedman
     
Contents   Page
Report of the director
   2 – 4
Auditors report
   5 – 6
Profit and Loss Account
   7
Balance Sheet
   8
Cash Flow Statement
   9
Accounting Policies
   10 – 11
Notes to the Accounts
   12 – 18

 

 

CARDS INC. LIMITED
Independent auditors’ report to the shareholders of Cards Inc. Limited.
We have audited the financial statements of Cards Inc. Limited for the year ended 31st July 2005 which comprise a Profit and Loss Account, Balance Sheet, Cash Flow Statement and the related notes on pages 9 to 17. The financial statements have been prepared under the historical cost convention and the accounting policies set out therein.
This report is made solely to the company’s shareholders, as a body, in accordance with section 235 of the Companies Act 1985. Our work has been undertaken so that we might state to the company’s shareholder those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As described in the Statement of Director’s Responsibilities the company’s director is responsible for the preparation of the accounts in accordance with applicable law and United Kingdom Accounting Standards.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards.
We report to you our opinion as to whether the accounts give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Director’s Report is inconsistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding director’s remuneration and transactions with the company is not disclosed.
We read the Director’s Report and consider the implications for our report if we become aware of any apparent misstatements within it.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial

2

 

CARDS INC. LIMITED
Independent auditors’ report to the shareholders of Cards Inc. Limited.
Basis of audit opinion (continued)
statements. It also includes an assessment of the significant estimates and judgements made by the director in the preparation of the financial statements, and whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanation which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state of the company’s affairs at 31st July 2005 and of its loss for the year then ended and have been properly prepared in accordance with the Companies Act 1985.
     
 
   /s/ Leslie Woolfson & Co.
Profex House
    
25 School Lane
  Leslie Woolfson & Co.
Bushey
  Chartered Accountants and
Herts. WD23 1SS
  Registered Auditors
 
   
19th December 2006

3

 

CARDS INC. LIMITED
Profit and Loss Account for the year ended 31st July 2005
                         
      Note     2005     2004  
            £     £  
TURNOVER
     1       13,679,800       18,487,021  
Cost of sales
             (10,930,224 )     (15,132,301 )
 
                    
GROSS PROFIT for the year
             2,749,576       3,354,720  
 
                        
Distribution costs and administrative expenses
     2       (3,258,554 )     (2,814,068 )
 
                    
Operating (loss)/profit
     3       (508,978 )     540,652  
Interest receivable and similar income
     4       19,844       11,435  
Interest payable and similar charges
     5       (120,435 )     (25,934 )
 
                    
(Loss)/Profit on ordinary Activities before taxation
             (609,569 )     526,153  
UK tax refund/(taxation) on loss/(profit ) on ordinary activities
     6       148,478       (137,956 )
 
                    
(Loss)/Profit on ordinary Activities after taxation
             (461,091 )     388,197  
 
                    
Retained (Loss)/Profit For the financial year
     13     £ ( 461,091 )   £ 388,197  
 
                    
Continuing Operations
Turnover and operating loss derive wholly from continuing operations.
Statement of total recognised gains and losses
The company has no recognised gains or losses other than the loss for the current period.

4

 

CARDS INC. LIMITED
Balance Sheet as at 31st July 2005
                         
    Note   2005   2004
            £   £
FIXED ASSETS
                        
Tangible assets
     7       206,574       128,595  
 
                        
 
                        
CURRENT ASSETS
                        
Stocks
     8       3,624,785       847,228  
Debtors
     9       3,114,115       4,871,241  
Cash at bank
             1,539,067       1,718,047  
 
                        
 
             8,277,967       7,436,516  
 
                        
Creditors: amounts falling due within one year
     10       (7,461,348 )     (6,090,737 )
 
                        
Net current assets
             816,619       1,345,779  
 
                        
 
                        
Total assets less current liabilities
             1,023,193       1,474,374  
 
                        
Creditors: amounts falling due after more than one year
     10       (27,727 )     (14,600 )
 
                        
Provision for liabilities
     11       ( — )     (3,217 )
 
                        
 
                        
Total net assets
             995,466       1,456,557  
 
                        
 
                        
Financed by:
                        
 
                        
CAPITAL and RESERVES
                        
Called — up Share Capital
     12       100,000       100,000  
Profit and Loss Account
     13       895,466       1,356,557  
 
                        
 
                        
Shareholders’ funds — Equity
             995,466       1,456,557  
 
                        
Approved by the board of directors on 19th December 2006 and signed on its behalf:
D. Epstein director

5

 

CARDS INC. LIMITED
Cash Flow Statement
Year ended 31st July 2005
                         
    Notes   2005   2004
            £   £
Reconciliation of operating profit to net cash inflow from operating activities
                        
 
                        
Operating (loss)/profit
             (508,978 )     540,652  
Depreciation charges
             65,401       42,011  
(Increase)/decrease in stocks
             (2,777,557 )     133,701  
Decrease/(increase) in debtors
             1,757,126       (2,497,285 )
Increase in creditors
             210,896       1,313,403  
 
                        
 
                        
Net cash (outflow) / inflow from operating activities
             (1,253,112 )     (467,518 )
 
                        
 
                        
CASH FLOW STATEMENT
                        
Net cash (outflow)/inflow from operating activities
             (1,253,112 )     (467,518 )
 
                        
Returns on investments and servicing of finance
     15       (100,591 )     (14,499 )
Taxation
             (124,294 )     (32,119 )
Capital expenditure
     15       (143,380 )     (108,400 )
 
                        
 
             (1,621,377 )     (622,536 )
Financing
     15       796,004       (228,545 )
 
                        
(Decrease) in cash
             (825,373 )     (851,081 )
 
                        
Reconciliation of net cash flow to movement in net debt
                        
(Decrease) in cash
             (825,373 )     (851,081 )
(Increase)/decrease in debt & lease financing
             (796,004 )     213,945  
 
                        
Change in net debt
     16       (1,621,377 )     (637,136 )
Net funds at 1st August
             (623,435 )     13,701  
 
                        
 
                        
Net funds at 31st July
             (2,244,812 )     (623,435 )
 
                        

6

 

CARDS INC. LIMITED
ACCOUNTING POLICIES
Year ended 31st July 2005
The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards.
The following accounting policies have been applied:
Turnover
Turnover represents amounts derived from ordinary activities at invoiced amount less VAT where applicable.
Foreign Currencies
Transactions in foreign currencies are translated into Sterling and recorded at the rate ruling at the date of receipt or payment.
Stocks
Stocks are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow-moving stocks. Cost includes all direct expenditure.
Taxation
Corporation tax is provided on taxable profits at the current rate.
Deferred Taxation
Full provision is made for deferred taxation resulting from timing differences between the recognition of gains and losses in the accounts and their recognition for tax purposes.
Deferred tax is calculated at the tax rates which are expected to apply in the periods when the timing differences will reverse.
Depreciation
Depreciation has been provided at the following rates in order to write off the assets over their estimated useful lives.
     
Plant
  20% per annum on cost
Motor Vehicle
  25% per annum on cost
The director does not feel the charge in the current period will materially affect any comparison with the comparative figures.

7

 

CARDS INC. LIMITED
ACCOUNTING POLICIES
Year ended 31st July 2005
(continued)
Leasing and hire purchase commitments
Rentals paid under operating leases are charged to income on a straight line basis over the lease term.
Assets held under finance leases are capitalised and depreciated over their useful lives. The corresponding lease obligation is treated in the balance sheet as a liability. The interest element of rental obligations is charged to profit and loss account over the period of the lease at a constant proportion of the balance of capital repayments outstanding.

8

 

CARDS INC. LIMITED
Notes forming part of the financial statements for the year ended 31st July 2005.
1. TURNOVER
The turnover and result before taxation is attributable to the sales of cards and collectibles.
Turnover is attributable to one continuing activity, the sales of cards and collectibles.
                 
    2005   2004
    £   £
Turnover is analysed by market below:
                
United Kingdom
     11,082,479       12,215,780  
E.E.C.
     1,956,096       5,431,076  
Non — E.E.C
     641,225       840,165  
 
                
 
     13,679,800       18,487,021  
 
                
2. DISTRIBUTION COSTS and ADMINISTRATIVE EXPENSES
                
Distribution costs
     1,501,123       1,219,869  
Administration expenses
     1,757,431       1,594,199  
 
                
 
     3,258,554       2,814,068  
 
                
 
                
3. OPERATING (LOSS)/PROFIT
                
This is stated after charging:
                
Director’s remuneration
     144,000       245,000  
Auditors remuneration
     11,000       11,000  
Non — audit services
     4,000       4,000  
Operating lease charges:
                
Land and buildings
     183,143       136,400  
Hire of plant
     7,544       7,016  
Depreciation of tangible fixed assets:
                
Owned
     56,290       36,803  
Held under finance lease
     9,111       464  
Loss on sale of fixed asset
     3,756       4,744  
 
                
 
                
4. INTEREST RECEIVABLE
                
Bank interest received
     19,844       11,435  
 
                
 
                
5. INTEREST PAYABLE AND SIMILAR CHARGES
                
Bank loans and overdrafts
     115,985       23,529  
 
                
Finance charges in respect of finance leases
     4,450       2,405  
 
                
 
     120,435       25,934  
 
                

9

 

CARDS INC. LIMITED
Notes forming part of the financial statements for the year ended 31st July 2005.
                 
    2005   2004
    £   £
6. TAXATION
                
UK Corporation tax:
                
Tax refund (tax) on income for the year
     137,000       (137,344 )
(see below)
                
Deferred tax:
                
Origination and reversal of timing differences.
     11,478       (612 )
 
                
Tax refund (tax) on profit on Ordinary activities
     148,478       (137,956 )
 
                
 
                
2004:
                
The tax assessed for the period is lower than the standard rate of corporation tax in the U.K. (30%).
                
The differences are explained below:
                
 
                
Loss on ord. activities before tax
     609,569       —  
Profit on ord. activities before tax
     —       526,153  
 
                
Profit on ordinary activities multiplied by the standard rate of UK Corporation tax (30% — 2004:30%)
     —       157,846  
Tax refund
     (137,000 )        
Effects of:
                
Expenses not deductible for tax purposes
     —       8,219  
Capital allowances for year (in excess) of depreciation
     —       (2,476 )
Marginal rate relief
     —       (26,245 )
 
                
 
                
(Refund) tax on income for the period
     (137,000 )     137,344  
 
                
The company rate of 30% has been used as the director considers that this rate is the most convenient for comparison purposes.
Factors that may affect future tax charges:
It is likely in future years that capital allowances will be in excess of depreciation.
The tax claim for the year ended 31st July 2005 is restricted to the actual tax liability for the previous year.

10

 

CARDS INC. LIMITED
Notes forming part of the financial statements for the year ended 31st July 2005.
7. TANGIBLE ASSETS
                         
            Motor    
    Plant   Vehicle   Total
    £   £   £
COST:
                        
As at 1st August 2004
     152,129       22,264       174,393  
Additions
     122,511       38,495       161,006  
Sales
     —       (22,264 )     (22,264 )
 
                        
 
As at 31st July 2005
     274,640       38,495       313,135  
 
                        
 
DEPRECIATION
                        
As at 1st August 2004
     45,334       464       45,798  
Charge for the period
     56,290       9,111       65,401  
Charge on sales
     —       (4,638 )     (4,638 )
 
                        
 
As at 31st July 2005
     101,624       4,937       106,561  
 
                        
 
Net Book Value
                        
As at 31st July 2005
     173,016       33,558       206,574  
 
                        
 
As at 31st July 2004
     106,795       21,800       128,595  
 
                        
The net book value of the motor vehicle £33,558 (2004 - £21,800) is in respect of an asset held under a finance lease. The depreciation charge in respect of the asset amounted to £4,937 — (2004 - £464 ).
                 
    2005   2004
    £   £
8. STOCKS
                
Cards and collectibles for re-sale
     3,624,785       847,228  
 
                
 
                
9. DEBTORS
                
Trade
     2,880,039       4,775,345  
Other
     234,076       95,896  
 
                
 
     3,114,115       4,871,241  
 
                
 
                
10. CREDITORS
                
Falling due within one year:
                
Bank overdrafts (secured)
     2,965,975       2,326,882  
Bank loan accounts (secured)
     785,000       —  
Finance lease obligations
     5,177       7,300  
Trade
     2,426,646       2,295,749  
Other
     1,075,671       1,072,905  
Taxation and social security
     201,923       124,690  
Corporation tax
     956       263,211  
 
                
 
     7,461,348       6,090,737  
 
                
Falling due after more than one year:
                
Finance lease obligations
     27,727       14,600  
 
                
 
     27,727       14,600  
 
                

11

 

CARDS INC. LIMITED
Notes forming part of the financial statements for the year ended 31st July 2005.
The bank loans are secured on the company’s assets by way of a debenture dated 24th February 1999.
The company has annual commitments under non-cancellable operating leases which expire as follows:
                                 
    2005   2004
    Land and           Land and    
    buildings   other   buildings   other
    £   £   £   £
Operating leases which expire
                                
Within one year
     —       —       56,100       —  
In the 2nd to 5th year inclusive
     —       7,544       13,800       7,016  
Over 5 years
     249,170       —       122,090       —  
 
                                
 
     249,170       7,544       191,990       7,016  
 
                                
                 
    2005   2004
    £   £
11 PROVISION for LIABILITIES — deferred taxation
                
At beginning of the year
     3,217       2,605  
Charge for year in the profit and loss account
     (3,217 )     612  
 
                
 
                
At end of year
     —       3,217  
 
                
 
                
The amounts provided are as follows:
                
Accelerated capital allowances
     —       3,217  
 
                
 
                
12. CALLED-UP SHARE CAPITAL
                
Authorised:
                
100,000 Ordinary shares of £1 each
     100,000       100,000  
 
                
 
                
Allotted, called-up and fully paid:
                
100,000 Ordinary shares of £1 each
     100,000       100,000  
 
                

12

 

CARDS INC. LIMITED
Notes forming part of the financial statements for the year ended 31st July 2005.
                 
    2005   2004
    £   £
13. PROFIT AND LOSS ACCOUNT
                
Balance as at 1st August 2004
     1,356,557       1,068,358  
Retained (loss)/profit for the year
     (461,091 )     388,197  
less: increase in issued share capital
     —       (99,998 )
 
                
 
                
Balance as at 31st July 2005
     895,466       1,356,557  
 
                
14. RECONCILIATION of MOVEMENT in SHAREHOLDER’S FUNDS
                 
    2005   2004
    £   £
At 1st August 2004
     1,456,557       1,068,360  
(Loss)/ Profit for the financial year
     (461,091 )     388,197  
 
                
 
                
At 31st July 2005
     995,466       1,456,557  
 
                
Shareholder’s Funds: Equity
     995,466       1,456,557  
 
                
 
                
15. GROSS CASH FLOWS
                
 
                
Returns on investments and servicing of finance
                
Interest receivable
     19,844       11,435  
Interest payable
     (115,985 )     (23,529 )
Interest element of finance lease rentals
     (4,450 )     (2,405 )
 
                
 
     (100,591 )     (14,499 )
 
                
 
                
Capital expenditure
                
Payments to acquire tangible fixed assets
     (161,006 )     (114,000 )
Receipts from sales of tangible fixed assets
     17,626       5,600  
 
                
 
     (143,380 )     (108,400 )
 
                

13

 

CARDS INC. LIMITED
Notes forming part of the financial statements for the year ended 31st July 2005.
                 
    2005   2004
    £   £
Financing
                
Loan (repayments)
     785,000       (219,987 )
Capital element of finance lease payments
     11,004       (8,558 )
 
                
 
     796,004       (228,545 )
 
                
16. ANALYSIS of CHANGES in NET DEBT
                         
    At 1/8/04   Cash flows   At 31/7/2005
    £   £   £
Cash at bank
     1,718,047       (178,980 )     1,539,067  
Overdrafts
     (2,319,582 )     (646,393 )     (2,965,975 )
 
                        
 
             (825,373 )        
 
                        
Debt due within 1 year
     —       (785,000 )     (785,000 )
 
                        
Hire Purchase
     (21,900 )     (11,004 )     (32,904 )
 
                        
 
             (796,004 )        
 
                        
 
                        
 
                        
Total
     (623,435 )     (1,621,377 )     (2,244,812 )
 
                        
Cash at bank relates to monies at the company’s bankers on current account and any interest bearing accounts held on short term notice.
17. DIRECTOR
Staff costs include the following emoluments in respect of a director:
                 
    2005   2004
    £   £
Emoluments
     144,000       245,000  
 
                
18. EMPLOYEES
Number of employees:
The average monthly number of employees (including the director) during the period was:
                 
    2005   2004
    no.   no.
Administration
     24       17  
Warehouse
     4       5  
Sales
     7       9  
 
                
 
     35       31  
 
                

14

 

CARDS INC. LIMITED
Notes forming part of the financial statements for the year ended 31st July 2005.
                 
Employment costs:   £   £
Wages and salaries
     994,442       969,759  
Social security costs
     147,203       77,294  
 
                
 
     1,141,645       1,047,053  
 
                
19. CONTROLLING PARTY
Darren Epstein, the company’s director, controls the company as a result of controlling directly 92% ( 2004 — 100% ) of the issued Ordinary share capital. Mr. Epstein has lent money to the company on an interest free basis. The amount outstanding on this loan at 31st July 2005 was £405,810 (2004 — £237,659.)
20. RELATED PARTY TRANSACTIONS
During the year the company purchased, on normal commercial terms, goods to the value of £164,821 from Strictly Ink Limited, a company in which Darren Epstein is a director and materially interested as a shareholder. The company sold goods to this firm amounting to £983. The net balance due to Strictly Ink Limited at the end of the year was £14,662 (2004-£10,445)
Darren Epstein has given a personal guarantee up to £150,000 to the company’s bankers to secure any borrowings by the company.
21. In the year ended 31st July 2005 bank charges have been included in ‘Administration expenses’. This is a departure from previous accounts which included the expense in ‘Interest payable and similar charges’. As a result of this change in accounting practice certain comparative figures have been restated.

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