Last checked at 30 Apr 2009 07:00
Final Results
Ross Group plc are pleased to file final audited accounts for the year ended 31st December 2008.
A full review for the year is included within the accounts.
ROSS GROUP PLC
FINANCIAL STATEMENTS
31 DECEMBER 2008
EVERETT & SON
Chartered Accountants & Registered Auditors
35 Paul Street
London
EC2A 4UQ
ROSS GROUP PLC
FINANCIAL STATEMENTS
for the Year Ended 31 December 2008
| Company registration number: | 131902 |
| Registered Office: | 35 Paul Street London EC2A 4UQ |
| Directors: | A C C Ma R Lee Yen Kee M A B Binney M J Simon (Resigned 22 December 2008) B Pettitt (Appointed 22 December 2008) T Wilkinson T Wil T Wilkinson |
| Secretary: | R Lee Yen Kee |
| Banker: | HSBC Bank plc Corporate, Investment Banking And Markets Industrials Level 19, 8 Canada Square London E14 5HQ London London |
| Solicitors: | K & L Gates LLP 110 Cannon Street London EC4N 6AR Lond |
| Brokers: | Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU |
| Auditors: | Everett & Son Chartered Accountants & Registered Auditors 35 Paul Street London EC2A 4UQ London |
ROSS GROUP PLC & SUBSIDIARIES
CONTENTS OF THE FINANCIAL STATEMENTS
for the Year Ended 31 December 2008
Page
| Chairman's Statement | 1 |
| Operating and Financial Review | 2 |
| Report of the Directors Corporate Governance Statement Directors' Remuneration Report Corporate Social Responsibility Report of the Independent Auditors | 3-5 6-8 9 10 11-12 |
| Consolidated Income Statement | 13 |
| Consolidated Statement of Changes in Equity | 14 |
| Consolidated Balance Sheet | 15 |
| Company Balance Sheet | 16 |
| Consolidated Cash Flow Statement | 17 |
| Notes to the Cash Flow Statement | 18 |
| Notes to the Financial Statements | 19-34 |
ROSS GROUP PLC & SUBSIDIARIES
CHAIRMAN'S STATEMENT
for the Year Ended 31 December 2008
RESULTS
The Group result before tax, for the year ended 31 December 2008 was a loss of £1,055,000 (Year ended 31 December 2007: £1,068,000).
The result for the year is disappointing however the Directors consider that it is consistent with the action that had to be taken to prevent and stop the continuing drain on resources caused by GEL Engineering Ltd.
STRATEGY
The appointment of a new Group CEO, Barry Pettitt, which was approved at the Group AGM on 22 December 2008, should enable the Group to continue in its efforts to reduce expenses, increase efficiencies and provide a new strategy for the future benefit of shareholders, even during this time of global economic adversity and uncertainty.
The Board cannot recommend a payment of a dividend.
APPRECIATION
I would like to take this opportunity to thank our Shareholders, Bankers, Advisers, Suppliers and Customers for their continuing support in a challenging year.
A C C Ma
Chairman
28 April 2009
ROSS GROUP PLC & SUBSIDIARIES
OPERATING AND FINANCIAL REVIEW
for the Year Ended 31 December 2008
Business Review
Whilst Ross Group could no longer continue to support the loss making operation of GEL Engineering Ltd which went into administration on 23 April 2008, Sansui Electronics (UK) Ltd continued to earn a small amount of income during the period under review and is presently looking at other licence opportunities in consumer electronics.
The Directors have been continuing to investigate opportunities for the Group with a view to bringing new management and activities into the business profile. The Directors are confident that a suitable potential opportunity will be put together to commence the re-generation of the Group next year.
Business Outlook
The outlook for the Group should be enhanced by the new and potential significant changes in the structure and operation of the Group going forward.
ROSS GROUP PLC & SUBSIDIARIES
REPORT OF THE DIRECTORS
for the Year Ended 31 December 2008
The directors present their report with the financial statements of the company and the group for the year ended 31 December 2008.
PRINCIPAL ACTIVITY
The principal activities of the group are primarily the design and manufacture of engineering projects and the sale and distribution of electronic products.
REVIEW OF BUSINESS
The results for the year and financial position of the company and the group are as shown in the annexed financial statements and detailed in the Operating and Financial Review.
DIVIDENDS
No dividends will be distributed for the year ended 31 December 2008.
There was a loss for the year after taxation amounting to £1,055,000 (2007: £1,068,000). The directors do not recommend payment of a dividend and the loss has been applied to reserves.
DIRECTORS
A C C Ma (Chairman)
Adrian Chi Chiu Ma, aged 64, was appointed to the board on 8 February 2000. He is a commerce graduate from Birmingham University, England and a member of the Institute of Chartered Accountants in England and Wales. Mr Ma has more than 20 years experience in the finance and operations of the computer peripheral and electronics industry. He is also an executive director of The Grande Group.
M A B Binney (Chief Executive)
Michael Andrew Barclay Binney, aged 49, was appointed to the board on 11 February 2000. He studied at Coventry University, England and is a Fellow of the Institute of Chartered Accountants in England and Wales and the Hong Kong Society of Accountants. Mr Binney has extensive experience in manufacturing and operations of the consumer and computer electronics industry. He is also a non-executive director of The Grande Holdings Limited.
R Lee Yen Kee (Executive Director)
Ruby Lee Yen Kee, aged 47, was appointed to the board on 11 May 2001. She is a law graduate from the University of Singapore, and is called to the Singapore Bar. She also holds a masters in law from the London School of Economics, University of London. Prior to joining The Grande Group, Ms Yen Kee was in legal practice and she now leads the legal and company secretarial team of The Grande Group.
M J Simon (Non Executive Director)
Michael Jonathan Simon, aged 50, was appointed to the board on 28 March 2000. He is an economics graduate from the University of Cambridge and a fellow of the Institute of Chartered Accountants in England and Wales and also of the Association of Chartered Certified Accountants. Mr Simon is in a partnership in public practice. Mr Simon resigned as a director on 22 December 2008.
B R Pettitt (Chief Executive Officer - Designate - Subject to Contract)
Barry Richard Pettitt, aged 49, was appointed to the board on 22 December 2008 to become the CEO of the Group subject to contract. In the interim period, subject to his contract approval, he has agreed to be a non executive director. He has more than 30 years experience in the consumer electronics industry and has successfully started several privately owned companies covering a broad spectrum of supply chain management services, managed a number of Public Company divisions (in the capacities of President and Managing Director) and also is a founding partner in a specialist consulting company. He was a main board director of the Ross Group (formerly Ross Consumer Electronic plc) in 1988/89.
ROSS GROUP PLC & SUBSIDIARIES
REPORT OF THE DIRECTORS
for the Year Ended 31 December 2008
GROUP'S POLICY ON PAYMENT OF CREDITORS
It is the policy of the company that it and each of its subsidiaries should agree appropriate terms and conditions for its transactions with suppliers (by means ranging from standard written terms to individually negotiated contracts) and that payment should be made in accordance with those terms and conditions, provided that the supplier has also complied with them. There were no cost of sales in the year, therefore there are no trade creditors at the year end. At the previous period end the average number of day's purchases in trade creditors was 126 days.
EMPLOYEE INVOLVEMENT
Currently the directors are the only employees.
Directors
The directors had no interests in contracts of significance with the company.
In accordance with the Articles of Association members will be asked to confirm the appointment of all directors.
None of the directors at the year end held any shares in the Group.
Substantial shareholdings
As at 31st December 2008 the following were registered as being materially interested in 3% or more of the company's issued share capital, or being a related shareholder:
|
| No. of Ordinary Shares | % of issued share capital | |||||
| The Grande Holdings Limited | 7,272,718 | 5.34 % | |||||
| The Grande Holdings Limited also had the following interests through its nominees: | |||||||
| The Alpha Capital Limited | 23,294,837 | 17.11 % | |||||
| Escalating Investments Limited | 22,200,720 | 16.3 % | |||||
| Vidacos Nominees Limited | 3,636,359 | 2.67 % | |||||
The total number of shares controlled by The Grande Holdings Limited, directly and indirectly, at the date of this report was 56,404,634 (41%).
FINANCIAL INSTRUMENTS
Details of the financial instruments used by the Group can be found in note 17 of the accounts.
ROSS GROUP PLC & SUBSIDIARIES
REPORT OF THE DIRECTORS
for the Year Ended 31 December 2008
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted for use in the European Union. The financial statements are required by law to give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to
| - | select suitable accounting policies and then apply them consistently; | |
| - | make judgements and estimates that are reasonable and prudent; | |
| - | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. | |
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and the group and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit information (as defined by Section 234ZA of the Companies Act 1985) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.
AUDITORS
The auditors, Everett & Son, will be proposed for re-appointment at the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD:
Ms R Y K Lee - Secretary
28 April 2009
ROSS GROUP PLC & SUBSIDIARIES
CORPORATE GOVERNANCE STATEMENT
for the Year Ended 31 December 2008
The company is pleased to present its report on Corporate Governance the Combined Code. The Board strives to comply with the high standards set by The Combined Code as incorporated in the UK Listing Rules of the Financial Services Authority. The Code on Corporate Governance requires the company to make a two part disclosure statement, firstly on how the principles of the code are applied and secondly confirmation of compliance or explanation of any reason for deviation from the Code.
Application Of The Principles Of The Combined Code
The Board
There is an effective and appropriately constituted board which consists of four directors. During the year under review this comprised the Chairman (A C C Ma), the Chief Executive (M A B Binney), one independent non-executive director (M J Simon resigned 22 December 2008) and one executive director (R Lee Yen Kee). Details of the experience and qualifications of the directors are contained within the Annual Report.
The Chief Executive, Mr Binney is normally based overseas.
The non-executive director, Mr Simon, is considered to be independent as there are no circumstances or relationships as described by Code provision A.3.1 which apply to his appointment.
The Chairman, Mr. Ma, is also a director of The Grande Holdings Limited which has a controlling interest in Ross Group due to its shareholding directly and by nominee and subsidiary companies. Mr. Binney is a director of The Grande Holdings Limited. Mr. Ma has other management commitments to companies within The Grande Group.
Board Procedure
The Board is responsible for decisions concerning strategic and financial planning and matters involving the overall direction of the company. Management will seek Board approval of the annual budget and rolling business plan. Reforecasts are presented as updates to the budget throughout the year to account for variances and provide forward vision. The operational business decisions are taken by local management with reference to the Board where necessary.
The Board is of the opinion that taking into account the number of members on the Board a separate Nomination Committee is currently not required. This function is covered by the full Board.
As mentioned above the Board has one non-executive director who is a member of the Audit and Remuneration Committees. As an ongoing part of the reorganisation process the Group is committed to re-examine the constitution of the board and to recruit at the earliest opportunity non-executive directors as necessary. The Group's definition of a non-executive director is one who considers the interest of all the shareholders and this is demonstrated during the board meetings.
Except for the non-executive director who is on a one-year appointment at a fixed fee, all of the other directors are subject to periodic re-election and the full board considers all appointments. A director will require re-election within a maximum period of three years.
Biographies of the Board are included in the Financial Statements. These indicate a wealth of experience, which is essential in effectively managing the activities of the Group. In addition to this the board members, where appropriate, attend seminars and courses of their respective professional organisations.
ROSS GROUP PLC & SUBSIDIARIES
CORPORATE GOVERNANCE STATEMENT
for the Year Ended 31 December 2008
Attendance
Board meetings are held regularly throughout the year. Due to the location of the directors, the meetings are often held electronically.
The Board has now established procedures in respect of access to the Company Secretary and the Directors have access to consult the Company Secretary when required.
All Shareholders have the opportunity to put forward questions to the Board during the Company's Annual General Meeting and the Board communicates with the Shareholders via the notices and other papers relating to the Annual General Meeting. The Company also welcomes and responds to written communication from its shareholders. The Company website allows shareholders to contact the directors by email.
The Board has carried out a formal and rigorous annual evaluation of its performance and of its committees and individual directors. This evaluation covers contribution, commitment and the manner in which board related duties have been completed. The chairman has discussed the review with individual directors where necessary to ensure the Board operates as an effective unit. The performance review was conducted using recognised evaluation processes. The independent non-executive director has conducted a performance review on the chairman which included the consideration of the views expressed by the executive directors.
Statement of Compliance with the Combined Code
The Group has complied with the Combined Code apart from provision A.3.2 which requires that the Board should include at least two independent non-executive directors. Since Michael Simon resigned on 22 December 2008, the Group has no non-executive directors. However the Group is currently in negotiations with executive and non-executive directors with a view to strengthening the board in the near future.
The Group continues to actively seek to appoint additional non-executive directors of the correct experience and calibre. Furthermore whilst the future strategy of the Group continues to develop, the Board feels that it is essential that any additional non-executive director be brought on board with the correct skill-sets to enhance the overall abilities of the Board. The improvement in the results and financial standing of the Group should assist with appointing additional non executive directors and thus strengthening the board.
Internal audit and control
The respective responsibilities of the directors and the auditors in connection with the Financial Statements are set out in the audit report. The directors have overall responsibility of the effectiveness of the Group's whole system of internal control, including financial and other controls, which are designed to provide reasonable but not absolute assurance against material misstatement or loss. The key procedures that the directors have established to provide effective internal financial control are as follows:
Financial Reporting
There is a comprehensive system for reporting performance. During the course of the year, a one year rolling budget is prepared for each company within the Group and a consolidated budget is prepared for the whole Group. The Board then formally approves the budgets. The monthly results are then reported to the Board for their consideration and forecasts are revised accordingly.
Quality and Integrity of Personnel
The integrity of the Group is maintained through the appointment of experienced and professional staff and the application of appropriate policies and procedures.
ROSS GROUP PLC & SUBSIDIARIES
CORPORATE GOVERNANCE STATEMENT
for the Year Ended 31 December 2008
Capital Investment
The Group has set procedures for capital expenditure. These include annual budgets, appraisals and review of the required expenditure, approvals at the right levels of authority and the commissioning of independent professional advice where appropriate.
Professional Advice
Professional advice is usually sought on contentious and disclosure issues, this being as a result of discussions during the Board Meetings. During the year the Chairman can seek independent professional advice in relation to matters affecting the Group.
The Group has an on going system for identifying, evaluating and managing the significant risks faced by the Group which has been in place for the whole of the year under review up to the date of approval of the annual report and accounts and which is regularly reviewed by the Board to ensure it continues to accord with the "Turnbull Guidance". The directors have reviewed the effectiveness of the system of internal financial control during the year from information provided by the management and the Group's external auditors. It must be recognised that such a system can only provide reasonable and not absolute assurance, and in that context, the review revealed nothing which, in the opinion of the directors, indicates that the system was inappropriate or unsatisfactory.
The Group has no formal internal audit function and the Board has determined that there is no need for one. The Board considers that internal audit is dealt with in other ways and the situation is regularly reviewed.
Going Concern
The directors confirm that after making the appropriate enquires, they are of the opinion that the Group as a whole has adequate resources to continue in operational existence for the foreseeable future and therefore have prepared the Financial Statements on a going concern basis.
External Audit and Audit Committee
The Audit Committee comprises the non-executive director and an executive director. Although this does not meet the provision of code C.3.1, the spirit of the provision is in force and as stated above the Board is seeking to recruit additional non-executive directors.
The Audit Committee meets periodically to review the adequacy of the Group's internal control systems, accounting policies, corporate governance policies and compliance with applicable accounting standards and to consider the appointment of the external auditors and to review their fees. Everett & Son is invited to attend these meetings. The Audit Committee is authorised by the Board to investigate any activity within its terms of reference and obtain external professional advice as is necessary.
By order of the Board
A C C Ma
Chairman
28 April 2009
ROSS GROUP PLC & SUBSIDIARIES
DIRECTORS' REMUNERATION REPORT
for the Year Ended 31 December 2008
The Board is pleased to present its Remuneration Report in accordance with section 12.43A(c) of The Listing Rules.
The Board has in place a Remuneration Committee, comprising Mr Michael Simon, the non executive director, and Mr Michael Binney, Chief Executive, to determine the remuneration of the Board.
The Company policy on Executive Directors is to award those involved in the day to day running of the company with an annual salary which may be enhanced, at the Board's discretion, by a bonus in successful years. The Chairman and the other Executive Directors resident outside the UK are not currently rewarded by the company, but this could be reconsidered when the company enjoys more success. These directors feel it would be inappropriate to take any reward until a complete turnaround of the company can be demonstrated and the conditions exist for the restoration of dividend payments to the shareholders.
| Name | Position | Gross Salary | Benefits | Notice Pay | Total Remuneration 2008 | Total Remuneration 2007 |
| A C C Ma | Chairman | Nil | Nil | Nil | Nil | Nil |
| R Lee Yen Kee | Executive director | Nil | Nil | Nil | Nil | Nil |
| M A B Binney | Chief Executive | Nil | Nil | Nil | Nil | Nil |
| M J Simon | Non executive director | Nil | Nil | Nil | £8,000 | £8,000 |
| Total | Nil | Nil | Nil | £8,000 | £8,000 |
No director has a service contract with a notice period in excess of 12 months. All executive directors have contracts that require a notice period of one month. The contract of the non-executive director falls due for renewal in March and would normally be renewed for a period of one year. All directors are presented for re-election by the members at the Annual General Meeting on a maximum cycle of three years.
The Group does not operate a director's share option scheme or a long-term incentive scheme. The Group also does not currently have an employees share scheme or other long-term incentive scheme. None of the Directors take advantage of the Company's Group Personal Pension Scheme to which the company contributes on behalf of employees.
ROSS GROUP PLC & SUBSIDIARIES
CORPORATE SOCIAL RESPONSIBILITY (CSR)
for the Year Ended 31 December 2008
The Board is fully aware of its responsibilities and fully supports the drive for ongoing improvement in this area. The impact the group's activities on the environment are regularly assessed to enable action to be directed at areas where any harmful impact could be reduced.
The Board has instructed local management to ensure the companies address those corporate social responsibilities which are recognised as being of prime importance. The responsibility for CSR rests with the UK based executive director, Michael Binney, who will bring to the Board's attention any major issues which require their approval and regularly updates the Board on CSR matters. The views of shareholders and interested external parties are considered when developing the ongoing policy to CSR.
Figures are available for the board to review to enable them to assess the trend towards improvement in CSR matters and to direct the policy towards those areas that require further attention.
Employees
The company considers its employees to be its most valuable asset and therefore is committed to ensuring they are rewarded with the best environment in which to perform their duties. This environment is one of equal opportunity and free from discrimination and harassment. The company is keen to development a culture which suits the recruitment and retention of the highest calibre of staff and to ensure the all staff are trained to the appropriate standard required to fully meet their job specifications.
The health and safety of the employees is paramount to the company. Staff are issued with data sheets on the handling of any substances which might be toxic and trained in the correct procedures to follow. The company has a Health and Safety committee where any potential issues can be raised. During the calendar year 2008 there were no reportable injuries, diseases or dangerous occurrences under the RIDDOR regulations 1995. This is the fourth year we have been able to report that no instances have occurred.
Environment
The Company has worked with its suppliers during the year to ensure the products used in manufacturing and any waste arising from the use of those products has a minimal impact on the environment. The use of energy is closely monitored and the available controls are used to good effect to reduce consumption where possible.
Customers
Customer satisfaction is one of the main targets for the company and this is aided by a rigorous quality policy. The Quality procedures adopted by the company require the recording of customer feedback and measures our performance against customer expectation. The company strives to meet the demands of its customers, but also ensures that solutions to their requirements are designed with efficiency.
Local Community
The company seeks to inter act with the local community and develop close relationships within its area of operation. It has established links with the local schools and colleges.
Commitment
The Group will continue to enhance its approach to CSR to ensure that it supports the principles as it expands its range of activities and welcomes any suggestions on how it can improve in this area.
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
ROSS GROUP PLC & SUBSIDIARIES
We have audited the financial statements of Ross Group Plc & Subsidiaries for the year ended 31 December 2008, that is, the primary statements and the notes. These financial statements have been prepared under the accounting policies set out therein.
This report is made solely to the company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described in the statement of directors' responsibilities, the company's directors are responsible for the preparation of the financial statements in accordance with applicable law and International Financial reporting Standards (IFRSs) as adopted for use in the European Union. The Directors are also responsible for preparing the report on Directors' remuneration.
Our responsibility is to audit the financial statements and the auditable part of the report on Directors' remuneration in accordance with relevant legal and regulatory requirements and International Standards on auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements and the auditable part of the report on Directors' remuneration give a true and fair view and are properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS regulation. We also report to you if, in our opinion, the directors' report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law or the Listing Rules of the Financial Services Authority regarding the directors' remuneration report and transactions with the company is not disclosed.
We review whether the corporate governance statement reflects the company's compliance with the nine provisions of the combined code specified for our review by the Listing Rules, and we report if it does not. We are not required to form an opinion on the effectiveness of the group's corporate governance procedures or its risk and control procedures.
We read the other information contained in the annual report and consider whether it is consistent with the audited financial statements. This information comprises only the Chairman's statement, Operating and financial review, Report of the Directors, Corporate governance statement, Directors' remuneration report and the Corporate social responsibility statement. We consider the implications on our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
ROSS GROUP PLC & SUBSIDIARIES
OPINION
In our opinion:
| the financial statements give a true and fair view, in accordance with International Financial Reporting Standards as adopted for use in the European Union, of the state of affairs of the company and the group as at 31 December 2008 and of the loss and cash flows of the group for the year then ended; | |
| the financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS regulation; | |
| those parts of the report on Directors' remuneration required by part 3 of Schedule 7A to the Companies Act 1985 have been properly prepared in accordance with the Companies Act 1985; and | |
| the information given in the Report of the Directors is consistent with the financial statements. |
EVERETT & SON
REGISTERED AUDITORS
35 Paul Street
London
EC2A 4UQ
29 April 2009
ROSS GROUP PLC & SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
for the Year Ended 31 December 2008
| Notes | 31.12.08 | 31.12.07 | ||||
| £'000 | £'000 | |||||
| CONTINUING OPERATIONS | ||||||
| Revenue | 2 | 42 | 1,702 | |||
| - | (1,098) | |||||
| Cost of sales | ||||||
| GROSS PROFIT | 42 | 604 | ||||
| Administrative expenses | (437) | (1,151) | ||||
| OPERATING LOSS | (395) | (547) | ||||
| Net finance costs | 4 | (660) | (521) | |||
| LOSS BEFORE TAX | (1,055) | (1,068) | ||||
| Tax | 6 | - | - | |||
| LOSS FOR THE YEAR | (1,055) | (1,068) | ||||
| CONTINUING OPERATIONS LOSS FOR THE YEAR | ||||||
| DISCONTINUED OPERATIONS LOSS FOR THE YEAR | ||||||
| Attributable to: | ||||||
| Equity holders of the parent | 8 | (1,055) | (1,068) | |||
| Earnings per share expressed in pence per share: | 8 | |||||
| (0.77) | (0.78) | |||||
| (0.77) | (0.78) |
ROSS GROUP PLC & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2008
|
| Share capital | Accumulated losses | Other reserves | Total equity | |||
| £'000 | £'000 | £'000 | £'000 | ||||
| Balance at 1 January 2007 | 11,136 | (33,580) | 17,701 | (4,743) | |||
| Exchange (loss) on retranslation of Subsidiary | - | (1) | - | (1) | |||
| (Loss) for the year | - | (1,068) | - | (1,068) | |||
| Total Recognised income for 2007 | - | (1,069) | - | (1,069) | |||
| Balance at 31 December 2007 | 11,136 | (34,649) | 17,701 | (5,812) | |||
| Balance at 1 January 2008 | 11,136 | (31,600) | 17,701 | (2,763) | |||
| Exchange (loss) on retranslation of Subsidiary | - | (2,704) | - | (2,704) | |||
| (Loss) for the year | - | (1,055) | - | (1,055) | |||
| Total recognised income for 2008 | - | (3,759) | - | (3,759) | |||
| Balance at 31 December 2008 | 11,316 | (35,359) | 17,701 | (6,522) |
The retained earnings at 31 December 2007 included a deficit of £(3,049,819) from GEL Engineering Ltd. Since their results are not being consolidated this year, this figure must be excluded from the accumulated losses and total equity brought forward at 1 January 2008.
ROSS GROUP PLC & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
31 December 2008
| Notes | 31.12.08 | 31.12.07 | ||||
| £'000 | £'000 | |||||
| NON-CURRENT ASSETS HELD FOR SALE | ||||||
| Property, plant and equipment | 11 | - | 38 | |||
| Trade and other receivables | 12 | - | 11 | |||
| CURRENT ASSETS | ||||||
| Inventories | - | 3 | ||||
| Trade and other receivables | 12 | 247 | 660 | |||
| Cash and cash equivalents | 13 | 5 | 11 | |||
| 252 | 674 | |||||
| LIABILITIES | ||||||
| CURRENT LIABILITIES | ||||||
| Trade and other payables | 14 | 6,574 | 6,335 | |||
| Financial liabilities - borrowings | ||||||
| Interest bearing loans and borrowings | 200 | 200 | ||||
| 6,774 | 6,535 | |||||
| NET CURRENT LIABILITIES | (6,522) | (5,861) | ||||
| NET LIABILITIES | (6,522) | (5,812) | ||||
| SHAREHOLDERS' EQUITY | ||||||
| Called up share capital | 18 | 11,136 | 11,136 | |||
| Share premium | 19 | 2,317 | 2,317 | |||
| Other reserves | 19 | 15,384 | 15,384 | |||
| Accumulated losses | 19 | (35,359) | (34,649) | |||
| Total equity | (6,522) | (5,812) | ||||
| TOTAL EQUITY | (6,522) | (5,812) |
The financial statements were approved by the Board of Directors on 28 April 2009 and were signed on its behalf by:
A C C Ma - Director
M A B Binney - Director
ROSS GROUP PLC & SUBSIDIARIES
COMPANY BALANCE SHEET
31 December 2008
| Notes | 31.12.08 | 31.12.07 | ||||
| £'000 | £'000 | |||||
| ASSETS | ||||||
| CURRENT ASSETS | ||||||
| Trade and other receivables | 12 | 50 | 47 | |||
| Cash and cash equivalents | 13 | 5 | 1 | |||
| 55 | 48 | |||||
| LIABILITIES | ||||||
| CURRENT LIABILITIES | ||||||
| Trade and other payables | 14 | 5,919 | 5,234 | |||
| NET CURRENT LIABILITIES | (5,864) | (5,186) | ||||
| NET LIABILITIES | (5,864) | (5,186) | ||||
| SHAREHOLDERS' EQUITY | ||||||
| Called up share capital | 18 | 11,136 | 11,136 | |||
| Share premium | 19 | 2,317 | 2,317 | |||
| Other reserves | 19 | 30,938 | 30,938 | |||
| Accumulated losses | 19 | (50,255) | (49,577) | |||
| Total equity | (5,864) | (5,186) | ||||
| TOTAL EQUITY | (5,864) | (5,186) |
The financial statements were approved by the Board of Directors on 28 April 2009 and were signed on its behalf by:
A C C Ma - Director
M A B Binney - Director
ROSS GROUP PLC & SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENT
for the Year Ended 31 December 2008
| Notes | 31.12.08 | 31.12.07 | ||||
| £'000 | £'000 | |||||
| Cash flows from operating activities | ||||||
| Cash generated from operations | 656 | 328 | ||||
| Interest paid | (660) | (521) | ||||
| Net cash from operating activities | (4) | (193) | ||||
| Cash flows from investing activities | ||||||
| Purchase of tangible fixed assets | - | (8) | ||||
| Net cash from investing activities | - | (8) | ||||
| Cash flows from financing activities | ||||||
| New loans in year | - | 200 | ||||
| Net cash from financing activities | - | 200 | ||||
| Decrease in cash and cash equivalents | (4) | (1) | ||||
| Cash and cash equivalents at beginning of year | 9 | 12 | ||||
| Cash and cash equivalents at end of year | 5 | 11 |
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
for the Year Ended 31 December 2008
| 1. | RECONCILIATION OF LOSS BEFORE TAX TO CASH GENERATED FROM OPERATIONS |
| 31.12.08 | 31.12.07 | ||||||
| £'000 | £'000 | ||||||
| Loss before tax | (1,055) | (1,068) | |||||
| Finance costs | 660 | 521 | |||||
| (395) | (547) | ||||||
| Decrease in inventories | 3 | 8 | |||||
| Decrease in trade and other receivables | 424 | 276 | |||||
| Increase in trade and other payables | 239 | 591 | |||||
| Elimination of GEL 2007 closing balances | 385 | - | |||||
| Cash generated from operations | 656 | 328 | |||||
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the cash flow statement in respect of cash and cash equivalents are in respect of these balance sheet amounts:
| Year ended 31 December 2008 | |||||||
| 31.12.08 | 1.1.08 | ||||||
| £'000 | £'000 | ||||||
| Cash and cash equivalents | 5 | 9 | |||||
| Year ended 31 December 2007 | |||||||
| 31.12.07 | 1.1.07 | ||||||
| £'000 | £'000 | ||||||
| Cash and cash equivalents | 11 | 12 | |||||
The difference between the 2007 closing cash balance and the 2008 opening cash balance is the GEL bank
account. The 2007 GEL closing inventory, receivables and payables balances have been eliminated in note 1
above.
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2008
1. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with International Accounting Standards under the historical cost convention, as modified for the revaluation of certain fixed assets.
Basis of consolidation
The group financial statements consolidate those of the company and of its subsidiary undertakings drawn up to 31 December 2008. The results of GEL Engineering Ltd (GEL) have not been consolidated due to the fact they are in liquidation. Any amounts arising between 1 January 2008 and the date GEL went into administration, 23 April 2008, have not been included because they are immaterial. Profits or losses on intra-group transactions are eliminated in full. On acquisition of a subsidiary, all of the subsidiary's assets and liabilities which exist at the date of acquisition are recorded at their fair values reflecting their condition at that date.
Goodwill arising on consolidation represents the excess of the fair value of the consideration given over the fair values of the identifiable net assets acquired. Goodwill arising subsequent to the adoption of International Accounting Standard No. 38 is capitalised and is subject to an annual impairment review. Such goodwill will be charged or credited to the income statement on the subsequent disposal of the business to which it relates. Goodwill previously charged to the special reserve has now been charged to the income statement in relation to subsidiaries disposed of.
Revenue recognition
Revenue is the total amount receivable by the group for goods supplied and services provided to third parties, excluding VAT.
Property, plant and equipment
Depreciation is calculated to write down the cost or valuation less estimated residual value of all tangible fixed assets by equal annual instalments over their expected useful lives. The rates generally applicable are:
|
| Leasehold improvements | - over the term of the lease | ||
|
| Plant, equipment and vehicles | - 10% to 33% |
Per IFRS 5: Non-current Assets Held For Sale and Discontinued Operations, any assets that are classified as "Held for Sale" are valued at the lower of carrying value and fair value less costs to sell. These assets are also not subject to any depreciation.
Financial instruments
Financial assets and liabilities are recognised on the balance sheet when the entity becomes party to the contractual provisions of the instrument.
The Group's financial instruments consist primarily of cash and cash equivalents, accounts receivable and accounts payable.
Cash and cash equivalents
Cash and cash equivalents comprise cash and short term deposits held with banks, bank overdrafts are recorded under current liabilities on the balance sheet.
Trade and other receivables
Trade and other receivables are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts and included in current assets, except for maturities greater than 12 months from the balance sheet date.
Trade and other payables
Trade and other payables are stated at their nominal value and included in current liabilities, except for maturities greater than 12 months from the balance sheet date.
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
Deferred taxation
Deferred tax is provided for if material, using the tax rates estimated to arise when the timing differences reverse and is accounted for to the extent that it is probable that an asset will crystallise.
Long term contracts
Long term contracts are defined as those contracts which straddle two or more accounting periods.
Revenue from long term contracts is recognised as the sum of work performed at the balance sheet date plus a proportion of estimated total contract profit. This proportion is measured by reference to the stage of completion at the balance sheet date, determined as the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs.
Amounts invoiced for work completed are deducted from long term contract revenue and this value is included under 'Amounts recoverable on contracts' while amounts invoiced in excess of recognised revenue are held as current liabilities under 'Amounts payable on contracts'.
Full provision is made for losses on all contracts in the year in which the loss is first foreseen.
Foreign currencies
Transactions denominated in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. These transaction differences are dealt with in the profit and loss account. The financial statements of foreign subsidiaries are translated at the rate of exchange ruling at the balance sheet date. The exchange differences arising from the retranslation of the opening net investment in subsidiaries are taken directly to reserves.
Contributions to pension funds
Money purchase scheme
The pension costs charged against profits represent the amount of the contributions payable to the scheme in respect of the accounting period.
Leased assets
Assets held under finance leases and hire purchase contracts are capitalised at their fair value at the inception of the lease and depreciated over the shorter of the period of the lease and their expected useful lives. The capital element of the future payments is treated as a liability and the interest is charged to the profit and loss account on a sum of digits basis.
Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.
Non-current Assets Held for Sale and Discontinued Operations
In accordance with IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations", a company component is deemed to be a discontinued operation if it has been sold or is classified as held for sale as at the balance sheet date and represents a separate major line of business, whose activities and cash flows can be clearly distinguished from continuing activities both operationally and for accounting purposes. The assets of discontinued operations classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
2. SEGMENTAL REPORTING
Revenue and profit/(loss) on ordinary activities before tax are attributable to the following classes of business.
The revenue and profit/(loss) before tax are attributable to the principal activity of the group.
An analysis of revenue is given below:
| 31.12.08 | 31.12.07 | ||
| £'000 | £'000 | ||
| Revenue by business segment: | |||
| Consumer electronics | 42 | 62 | |
| Technical services | - | 1,640 | |
| 42 | 1,702 | ||
| All consumer electronics sales were to a related party, see note 20. | |||
| 31.12.08 | 31.12.07 | ||
| £'000 | £'000 | ||
| Revenue by destination: | |||
| United Kingdom | - | 38 | |
| Rest of the World | 42 | 1,664 | |
| 42 | 1,702 | ||
|
|
3. EMPLOYEES AND DIRECTORS
| 31.12.08 | 31.12.07 | ||
| £'000 | £'000 | ||
| Wages and salaries | 8 | 938 | |
| Social security costs | - | 88 | |
| Other pension costs | - | 17 | |
| 8 | 1,043 | ||
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
3. EMPLOYEES AND DIRECTORS - continued
The average number of employees during the year was as follows:
| 31.12.08 | 31.12.07 | ||
| £'000 | £'000 | ||
| Warehousing and manufacturing | - | 15 | |
| Admin, distribution and management | 4 | 9 | |
| 4 | 24 | ||
| 31.12.08 | 31.12.07 | ||
| £ | £ | ||
| Directors' emoluments | 8000 | 55,882 | |
The number of directors to whom retirement benefits were accruing was as follows:
| 31.12.08 | 31.12.07 | ||
| Money purchase schemes | - | 1 | |
The amounts set out above include remuneration in respect of the highest paid director as follows:
| 31.12.08 | 31.12.07 | ||
| £'000 | £'000 | ||
| Salary and other emoluments | - | 48 | |
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
4. NET FINANCE COSTS
| 31.12.08 | 31.12.07 | ||
| £'000 | £'000 | ||
| Finance costs: | |||
| Bank interest | 660 | 521 | |
5. LOSS BEFORE TAX
The loss before tax is stated after charging:
| 31.12.08 | 31.12.07 | ||
| £'000 | £'000 | ||
| Cost of inventories recognised as expense | - | 666 | |
| Operating lease - land and building | 8 | 95 | |
| Auditors' remuneration: | |||
| Audit services | 30 | 26 | |
| Professional advisory and statutory services | 30 | 20 | |
| Profit/(loss) before tax | Net assets/(liabilities) | |||
| 31.12.08 £'000 | 31.12.08 £'000 | 31.12.08 £'000 | 31.12.07 £'000 | |
| By business segment: | ||||
| Consumer electronics | 46 | (25) | (409) | (54) |
| Technical services | (441) | (522) | (249) | (3,154) |
| Central assets/(liabilities) | - | - | (5,864) | (2,604) |
| Net interest payable | (660) | (521) | - | - |
| Group profit/(loss) before tax and net liabilities | (1,055) | (1,068) | (6,522) | (5,812) |
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
| 5. | LOSS BEFORE TAX - continued |
Profit/(loss) from operations:
| 31.12.08 | 31.12.07 | ||
| £'000 | £'000 | ||
| Revenue | 42 | 1,702 | |
| Cost of sales | - | (1,098) | |
| Administrative expenses | (437) | (1,151) | |
| Operating profit/(loss) | (395) | (547) | |
6. TAX
Analysis of the tax charge
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2008 or for the year ended 31 December 2007.
No liability to corporation tax arose on ordinary activities for the year ended 31 December 2008. For the year ended 31 December 2007 no provision in respect of corporation tax were made because the Group had sufficient taxable losses brought forward.
Subject to the agreement with HM Revenue and Customs, the Group has taxable trading losses at 31 December 2008 for set-off against future trading profits of £13.37m (2007: £12.32m).
A deferred tax asset of £Nil (2007: £28,000) arises due to timing differences between depreciation of fixed assets and capital allowances. As the Group has large trading losses the recoverability of this asset is uncertain, therefore the asset is not recognised.
7. LOSS OF PARENT COMPANY
As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the parent company is not presented as part of these financial statements. The parent company's loss for the financial year was £(677,668) (2007 - £(275,536)).
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
8. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.
Reconciliations are set out below.
| 31.12.08 | |||
| Weighted | Per share | ||
| Earnings | Average Number | amount | |
| £'000 | Of Shares | Pence | |
| Earnings attributable to ordinary shareholders | (1,055) | 136,181,000 | (0.77) |
| Effect of dilutive securities | - | - | - |
| Diluted EPS | |||
| Adjusted earnings | (1,055) | 136,181,000 | (0.77) |
| 31.12.07 | |||
| Earnings | Weighted Average Number | Per Share amount | |
| £'000 | Of Shares | Pence | |
| Earnings attributable to ordinary shareholders | (1,068) | 136,181,000 | (0.78) |
| Effect of dilutive securities | - | - | - |
| Diluted EPS | |||
| Adjusted earnings | (1,068) | 136,181,000 | (0.78) |
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
9. SUBSIDIARIES
At 31 December 2008 the company held 100% of the allotted equity share capital of the following:-
| Name of subsidiary undertaking | Country of registration and incorporation | Class of share capital held | Nature of business | ||||
| Sansui Electronics (UK) Limited | England and Wales | Ordinary | Distribution of electronic products. | ||||
| GEL Engineering Limited | England and Wales | Ordinary | In liquidation. | ||||
| San Gain Industrial Company Limited | Hong Kong | Ordinary | Group financing services. |
The subsidiaries as identified above.
The costs of the fixed asset investments have been written off over the previous periods.
10. LONG TERM CONTRACTS
Long term contracts in progress at the year end are described by the following:
| 31.12.08 | 31.12.07 | ||
| £000 | £000 | ||
| Contract revenue recognised as revenue in the period | - | 1,585 | |
| Contract costs incurred and recognised profits (less recognised losses) to date | - | 1,585 | |
| Advances received | - | - | |
| Gross amounts due from customers for contract work | - | 79 | |
| Gross amounts due to customers for contract work | - | - | |
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
11. PROPERTY, PLANT AND EQUIPMENT
No depreciation was charged in the year ended 31 December 2007 as the assets were classified as "held for sale" per IFRS 5. These assets were valued at the lower of carrying value and fair value less costs to sell. There was no non current assets held in the year ended 31 December 2008.
12. TRADE AND OTHER RECEIVABLES
| Group | Company | ||||||
| 31.12.08 | 31.12.07 | 31.12.08 | 31.12.07 | ||||
| £'000 | £'000 | £'000 | £'000 | ||||
| Current: | |||||||
| Trade debtors | - | 237 | - | - | |||
| Amounts owed by group undertakings | - | - | 3 | 1 | |||
| Amounts owed by participating interests | 239 | 243 | 39 | 39 | |||
| Amounts recoverable on contract | - | 79 | - | - | |||
| VAT | 7 | 30 | 7 | - | |||
| Prepayments and accrued income | 1 | 71 | 1 | 7 | |||
| 247 | 660 | 50 | 47 | ||||
| Non current: | |||||||
| Other debtors | - | 11 | - | - | |||
| Aggregate amounts | 247 | 671 | 50 | 47 | |||
13. CASH AND CASH EQUIVALENTS
| Group | Company | ||||||
| 31.12.08 | 31.12.07 | 31.12.08 | 31.12.07 | ||||
| £'000 | £'000 | £'000 | £'000 | ||||
| Bank deposit account | 5 | 9 | 5 | 1 | |||
| Bank accounts | - | 2 | - | - | |||
| 5 | 11 | 5 | 1 | ||||
Ross Group Plc and its subsidiaries have given an unlimited, multilateral guarantee dated 27 April 2000 as security to HSBC Bank Plc. In addition HSBC Bank Plc holds a debenture including fixed charge over all freehold and leasehold property; first fixed charge over debts, chattels, goodwill and uncalled capital, both present and future; and first floating charge over all assets and undertakings both present and future dated 31 August 2001.
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
14. TRADE AND OTHER PAYABLES
| Group | Company | ||||||
| 31.12.08 | 31.12.07 | 31.12.08 | 31.12.07 | ||||
| £'000 | £'000 | £'000 | £'000 | ||||
| Current: | |||||||
| Trade creditors | - | 378 | - | 42 | |||
| Amounts owed to group undertakings | - | - | 5,276 | 5,129 | |||
| Amounts owed to participating interests | 6,111 | 5785 | 181 | 1 | |||
| Social security and other taxes | 2 | 88 | 2 | 2 | |||
| Other creditors | 393 | 7 | 393 | - | |||
| Accruals and deferred income | 68 | 77 | 67 | 25 | |||
| VAT | - | - | - | 35 | |||
| 6,574 | 6,335 | 5,919 | 5,234 | ||||
| 15. | FINANCIAL LIABILITIES - BORROWINGS | ||||||
| Group | |||||||
| 31.12.08 | 31.12.07 | ||||||
| £'000 | £'000 | ||||||
| Current: | |||||||
| Other loans | 200 | 200 | |||||
Terms and debt repayment schedule
Group
| 1 year or less | |||
| £'000 | |||
| Other loans | 200 | ||
16. LEASING AGREEMENTS
| Group | |||
| Operating leases | 31.12.08 | 31.12.07 | |
| £'000 | £'000 | ||
| Within one year | - | 95 | |
| Between one and five years | - | 380 | |
| In more than 5 years | - | 190 | |
| Operating profit/(loss) | |||
| - | 665 | ||
Due to the disposal of GEL Engineering Ltd's trade and assets on 23 April 2008, the liability was passed onto
another entity.
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
17. FINANCIAL INSTRUMENTS
The group uses financial instruments, other than derivatives, comprising borrowings, cash, liquid resources and various items, such as trade debtors, trade creditors etc., that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the group's operations.
The group did not enter into derivatives transactions such as interest rate swaps, forward rate agreements and forward foreign currency contracts.
The board of the group considers that the interest rate risk, liquidity risk and foreign currency risks arising from the group financial instruments are low. However it reviews policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous periods.
It is and has been throughout the year under review, the group policy that no trading in financial instruments shall be undertaken.
Short-term debtors and creditors
Short-term debtors and creditors have been excluded from all the following disclosures, other than the currency risk disclosures.
Interest rate risk
The group finances its operations through a mixture of borrowings. The group exposure to interest rate fluctuations on its borrowings is managed by the use of floating facilities.
The interest rate exposure of the financial liabilities of the group as at 31 December 2008 was:
| Interest rate | |||||||
| Fixed | Floating | Zero | Total | ||||
| £000 | £000 | £000 | £000 | ||||
| 31.12.08 | |||||||
| Loans from shareholder | - | 4,010 | - | 4,010 | |||
| Loans from others | - | 200 | - | 200 | |||
| - | - | - | - | ||||
| - | 4,210 | - | 4,210 | ||||
| 31.12.07 | |||||||
| Loans from shareholder | - | 3,651 | - | 3,651 | |||
| Loans from others | - | 200 | - | 200 | |||
| - | 3,851 | - | 3,851 | ||||
The net bank borrowings bear interest at an average rate of 7% during the year (2007: 7%).
The overdrawn current account with associates bears interest at rates that varied in accordance with the rate charged by The Grande Capital Group Limited. The average rate during 2008 was 6.6% (2007: 6.6%). All loans from this associate were allocated to a third party, Keniworth Capital on 30th May 2007.
The group relies on a loan from one of its shareholders, Keniworth Capital as well as support from its associate, The Grande Capital Group Limited, to ensure sufficient liquidity is available to meet foreseeable needs.
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
Maturity of financial liabilities
The group financial liabilities analysis at 31 December 2008 was as follows:
| Group | Company | ||||||
| 31.12.08 | 31.12.07 | 31.12.08 | 31.12.07 | ||||
| £000 | £000 | £000 | £000 | ||||
| In less than one year or on demand | |||||||
| Trade payables | - | 378 | - | 43 | |||
| Amounts owed to associated and group undertakings | 6,111 | 5,785 | 5,457 | 5,129 | |||
| Other financial liabilities | 463 | 172 | 462 | 62 | |||
| 6,574 | 6,335 | 5,919 | 5,234 | ||||
There are no borrowings repayable after one year.
Currency risk
The group does not have foreign investments held in foreign currencies.
The group's exposure to translation and transaction foreign exchange risk is considered to be low by the board.
100% (2007: 97%) of sales by the group's UK businesses are to customers in continental Europe and other foreign countries. These sales are invoiced in US dollars. The board does not consider there is a need for group policy to manage the currency risk as it considers the risk to be low.
Fair values
Set out below is a comparison of fair values and book values of the group financial instrument.
| | 31.12.08 | 31.12.07 | ||
| | Book value | Fair value | Book value | Fair value |
| | £000 | £000 | £000 | £000 |
| | | | | |
| Primary financial instrument held to finance the group operations: | | | | |
| Loans from associate | - | - | - | - |
| Loans from shareholder | 4,010 | 4,010 | 3,651 | 3,651 |
| | | | | |
Where available fair value is taken as the market value of similarly traded financial instruments.
Where market prices are not available for a particular instrument, fair values have been calculated by discounting cash flows at prevailing interest and exchange rates.
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
18. CALLED UP SHARE CAPITAL
Group and Company
| 31.12.08 | 31.12.07 | |||||
| Authorised share capital: | £000 | £000 | ||||
| 195,000,000 Deferred shares of 4.8p each | 9,360 | 9,360 | ||||
| 300,000,000 Ordinary shares of 1p each | 3,000 | 3,000 | ||||
| 67,052,306 Deferred shares of 4p each | 2,682 | 2,682 | ||||
| 15,042 | 15,042 | |||||
Allotted, called up and fully paid:
| 147,745,300 Deferred shares of 4.8p each | 7,092 | 7,092 | |
| 136,180,924 Ordinary shares of 1p each | 1,362 | 1,362 | |
| 67,052,306 Deferred shares of 4p each | 2,682 | 2,682 | |
| 11,136 | 11,136 | ||
The ordinary shares have both voting rights and the right to dividends.
The deferred shares have no rights to dividends and no voting rights. On a winding up the holders of the deferred shares of 4.8p each shall be entitled to receive 1p per share after the repayment of all amounts payable to the holders of any other class of share and the payment of £5,000 on each ordinary share for the time being in issue. The deferred shares of 4.8p each are redeemable at the company's option any time at a price of 1p for each of the deferred shares held by any member. As the deferred shares rank behind the ordinary shares, they are recognised as equity.
Managing Capital
The Group's objectives when managing capital are:
To safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.
To provide an adequate return to shareholders by pricing products and services at an appropriate level taking into account the level of risk.
The Group sets an amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and risk characteristics of the underlying assets.
The entity is not subject to any externally imposed capital requirements.
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
19. RESERVES
| Group | |||||||
| Accumulated | Share | Other | |||||
| Losses | Premium | Reserves | Total | ||||
| £'000 | £'000 | £'000 | £'000 | ||||
| At 1 January 2008 | (31,600) | 2,317 | 15,384 | (13,899) | |||
| Deficit for the year | (1,055) | - | - | (1,055) | |||
| Foreign exchange loss on consolidation | (2,704) | - | - | (2,704) | |||
| At 31 December 2008 | (35,359) | 2,317 | 15,384 | (17,658) | |||
| Company | |||||||
| Accumulated | Share | Other | |||||
| Losses | Premium | Reserves | Total | ||||
| £'000 | £'000 | £'000 | £'000 | ||||
| At 1 January 2008 | (49,577) | 2,317 | 30,938 | (16,322) | |||
| Deficit for the year | (678) | - | - | (678) | |||
| At 31 December 2008 | (50,255) | 2,317 | 30,938 | (17,000) | |||
The retained earnings at 31 December 2007 included £(3,049,819) from GEL Engineering Ltd. Since their results are not being consolidated this year, this figure must be excluded from the retaining earnings and total reserves brought forward at 1 January 2008.
Other reserves of the Group consist of a capital redemption reserve of £1.92m (2007: £1.92m), a non-distributable capital reserve of £3.33m (2007: £3.33m), and a special reserve of £10.13m (2007: £10.13m).
Other reserves of the company consist of a capital redemption reserve of £1.92m (2007: £1.92m) and a special reserve of £29.02m (2007: £29.02m).
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
20. RELATED PARTY DISCLOSURES
The Group carried out the following transactions with related parties during the year:
| 31.12.08 | 31.12.07 | ||
| £000 | £000 | ||
| Sale of goods | |||
| Emerson Radio International | 42 | 48 | |
| Purchases of goods | |||
| Emerson Radio International | - | 69 | |
| The Group had the following balances with related parties at the year end: | |||
| 31.12.08 | 31.12.07 | ||
| £000 | £000 | ||
| Receivables | |||
| Sansui Enterprises (HK) Ltd | 200 | 200 | |
| Akai Europe Ltd | - | 3 | |
| The Grande Capital Group Ltd | - | 4 | |
| The Grande Holdings Ltd (Innovative Capital) | 39 | 36 | |
| 239 | 243 | ||
| Payables | |||
| Akai Sales PTE Ltd Innovative Capital | 25 156 | - 1 | |
| Akai Europe Ltd | - | 7 | |
| Emerson Radio International | - | 50 | |
| Sansui Sales PTE Ltd | - | 2 | |
| 181 | 60 | ||
| Loans from related parties | |||
| The Grande Capital Group Ltd | 1,920 | 2,074 | |
| Keniworth Capital Ltd | 4,010 | 3,651 | |
| 5,930 | 5,725 | ||
The Grande Holdings Limited, the ultimate controlling party of Ross Group Plc, owns all of the above companies with the exception of Keniworth Capital Ltd who have a 29% holding in Ross Group Plc.
The above transactions were at normal commercial terms.
ROSS GROUP PLC & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
for the Year Ended 31 December 2008
Wholly owed subsidiaries
At the year end Ross Group Plc had the following outstanding balances with it subsidiaries:
| 31.12.08 | 31.12.07 | ||
| £000 | £000 | ||
| Receivables | |||
| GEL Engineering Ltd | - | 2,582 | |
| Sansui Electronics (UK) Ltd | 3 | 1 | |
| 3 | 2,583 | ||
| Payables | |||
| San Gain Industrial Co. Ltd | 5,276 | 5,129 | |
| 5,276 | 5,129 | ||
The above transactions were at normal commercial terms.
21. ULTIMATE CONTROLLING PARTY
The directors consider that the ultimate controlling party of Ross Group Plc and Subsidiaries for 2008 and 2007 is The Grande Holdings Limited, a company which is incorporated in Bermuda. The Grande Holdings Limited holds, directly and indirectly, 41% (2007: 41%) of the issued share capital of the company and is the major shareholder. Copies of the group accounts for The Grande Holdings Limited can be obtained from its registered office at Bank of Bermuda Building, 6 Front Street, Hamilton HM11, Bermuda.
22. PENSIONS
Money purchase scheme
The group operated a money purchase pension scheme for the benefit of the directors and employees. The assets of the scheme are administered by trustees in a fund independent from those of the group. The amount recognised as an expense for the year was £Nil (2007: £17k).