Half-yearly report

THE CORE BUSINESS PLC ("TCB" or the "Company") Preliminary Results for the half year to 30 November 2007 21 January 2008 HIGHLIGHTS · Completed the acquisition of Amirose International in July 2007 · Revenue for the half year increased by over 12 fold to £972,000 versus £78,000 for the half year period last year. · Distribution revenue delivered group sales of £930,000 versus £Nil for the half year period last year. Of this, 51% was generated by The Core Business and 49% by Amirose International. · Signed an agreement with Ulric de Varens SA, a Bourse-listed leading French mass fragrance manufacturer, to establish and manage a joint venture in the UK. · Strong flow of new distribution opportunities and own brand projects with several launches agreed by major retailers in early 2008. CHAIRMAN'S STATEMENT The Amirose acquisition last July has added significantly to the Group's spread of activity, giving it a strategically important distribution capability and Far Eastern manufacturing contacts. It has also boosted the range of products that we sell to major retail operations that include Tesco, Superdrug, Asda and own label supply for Marks and Spencer. The distribution side of the business is moving apace and substantial sales are already contracted for the rest of 2008 including the launch of a further colour cosmetics brand into Superdrug and a skincare product into Tesco. We are particularly pleased with the potential of the Elite Models Fashion ranges of cosmetics and manicure and hair accessories products. The cosmetics range is listed in 200 Superdrug stores and manicure and hair accessories in over 350 stores. A further roll out of selected Elite Models Fashion products in early 2008 has been agreed with a major retailer. Sales and distribution agreements with other international brands are under review as are the development and launch of our own brands. The signing of the agreement with Ulric de Varens provides The Core Business with a 20% shareholding in a UK subsidiary and a long term monthly management fee. The Core Business has delivered quick results with a selection of Ulric De Varens fragrances launching in 300 Superdrug stores in January 2008. Consultancy, although no longer a key driver of revenue for the company, will continue to receive focus as a provider of business opportunities. The Core Business maintains a close dialogue with all leading retailers and is continually assessing brand opportunities within the personal care market. Although the time taken to bring new brands to market can be lengthy we are very confident that our efforts will show good returns over the coming years. FINANCIAL OVERVIEW Turnover for the six months to 30 November 2007 was £972,000 (six months to 30 November 2006: £78,000) and the loss for the half year was £143,000 (six months to 30 November 2006: £179,000 loss) equivalent to 0.10 pence loss per share (six months to 30 November 2006: 0.43 pence loss per share). Of this total turnover figure The Core Business generated £518,000 and Amirose £454,000. The Group's net assets at 30 November were £1,430,000, £1,345,000 higher than at 31 May 2007. The increase is due to the issue of shares for cash to acquire Amirose International Limited in July 2007. Total liabilities were £1,221,000, an increase of £903,000 since 31 May 2007. The increase is due to the issue of loan notes to acquire Amirose. In line with our previous statements we have focused our business on distributing brands and have generated over £930,000 in distribution revenue in the six months to 30 November 2007 compared with £Nil in the comparative period last year. Of this 51% was generated by The Core Business and 49% by Amirose International which was acquired in July 2007. Consultancy revenue for the period was down from £78,000 to £38,000 reflecting our focus on distributing brands and being selective in our choice of consultancy projects. The results for the six months to 30 November 2007 include exceptional costs of £149,000 in relation to facility costs. These costs were incurred in putting in place the financing for the acquisition of Amirose International. OUTLOOK We have started to see a major uplift in our business, not just through the acquisition of Amirose but also through the brands distributed by The Core Business and are excited at the massive potential leading into next six months. In the half year to 30 November 2007 we have made important progress in the delivery of our strategy; our distribution business has been launched and is on a strong footing and we have completed our first acquisition. With the combined efforts of Amirose and The Core Business we have an aggressive plan in place to launch further brands throughout 2008 and a great deal of work has already gone into negotiating supplier and retailer contracts. We are confident that our strategy to focus on distributing and developing brands leaves us well placed to create value for our shareholders in the years to come. Mark Watson-Mitchell Chairman For further information, please contact: The Core Business plc Stirling Murray, Chief Executive 020 7483 4300 Ellis Stockbrokers Limited Neil Badger 01293 517 744 Blomfield Corporate Finance Limited Nick Harriss 020 7512 0191 BALANCE SHEET HALF YEAR ENDED 30 NOVEMBER 2007 As at As at As at Notes 30/11/07 30/11/06 31/5/07 £ £ £ Assets Non-current assets Property, plant and equipment 115,365 1,325 1,507 Financial assets 21,706 20,578 21,706 Goodwill 1,648,971 - - ___________________________________ 1,786,042 21,903 23,213 Current Assets Inventories 399,191 - 5,510 Trade receivables 285,501 17,537 52,395 Other current assets 710 32,688 156,886 Cash and cash equivalents 179,802 273,210 79,576 ___________________________________ 865,204 323,435 294,367 ___________________________________ Total assets 2,651,246 345,338 317,580 =================================== Equity and liabilities Equity attributable to the Company's equity holders Share capital 4 1,016,776 211,982 211,982 Share premium 1,095,794 411,913 411,913 Retained earnings (682,565) (310,904) (539,267) ___________________________________ 1,430,005 312,991 84,628 Current liabilities Trade and other payables 459,497 32,347 232,952 Loan notes 460,313 - - ___________________________________ 919,810 32,347 232,952 Non Current liabilities Loan notes 301,431 - - ___________________________________ 301,431 - - ___________________________________ Total liabilities 1,221,241 32,347 232,952 =================================== Total equity and liabilities 2,651,246 345,338 317,580 =================================== PROFIT AND LOSS ACCOUNT HALF YEAR TO 30 NOVEMBER 2007 6 months 6 months Year ended ended ended 30/11/07 30/11/06 31/5/07 Notes £ £ £ Turnover Consultancy fees 38,323 77,848 164,957 Sale of goods 930,038 - 92,101 Other income 3,669 - - ___________________________________ Total turnover 972,030 77,848 257,058 Cost of goods sold (489,461) - (58,137) ___________________________________ Gross profit 482,569 77,848 198,921 Overhead costs Staff costs (178,743) (119,139) (227,793) Depreciation (6,842) (442) (1,196) Other operating costs (265,392) (144,828) (384,854) Exceptional item 3 (149,550) - - ___________________________________ Loss from operations (117,958) (186,561) (414,922) Net financing cost (25,341) 7,902 11,210 ___________________________________ Loss before tax (143,299) (178,659) (403,712) Income tax expense - - (3,310) ___________________________________ Loss for the period (143,299) (178,659) (407,022) =================================== Loss per share 2 Basic (0.10 pence) (0.43 pence) (0.97 pence) Diluted (0.10 pence) (0.43 pence) (0.97 pence) CASH FLOW STATEMENT HALF YEAR TO 30 NOVEMBER 2007 6 months 6 months Year ended ended ended Notes 30/11/07 30/11/06 31/5/07 £ £ £ Cash flows from operating activities Cash generated from operating activities 6 (10,767) (209,543) (404,421) Tax paid - - - ___________________________________ (10,767) (209,543) (404,421) Cash flows from investing activities Purchases of property, plant and equipment (111,539) (1,027) (1,963) Investment in financial asset - (10,000) (11,128) Acquisition of subsidiary 7 (2,002,547) - - Interest received 4,314 7,902 11,210 ___________________________________ Net cash (used in) investing activities (2,109,772) (3,125) (1,881) Cash flows from financing activities Net proceeds on issues of shares 1,488,676 84,793 84,793 Proceeds on issue of loan notes 779,125 - - Repayment of loan notes (17,381) - - Interest paid (29,655) - - ___________________________________ Net cash (used in)/from financing activities 2,220,765 84,793 84,793 Net increase/(decrease) in cash and cash equivalents 100,226 (127,875) (321,509) Cash and cash equivalents at beginning of year 79,576 401,085 401,085 ___________________________________ Cash and cash equivalents at end of year 179,802 273,210 79,576 =================================== Bank balances and cash 179,802 273,210 79,576 =================================== NOTES TO THE ACCOUNTS 1. Accounting policies The principal accounting policies are as set out in the May 2007 annual report. The financial statements of The Core Business PLC have been prepared in accordance with International Financial Reporting Standards (IFRS), IFRIC interpretations endorsed by the European Union and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. These financial statements have been prepared under the historic cost convention. The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. 2. Loss per share 6 months 6 months Year ended ended ended 30/11/07 30/11/06 31/5/07 £ £ £ Loss for the purpose of basic loss per share (143,299) (178,659) (407,022) Loss for the purpose of diluted loss per share (143,299) (178,659) (407,022) Number of shares 6 months 6 months Year ended ended ended 30/11/07 30/11/06 31/5/07 No. No. No. Weighted average number of ordinary shares: - for the purposes of basic loss per share 138,411,201 41,736,175 42,065,406 - for the purposes of diluted loss per share 138,411,201 41,736,175 42,065,406 The impact of the warrants issued during the year is anti dilutive. 3. Exceptional item Exceptional items are events or transactions that fall within the activities of the Group and which by virtue of their size or incidence have been disclosed in order to improve a reader's understanding of the financial statements. 6 months 6 months Year ended ended ended 30/11/07 30/11/06 31/5/07 £ £ £ Financing costs in respect of acquisition of Amirose International 149,550 - - ==================================== 4. Share capital 6 months 6 months Year ended ended ended 30/11/07 30/11/06 31/5/07 No. No. No. Authorised: Ordinary shares of £0.005 200,000,000 200,000,000 200,000,000 ====================================== Issued and fully paid: Reported as at 1 June 42,396,447 40,276,625 40,276,625 Issue of shares 160,958,730 2,119,822 2,119,822 ______________________________________ Reported as at end of period 203,355,177 42,396,447 42,396,447 ====================================== 6 months 6 months Year ended ended ended 30/11/07 30/11/06 31/5/07 £ £ £ Authorised: Ordinary shares of £0.005 each 1,000,000 1,000,000 1,000,000 ====================================== Issued and fully paid: Reported as at 1 June 211,982 201,383 201,383 Issue of shares 804,794 10,599 10,599 ______________________________________ Reported as at end of period 1,016,776 211,982 211,982 ====================================== On 27 July 2007, the Company raised £1,350,000 through the issue of 135,000,000 new ordinary shares of nominal value 0.5 pence each at a placing price of 1 penny each. This represented 76% of the enlarged issued share capital of the Company. Warrants were issued to subscribers on a ratio of 1 warrant for every 2 shares subscribed for. The exercise price of the warrants is 1 penny per ordinary share exercisable at any time up to and including the fifth anniversary of issue. On the same date the Company issued 4,450,000 new ordinary shares of nominal value 0.5 pence each to professional advisors and financiers in respect of the acquisition of Amirose International. On 13 November 2007, the Company raised £200,000 through the issue of 19,047,619 new ordinary shares of nominal value 0.5 pence each at a placing price of 1.05 pence. This represented 9.5% of the enlarged issued share capital of the Company. On 28 November 2007, the Company issued 2,461,111 new ordinary shares of nominal value 0.5 pence each in lieu of professional fees. At 30 November 2007 warrants over 93,500,000 ordinary shares were outstanding. Date of At Granted Exercised Forfeits At Exercise/ Exercise/Vesting grant 1 June /vested 30 Nov Share price date 2007 2007 From To _________________________________________________________________________________________________________ Warrants 8.03.06 6,500,000 - - - 6,500,000 6.0p 8.03.06 08.03.11 27.07.07 - 87,000,000 - - 87,000,000 1.0p 27.07.07 27.07.12 ========================================================================================================= 5. Status of financial information The interim results for the six months ended 30 November 2007 are unaudited and do not constitute statutory accounts within the meaning of section 240 Companies Act 1985. The figures for the year ended 31 May 2007 and for the six months ended 30 November 2006 have been extracted from audited accounts for those periods. 6. Note to the cash flow statement 6 months 6 months Year ended ended ended 30/11/07 30/11/06 31/5/07 £ £ £ Loss for the period (143,299) (178,659) (407,022) Adjustments for: - Taxation - - 3,310 - Finance credits 25,341 (7,902) (11,210) - Depreciation 6,842 442 1,196 Changes in working capital: - (Increase)/decrease in trade and other receivables 209,720 (4,254) (166,620) - Increase in inventories (164,196) - (5,510) - Increase/(decrease) in trade and other payables 54,825 (19,170) 181,435 ____________________________________ Cash used in operations (10,767) (209,543) (404,421) ==================================== 7. Business combinations On 27 July 2007 the Company acquired the entire share capital of Amirose International Limited, a beauty products distributor operating in the UK. The acquired business contributed revenues of £454,082 and net profit of £100,782 to the group for the period from 27 July to 30 November 2007. Details of assets acquired and goodwill are as follows: Cost of acquisition: £ Equity 1,350,000 Loan notes 850,000 Cash 685,930 Directly attributable acquisition costs 282,971 _________________________________________________________________ Total 3,168,901 ================================================================= The equity consideration was satisfied by The Core Business Plc issuing 135,000,000 ordinary shares at a price of 1 penny on 27 July 2007. The issue price consists of the nominal value of the ordinary shares of 0.5 pence and a share premium of 0.5 pence. Warrants were issued to subscribers on a ratio of 1 warrant for every 2 shares subscribed for. The exercise price of the warrants is 1 penny per ordinary share exercisable at any time up to and including the fifth anniversary of issue. Directly attributable acquisition costs are those charged by the Company's advisers in performing due diligence activities and producing the acquisition documents. The total consideration payable for Amirose International Limited is £2,885,930 and comprises £2,600,000 paid on acquisition subject to a £1 for £1 increase or reduction if the net assets value of Amirose following a verification exercise at completion was greater or less than £1,234,000. The net assets acquired at 27 July 2007 were: Book value at Fair value at acquisition acquisition £ £ Non-current assets Property, plant and equipment 9,162 9,162 Current Assets Inventories 229,485 229,485 Trade receivables 286,650 286,650 Cash and cash equivalents 1,166,353 1,166,353 ________________________________ 1,682,488 1,682,488 ________________________________ Total assets 1,691,650 1,691,650 ================================ Current liabilities Trade and other payables 70,702 70,702 Current tax payable 101,018 101,018 ________________________________ Total liabilities 171,720 171,720 ================================ Net assets acquired 1,519,930 1,519,930 ================================ Purchase consideration settled in cash 3,168,901 Cash and cash equivalents in subsidiary acquired (1,166,353) ________________________________ Cash outflow on acquisition 2,002,548 ================================

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