Annual Report - Cinemax India - 2009-2010

CINEMAX INDIA LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

To
The Members of
Cinemax India Limited

Your Directors are pleased to present the Eighth Annual Report, to the
members, on the business and operations of your Company together with
Audited Accounts for the financial year ended 31 March, 2010.



I. FINANCIAL OVERVIEW

The financial results for the year ended 31 March, 2010 are as follows:

(Rs. In Lacs)

For the year ended 31st March 2010 2009

Gross Income 14256.39 11553.07

Profit before Interest,
Depreciation and Tax 2742.41 2550.85

Interest 758.06 581.27

Depreciation/Amortisation 1480.26 1150.95

Profit before Tax and after
extra ordinary items 504.09 818.63

Provision for Tax (including
Deferred & Fringe Benefit Tax) (529.16) 177.32

Profit after Tax 602.94 641.31

Profit brought forward from
previous year 1518.81 1287.61

Amount available for
Appropriation 2121.75 1928.93

Appropriation:

Capitalisation of Reserves - -

Proposed Dividend on
Preference Shares 0.85 0.85

Proposed dividend on
Equity Shares 336.00 336.00

Tax on dividend 55.96 57.25

Surplus carried to
Balance Sheet 1713.86 1518.81

Review of Financials

During the year under review, the Gross Income increased from Rs. 11553.07
Lacs (2008-09) to Rs. 14256.39 Lacs (2009-10).

Consequently, the Profit before Interest, Depreciation and Tax (PBIDT)
increased from Rs. 2550.85 Lacs (2008-09) to Rs. 2742.41 Lacs (2009-10).

Profit after tax for the year was Rs.602.94 Lacs as compared to Rs. 641.31
Lacs in the previous year.

II. DIVIDEND

Your Directors have pleasure in recommending a dividend on preference
shares @5% and on equity shares @ 12% i.e. Rs. 1.20 per equity share for
the financial year 2009-10.

The dividend, if approved at the ensuing Annual General Meeting, will
involve cash outflow of Rs. 392.81 Lacs including dividend distribution
tax.

III. SUBSIDIARIES

Your Company has four subsidiaries, namely, Cinemax Motion Pictures
Limited, Vista Entertainment Private Limited, Growel Entertainment Private
Limited and Nikmo Finance Private Limited. Nikmo Finance is a subsidiary of
Growel Entertainment Private Limited.

The statement pursuant to section 212 of the Companies Act, 1956 containing
details of the Company's subsidiaries is attached.

The Consolidated Financial Statements of the Company and its subsidiaries,
prepared in accordance with relevant Accounting Standard issued by The
Institute of Chartered Accountants of India, forms part of this Annual
Report.

We believe that the Consolidated Financial statements present a more
comprehensive picture rather than the standalone financial statements of
Cinemax India Limited and each of its subsidiaries. We, therefore, applied
to the Ministry of Corporate Affairs, Government of India and sought
exemption from the requirement to present detailed financial statements of
each subsidiary.

However, the summary of financial information of each subsidiary regarding
Share Capital, Reserves and Surplus, Total Assets, Total Liabilities, our
holding in the subsidiary, Sales and other income, profit before taxation,
provision for taxation, profit after taxation and proposed dividend have
been separately furnished forming part of this Annual Report.

The Company will make available the annual accounts of the subsidiary
companies and the related detailed information upon request by any member
of the Company. These documents/details will also be available for
inspection by any member of the Company at its registered office during
business hours on working days up to the date of the Annual General
Meeting.

IV. EXPLANATION FOR ANY QUALIFICATION IN THE AUDITORS' REPORT

There is no qualification in the Auditors Report which requires
explanation.

V. HUMAN CAPITAL

Your Company recognizes that 'Human Capital' is its principal asset and
values it highly. Human capital has been one of the key pillars of the
Company's success. The Company has been able to attract, grow and retain
some of the best talent in the industry. Your Company is professionally
managed with key management personnel having a relatively long tenure with
the Company. The Company encourages and facilitates long-term careers
through carefully designed management development and performance
management systems.

VI. INFORMATION TECHNOLOGY

The existing system will be able to cater to your Company's future growth
at reasonable incremental costs. The modular nature of the system supports
efficiency in operations coupled with strong systems and operational
controls. The system is robust to cater to efficient customer service and
support marketing initiatives.

VII. COMMUNICATION AND PUBLIC RELATIONS

Your Company has, on a continuous basis, endeavored to increase awareness
among its Shareholders and in the market place about the Company's
strategy, new developments and financial performance. Financial results,
important developments and achievements are regularly released to the
press, media and uploaded on our website.

Parallely, internal communication and brand building within the
organization is being given further impetus.

VIII. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report covering a wide range of
issues relating to Performance, outlook etc., is annexed as Annexure-A to
this report.

IX. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of the Corporate
Governance. The detailed report on Corporate Governance as stipulated under
Clause 49 of the Listing Agreement forms Annexure-B to this report.

The Statutory Auditors of your Company have examined the Company's
compliance and have certified the same as required under the listing
agreement. The certificate is reproduced as Annexure-D to this report.

X. CHAIRMAN AND CHIEF FINANCIAL OFFICER CERTIFICATION

Chairman and Chief Financial Officer Certification as required under clause
49 of the Listing Agreement, and Chairman Declaration about code of conduct
are furnished in Annexure-C to this report.

XI. AUDITORS

M/s. Walker Chandiok & Co., Chartered Accountants, the Statutory Auditors
of your Company, hold office until the conclusion of the ensuing Annual
General Meeting and are eligible for appointment.

The Company has received letters from Statutory Auditors to the effect that
their appointment, if made, would be within the prescribed limits under
Section 224(1B) of the Companies Act, 1956 and that they are not

disqualified for such appointment within the meaning of Section 226 of the
said Act.

XII. STATUTORY INFORMATION

A) Employees Particulars

Particulars of employees as required under Section 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules 1975 as
amended, forms part of this report.

B) Fixed Deposits

Your Company has not accepted any fixed deposits from the public and, as
such, no amount of principal or interest was outstanding as on the balance
sheet date.

C) Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo

Information required to be provided under Section 217(1)(e) of the
Companies Act, 1956 read with the Companies (Disclosures of Particulars in
the report of the Board of Directors) Rules, 1988 in relation to
Conservation of Energy, Technology Absorption and Research and Development
are currently not applicable to the Company.

The Company has made foreign exchange outgo towards traveling and marketing
amounting to Rs.6.75 Lacs and import of Capital Goods amounting to Rs.38.23
Lacs (Corresponding figures for previous year are Rs. 6.05 Lacs and
Rs.267.83 Lacs).

XIII. DIRECTORS

Mr. Kranti Sinha, Director of your Company is liable to retire by rotation
at the ensuing Annual General Meeting.

XIV. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 your Directors,
based on the information and documents made available to them, confirm
that:

i) In the preparation of annual accounts for year ending 31 March 2010, the
applicable accounting standards have been followed. There are no material
departures in the adoption and application of the accounting standards;

ii) They have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of your
Company at the end of the financial year and of the profit of your Company
for that period;

iii) They have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting records in
accordance with the provisions of the Companies Act, 1956 for safeguarding
the assets of your Company and for preventing and detecting fraud and other
irregularities; and

iv) They have prepared the annual accounts on a going concern basis.

ACKNOWLEDGMENTS

Your Board takes this opportunity to thank the patrons, vendors, business
partners, shareholders and bankers for the faith reposed in the Company and
also thank the Government of India, various regulatory authorities and
agencies for their support and looks forward to their continued
encouragement. Your Directors are deeply touched by the efforts, sincerity
and loyalty displayed by the employees without whom the growth was
unattainable. You Directors wish to thank the investors and shareholders
for placing immense faith in them and the plans designed for growth of your
Company. Your Directors seek and look forward to the same support during
the future years of growth and hope that they can continue to satisfy you
in the years to come.

For and on behalf
of the Board of Directors

Place: Mumbai Rasesh B. Kanakia
Date : 26th May, 2010 Chairman

MANAGEMENT DISCUSSION AND ANALYSIS

ECONOMIC OVERVIEW

The year 2009-10 proved to be a year of global economic resurgence. The
global economy, after faltering due to recession during 2008-09, witnessed
an improvement, mainly on account of infusion of stimulus funds by
respective countries. China and India led the recovery from the front, on
account of huge domestic demand and continued thrust on infrastructure
creation, further propelling demand within the core sectors. The US
recovery, largely driven by fiscal and monetary stimulus, is expected to
clock a GDP growth of 2.8% in 2010.

The Indian economy grew at 7.4% in 2009-10 mainly driven by factors like
rising per-capita income, urbanisation, favourable demographics, declining
household size and increasing job security. Barring any problems caused by
the country's fiscal vulnerability, growth is expected to strengthen in
subsequent years, as it will continue to reap the benefits of the ongoing
opening up of the economy and gradual improvements in infrastructure.

INDUSTRY OVERVIEW

Entertainment and Media (E & M) Industry

Indian Entertainment and Media (E&M) industry went through a tough phase in
the last two years due to the economic slowdown which impacted businesses
in the country. The industry which is dependent on advertising for almost
38% of its revenues was hit due to shrinking advertisement budgets of the
corporate world. The overall E&M industry size grew from Rs. 579 billion in
2008 to Rs. 587 billion at a rate of 1.4% as compared to 12% in 2008.

Some sectors were impacted more than the others like Films, Radio and Out
of Home (OOH), registering a negative growth during the year. In 2010, they
are expected to recover somewhat with a moderate growth rate. Print showed
a flat trend and music grew moderately. TV industry showed a good growth
rate, and Internet, Gaming and Animation, brought reasons to cheer for the
industry with their growth rates touching double digits, albeit on a
smaller base.

The industry is looking at reaching newer target segments, geographies and
mediums, while tapping the potential of the existing ones. The year 2009
was a year marked with innovation and a focus on cost efficiencies across
sectors, more as a necessity to combat the pressures on bottom line. Newer
content formats and strategies adopted by the players in the industry
helped ensure that customers had more choices which led to the evolution of
the industry. Cost efficiencies which came about last year proved to be a
silver lining for the industry in a bad year, and many of these measures
are here to stay and could benefit companies in the long run.

Film Entertainment

The Indian Film industry outshines Hollywood both in terms of number of
films produced and theatrical admissions. The total annual theatrical
admissions in Indian cinemas are around 3 billion, as compared to 1.50
billion tickets sold annually in the us.

While the film entertainment sector had grown by over 15% between 2006 and
2008, the industry witnessed a de-growth in the year 2009. In 2009 the
industry is estimated to have declined by nearly 14% to Rs. 89.30 billion
from Rs. 104.40 billion in 2008. This was largely on account of lower
domestic theatrical collections in 2009 compared to the previous year. As
per industry estimates, the industry is projected to grow at a CAGR of 9%
to touch an estimated amount of USD 3.02 billion over the next five years.

Growth drivers for the sector would include expansion of factors like an
increase in the number of multiplex screens, digital screens facilitating
wider releases, higher cable and satellite revenues, improving collections
from the overseas markets and supplementary revenue streams like DTH,
digital downloads, etc., which are expected to emerge in future.

Apart from Indian movies, additional revenue has been generated by
international film studios. They continued to capitalise on the potential
of their Hollywood portfolio in the Indian market place by releasing a
larger number of prints and increasing the number of dubbed film screenings
in regional Indian markets.

Similarly, 3D films are now gaining prominence. Acase in point was Avatar,
James Cameron's epic 3D film which opened to packed theatres in India and
abroad. Encouraged by the response that Avatar received in India, many
Indian producers are also planning their own 3D films targeted to the
Indian audiences. Their aspirations are well supported by technology
providers who are in the process of implementing 3D compliant projection
systems.

Thus continued interest by global studios in India, investment in
technology such as 3D and digitisation, introduction of miniplexes, coupled
with strong government support against piracy is likely to help the Indian
film industry strengthen its position in the years to come.

Multiplexes

With the growing relevance of multiplexes over the last few years, the
Indian film exhibition industry has undergone a metamorphosis. The first
multiplex came up in Delhi in 1997 and today the total number of multiplex
screens in the country stands at over 800. Over the last few years,
multiplexes have brought back audiences to the theatres. As compared to the
poorly maintained condition of many single screen theatres, multiplexes
offer an enhanced viewing experience that has attracted audiences despite
higher ticket prices. Growing disposable incomes, favourable demographic
changes, increase in the number of films targeted at niche audiences and
entertainment tax benefits granted by various states have contributed to
the growth of multiplexes.

Note-In South India single screens have a stronghold and the four southern
states account for nearly 60% of the single screen theatres and only 10% of
the multiplexes in the country.

Multiplexes, with lower average seating capacities and a differentiated
viewing experience, have led to producers experimenting with film content
for niche audiences. Multiplexes also offer more choices to audiences due
to the flexibility in pricing and programming.

With multiplexes playing such a critical role, understandably the producer-
multiplex impasse had a deep impact on the entire industry. A significant
event that happened last year was the multiplex strike. The strike launched
by Hindi film producers and backed by United Producers Forum lasted for two
months and stalled several movie releases in multiplexes. As collections
from multiplexes contribute a considerable percentage of a film's gross
domestic theatrical collections, the lack of major films released during
this period resulted in significant losses for the industry. After the
strike a number of films were released together, leading to cannibalisation
of revenues.

The key reason for the standoff was the revenue sharing norms between
multiplexes and film producers with multiplex owners demanding a higher
share of the revenues. As per the final settlement, producers will the
rights of distribution of the films whilst exhibitors are to control the
showcasing rights. The revenue share between multiplex exhibitors and
producers is as follows:

Pre-standoff

Producers Multiplex

Week 1 48% 52%
Week 2 38% 62%
Week 3 30% 70%

Post-standoff
Movie earns < Rs. 17.5 Cr Movie earns > Rs. 17.5 Cr
Producers Multiplex Producers Multiplex

Week 1 50% 50% 52% 48%
Week 2 42% 58% 45% 55%
Week 3 35% 65% 38% 62%
Week 4 30% 70% 30% 70%

Recently the industry has also seen the launch of miniplexes (a multi-use
theatre with two screens, seating capacity of approximately 75 per screen
and price point of nearly Rs 80 per ticket). These miniplex operators have
aggressive roll out plans of having over 500 miniplexes across the country
in the nextfew years.

Gaming

The gaming segment is expected to be the fastest growing sector in the E&M
industry. The sector showed a 22% growth in 2009 and is expected to grow at
a CAGR of 32% to reach USD 7.05 billion by 2014, while the animation
segment is expected to record a CAGR of 18.7% in the next five years.

BUSINESS OVERVIEW

Cinemax India Limited (Cinemax) is one of India's leading entertainment
companies, currently focused on the film exhibition and gaming segments. A
part of the Kanakia Group which has over 24 years of experience in real
estate, having developed over 8 million sq.ft. of residential and
commercial properties, the Company owns and controls all the movie
exhibition businesses of the Group. The Company started its operations in
1997 by acquiring a single-screen theatre in Mumbai and later retrofitting
it into a two screen multiplex. Initially, the Company worked on this model
and ended up owing most of the properties. Once the Government announced
the multiplex policy, Cinemax opted for the lease model for its upcoming
projects. The Company has limited interests in mall development and gaming
parlours.

Cinemax runs one of the largest film exhibition theatre chains in India
having 94 (FY09-74) screens in 29 locations (FY09-25) with 25,173 seats (FY
09-20,305). As Mumbai's largest theatre chain with 13 properties and 40
screens it accounts for nearly 32% of the box office collection from Mumbai
from multiplexes. (Around 40% of the total box office collections for Hindi
films in the country come from the Mumbai territory) The Company currently
operates in two distinct business segments-film exhibition and gaming. The
Company has 27 tax free screens.

Due the tough conditions last year, the occupancy rate grew marginally to
26% (FY09-25%), while the Average Ticket Price (ATP) remained the same as
last year at Rs. 128 and the total Spend Per Head (SPH) is now at Rs.159
(FY09-158).

The Company operates in the gaming business under the brand name 'Giggles'.
'Giggles-The Gaming Zone' includes irresistible arcade games, LAN games and
fun rides. The Company is renowned as a pioneer in this field for
introducing outdoor activities like Bungee Jumping, Carousel and Giant
Wheel inside the mall area. Currently, there are several Giggles outlets in
the country. At Eternity Mall, Thane (60 games spread over 12,500 sq.ft.);
Eternity Mall, Nagpur (5,000 sq.ft. with 35 games); Iscon Mall, Rajkot
(jungle theme spread over 4,000 sq.ft. and offering 32 games) and at Sion,
Mumbai (1,500 sq.Ft. and 20 games) etc.

OPPORTUNITIES

With revised growth estimates for GDP at 6.8% in 2009 by IMF, which is
higher than the world average and the expected recovery from the slow down,
the E&M industry is expected to grow steadily over the next five year
period. The growth rate is expected to increase to approximately 11.2% in
2010, as the industry witnesses a recovery. The CAGR from 2006 to 2009 has
remained at 10% and the industry is expected to grow at a rate of 13% in
next five years.

Though the previous year witnessed a decline for the film entertainment
industry, the trend is likely to reverse in 2010 to grow at a CAGR of 8.9%
to reach Rs.136.70 billion by 2014.

The industry learnt some important lessons from the business cycle of 2009.
Although the multiplex strike temporarily derailed the industry, it sowed
the seeds of an open constructive dialogue between the stakeholders. This
augurs well for the industry as it is expected to lead to a more
collaborative approach towards business in the future.

Over the last year and a half, falling consumer confidence and slow down in
the real estate sector, led to nearly many of the major multiplex chains
delaying their expansion plans. However, the long term multiplex story is
still intact; and by 2013 the number of multiplex screens in India will
likely cross 1,600.

The rising number of digital screens also provides the film industry with a
larger number of release centres. While earlier an average film released in
approximately 250 centers, increased penetration of digital screens is
enabling filmmakers to release their films in 700 to 800 centers on an
average due to lower costs and ease of logistics. The total number of
digital screens in the country is currently over 3,000. As per industry
sources, the number of digital screens is expected to increase
significantly in the future as producers and distributors start to utilise
more number of digital screens to ensure a wider release of their films,
reduce print costs and piracy.

Thus rising disposable incomes of the working population and increased
spend on discretionary items, not only in Tier-I but also Tier-II and III
cities is expected to continue impacting the E&M industry favourably. Also,
growth of newer delivery platforms with superior technology and
functionality is likely to expand horizons for the E&M business.
Aspirations of Indian players to go global and foreign players entering the
industry are likely to help the industry target a double digit growth in
next five years. The role of the new media is becoming increasingly
important in the distribution portfolio of advertisers. A strong focus on
talent development, consumer research and innovation can help players in
differentiating themselves amidst growing competition.

OUTLOOK

Cinemax is on a high trajectory growth path. The Company has an aggressive
expansion plan to increase the number of screens in operation by 42 taking
the number to 136, pan India in the next 12 months. The number of seats to
be added is 9,375. Keeping in line with the latest technology, nearly 30
new screens added will be digital. This will help the Company to showcase
3D Hollywood blockbusters and combat privacy. Cinemax will enter several
places for the first time such as Raipurand Sangli.

The Company will continue to ramp up its presence in retail entertainment
landscape by opening several new Giggles outlets in various parts of the
country such as Kalyan, Ahmedabad, Bengaluru, Delhi etc. These will enhance
the out of home entertainment experience for Indian consumers.

In India the number of screens per million of population is just 14 whereas
the average in western countries is approx. 40. With robust long term
outlook and expansion plans, Cinemax is poised to capitalise on this
opportunity.

RISKS AND CONCERNS

Regulatory Risks

Regulations differ from state to state making it difficult for a chain to
operate on a pan India basis, underlying the need for central jurisdiction.
Also, archaic rules framed as back as 1953 require nearly 40 licenses and
up to 3 months for a multiplex to start operations.

The Company has successfully set up properties in eight states across the
country. Thus Cinemax has sufficient experience in handling regulatory
procedures and prepares well in advance to avoid any delays. Cinemax
believes that this risk is thus adequately mitigated if not completely.

Pirac

Piracy continues to be a major concern for the film industry particularly
the Hindi Film Industry.

The Maharashtra Prevention of Dangerous Activities (MPDA) act was amended
and enforced in 2009. Similarly in Karnataka, the Karnataka Prevention of
Dangerous Activities, popularly known as the Goonda act bought film and
video piracy under its purview in July 2009. The industry expects the
legislations to help curb revenue losses due to audio and video piracy in
the two states.

Cinemax has 37 digital screens out of its existing 94 screens which has
helped arrest piracy to a great extent.

Cannibalisation from diverse platforms

The shelf life of movies in theatres has seen a steady decline, where most
movies face a make or break situation in the first weekend itself. The
growing importance alternate distribution platforms like DTH, satellite
television and the soon expected 3G enabled mobile handsets are a threat to
the profitability of theatres.

The Indian Film Industry enjoys mass appeal in India. Despite the entry of
multiple mediums, Indians have always enjoyed watching movies in the
theatre. Besides, with increasing income of the lower middle class, more
people can now afford to watch movies. Theatre owners on their part are
making the movie watching experience more memorable by offering snacks on
the seat, fancy lounge chairs, home delivery of tickets even at two hours
notice. Cinemax offers the gaming experience in some of their locations and
a variety of dishes from international cuisine. Thus going to the theatre
is no more just about watching a movie and overall fun experience.

Competition Risk

The Company faces competition from other exhibition players in the
industry.

Cinemax has established phenomenal brand recall and goodwill in the market.
The cinematic experience offered by the Company's 'Red Lounge' remains
unmatched, having set a benchmark in the industry. Given its strong
relationships in the film business, aggressive roll out across the country,
increasing emphasis on the gaming business, sound financials and a highly
qualified and experienced management team, Cinemax does not expect to be
significantly affected by this risk.

Besides the Indian Film exhibition market is hugely under penetrated which
gives enough scope for multiple players to exist.

Soft targets for miscreants

The film industry is seen as a soft target for terrorists and miscreants as
they can hold the entire industry to ransom if the domestic theatrical
releases are impacted due to any reason. The industry needs to beef up
security to combat this threat and train security personnel adequately.

The Company has adequate security guards and have installed high quality
security systems to check for miscreants. Every person is frisked when they
enter the property.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Company has a cyclical process for identifying, assessing and managing
its internal control, which has been in place for the full year under
review and up to the date of this report. The process is designed to enable
the Board to be confident that such risks are mitigated, or controlled as
far as possible. It should be noted however that no system can eliminate
the risk of failure to achieve business objectives entirely and can provide
reasonable and not absolute assurance against material misstatement and
loss. The Audit Committee is delegated the task of reviewing all identified
risks, with the absolute key risks retained for full board view. Risks and
controls are reviewed to ensure effective management of appropriate
strategic, financial, and operational & compliance issues.

DISCUSSION ON FINANCIAL PERFORMANCE

Income: The Company recorded total income of Rs. 17,607 lacs, as compared
to Rs. 15,402 lacs for 2008-09, a growth of 14.3%.

Of the theatrical exhibition revenues, 73.94% comes from ticket sales,
18.21% from F&B sales, 6.06% from advertisements and 1.79% from others
(includes gaming revenue).

EBIDTA:

The EBIDTA of the Company was Rs. 4,036 lacs in 2008-09 and Rs. 3,593 lacs,
a reduction of 11%.

PAT: The Company's Profit After Tax (PAT) stood at Rs. 1,697 lacs against
Rs. 1,105 lacs in 2008-09, an increase of 53.6%.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

The Company believes that human resource is one of the most vital resources
and a key pillar providing the organisation a competitive edge in current
business environment. The work environment is very challenging and
performance oriented, recognising employee potentials along with providing
them with opportunities. Cinemax takes adequate precautionary measures for
its employee's welfare.

As on 31 March 2010, Cinemax had staff strength of 1297 on its payroll.

CAUTIONARY STATEMENTS

This report contains forward looking statements that involve risks and
uncertainties including, but not limited to, risk inherent in the Company's
growth strategy, acquisition plans, dependence on certain businesses,
dependence on availability of qualified and trained manpower and other
factors. Actual results, performances or achievements could differ
materially from those expressed or implied in such forward looking
statements. This report should be read in conjunction with the financial
statements included herein and the notes there to.