-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OzdtcznlvAzbdW77MFi+zPiAzaaBuErAN76q9Jl1PldtbgywxjbuASEoASfmbMbF Lz4HZFSeQRFbHyfGLpmqcg== 0000899243-96-001576.txt : 19961213 0000899243-96-001576.hdr.sgml : 19961213 ACCESSION NUMBER: 0000899243-96-001576 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960927 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961212 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ERC INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000775477 STANDARD INDUSTRIAL CLASSIFICATION: OIL & GAS FILED MACHINERY & EQUIPMENT [3533] IRS NUMBER: 760382879 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-14439 FILM NUMBER: 96679928 BUSINESS ADDRESS: STREET 1: 2906 HOLMES RD CITY: HOUSTON STATE: TX ZIP: 77051 BUSINESS PHONE: 7137339301 MAIL ADDRESS: STREET 2: 2906 HOLMES RD CITY: HOUSTON STATE: TX ZIP: 77051 FORMER COMPANY: FORMER CONFORMED NAME: ERC CORP /DE/ DATE OF NAME CHANGE: 19851103 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 27, 1996 ERC Industries, Inc. -------------------- (Exact name of registrant as specified in its charter) Delaware -------- (State or other jurisdiction of incorporation) 0-14439 76-0382879 ------- ---------- (Commission File Number) (IRS Employer Identification No.) 15835 Park Ten Place, Suite 115, Houston, Texas 77084 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (713) 398-8901 ---------------- Not Applicable -------------- (Former name or former address, if changed since last report) ITEM 7. Financial Statements and Exhibits. ---------------------------------- a. Financial Statements of Businesses Acquired: *Financial Statements of Seaboard Lloyd Limited for the financial years ended March 31, 1996 and March 25, 1995, respectively Directors' Report Statement of directors' responsibilities Auditors' Report Profit and loss account Balance sheet Notes b. *Pro Forma Financial Information: Introduction Pro Forma Consolidated Statement of Income for the Year Ended December 31, 1995 Notes to Pro Forma Consolidated Statements of Income for the Year ended December 31, 1995 Pro Forma Consolidated Statement of Income for the Nine Months ended September 30, 1996 Notes to the Pro Forma Consolidated Statements of income for the Nine Months ended September 30, 1996 c. Exhibits: **10.1 Purchase Agreement - ------------ * Filed herewith. ** Previously filed. Registered Number 106505 Seaboard Lloyd Limited Directors' Report and Financial Statements 31 March 1996 SEABOARD LLOYD LIMITED - -------------------------------------------------------------------------------- DIRECTORS' REPORT AND FINANCIAL STATEMENTS CONTENTS PAGE Directors' report 2 Statement of directors' responsibilities 5 Auditors' report 6 Profit and loss account 7 Balance sheet 8 Notes 9 SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- DIRECTORS' REPORT The Directors present their annual report and audited financial statements for the financial year ended 31st March 1996. The Company's holding company, VSEL Limited was acquired by The General Electric Company, p.l.c. on 30th June 1995 and was re-registered as a Private Limited Company on 2nd January 1996. With effect from 30th June 1995 the Company's ultimate holding company was The General Electric Company, p.l.c. PRINCIPAL ACTIVITIES The principal activities of the Company are the design, manufacture, sale and service of wellhead control equipment and subsea products to the oil and gas industry. BUSINESS REVIEW The company has continued to experience difficult trading conditions which have placed pressure on margins and resulted in a reduction in turnover in the year. PROPOSED DIVIDEND AND TRANSFER TO RESERVES The loss after taxation for the year ended 31st March 1996 amounted to (pound) 525,875 (1995: (pound) 126,592). The Directors do not recommend the payment of a dividend. (1995: (pound) NIL). DIRECTORS AND DIRECTORS' INTERESTS The Directors who served during the year were as follows: CN Davies (resigned 2 December 1995) R.D. Holden N MacDonald R Ruesse C Hart S McCulloch KAW Taggart SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- DIRECTORS' REPORT (continued) DIRECTORS AND DIRECTORS' INTERESTS (continued) According to the Register kept by the Company in accordance with Section 325 of the Companies Act 1985, the interests of those persons who were directors at the end of the year in the shares of the Company, its ultimate holding company or its subsidiaries were as follows: The General Electric Company, plc. - ---------------------------------- Options over ordinary shares of 5p each: - ---------------------------------------- The GEC Employee 1992 Savings-Related Share Option Scheme - --------------------------------------------------------- 1 April 1995 Options Options 31 March 1996 granted during exercised the year during the year R. Ruesse - 6,872 - 6,872 The options were granted during the year at a subscription price of 251p per share. The options are normally exercisable within six months of 1st April 2001. The interests of CN Davies and RD Holden are disclosed in the Directors' Report of VSEL Limited. PAYMENT OF CREDITORS The Companies Act 1985 (Miscellaneous Accounting Amendments) Regulations 1996 requires the Company to make a statement of its policy on the payment of creditors. The Company seeks the best possible terms from suppliers appropriate to its business and in placing orders, gives consideration to quality, delivery, price and the terms of payment which will be agreed with suppliers when the details of the transaction are settled. The Company will continue to honour its contractual and other legal obligations and to pay creditors on the dates agreed in contracts and purchase orders. SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- AUDITORS During the year, the Company's auditors, KPMG, resigned and Coopers & Lybrand were appointed in their place. In accordance with Section 384 of the Companies Act 1985, a resolution for the appointment of Coopers & Lybrand as auditors of the Company is to be proposed at the forthcoming Annual General Meeting. By order of the Board, KAW Taggart 2 Old Quarry Road Company Secretary Westfield Industrial Park Cumbernauld Date: 12 July 1996 SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- STATEMENT OF DIRECTORS RESPONSIBILITIES Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the profit or loss for that year. In preparing those financial statements, the Directors are required to (a) select suitable accounting policies and then apply them consistently, (b) make judgements and estimates that are reasonable and prudent, (c) state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements, and (d) prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. SEABOARD LLOYD LIMITED - -------------------------------------------------------------------------------- REPORT OF THE AUDITORS TO THE MEMBERS OF SEABOARD LLOYD LIMITED. We have audited the financial statements on pages 7 to 22. Respective responsibilities of directors and auditors As described above the Company's Directors are responsible for the preparation of financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you. Basis of opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the Company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view of the state of the Company's affairs as at 31 March 1996 and of its loss for the year then ended and have been properly prepared in accordance with the Companies Act 1985. Coopers & Lybrand Chartered Accountants Glasgow Registered Auditors Date: 4 September 1996 SEABOARD LLOYD LIMITED - -------------------------------------------------------------------------------- PROFIT AND LOSS ACCOUNT for the year ended 31 March 1996
Note 1996 1995 (pound) (pound) TURNOVER 3 4,523,092 5,956,490 Cost of Sales (3,723,801) (4,797,614) ---------- ---------- GROSS PROFIT 799,291 1,158,876 Other operating expenses (net) 4 (1,244,844) (1,463,015) ---------- ---------- OPERATING LOSS (445,553) (304,139) Interest payable and similar charges 8 (65,077) (170,554) Interest receivable 100 - ---------- ---------- LOST ON ORDINARY ACTIVITIES BEFORE TAXATION 5 (510,530) (474,693) Tax on loss on ordinary activities 9 (15,345) 348,101 ---------- ---------- LOST FOR THE FINANCIAL PERIOD (525,875) (126,592) ========== ==========
A statement of movements on reserves is given in note 23. There were no recognised gains or losses in either year other than the retained loss for the financial year. SEABOARD LLOYD LIMITED - --------------------------------------------------------------------------------
BALANCE SHEET at 31 March 1996 1996 1995 Note (pound) (pound) (pound) (pound) FIXED ASSETS Intangible assets 10 238,329 284,110 Tangible assets 11 1,490,166 1,689,548 Investments 12 47,107 47,107 CURRENT ASSETS Stocks 13 894,794 1,101,117 Debtors: amounts falling due within 14 1,946,140 1,515,308 one year Cash at bank and in hand 1,969 640 --------- --------- 2,842,903 2,617,065 Creditors: amounts falling 15 (2,277,981) (1,768,023) due within one year --------- --------- NET CURRENT ASSETS 564,922 849,042 --------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 2,340,524 2,869,807 CREDITORS: amounts falling 16 due after more than one year (56,811) (73,219) DEFERRED INCOME 17 - - PROVISION FOR LIABILITIES AND CHARGES 18 (42,000) (29,000) --------- --------- NET ASSETS 2,241,713 (2,767,588) ========= ========= CAPITAL AND RESERVES Called up share capital 20 2,810,000 2,810,000 Share premium account 21 84,050 84,050 Profit and loss account 22 (652,337) (126,462) --------- --------- EQUITY SHAREHOLDERS' 23 2,241,713 2,767,588 FUNDS ========= =========
These financial statements were approved by the Board of Directors on 12 July 1996 and were signed on its behalf by: /s/ N MacDonald - --------------------------------- N MacDonald Chairman SEABOARD LLOYD LIMITED - -------------------------------------------------------------------------------- NOTES (forming part of the financial statements) 1. ACCOUNTING DATE The Company made up its financial statements for the financial year ended 31 March 1996 (1995: for the 52 week financial year ended 25 March 1995). 2. ACCOUNTING POLICIES The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company's financial statements. Basis of preparation The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting rules. The Accounting Standards Board has issued Financial Reporting Standard ('FRS') 1, which requires companies to prepare a cash flow statement. However, companies which are wholly owned subsidiary undertakings of a European Community parent are granted exemption by FRS 1 from the requirement to prepare a cash flow statement, provided that certain conditions are met. Seaboard Lloyd Limited is such a subsidiary undertaking and, accordingly, a cash flow statement has not been prepared. Consolidated accounts As the Company is a wholly owned subsidiary undertaking of The General Electric Company, p.l.c., it is exempt from preparing consolidated accounts. Fixed assets and depreciation Tangible assets are stated at cost less depreciation. The annual depreciation charge is calculated on a straight line basis on cost and is designed to write-off the relevant assets over the following estimated working lives: Buildings - 50 years Plant and machinery - 3-10 years Land is not depreciated. Intangible fixed assets and amortisation Patents, licences, trade marks and similar rights and assets are amortised by the straight line method over a period of ten years. Goodwill The business and assets of Sealand Industries Limited (formerly Seaboard Lloyd Limited) were transferred to the company on 27 March 1994 for their book value which was less than their fair value. The cost of the Company's investments in the subsidiary undertaking selected the underlying fair value of their net assets and goodwill at the time of acquisition. SEABOARD LLOYD LIMITED - ---------------------------------------------------------------------------- NOTES (continued) ACCOUNTING POLICIES (continued) As a result of the transfer, the value of the Company's investments in the subsidiary undertakings fell below the amount at which they were stated in the Company's accounting records. Schedule 4 to the Companies Act 1985 requires that the investments be written down accordingly and that the amount be charged as a loss in the Company's profit and loss account. However, the Directors consider that, as there has been no overall loss to the Company, it would fail to give a true and fair view to charge that diminution to the Company's profit and loss account and it should instead be re-allocated to goodwill and the identifiable net assets transferred, so as to recognise in the company's balance sheet the effective cost of these net assets and goodwill. The goodwill is shown as an intangible asset and amortised over its expected useful economic life. Goodwill is written off over a period of ten years from the date of the Company's investment in subsidiary undertakings. Stocks Stocks are valued at cost or, if less, at estimated net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of the overheads incurred in bringing the stock to its present location and condition. Foreign currencies Transactions denominated in foreign currencies are translated into sterling and recorded at the rate of exchange ruling at the date of the transaction. Balances denominated in foreign currencies are translated into sterling at the exchange rates ruling at the balance sheet date and differences on exchange included in the profit and loss account. Deferred taxation Provision is made for taxation on timing differences between profits computed for taxation purposes and those disclosed in the financial statements only if there is a reasonable probability that such taxation will become payable in the foreseeable future. Leased assets Assets acquired under finance leases are capitalised at their fair value at the date of inception of the agreement. The capital element repayable within one year is included within creditors due within one year. The total finance charges are allocated over the period of the agreement in accordance with the terms of the lease. The cost of operating leases is charged to income in the year of expenditure. SEABOARD LLOYD LIMITED - -------------------------------------------------------------------------------- ACCOUNTING POLICIES (continued) Government grants Regional Selective Assistance Grants received are credited to the profit and loss account over a period of three years. Other grants are credited to the profit and loss account on a basis which matches the grants with the costs to which they relate. Pension costs The Company provides for certain pension benefits by payments to defined contribution insured funds independent from the finances of the Company and contributions are charged against profits. Research & Development Expenditure incurred in the year is charged to the profit and loss account in full. 3. ANALYSIS OF TURNOVER The turnover stated is the amount receivable (excluding VAT) in respect of goods and services supplied during the financial year. The analysis of turnover by geographical market is: 1996 1995 (pound) (pound) United Kingdom 3,531,266 3,108,926 Rest of EC 83,125 390,306 Rest of Europe 430,056 550,785 Africa - 180,956 Asia 275,997 637,626 Australasia 201,094 1,080,245 USA 1,554 7,646 --------- --------- 4,523,092 5,956,490 ========= ========= SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- NOTES (continued) 4. OTHER OPERATING EXPENSES (NET)
1996 1995 (pound) (pound) Distribution Costs 360,790 408,490 Administrative expenses 1,065,561 1,148,962 Amortisation of goodwill (note 10) 24,781 24,781 --------- --------- 1,451,132 1,582,233 Other operating income Government grants: Regional Selective Assistance (note 17) (175,000) (58,333) Other income (31,288) (60,885) --------- --------- 1,244,844 1,463,015 ========= ========= 5. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 1996 1995 (pound) (pound) Loss on ordinary activities before taxation is stated after charging Auditors' remuneration: Audit 14,500 15,000 Other Services 4,570 6,446 Depreciation and other amounts written off tangible and intangible fixed assets: Owned assets 307,046 341,811 Leased assets 41,740 43,296 Other operating leases: Property leases 37,000 36,200 Others 39,800 53,108 Re-organisation costs 114,976 204,152
The total amount charged to revenue for the hire of plant and machinery amounted to (pound) 155,742 (1995: (pound) 193,312). This comprises rentals payable under operating leases as well as depreciation on plant and machinery held under finance leases together with the related finance charges. SEABOARD LLOYD LIMITED - -------------------------------------------------------------------------------- NOTES (continued) 6. REMUNERATION OF DIRECTORS 1996 1995 (pound) (pound) Directors' emoluments: Fees as Directors 66,320 - Other emoluments, including pension contributions and taxable benefits 209,190 191,158 Compensation for loss of office paid by the Company - 161,158 ------- ------- 275,510 352,316 ======= ======= The emoluments, excluding pension contributions, of the Chairman were (pound) 66,320 (1995: (pound) 69,328) and those of the highest paid Director were (pound) 61,897 ((pound) 1995: (pound) 69,328) Details of Directors' share options are given in the Directors' Report on page 2. The emoluments, excluding pension contributions, of the Directors (including the Chairman and highest paid Director) were within the following ranges: NUMBER OF DIRECTORS 1996 1995 (Pound) 0 - (Pound) 5,000 2 6 (Pound) 35,001 - (Pound) 40,000 1 - (Pound) 40,001 - (Pound) 45,000 1 1 (Pound) 50,001 - (Pound) 55,000 1 1 (Pound) 65,001 - (Pound) 70,000 2 1 SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- NOTES (continued) 7. STAFF NUMBERS AND COSTS The average number of persons employed by the Company (including executive Directors) during the year, analysed by category, was as follows: NUMBER OF EMPLOYEES 1996 1995 Staff 41 47 Works 26 23 -- -- 67 70 == == The aggregate payroll costs of these persons were as follows: 1996 1995 (pound) (pound) Wages and salaries 1,336,970 1,447,898 Social security costs 129,270 145,649 Other pension costs 14,584 19,405 --------- --------- 1,480,824 1,642,952 ========= ========= 8. INTEREST PAYABLE AND SIMILAR CHARGES 1996 1995 (pound) (pound) Finance charges payable in respect of finance leases and hire purchase contracts 14,986 20,222 Other interest 180 2,948 Interest payable to group undertakings 49,911 147,384 --------- --------- 65,077 170,554 ========= ========= SEABOARD LLOYD LIMITED - -------------------------------------------------------------------------------- NOTES (continued) 9. TAXATION 1996 1995 (pound) (pound) Group relief receivable - (393,743) Adjustment relating to an earlier year (3,300) 718 Overseas taxation unrelieved 5,645 15,924 Deferred taxation 13,000 29,000 ------- ------- 15,345 (348,101) ======= ======= The taxation credit in 1995 reflects (pound) 393,743 for group relief surrendered to the Company's then ultimate parent undertaking at 100% of the value of tax losses for the year. 10. INTANGIBLE FIXED ASSETS GOODWILL PATENTS TOTAL LICENCES, TRADE MARKS & SIMILAR RIGHTS AND ASSETS (pound) (pound) (pound) Cost At beginning and end of period 125,245 209,896 335,141 ======= ======= ======= Accumulated depreciation At beginning of period 24,781 26,250 51,031 Amortised in the period 24,781 21,000 45,781 ------- ------- ------- At end of period 49,562 47,250 96,812 ======= ======= ======= Net book value At 31 March 1996 75,683 162,646 238,329 ======= ======= ======= At 25 March 1995 100,464 183,646 284,110 ======= ======= ======= The goodwill of (pound) 75,683 represents the excess of the cost of investments in subsidiary undertakings over the net assets of these subsidiary undertakings transferred to the Company on 27 March 1994. This amount is being amortised over its expected useful economic life (note 2). SEABOARD LLOYD LIMITED - -------------------------------------------------------------------------------- NOTES (continued) 11. TANGIBLE FIXED ASSETS LAND AND PLANT AND TOTAL BUILDINGS MACHINERY (pound) (pound) (pound) Cost 1,062,949 2,322,103 3,385,052 At beginning of period Additions - 114,140 114,140 Disposals (4,800) (50,861) (55,661) --------- --------- --------- At end of period 1,058,149 2,385,382 3,443,531 --------- --------- --------- Depreciation and diminution in value At beginning of period 120,497 1,575,007 1,695,504 Charge for period 26,728 276,277 303,005 On disposals (4,319) (40,825) (45,144) --------- --------- --------- At end of period 142,906 1,810,459 1,953,365 --------- --------- --------- Net book value At 31 March 1996 915,243 574,923 1,490,166 ========= ========= ========= At 25 March 1995 942,452 747,096 1,689,548 ========= ========= ========= The net book value of land and building comprised: 1996 1995 (pound) (pound) Freehold 910,529 934,032 Short leasehold 4,713 8,420 --------- --------- 915,242 942,452 --------- --------- SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- NOTES (continued) 11. TANGIBLE FIXED ASSETS (continued) Tangible fixed assets include the following assets held under finance leases (including similar hire purchase contracts): 1996 1995 (pound) (pound) Plant and machinery 87,569 150,292 Accumulated depreciation (64,033) (88,834) ------ ------- 23,536 61,458 ====== ======= 12. INVESTMENTS 1996 1995 (pound) (pound) Shares in group undertakings at cost: At beginning of period 47,107 172,352 Transferred to goodwill (note 10) - (125,245) ------ ------- At end of period 47,107 47,107 ====== ======= Sealand Industries Limited (formerly Seaboard Lloyd Limited) is a wholly owned subsidiary undertaking and is registered in England and Wales. Sealand Industries Limited is dormant within the meaning of Section 250 of the Companies Act 1985. Forsac Limited is a wholly owned subsidiary undertaking and is registered in Scotland. Forsac Limited is dormant within the meaning of Section 250 of the Companies Act 1985. In both cases, the shares held are ordinary shares. SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- NOTES (continued) 13. STOCKS 1996 1995 (pound) (pound) Raw materials 108,831 198,124 Work in progress 201,938 181,878 Finished goods 584,025 721,115 --------- --------- 894,794 1,101,117 ========= ========= 14. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 1996 1995 (pound) (pound) Trade debtors 1,609,473 955,101 Prepayments & accrued income 34,645 107,101 Amounts owed by group undertakings: Parent undertakings 302,022 453,106 --------- --------- 1,946,140 1,515,308 ========= ========= 15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 1996 1995 (pound) (pound) Bank overdraft 1,092,356 999,974 Finance lease commitments (note 24) 13,740 30,144 Trade creditors 781,514 523,978 Other taxes and social security 184,290 43,561 Other creditors 2,109 73,664 Accruals and deferred income 203,972 96,702 --------- --------- 2,277,981 1,768,023 ========= ========= SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- NOTES (continued) 16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 1996 1995 (pound) (pound) Amounts owed to group undertakings: Subsidiary undertakings 47,107 47,107 Finance lease commitments (note 24) 9,704 26,112 ------- ------- 56,811 73,219 ======= ======= There were no fixed repayment terms for the amounts owed to group undertakings. These amounts were interest free. 17. DEFERRED INCOME 1996 (pound) Government grants: At beginning of period - Grants received during the period 175,000 Credited to the profit and loss account (175,000) during the period ------- At end of period - ======= The grant received during the year represents the final instalment under a project qualifying for Regional Selective Assistance. In these circumstances, the Directors consider that it is appropriate to credit the grant received to the profit and loss account in full. SEABOARD LLOYD LIMITED - -------------------------------------------------------------------------------- NOTES (continued) 18. PROVISIONS FOR LIABILITIES AND CHARGES TAXATION INCLUDING DEFERRED TAXATION (pound) At beginning of period 29,000 Charge for the year in the profit and loss account 13,000 ------- At end of period 42,000 ======= The amounts provided for deferred taxation and the amounts not provided are set out below: 1996 1995 Provided Unprovided Provided Unprovided (pound) (pound) (pound) (pound) Difference between accumulated depreciation and amortisation and capital allowances 122,000 - 38,000 118,000 Other timing differences (80,000) (79,000) (9,000) (80,000) ------- ------ ------ ------- 42,000 (79,000) 29,000 38,000 ======= ====== ====== ======= 19. CONTINGENT LIABILITIES The Company has issued bank guarantees to certain customers in the normal course of business. The total amount outstanding at 31 March 1996 was (pound) 324,212. (1995: (pound) 414,046). 20. CALLED UP SHARE CAPITAL 1996 1995 (pound) (pound) Authorised Ordinary shares of (pound) 1 each 2,810,000 2,810,000 ========= ========= Allotted, called up and fully paid Ordinary shares of (pound) 1 each 2,810,000 2,810,000 ========= ========= SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- NOTES (continued) 21. SHARE PREMIUM ACCOUNT 1996 1995 (pound) (pound) Balance at beginning and end of the period 84,050 84,050 ========= ========= 22. PROFIT AND LOSS ACCOUNT (pound) Balance at beginning of period (126,462) Loss for the financial period (525,875) --------- Balance at end of period (652,337) ========= 23. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS 1996 1995 (pound) (pound) Loss for the financial period (525,875) (126,592) Shares issued during period - 1,794,000 --------- --------- Net addition to shareholders' funds (525,875) 1,667,408 Opening shareholders' funds 2,767,588 1,100,180 --------- --------- Closing shareholders' funds 2,241,713 2,767,588 ========= ========= SEABOARD LLOYD LIMITED - ------------------------------------------------------------------------------- NOTES (continued) 24. COMMITMENTS (l) There were no capital commitments at the end of the financial year for which no provision has been made. (ii) Finance leases The Company's total capital repayment obligations under finance leases at 31 March 1996 were as follows: 1996 1995 (pound) (pound) Due within on year (note 15) 13,740 30,144 Due between two and five years (note 16) 9,704 26,112 ------ ------ 23,444 56,256 ====== ====== (iii) Operating leases At the end of the financial year the Company had annual commitments under non-cancellable operating leases as follows: 1996 1995 LAND & OTHER Land & Other BUILDINGS building (pound) (pound) (pound) (pound) Operating leases which expire: Within one year - 24,504 - 13,032 In the second to fifth years inclusive 13,500 21,308 13,500 38,776 Over five years 23,500 - 23,500 - ------ ------ ------ ------ 37,000 45,812 37,000 51,808 ====== ====== ====== ====== 25. ULTIMATE PARENT UNDERTAKING The Company's ultimate holding company is The General Electric Company, p.l.c., a company registered in England and Wales which is the largest group in which the results of the Company are consolidated. The consolidated accounts of The General Electric Company, p.l.c. are available to the public and may be obtained from its Registered Office at 1 Stanhope Gate, London, W1A 1EH SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) Directors' report and financial statements 25 March 1995 Registered number 106505 SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) Directors' report and financial statements Contents Page Directors' report 1-3 Statement of directors' responsibilities 4 Auditors' report 4 Profit and loss account 5 Balance sheet 6 Notes 7-21 SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) Directors' report The directors present their annual report and audited financial statements for the 52 week period ended March 1995. CHANGE OF NAME On 22 February 1995 the company changed its name to Seaboard Lloyd Limited. PRINCIPAL ACTIVITIES The principal activity of the company was to act as an investment holding company. On 27 March 1994, the company entered into an agreement whereby the business and assets of its subsidiary undertaking, Seaboard Lloyd Limited, were transferred to it. On 22 February 1995 Seaboard Lloyd Limited changed its name to Sealand Industries Limited. Since 27 March 1994 the principal activities of the company have been the design, manufacture, sale and service of wellhead control equipment and subsea products to the oil and gas industry. BUSINESS REVIEW In recognition of difficult trading conditions in the North Sea market, reorganisation programmes were undertaken during 1994 and 1995 to create an operating structure appropriate to the level of business. Critical reviews of processes have been successful in achieving a significant improvement in gross margin. Product development is receiving considerable attention and a number of focussed programmes are in progress within our engineering group. PROPOSED DIVIDEND AND TRANSFER TO RESERVES The loss for the financial year amounted to (pound) 126,592 (1994: (pound) Nil) and this has been applied against reserves. The directors do not recommend the payment of a dividend. DIRECTORS AND DIRECTORS' INTERESTS The directors who held office during the year were as follows: CN Davies NN Broadhurst (resigned 30 June 1994) RD Holden (appointed 30 June 1994) N MacDonald AA MacDonald (resigned 30 November 1994) R Ruesse (appointed 20 February 1995) C Hart S McCulloch (appointed 20 February 1995) KAW Taggart (appointed 20 February 1995) SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) Directors' report (continued) DIRECTORS AND DIRECTORS' INTERESTS (continued) The directors who held office at the end of the financial year had no interests in the ordinary shares of the company. Their interests in the ordinary shares of VSEL plc, the company's ultimate parent undertaking, were as follows: BENEFICIAL OPTION INTEREST INTEREST AT INTEREST INTEREST AT AT END OF BEGINNING OF AT END OF BEGINNING OF YEAR YEAR (OR DATE OF YEAR YEAR (OR DATE OF APPOINTMENT APPOINTMENT IF LATER) IF LATER) N MacDonald 21,664 21,664 - - C Hart 4,489 5,289 676 676 R Ruesse - - - - S McCulloch - - - - KAW Taggart - - 178 178 The interests of CN Davies and RD Holden are disclosed in the directors' report of VSEL plc. SIGNIFICANT CHANGES IN FIXED ASSETS Movements in tangible fixed assets are set out in note 11 to the financial statements. SHARE CAPITAL As part of the reorganisation of the Seaboard Lloyd Limited group, the authorised and issued share capital of the company was increased by (pound) 1,794,000 on 20 February 1995. Movements in the authorised and issued share capital during the year are detailed in note 20 to the financial statements. LIABILITY INSURANCE VSEL plc has maintained during the year insurance of the kind referred to in Section 310(3)(a) of the Companies Act 1985 (as amended) covering officers against certain liabilities in relation to the company. SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) Directors' report (continued) AUDITORS On 6 February 1995 our auditors change the name under which they practise to KPMG and, accordingly, have signed their report in their new name. In accordance with Section 384 of the Companies Act 1985, a resolution for the re-appointment of KPMG as auditors of the company is to be proposed at the forthcoming Annual General Meeting. By order of the board /s/ H Lavitt - -------------------------------- 2 Old Quarry Road H LAVITT Westfield Industrial Park Secretary Cumbernauld 23 May 1995 SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) Statement of directors' responsibilities Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the profit or loss for that period. In preparing those financial statements, the directors are required to (a) select suitable accounting policies and then apply them consistently, (b) make judgements and estimates that are reasonable and prudent, (c) state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements, and (d) prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities. KPMG Report of the auditors to the members of Seaboard Lloyd Limited (formerly Sealand Industries plc) We have audited the financial statements on pages 5 to 21. Respective responsibilities of directors and auditors As described above the company's directors are responsible for the preparation of financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you. Basis of opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view of the state of the company's affairs as at 25 March 1995 and of its loss for the year then ended and have been properly prepared in accordance with the Companies Act 1985. KPMG 24 Blythswood Square Chartered Accountants Glasgow Registered Auditors G2 4QS 1 June 1995 SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) PROFIT AND LOSS ACCOUNT for the year ended 25 March 1995
Note 1995 1994 (pound) (pound) TURNOVER 3 5,956,490 415,195 Cost of Sales (4,797,614) -- ---------- -------- GROSS PROFIT 1,158,876 415,195 Other operating expenses (net) 4 (1,463,015) (415,195) ---------- -------- OPERATING LOSS (304,139) -- Interest payable and similar charges 8 (170,554) -- ---------- -------- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 5 (474,693) -- Tax on loss on ordinary activities 9 348,101 -- ---------- -------- LOSS FOR THE FINANCIAL YEAR (126,592) -- ========== ========
A statement of movements on reserves is given in note 22. There were no recognised gains or losses in either year other than the retained loss for the financial year. SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) BALANCE SHEET at 25 March 1995
1995 1994 Note (pound) (pound) (pound) (pound) FIXED ASSETS Intangible assets 10 284,110 -- Tangible assets 11 1,689,548 -- Investments 12 47,107 172,352 CURRENT ASSETS Stocks 13 1,101,117 -- Debtors: amounts falling due within one year 14 1,515,308 349,034 amounts falling due after more than one year 14 -- 1,857,145 Cash at bank and in hand 640 -- --------- --------- 2,617,065 2,206,179 CREDITORS: amounts falling due within one year 15 (1,768,023) (525,999) --------- --------- NET CURRENT ASSETS 849,042 1,680,180 --------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 2,869,807 1,852,532 CREDITORS: amounts falling due after more than one year 16 (73,219) (752,352) PROVISION FOR LIABILITIES AND CHARGES 18 (29,000) -- --------- --------- NET ASSETS 2,767,588 1,100,180 ========= ========= CAPITAL AND RESERVES Called up share capital 20 2,810,000 1,016,000 Share premium account 21 84,050 84,050 Profit and loss account 22 (126,462) 130 --------- --------- SHAREHOLDERS' FUNDS 23 2,767,588 1,100,180 ========= =========
These financial statements were approved by the board of directors on 23 May 1995 and were signed on its behalf by: /s/ KAW TAGGART KAW Taggart Director SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (forming part of the financial statements) 1 ACCOUNTING DATE The company made up its financial statements for the 52 week period ended 25 March 1995 (1994: for the 52 week period ended 26 March 1994). 2 ACCOUNTING POLICIES The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the company's financial statements. Basis of preparation The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting rules. The Accounting Standards Board has issued Financial Reporting Standard ('FRS') 1, which requires companies to prepare a cash flow statement. However, companies which are wholly owned subsidiary undertakings of a European Community parent are granted exemption by FRS 1 from the requirement to prepare a cash flow statement, provided that certain conditions are met. Seaboard Lloyd Limited is such a subsidiary undertaking and, accordingly, a cash flow statement has not been prepared. Consolidated accounts As the company is a wholly owned subsidiary undertaking of VSEL plc it is exempt from preparing consolidated accounts. Fixed assets and depreciation Tangible assets are stated at cost less depreciation. The annual depreciation charge is calculated on a straight line basis on cost and is designed to write off the relevant assets over the following estimated working lives: Buildings - 50 years Plant and machinery - 3 - 10 years Land is not depreciated. Intangible fixed assets and amortisation Patents, licences, trade marks and similar rights and assets are amortised by the straight line method over a period of ten years. SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 2 ACCOUNTING POLICIES (continued) Goodwill The business and assets of Sealand Industries Limited (formerly Seaboard Lloyd Limited) were transferred to the company on 27 March 1994 for their book value which was less than their fair value. The cost of the company's investments in the subsidiary undertaking reflected the underlying fair value of their net assets and goodwill at the time of acquisition. As a result of the transfer, the value of the company's investments in the subsidiary undertakings fell below the amount at which they were stated in the company's accounting records. Schedule 4 to the Companies Act 1985 requires that the investments be written down accordingly and that the amount be charged as a loss in the company's profit and loss account. However, the directors consider that, as there has been no overall loss to the company, it would fail to give a true and fair view to charge that diminution to the company's profit and loss account and it should instead be re-allocated to goodwill and the identifiable net assets transferred, so as to recognise in the company's balance sheet the effective cost of these net assets and goodwill. The goodwill is shown as an intangible asset and amortised over its expected useful economic life. The effect of this departure from the Companies Act is to reduce the company's loss for the financial year by (pound)100,464 and to increase the value of the goodwill and profit and loss account in the company's balance sheet by (pound)100,464. Goodwill is written off over a period of ten years from the date of the company's investment in subsidiary undertakings. Stocks Stocks are valued at cost or, if less, at estimated realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of the overheads incurred in bringing the stock to its present location and condition. Foreign currencies Transactions denominated in foreign currencies are translated into sterling and recorded at the rate of exchange ruling at the date of the transaction. Balances denominated in foreign currencies are translated into sterling at the exchange rates ruling at the balance sheet date and differences on exchange included in the profit and loss account. Deferred taxation Provision is made for taxation on timing differences between profits computed for taxation purposes and those disclosed in the financial statements only if there is a reasonable probability that such taxation will become payable in the foreseeable future. Leased assets Assets acquired under finance leases are capitalised at their fair value at the date of inception of the agreement. The capital element repayable within one year is included within creditors due within one year. The total finance charges are allocated over the period of the agreement in accordance with the terms of the lease. The cost of operating leases is charged to income in the year of expenditure. SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) DIRECTOR' REPORT (continued) 2 ACCOUNTING POLICIES (continued) Government grants Regional Selective Assistance Grants received are credited to the profit and loss account over a period of three years. Other grants are credited to the profit and loss account on a basis which matches the grants with the costs to which they relate. Pension costs The company provides for certain pension benefits by payments to defined contribution insured funds independent from the finances of the company and contributions are charged against profits. 3 ANALYSIS OF TURNOVER The turnover stated is the amount receivable (excluding VAT) in respect of goods and services supplied during the financial year. The analysis of turnover by geographical market is: 1995 1994 (pound) (pound) United Kingdom 3,108,926 415,195 Rest of EC 390,306 -- Rest of Europe 550,785 -- Africa 180,956 -- Asia 637,626 -- Australasia 1,080,245 -- USA 7,646 -- --------- --------- 5,956,490 415,195 ========= ========= SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 4 OTHER OPERATING EXPENSES (NET) 1995 1994 (pound) (pound) Distribution costs 408,490 -- Administrative expenses 1,148,962 415,195 Amortisation of goodwill (note 10) 24,781 -- --------- --------- 1,582,233 415,195 Other operating income Government grants: Regional Selective Assistance (note 17) (58,333) -- Other income (60,885) -- --------- --------- 1,463,015 415,195 ========= ========= 5 LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 1995 1994 (pound) (pound) Loss on ordinary activities before taxation is stated after charging Auditors' remuneration: Audit 15,000 -- Other services 6,446 -- Depreciation and other amounts written off tangible and intangible fixed assets: Owned assets 341,811 -- Leased assets 43,296 -- Other operating leases: Property leases 36,200 -- Others 53,108 -- Re-organisation costs 204,152 -- The total amount charged to revenue for the hire of plant and machinery amounted to (pound)188,731 (1994:(pound)Nil). This comprises rentals payable under operating leases as well as depreciation on plant and machinery held under finance leases together with the related finance charges. SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 6 REMUNERATION OF DIRECTORS 1995 1994 (pound) (pound) Directors' emoluments: Fees as directors -- -- Other emoluments, including pension contributions and taxable benefits 191,158 -- --------- --------- 191,158 -- Compensation for loss of office paid by the company 161,158 -- --------- --------- 352,316 -- ========= ========= The emoluments, excluding pension contributions, of the chairman were (pound)69,328 (1994:(pound)Nil) and those of the highest paid director were (pound)69,328 (1994:(pound)Nil). Details of directors' share options are given in the directors' report on page 2. The emoluments, excluding pension contributions, of the directors (including the chairman and highest paid director) were within the following ranges: Number of directors 1995 1994 (pound)0 - (pound)5,000 6 8 (pound)40,0001 - (pound)45,000 1 -- (pound)50,0001 - (pound)55,000 1 -- (pound)65,0001 - (pound)70,000 1 -- ==== ==== SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 7 STAFF NUMBERS AND COSTS The average number of persons employed by the company (including executive directors) during the year, analysed by category, was as follows: Number of employees 1995 1994 Staff 47 8 Works 23 -- ---- ---- 70 8 ==== ==== The aggregate payroll costs of these persons were as follows: 1995 1994 (pound) (pound) Wages and salaries 1,477,898 -- Social security costs 145,649 -- Other pension costs 19,405 -- --------- --------- 1,642,952 -- ========= ========= 8 INTEREST PAYABLE AND SIMILAR CHARGES 1995 1994 (pound) (pound) Finance charges payable in respect of finance leases and hire purchase contracts 20,222 -- Other interest 2,948 -- Interest payable to group undertakings 147,384 -- --------- --------- 170,554 -- ========= ========= SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 9 TAXATION 1995 1994 (pound) (pound) Group relief receivable 393,743 -- Adjustment relating to an earlier year (718) -- Overseas taxation unrelieved (15,924) -- Deferred taxation (29,000) -- --------- --------- 348,101 -- ========= ========= The taxation credit reflects (pound)393,743 (1994:(pound)Nil) for group relief surrendered to the company's ultimate parent undertaking at 100% of the value of tax losses for the year. 10 INTANGIBLE FIXED ASSETS
GOODWILL PATENTS TOTAL LICENCES, TRADE MARKS AND SIMILAR RIGHTS AND ASSETS (pound) (pound) (pound) Cost At beginning of year -- -- -- Transferred from subsidiary undertaking -- 209,896 209,896 Transferred from investments (note 12) 125,245 -- 125,245 ------- ------- ------- At end of year 125,245 209,896 335,141 Accumulated depreciation At beginning of year -- -- -- Transferred from subsidiary undertaking -- 5,250 5,250 Amortised in the year 24,781 21,000 45,781 ------- ------- ------- At end of year 24,781 26,250 51,031 ------- ------- ------- Net book value AT 25 MARCH 1995 100,464 183,646 284,110 ======= ======= ======= At 26 March 1994 -- -- -- ======= ======= =======
The goodwill of (pound)125,245 represents the excess of the cost of investments in subsidiary undertakings over the net assets of these subsidiary undertakings transferred to the company on 27 March 1994. This amount is being amortised over its expected useful economic life (note 2). SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 11 TANGIBLE FIXED ASSETS
LAND AND PLANT AND TOTAL BUILDINGS MACHINERY (pound) (pound) (pound) Cost At beginning of year -- -- -- Transferred from subsidiary undertaking 1,056,244 2,243,110 3,299,354 Additions 6,705 81,093 87,798 Disposals -- (2,100) (2,100) --------- --------- --------- At end of year 1,062,949 2,322,103 3,385,052 --------- --------- --------- Depreciation and diminution in value At beginning of year -- -- -- Transferred from subsidiary undertaking 93,159 1,264,488 1,357,647 Charge for year 27,338 311,988 339,326 On disposals -- (1,469) (1,469) --------- --------- --------- At end of year 120,497 1,575,007 1,695,504 Net book value AT 25 MARCH 1995 942,452 747,096 1,689,548 ========= ========= ========= At 26 March 1994 -- -- -- ========= ========= ========= The net book value of land and buildings comprised: 1995 1994 (pound) (pound) Freehold 934,032 -- Short leasehold 8,420 -- --------- --------- 942,452 -- ========= =========
SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 11 TANGIBLE FIXED ASSETS (continued) Tangible fixed assets include the following assets held under finance leases (including similar hire purchase contracts):
1995 1994 (pound) (pound) Plant and machinery 150,292 -- Accumulated depreciation (88,834) -- --------- --------- 61,458 -- ========= ========= 12 INVESTMENTS 1995 1994 (pound) (pound) Shares in group undertakings at cost: At beginning of year 172,352 172,352 Transferred to goodwill (note 10) (125,245) -- --------- --------- 47,107 172,352 ========= =========
Sealand Industries Limited (formerly Seaboard Lloyd Limited) is a wholly owned subsidiary undertaking and is registered in England. Its principal activities, which were carried out in the United Kingdom, were the design, manufacture, sale and service of wellhead control equipment to the oil and gas industries. On 27 March 1994 the company entered into an agreement whereby its business and assets were transferred to Seaboard Lloyd Limited and it became dormant. Forsac Limited is a wholly owned subsidiary undertaking and is registered in Scotland. Forsac Limited is dormant. In both cases, the shares held are ordinary shares. SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 13 STOCKS
1995 1994 (pound) (pound) Raw materials 198,124 -- Transferred to goodwill (note 10) 181,878 -- Finished goods 721,115 -- --------- --------- 1,101,117 -- ========= =========
14 DEBTORS
1995 1994 DUE WITHIN DUE AFTER Due within Due after ONE YEAR ONE YEAR one year one year (pound) (pound) (pound) (pound) Trade debtors 955,101 -- -- -- Prepayments and accrued income 107,101 -- -- -- Amounts owned by group undertakings: Parent undertaking 453,106 -- -- -- Subsidiary undertakings -- -- 349,034 1,857,145 --------- --------- --------- --------- 1,515,308 -- 349,034 1,857,145 ========= ========= ========= =========
15 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1995 1994 (pound) (pound) Bank overdraft 999,974 -- Finance lease commitments (note 24) 30,144 -- Trade creditors 523,978 -- Amounts owed to parent and fellow subsidiary undertakings -- 525,999 Other taxes and social security 43,561 -- Other creditors 73,664 -- Accruals and deferred income 96,702 -- --------- --------- 1,768,023 525,999 ========= =========
SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued)
16 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 1995 1994 (pound) (pound) Amounts owed to group undertakings: Parent and fellow subsidiary undertakings -- 600,000 Subsidiary undertakings 47,107 152,352 Finance lease commitments (note 24) 26,112 -- --------- --------- 73,219 752,352 ========= =========
There were no fixed repayment terms for the amounts due to group undertakings. The amounts owed to parent and fellow subsidiary undertakings in 1994 represented loans which bore interest at 1% over the base rate of the National Westminster Bank plc. The interest was waived during the year ended 26 March 1994. All other amounts owed to group undertakings were interest free. 17 DEFERRED INCOME
1995 (pound) Government grants: At beginning of year -- Transferred from subsidiary undertaking 58,333 Credited to the profit and loss account during the year (note 4) (58,333) --------- At end of year -- =========
SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 18 PROVISIONS FOR LIABILITIES AND CHARGES
TAXATION INCLUDING DEFERRED TAXATION (pound) At beginnings of year -- Charge for the year in the profit and loss account 29,000 --------- At end of year 29,000 =========
The amounts provided for deferred taxation and the amounts not provided are set out below:
1995 1994 PROVIDED UNPROVIDED Provided Unprovided (pound) (pound) (pound) (pound) Difference between accumulated depreciation and amortisation and capital allowances 38,000 118,000 -- -- Other timing differences (9,000) (80,000) -- 8,800 --------- --------- --------- --------- 29,000 38,000 -- 8,800 ========= ========= ========= =========
19 CONTINGENT LIABILITIES The company has issued bank guarantees to certain customers in the normal course of business. The total amount outstanding at 25 March 1995 was (pound)414,046 (1994:(pound)Nil). The company has issued cross guarantees for other group undertakings under the group banking arrangements. The contingent liability as at 25 March 1995 in respect of these guarantees amounted to (pound)Nil (1994: (pound)26,769,000). SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 20 CALLED UP SHARE CAPITAL
1995 1994 (pound) (pound) Authorised Ordinary shares of (pound)1 each At beginning of year 1,016,000 1,016,000 Increase during the year 1,794,000 -- --------- --------- At end of year 2,810,000 1,016,000 ========= ========= Allotted, called up and fully paid Ordinary shares of (pound)1 each At beginning of year 1,016,000 1,016,000 Issued during year 1,794,000 -- --------- --------- At end of year 2,810,000 1,016,000 ========= ========= On 20 February 1995, the authorised share capital of the company was increased to (pound)2,810,000. On 20 February 1995, the issued share capital of the company was increased by 1,794,000 ordinary shares of (pound)1 each issued at par. The increase in the authorised and issued share capital was part of the reorganisation of the Seaboard Lloyd Limited group and involved the conversion of (pound)1,794,000 of loans received from the ultimate parent undertaking, VSEL plc, to ordinary share capital. 21 SHARE PREMIUM ACCOUNT 1995 1994 (pound) (pound) Balance at beginning and end of year 84,050 84,050 ========= =========
SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued)
22 PROFIT AND LOSS ACCOUNT (pound) Balance at beginning of year 130 Loss for the financial year (126,462) --------- Balance at end of year (126,462) ========= 23 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS 1995 1994 (pound) (pound) Loss for the financial year (126,592) -- Shares issued during year 1,794,000 -- --------- --------- Net addition to shareholders' funds 1,667,408 -- Opening shareholders' funds 1,100,180 1,100,180 ========= ========= Closing shareholders' funds 24 COMMITMENTS (i) There were no capital commitments at the end of the financial year for which no provision has been made. (ii) Finance leases The company's total capital repayment obligations under finance leases at 25 March 1995 were as follows: 1995 1994 (pound) (pound) Due within one year (note 15) 30,144 -- Due between two and five years (note 16) 26,112 -- --------- --------- 56,256 -- ========= =========
SEABOARD LLOYD LIMITED (formerly Sealand Industries plc) NOTES (continued) 24 COMMITMENTS (continued) (iii) Operating leases At the end of the financial year the company had annual commitments under non-cancellable operating leases as follows:
1995 1994 LAND AND OTHER Land and Other BUILDINGS buildings (pound) (pound) (pound) Operating leases which expire: within one year -- 13,032 -- -- In the second to fifth years inclusive 13,500 38,776 -- -- Over five years 23,500 -- -- -- -------- -------- -------- -------- 37,000 51,808 -- -- ======== ======== ======== ========
25 ULTIMATE PARENT UNDERTAKING The company's ultimate parent undertaking is VSEL plc, a company registered in England. The largest group in which the results of the company are consolidated is that headed by VSEL plc. The consolidated accounts of VSEL plc are available to the public and may be obtained from Barrow-in-Furness, Cumbria LA14 1AF. No other group accounts include the results of the company. Pro Forma Financial Information Introduction The Unaudited Pro Forma Condensed Consolidated Income Statements have been prepared in accordance with the requirements of Article 11 of Regulation S-X promulgated by the Securities and Exchange Commission ("SEC"). These statements are presented for informational purposes only and are not indicative of the results of future operations, nor the results of historical operations had the acquisition occurred as of the assumed dates. These statements have been prepared assuming that the acquisition of Seaboard Lloyd Limited had occurred at the beginning of the period presented. Pursuant to the SEC's regulations, permitted pro forma adjustments include only the effects of events directly attributable to a transaction that are factually supportable and are expected to have a continuing impact, and should be read in conjunction with the historical consolidated financial statements included in ERC's annual report on Form 10-K for the year ended December 31, 1995 and the Seaboard Lloyd Limited audited statement of income in item 7 (b) above. ERC INDUSTRIES, INC. PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL PRO FORMA ------------------------------------------ ----------------------------------- ERC SEABOARD FOR THE YEAR ENDED FOR THE YEAR ENDED DECEMBER 31, 1995 MARCH 31, 1996 CONSOLIDATED US$ US$ ADJUSTMENTS TOTAL ------------------ ------------------ ------------ ------------ Revenues $ 34,840 $ 7,146 $ 41,986 Cost of goods sold 27,399 5,884 $ (300) (a) 32,983 ------------------ ------------------ ------------ ------------ Gross profit 7,441 1,262 300 9,003 ------------------ ------------------ ------------ ------------ Selling, general and administrative expenses 8,116 1,967 (140)(c, d, e) 9,943 ------------------ ------------------ ------------ ------------ Operating (loss) income (675) (705) 440 (940) ------------------ ------------------ ------------ ------------ Other (income) expense: Interest expense 439 103 96 (b) 638 Other, net (66) 0 (66) ------------------ ------------------ ------------ ------------ (Loss) income before provision for income taxes (1,048) (808) 344 (1,512) (Benefit) provision for income taxes (273) (101) 0 (374) ------------------ ------------------ ------------ ------------ Net (loss) income $ (775) $ (707) $ 344 $ (1,138) ================== ================== ============ ============ Net (loss) per share $ (0.06) $ (0.08) ------------------ ------------ Weighted average shares outstanding 13,864 13,864 ================== ============
ERC INDUSTRIES, INC. NOTES TO THE PRO FORMA CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995 One UK pound sterling equivalent to $1.58, which represents the average exchange rate for the period. a) To record the estimated cost savings from the headcount reduction of 10 employees that was effected immediately upon the acquisition. b) To record interest cost for debt incurred by ERC Industries to finance the acquisition of Seaboard. c) To remove the historical goodwill amortization recorded by Seaboard during the year for $72,000. d) Amortization of goodwill recorded in the acquisition of Seaboard (10 year life, $32,000 per year). e) To subtract corporate charge by previous management group (General Electric) to Seaboard for certain management fees ($100,000). The following adjustments were made to the historical financials of Seaboard Lloyd Limited in order to restate historical financial statements to US GAAP:
Historical Amounts As reported in Unaudited Converted to US Dollars Adjustments to Pro Forma Combined in UK GAAP US GAAP Statement of Income ----------------------- ------------------ ------------------------ Revenues $ 7146 $ $ 7,146 Cost of goods sold 5,884 5,884 ----------------------- ------------------ ------------------------ Gross profit 1262 0 1,262 Selling, general and administrative expenses 1,967 1,967 ----------------------- ------------------ ------------------------ Operating loss (705) 0 (705) ----------------------- ------------------ ------------------------ Other (income) expense: Interest expense 103 103 Other, net 0 0 ----------------------- ------------------ ------------------------ Loss before provision for income taxes (808) 0 (808) (Benefit) provision for income taxes 24 (125) (1) (101) ----------------------- ------------------ ------------------------ Net (loss) income $ (832) $ 125 $ (707) ======================= ================== ========================
(1) Under UK GAAP, deferred taxation is provided under the liability method only to the extent that an asset or liability will materialize. Under US GAAP deferred tax liabilities or assets are provided on all temporary timing differences existing at the end of a financial period. For the purposes of the above adjustment, a deferred tax provision has been recognized for all timing differences. ERC INDUSTRIES, INC. PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL PRO FORMA ------------------------------------------ ----------------------------------- ERC SEABOARD NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, 1996 SEPTEMBER 30, 1996 CONSOLIDATED US$ US$ ADJUSTMENTS TOTAL ------------------ ------------------ ------------ ------------ Revenues $ 34,949 $ 6,137 $ 41,086 Cost of goods sold 26,924 4,977 $ (225) (a) 31,676 ------------------ ------------------ ------------ ------------ Gross profit 8,025 1,160 225 9,410 ------------------ ------------------ ------------ ------------ Selling, general and administrative expenses 6,906 1,481 (105)(c, d ,e) 8,282 ------------------ ------------------ ------------ Operating (loss) income 1,119 (321) 330 1,128 ------------------ ------------------ ------------ ------------ Other (income) expense: Interest expense 211 83 72 (b) 366 Other, net (34) 0 0 (34) ------------------ ------------------ ------------ ------------ (Loss) income before provision for income taxes 942 (404) 258 796 (Benefit) provision for income taxes 370 (39) 0 331 ------------------ ------------------ ------------ ------------ Net (loss) income $ 572 $ (365) $ 258 $ 465 ================== ================== ============ ============ Net income per share $ 0.03 $ .03 ------------------ ------------ Weighted average shares outstanding 16,990 16,990 ================== ============
ERC INDUSTRIES, INC. NOTES TO THE PRO FORMA CONSOLIDATED STATEMENTS OF INCOME SEPTEMBER 30, 1996 One UK pound sterling equivalent to $1.54, which represents the average exchange rate for the period. a) To record the estimated cost savings from the headcount reduction of 10 employees that was effected immediately upon the acquisition. b) To record interest cost for debt incurred by ERC Industries to finance the acquisition of Seaboard. c) To remove the historical goodwill amortization recorded by Seaboard during the nine months of $54,000. d) Amortization of goodwill recorded in the acquisition of Seaboard of $24,000 for the nine months. e) To subtract corporate charge by previous management group to Seaboard for certain management fees ($75,000 for the nine months). The following adjustments were made to the historical financials of Seaboard Lloyd Limited in order to restate historical financial statements to US GAAP:
Historic Amounts As reported in Unaudited Converted to US Dollars Adjustments to Pro Forma Combined in UK GAAP US GAAP Statement of Income ----------------------- ------------------ ------------------------ Revenues $ 6,137 $ $ 6,137 Cost of goods sold 4,977 4,977 ----------------------- ------------------ ------------------------ Gross profit 1,160 0 1,160 Selling, general and administrative expenses 1,481 1,481 ----------------------- ------------------ ------------------------ Operating (loss) income (321) 0 (321) ----------------------- ------------------ ------------------------ Other (income) expense: Interest expense 83 83 Other, net 0 0 ----------------------- ------------------ ------------------------ Loss before provision for income taxes (404) 0 (404) (Benefit) provision for income taxes 23 (62) (1) (39) ----------------------- ------------------ ------------------------ Net (loss) income $ (427) $ 62 $ (365) ======================= ================== ========================
(1) Under UK GAAP, deferred taxation is provided under the liability method only to the extent an asset or liability will materialize. Under US GAAP deferred tax liabilities or assets are provided on all temporary timing differences existing at the end of a financial period. For the purposes of the above adjustment, a deferred tax provision has been recognized for of all timing differences. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ERC Industries, Inc. By: /s/ Wendell R. Brooks ------------------------------------- Wendell R. Brooks President and Chief Executive Officer Date: December 12, 1996 -----END PRIVACY-ENHANCED MESSAGE-----