-----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, DZmWE7xRYky5tjXF3XG2tUwktY6mYb0/zUcT+i7ShRT+zzr0BTWTyP7Q8lzRmohp ZpMi0XewQqFd5yfgeCIzuQ== 0000950148-96-001206.txt : 19960629 0000950148-96-001206.hdr.sgml : 19960629 ACCESSION NUMBER: 0000950148-96-001206 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960611 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960614 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUILDERS WAREHOUSE ASSOCIATION INC CENTRAL INDEX KEY: 0000840249 STANDARD INDUSTRIAL CLASSIFICATION: 5211 IRS NUMBER: 841090968 STATE OF INCORPORATION: CO FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-21082 FILM NUMBER: 96581612 BUSINESS ADDRESS: STREET 1: 2800 28TH ST. STREET 2: SUITE 100 CITY: SANTA MONCIA STATE: CA ZIP: 90405 BUSINESS PHONE: 3104534371 MAIL ADDRESS: STREET 1: 700 EXCHANGE AVE CITY: CONWAY STATE: AR ZIP: 72032 FORMER COMPANY: FORMER CONFORMED NAME: OMNI CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CEETAC CORP DATE OF NAME CHANGE: 19910815 8-K/A 1 FORM 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8 - K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (Date of earliest event reported): June 14, 1996 (April 3, 1996) BUILDERS WAREHOUSE ASSOCIATION, INC. EXACT NAME OF REGISTRANT, AS SPECIFIED IN ITS CHARTER Colorado 0-2108-2 84-1090968 -------- -------- ---------- (STATE OR JURISDICTION (COMMISSION (IRS EMPLOYER OF INCORPORATION FILE NUMBER) IDENTIFICATION NO.) 2800 28th STREET, #100, SANTA MONICA, CALIFORNIA 90405 - - ------------------------------------------------ ----- (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (310) 453-4371 -------------- 2 ITEM 7. - FINANCIAL STATEMENTS (a) The financial statements for the six months ended March 31, 1996 and the year ended September 30, 1995. (b) Pro forma financial information at February 29, 1996 and for the nine months then ended and for the period from July 1, 1994 (inception) to May 31, 1995. 3 ITEM 7 (b) Pro Forma Financial Information The following pro forma financial information presents the effects of the acquisition of Uni Precision Industrial Limited ("UNI") by the registrant as if the acquisition had been completed as of February 29, 1996. The unaudited pro forma financial information has been compiled by management. All amounts have been converted to United States dollars at the rate of 1 HK$=US $.1293. The pro forma consolidated income statement is based on the average monthly activity for the 24 months ended September 30, 1995. The pro forma financial information is not necessarily indicative of the results of operations and financial position which will be attained in the future. The pro forma information should be read in conjunction with the historical consolidated financial statements of Builders Warehouse Association, Inc. as reported on Forms 10-QSB and 10-KSB for the nine months and the year ended February 29, 1996 and May 31, 1995 respectively. Builders Warehouse Association, Inc. Pro Forma Condensed Consolidated Balance Sheet February 29, 1996
Company before Pro forma Pro forma acquisition UNI adjustments consolidated ----------- --- ------------ ------------ ASSETS Cash $6,562,103 $ 3,459,084(a) ($6,000,000) $ 4,021,187 Accounts receivable 503,953 3,103,200 3,607,153 Inventories 193,322 5,081,490 5,274,812 Due from subsidiary 113,525 113,525 Due from associated companies 1,305,930 1,305,930 Due from related companies 762,870 762,870 Marketable securities 254,546 0 254,546 Prepaid expenses 10,950 483,582 492,532 Other current assets 583,435 0 583,435 ---------- ----------- ----------- ----------- Total current assets 8,108,309 14,309,681 (6,000,000) 16,417,990 Investment in joint venture 155,160 155,160 Investment in Uni Property and equipment - net 30,932 6,115,890 6,146,822 Goodwill 299,999 0(b) 6,551,647 6,851,646 Other investments 269,415 49,134 318,549 Other assets 9,268 27,412 36,680 ---------- ----------- ----------- ----------- TOTAL ASSETS $8,717,923 $20,657,277 $ 551,647 $29,926,847 ========== =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $ 708,711 $10,108,803 $10,817,514 Notes payable 11,041 4,756,430(a) 4,000,000 8,767,471 Capital lease obligations-current 179,210 179,210 Dividends payable 1,255,762 1,255,762 ---------- ------------ ---------- ----------- Total current liabilities 719,752 16,300,205 4,000,000 21,019,957 ---------- ------------ ---------- ----------- Capital lease obligations - long term 660,594 Deferred taxation 248,127 ---------- ------------ ---------- ----------- TOTAL LIABILITIES 719,752 17,208,925 4,000,000 21,928,677 ---------- ------------ ---------- ----------- Preferred stock 6,176,239 0 6,176,239 Common stock 23,575 62,840(b) (62,840) 23,575 Additional paid-in-capital 2,218,211 1,802,701(b) (1,802,701) 2,218,211 Retained earnings (Accumulated deficit) (242,361) 1,582,812(b) (1,582,812) (242,361) Treasury stock (177,493) 0 (0) (177,493) ---------- ------------ ---------- ----------- TOTAL STOCKHOLDERS' EQUITY 7,998,171 3,448,353 (3,448,353) 7,998,171 ---------- ------------ ---------- ----------- TOTAL LIABILITIES AND EQUITY $8,717,923 $20,657,277 $ 551,647 $29,926,847 ========== ============ ========== ===========
- - ------------------- (a) To record cash payments due on closing and accrue balance of purchase price due. (b) To eliminate Uni equity and record excess of cost over net assets acquired as goodwill. 4 ITEM 7 (b) Pro Forma Financial Information (continued) BUILDERS WAREHOUSE ASSOCIATION, INC. Pro Forma Condensed Consolidated Income Statements For the Nine Months Ended February 29, 1996 and July 1, 1994 (inception) to May 31, 1995
Company before pro forma Pro forma adjustments Uni consolidated ----------- --- ------------ NINE MONTHS ENDED FEBRUARY 29, 1996 Net Sales $4,987,688 $36,750,000 $41,737,688 Cost of Sales 4,310,839 33,000,000 37,310,839 ---------- ----------- ----------- Gross Profit 676,849 3,750,000 4,426,849 Selling, General & Administrative Expenses $ 772,421 $ 3,588,000 $ 4,360,421 Unrealized losses in marketable securities (72,728) (72,728) Interest Income 6,959 6,959 ---------- ----------- ----------- Net earnings (loss) ($161,341) $ 162,000 $ 659 ========== =========== =========== PRIMARY EARNINGS (LOSS) PER COMMON SHARE Total earnings (loss) per share ($0.10) $.10 ($0.02) Weighted average shares used in computation 1,678,512 1,678,512 1,678,512 FOR THE PERIOD JULY 1, 1994 (inception) TO MAY 31, 1995 Net sales $6,693,731 $44,900,000 $51,593,731 Cost of sales 5,699,274 40,300,000 45,999,274 ---------- ----------- ----------- Gross profit 994,457 4,600,000 5,594,457 Selling, general & administrative expenses 1,077,935 4,385,000 5,462,935 Unrealized losses in marketable securities Interest Expense 1,418 Interest Income 3,876 3,876 ---------- ----------- ----------- Net earnings (loss) ($81,020) $ 215,000 $ 133,980 ========== =========== =========== PRIMARY EARNINGS (LOSS) PER COMMON SHARE Total earnings (loss) per share ($0.05) $0.13 $0.08 Weighted average shares used in computation 1,678,512 1,678,512 1,678,512
5 Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized. Builders Warehouse Association, Inc. ------------------------------------ (Registrant) Date: June 14, 1996 By: /s/ Barry Witz --------------------------------- Barry Witz Chief Executive Officer 6 [LETTER HEAD] ARTHUR ANDERSEN & CO, SC ___________________________ Arthur Andersen & Co. Certified Public Accountants AUDITORS' REPORT TO THE SHAREHOLDERS OF UNI PRECISION INDUSTRIAL LIMITED ___________________________ 25/F., Wing On Centre (INCORPORATED in HONG KONG WITH LIMITED LIABILITY) 111 Connaught Road Central Hong Kong We have audited the financial statements on pages 4 to 25 which have been prepared in accordance with accounting principles generally accepted in Hong Kong. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Companies Ordinance requires the directors to prepare financial statements which give a true and fair view. In preparing financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you. BASIS OF OPINION We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the circumstances of the Company, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion. OPINION In our opinion the financial statements give a true and fair view of the state of affairs of the Company as of March 31, 1996 and of the profit and cash flows of the Company for the period from October 1, 1995 to March 31, 1996 and have been properly prepared in accordance with the Companies Ordinance. [SIG] - - ----------------------------- Hong Kong, May 10, 1996. - 3 - 7 UNI PRECISION INDUSTRIAL LIMITED PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM OCTOBER 1, 1995 TO MARCH 31,1996
Note 6 months ended 3/31/1996 12 months ended 9/30/1995 ---- ------------------------------ ------------------------------ (Note 24) HK$ US$ HK$ US$ TURNOVER 3 224,479,521 29,040,042 410,188,708 53,064,516 COST OF SALES 3 (193,394,097) (25,018,641) (359,130,103) (46,459,263) ------------- ------------ ------------- ------------ Gross profit 31,085,424 4,021,401 51,058,605 6,605,253 OPERATING EXPENSES 3 (19,975,464) (2,584,148) (37,428,039) (4,841,920) ------------- ------------ ------------- ------------ Profit before taxation and exceptional item 11,109,960 1,437,253 13,630,566 1,763,333 EXCEPTIONAL ITEM 11 1,795,845 232,321 (1,795,845) (232,321) ------------- ------------ ------------- ------------ Profit before taxation 4 12,905,805 1,669,574 11,834,721 1,531,012 TAXATION 5 (1,699,000) (219,793) - - ------------- ------------ ------------- ------------ Net profit 11,206,805 1,449,781 11,834,721 1,531,012 RETAINED EARNINGS, beginning of period/year 16,060,068 2,077,628 4,225,347 546,616 ------------- ------------ ------------- ------------ 27,266,873 3,527,409 16,060,068 2,077,628 DIVIDENDS 6 (11,813,433) (1,528,258) - - ------------- ------------ ------------- ------------ RETAINED EARNINGS, end of period/year 15,453,440 1,999,151 16,060,068 2,077,628 ============= ============ ============= ============
Translation of amounts from Hong Kong dollars (HK$) into United States dollars (US$) for the convenience of the reader has been made at the exchange rate US$1=HK$7.73. No representation is made that the Hong Kong dollar amounts could have been, or could be, converted into United States dollars at that rate or at any other certain rate. - 4 - 8 UNI PRECISION INDUSTRIAL LIMITED BALANCE SHEET AS OF MARCH 31,1996
Note 6 months ended 3/31/1996 12 months ended 9/30/1995 ---- ------------------------------- ------------------------------- (Note 24) HK$ US$ HK$ US$ Fixed assets, net 7 47,284,272 6,116,982 46,350,213 5,996,147 Investment in associated companies 8 1,400,000 181,113 350,000 45,278 Investment in subsidiaries 9 379,861 49,141 219,860 28,442 Investment in a joint venture 10 1,200,000 155,239 1,200,000 155,239 Short-term investment 11 - - - - Other non-current assets 212,129 27,442 282,838 36,590 Current assets 12 112,487,278 14,552,041 100,028,394 12,940,284 Current liabilities 13 (126,054,385) (16,307,165) (111,786,206) (14,461,346) Hire purchase payable - long-term portion 16 (5,109,072) (660,941) (5,824,407) (753,481) Deferred taxation 17 (1,919,000) (248,253) (940,000) (121,604) ------------- ------------ ------------- ------------ 29,881,083 3,865,599 29,880,692 3,865,549 ============= ============ ============= ============ Representing - Share capital 18 11,114,583 1,437,850 10,507,564 1,359,323 Share premium 486,500 62,937 486,500 62,937 Revaluation reserve 19 2,826,560 365,661 2,826,560 365,661 Retained earnings 15,453,440 1,999,151 16,060,068 2,077,628 ------------- ------------ ------------- ------------ Shareholders' equity 29,881,083 3,865,599 29,880,692 3,865,549 ============= ============ ============= ============
Approved by the Board of directors on May 10, 1996. Directors: [SIG] [SIG] ------------------------- ------------------------------ Transaction of amounts from Hong Kong dollars (HK$) into United States dollars (US$) for the convenience of the reader has been made at the exchange rate US$1=HK$7.73. No representation is made that the Hong Kong dollar amounts could have been, or could be, converted into United States dollars at that rate or at any other certain rate. - 5 - 9 UNI PRECISION INDUSTRIAL LIMITED CASH FLOW STATEMENT FOR THE PERIOD FROM OCTOBER 1, 1995 TO MARCH 31,1996
Note 6 months ended 3/31/1996 12 months ended 9/30/1995 ---- --------------------------- ----------------------------- (Note 24) HK$ US$ HK$ US$ Net cash inflow from operating activities 22 19,730,683 2,552,481 20,690,072 2,676,594 Returns on investments and servicing of finance Interest received 762,535 98,646 1,364,293 176,493 Interest paid (2,677,369) (346,361) (5,176,061) (669,606) Interest paid on hire purchase loans (373,208) (48,280) (182,518) (23,612) Dividend paid (2,101,513) (271,864) - - ----------- ---------- ----------- ---------- Net cash outflow from returns on investments and servicing of finance (4,389,555) (567,859) (3,994,286) (516,725) ----------- ---------- ------------ ----------- Investing activities Purchase of fixed assets (4,874,938) (630,652) (17,779,899) (2,300,116) Investment in subsidiaries (160,001) (20,699) - - Investment in associated companies (1,050,000) (135,834) (350,000) (45,278) Proceed from disposal of fixed assets - - 52,132 6,744 Decrease in other non-current assets - - 425,491 55,044 ----------- ---------- ------------ ----------- Net cash outflow from investing activities (6,084,939) (787,185) (17,652,276) (2,283,606) ----------- ---------- ------------ ----------- Net cash inflow (outflow) before financing activities 9,256,189 1,197,437 (956,490) (123,737) Financing activities Repayment of loan to a director - - 1,771,400 229,159 Repayment of loan from a director - - (3,635,653) (470,330) Issue of share capital 607,019 78,527 - - Increase in hire purchase loans - - 7,356,651 951,701 Repayment of hire purchase loans (649,639) (84,041) (757,585) (98,006) ----------- ---------- ------------ ----------- Net cash (outflow) inflow from financing activities (42,620) (5,514) 4,734,813 612,524 ----------- ---------- ------------ ----------- Increase in cash and cash equivalents 9,213,569 1,191,923 3,778,323 488,787 Cash and cash equivalents, beginning of period/year (17,376,367) (2,247,913) (21,154,690) (2,736,700) ------------ ----------- ------------ ----------- Cash and cash equivalents, end of period/year (8,162,798) (1,055,990) (17,376,367) (2,247,913) ============ =========== ============ =========== Analysis of cash and cash equivalents Cash and bank deposits 28,623,610 3,7O2,924 26,397,033 3,414,881 Short-term borrowings (36,786,408) (4,758,914) (43,773,400) (5,662,794) ------------ ----------- ------------ ----------- (8,162,798) (1,055,990) (17,376,367) (2,247,913) ============ =========== ============ ===========
Translation of amounts from Hong Kong dollars (HK$) into United States dollars (US$) for the convenience of the reader has been made at the exchange rate US$1=HK$7.73. No representation is made that the Hong Kong dollar amounts could have been, or could be, converted into United States dollars at that rate or at any other certain rate. - 6 - 10 UNI PRECISION INDUSTRIAL LIMITED NOTES TO THE FINANCIAL STATEMENT'S MARCH 31,1996 (Amounts expressed in Hong Kong dollars) 1. ORGANIZATION AND OPERATIONS The Company was incorporated in Hong Kong with limited liability on April 3,1985. The Company was principally engaged in the manufacture and sale of electronic products. Its wholly-owned subsidiary, Uni Precision Mould Limited, was principally engaged in the manufacture and sale of plastic moulds. 2. PRINCIPAL ACCOUNTING POLICIES a. Group accounts Group accounts are not prepared as the directors are of the opinion that consolidated financial statements would be of no real value to the members of the Company and the impact of non-consolidation is immaterial. b. Turnover Turnover comprises sales revenue and other related revenues which is recognized when the goods are delivered and title has passed. C. Taxation The Company provides for Hong Kong profits tax on the basis of its profit for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for taxation purposes. Deferred taxation is provided under the liability method in respect of significant timing differences between profit as computed for taxation purposes and profit as stated in the financial statements except when it is considered that no liability will arise in the foreseeable future. Deferred tax assets are not recognized unless it is certain that such assets will be crystallized in the foreseeable future. - 7 - 11 2. PRINCIPAL ACCOUNTING POLICIES (Cont'd) d. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is calculated using the weighted average basis and includes costs incurred in bringing the goods to their present locations and conditions. Net realizable value is based on estimated normal selling price, less further costs expected to be incurred to completion and disposal. Provision is made for obsolete, slow moving or defective items where appropriate. e. Fixed assets and depreciation Leasehold land and buildings are stated at original historical cost or subsequent valuation as set out in Note 7. Other fixed assets are stated at cost less accumulated depreciation. Depreciation is provided at rates estimated to write off the cost or the revalued amount of each asset, on a reducing balance basis over its expected useful life. The annual rates of depreciation are as follows: Leasehold land Nil Leasehold buildings 2% Plant and machinery 20% Furniture, office equipment and motor vehicles 15%-20% Moulds and small tools 20%
Fixed assets held under hire purchase contracts are initially recorded at the present value of the minimum payments at the inception of the contracts, with an equivalent liability categorized as appropriate under current or non-current liabilities. Such assets are depreciated on the same basis as described above. Interest expenses, which represent the difference between the minimum payments and the present value of the minimum payments at the inception of the contracts, are allocated to accounting periods over the period of the relevant hire purchase contracts to produce a constant rate of charge on the outstanding balances. Leasehold land and buildings are held for the long term and are included in the balance sheet at their open market value on the basis of valuation by independent qualified valuers. AU changes in the value of leasehold land and buildings are dealt with in the revaluation reserve. Any revaluation surplus/ deficit should be charged directly to the revaluation reserve to the extent that the deficit of a particular asset does not exceed the amount held in the revaluation reserve in respect of that same asset; in which case the excess of the deficit should be charged to the profit and loss account. - 8 - 12 2. PRINCIPAL ACCOUNTING POLICIES (Cont'd) f. Investment in subsidiaries A subsidiary is a company in which the Company holds, directly or indirectly, more than 50% of the issued share capital. Investment in subsidiaries is stated at cost less provision for permanent diminution in value, if any. g. Investment in associated companies An associated company is a company, not being a subsidiary company, in which the Company has an attributable equity interest of more than 20% and can exercise significant influence over its operating and financial policies. Investment in associated companies is stated at cost less, if any, (i) provision for permanent diminution in value and (ii) for an associated company that has a shareholders' deficit and one that the Company has undertaken to provide continuing financial support, the Company's share of the associated company's shareholders' deficit, to the extent of the Company's equity interests in the associated company and not otherwise provided as permanent diminution in value. h. Investment in a joint venture A joint venture is an entity established between the Company and one or more other parties, with the rights and obligations of the joint venture partners governed by a contract. Investment in a joint venture is stated at cost less provision for any permanent diminution in value, if any. Income from the joint venture is recorded to the extent of dividends received and receivable. i. Operating leases Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Rentals applicable to such operating leases are charged to the profit and loss account on a straight-line basis over the period of the relevant leases. j. Foreign currency translation The Company maintains its books and records in Hong Kong dollars. Monetary assets and liabilities denominated in other currencies are translated into Hong Kong dollars at the applicable rates of exchange in effect at the balance sheet date; non-monetary assets and liabilities denominated in other currencies are translated at historical rates. Transactions in other currencies during the year are translated into Hong Kong dollars at the applicable rates of exchange prevailing at the time of the transactions. Exchange gains or losses are dealt with in the profit and loss account. - 9 - 13 2. PRINCIPAL ACCOUNTING POLICIES (Cont'd) k. Related companies Related companies are companies, other than associated companies and subsidiary companies, in which one or more of the directors or shareholders of the Company have direct or indirect beneficial interest. 3. RELATED PARTY TRANSACTIONS a. In the ordinary course of business, the Company entered into business transactions with associated companies, a joint venture, a subsidiary and certain related companies as follows:
6 months 2 months ended ended 3/31/1996 9/30/1995 --------------- --------------- Sales to a subsidiary $1,288,754 $ - Sales to associated companies 7,098,145 32,735,321 Sales to a joint venture 52,653 3,019,655 Sales to related companies 322,154 13,862,783 Purchases from a subsidiary 766,000 2,585,000 Purchases from associated companies 1,702,755 42,185,145 Purchases from a related company - 306,476 =============== ===============
b. During the period, the Company charged a subsidiary and certain associated companies rental expenses of approximately $179,000 and $185,000 respectively (year ended 9/30/1995 - $357,000 and $162,000) for sharing of office and factory premises. C. During the period, the Company paid marketing research service fee of approximately $3,000,000 to an associated company (year ended 9/30/1995 $10,200,000). - 10 - 14 3. RELATED PARTY TRANSACTIONS (Cont'd) d. During the period, the Company provided administrative and management service to a subsidiary in return for a fee of approximately $77,000 (year ended 9/30/1995 - $259,000). Also, the Company paid management and service fees of approximately $2,250,000 (year ended 9/30/1995 - $1,896,000) to related companies for management services provided. Moreover, no service fee was paid (year ended 9/30/1995 - $387,000) to a related company for collection service. e. During the period, the Company purchased fixed assets of approximately $553,000 (year ended 9/30/1995 - $708,000) from a subsidiary. f. During the period, the Company paid legal and professional fees of approximately $4,000, $47,000 and $38,000 (year ended 9/30/1995 - $11,000, nil and nil) for services provided to the subsidiaries, an associated company and certain related companies respectively. g. A director and shareholder of an associated company and a related company has undertaken to provide continuing financial support to the associated company and the related company. The director and shareholder has also guaranteed, subject to the following conditions, to indemnify the Company against any loss if the outstanding balances of approximately $9,595,000 and $4,963,000 owed by the associated company and the related company respectively to the Company as of March 31, 1996 are not fully settled by May 30, 1996: (i) completion of the sale of the shares ("Sale of Shares") of the Company to a third party by the shareholders of the Company on or before May 15, 1996 (refer to Note 11 for details); and (ii) receipt of US$6 million by the shareholders of the Company from the third party in return for Sale of Shares on or before May 15, 1996. h. All outstanding balances with the subsidiaries, joint venture, associated companies and related companies resulted from normal business activities and, were unsecured, non-interest bearing and had no fixed repayment dates. i. Certain of the Company's banking facilities were secured, among others, by (i) personal guarantees given by certain directors of the Company, (h) two directors of an associated company, and (iii) a corporate guarantee given by an associated company. - 11 - 15 4. PROFIT BEFORE TAXATION Profit before taxation was determined after charging and crediting the following:
6 months 12 months ended ended 3/31/1996 9/30/1995 --------- --------- After charging - Auditors' remuneration $550,000 480,800 Directors' emoluments for - services as directors - - - other services 1,326,625 2,142,748 Depreciation on - fixed assets held under hire purchase contracts 882,358 961,875 - owned fixed assets 3,058,521 5,656,648 Interest expenses on - bank overdrafts and loans wholly repayable within five years 2,677,369 5,176,061 - hire purchase contracts 373,208 182,518 Rental expense in respect of land and buildings under operating leases 2,883,143 5,977,763 Provision for loss on disposal of other non-current assets - 13,163 Net loss on disposals of fixed assets - 54,281 ========= ========= After crediting - Interest income on bank deposits $762,535 1,364,293 Net exchange gain 229,739 247,412 Writeback of provision for permanent diminution in value of investments (Note 11) 1,795,845 - ========= =========
- 12 - 16 5. TAXATION Taxation for the period comprised:
6 months 12 months ended ended 3/31/1996 9/30/1995 -------------- -------------- Hong Kong profits tax $ 720,000 $ - Deferred taxation (Note 17) 979,000 - -------------- -------------- $1,699,000 $ - ============== ==============
Hong Kong profits tax has been provided at the rate of 16.5% (year ended 9/30/1995 16.5%) on the estimated assessable profit for the period. 6. DIVIDENDS
6 months 12 months ended ended 3/31/1996 9/30/1995 --------------- --------------- Interim, paid of $0.20 per ordinary share (year ended 9/30/1995 - nil) $ 2,101,513 $ - Final, declared of $0.8738 per ordinary share (year ended 9/30/1995 - nil) 9,711,920 - --------------- --------------- $11,813,433 $ - =============== ===============
- 13 - 17 7. FIXED ASSETS a. The movements in fixed assets were as follows:
12 months ended 6 months ended 3/31/1996 9/30/1995 ------------------------------------------------------------------- ----------- Furniture, office Leasehold equipment land and Plant and and motor Moulds and buildings machinery vehicles small tools Total Total Cost Beginning of period/year $ 5,400,000 $ 33,951,330 $ 23,101,706 $ 8,488,543 $ 70,941,579 $ 53,380,071 Additions - 780,588 1,745,222 2,349,128 4,874,938 17,779,899 Disposals - - - - (218,391) ----------- ------------ ------------ ----------- ------------ ------------ End of period/year 5,400,000 34,731,918 24,846,928 10,837,671 75,816,517 70,941,579 ----------- ------------ ------------ ----------- ------------ ------------ At cost - 34,731,918 24,846,928 10,837,671 70,416,517 65,541,579 At professional valuation 5,400,000 - - - 5,400,000 5,400,000 ----------- ------------ ------------ ----------- ------------ ------------ 5,400,000 34,731,918 24,846,928 10,837,671 75,816,517 70,941,579 ----------- ------------ ------------ ----------- ------------ ------------ Accumulated depreciation Beginning of period/year 211,910 12,281,292 9,258,084 2,840,080 24,591,366 18,084,821 Provision for the period/year 51,665 2,127,064 1,076,944 685,206 3,940,879 6,618,523 Written back on disposals - - - - - (111,978) ----------- ------------ ------------ ----------- ------------ ------------ End of period/year 263,575 14,408,356 10,335,028 3,525,286 28,532,245 24,591,366 ----------- ------------ ------------ ----------- ------------ ------------ Net book value End of period/year $ 5,136,425 $ 20,323,562 $ 14,511,900 $ 7,312,385 $ 47,284,272 $ 46,350,213 =========== ============ ============ =========== ============ ============ Beginning of period/year $ 5,188,090 $ 21,670,038 $ 13,843,622 $ 5,648,463 $ 46,350,213 $ 35,295,250 =========== ============ ============ =========== ============ ============
b. The leasehold land and buildings were situated in Hong Kong and were held under long leases. The leasehold land and buildings were valued by independent professional valuers on an open market value basis as of March 31, 1996. Their reports indicated no significant change in the value of the leasehold land and buildings since the previous revaluation. The leasehold land and buildings were pledged to secure the Company's banking facilities (see Note 20). - 14 - 18 7. FIXED ASSETS (Cont'd) C. Certain fixed assets included in the above were purchased under hire purchase contracts. The details of these assets were as follows:
3/31/1996 9/30/1995 ----------------------------------------------- ------------- Furniture, office equipment Plant and and motor machinery vehicles Total Total ----------- ---------- ----------- ----------- Cost $ 11,538,466 $550,000 $ 12,088,466 $ 12,088,466 Accumulated depreciation (3,435,411) (336,984) (3,772,395) (2,890,037) ------------ -------- ------------ ------------ Net book value $8,103,055 $213,016 $8,316,071 $9,198,429 ============ ======== ============ ============
8. INVESTMENT IN ASSOCIATED COMPANIES Details of the associated companies were as follows:
Percentage of Place of ordinary shares incorporation held by the Name and operation Company Principal activities ------------------------------ -------------------- -------------------- ----------------------- Co-Time Technology Limited Hong Kong 40% Trading and sourcing of electronic products Suning Mings Company Hong Kong 20% Dormant Limited Spectra Electronic Systems Hong Kong 35% Trading of electronic Limited products
- 15 - 19 8. INVESTMENT IN ASSOCIATED COMPANIES (Cont'd) Investment in associated companies comprised the following:
3/31/1996 9/30/1995 ---------- ---------- (i) Suning Mings Company Limited Unlisted shares, at cost $200,000 200,000 ---------- ---------- Provision for permanent diminution in value (Note 2.g) (200,000) (200,000) - - ---------- ---------- (ii) Spectra Electronic Systems Limited Unlisted shares, at cost 1,400,000 350,000 ---------- ---------- Total of (i) and (ii) $1,400,000 $350,000 ---------- ----------
Investment in Co-Time Technology Limited has been reclassified as short-term investment in the current period. Refer to Note 11 for details. - 16 - 20 9. INVESTMENT IN SUBSIDIARIES Details of the subsidiaries were as follows:
Percentage of Place of ordinary incorporation shares held by Name and operation the Company Principal activities ---- ------------- -------------- -------------------- Uni Precision Mould Hong Kong 100% Manufacture and Limited sale of plastic moulds Uni Pak Limited Hong Kong 90% Dormant Uni Technology Limited Hong Kong 80% Trading of electronic products
Investment in subsidiaries comprised the following:
3/31/1996 9/30/1995 --------- --------- (i) Uni Precision Mould Limited Unlisted shares, at cost $219,860 $219,860 Provision for permanent diminution in value - - -------- -------- 219,860 219,860 -------- -------- (ii) Uni Pak Limited Unlisted shares, at cost 1 - Provision for permanent diminution in -------- -------- value 1 - -------- -------- (iii) Uni Technology Limited Unlisted shares, at cost 160,000 - Provision for permanent diminution in value - - -------- -------- 160,000 - -------- -------- Total of (i), (ii) and (iii) $379,861 $219,860 ======== ========
- 17 - 21 9. INVESTMENT IN SUBSIDIARIES (Cont'd) As of March 31, 1996, the net aggregate post-acquisition profit (loss) of the subsidiaries attributable to the Company was as follows:
Brought forward from previous financial year For current since period acquisition Total ----------- -------------- -------- Dealt with in the Company's financial statements $ $ $ Not dealt with in the Company's financial statements (198,790) 275,699 76,909 ---------- --------- -------- Total $(198,790) $275,699 $76,909 ========== ========= ========
10. INVESTMENT IN A JOINT VENTURE The equity joint venture was incorporated in the People's Republic of China in May 1994. Details of the joint venture as of March 31, 1996 were as follows:
Name of Authorized Contractual Contribution Contribution joint Joint venture party Principal share investment of capital by of capital by venture ("JV party") activities capital sum the Company the JV party --------- ------------------- ------------ ---------- ------------ ------------- ------------- Shenzhen Shenzhen Sang Xia Manufacture $2 million $2.8 million 60% 40% ACT Computer and and sale of Electronic Artificial electronic Industrial Intelligence products company Development Co. Limited Zhuhai Co.
Under the joint venture agreement, the joint venture period is 20 years up to May 2014 and, upon consent of both parties, an application for an extension of the joint venture period could be made six months prior to the expiration date. The Company shares the net profit/ loss of the joint venture with the TV party according to the percentage of capital contribution. The value of the investment in a joint venture was, in the opinion of the Company's directors, not less than the Company's carrying value as of March 31, 1996. - 18 - 22 11. SHORT-TERM INVESTMENT Short-term investment comprised the following:
3/31/1996 9/30/1995 ----------- ----------- Investment in Co-Time Technology Limited ("Co-Time") Unlisted shares, at cost $1,750,000 $1,750,000 ----------- ----------- Provision for permanent diminution in value (Note 2.g) (1,750,000) (3,545,845) ----------- ----------- - (1,795,845) - ----------- Excess of provision made over investment cost, included under accounts payable and accruals (Note 13) $ - $1,795,845 =========== ===========
During the period, the shareholders of the Company have entered into a Stock Purchase Agreement (the "Agreement") with a third party for the sale of the shares of the Company to that third party. Under the terms of the Agreement, the Company shall dispose of its 40% interest in Co- Time to one of the shareholders and directors of the Company at a nominal consideration on or before May 15,1996. In addition, the Company will withdraw its continuing financial support provided to Co-Time following the disposal. Accordingly, the investment in Co-Time was reclassified as a short-term investment as of March 31, 1996. The excess of provision made over investment cost in prior year of approximately $1,796,000 has been written back in the current period profit and loss account as an exceptional item. 12. CURRENT ASSETS Current assets comprised the following:
Note 3/31/1996 9/30/1995 - - ---- --------- --------- Cash and bank deposits 20 $ 28,623,610 $ 26,397,033 Accounts receivable, net 23,879,051 22,236,335 Inventories, net 14 39,349,427 35,565,981 Amount due from a subsidiary 3 878,396 - Amount due from associated companies 3 10,125,939 5,644,770 Amount due from related companies 3 5,890,219 7,398,388 Prepayments and other current assets 3,740,636 2,785,887 --------- --------- $ 112,487,278 $ 100,028,394 ============= =============
- 19 - 23 13. CURRENT LIABILITIES Current liabilities comprised the following:
Note 3/31/1996 9/30/1995 ---- --------- --------- Short-term bank borrowings 15 $ 36,786,408 $ 43,773,400 Accounts payable and accruals 11 76,582,547 66,265,316 Amount due to a subsidiary 3 336,915 352,164 Amount due to a joint venture 3 530,577 75,004 Hire purchase payable - current portion 16 1,386,018 1,320,322 Provision for taxation 720,000 - Dividends payable 6 9,711,920 - ------------- ------------- $ 126,054,385 $ 111,786,206 ============= =============
14. INVENTORIES Inventories comprised the following:
3/31/1996 9/30/1995 --------- --------- Raw materials $ 23,919,523 $ 26,849,748 Work-in-progress 12,415,941 8,701,919 Finished goods 6,082,930 2,284,281 ------------ ------------ 42,418,394 37,835,948 Less: Provision for obsolescence (3,068,967) (2,269,967) ------------ ------------ $ 39,349,427 $ 35,565,981 ============ ============
Certain of the inventories were subject to floating charges in respect of the Company's trust receipt loans (Note 20). - 20 - 24 15. SHORT-TERM BANK BORROWINGS Short-term bank borrowings comprised:
3/31/1996 9/30/1995 --------- --------- Bank overdrafts $10,253,913 $13,518,472 Trust receipt loans 26,532,495 30,254,928 ----------- ----------- $36,786,408 $43,773,400 =========== ===========
Refer to Note 20 for details of banking facilities. 16. HIRE PURCHASE PAYABLE Hire purchase payable comprised:
3/31/1996 9/30/1995 --------- --------- Amount repayable within a period - not exceeding one year $1,386,018 $1,320,322 - more than one year but not exceeding five years 5,109,072 5,824,407 - exceeding five years - - ---------- ---------- 6,495,090 7,144,729 Less: Amount repayable within one year included under current liabilities (Note 13) (1,386,018) (1,320,322) ----------- ----------- $5,109,072 $5,824,407 ========== ==========
17. DEFERRED TAXATION Movements in deferred taxation were as follows:
6 months 12 months ended ended 3/31/1996 9/30/1995 --------- --------- Beginning of period/ year $940,000 $940,000 Provision for the period/year (Note 5) 979,000 - ---------- -------- End of period/year $1,919,000 $940,000 ========== ========
- 21 - 25 17. DEFERRED TAXATION (Cont'd) The components of deferred taxation were:
3/31/1996 9/30/1995 --------- --------- Accelerated depreciation for taxation purposes $2,154,000 $1,729,000 Cumulative tax losses - (662,000) Others (235,000) (127,000) ---------- ---------- Total $1,919,000 $ 940,000 ========== ==========
There was no significant unprovided deferred taxation as of March 31, 1996. 18. SHARE CAPITAL
3/31/1996 9/30/1995 Authorized, issued and fully paid - 11,114,583 (1995 - 10,507,564) ordinary shares of $1 each $ 11,114,583 $ 10,507,564 ============ ============
By an ordinary resolution passed on March 26,1996, the authorized ordinary share capital of the Company was increased from $10,507,564 to $11,114,583 by the creation OF 607,019 shares of $1.00 each, ranking pari passu with the then existing shares. By another ordinary resolution passed on March 26, 1996, 607,019 ordinary shares were issued at par and were fully paid up. 19. REVALUATION RESERVE Movements in revaluation reserve were as follows:
6 months 12 months ended ended 3/31/1996 9/30/1995 --------- --------- Beginning of period/year $2,826,560 $2,826,560 Revaluation of fixed assets - - - - End of period/year $2,826,560 $2,826,560 ========== ==========
- 22 - 26 20. BANKING FACILITIES As of March 31,1996, the Company had aggregate facilities of approximately $97 million (9/30/1995 - $77 million) from various banks for overdrafts, loans and trade financing. Unused facilities as of the same date amounted to approximately $38 million (9/30/1995 $9 million). These facilities were secured by: a. first legal charges over the Company's leasehold land and buildings (see Note 7); b. pledge of the Company's fixed deposits amounting to approximately $27 million (see Note 12); C. floating charges on the Company's inventories released under trust receipt loans (see Note 14); In connection with certain of the aforementioned facilities, the Company has made the undertaking that its tangible net worth would not be less than $29 million. 21. COMMITMENTS AND CONTINGENT LIABILITIES a. As of March 31,1996, the Company had significant commitments and contingent liabilities for open letters of credit, discounted bills and shipping guarantees executed in favour of various banks totalling approximately $24,992,000 (9/30/1995 - $23,747,000). b. The Company also entered into a provisional agreement for the purchase of new office premise. Refer to Note 23 for details. - 23 - 27 22. NOTE TO THE CASH FLOW STATEMENT
6 months 12 months ended ended 3/31/1996 9/30/1995 ------------ ------------ Operating activities Profit before taxation $ 12,905,805 $ 11,834,721 Interest income (762,535) (1,364,293) Interest expense 3,050,577 5,358,579 Depreciation of fixed assets 3,940,879 6,618,523 Amortization of other non-current assets 70,709 141,420 Writeback of provision for permanent diminution in value of investments (1,795,845) - Loss on disposal of fixed assets - 54,281 Increase in account receivable, net (1,642,716) (2,625,684) Increase in inventories, net (3,783,446) (5,217,839) Increase in amount due from a subsidiary, net (893,645) - Increase in amount due from associated companies (4,481,169) (2,955,890) Decrease(Increase) in amount due from related companies 1,508,169 (2,125,973) Increase in prepayments and other current assets (954,749) (1,442,374) Increase in accounts payable and accruals 12,113,076 10,961,749 Increase in amount due to a subsidiary, net - 341,634 Increase in amount due to a joint venture 455,573 75,004 Decrease in amount due from a corporate director - 1,036,214 ------------ ------------ Net cash inflow from operating activities $ 19,730,683 $ 20,690,072 ============ ============
23. POST BALANCE SHEET EVENT'S a. On April 1, 1996, the Company purchased a new office premise at a consideration of $13.7 million. The new office premise was situated in Hong Kong and was held under long lease. The purchase was financed by bank loans, which were secured by, among others, (i) a first legal charge over the property, and (ii) a corporate guarantee given by an associated company. b. On May 9,1996, the Company disposed of its 40% interest in Co-Time to one of its shareholders and directors at a nominal consideration. Refer to Note 11 for details. 24 - - 24 - 28 24. PRIOR YEAR COMPARATIVES Certain figures included in the accompanying financial statements for the year ended September 30, 1995 had been reclassified to conform to the current period presentation. - 25 - -----END PRIVACY-ENHANCED MESSAGE-----