Interim Results

Comeleon PLC
14 May 2002


For Immediate Release                                              14 May 2002




                                  comeleon plc

                                Interim Results

                     for the six months ended 31 March 2002

                        Moving from strength to strength



comeleon plc is pleased to announce its interim results for the six months ended
31st March 2002.



Highlights:



Sales, Operational & Technical

•        Rapid growth in order book since September 2001

•        Current sales and order book for 2001/02 : £4.1 m and ahead of plan

•        E-commerce development and Interactive Design Studio

•        Awards for technology

•        Routes to market expanded quickly

•        Successful entry into US market

•        Diversification and Innovation

o           Non-mobile production rising

o           Significant order with Philips for new 'Coolskin' shavers - launched
            in April

•        New UK HQ and production facilities completed

o           Capacity 62k per week - room to increase four fold

o           Recruitment : 112 people

Financial

•        Financial performance exceeded expectations

o           Sales up 381% to £1.575m

o           Loss of £1.671m : £107k better than plan



On prospects, Jon Pither, Chairman, said: 'In my last statement I said the
company's aim was to become the imaging partner of choice. We have made good
progress to realise this aim in the 6 months under review and I look forward
with confidence to further achievement in the full year.'



For further information, please contact:
Roy Stanley, Chief Executive Officer                Today on: 020 7466 5000
Tim Robinson, Finance Director                  thereafter on: 01207 523333
Comeleon plc                                          www.comeleon-ir.co.uk

Tim Anderson
Lisa Baderoon                                         Tel No: 0207 466 5000
Buchanan Communications Limited                         www.buchanan.uk.com




CHAIRMAN'S STATEMENT



Comeleon is developing so fast that the best way to get a current view of the
business is to look at recent trading. Sales of nearly £1.6m for the six months
ended 31st March 2002 compares to an expected turnover of £0.6m in the single
month of April 2002. The order book currently stands at about £2m and the book
to bill ratio is currently running at 1.9, an indication that the growth will
continue.



Expansion at this rate is not achieved without significant developments across
the business. Comeleon's routes to market have expanded greatly. We sell in
every continent to a greatly expanded number of OEMs (original equipment
manufacturers), distributors, dealers and individual customers. Direct sales via
our Interactive Web Site, which we encourage you to visit on www.e-comeleon.com,
are now starting to increase.  Joint marketing initiatives with OEMs have been
very successful, and are leading to diversification into other consumer goods,
such as computer mice, electric shavers and fixed line phones.



Comeleon's infrastructure has been expanded to deal with this growth, and there
has been no compromise on quality. Comeleon is one of the fastest companies in
the North East to receive the prestigious 'Investor in People Award'. We have
also won other awards for Best Technology, Best Product and Best Website. We
continue to identify and explore other markets and methods by which the Company
can fully exploit this unique technology.



Financial Review



The financial performance during the six months under review has exceeded our
expectations.  Sales for the six month period were up 381% at £1.575m compared
with £0.413m for the full year to September 2001. Similarly, the loss of £1.671m
was better than expected.



Operating Review



Increases in sales have been driven primarily by an increase in our routes to
market and our growing reputation.  In September 2001 we received approval from
Nokia to officially supply genuine branded covers for its mobile phones and we
now image genuine covers for all four of the major manufacturers: Nokia,
Siemens, Motorola, and Sendo. Two of these, Siemens and Sendo, direct customers
via a hotlink from their corporate, global websites to our interactive design
website for all their web based replacement phone cover orders. We believe that
Comeleon is now the biggest supplier of genuine replacement covers for mobile
phones in Europe.



OEMs and airtime providers are now involved in joint promotions with Comeleon.
The first was with Siemens in Belgium. This jointly-branded initiative involved
5,000 vouchers which provided access to our Interactive Design Studio for
individual designs. After just 8 weeks over 2000 orders have been received, a
remarkable take-up rate. A second promotion in the USA with a large airtime
provider has potential for over 45,000 units, as estimated by the customer.



The design capability of Comeleon is a major selling point. Large customers,
including OEMs, use our in-house design service to develop mobile phone
faceplate designs. Our resources include a fashion designer who works with
product manufacturers to develop images for mobile phones and other devices
which extend the influence of their brands. Others utilise our portfolio of
images, which has been expanded through recent agreements with several Master
Licencees, including Harry Potter, the Lord of the Rings, Manchester United and
Coca Cola. We have also become the sole producer of mobile phone covers
containing the image of Elvis Presley as approved by Gracelands. 2002 is the
25th anniversary of Elvis's death.

Manufacturing commenced in our 12,000 square foot North Carolina plant in March.
Initial capacity is 2,000 units per week rising to 5,000 during 2002. However,
our current success may require further expansion in the near future.



Diversification and Innovation



In December 2001, approximately 98% of our sales were mobile phone covers with
the rest being computer peripherals. The percentage of non-mobile production,
has now risen to over 34% of a much larger monthly total. The most significant
order was from Philips for its new range of 'Coolskin' shavers, which were
launched in April this year.  The 'Coolskin' is aimed at the youth and young
adult market and breaks new ground as the first imaged shaver ever to be
launched.



Comeleon won the Philips order because of its ability to apply images to nearly
any plastic product, a technology which effectively launched a new and unique
product for Philips.  This was coupled with the quality of image Comeleon
technology provides, the speed it could deliver prototypes and its ability to
deliver high volumes in short lead times. This combination has attracted
manufacturers from other industries. Prototypes have been produced for the
automotive industry and for a range of consumer goods.



The Directors are confident that the Philips order is the beginning of a trend
which will rapidly increase the percentage of sales from products outside the
mobile phone market.



Innovation is not just confined to products. Production innovation is increasing
efficiency, reducing unit costs and increasing the applicability of Comeleon's
technology.



Infrastructure and Capacity



In September 2001 we employed 67 people, the total now stands at 112.
Production capacity then was 30k units per week and is now 62k per week. There
is room within our existing UK factory to increase production 4 fold.



Prospects



The range of prototypes for consumer goods, which are currently being assessed,
and the continued growth in interest in the technology are encouraging. Our
geographical spread is expanding faster than we anticipated and the depth of our
relationships with OEMs, airtime providers and distributors through joint
promotions and other means, is a key business driver.



In my last statement I said the Company's aim was to become the imaging partner
of choice. We have made good progress to realise this aim in the 6 months under
review and I look forward with confidence to further achievement in the full
year.



Consolidated Profit And Loss Account


                                                           Unaudited            Unaudited                     Audited
                                                          Six Months            Six Months              Twelve Months
                                                               Ended                 Ended                      Ended
                                                            31 March              31 March               30 September
                                       Notes                    2002                  2001                       2001
                                                                   £                     £                          £

Turnover: continuing operations                            1,575,460                56,279                    412,872
Cost of sales                                            (1,188,380)             (159,079)                  (715,268)

Gross profit/(loss)                                          387,080             (102,800)                  (302,396)

Administrative expenses                                  (2,074,553)           (1,046,307)                (2,627,915)
Exceptional admin expenses                                         -             (250,000)                  (916,619)
Total administration costs                               (2,074,553)           (1,296,307)                (3,544,534)
Other operating income                                        20,000                     -                     30,000

Operating Loss: continuing
operations                                    2          (1,667,473)           (1,399,107)                (3,816,930)

Interest received and similar income                          48,909               115,813                    245,497
Interest payable and similar charges                        (52,331)               (8,534)                   (74,187)

Loss On Ordinary Activities Before
Taxation                                                 (1,670,895)           (1,291,828)                (3,645,620)

Tax on loss on ordinary activities            3                    -                     -                          -

Loss For The Financial Period
Withdrawn From Reserves                                  (1,670,895)           (1,291,828)                (3,645,620)



Basic loss per ordinary share                                 (13.13p)              (14.09p)               (33.38p)

Basic loss per ordinary share before costs
in connection with flotation                     4            (13.13p)              (11.36p)               (24.99p)



Consolidated Balance Sheet


                                                              Unaudited           Unaudited                 Audited
                                                                  as at                as at                  as at
                                                               31 March             31 March           30 September
                                             Note                  2002                 2001                   2001
                                                                      £                    £                      £
Fixed Assets
Intangible assets                                               790,980              819,981                828,060
Tangible assets                                               2,260,431              856,775              1,699,107

                                                              3,051,411            1,676,756              2,527,167
Current Assets
Stocks                                                          304,558                    -                189,837
Debtors                                                         963,873              152,739                596,253
Cash at bank and in hand                                      2,024,700            5,944,329              3,847,856

                                                              3,293,131            6,097,068              4,633,946
Creditors: amounts falling due
within one year                                             (1,749,421)            (578,773)            (1,251,129)

Net Current Assets                                            1,543,710            5,518,295              3,382,817

Total Assets Less Current Liabilities                         4,595,121            7,195,051              5,909,984

Creditors: amounts falling due after
more than one year
Obligations under finance leases                              (943,353)            (186,165)              (588,271)

                                                              3,651,768            7,008,886              5,321,713


Capital And Reserves
Called up share capital                                          127,563             126,613                126,613
Shares to be issued reserve                                      555,469                   -                666,619
Share premium                                                  8,589,543           8,589,543              8,589,543
Other reserves                                                   111,150                   -                      -
Merger reserve                                                   615,614             614,719                615,614
Profit and loss account                                      (6,347,571)         (2,321,989)            (4,676,676)

Total Equity Shareholders' Funds                               3,651,768           7,008,886              5,321,713



Consolidated Cash Flow Statement


                                                            Unaudited           Unaudited                  Audited
                                                           Six Months          Six Months            Twelve Months
                                                                Ended               Ended                    Ended
                                                             31 March            31 March             30 September
                                         Notes                   2002                2001                     2001
                                                                    £                   £                        £

Net cash outflow from operating activities      5         (1,411,160)         (1,333,374)              (2,929,883)

Return on investments and servicing of finance                (3,422)             104,222                  168,253

Taxation                                                            -                   -                        -

Capital expenditure & financial investment                  (214,346)           (506,626)              (1,019,083)

Cash outflow before financing                             (1,628,928)         (1,735,778)              (3,780,713)

Financing                                                   (194,228)           7,233,961                7,171,104

(Decrease)/increase in cash                               (1,823,156)           5,498,183                3,390,391



Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the period                    (1,823,156)           5,498,183              3,390,391
Cash outflow/(inflow) from
decrease/(increase)in debt                                       195,178           1,423,870              1,475,409

Change in debt resulting from cashflows                      (1,627,978)           6,922,053              4,865,800
New finance leases                                             (600,996)           (220,785)              (772,060)

                                                             (2,228,974)           6,701,268              4,093,740

Net funds/(debt) at 1 October 2001 / 2000                      3,071,950         (1,021,790)            (1,021,790)

Net funds/(debt) at 31 March 2002 / 2001                         842,976           5,679,478              3,071,950



Notes



1.      Basis of preparation



The interim financial statements, which have been neither audited nor reviewed
by the auditors, have been prepared on the basis of the accounting policies set
out in the Comeleon plc statutory accounts for the period ended30 September
2001.



The interim financial statements do not constitute statutory accounts within the
meaning of S240 of the Companies Act and have not been delivered to the
Registrar of Companies.



The significant accounting policies upon which the interim results are based are
as follows:



Accounting Convention

The financial statements have been prepared under the historical cost
convention.



Consolidation

The consolidated financial statements incorporate the financial statements of
the company and all its subsidiaries.



Investments

Investments held as fixed assts are stated at cost or valuation less provision
for any impairment.



Goodwill

For acquisitions of a business purchased goodwill is capitalised in the year in
which it arises and amortised over its useful life up to a maximum of 20 years.
The directors regard 20 years as a reasonable maximum for the estimated useful
life of the goodwill since it matches the life of patents held by the company.



Tangible fixed assets

The cost less residual value of fixed assets is depreciated in equal instalments
over the expected useful economic lives of the assets at the following rates:


                Short leasehold property                5 years
                Plant and machinery                     5 years
                Fixtures, fittings and equipment        5 years



Deferred taxation

The group has adopted FRS 19 Deferred Tax which became effective on 23 January
2002. Deferred tax is provided in full on timing differences which result in an
obligation at the balance sheet date to pay more tax, or a right to pay less
tax, at a future date, at rates expected to apply when they crystallise based on
current tax rates and law. Timing differences arise from the inclusion of items
of income and expenditure in taxation computations in periods different from
those in which they are included in financial statements. Deferred tax is not
provided on timing differences arising from the revaluation of fixed assets
where there is no commitment to sell the asset. Deferred tax assets are
recognised to the extent that it is regarded as more likely than not that they
will be recovered. Deferred tax assets and liabilities are not discounted. This
has no impact on the current or prior year results.



2.      Exceptional Administrative Expenses


                                                   Unaudited             Unaudited                            Audited

                                                          Six Months            Six Months    Twelve Months

                                                               Ended                 Ended                     Ended
                                                            31 March              31 March              30 September
                                            Notes               2002                  2001                      2001
                                                                   £                     £                         £

Costs in respect of the flotation of the group                     -               250,000                   250,000
Costs arising from share options issued in
connection with the flotation                                      -                     -                   666,619

                                                                   -               250,000                   916,619



In accordance with UITF 17, the costs arising on the share options granted
represent the difference between the fair value and the exercise price on those
options.



3.      Taxation



The tax charge in the period is based on the anticipated effective rate of tax
for the year ended 30 September 2002.



4.      Loss per ordinary share



Loss per share have been calculated using the weighted average number of shares
in issue during the relevant financial periods.


                                                           Unaudited             Unaudited                   Audited
                                                          Six Months            Six Months             Twelve Months
                                                               Ended                 Ended                     Ended
                                                            31 March              31 March              30 September
                                        Notes                   2002                  2001                      2001
                                                             No. / £               No. / £                   No. / £

Weighted average number of shares                         12,725,027             9,171,630                10,921,269

Loss on ordinary activities after taxation                 1,670,895             1,291,828                 3,645,620

Loss on ordinary after taxaxtion and before
costs in connection with the flotation                     1,670,895             1,041,828                 2,729,001




Loss per share before costs in connection with the flotation has been presented
in addition to the basic earnings per share as permitted by FRS 3 and FRS 14,
since, in the opinion of the directors, this presents a better comparison of
earnings of the Group. The diluted loss per ordinary share is the same as the
basic loss per ordinary share.



5.      Net cash outflow from operating activities


                                                          Unaudited              Unaudited Audited

                                                         Six Months             Six Months             Twelve Months
                                                              Ended                  Ended                     Ended
                                                           31 March               31 March              30 September
                                                               2002                   2001                      2001
                                                                  £                      £                         £

Operating loss                                          (1,667,473)            (1,399,107)               (3,816,930)
Depreciation on tangible fixed assets                       244,396                 43,950                   172,064
Amortisation of intangible fixed assets                      46,702                  6,000                    30,741
Increase in stocks                                        (114,721)                      -                 (189,837)
Increase in debtors                                       (367,620)              (114,594)                 (558,107)
Increase in creditors                                       447,556                130,377                   765,567
Costs in respect of share options                                 -                      -                   666,619

Cash outflow from operating activities                  (1,411,160)            (1,333,374)               (2,929,883)



6.      Financial Information



Copies of this report are being forwarded to all shareholders and further copies
are available from the Company's Registered Office at Comeleon House, North
Tanfield Industrial Estate, Tanfield Lea, Co Durham. DH9 9NX.



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