Active Energy Regulatory News (AEG)

7 Jul 2005 14:44

Buckland Group PLC07 July 2005 Buckland Group plc Final Results Chairman's statement for the year ended 31 December 2004 I present the financial results for Buckland Group plc for the year ended 31December 2004. The group results show a loss before tax of £488,376 ( 2003:loss £ 464,840 ) on sales of £2,957,083 (2003: £4,453,297). The loss per sharewas 0.26p compared with a loss of 0.30p in 2003. No dividend is proposed. Review of Euro Asia Connectors & Derlite At the time of the interim report last September, I expressed cautious optimismthat the return to profits shown in the management accounts last August would bemaintained. Unfortunately this has not proved to be the case with the groupfalling back into losses in recent months. Whilst our strategy had been totransfer operating assets and personnel from Euro Asia Connectors (EAC) toDerlite as the former relinquished low margin sales and the latter grew, it hasnot proved possible to expand Derlite at a fast enough rate to bridge the gap.Consequently the decision has been taken for EAC to withdraw entirely from theconnector business, with the majority of the workforce being made redundant thismonth. A charge of £60,000 has been taken to the 2004 profit and loss account,reflecting the anticipated write-down in the value of EAC's fixed assets andstocks as a result of this withdrawal. The General Manager and the FinanceDirector in Thailand have also both left the group. EAC is currently completing all its outstanding orders and a decision on thefuture of the company will be taken within the next few weeks, once these ordershave been completed. Derlite achieved further growth in sales in 2004 and the prospects for thesecond half of 2005 are encouraging with the first production orders due fordelivery to various important new customers in the third quarter. Acquisition of the Kigass business On 18th February 2005 the Group acquired the business and certain assets ofKigass Electronics Ltd. Kigass, which now trades under the name DK Gas ("DK"),designs and manufactures spark ignition electrodes and spark generators for usein domestic gas cookers and boilers, with annual sales of some £2.7m. Thecompany is based in Redditch, West Midlands and employs a staff of 80. DK's activities are highly complementary with those of Derlite, with 95% of DK'ssales currently in the UK compared with over 90% of Derlite's sales in the restof the EU and in USA/Mexico. The combination of Derlite and DK Gas gives theGroup a significant presence as a supplier of ignition components to thedomestic gas cooker markets in the UK and Mexico/North America, with goodpotential to strengthen its position both in these markets and in the rest ofEurope. It is planned to commence the integration of the two companies' manufacturingoperations in the third quarter of this year. Balance sheet Following the significant loss in 2004, shareholders' funds at the year endstood at approximately £50,000. The acquisition of the Kigass business inFebruary 2005 was funded by the issue of 214,000,000 new shares at 0.5p each,thereby increasing shareholders funds' by approximately £1.0m. Outlook Short term the Group faces some significant challenges in rationalising the Thaioperations to concentrate on Derlite and DK Gas. This is putting some strain onthe Group's short term liquidity position as referred to in more detail in theReport of the Directors. I am confident, once we have resolved these problems, that we should be able toachieve a satisfactory return on shareholders' funds. Patrick RogersChairman 6 July 2005 Report of the directors for the year ended 31 December 2004 The directors present their report together with the audited financialstatements for the year ended 31 December 2004. Results and dividends The profit and loss account is set out on page 9 and shows the result of thegroup for the year ended 31 December 2004. The directors do not recommend the payment of a dividend. Principal activities, trading review and future developments The Group has two principal activities; the manufacture of connectors used inconsumer electronics products and the manufacture of components used in gasignition systems for gas cookers, gas ovens and gas boilers. The Group is in theprocess of withdrawing from the manufacture of connectors. A review of the group's activities during the period together with an indicationof future developments is given in the Chairman's statement on pages 2 and 3. Research and development Research and development in the gas ignition businesses is concentrated on thedevelopment of new products capable of maintaining and increasing sales. Key events during 2004 During 2004 Euro Asia Connectors continued to be loss-making. Since the yearend the decision has been taken to cease all production of connectors and tomake redundant the majority of its workforce. The future scope of operations ofthe company is currently under review and a decision will be taken on the futureof the company within the next weeks. Derlite achieved further growth in sales, derived from both new product linesand from new customers. Post balance sheet events On 18th February 2005 the Group acquired the business and certain of the assetsof Kigass Electronics Ltd for a total cash consideration of £ 1.07m, funded bythe issue of 214 million new ordinary shares at 0.5p each to institutional andother investors. Directors The directors of the company during the year and their interests in the ordinaryshare capital of the company were: 31 December 31 December 2004 2003 Patrick CRC Rogers (note 1) 4,360,000 15,908,332Leon K Sharples (note 1) 4,360,000 15,908,332Leon K Sharples 11,548,332 -Phillip E Palmer (note 2) 8,866,666 8,866,666 Notes: (1) Joint shareholdings, held by Wharton Holdings Corporation as trustees. (2) Held by C I Law Trustees Limited on behalf of a discretionary trust thebeneficiaries of which include the family of Mr Palmer. Details of directors' interests in options to acquire ordinary shares are shownin note 21. Substantial shareholdings At 28th June 2005 , those shareholders which have notified the company ofdisclosable interests of 3 per cent or more in the ordinary share capital of thecompany are as set out below; Ordinary sharesHolder of 0.5p each Percentage Prof Richard Price 20,250,000 5.0% Creditor payment policy and practice It is the company's policy that payments to suppliers are made in accordancewith those terms and conditions agreed between the company and its suppliers,provided that all trading terms and conditions have been complied with. Tradecreditors at the year end amount to 110 days of average supplies for the year(2003: 69 days). Going Concern The Directors have reviewed the profit and loss and cash flow projections forthe Group for the year ending 30 June 2006 and expected cash trends for July2006. Based on current forecasts and assumptions, the Directors anticipate thatthere may be a short term funding requirement, in excess of banking and loanfacilities already in place, during the period August/September 2005. TheDirectors are currently examining the options for covering this anticipatedshortfall by a combination of additional bank borrowings, shareholders' loansand/or additional equity funding and are of the opinion that adequate additionalfacilities will be forthcoming to cover this requirement. Auditors The directors' consider the independence and objectivity of the external auditorand the level of fees payable for both audit and non-audit work. Details of thenon-audit related fees are shown in note 6 to the financial statements. A resolution concerning re-appointment of Grant Thornton UK LLP will be proposedat the forthcoming Annual General Meeting, in accordance with section 385 of theCompanies Act 1985. On behalf of the Board Patrick RogersDirector Statement of directors' responsibilities Company law in the United Kingdom requires the directors to prepare financialstatements for each financial period which give a true and fair view of thestate of affairs of the company and the group and of the profit or loss of thegroup for that period. In preparing those financial statements, the directorsare required to: • select suitable accounting policies and then apply them consistently • make judgements and estimates that are reasonable and prudent • state whether applicable accounting standards have been followed subject to any material departures disclosed and explained in the financial statements • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business. The directors are responsible for keeping proper accounting records, forsafeguarding the assets of the group and for taking reasonable steps for theprevention and detection of fraud and other irregularities. The directors are responsible for ensuring that the directors' report andchairman's statement are prepared in accordance with United Kingdom company law. They are also responsible for ensuring that the annual report includesinformation required by the AIM rules. Report of the independent auditors to the members of Buckland Group Plc We have audited the financial statements of Buckland Group plc for the yearended 31 December 2004 which comprise the consolidated profit and loss account,the consolidated statement of total recognised gains and losses, theconsolidated reconciliation of movements in shareholders' funds, the balancesheets, the consolidated cash flow statement with two cash flow reconciliationsand notes 1 to 26. These financial statements have been prepared under theaccounting policies set out therein. This report is made solely to the company's members, as a body, in accordancewith Section 235 of the Companies Act 1985. Our audit work has been undertakenso that we might state to the company's members those matters we are required tostate to them in an auditors' report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyoneother than the company and the company's members as a body, for our audit work,for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the annual report and thefinancial statements in accordance with United Kingdom law and accountingstandards are set out in the statement of directors' responsibilities. Our responsibility is to audit the financial statements in accordance withrelevant legal and regulatory requirements and United Kingdom auditingstandards. We report to you our opinion as to whether the financial statements give a trueand fair view and are properly prepared in accordance with the Companies Act1985. We also report to you if, in our opinion, the directors' report is notconsistent with the financial statements, if the company has not kept properaccounting records, if we have not received all the information and explanationswe require for our audit, or if information specified by law regardingdirectors' remuneration and transactions with the group is not disclosed. We read other information contained in the annual report, and consider whetherit is consistent with the audited financial statements. This other informationcomprises only the directors' report and the chairman's statement. We considerthe implications for our report if we become aware of any apparent misstatementsor material inconsistencies with the financial statements. Our responsibilitiesdo not extend to any other information. Basis of opinion We conducted our audit in accordance with United Kingdom auditing standardsissued by the Auditing Practices Board. An audit includes examination, on a testbasis, of evidence relevant to the amounts and disclosures in the financialstatements. It also includes an assessment of the significant estimates andjudgements made by the directors in the preparation of the financial statementsand of whether the accounting policies are appropriate to the group'scircumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the financial statementsare free from material misstatement whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overalladequacy of the presentation of information in the financial statements. Report of the independent auditors to the members of Buckland Group Plc(continued) Going concern In forming our opinion we have considered the adequacy of the disclosures madein the financial statements concerning the possible outcome of negotiations foradditional finance. The financial statements have been prepared on the goingconcern basis, the validity of which depends upon current funding beingmaintained and additional future funding being made available. The financialstatements do not include any adjustments that would result from a failure toobtain such funding. The directors are currently negotiating for funding tocover the deficit through a combination of bank borrowings, shareholder loansand/or the net proceeds of a placing which the Directors believe will beconcluded successfully. Details of the circumstances relating to thisfundamental uncertainty are described in Note 2. Our opinion is not qualifiedin this respect. Opinion In our opinion the financial statements give a true and fair view of the stateof affairs of the company and group at 31 December 2004 and of the loss of thegroup for the year then ended and have been properly prepared in accordance withthe Companies Act 1985. GRANT THORNTON UK LLPRegistered AuditorsChartered AccountantsGatwick Consolidated profit and loss account for the year ended 31 December 2004 Note Year ended Year ended 31 December 2004 31 December 2003 £ £ Turnover 3 2,957,083 4,453,297 Cost of sales (2,458,683) (3,956,500) Gross profit 498,400 496,797 Administrative expenses (1,029,754) (1,282,109)Other operating income 3 70,418 369,711 Operating loss 6 (460,936) (415,601) Interest receivable 7 97 104 Interest payable and 8 (27,537) (49,343)similar charges Loss on ordinary activities (488,376) (464,840)before taxation Tax on loss on ordinary 9 - (2,137)activities Loss transferred to 11,22 (488,376) (466,977)reserves Loss per ordinary share: Basic 10 (0.26p) (0.30)p The loss arises from operations continuing as at 31 March 2005. The accompanying notes form an integral part of these financial statements. Consolidated statement of total recognised gains and losses andconsolidated reconciliation of movements in shareholders' fundsfor the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 £ £Consolidated statement of total recognised gains and losses Loss for the year (488,376) (466,977)Exchange translation loss on foreign currency (53,887) (110,944)net investments in subsidiary undertakings Total recognised gains and losses for the year (542,263) (577,921) Consolidated reconciliation of movements in shareholders' funds Total recognised gains and losses (542,263) (577,921) New ordinary share capital subscribed for and allotted in the period, - 283,000including share premium (net of expenses) Net reduction in equity shareholders' funds (542,263) (294,921) Opening equity shareholders' funds 592,065 886,986 Closing equity shareholders' funds 49,802 592,065 The accompanying notes form an integral part of these financial statements. Consolidated balance sheet at 31 December 2004 Note At At 31 December 2004 31 December 2003 £ £ £ £Fixed assets Intangible assets 12 318,313 336,188Tangible assets 13 173,382 318,009 491,695 654,197Current assets Stocks 15 423,088 471,646Debtors 16 331,243 581,870Cash at bank and in hand 24b 37,298 84,542 791,629 1,138,058Creditors: amounts falling due 17 (1,206,754) (1,150,943)within one year Net current liabilities (415,125) (12,885) Total assets less current liabilities 76,570 641,312 Creditors: amounts falling due 18 (26,768) (49,247)after more than one year 49,802 592,065 Capital and reservesCalled up share capital 21 2,417,752 2,417,752Share premium account 22 735,775 735,775Profit and loss account 22 (3,103,725) (2,561,462) Equity shareholders' funds 49,802 592,065 The financial statements were approved by the Board on 6 July 2005. Patrick C R C RogersDirector The accompanying notes form an integral part of these financial statements. Company balance sheet at 31 December 2004 Note At At 31 December 2004 31 December 2003 £ £ £ £Fixed assets Investments 14 162 162 Current assets Stock 7,115 -Debtors 16 494,973 523,205Cash at bank and in hand 4,493 1,000 506,581 524,205 Creditors: amounts falling due 17 (465,897) (330,784)within one year Net current assets 40,684 193,421 Total assets less current liabilities 40,846 193,583 Capital and reservesCalled up share capital 21 2,417,752 2,417,752Share premium account 22 735,775 735,775Profit and loss account 22 (3,112,681) (2,959,944) Equity shareholders' funds 40,846 193,583 The financial statements were approved by the Board on 6 July 2005. Patrick C R C RogersDirector The accompanying notes form an integral part of these financial statements. Consolidated cash flow statement for the year ended 31 December 2004 Note Year ended Year ended 31 December 31 December 2003 2004 £ £ Net cash inflow/(outflow) from operating activities (see below) 47,226 (56,700) Returns on investments and servicing of finance 24a (27,440) (49,239)Taxation(2,066)- 24a (62,927) (126,945) Acquisitions and disposals Cash outflow before management of liquid resources and financing (45,207) (232,884) Financing 24a 8,166 164,953 Decrease in cash (37,041) (67,931) Reconciliation of net cash flow to movement in net debt 24bDecrease in cash in the period (37,041) (67,931)Cash outflow from decrease in debt (8,166) 28,047Change in net debt resulting from cash flows (45,207) 39,884 Loan notes repaid - 90,000Finance leases acquired - (29,403)Exchange movement (6,653) (490) Movement in net debt in the period (51,860) 20,223 Opening net debt (237,242) (257,465) Closing net debt 24b (289,102) (237,242) Reconciliation of operating loss to netcash inflow/(outflow) from operating activitiesOperating loss (460,936) (415,601)Depreciation and impairment 191,095 192,631Amortisation of goodwill 17,875 100,470(Profit)/loss on sale of fixed assets (560) 1,553Decrease in stocks 48,558 63,280Decrease in debtors 250,627 106,215Increase/(decrease) in creditors 30,782 (98,713)Other non cash operating adjustment (30,215) (6,535) Net cash inflow/(outflow) from operating activities 47,226 (56,700) The accompanying notes form an integral part of these financial statements. Notes forming part of the financial statements for the year ended 31 December2004 1 Accounting policies The financial statements have been prepared under the historical cost conventionand are in accordance with applicable United Kingdom accounting standards. Theprincipal accounting policies of the Group are set out below. In accordancewith Financial Reporting Standard ('FRS') 18 the Group has reviewed itsaccounting policies and estimation techniques and consider that these policiesare the most appropriate. The Group's accounting policies remain unchanged fromthe previous year. Turnover Turnover represents supplies of components used in colour televisions, PCmonitors, VCRs, DVDs, satellite decoders and gas ignition decoders to thirdparties, excluding Value Added Tax or local sales tax where appropriate.Turnover is recognised upon delivery and its treatment is in line with FRS 5. Basis of consolidation The group has used the acquisition method of accounting to consolidate theresults of subsidiary undertakings. The results of subsidiary undertakings areincluded in the group results from the date of acquisition. The consolidatedfinancial statements incorporate the financial statements of Buckland Group PLCand all of its subsidiary undertakings made up to 31 December 2004. Goodwill Goodwill arising on an acquisition of a subsidiary undertaking is the differencebetween the fair value of the consideration paid and the fair value of theassets and liabilities acquired. It is amortised through the profit and lossaccount over the directors' estimate of its useful economic life from the dateof acquisition. Any permanent diminutions in value are written off. Valuation of investments Investments held as fixed assets are stated at cost less any amounts written offin respect of permanent diminution in value. Depreciation Depreciation is provided to write off the cost less estimated residual value, ona straight line basis, of all fixed assets, except freehold land, evenly overtheir expected useful economic lives. Asset lives are as follows: Leasehold improvements - 5 yearsMachines and equipment - between 3 and 5 yearsFixtures and fittings - between 3 and 10 yearsMotor vehicles - 4 years Financial Instruments The group does not use derivative financial instruments. Financial assets arerecognised in the balance sheet at the lower of cost and net realisable value.Income and expenditure arising on financial instruments is recognised on theaccruals basis, and credited or charged to the profit and loss account in thefinancial period to which it relates. Notes forming part of the financial statements for the year ended 31 December2004 (continued) 1 Accounting policies (continued) Foreign currency Foreign currency transactions of individual companies are translated at therates ruling when they occurred. Foreign currency monetary assets andliabilities are translated at the rates ruling at the balance sheet dates. Anydifferences are taken to the profit and loss account. The profit and loss accounts of foreign subsidiary undertakings are translatedinto sterling at the average rate of exchange for the period. Assets andliabilities of foreign subsidiary undertakings are translated into sterling atthe rates of exchange ruling at the balance sheet date. Differences on exchangearising from the translation of the opening net investment in subsidiaries aretaken directly to reserves. All other exchange differences are dealt withthrough the profit and loss account. Product research and development Product research and development costs are charged to profit and loss account inthe period in which the expenditure is incurred. Stocks Stocks are valued at the lower of cost and net realisable value. Cost iscalculated as follows: Raw materials - purchase cost on a first in, first out basis.Work in progress and finished goods - cost of raw materials and labour together with attributable overheads Net realisable value is based on estimated selling price less additional coststo completion and disposal. Deferred taxation Deferred tax has been provided in accordance with FRS 19. Deferred tax is recognised on all timing differences where the transactions orevents that give the group an obligation to pay more tax in the future, or aright to pay less tax in the future, have occurred by the balance sheet date.Deferred tax assets are recognised when it is more likely than not that theywill be recovered. Deferred tax is measured using rates of tax that have beenenacted or substantially enacted by the balance sheet date. Leased assets Assets acquired under hire purchase contracts and finance leases are capitalisedin the balance sheet. The corresponding leasing commitments are shown as amountspayable to the lessor. Depreciation on the relevant assets is charged to theprofit and loss account. Lease payments are analysed between capital and interest components. Theinterest element of the payment is charged to the profit and loss account overthe period of the lease and is calculated so that it represents a constantproportion of the balances of capital repayments outstanding. The capitalelement reduces the amounts payable to the lessor. Rentals paid under operating leases are charged to the profit and loss accounton a straight line basis over the lease period. Retirement benefits Defined contributions pension scheme. The pension costs charged againstoperating profits are the contributions payable to a foreign scheme in respectof the accounting period. Notes forming part of the financial statements for the year ended 31 December2004 (continued) 2 Going Concern The Directors have reviewed the profit and loss and cash flow projections forthe Group to 30 June 2006. Based on current forecasts and assumptions, theDirectors anticipate that there may be a short term funding requirement, inexcess of banking and loan facilities already in place, during the period August/September 2005. The Directors are currently examining the options for coveringthis anticipated shortfall by a combination of additional bank borrowings,shareholders' loans and/or additional equity funding and are of the opinionthat adequate additional facilities will be forthcoming to cover thisrequirement. In the event that the decision is taken to close all of Euro Asia Connectors CoLtd's operations in Bangkok, it is not anticipated that this would have anyadverse impact on the operation of Derlite Co Ltd. There are no crossguarantees in force whereby any of the liabilities of EAC could fall upon othergroup companies. 3 Turnover, profit, net assets and other operating income Turnover is related to the manufacture of components used in colour televisions,PC Monitors, VCRs, DVDs and satellite decoders: and to the manufacture ofcomponents used in gas ignition systems for gas cooking and gas heatingappliances. An analysis by geographical market follows: Year ended 31 Year ended December 31 December 2004 2003Turnover by origin £ £ Europe - 318,973Asia 2,957,083 4,134,324 2,957,083 4,453,297 Year ended Year ended 31 December 31 December 2004 2003Turnover by destination £ £ Europe 2,375,450 3,313,239Asia 269,086 810,438Rest of the World 312,547 329,620 2,957,083 4,453,297 An analysis by segment follows: Year ended 31 Year ended December 31 December 2004 2003Turnover by segment £ £ Electronic Components 1,534,425 3,161,677Gas Ignition Equipment 1,422,658 1,291,620 2,957,083 4,453,297 Loss before tax and net assets relating to each major geographical market arenot disclosed as, in the opinion of the directors, their disclosure would beseriously prejudicial to the interests of the group. Other operating income in 2003 included a one-off accounts payable write offamounting to £205,000 and exchange differences of £149,000. Notes forming part of the financial statements for the year ended 31 December2004 (continued) 4 Employees Year ended Year ended 31 December 2004 31 December 2003Staff costs excluding directors consist of: £ £ Wages and salaries 712,618 984,414Pension costs 661 744Social security costs 22,065 25,053 735,344 1,010,211 The average monthly number of employees of the group, excluding directors,during the year was as follows: Number Number 2004 2003 Manufacturing 344 388Sales 2 3Administration 9 12Research and development 3 3 358 406 5 Directors' emoluments Year ended Year ended 31 December 31 December 2004 2003 £ £ Fees 134,600 114,333 No director receives contributions to a pension scheme. 6 Operating loss Year ended Year ended 31 December 31 December 2004 2003This has been arrived at after charging / (crediting) : £ £ Depreciation - own assets 140,361 183,501 - leased assets 8,407 9,130Impairment provision 42,327 -Amortisation of goodwill 17,875 100,470Operating lease rentals - plant and machinery 8,047 - - other 77,099 109,896Auditors' remuneration - audit services 50,056 50,679 - non-audit services: taxation 8,510 3,948Research and development expenditure 20,543 24,180Profit/loss on disposal of fixed assets (560) 1,553Net (profit) on foreign exchange (36,280) (119,217) Notes forming part of the financial statements for the year ended 31 December2004 (continued) 7 Interest receivable Year ended Year ended 31 December 31 December 2004 2003 £ £ Interest on bank balances 97 104 8 Interest payable and similar charges Year ended 31 Year ended December 31 December 2004 2003 £ £ Interest on bank loans and overdrafts 2,723 6,461Finance charges payable under finance leases and hire purchase 1,747 2,028contractsOther loans 23,067 40,854 27,537 49,343 9 Taxation Year ended Year ended 31 December 31 December 2004 2003 £ £Current tax:UK corporation tax on loss for the period - -Foreign corporation tax on profits for the year - 2,137 - 2,137 The tax assessed for the period is higher than the standard rate ofcorporation tax in the UK (30%). The differences are explainedbelow: Loss on ordinary activities before tax (488,376) (464,840) Loss on ordinary activities multiplied by standard rate of (146,513) (139,452)corporation tax in the UK of 30% Effects of:Expenses not deductible for tax purposes 134,586 (30,889)Capital allowances for the period in (excess of)/less than (199) 813depreciationUtilisation of tax losses 3,483 -Current year tax losses 107,899 241,119Foreign tax exemption (115,081) (64,733)Inter company adjustments 15,825 (4,721)Current tax charge for the period - 2,137 Current year tax losses relate to £104,540 of UK losses and £255,123 of lossesin Thailand. Notes forming part of the financial statements for the year ended 31 December2004 (continued) 10 Earnings per share The calculations of basic earnings per share are based on the loss for the yearattributable to ordinary shareholders of £488,376 (2003: loss £466,977) and aweighted average number of shares in issue during the year of 190,779,408 (2003:153,135,572). Note 21 shows that share options exist at 20% of issued share capital. Theseshare options have an anti- dilutive effect on the earnings per share since theexercise prices are in excess of the market price. 11 Loss for the financial period The parent company has taken advantage of section 230 of the Companies Act 1985and has not included its own profit and loss account in these financialstatements. The parent company's loss after tax for the year was £152,737(2003: loss £193,583). 12 Intangible assets Goodwill on:Group Acquisition Acquisition Total of 10% of Purchased of 100% of Euro Asia Goodwill Derlite Limited Connectors Co. Limited £ £ £ Cost At 1 January 2004 and 31 December 2004 357,491 97,472 454,963 Amortisation At 1 January 2004 21,303 97,472 118,775 Provision for the period 17,875 - 17,875 At 31 December 2004 39,178 97,472 136,650 Net book value At 31 December 2004 318,313 - 318,313 At 31 December 2003 336,188 - 336,188 The goodwill relating to Derlite Limited is being amortised over its usefuleconomic life of 20 years and for Euro Asia Connectors Co. Limited has beenwritten off due to declining returns on the connector business. Notes forming part of the financial statements for the year ended 31 December2004 (continued) 13 Tangible assets Plant, machinery and motor vehicles Fixtures, fillings and Leasehold equipmentGroup Improvements Total £ £ £ £CostAt 1 January 2004 69,817 1,994,848 103,064 2,167,729 Additions during the year 13,459 44,099 6,049 63,607 Disposals - (324) (5,580) (5,904) Exchange differences (4,417) (120,631) (6,202) (131,250) At 31 December 2004 78,859 1,917,992 97,331 2,094,182 Depreciation At 1 January 2004 51,545 1,732,632 65,543 1,849,720 Provided for in the year 17,646 120,092 11,030 148,768 Disposals - (204) (5,580) (5,784) Impairment provision 11,213 16,280 14,834 42,327 Exchange differences (3,572) (106,387) (4,272) (114,231) At 31 December 2004 76,832 1,762,413 81,555 1,920,800 Net book value At 31 December 2004 2,027 155,579 15,776 173,382 At 31 December 2003 18,272 262,216 37,521 318,009 The net book value of tangible fixed assets included within plant, machinery andmotor vehicles, includes an amount of £17,916 (2003: £27,859) in respect ofassets held under finance leases and hire purchase contracts. Depreciationcharged in the year on assets held under finance lease was £8,407 (2003:£9,130). Notes forming part of the financial statements for the year ended 31 December2004 (continued) 14 Fixed asset investments Subsidiary undertakingsCompany £ Cost At 1 January 2004 1,022,896 Additions - At 31 December 2004 1,022,896 Provisions at 1 January 2004 1,022,734Provided during the year -Provisions at 31 December 2004 1,022,734 Net book value at 31 December 2004 162 Net book value at 31 December 2003 162 As at 31 December 2004 the Group held 100% of the share capital of the followingcompanies. Nature of business Date of acquisition/ set up Subsidiary undertaking Country of incorporation Sparkle Investment B V Holland Dormant 6 March 1998Euro Asia Connectors Co Thailand Manufacturing 6 March 1998LimitedEuro Asia Connectors Co Hong Kong Trading 19 March 1999(Hong Kong) LimitedEuro Asia Strip Tinning Thailand Manufacturing 24 April 2000Limited Ravago Plastics LtdUnited Kingdom Trading 5 June 2002Holdsafe Limited United Kingdom Dormant 22 October 2002Derlite Co. Limited Thailand Manufacturing 21 February 2003(Thailand) Hong Kong Trading 29 October 2003Buckland Group (HongKong) Limited All companies within the group have co-terminous year ends. Notes forming part of the financial statements for the year ended 31 December2004 (continued) 15 Stocks Group 31 December 2004 31 December 2003 £ £ Raw materials 272,873 202,262Work in progress 96,829 125,430Finished goods 53,386 143,954 423,088 471,646 There is no material difference between the replacement cost of stocks and theamounts stated above. 16 Debtors Group Company 31 December 31 December 31 December 31 December 2004 2003 2004 2003 £ £ £ £ Trade debtors 179,251 391,976 - -Amounts owed by group undertakings - - 474,052 481,475Other debtors 110,387 145,779 8,269 39,430Prepayments and accrued income 41,605 44,115 12,652 2,300 331,243 581,870 494,973 523,205 At 31 December 2004 £13,953 (2003: £21,647) of the trade debtors have beenfactored with recourse. At 31 December 2004 and 31 December 2003 Euro Asia Connectors Co Ltd had a cashdeposit of Thai Baht 1.66 million (£22,220, 2003: £23,641) with the MetropolitanElectrical Authority for a guaranteed contract to supply electricity. 17 Creditors: amounts falling due within one year 31 December 31 December 31 December 31 December 2004 2003 2004 2003 £ £ £ £ Bank loans and other borrowings 282,880 256,022 216,303 195,717Bank overdrafts 409 363 - 363Trade creditors 740,329 719,116 208,958 100,415Amounts owed to group undertakings - - 72 1,254Corporation tax - 2,066 - -Obligations under finance leases and hire 16,343 16,152 - -purchase contractsAccruals 166,793 157,224 40,564 33,035 1,206,754 1,150,943 465,897 330,784 Amounts due under finance leases and hire purchase contracts are secured on theassets to which they relate. Notes forming part of the financial statements for the year ended 31 December2004 (continued) 18 Creditors: amounts falling due after more than one year Group 31 December 31 December 2004 2003 £ £ Bank loans and other borrowings 18,038 32,743Obligations under finance leases and hire purchase 8,730 16,504contracts 26,768 49,247 Further details of the terms of the loans are shown in note 19. Amounts due under finance leases and hire purchase contracts are secured on theassets to which they relate. 19 Financial Instruments The company's treasury policy is to avoid transactions of a speculative nature.The main risks arising from the group's financial instruments are interest raterisk and foreign currency risk. The directors review and agree policies formanaging each of these risks and they are summarised below. Short term debtors and creditors Short term debtors and creditors have been excluded from all the followingdisclosures, other than the currency risk disclosures. Interest rate risk The group finances its operations through bank borrowings. The group exposureto interest rate fluctuations on its borrowings is managed by the use of bothfixed and floating facilities. It is the Group's policy that approximately 2/3of its borrowings should be at a fixed rate. At the year end 100% per cent ofthe borrowings were at fixed rates, excluding a shareholder loan which isincurring no further interest. Loans amounting to £216,303 (2003: £195,717) are unsecured, repayable on demand,due to a shareholder, Groupe Industriel, and include interest at 10% per annum.Of the amount due £133,337 (2003: £133,337) is related to capital and £82,966 tointerest (2003: £62,511). Loans amounting to £50,663 (2003: £71,402) are due to Eurovideo, secured by acharge over the group's shareholdings in EACHK. The loan bears interest of 7%per annum and is repayable by equal quarterly instalments. A loan of £20,000 (2003: £Nil) is due to Dr Leon Sharples. The loan is interestfree, unsecured and repayable on demand after 31 December 2006. Bank loans Other borrowings amounting to £13,953 (2003: £21,646) relate to factored bookdebts. The borrowings bear interest of 9.5% per annum (2003: 9.5%). Bank overdrafts Other overdrafts amounting to £409 (2003: £363) are secured by a fixed andfloating charge over the Company's assets. The overdraft bears interest of 4%over base rate. Notes forming part of the financial statements for the year ended 31 December2004 (continued) 19 Financial instruments (continued) Liquidity risk The group seeks to manage financial risk, to ensure sufficient liquidity isavailable to meet foreseeable needs and to invest cash assets safely andprofitably manage the liquidity through the use of overdraft. It is the Group'spolicy to factor its trade debtors wherever practicable. Maturity of financial liabilities The group financial liabilities analysis at 31 December 2004 was as follows: Group 2004 2003 £ £ Borrowings are repayable as follows: Within one year Bank loans 13,953 21,647 Other loans 268,927 234,376 Finance leases 16,343 16,152 Between one and two years Other loans 18,038 32,743 Finance leases 6,783 7,217 Between two and five years Other loans - - Finance leases 1,947 9,288 325,991 321,423 Borrowing facilities At 31 December 2004 the group had un-drawn committed borrowing facilities£52,971 (2003: £120,763). Currency risk The group does not hedge its exposure of foreign investments held in foreigncurrencies. The Group considers that the prevailing financial conditions inThailand preclude the need to hedge against the Baht. The group is exposed to translation and transaction foreign exchange risk. Inrelation to translation risk the proportion of assets held in the foreigncurrency is matched to an appropriate level of borrowings in the same currency. The group has overseas subsidiaries operating in Thailand and Hong Kong whoserevenues and expenses are denominated in US dollars and local currencies. Thedirectors protect the group's sterling balance sheet from movements in the USdollar/local currency exchange rates, by financing its net investments in itssubsidiaries, with the exception of Thailand, by means of local currencyborrowings. The majority of the group's sales are to Europe and Asia. These sales areinvoiced primarily in US dollars and Euros. Notes forming part of the financial statements for the year ended 31 December2004 (continued) 19 Financial instruments (continued) The table below shows, in sterling, the extent to which group companies havemonetary assets and liabilities in currencies other than their local currency.Foreign exchange differences on retranslation of these assets are taken to theprofit and loss account of the group companies and the group. Functional currency of operation Net foreign currency monetary (liabilities) Euro GBP US dollars At 31 December 2004 Euro - (16,225) (50,371) GBP (216,303) - - (216,303) (16,225) (50,371) At 31 December 2003 Euro - 5,100 (70,649) GBP (195,717) - - (195,717) 5,100 (70,649) Fair Values The fair value of short term deposits, long term borrowings, loans, overdraft