Independent Auditors' Report and Consolidated Financial Statements of Ring PLC for Fiscal Years Ended June 30, 2000, 1999, and 1998

Summary

This document is an independent auditors' report by KPMG Audit Plc for Ring PLC, addressed to its board of directors and shareholders. It covers the audit of Ring PLC's consolidated financial statements for the years ending June 30, 2000, 1999, and 1998. The auditors confirm that the financial statements fairly present the company's financial position and results in accordance with UK accounting principles, with differences from US standards noted in the report. The document includes key financial statements, such as the balance sheet, profit and loss account, and cash flow statements.

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EX-10.197 2 0002.txt EXHIBIT 10.197 RING PLC INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Ring PLC We have audited the accompanying consolidated balance sheets as at 30 June 2000 and 30 June 1999 and the related consolidated profit and loss accounts, statements of total recognised gains and losses, reconciliation of movements in shareholders' funds and cash flow statements for each of the years in the three year period ended 30 June 2000 appearing in Exhibit EX-10.197. These consolidated financial statements are the responsibility of the management of Ring PLC. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United Kingdom which are substantially equivalent to the standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Ring PLC at 30 June 2000 and 30 June 1999 and the consolidated results of its operations, total recognised gains and losses, changes in shareholders' funds and cash flows for each of the years in the three year period ended 30 June 2000 in conformity with generally accepted accounting principles in the United Kingdom. Generally accepted accounting principles in the United Kingdom vary in certain significant respects from generally accepted accounting principles in the United States of America. Application of generally accepted accounting principles in the United States of America would have affected the results of operations and cash flows for each of the years in the two year period ended 30 June 2000 and shareholders' funds as of 30 June 1999 and 30 June 2000 to the extent summarised in note 28 to the consolidated financial statements. /s/ KPMG Audit Plc Chartered Accountants Registered Auditor 18 September 2000 Leeds, England RING PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED 30 JUNE
Continuing Discontinued operations operations 2000 1999 1998 /pound /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ sterling/ '000 '000 Note '000 '000 '000 TURNOVER 76,686 1,816 2 78,502 74,612 77,857 Cost of sales (50,965) (1,218) 3 (52,183) (52,182) (53,452) ----------------------- ---------------------------------- GROSS PROFIT 25,721 598 26,319 22,430 24,405 Operating costs (23,449) (596) 3 (24,045) (18,963) (21,355) ----------------------- ---------------------------------- OPERATING PROFIT 2,272 2 2,274 3,467 3,050 ----------------------- ---------------------------------- EXCEPTIONAL ITEMS 4 (986) (20) (18,159) ---------------------------------- PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE INTEREST 1,288 3,447 (15,109) Interest receivable 7 9 40 4 Interest payable 7 (254) (265) (757) ---------------------------------- PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 1,043 3,222 (15,862) Tax on profit/(loss) on ordinary activities 8 (881) (1,037) (438) ---------------------------------- PROFIT/(LOSS) ON ORDINARY ACTIVITIES AFTER TAXATION 162 2,185 (16,300) Minority interest - - (12) ---------------------------------- PROFIT/(LOSS) FOR THE FINANCIAL YEAR 162 2,185 (16,312) Dividends - non-equity shares 9 (511) (543) (509) Dividends - equity shares 9 - (696) (634) ---------------------------------- (ACCUMULATED DEFICIT)/RETAINED PROFIT FOR THE FINANCIAL YEAR (349) 946 (17,455) ----------------------------------
There is no material difference between the reported profits and the historical cost profits for these years. RING PLC CONSOLIDATED BALANCE SHEETS
30 June 30 June 2000 1999 /pound /pound sterling/ sterling/ Note '000 '000 FIXED ASSETS Intangible assets 10 2,142 2,258 Tangible assets 11 3,361 3,225 Investments 12 305 299 --------- --------- 5,808 5,782 --------- --------- CURRENT ASSETS Stocks 13 12,949 11,838 Debtors: amounts falling due within one year 14 15,462 14,965 amounts falling due after more than one year 14 113 140 Cash at bank and in hand 311 2,338 --------- --------- 28,835 29,281 Creditors: amounts falling due within one year 15 (22,082) (21,769) --------- --------- NET CURRENT ASSETS 6,753 7,512 --------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 12,561 13,294 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 16 (413) (546) MINORITY INTERESTS - NON-EQUITY SHARES 18 (99) (743) --------- --------- NET ASSETS 12,049 12,005 --------- --------- CAPITAL AND RESERVES Called-up share capital - equity shares 19 19,823 19,823 - non-equity shares 19 2,386 2,386 --------- --------- 22,209 22,209 Share premium account 20 10,405 10,405 Other reserves 20 1,050 1,050 Profit and loss account 20 (21,615) (21,659) --------- --------- TOTAL SHAREHOLDERS' FUNDS 12,049 12,005 --------- ---------
RING PLC OTHER PRIMARY STATEMENTS STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Profit/(loss) for the financial year 162 2,185 (16,312) Exchange differences - overseas subsidiaries -- -- (6) ------------------------------- Total recognised gains and losses relating to the financial year 162 2,185 (16,318) -------------------------------
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Profit/(loss) for the financial year 162 2,185 (16,312) Dividends (511) (1,239) (1,143) ------------------------------- (349) 946 (17,455) Goodwill reinstated on disposals 393 -- 23,514 Other recognised gains and losses -- -- (6) ------------------------------- Net increase in shareholders' funds 44 946 6,053 Opening shareholders' funds 12,005 11,059 5,006 ------------------------------- Closing shareholders' funds 12,049 12,005 11,059 ------------------------------- Attributable to: Equity share interests 9,663 9,619 8,673 Non-equity share interests 2,386 2,386 2,386 ------------------------------- 12,049 12,005 11,059 -------------------------------
RING PLC CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEARS ENDED 30 JUNE
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Cash flow from operating activities (note 22) 840 3,858 4,403 Returns on investments and servicing of finance (note 23) (780) (742) (1,522) Taxation (419) (663) (909) Capital expenditure and financial investment (note 23) (676) (441) 78 Acquisitions and disposals (note 23) 618 (1,647) 13,433 Equity dividends paid (696) (634) -- ----------------------------- CASH (OUTFLOW)/INFLOW BEFORE FINANCING (1,113) (269) 15,483 Financing (Note 23) Repayment of debt (716) (1,741) (6,603) Redemption of preference shares in subsidiary undertakings (644) -- -- ----------------------------- (DECREASE)/INCREASE IN CASH IN THE YEAR (2,473) (2,010) 8,880 -----------------------------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (DEBT)/FUNDS:
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 (Decrease)/increase in cash in the year (2,473) (2,010) 8,880 Cash outflow from decrease in debt and lease financing 716 1,741 6,603 ----------------------------- Change in net debt resulting from cash flows (1,757) (269) 15,483 Loans and finance leases acquired with subsidiary undertakings -- (4) -- Loans and finance leases transferred on sale of subsidiary undertakings -- -- 235 New finance leases (477) (880) (506) Translation difference -- -- (2) ----------------------------- Movement in net debt in the year (2,234) (1,153) 15,210 Net funds/(debt) at 1 July 1,084 2,237 (12,973) ----------------------------- Net (debt)/funds at 30 June (1,150) 1,084 2,237 ----------------------------- 2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 NET (DEBT)/FUNDS IS COMPRISED OF: Bank overdraft and short term loans net of cash at bank (205) 2,268 4,278 Other secured bank loans -- (142) (1,371) Other loans -- (4) (8) Obligations under finance leases (945) (1,038) (662) ----------------------------- Net (debt)/funds at 30 June (1,150) 1,084 2,237 -----------------------------
RING PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements, except for the adoption of new financial reporting standards introduced in the year. The effect of these are disclosed where relevant. ACCOUNTING CONVENTION The accounts are prepared under the historical cost convention and in accordance with applicable accounting standards. These financial statements are prepared in accordance with generally accepted accounting principles (GAAP) in the United Kingdom (UK). A summary of the differences between UK GAAP and US GAAP, as applicable to Ring plc is set out in Note [ ]. BASIS OF CONSOLIDATION The consolidated accounts incorporate the accounts of Ring plc (the Company) and each of its subsidiary undertakings for the year ended 30 June. The results of subsidiary undertakings acquired or disposed of during the year, and requiring to be acquisition accounted, are included in the consolidated profit and loss account from or up to the effective date of acquisition or disposal. TURNOVER Turnover comprises the invoiced value of goods and services supplied by the Group, net of VAT and intra-group transactions. LEASED ASSETS Assets held under leasing arrangements that give rights approximating to ownership are capitalised as finance leases. The amount capitalised is the present value of the minimum payments payable during the term of each lease. The corresponding leasing commitments are included in creditors. The interest element of the rental obligations is charged to the profit and loss account using the annuity method. Rentals in respect of all other leases are charged to the profit and loss account on a straight line basis over the lease term. DEPRECIATION Freehold and long leasehold land is not depreciated. Depreciation on other assets is calculated to write off the cost on a straight line basis over the estimated useful lives, at the following rates: Freehold buildings - 50 years Short leasehold property - over period of lease Plant and equipment - 3 - 5 years Motor vehicles - 4 - 5 years Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. STOCKS Stocks are valued at the lower of cost, on a first in first out basis, and net realisable value after making due allowance for any obsolete or slow moving items. In the case of finished goods, cost comprises direct materials, direct labour and an appropriate proportion of production overheads. RING PLC NOTES TO THE FINANCIAL STATEMENTS DEFERRED TAXATION Provision is made for deferred taxation, using the liability method, on all timing differences to the extent that it is probable that the liability or asset will crystallise. PENSION BENEFITS Pension benefits are funded over the employees' periods of service. Contributions to certain personal pension policies are charged to the profit and loss account as incurred. GOODWILL Following the issuance of FRS 10 "Goodwill and Intangible Assets" goodwill arising on acquisitions during the year ended 30 June 1999 and thereafter, being the excess of the fair value of the purchase consideration over the fair value of the net assets at the time of the purchase of business, is capitalised and amortised over a maximum estimated useful life of 20 years on a straight line basis. Goodwill written off in prior years will not be re-stated except in the event of a business with related goodwill being sold, where goodwill is written back in calculating the profit or loss on disposal. In the event of a business being sold when goodwill has been capitalised the associated goodwill is written off in the profit and loss account. The directors consider annually whether a provision against the value of goodwill on an individual investment basis is required. FOREIGN CURRENCY TRANSLATION Transactions denominated in foreign currency are translated into sterling at either the rate of exchange ruling on the date of the transaction or at the exchange rate of a forward foreign currency contract taken out to cover that transaction. On consolidation, foreign currency values in the profit and loss accounts of overseas subsidiaries are translated into sterling at the average rate of exchange ruling throughout the year. Foreign currency values in the balance sheets of overseas subsidiary companies are translated at the rates of exchange ruling at the balance sheet date. The difference between the average rate and closing rate for the profit and loss account is taken to reserves. RING PLC NOTES TO THE FINANCIAL STATEMENTS 2 SEGMENTAL ANALYSIS An analysis of turnover and operating profit (net of allocation of head office costs) by segment and by geographical location is:
2000 1999 1998 Operating Operating Operating Turnover profit Turnover profit Turnover profit /pound /pound /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 '000 '000 Continuing operations Distribution 76,686 2,272 70,387 3,630 64,895 3,321 --------------------------------------------------------------- Discontinued operations Engineering -- -- -- -- 8,119 259 Distribution 1,816 2 4,225 (163) 4,248 5 Other -- -- -- -- 595 (535) --------------------------------------------------------------- 1,816 2 4,225 (163) 77,857 (271) --------------------------------------------------------------- Total 78,502 2,274 74,612 3,467 77,857 3,050 --------------------------------------------------------------- Geographical location by origin United Kingdom 78,502 2,274 74,612 3,467 75,676 3,201 Rest of Europe -- -- -- -- 418 (148) North America -- -- -- -- 1,173 (30) Rest of World -- -- -- -- 590 27 --------------------------------------------------------------- 78,502 2,274 74,612 3,467 77,857 3,050 --------------------------------------------------------------- Tumover by destination United Kingdom 75,102 71,259 72,189 Rest of Europe 2,550 2,365 2,834 Far and Middle East 214 105 288 North America 327 458 1,621 Rest of World 309 425 925 ------- ------- ------ 78,502 74,612 77,857 ------- ------- ------
In the opinion of the directors, there was only one segment of trade at 30 June 2000, 30 June 1999 and 30 June 1998 and that all the net assets were utilised in that trade. RING PLC NOTES TO THE FINANCIAL STATEMENTS 3 COST OF SALES AND OPERATING COSTS
2000 1999 1998 Continuing Discontinued Continuing Discontinued Continuing Discontinued operations operations Total operations operations Total operations operations Total /pound /pound /pound /pound /pound /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ sterling/ sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 '000 '000 '000 '000 '000 Cost of sales 50,965 1,218 52,183 49,168 3,014 52,182 45,782 7,670 53,452 ------------------------------------------------------------------------------------------------------- Operating costs: Distribution costs 8,625 149 8,774 6,363 371 6,734 5,441 1,294 6,735 Selling & marketing costs 9,610 217 9,827 6,071 661 6,732 5,144 1,549 6,693 Administrative costs 4,633 230 4,863 4,985 447 5,432 5,207 2,410 7,617 Amortisation of goodwill 116 -- 116 65 -- 65 -- -- -- ------------------------------------------------------------------------------------------------------- 22,984 596 23,580 17,484 1,479 18,963 15,792 5,253 21,045 Exceptional costs 465 -- 465 -- -- -- -- 310 310 ------------------------------------------------------------------------------------------------------- 23,449 596 24,045 17,484 1,479 18,963 15,792 5,563 21,355 -------------------------------------------------------------------------------------------------------
The exceptional costs in the year ended 30 June 2000 relate to professional costs incurred by the Company during the acquisition by Catalina Lighting, Inc. The exceptional costs in the year ended 30 June 1998 were redundancy costs connected with the disposal of the non-distribution businesses. Operating costs are stated after charging/(crediting):
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Hire of plant, equipment and vehicles under operating leases 473 352 472 Leasehold property rents (net of rents received) 690 471 528 Auditors' remuneration 60 60 52 Other fees paid to KPMG Audit Plc and its associates 64 44 10 Profit on the disposal of tangible fixed assets (26) (70) -- Depreciation 1,006 1,040 1,376
4 EXCEPTIONAL ITEMS
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Loss on sale of discontinued activities (note 21) (366) -- (18,159) Additional consideration from the sale of the Engineering -- -- -- Division following the release of the warranty retention -- 500 -- Additional pension liabilities relating to the sale of the Engineering Division (note 25) (620) (520) -- ------------------------------- (986) (20) (18,159) -------------------------------
RING PLC NOTES TO THE FINANCIAL STATEMENTS 5 STAFF COSTS AND NUMBERS
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Wages 7,992 7,889 10,296 Social security costs 714 686 904 Other pension costs 225 187 369 ------------------------------ 8,931 8,762 11,569 ------------------------------
The average number of persons employed by the Group during the year, including directors, was as follows:
Number Number Number Selling and marketing 170 156 149 Distribution and production 229 243 403 Administration 94 101 163 ------------------------------- 493 500 715 -------------------------------
6 EMOLUMENTS OF DIRECTORS
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Emoluments 351 389 351 Contributions to money purchase schemes 26 23 20 ------------------------------ 377 412 371 ------------------------------
Directors' emoluments excluding pension contributions were: a) Year ended 30 June 2000
Basic salary and fees Annual bonus Benefits Total 2000 /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 Executive Directors JM Hall 155 -- 13 168 AF Welham 100 -- 12 112 Non-Executive Directors K Jackson 35 -- -- 35 BP Doe 18 -- -- 18 RG Hardie 18 -- -- 18 --------------------------------------------------------- Total 326 -- 25 351 ---------------------------------------------------------
RING PLC b) Year ended 30 June 1999
Basic salary and fees Annual bonus Benefits Total 1999 /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 Executive Directors JM Hall 140 42 14 196 AF Welham 91 29 12 132 Non-Executive Directors K Jackson 27 -- -- 27 BP Doe 17 -- -- 17 RG Hardie 17 -- -- 17 --------------------------------------------------------- Total 292 71 26 389 ---------------------------------------------------------
c) Year ended 30 June 1998
Basic salary and fees Annual bonus Benefits Total 1998 /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 Executive Directors JM Hall 124 -- 13 137 AF Welham (appointed 22 October 1997) 59 -- 8 67 RE Richardson (resigned 21 August 1997) 18 -- 2 20 MA Fawcett (resigned 22 October 1997) 26 -- 11 37 DW Hammond (resigned 22 October 1997) 36 -- -- 36 Non-Executive Directors K Jackson (appointed 10 November 1997) 17 -- -- 17 BP Doe (appointed 2 February 1998) 7 -- -- 7 RG Hardie (appointed 2 February 1998) 7 -- -- 7 WA McClue (resigned 30 January 1998) 12 -- 1 13 RJJ Wickham (resigned 30 January 1998) 10 -- -- 10 --------------------------------------------------------- Total 316 -- 35 351 ---------------------------------------------------------
In addition to the emoluments shown above, consequent upon the termination of their employment by the Company, three of the directors who resigned received the following payments by way of compensation for breach of contract for the year ended 30 June 1998: Mr RE Richardson - /pound sterling/356,500 together with an additional pension contribution of /pound sterling/49,680 Mr WA McClue - /pound sterling/17,500 Mr RJJ Wickham - /pound sterling/4,375 Under the terms of their consultancy agreements with the Company, former directors, Messrs. C E Davies and P A C Fox received payments during the period of /pound sterling/31,000 and /pound sterling/41,123 respectively. Their agreements terminated in November 1997. RING PLC NOTES TO THE FINANCIAL STATEMENTS Directors' pension information Retirement benefits are provided under money purchase schemes, on an individual basis. Contributions paid 2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 JM Hall 16 14 12 AF Welham 10 9 6 RE Richardson -- -- 2 ------------------------------------ 26 23 20 ------------------------------------ 7 INTEREST RECEIVABLE, PAYABLE AND SIMILAR CHARGES
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Interest receivable On cash deposits 9 40 4 ------------------------------- Interest payable and similar charges Bank loans and overdrafts and other loans repayable within 5 years 129 171 684 Other loans 1 17 5 Finance lease charges 75 77 63 Other 49 -- 5 ------------------------------- 254 265 757 -------------------------------
RING PLC NOTES TO THE FINANCIAL STATEMENTS 8 TAXATION
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 The charge based on the profit/(loss) for the year comprises: Current year Corporation tax at 30% (1999: 30.75%, 1998: 31%) 831 1,162 530 Overseas tax -- -- (42) Deferred tax 115 (118) 49 ------------------------------------ 946 1,044 537 Adjustments relating to prior years (65) (7) (99) ------------------------------------ 881 1,037 438 ------------------------------------
9 DIVIDENDS
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Preference - non-equity shares 511 543 509 Ordinary - equity shares - Interim dividend 0.6p per share -- 232 -- - Final dividend proposed 1.2p per share (1998: 1.6p) -- 464 634 ------------------------------------ 511 1,239 1,143 ------------------------------------
At 30 June 1999 dividends on shares held by the Ring Employee Share Ownership Plan (ESOP) trust were waived except for 0.01p per share. At 30 June 1999 the trustees of the ESOP held 987,180 ordinary shares. 10 INTANGIBLE FIXED ASSETS 30 June 30 June 2000 1999 /pound /pound sterling/ sterling/ '000 '000 Cost At 1 July 2,323 -- Additions (note 21) -- 2,323 ----- ----- At 30 June 2,323 2,323 ----- ----- Amortisation At 1 July 65 -- Charge for year 116 65 ----- ----- At 30 June 181 65 ----- ----- Net book amounts At 30 June 2,142 2,258 ----- ----- Intangible fixed assets comprises goodwill relating to the acquisitions of P H Products Limited and Arctic Products Limited. RING PLC NOTES TO THE FINANCIAL STATEMENTS 11 TANGIBLE FIXED ASSETS a) YEAR ENDED 30 JUNE 2000
Freehold Long Short Plant, land and leasehold leasehold equipment buildings property property and vehicles Total /pound /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 '000 Cost At 1 July 1999 536 774 150 8,142 9,602 Additions -- -- -- 1,443 1,443 Disposals (193) -- -- (3,152) (3,345) Disposal of subsidiary undertaking -- -- -- (539) (539) ------------------------------------------------------ At 30 June 2000 343 774 150 5,894 7,161 ------------------------------------------------------ Depreciation At 1 July 1999 67 185 149 5,976 6,377 Charge for year 2 18 1 985 1,006 Disposals (43) -- -- (3,038) (3,081) Disposal of subsidiary undertaking -- -- -- (502) (502) ------------------------------------------------------ At 30 June 2000 26 203 150 3,421 3,800 ------------------------------------------------------ Net book amounts At 30 June 2000 317 571 -- 2,473 3,361 ------------------------------------------------------ At 1 July 1999 469 589 1 2,166 3,225 ------------------------------------------------------
b) YEAR ENDED 30 JUNE 1999
Freehold Long Short Plant, land and leasehold leasehold equipment buildings property property and vehicles Total /pound /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 '000 Cost At 1 July 1998 599 774 150 7,354 8,877 Additions -- -- -- 1,316 1,316 Acquisition of subsidiary undertakings -- -- -- 86 86 Disposals (63) -- -- (614) (677) ----------------------------------------------------- At 30 June 1999 536 774 150 8,142 9,602 ----------------------------------------------------- Depreciation At 1 July 1998 92 163 149 5,446 5,850 Charge for year 2 22 -- 1,016 1,040 Disposals (27) -- -- (486) (513) ----------------------------------------------------- At 30 June 1999 67 185 149 5,976 6,377 ----------------------------------------------------- Net book amounts At 30 June 1999 469 589 1 2,166 3,225 ----------------------------------------------------- At 1 July 1998 507 611 1 1,908 3,027 -----------------------------------------------------
The net book amounts of plant, equipment and vehicles includes /pound sterling/1,040,000 (1999: /pound sterling/1,095,000) in respect of leased assets. Included in freehold land and buildings at 30 June 2000 is land with a net book value of /pound sterling/295,000 (1999: /pound sterling/295,000) which is not depreciated. RING PLC NOTES TO THE FINANCIAL STATEMENTS 12 FIXED ASSET INVESTMENTS 30 June 30 June 2000 1999 /pound /pound sterling/ sterling/ '000 '000 Investment in own shares 305 299 --------------------- The Ring Employee Share Ownership Plan (ESOP) trust was established in 1995 to hedge the future obligations of the Group in respect of shares awarded under share option schemes. At 30 June 2000 they held 986,680 (1999: 987,180) ordinary shares with a market value at that date of /pound sterling/493,000 (1999: /pound sterling/331,000). At 30 June 1999 dividends on shares held by the ESOP were waived except for 0.01p per ordinary share. As required by UITF Abstract 13 (Accounting for ESOP Trusts) the assets and liabilities of the ESOP have been recognised as the assets and liabilities of the sponsoring company. The administration costs of the ESOP trust are charged to the profit and loss account of the Group as they accrue. Where appropriate provision has been made against the cost of the shares held in the Company's ESOP scheme reflecting the diminution in the value of the shares held. 13 STOCKS 30 June 30 June 2000 1999 /pound /pound sterling/ sterling/ '000 '000 Raw materials and consumables 464 507 Finished goods 12,485 11,331 ------------------- 12,949 11,838 ------------------- RING PLC NOTES TO THE FINANCIAL STATEMENTS 14 DEBTORS
30 June 30 June 2000 1999 /pound /pound sterling/ sterling/ '000 '000 Amounts falling due within one year: Trade debtors 14,930 13,832 Other debtors 248 219 Prepayments and accrued income 181 247 Corporation tax and ACT recoverable -- 486 Deferred taxation (note 17) -- 115 Deferred consideration for sale of operations of subsidiary undertakings 103 66 -------------------- 15,462 14,965 Amounts falling due after more than one year: Deferred consideration for sale of operations of subsidiary undertakings 113 140 -------------------- 15,575 15,105 --------------------
15 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
30 June 30 June 2000 1999 /pound /pound sterling/ sterling/ '000 '000 Bank overdrafts and short term bank loans (secured) 516 70 Other secured bank loans -- 142 Other loans -- 4 Deferred consideration for acquisition of subsidiaries (note 21) 75 303 Trade creditors 11,506 11,554 Other taxation and social security 1,010 970 Other creditors and accruals 6,922 5,879 Obligations under finance leases 532 492 Corporation tax and ACT payable 1,290 1,428 Proposed equity dividends -- 696 Non-equity dividends 231 231 ---------------------- 22,082 21,769 ----------------------
/pound sterling/nil (1999: /pound sterling/142,000) of the secured bank loans are secured by charges over the borrowing subsidiary companies' assets, the remainder being secured on assets of the Group. RING PLC NOTES TO THE FINANCIAL STATEMENTS 16 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 30 June 30 June 2000 1999 /pound /pound sterling/ sterling/ '000 '000 Obligations under finance leases 413 546 --------- --------- The total borrowings of the Group (including finance leases) are repayable as follows: Bank loans Finance leases and and overdrafts other borrowings 2000 1999 2000 1999 /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 Within one year 516 212 532 496 Between one and two years -- -- 320 369 Between two and five years -- -- 93 177 ---------------------------------------------- 516 212 945 1,042 ---------------------------------------------- RING PLC NOTES TO THE FINANCIAL STATEMENTS 17 DEFERRED TAXATION Movements in deferred taxation assets during the year are as follows:
2000 1999 /pound /pound sterling/ sterling/ '000 '000 At 1 July 115 -- (Charged)/credited during the year (115) 118 Acquired on purchase of a subsidiary undertaking (note 21) -- (3) ----------------------- At 30 June -- 115 -----------------------
Deferred taxation assets recognised in the accounts and the amounts not recognised, calculated at the rate of 30% (1999: 30%), are as follows:
Recognised Not recognised 2000 1999 2000 1999 /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 Capital allowances -- -- 142 136 Other timing differences -- 115 468 272 Losses carried forward -- -- 61 50 ----------------------------------------------- -- 115 671 458 ------------------------------------------------
18 MINORITY INTERESTS This represents the external ownership of portions of the issued preference shares of various subsidiary companies. The movement during the year was:
2000 1999 Marshall's Newton Marshall's Newton Universal Mill Total Universal Mill Total /pound /pound /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 '000 '000 At 1 July 644 99 743 644 99 743 Redeemed during the year (644) -- (644) -- -- -- ------------------------------------------------------------------------- At 30 June -- 99 99 644 99 743 --------------------------------------------------------------------------
19 CALLED-UP SHARE CAPITAL The authorised and allotted share capital at 30 June 2000 and 1999 was:
Allotted, called-up Authorised and fully paid 2000 1999 2000 1999 /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 Equity shares Ordinary shares of 50p each 28,250 28,250 19,823 19,823 ------------------------------------------ Non-equity shares 19.2% convertible preference shares of 25p each 5,000 5,000 2,373 2,373 3.5% cumulative preference shares of 62.5p each 13 13 13 13 ------------------------------------------ 5,013 5,013 2,386 2,386 ------------------------------------------ Total 33,263 33,263 22,209 22,209 ------------------------------------------
The holders of the convertible preference shares of 25p each are entitled to receive in priority to the equity shareholders a fixed cumulative dividend of 19.2% per annum until 1 January 2004. From 1 January 1996, the shares can be converted into fully paid equity shares on the basis of two ordinary 50p shares for every five 25p preference shares. Any outstanding preference shares at 1 January 2004 shall automatically convert into fully paid ordinary shares on the same basis. The holders of the preference shares are not entitled to vote at general meetings so long as dividends are not greater than six months in arrears. On a winding-up, the assets available for distribution shall be applied to repaying the preference shareholders, in priority to the equity shareholders, at a rate of /pound sterling/1 per fully paid share and arrears of dividends due. The holders of the cumulative preference shares of 62.5p each are entitled to receive, with equal priority to the convertible preference shareholders, a fixed dividend of 3.5% per annum. Voting rights and entitlement to assets on a winding-up are identical to those held by the holders of the convertible preference shares. RING PLC NOTES TO THE FINANCIAL STATEMENTS 20 RESERVES
2000 1999 Share Other non- Profit and Share Other non- Profit and premium distributable loss account premium distributable loss account /pound /pound /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 '000 '000 Group At 1 July 10,405 1,050 (21,659) 10,405 1,050 (22,605) Goodwill reinstated on disposals -- -- 393 -- -- -- (Accumulated deficit)/retained profit for the financial year -- -- (349) -- -- 946 -------------------------------- -------------------------------- At 30 June 10,405 1,050 (21,615) 10,405 1,050 (21,659) -------------------------------- --------------------------------
The cumulative amount of goodwill written off directly against reserves in relation to acquisitions, net of goodwill relating to businesses disposed of, is /pound sterling/25,506,000 (1999: /pound sterling/25,899,000). 21 ACQUISITIONS AND DISPOSALS a) Year ended 30 June 2000 Acquisitions During the year the Group, in accordance with the terms of the purchase agreement, made a deferred consideration payment of /pound sterling/228,000 in respect of the acquisition of Arctic Products Limited in April 1999. The amount was fully provided for in the accounts for the year ended 30 June 1999. Disposals On 29 November 1999 the Group disposed of M&F Components Limited. Details of the net tangible assets disposed of are: /pound /pound sterling/ sterling/ '000 '000 Consideration (net of costs) 65 Fixed assets 37 Stocks 689 Debtors 1,121 Creditors (969) Overdraft (839) Corporation Tax (1) ------ 38 ------ Profit on disposal before goodwill reinstated 27 Goodwill reinstated (393) ------ Loss on disposal (note 4) (366) ------ RING PLC NOTES TO THE FINANCIAL STATEMENTS b) Year ended 30 June 1999 Acquisitions On 7 August 1998 the Group acquired the entire issued share capital of P H Products Ltd for /pound sterling/1.4m. On 22 April 1999 the Group acquired the entire issued share capital of Arctic Products Ltd for /pound sterling/1.1m with a deferred consideration of up to /pound sterling/227,500 dependant upon the profit before tax for the year ended 30 September 1999. The directors believe that it is likely that the deferred consideration will be payable and that has been assumed in the calculation of total consideration payable below. Book value at acquisition /pound sterling/ '000 Net assets acquired: Tangible fixed assets 86 Stocks 170 Debtors 378 Cash at bank and in hand 212 Taxation (71) Creditors (382) Obligations under finance leases (4) Deferred taxation (3) ------ 386 Goodwill 2,323 ------ Total consideration (including expenses incurred) 2,709 ------ The consideration was satisfied as follows: /pound sterling/ '000 Cash consideration 2,406 Warranty retention 75 Deferred consideration 228 ------ 2,709 ------ In the opinion of the directors there is no material difference between the book values of the net assets acquired and their fair values. c) Year ended 30 June 1998 Acquisitions During the year the Group, in accordance with the terms of the respective purchase agreements, made deferred consideration payments in respect of these prior years acquisitions: /pound sterling/ '000 Lighten Point Corporation Europe Ltd 2,000 Grove Products (Caravan Accessories) Ltd 350 ------- 2,350 ------- These amounts had been fully provided for in the accounts for the year ended 30 June 1997. RING PLC NOTES TO THE FINANCIAL STATEMENTS Disposals On 10 November 1997 the Group disposed of its Engineering Division to Broomco, a newly formed company, which is a subsidiary of IMI, an investment company. The consideration of /pound sterling/17.7m was adjusted in accordance with the disposal agreement for the division's net taxation liability (/pound sterling/0.3m) and net bank loans and overdrafts (/pound sterling/0.8m) which were assumed by the purchaser. On 11 November 1997 Ptarmigan (Porth) Ltd (formerly known as Gainsborough (Porth) Ltd) sold its business to Gainsborough Decorations Ltd for a consideration of /pound sterling/1. On 21 May 1998 the entire share capital of Mary Ford Publications Ltd was sold for a consideration of /pound sterling/60,000 to Michael O'Mara Holdings Ltd. On 26 June 1998 the entire share capital of Ptarmigan Hotels Ltd was sold to Tradeway Consultants Ltd. The consideration of /pound sterling/345,000 payable on completion is subject to an adjustment in accordance with the terms of the disposal agreement to eliminate net current assets or liabilities at the completion date. A provision of /pound sterling/9,000 has been made in the accounts for this adjustment. Net tangible assets disposed of /pound sterling/ '000 Fixed assets 4,725 Stocks 5,870 Debtors 6,878 Creditors (including hire purchase liabilities) (6,525) Corporation tax (324) Deferred tax (32) ---------- 10,592 Minority interest (104) ---------- 10,488 Goodwill reinstated on disposal 23,514 ---------- 34,002 Loss on sale of Engineering Division (17,980) Loss on sale of Gainsborough (Porth) Ltd business (59) Loss on sale of Ptarmigan Hotels Ltd (112) Loss on sale of Mary Ford Publications Ltd (8) ---------- (18,159) ---------- 15,843 ---------- Discharged by: Cash received (net of expenses) 15,069 Other secured loans assumed by purchaser 154 Net overdrafts assumed by purchaser 620 ---------- 15,843 ---------- Net cash flow from acquisitions and disposals /pound sterling/ '000 Cash received from current year disposals 15,689 Deferred consideration from prior year disposals 94 Deferred consideration relating to prior year acquisitions (2,350) ---------- 13,433 ---------- RING PLC NOTES TO THE FINANCIAL STATEMENTS 22 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Operating profit 2,274 3,467 3,050 Depreciation charges 1,006 1,040 1,376 Amortisation of goodwill 116 65 -- Provision to write down ESOP investment -- -- 31 Profit on disposal of fixed assets (26) (70) -- Provision against recovery of deferred consideration 50 -- -- Revaluation of investment in own shares (6) -- -- (Increase)/decrease in stocks (1,800) 133 (943) Increase in debtors (2,126) (3,152) (713) Increase in creditors 1,352 2,375 1,602 ------------------------------------- Net cash inflow from operating activities 840 3,858 4,403 -------------------------------------
23 ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
2000 1999 1998 /pound /pound /pound sterling/ sterling/ sterling/ '000 '000 '000 Returns on investments and servicing of finance Interest received 9 43 4 Interest paid (203) (165) (952) Preference dividends paid (511) (543) (511) Interest element of finance lease rental payments (75) (77) (63) ------------------------------------- Net cash outflow from returns on investments and servicing of finance (780) (742) (1,522) ------------------------------------- Capital expenditure and financial investment Purchase of tangible fixed assets, net of leasing finance (966) (436) (546) Sale of tangible fixed assets 290 234 624 Purchase of investments -- (239) -- ------------------------------------- Net cash (outflow)/inflow from capital expenditure and financial investment (676) (441) 78 ------------------------------------- Acquisitions and disposals Purchase of subsidiary undertakings -- (2,406) -- Net cash balances acquired with subsidiary undertakings (note 21) -- 212 -- Net cash balances transferred on sale of subsidiary undertakings (note 21) 839 -- 620 Sale of subsidiary undertakings and deferred consideration from prior year disposals 7 47 15,163 Release of warranty retention from prior year disposals (note 4) -- 500 -- Costs associated with acquisitions in prior years (228) -- (2,350) ------------------------------------- Net cash inflow/(outflow) from acquisitions and disposals 618 (1,647) 13,433 ------------------------------------- Financing Debt due within a year: - - repayment of loans (146) (713) (1,932) Debt due beyond a year: - - repayment of loans -- (520) (4,111) Capital element of finance lease rental payments (570) (508) (560) Redemption of preference shares (note 18) (644) -- -- ------------------------------------- Net cash outflow from financing (1,360) (1,741) (6,603) -------------------------------------
RING PLC NOTES TO THE FINANCIAL STATEMENTS 24 FINANCIAL COMMITMENTS Authorised future capital expenditure amounted to: 30 June 30 June 2000 1999 /pound /pound sterling/ sterling/ '000 '000 Contracted 68 72 -------------------- The annual commitment under non-cancellable operating leases was as follows: 2000 1999 Plant, Plant, Land and equipment Land and equipment buildings and vehicles buildings and vehicles /pound /pound /pound /pound sterling/ sterling/ sterling/ sterling/ '000 '000 '000 '000 Leases expiring: Within one year 11 119 -- 61 Within one to two years -- 1 36 109 Within two to five years 79 113 78 201 Thereafter 818 -- 685 -- --------------------- --------------------- 908 233 799 371 --------------------- --------------------- 25 PENSIONS The Group operates a contracted out defined benefit pension scheme covering certain current subsidiary companies of the Group and, until its disposal in November 1997, a number of companies included in the Engineering Division. The scheme is administered externally and the assets are held separately by professional investment managers. The scheme is funded by contributions from members at 5% of pensionable salary and by contributions from current participating companies at rates recommended by the Actuary. The amount charged to the profit and loss account during the year to 30 June 2000 was /pound sterling/59,000 (1999: /pound sterling/82,000) (1998: /pound sterling/249,000). The last completed triennial actuarial valuation of the scheme was carried out as at 5 April 1997, prior to the disposal of the Engineering Division. The actuarial valuation used the projected unit method, the principal assumptions on a continuing prospective rights basis being an investment return of 9% per annum, salary increases of 7.5% per annum and dividend growth of 4.25% per annum. The valuation indicated that the market value of the assets as at the valuation date represented 102% of the benefits that had accrued to members after allowing for expected future salary increases. On disposal of the Engineering Division in November 1997, the active members of the relevant companies were transferred out of the pension fund at a transfer value calculated in accordance with the sale and purchase agreement. As a result of the disposal and the resultant transfer the scheme demography altered considerably, the remaining number of active members amount to only 4% of the total membership. Taking this into account a partial valuation of the scheme was completed by the Actuary on the basis of assumptions more appropriate to the scheme's current and likely future circumstances. The results, received during the year, indicated that the scheme was underfunded. The Group therefore provided for additional contributions and an amount of /pound sterling/520,000 (including expenses) was charged in the year to 30 June 1999 (note 4). The investment strategy was also revised. A further actuarial valuation is being carried out and indicates that the level of under funding created as outlined above has increased. The Group is therefore to make additional contributions to the scheme in respect of which /pound sterling/620,000 has been charged in the financial statements for the year ended 30 June 2000. The Group also operates a defined contribution scheme covering the remaining subsidiary companies of the Group. RING PLC NOTES TO THE FINANCIAL STATEMENTS 26 CONTINGENT LIABILITIES 2000 1999 /pound /pound sterling/ sterling/ '000 '000 Guarantee in favour of HM Customs & Excise in respect of deferment of import duties and VAT 962 762 ----- ----- 27 POST BALANCE SHEET EVENT Further to an Offer Document issued on behalf of Catalina International PLC setting out terms to acquire the ordinary and convertible preference share capital of the Company, dated 1 June 2000 (the "Offer"), on 5 July 2000 the Offer was declared unconditional and the Company became a wholly owned subsidiary of Catalina Lighting, Inc. On 17 August 2000 the Company ceased to be listed on the London Stock Exchange. A resolution was passed on the 22 August 2000 that the Company re-register as a private limited company. The statutory notice period had not expired at the date of this report and therefore the Company is still trading as Ring PLC. RING PLC NOTES TO THE FINANCIAL STATEMENTS 28 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP The Group's consolidated financial statements are prepared in accordance with UK GAAP, which differs in certain significant respects from US GAAP. These differences, together with the approximate effects of the adjustments to the loss/profit for the financial year and shareholders' equity, relate principally to the items set out below. (a) Goodwill and other intangible assets Under UK GAAP, goodwill arising on acquisitions made after December 31 1997 has been capitalised as an intangible fixed asset and is being amortised through the profit and loss account over its economic life. Goodwill arising on acquisitions made prior to January 1 1998 was eliminated against equity reserves. Under US GAAP, the excess of the fair value of the consideration paid over the fair value of the net assets acquired is first allocated to identifiable intangible assets with the remaining amount assigned to goodwill. Identifiable intangible assets which are immaterial and goodwill are capitalised and amortised over their estimated useful lives. Amortization periods of no more than 20 years have been applied in respect to goodwill arising on acquisition. In the application of purchase accounting the fair value of certain assets acquired and liabilities assumed is measured differences under UK GAAP and US GAAP, resulting in a difference in the recorded amounts of these assets, liabilities and resulting goodwill. Under UK GAAP the profit and loss on disposal of a business acquired prior to January 1 1998 is calculated after taking account of any goodwill written off to equity reserves. Under US GAAP an adjustment to the UK GAAP profit and loss is made in respect of goodwill previously amortised. (b) ESOP shares Under UK GAAP, ESOP shares are carried as fixed asset investments. Under US GAAP, ESOP shares are presented as a reduction of equity shareholders' funds. (c) Ordinary dividends Under UK GAAP, proposed dividends on ordinary shares, as recommended by the directors, are deducted from shareholders' funds and shown as a liability in the Group's balance sheet at the end of the year to which they relate. Under US GAAP, such dividends are deducted from shareholders' funds at the date of declaration of the dividend. (d) Pensions Under UK GAAP the expected cost of pensions is charged to the Group's profit and loss account so as to spread the cost of pensions over the expected service lives of employees. Surpluses arising from the actuarial valuation are similarly spread. Under US GAAP costs and surpluses are also spread over the expected service lives but based on prescribed actuarial assumptions, allocation of costs and valuation methods which differ from those used for UK GAAP. Based upon the Group's actuarial valuation, the pension liability recorded did not exceed the unrecognized prior service cost. This deficit is reported as a reduction of other comprehensive income, which is a component of shareholders' equity. (e) Current assets and liabilities Current assets and liabilities under UK GAAP include amounts which fall due after more than one year. Under US GAAP such assets and liabilities would be reclassified as non current assets. RING PLC NOTES TO THE FINANCIAL STATEMENTS (f) Deferred consideration The Group recognises a liability for deferred and contingent consideration on acquisitions expected to be payable in the future. Under US GAAP, such consideration is only recognised when a liability actually arises. (g) Deferred taxation Under UK GAAP, deferred taxation is provided under the liability method, unless there is reasonable certainty that such deferred taxation will not become payable in the foreseeable future. Deferred tax assets are recognised where recovery in the following year is certain. Under US GAAP, deferred taxation is accounted for in accordance with SFAS 109 "Accounting for Income Tax". Deferred taxation is recognised for all temporary differences which result in taxable or tax deductible amounts in future years, subject to a valuation allowance to reduce the deferred tax asset if it is more likely than not that the related tax benefit will not be realised. Deferred taxation also arises in relation to the tax effects of certain other US GAAP adjustments. (h) Share option schemes For the Group's share option schemes, the difference of the option price and the market price of the shares when the options are awarded is charged to compensation cost over the period in respect of the performance conditions apply. To the extent the award is adjusted by virtue of the performance conditions being met or not, the compensation cost is adjusted in line with this. Under US GAAP, the cost is calculated as the difference between the option price and the market price at the end of each period in respect of which performance conditions apply. Under the requirements of APB Opinion No. 25, any compensation cost would be amortized over the period from the date the options are granted to the date they are first exercisable. Save-as-you-earn (SAYE) schemes generally grant shares to employees at a discount to fair value at the date of grant. No compensation cost is recognized for such awards. Under US GAAP, this discount provided to employees would be recorded as compensation cost over the vesting period. The Group's SAYE options were granted at fair value at the date of grant therefore no compensation cost was recorded. Classification differences between UK and US GAAP Statement of cash flows Under UK GAAP, cash flows are presented for operating activities, returns on investment and servicing of finance, taxation paid, capital expenditure, acquisitions and disposals, dividends paid and financing activities. Under UK GAAP, each includes cash in hand and cash on deposit, net of bank overdrafts. Under US GAAP, cash flows are reported as operating, investing and financing activities. Cash flows from taxation and returns on investment and servicing of finance would, with the exception of ordinary dividends paid, be included as operating activities. The payment of dividends would be included under financing activities. Cash and cash equivalents would include cash and short-term investments with original maturities of three months or less. Exceptional items Under UK GAAP, certain exceptional items identified in the Group's financial statements would not be considered exceptional and would be treated as part of income from continuing operations. Discontinued operations Under UK GAAP and US GAAP have different criteria for determining discontinued operations. As a result, the operations of Engineering division, which are discontinued for UK GAAP would qualify as continuing operations under US GAAP. Disclosures In general, the disclosure requirements for UK GAAP are not as extensive as those required by US GAAP. Areas where US GAAP requires specific additional disclosures include: significant customers and suppliers, related party transactions, use of estimates, income taxes, business segment reporting, pensions, financial instruments, fair values, earnings per share, commitments and contingencies, comprehensive income and subsequent events. 2000 1999 /pound /pound Net profit sterling/ sterling/ for the year ended 30 June '000 '000 - ------------------------------------------------------------------------ Net profit for the financial year in accordance with UK GAAP 162 2,185 US GAAP adjustments: Amortisation of goodwill and other intangibles (2,449) (2,031) Deferred taxation 101 172 Pension costs 341 335 Share option expense (37) (4) ------------------ Net (loss) profit for the financial year in accordance with US GAAP (1,882) 657 ------------------ 2000 1999 /pound /pound Shareholders' funds sterling/ sterling/ at 30 June '000 '000 - ------------------------------------------------------------------------ Shareholders' funds in accordance with UK GAAP 12,049 12,005 US GAAP adjustments: Goodwill and other intangibles 13,585 16,427 Deferred tax assets 736 635 Pension costs liabilities (416) (757) Excess of minimum pension liability over unrecognised prior service cost (793) (827) Dividends 0 464 ESOP (305) (299) ------------------ Shareholders' funds in accordance with US GAAP 24,856 27,648 ------------------ 2000 1999 /pound /pound Cash flow statement sterling/ sterling/ for the years ended 30 June '000 '000 - ------------------------------------------------------------------------ Net cash (outflow)/inflow from operating activities (359) 2,453 Net cash (outflow) from investing activities (58) (2,088) Net cash (outflow) from financing activities (1,610) (2,425) ------------------ Net (decrease) in cash and cash equivalents per US GAAP (2,027) (2,060) Cash and cash equivalents at beginning of year 2,338 4,398 ------------------ Cash and cash equivalents at end of year 311 2,338 ------------------ RING PLC NOTES TO THE FINANCIAL STATEMENTS Recent ASB and FASB pronouncements In June 2000, the US Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 138 ("SFAS 138"), "Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133." This statement incorporates the requirements of SFAS 133 which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. This statement is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. The Group is currently assessing any impact on its financial statements. In June 2000, the SEC staff issued Staff Accounting Bulletin (SAB) 101B, "Second Amendment: Revenue Recognition in Financial Statements" which delays the implementation date of SAB 101, "Revenue Recognition in Financial Statements", for registrants to the fourth quarter of fiscal years that begin after December 15, 1999. SAB 101 addresses the timing and extent of recognition of revenue in financial statements. The Group is currently assessing any impact on its financial statements.