Interim Results & Placing
Embargoed:0700hrs 30 September 2004
International Brand Licensing plc
( `IBL' or the `Group')
Placing of 3,030,000 New Ordinary Shares
and
Interim results for the six months ended 30 June 2004
* Placing of 3,030,000 New Ordinary Shares at 27.5 pence per share to raise £
833,250 (before expenses) to be utilised for working capital purposes.
* Turnover for the period increased by 124% to £1.326m (2003: £593,000)
* Pre-tax profit of £51,000 (2003: loss of £105,000)
* Admiral Sponsorship of the England & Wales Cricket Board extended until
2010
* Successful launch of Admiral at ASDA on 10 May 2004
* Strong sales of Admiral England cricket replica kit
* New international licensee partners for Admiral in Italy, the Middle East,
Cyprus and Turkey
* Further investment in Mountain Equipment by our European licensee, Swiss
Cutlery, which should result in enhanced revenue
Tony Hutchinson, Chief Executive commented:
' The performance of the Group over the first six months of the year has been
strong and your Board is very confident about the future growth prospects.
It was with great regret that on 13 September 2004 we announced the death of
our Chairman Lance Yates. Lance will be greatly missed by all who knew him, but
at IBL he leaves behind a highly dedicated team committed to achieving the
Company's objectives of maximising shareholder value.'
For further information, please contact:
Mark Kirkland
IBL, Finance Director
07798-827786
Adam Reynolds
Hansard Communications
020-7245-1100
Application will be made for the New Ordinary Shares to be admitted to trading
on the Alternative Investment Market of the London Stock Exchange plc
(`Admission'). It is expected that admission will become effective and that
dealings in the shares of the Company will commence on 6 October 2004.
CHIEF EXECUTIVES STATEMENT
For the six month period ending 30 June 2004 turnover increased by £733,000 to
£1,326,000 (2003: £593,000) and profits increased by £156,000 to a profit
before tax of £51,000 (2003: loss of £105,000).
The successful launch of Admiral in George at ASDA in May combined with
excellent sales of the Admiral England replica cricket kit throughout the
season have together resulted in the company achieving half year revenues that
are higher than the total revenues generated in the whole of 2003.
Admiral sales at ASDA will continue to build throughout the remainder of the
year as additional ranges of clothing, footwear, and sports equipment are
launched in store. Admiral clothing has also been introduced in several of the
George stand alone stores, resulting in prime visibility of the brand on the UK
high street.
Driven by the team's on field success this year sales of the Admiral England
replica cricket kit have reached unprecedented levels, and with the Ashes Test
series against Australia being held in the UK next summer we are confident that
the company's cricket replica sales in 2005 will again achieve record levels.
Internationally, new licensee partners have this year relaunched the Admiral
brand in Italy, the Middle East, Cyprus and Turkey, and we are currently in
negotiations with a number of other licensees in major territories. Other
market opportunities continue to be identified, and as the Admiral brand
visibility increases we are confident that the company will be able to attract
additional high calibre licensee partners to add to its portfolio.
Sales of Mountain Equipment, our high integrity outdoor brand, continue to
steadily grow in Europe and Japan. We are confident that with the further
investment in the brand being undertaken by Swiss Cutlery, our European
licensee, sales will accelerate and thereby generate enhanced revenues for the
company in the coming years.
On 13 September 2004 we regretfully announced the death of our Chairman, Lance
Yates. The Board is deeply saddened by this news and extends its sympathies to
his family. The Board will shortly be in discussions with Mr Yates' executors
to agree the amount and timing of a settlement of death in service obligations
under his employment contract.
Lance will be greatly missed by all who knew him, but at IBL he leaves behind a
highly dedicated team committed to achieving the company's objectives of
maximising shareholder value. The Board is now considering the appointment of a
non-executive chairman who will bring added value to the Group. In turning the
corner in 2004 the Board are confident as to the company's substantial future
prospects.
TONY HUTCHINSON
Chief Executive
30 September 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 30 JUNE 2004
Notes 6 Month 6 Month Year ended
period period 31
ended 30 ended 30 December
June 2004 June 2003 2003
£000 £000 £000
TURNOVER 1,326 593 1,275
Cost of sales (322) (72) (176)
GROSS PROFIT 1,004 521 1,099
Administrative expenses 2 (864) (530) (1,391)
OPERATING PROFIT/(LOSS) 140 (9) (292)
Interest payable and similar (89) (96) (166)
charges
PROFIT/(LOSS) ON ORDINARY 51 (105) (458)
ACTIVITIES BEFORE TAX
Tax on ordinary activities (63) - (17)
-current year
-prior year (70) - -
3 (133) - (17)
LOSS ON ORDINARY ACTIVITIES (82) (105) (475)
AFTER TAX
RETAINED LOSS FOR THE PERIOD (82) (105) (475)
EARNINGS PER ORDINARY SHARE
-basic 4 (0.3)p (0.4)p (1.7)p
-diluted 4 (0.3)p (0.4)p (1.7)p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE PERIOD ENDED 30 JUNE 2004
6 Month 6Monthperiod Year ended
period ended ended 30 31 December
June 2003 2003
30 June 2004
£000 £000 £000
Loss for the period (82) (105) (475)
Exchange differences (145) (20) 31
Total recognised losses relating (227) (125) (444)
to the period
CONSOLIDATED BALANCE SHEET
AT AS 30 JUNE 2004
30 June 2004 30 June 2003 31 December
2003
£000 £000 £000
FIXED ASSETS
Intangible assets 5,659 5,805 5,811
Tangible assets 18 22 22
5,677 5,827 5,833
CURRENT ASSETS
Stock 271 77 70
Debtors 944 422 383
Cash at bank and in hand 9 37 40
1,224 536 493
CREDITORS: amounts falling due (2,237) (836) (1,493)
within one year
NET CURRENT LIABILITIES (1,013) (300) (1,000)
TOTAL ASSETS LESS CURRENT 4,664 5,527 4,833
LIABILITIES
CREDITORS: amounts falling due (1,937) (2,750) (2,375)
after more than one year
NET ASSETS 2,727 2,777 2,458
CAPITAL AND RESERVES
Called up share capital 303 276 276
Share premium account 2,356 1,887 1,887
Merger reserve 244 244 244
Profit and loss account (176) 370 51
EQUITY SHAREHOLDERS' FUNDS 2,727 2,777 2,458
The financial information was approved by the Board on 30 September 2004
and signed on its behalf by:
MARK KIRKLAND
Finance Director
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2004
Notes 6 Month 6 Month Year 31
period period ended
ended 30 ended 30 December
June 2004 June 2003 2003
£000 £000 £000
NET CASH(OUTFLOW)/INFLOW FROM 5(a) (429) 68 265
OPERATING ACTIVITIES
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest paid (89) (46) (174)
TAXATION
Foreign taxes paid (9) - (118)
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Purchase of intangible fixed - (56) -
assets
Purchase of tangible fixed - (8) (11)
assets
NET CASH (OUTFLOW) BEFORE (527) (42) (38)
FINANCING
FINANCING
Repayment of bank borrowing - (125) (125)
Issue of ordinary shares 496 - -
NET CASH INFLOW/(OUTFLOW) 496 (125) (125)
FROM FINANCING
(DECREASE) IN CASH IN THE 5(b) (31) (167) (163)
PERIOD
NOTES TO THE INTERIM REPORT
AT 30 JUNE 2004
1. BASIS OF PREPARATION AND ABRIDGED ACCOUNTS
The financial information for the 6 months ended 30 June 2004 is prepared under
the historical cost convention and in accordance with applicable United Kingdom
law and accounting standards and has been prepared on the basis of the
accounting policies set out in the group's statutory accounts for the year
ended 31 December 2003 and is unaudited. The financial information set out on
pages 3 to 5 does not constitute full financial statements as defined in
section 240 of the Companies Act 1985.
The financial information for the full preceding year is based on the statutory
accounts for the financial year ended 31 December 2003. These accounts, upon
which the auditors issued an unqualified opinion, have been delivered to the
Registrar of Companies.
GOING CONCERN
The financial information has been prepared on the assumption that the group is
a going concern. The group's ability to continue as a going concern is
dependent on the group's ability to achieve substantial revenue improvements on
a sustained basis and thereby to meet the repayment schedule and covenant
conditions in relation to the loan of £2.8 million, which has been advanced by
the group's bankers. The relevant loan covenants comprise operating profit
covenants for the period to 31 December 2004 and interest cover covenants
thereafter. These covenants were set based on forecasts prepared at June 2003
as part of the restructuring of the group's bank debt. The directors have
prepared forecasts which indicate that the group will breach the operating
profit covenants at September and December 2004. After 1 January 2005 the
operating profit covenants cease to apply and are replaced by interest cover
covenants which are forecast to be met. Despite the technical covenant breaches
forecast for the second half of 2004 the directors are of the opinion that the
agreed bank facilities will continue to be available to the group and that
future loan repayments and covenants will be met.
Accordingly, the directors have prepared the financial information on a going
concern basis. If the group does not meet its forecasts and is unable to
renegotiate further revisions to the terms and conditions in relation to the
term loan, then the going concern basis may not be appropriate. The financial
statements do not include any adjustments which would result should the going
concern basis not be appropriate.
INTANGIBLE ASSETS
Intangible assets represent acquired trademarks and are recorded at historic
cost. No amortisation is charged as they are regarded as having infinite lives.
The results reflect the significant expenditure incurred in the support and
development of these brands. In addition, the trademarks are supported by the
existence of international licensee agreements, which establish obligations as
to guaranteed minimum license income and marketing arrangements with the view
to maximising long-term growth. The directors believe that the licence
agreements will be renewed at the end of their legal expiry dates and that the
value of the trademarks will be maintained. The carrying values are reviewed
annually in accordance with Financial Reporting Standard No. 11 'Impairment of
fixed assets and goodwill' with a view to write down if impairment arises.
STOCK
Stocks are stated at the lower of cost and net realisable value.
2. ADMINISTRATIVE EXPENSES
For the six months ended 30 June 2004, administrative expenses include a
provision in respect of a potential settlement of death in service obligations
under Mr Yates' employment contract. There is uncertainty as to how much will
be payable under these obligations, the ultimate liability being determined
after negotiation with the executors of Mr Yates' estate. The directors are of
the view that to disclose the amount of provision would seriously prejudice the
position of the group in future discussions with Mr Yates' executors. In the
opinion of the directors the maximum potential liability is £450,000.
For the year ended 31 December 2003, administrative expenses include costs of £
69,000, which primarily related to a provision for bad debts in respect of
amounts owed by Hay & Robertson plc and its subsidiaries.
3. TAX
The tax charge for the six month period ended 30 June 2004 is calculated on the
basis of the estimated effective tax rate for the full year.
Prior year taxation of £70,000 refers to additional corporation tax charges for
the year ending 31 December 2002 relating to controlled foreign company
matters.
4.EARNINGS PER ORDINARY SHARE
6 month 6 month Year ended
period ended period 31 December
30 June 2004 ended 30
June 2003 2003
No. No. No.
Weighted average ordinary shares 29,874,281 27,558,002 27,557,802
during the period
Dilutive effect of share options 252,197 - -
Diluted weighted average ordinary 30,126,478 27,558,002 27,557,802
shares
4.EARNINGS PER ORDINARY SHARE
6 month 6 month Year ended
period ended period 31 December
30 June 2004 ended 30
June 2003 2003
£000 £000 £000
Loss for the financial period (82) (105) (475)
Pence Pence Pence
Basic earnings per 1p ordinary (0.3) (0.4) (1.7)
share
Diluted earnings per 1p ordinary (0.3) (0.4) (1.7)
share
5.NOTES TO THE STATEMENT OF CASH FLOWS
a) Reconciliation of
operating profit to net
cash inflows from
operating activities
6 month 6 month Year
period period ended 31
ended 30 ended 30 December
June 2004 June 2003 2003
£000 £000 £000
Operating profit/(loss) 140 (9) (292)
Depreciation 4 6 9
(Increase)/decrease in (565) 12 37
debtors
(Increase)/decrease in (201) (77) (70)
stock
Increase in creditors 199 136 573
(Gain)/loss on exchange (6) - 8
(429) 68 265
b) Reconciliation of net
cash flow to movement in
net debt
6 month 6 month Year
period period ended 31
ended 30 ended 30 December
June 2004 June 2003 2003
£000 £000 £000
Decrease in cash in the (31) (167) (163)
period
Repayment of bank - 125 125
borrowings
Change in net debt (31) (42) (38)
arising from cash flows
Exchange differences - 1 -
Net debt at beginning of (2,773) (2,735) (2,735)
period
(2,804) (2,776) (2,773)
c) Analysis of net debt At 1 January Cash Exchange At 30
2004 Flows differences June
2004
£000 £000 £000 £000
Cash at bank 40 (31) - 9
Bank borrowings (2,813) - - (2,813)
(2,773) (31) - (2,804)
INDEPENDENT REVIEW REPORT TO INTERNATIONAL BRAND LICENSING PLC
INTRODUCTION
We have been instructed by the company to review the financial information for
the six month period ended 30 June 2004 which comprises the Consolidated Profit
and Loss Account, Consolidated Statement of Total Recognised Gains and Losses,
Consolidated Balance Sheet, Consolidated Statement of Cash Flows, and the
related notes 1 to 5. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the company having regard to guidance contained
in Bulletin 1999/4 'Review of Interim Financial Information' issued by the
Auditing Practices Board. To the fullest extent permitted by the law, we do not
accept or assume responsibility to anyone other than the company, for our work,
for this report, or for the conclusions we have formed.
DIRECTORS' RESPONSIBILITIES
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsiblefor preparing the interim report as required by the AIM Rules
issued by the London Stock Exchange.
REVIEW WORK PERFORMED
We conducted our review having regard to the guidance contained in Bulletin
1999/4 'Review of Interim Financial Information' issued by the Auditing
Practices Board for use in the United Kingdom. A review consists principally of
making enquiries of group management and applying analytical procedures to the
financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied, unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a
lower level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.
FUNDAMENTAL UNCERTAINTY - GOING CONCERN
In arriving at our review conclusion, we have considered the adequacy of the
disclosures made in Note 1 to the financial information concerning the
uncertainty overthe ability of the group to achieve trading improvements, and
thereby to meet the repayment schedule and the covenant conditions in relation
to the term loan of £2.8 million advanced by the group's bankers. The group's
ability to operate within the terms and conditions is fundamental to the
ability of the group to continue as a going concern. In view of the
significance of this uncertainty, we consider that it should be drawn to your
attention, but our conclusion is not modified in this respect.
REVIEW CONCLUSION
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six month
period ended 30 June 2004.
Ernst & Young LLP
London
30 September 2004
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