Preliminary Results
Embargoed: 07:00hrs 3 May 2007
International Brand Licensing Plc
("IBL" or the "Company")
Unaudited Preliminary Results
International Brand Licensing plc, the branded sports lifestyle company,
announces its preliminary results for the period ended 31 December 2006.
Highlights
* Third successive record year for Admiral's England cricket sales, up 4.9%
to £2,648,000 (2005: £2,525,000)
* Operating Profit before exceptional items up 12.9% to £647,000 (2005:£573,000)
* Administrative Expenses down 34% to £927,000 (2005: £1,402,000)
* Savings of £73,000 in interest payable
* Strategic partnership signed with @miral BV for the design, development,
and sourcing of the Admiral brand for its international licensee network
* Sale of Admiral Greek trademarks for cash consideration of £775,000,
generating £121,000 of exceptional profit
* Appointment of Axis Group as the new USA Admiral football licensee with
minimum guarantees of $850,000 during a five year term
* Appointment of Usher Corporation as new Admiral licensee in Australia and
New Zealand
* Appointment of Diethnis Athlitiki Ltd as the first ever Admiral licensee
for Turkey, with minimum guarantees of £550,000 over a ten year term
* Appointment of World Brands as the first ever Admiral licensee in the Czech
Republic, Slovakia, and Hungary
* Acquisition of the Muscle Athletic brand for a cash consideration of £350,000
* License Agreement with Asda renewed for a second three year term from 2007
to 2009
* Appointment of Rajan Group as the new Admiral apparel licensee in the UK
and Republic of Ireland with minimum guarantees of £295,000 for an initial
three year term
* Appointment of Tenzero as the new Admiral team sports licensee for the UK
and Republic of Ireland with £189,000 minimum guarantees for a six year
term
Commenting on the results, Tony Hutchinson, IBL's Chief Executive, said:
"During the year under review IBL has achieved a number of key objectives.
Following record Admiral England cricket sales in 2005, the year the team
regained the Ashes from Australia, the Company managed to grow its England
cricket replica sales again for the third year in succession. Distribution was
expanded for the first time into JJB Sports, resulting in national visibility
of the Admiral brand in this major sporting goods company.
In the licensing division it was extremely encouraging to successfully appoint
a significant number of new Admiral licensees in key markets across the world.
Several of these markets will see the Admiral brand distributed there for the
very first time, a positive indication of the brand's increasing value on an
international scale.
The Company was active in corporate transactions involving both acquisitions
and disposals; it successfully acquired the global rights to Muscle Athletic, a
fitness lifestyle brand established in the early 1970's, as well as having sold
the Admiral trademarks in Greece to the longstanding Admiral licensee there,
for a cash consideration of £775,000. This latter transaction is again
indicative of the general perception of the increasing global value of the
Admiral brand."
Chairman's Statement
I am pleased to announce a further increase in Operating Profit for the year to
31 December 2006 to £647,000 (2005: £573,000), despite turnover having
decreased to £3,077,000 (2005: £3,261,000).
This decrease in turnover was due to a £307,000 reduction in royalties, being
attributable to the termination of a number of underperforming licensees during
the year. Your Board has been working hard to sign up new Admiral territory
licensees around the world in order to provide long term growth for its
shareholders. In particular, the following regions are now represented:
* USA
* Australia/New Zealand
* Malaysia/Singapore
* Turkey
* Czech Republic/Hungary/Slovakia
Admiral is now distributed in 34 countries across the world, more than ever
before, and the effect of these new agreements will begin to benefit the Group
in 2007 and beyond.
In October 2006, the Company acquired the worldwide rights to the Muscle
Athletic trademarks. This fitness/gym lifestyle brand was established in 1974
and enjoyed considerable success until the late 1980's, since which it has been
largely dormant. However, we believe it offers significant opportunities to
expand our licensing network in market segments outside of Admiral's position,
and product development has already commenced with an objective of launching
early in 2008.
In addition, the Board actively pursued a number of corporate transactions
during the year, which resulted, subsequent to the year end, with an agreement
with the England and Wales Cricket Board ("ECB") for the early termination of
our Admiral kit sponsorship of the England cricket team on 31 March 2008. As a
result of this transaction, IBL has received £1.6m and a reduction in royalties
to the ECB for the period to 31 March 2008.
We are currently in discussions regarding new licensees and a further potential
disposal, which, if completed, will further enhance the Group's balance sheet.
Your Board is confident of the future and further positive developments.
Adam Reynolds
Chairman
3 May 2007
Financial
Group Turnover decreased by 5.6% to £3,077,000 due to a royalty shortfall
caused by changes in Admiral's representation in a number of markets. However,
a reduction in overall Administrative Expenses resulted in a 12.9% increase in
Operating Profit (before exceptionals) to £647,000. These savings are largely
due to the Board having made substantial operating changes in the year, in an
effort to reduce its fixed cost base, as well as tighter stock control and
reduced bad debt write-offs.
A further £73,000 of Interest Payable savings were made in the year due to the
Company having paid off in full its loan facility with Barclays Bank during
2005. In addition, an exceptional profit of £121,000 was generated through the
sale of the Admiral Greek trademarks.
FRS20 specifies the accounting treatment to be adopted by entities making
share-based payments. In particular, it requires entities to recognise an
expense, measured at fair value, in respect of the share-based payments they
make, including all types of executive share option schemes. For this reason,
the Financial Statements include a charge of £182,000 for the current year as
well as a charge of £62,000 relating to the year ending 31 December 2005.
Shareholders' funds have increased in the year from £3,714,000 to £4,299,000.
Subsequent to the year end, on 18 April 2007, the Company announced it had
entered into an agreement with the ECB and adidas for an early termination of
its Admiral kit sponsorship. In return for an up front payment of £1.6m and a
reduction in royalties to the ECB for the twelve months to April 2008, IBL has
agreed to an early mutual termination of its kit supply to the England team.
Also subsequent to the year end, on 30 April 2007, the Company announced it had
entered into a six year license agreement for its Admiral sports brand with
Jeddah based Khalid Al Amoudi Enterprises, which will generate minimum
royalties of $153,000, with management projections significantly higher, during
the term.
Dividends
No dividend has been paid or declared for the period.
Current Trading and Future Outlook
Trading in the sporting goods sector worldwide remains highly competitive, and
no more so than in the UK.
The Company expects that initial income streams from the new Admiral licensees
appointed during 2006 will begin to contribute additional royalty revenues in
2007. As the Company continues to identify and appoint additional Admiral
category and territory licensees and plans to launch Muscle Athletic early in
2008, the longer term prospects of the Company remain very positive.
The Annual General Meeting of the Company will be held at 11 a.m. on 18 June
2007 at the offices of Memery Crystal LLP, 44 Southampton Buildings, London
WC2A 1AP.
Group profit and loss account
For the year ended 31 December 2006
2006 2005
£000 £000
(as restated)
Turnover 3,077 3,261
Cost of sales (1,503) (1,286)
Gross Profit 1,574 1,975
Administrative expenses (927) (1,402)
Operating Profit before exceptional items 647 573
Exceptional profit on sale of intangible 121 475
asset
Share based-payments (182) (62)
Operating Profit after exceptional items 586 986
Interest receivable - 6
Interest payable (4) (77)
Profit on ordinary activities before tax 582 915
Taxation 14 (142)
Profit for the year 596 773
Earnings per ordinary share
Before exceptional items
- Basic and diluted 2.0p 1.1p
After exceptional items
- Basic and diluted 1.8p 2.3p
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
Group statement of total recognised gains and losses
For the year ended 31 December 2006
2006 2005
£000 £000
Profit for the year 596 773
Exchange differences (161) (236)
Prior year adjustment (62) -
Total recognised gains and losses relating to 373 537
the year
Group balance Sheet
As at 31 December 2006
2006 2005
£000 £000
Fixed assets
Intangible assets 3,142 3,471
Tangible assets 9 9
3,151 3,480
Current assets
Stock 593 252
Debtors 1,377 828
Cash at bank and in hand 40 283
2,010 1,363
Creditors: amounts falling due within (862) (1,129)
one year
Net current assets 1,148 234
Total assets less current liabilities 4,299 3,714
Capital and reserves
Share capital 336 333
Share premium 3,090 3,048
Merger reserve 244 244
Profit and loss account 629 89
Shareholders' funds 4,299 3,714
Group cash flow statement
For the year ended 31 December 2006
2006 2005
£000 £000
Net cash (outflow)/inflow from operating (656) 111
activities
Returns on investments and servicing of
finance
Interest paid (4) (80)
Interest received - 6
Taxation
UK Tax paid (121) (59)
Foreign taxes (paid)/received (45) 48
Capital expenditure and financial
investment
Purchase of intangible fixed assets (446) (37)
Purchase of tangible fixed assets (4) -
Sale of intangible fixed assets 775 2,772
Net cash (outflow)/inflow before (501) 2,761
financing
Financing
Repayment of bank borrowing - (2,563)
(Decrease)/increase in cash in the year (501) 198
Notes to the preliminary statement
For the year ended 31 December 2006
1. Basis of preparation
The financial information contained in this preliminary announcement does not
constitute the Group's statutory financial statements. These preliminary
financial statements have been extracted from the Group's audited financial
statements for the year ended 31 December 2006 upon which the auditors reported
without qualification. The audited financial statements for the Group will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
The financial statements have been prepared on the basis of accounting policies
which are consistent with those set out in the Group's statutory financial
statements for the previous financial year except for the first time adoption
of Financial Reporting Standard 20 'Share-based payment' as set out below.
In preparing the financial statements for the current year, the group has
adopted in full Financial Reporting Standard 20 'Share-based payment'. FRS 20
requires the recognition of equity-settled share-based payments at fair value
at the date of the grant and the recognition of liabilities for cash-settled
share-based payments at the current fair value at each balance sheet date. The
adoption of the standard requires the group to restate the prior year results
and the effect of this is a reduction in profit for the previous year of £62,000.
2. Taxation
The tax (credit)/charge is made up as follows:
2006 2005
£000 £000
Domestic Current year tax
UK Corporation tax 34 100
Withholding tax (12) (26)
Foreign corporation tax
Foreign tax - current year 2 68
Current tax charge 24 142
Deferred taxation
Deferred tax credit (38) -
(14) 142
3. Earnings per share
2006 2005
No. No.
Weighted average ordinary shares in 33,585,819 33,343,353
issue during the year
Dilutive effect of options 13,956 4,056
Diluted weighted average ordinary 33,599,775 33,347,409
shares
£000 £000
Profit for the year before 657 360
exceptional items
Exceptional items (61) 413
Profit for the year 596 773
Earnings per ordinary share
Before exceptional items Pence Pence
- Basic and diluted 2.0 1.1
After exceptional items
- Basic and diluted 1.8 2.3
There is no dilutive effect on options issued to the directors during the year
due to the exercise price being more than the fair value, or on bonus and share
incentive schemes as the market capitalisation targets were not achieved.
4. Dividends
No dividends have been paid during the year. It remains the Company's policy
not to pay dividends until future operations have provided appropriate levels
of distributable profits and cash.
5. Distribution of the annual report and accounts to shareholders
Copies of the group's audited statutory accounts for the year ended 31 December
2006 will be dispatched to shareholders and the AIM team shortly. Copies will
also be available to the public at 14 Kinnerton Place South, London, SW1X 8EH.
For further information please contact:
Adam Reynolds, Chairman
Paul Foulger, Finance Director
International Brand Licensing Plc
+44 (0)20 7245 1100
Romil Patel / Katie Ratner
Blue Oar Securities Plc
+44 (0)20 7448 4400
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