Interim Results

International Brand Licensing PLC 30 September 2003 Immediate Release 30th September 2003 International Brand Licensing PLC ('IBL' of 'the group') Interim figures for the six months ended 30 June 2003 CHAIRMAN'S STATEMENT As noted in the recently issued 2002 Annual Report, the activities and assets of International Brand Licensing Plc (IBL) were demerged from the Hay & Robertson Group on 5 June 2002. The interim financial information presented covers the 6 months ended 30 June 2003, together with comparisons for the 6 months ended 30 June 2002, during which time, the operation of the business was primarily carried out as a subsidiary of Hay & Robertson plc. For the period, turnover fell from £820,000 to £593,000 and profit on ordinary activities before tax fell from £173,000 to a loss of £105,000. These results reflect the previously reported continuing impact of the administration of IBL's main UK Admiral licensee, Big Hit Ltd, with royalty income for the period from this area of activity falling from £512,000 to £14,000. The group is continuing to investigate the possibility of recovering monies owed from the administrators of Big Hit Ltd. Following the termination of the Admiral licence agreement with Big Hit in April, discussions have been held with several potential replacement licensees for the UK market. Negotiations with one potential partner continue to progress positively and an announcement will be made in the event an agreement is concluded. The full integration of the operation of the group's England and West Indian cricket team replica supply and kit sponsorships is now complete and we are confident that this area of activity will contribute to the group's profitability and the ongoing visibility of our Admiral brand. Outside of the UK, the first six months of 2003 proved to be a strong period for Admiral. On a like for like basis royalty income from this area of activity grew 61% from £128,000 to £208,000. This spring Admiral was successfully launched into Benelux and Germany with new collections of leisure footwear. This represents the first step of a long-term brand-building project by our new licensee. Admiral Canada reported second quarter sales which saw the group become one of the leading suppliers of soccer team kit in the Canadian market, a tremendous achievement in the face of strong competition from all global brands. Following the long-term license agreement entered into in April with OSC, the European Mountain Equipment technical licensee, the company was acquired by Swiss Cutlery Ltd. With stronger financial and sourcing resources, Swiss Cutlery will more aggressively grow the Mountain Equipment business both in the UK and in Europe where there is huge potential to develop the brand. Under its outdoor division, Burton McCall, Swiss Cutlery is the European licensee for Timberland and Swiss Army luggage and, in addition, distributes Maglite Torches, Swiss Army knives and other outdoor products. After a difficult year, the Board are confident that the group will move forward and the full potential of Admiral and Mountain Equipment can now begin to fully reflect the true value of these brands. In addition, the other brands we represent will add to and strengthen the group's income streams as our network of licensee's increases in the future. LANCE A YATES Chairman 30 September 2003. Consolidated Profit and Loss Account 6 MONTHS ENDED 30 JUNE 2003 Notes 6 months ended 6 months ended Year ended 30 June 2003 30 June 2002 31 December 2002 (unaudited) (unaudited) (audited) £000 £000 £000 TURNOVER 593 820 1,616 --------- --------- ---------- Cost of Sales (72) - - --------- --------- ---------- GROSS PROFIT 521 820 1,616 Administrative expenses (530) (368) (730) Exceptional administrative - (151) (457) expenses --------- --------- ---------- OPERATING (LOSS)/PROFIT (9) 301 429 Interest receivable and - - 1 similar income Interest payable and (96) (40) (95) similar charges --------- --------- ---------- (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAX ------------------------------ --------- --------- ---------- -before exceptional (105) 412 792 items -exceptional items 2 - (151) (457) -------------------------- ------ --------- --------- ---------- (105) 261 335 --------- --------- ---------- Tax on (loss)/profit on 3 - (88) (192) ordinary activities --------- --------- ---------- (LOSS)/PROFIT ON ORDINARY (105) 173 143 ACTIVITIES AFTER TAX Ordinary dividend on - - - equity shares --------- --------- ---------- RETAINED (LOSS)/PROFIT FOR THE PERIOD (105) 173 143 ========= ========= ========== EARNINGS PER ORDINARY SHARE Before exceptional items -Basic 4 (0.4)p 1.4p 2.4p -Diluted 4 (0.4)p 1.4p 2.4p After exceptional items -Basic 4 (0.4)p 0.8p 0.6p -Diluted 4 (0.4)p 0.8p 0.6p CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 6 MONTHS ENDED 30 JUNE 2003 (Loss)/profit for the period (105) 173 143 Exchange differences (20) 56 179 ========= ========= ========== Total recognised gains and losses (125) 229 322 relating to the period ========= ========= ========== CONSOLIDATED BALANCE SHEET AT 30 JUNE 2003 Notes 30 June 2003 30 June 2002 31 December 2002 (unaudited) (unaudited) (audited) £000 £000 £000 FIXED ASSETS Intangible assets 5,805 5,559 5,775 --------- --------- ----------- Tangible assets 22 19 20 --------- --------- ----------- 5,827 5,578 5,795 CURRENT ASSETS Stock 77 - - Debtors 422 334 434 Cash at bank and in hand 37 452 203 --------- --------- ----------- 536 786 637 CREDITORS: amounts falling (836) (3,555) (905) due within one year --------- --------- ----------- NET CURRENT LIABILITIES (300) (2,769) (268) --------- --------- ----------- TOTAL ASSETS LESS CURRENT 5,527 2,809 5,527 LIABILITIES CREDITORS: amounts falling (2,750) - (2,625) due after more than one ========= ========= =========== year NET ASSETS 2,777 2,809 2,902 ========= ========= =========== CAPITAL AND RESERVES Called up share capital 276 276 276 Share premium account 1,887 1,887 1,887 Merger reserve 244 244 244 Profit and loss account 370 402 495 ========= ========= =========== SHAREHOLDERS' FUNDS 2,777 2,809 2,902 ========= ========= =========== The financial information was approved by the board on 30 September 2003. LANCE YATES CHAIRMAN CONSOLIDATED STATEMENT OF CASH FLOWS 6 MONTHS ENDED 30 JUNE 2003 Notes 6 months 6 months Year ended ended ended 31 30June 30 June December 2003 2002 2002 (unaudited) (unaudited) (audited) £000 £000 £000 NET CASH INFLOW FROM OPERATING 5 68 184 132 ACTIVITIES RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest paid (46) - - TAXATION - (96) (128) Foreign taxes paid CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of intangible fixed (56) - (99) assets Purchase of tangible fixed (8) - (5) assets -------- ---------- ----------- NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING (42) 88 (100) FINANCING Repayment of bank borrowings (125) - - Repayment of intercompany balance to Hay & Robertson plc on demerger - (1,600) (4,600) New bank borrowings - - 2,938 Issue of ordinary shares - 2,500 2,500 Less expenses of issue of - (550) (550) shares -------- ---------- ----------- NET CASH (OUTFLOW)/ INFLOW FROM FINANCING (125) 350 288 -------- ---------- ----------- (DECREASE)/INCREASE IN CASH IN THE PERIOD 5 (167) 438 188 ======= ========== =========== NOTES TO THE INTERIM REPORT AT 30 JUNE 2003 1. BASIS OF PREPARATION AND ABRIDGED ACCOUNTS International Brand Licensing Plc (the group) came into existence on 5 June 2002 following the demerger of International Brand Holdings Ltd and its subsidiary Hay & Robertson International Licensing AG from Hay & Robertson plc. The financial information for the 6 months ended 30 June 2003 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 current accounting policies of the group and is unaudited. The financial information set out on pages 3 to 7 does not constitute full financial statements within the meaning 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 2002. 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 upon its ability to achieve substantial revenue and improvements in gross margin on a sustained basis, and thereby to meet the repayment schedule and covenant conditions in relation to the term loan of £2.9 million, which has been advanced by the group's bankers. In June 2003, the group formally requested a waiver of certain capital repayments, which are due in the period to March 2004 together with an adjustment to the covenants attached. Following a review of the directors' cash flow forecasts, the group's bankers have now agreed to these revised terms and conditions, granting a capital repayment holiday until March 2004 unless earlier repayment is considered possible. The directors have prepared revised forecasts, on which basis they are confident that the group should be able to meet the revised terms and conditions of the loan. 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 information does 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 historical costs. 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 licence 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 trademarks will be maintained. The carrying values are reviewed on an ongoing basis in accordance with FRS 11 'Impairment of Fixed Assets and Goodwill', with a view to write down if impairment arises. 2. EXCEPTIONAL ITEMS For the year ended 31 December 2002, exceptional items comprised costs of £184,000 (six months ended 30 June 2002: £151,000), which primarily related to professional services costs incurred in connection with the demerger, and provision for bad debts of £273,000 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 2003 is calculated on the basis of the estimated effective tax rate for the half year. 4. EARNINGS PER ORDINARY SHARE 6 months ended 6 months Year ended 31 30 June ended December 30 June 2003 2002 2002 No. No. No. Weighted average ordinary shares in 27,558,002 22,205,790 24,903,890 issue during the period Dilutive effect of share options - - - --------- -------- ---------- Diluted weighted average ordinary 27,558,002 22,205,790 24,903,890 shares ========= ======== ========== £000 £000 £000 (Loss)/profit for the period before (105) 324 600 exceptional items Exceptional items - (151) (457) --------- -------- ---------- Net (loss)/profit for the financial (105) 173 143 period ========= ======== ========== 4. EARNINGS PER SHARE continued 6 months 6 months Year ended ended ended 31 30 June 30 June December 2003 Pence 2002 2002 Pence Pence Basic earnings per 1p ordinary share (0.4) 1.4 2.4 Before exceptional items After exceptional items (0.4) 0.8 0.6 Diluted earnings per 1p ordinary share Before exceptional items (0.4) 1.4 2.4 After exceptional items (0.4) 0.8 0.6 5. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (a) Reconciliation of operating (loss)/ profit to net cash inflow from operating activities 6 months 6 months Year ended ended ended 31 30 June 30 June December 2003 2002 2002 £000 £000 £000 Operating (loss)/profit (9) 301 429 Depreciation 6 1 7 Decrease/(increase) in debtors 12 (126) (120) Increase in stock (77) - - Decrease/(increase) in creditors 136 8 (184) ---------- ---------- ----------- 68 184 132 ========== ========== =========== (b) reconciliation of net cash flow movement in net debt 6 months 6 months Year ended ended ended 31 30June 30June December 2003 2002 2002 £000 £000 £000 (Decrease)/increase in cash in the (167) 438 188 period Bank loan taken out - - (2,938) Repayment of bank borrowings 125 - - ---------- ---------- ----------- Change in net debt arising from cash (42) 438 (2,750) flows Non-cash movements - 1,930 1,930 Exchange differences 1 (90) (89) Net debt at beginning of period (2,735) (1,826) (1,826) ---------- ---------- ----------- (2,776) 452 (2,735) ========== ========== =========== (c) Analysis of net debt At 1 January Cash Exchange 30 June 2003 Flow Differ ences 2003 £000 £000 £000 £000 Cash at bank 203 (167) 1 37 Bank borrowing (2,938) 125 - (2,813) -------- ---------- ---------- ----------- (2,735) (42) 1 (2,776) ======== ========== ========== =========== For further information, please contact: Adam Reynolds 0207 245 1100 Hansard Communications adam@hansardcommunications.com This information is provided by RNS The company news service from the London Stock Exchange

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