RNS Number : 5300S
International Brand Licensing PLC
20 May 2009
 



International Brand Licensing Plc

(the "Company")

 

Results for the year ended 31 December 2008


International Brand Licensing plc, the branded sports lifestyle company, announces its preliminary results for the year ended 31 December 2008.


Highlights:


  • Shareholder funds increased to £5.07m (2007: £4.98m)

  • Cash and cash equivalents increased 74% to £2.50m (2007: £1.44m)

  • Sale of three Admiral territories (Japan, South Africa, and Turkey), grossing over £1.8m in cash

  • Completion of WICB cricket contract with annual sponsorship costs terminated

  • Termination of ECB cricket contract with annual sponsorship costs terminated

  • All Admiral cricket stock written off and closure of warehouse, reducing ongoing fixed costs

  • Further investment in the Admiral and Muscle Brands, both of which have been expensed to the Income Statement



Contact:


International Brand Licensing Plc


Adam Reynolds

Paul Foulger


Tel: +44(0) 207 245 1100


Zeus Capital

Ross Andrews

Tom Rowley  


Tel: +44(0)161 8311512  

Website:  www.zeuscapital.co.uk



Chairman's Statement 

Despite the depressed global economic climate, International Brand Licensing plc ("IBL"), and in particular the Admiral brand, performed as well as could be expected in 2008. During the year the Board considerably simplified the business by terminating the cricket contracts with both the England and Wales Cricket Board ("ECB") and the West Indies Cricket Board ("WICB"). In addition, substantial efforts were made to further reduce the Company's fixed cost base and to increase the Company's cash balances.


In particular, the following was achieved during 2008:
 
·         Shareholder funds increased to £5.07m (2007: £4.98m)
·         Cash and cash equivalents increased 74% to £2.50m (2007: £1.44m)
·         Sale of three Admiral territories (Japan, South Africa, and Turkey), grossing over £1.8m in cash
·         Completion of WICB cricket contract with annual sponsorship costs terminated
·         Termination of ECB cricket contract with annual sponsorship costs terminated
·         All Admiral cricket stock written off and closure of warehouse, reducing ongoing fixed costs
·         Further investment in the Admiral and Muscle Brands, both of which have been expensed to the Income Statement



Following the sale of the above-mentioned three territories in 2008, the Board took the decision to undertake an impairment review of the Admiral trademark at the end of the year. Following this review, it was decided to write down the value of the Admiral Trademark by £2.1m, which includes the cost attributable to the regions which were sold. Without this exceptional write-off, the Group's Income Statement would have been significantly healthier albeit, a much larger Swiss corporation tax charge would have suppressed both the cash position as well as shareholder funds. 


The Board has achieved all of the objectives it set out to achieve in 2008; in 2009 it is envisaged that new territories for both the Admiral and Muscle brands will be signed up and if possible, further sales of existing territories executed in order to enhance shareholder value, should an appropriate opportunity arise.


Due to its healthy cash resources coupled with a substantially reduced fixed overhead base, the Group is very well positioned; it is interesting to note that based upon the current market capitalisation, the Admiral and Muscle brands are valued at less than £200,000, which is very surprising considering that during 2008, the Japanese territory alone for the Admiral brand was sold for in excess of £1.2m. 


Interest continues to be shown in the brand and a number of opportunities are being actively pursued. Despite the economic difficulties, IBL is in a very strong position and the Board will continue to work tirelessly to enhance shareholder value in the coming year.



Adam Reynolds

Chairman


Principal Activities and Business Review


The principal activity of the Group is the development and exploitation of a portfolio of sports and lifestyle brands, trademarks, trade names and logos. The Group seeks to exploit the value of its brands by granting licences to third parties authorising the manufacture, marketing and sale of specified licensed products for a fixed term by reference to a particular territory.

 

Historically, the business has comprised two elements a) royalties received worldwide through the licensing of the Admiral brand to contracted licensees and b) sales of cricket replica kits through its sponsorship agreements with the ECB and WICB. As both these sponsorship contracts terminated during 2008, the financial statements reflect only the ongoing business i.e. royalty income received from licensees around the world. As such, all income and costs relating to the cricket replica business have been classified as discontinued operations on the Consolidated Income Statement and the 2007 comparatives have been restated accordingly.


Group turnover increased by 36% to £465,000 (2007: £341,000). The increase in revenue was partly due to an early redemption fee from one of the UK licensees as well as favourable exchange rates on sales to both the US and Euro territories.


The Group made an operating loss before exceptional items for the year ended 31 December 2008 of £482,000 (2007: £443,000)There are four issues worth highlighting for shareholders when reviewing these results:

  • This loss would have been less if it had not been for around £115,000 having been spent on marketing costs for both the Admiral and Muscle Athletic brands which will not be repeated in 2009.

  • There were a number of transitional costs incurred in the year associated with moving the IBL offices from Klosters to Lausanne which will not be repeated in 2009.

  • Travel costs were higher than expected in the year due partly due to the extended negotiations associated with the three territory sales as well as certain visits to other worldwide licensees. A concerted effort will be made in 2009 to significantly reduce this expenditure.

  • Legal costs were still relatively high in the year due mainly to the continued maintenance and renewal of the various trademarks around the world. The Board has already put into place arrangements with its Trademark lawyers to significantly reduce these costs in 2009.

An exceptional profit on the sale of intangible assets of £834,000 was generated in the year. This related to the Admiral territorial sales of Japan, Turkey, and South Africa which grossed more than £1.8m in sales proceeds; around £187,000 of costs were associated with these sales but then a prudent accounting approach was taken whereby the brand value was reduced by £791,000 in order to reflect diminished future royalty incomes resulting from these three territories no longer generating revenues for the Group. It is of course hoped that future income streams will increase as a result of signing up new territories as well as organic growth from existing ongoing licensees. 


In addition to the intangible asset reduction of £791,000 above, an impairment review of the brand was undertaken at the year end and a further £1,300,000 was written off and charged to the Income Statement. Again, this was a prudent accounting decision and the Board is confident that through the continued exploitation of both the Admiral and Muscle Athletic brands, the business will experience strong growth in the future.


A share based payment, which is a non-cash item, of £61,000 (2007: £61,000) has been charged to the Income Statement


Following the above charges, an operating loss after exceptional items of £1,009,000 (2007: £163,000) has been incurred during the year.


After having received interest income of £86,000 (2007: £50,000), a loss before tax of £923,000 (2007: £120,000) was reported.


Income tax of £146,000 (2007: £150,000) was charged in the year, resulting in a loss from continuing operations of £1,069,000 (2007: loss of £270,000).


In addition to the above loss, an additional £238,000 (2007: profit of £735,000) was charged to the Income Statement in relation to discontinued operations i.e. the cricket replica kit business. This charge related mainly to stock write-offs, unrecoverable debts, and other final closure costs.


The loss for the year was reported at £1,307,000 (2007: profit of £465,000).


The balance sheet shows the Group's financial position remains strong with total assets of £5.74 million 

(2007 - £5.57 million) and net assets of £5.07 million (2007 - £4.98 million).


Included in the above assets are cash and cash equivalent balances of £2.50 million (2007: £1.44 million) as well as £176,000 of accrued income, most of which has been received after the year end.


It is worth noting that Intangible Assets are now valued at £2.62 million (2007: £3.37 million). As discussed above, around £2.28 million has been charged to the Income Statement following the disposal of certain Admiral territories during the year as well as an impairment review of the brand valuation having been undertaken. However, due to the volatile Swiss Franc / Sterling exchange rate fluctuation during the year, a net exchange rate gain of around £1.35 million has increased the brand value; in accordance with International Financial Reporting Standards this gain has not been realised in the Income Statement but has been credited to Equity within Foreign Currency Reserves as shown on the face of the Group Balance Sheet.


Future Outlook

The Group will continue to grow the Admiral and Muscle Athletic brands by negotiating new geographic territories with new Licensees as well as by encouraging existing Licensees to increase revenue.


Key Performance Indicators ("KPIs")

The Group's Directors are of the opinion that the following KPIs are relevant 


            2008            2007

           £'000           £'000

Turnover:                                   £465            £341

Operating loss:                      (£1,009)          (£163)

Number of Staff:                             5                  8



Consolidated Income Statement
For the year ended 31 December 2008

 
Notes
                    2008
 
                  2007
 
 
                   £’000
 
                 £’000
Revenue
 2
                     465
 
                    341
Operating expenses
 
                 (1,474)
 
                   (504)
 
 
 
 
 
Operating loss
 
                 (1,009)
 
                   (163)
 
 
 
 
 
Operating loss analysed as:
 
 
 
 
Before exceptional items
 
                   (482)
 
                    (443)
Exceptional profit on sale of intangible assets
3
                     834
 
                      341
Exceptional impairment of intangible assets
 
                 (1,300)
 
                          -
Share based payments
 
                     (61)
 
                      (61)
Operating loss after exceptional items
 
                 (1,009)
 
                    (163)
 
 
 
 
 
Finance Income
 
                       86
 
                       50
Finance Costs
 
                         -
 
                       (7)
 
 
 
 
 
Loss before income tax
 
                    (923)
 
                    (120)
Income tax expenses
 
                    (146)
 
                    (150)
Loss from continuing operations
 
                 (1,069)
 
                    (270)
(Loss)/profit from discontinued operations
 
                    (238)
 
                      735

(Loss)/profit for the year attributable to 
shareholders

 
                 (1,307)
 
                      465
 
 
 
 
 
(Loss)/earnings per ordinary share
 
                 Pence
 
                 Pence
Basic and diluted
4
                     (3.9)   
 
                     1.4
 
 
 
 
                    
 
 
 
 
 
Consolidated Statement of Recognised Income and Expenses
For the year ended 31 December 2008

 
                    2008
 
 
               2007
 
                   £’000
 
 
               £’000
Exchange differences on translation of foreign operations
                   1,420
 
 
                  224
Fair value adjustment in respect of available-for-sale financial
assets
 
                      (49)
 
 
                 
                 (43)
 
 
 
 
 
Income and expense recognised directly in equity
                   1,371
 
 
                  181
(Loss)/profit for the year
                 (1,307)
 
 
                  465
 
 
 
 
 
Total recognised income for the year
                       64
 
 
                  646
All amounts are attributable to equity holders of the company
 
 
 
 

 

 
Balance Sheet
As at 31 December 2008
 

 
 
 
 
          Group
 
           Group
 
 
 
 
 
             2008
 
              2007
 
Assets
 
 
 
            £’000
 
              £’000
 
Non-current assets
 
 
 
 
 
 
 
Property, plant and equipment
 
 
 
                 3
 
                   6
 
Intangibles
 
 
 
          2,621
 
            3,365
 
Deferred tax assets
 
 
 
               62
 
                 50
 
Investments
 
 
 
                 -
 
                  -
 

Available-for-sale financial 
assets

 
 
 
                21
 
                70
 
Total non-current assets
 
 
 
           2,707
 
            3,491
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
Inventories
 
 
 
                 -
 
               110
 
Trade and other receivables
 
 
 
              530
 
               527
 
Cash and cash equivalents
 
 
 
           2,501
 
            1,437
 
Total current assets
 
 
 
           3,031
 
            2,074
 
 
 
 
 
 
 
 
 
Total assets
 
 
 
           5,738
 
            5,565
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
Trade and other payables
 
 
 
            (457)
 
             (491)
 
Current tax liabilities
 
 
 
            (211)
 
              (98)
 
Total current liabilities
 
 
 
            (668)
 
             (589)
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
           5,070
 
            4,976
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
 
Share capital
 
 
 
              336
 
              336
 
Share premium
 
 
 
           3,090
 
           3,090
 
Other reserve
 
 
 
              244
 
              244
 
Foreign currency reserves
 
 
 
           1,483
 
                63
 
Retained earnings
 
 
 
              (83)
 
           1,243
 
Total shareholders’ equity
 
 
 
           5,070
 
           4,976
 
 
 
 
 
 
 
 
 
 
 
Consolidated Cash Flow Statement
For the year ended 31 December 2008

 
                2008
 
                2007
 
               £’000
 
               £’000
Operating activities
 
 
 
Operating loss
             (1,009)
 
                 (163)     
(Loss)/profit from discontinued operations
Depreciation
Exceptional impairment of intangible assets
                (238)
                      3
              1,300                
 
                   735
                       3
                       -
Exceptional profit on sale of intangible asset
                (834)
 
              (1,152)
(Increase)/decrease in receivables
                    (3)
 
                   812
Decrease in payables
                  (65)
 
                   (77)
Decrease in inventories
                  110
 
                   483
Share-based payment
                    61
 
                     61
Taxes paid
Foreign currency translation
                  (45)
                    73
 
                 (118)
                       -
Net cash (used in)/generated by operating activities
                (647)
 
                   584
 
 
 
 
Investing activities
 
 
 
Interest received
                   86
 
                    50
Net proceeds on sale of intangible asset
               1,625
 
               1,152
Purchase of listed Investments
                     -
 
                 (113)
Net cash generated by investing activities
               1,711
 
                1,089
 
 
 
 
Financing activities
 
 
 
Interest paid
                     -
 
                    (7)
Net cash used in financing activities
                     -
 
                    (7)
 
 
 
 
Net increase in cash and cash equivalents
                1,064
 
                1,666
 
 
 
 
Cash and cash equivalents at beginning of year
                1,437
 
                 (229)
 
 
 
 
Cash and cash equivalents at end of year
                2,501
 
                1,437
 
 
 
 
 
 

  Notes 

1.    Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC Interpretations) issued by the International Accounting Standards Board (IASB) as adopted by the European Union and with those parts of the Companies Acts applicable to companies preparing their financial statements under IFRS. Practice is continuing to evolve on the application and interpretations of IFRS. Further standards may be issued by the International Accounting Standards (IASB) and standards currently in issue and endorsed by the EU may be subject to interpretations issued by IFRIC.

The preparation of financial statements, in conformity with general accepted accounting principles under IFRS, requires management to make 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 reported period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these consolidated financial statements. 


2. Segmental Reporting
Primary segmental reporting
During the year the group discontinued its Replica kit business. Since then, the group’s business is attributable to a single segment, being its licensing business.
 
Secondary segmental reporting format
The turnover is attributable to the principal activity of the Group. An analysis of turnover by geographical destination is given below:
 

 
                    2008
 
               2007
 
                   £’000
 
              £’000
United Kingdom
                      190
 
                 120
Europe and Scandinavia
                        30
 
                   63
North America
                      134
 
                   81
Australia
                         -
 
                     8
Asia
                       95
 
                   53
Rest of the World
                       16
 
                   16
 
                      465
 
                 341
 
3.        Exceptional Items
      
 
           2008
 
            2007
 
          £’000
 
           £’000
Sales of intangible assets
           1,812
 
              341
 
 
 
 
Costs associated with sale of intangible assets
           (978)
 
                  -
 
             834
 
              341
          
 
Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to enable a full understanding of the Group’s financial performance.
 
4.         (Loss)/earnings per share
 

 
           2008
 
            2007
 
          £’000
 
           £’000
(Loss)/earnings
 
 
 
(Loss)/earnings for the purposes of basic and diluted earnings
per share
       
        (1,307)
 
            
             465
 
Numbers
 
 
 
Weighted average number of ordinary shares for the purpose of
basic earnings per share
       
 33,593,353
 
            
  33,593,353
 
 
 
 
Basic (loss)/earnings per 1p share
  (3.9)pence
 
     1.4pence
 
There is no dilutive effect of the options.
 
 
5.                   Delivery of Accounts
 
The statutory accounts in respect of the prior year ended 31 December 2007 have been delivered to the Registrar of Companies and the auditors of the Company made a report thereon under Section 235 of the Act. That report was an unqualified report and did not contain a statement under Section 237 (2) or (3) of the Act.


6. Availability of Accounts


This preliminary statement is not being posted to shareholders. The Report and Accounts will be posted to shareholders later today. Copies of this announcement and further copies of the Report and Accounts can be downloaded from the website www.iblplc.com



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The company news service from the London Stock Exchange
 
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