Last checked at 23 Jun 2008 07:00
Embargoed Release: 07:00hrs Monday 23 June 2008
International Brand Licensing Plc ("IBL", the "Company" or the "Group") Final Results for the Year Ended 31 December 2007
International Brand Licensing plc, the branded sports lifestyle company, announces its final results for the period ended 31 December 2007. Copies of the Report and Accounts are being posted to shareholders today.
Chairman's Statement
The Group experienced a very challenging year in 2007, but despite an extremelydifficult retail environment we closed the year in a strong position and withthe business model that was originally intended when the Company was de-mergedonto AIM in 2002.
At the year end we had in excess of ‚£1.4m of cash in the bank which we anticipate will grow during 2008 as we receive further deferred territorial payments. We are currently in advanced discussions to sell a further three territories for the Admiral brand which, if concluded, will further enhance the Group's cash reserves. We will keep shareholders fully informed of these developments in due course.
Having withdrawn from the capital intensive sports retail supply business wehave emerged as a streamlined intellectual property sporting brands Company,with licensing revenue from over twenty territories.During 2007 we took the opportunity of assigning the England cricketsponsorship agreement one year early in return for a ‚£1.6 million payment fromadidas. However, due to a massive downturn in the UK sporting goods market anda real decline in the demand for cricket replica kit, coupled with ourwithdrawal from the market, sales of our cricket merchandise decreased to ‚£1,516,000 compared to ‚£2,644,000 in 2006. In addition a stock write off of ‚£292,000 was necessary on the England replica merchandise that was cleared asthe sponsorship agreement terminated early. Furthermore, we have also includedin the 2007 results additional charges incurred by our withdrawal from theEngland cricket sponsorship and the wholesale trading including staffredundancies and the investment we have made in the development and marketingof the Muscle Athletic brand.Licensing revenue was ‚£348,000 compared to ‚£433,000 in 2006, the decreasealmost entirely due to the sales shortfall in the depressed UK market. However,during the year we appointed four new Admiral licensees, the most notable onebeing for China, Hong Kong and Macau. These new partners will only begin togenerate revenues in 2008 and beyond, and during the year ahead we are veryconfident that we will further expand Admiral's distribution by signingadditional agreements for new territories and product categories. In 2007 westarted developing Muscle Athletic which we had acquired late in 2006, and as aresult of this, the brand was successfully launched in February 2008 this yearat MAGIC, the world's most important fashion and lifestyle exhibition. Thebrand received a very positive reaction at the show and we are now progressingdiscussions with a number of candidate licensees, which we aim to sign during2008 and 2009. In the event that the Admiral brand is sold we believe thatMuscle Athletic will become its replacement.We have now succeeded in restructuring the Company into the financial andoperational position that we have strived for in recent years. We are no longerreliant on the sports retail trade as a significant proportion of our ongoingrevenues is now secured by guarantees. Furthermore we will continue to seekopportunities to strengthen the balance sheet and enhance shareholder value
going forward.Adam ReynoldsChairman23 June 2008Report of the Directors
The Directors have pleasure in submitting this report together with the financial statements of International Brand Licensing plc for the year ended 31 December 2007.
Directors
The Directors who held office during the year were as follows:
Tony Hutchinson, Chief Executive (aged 57)
Tony held a number of senior management positions in sales and marketing atCoats Viyella plc between 1973 and 1988 when he left to join UmbroInternational limited. In 1990 he was appointed to the executive board and in1992 moved to Italy as managing Director of Umbro Italia. On returning to theUK in 1993 he assumed responsibility for the three Umbro subsidiaries in Italy,Germany and France as well as European Licensing Operations. In 1995 he wasappointed Director of International Licensing for Europe and Asia, and in 1997became Head of Global Licensing responsible for all licensee markets worldwide.In 2000 he was appointed Chief Executive of Hay & Robertson InternationalLicensing AG and became Chief Executive of International Brand Licensing plcupon its incorporation in 2002.
Paul Foulger, Finance Director(aged 38)
Paul has considerable public and private Company experience, having been aDirector of a number of successful businesses as well as being involved in alarge variety of corporate transactions over the years including acting asfinance director in the reversal of FirstAfrica Oil plc into FinancialDevelopment Corporation plc. Paul previously worked in the publishing industrywith Harper Collins Publishers and subsequently became finance director atElsevier Science, a subsidiary of Reed Elsevier plc. He led a managementbuy-out of previously quoted financial communications Group Hansard in 2004, ofwhich he remains a Director. He also consulted on the listing of Table MountainMinerals plc in 2005 and its subsequent acquisition by Plectrum Petroleum plc.In 2005, he became a Director of Cielo Holdings plc, now called Curidium Medicaplc, and successfully completed an acquisition of Curidium Ltd in 2006. Heholds several other Directorships including TSE Group plc and WiltonInternational Management Group. Paul is a qualified certified accountant and iscurrently completing his MBA at Warwick Business School.
Adam Reynolds, Non-executive Chairman(aged 45)
Adam began his career as a stockbroker in 1980, working first with Rowe Ruddand then Jacobson & Townsley as a commission salesman. In 1983, he establishedthe London office of John Siddall & Son, becoming a Director in 1987. In 1988,he brokered the sale of that office to Branston & Gothard, where he headed upthe UK equity sales team, which he had brought with him, for the next fiveyears. He remained at Branston & Gothard as a UK equity salesman until 1998,when he joined Basham & Coyle, a financial PR firm as Director in charge ofinvestor relations, specialising in developing the PR strategies of smallerCompanies. In February 2000, he established Hansard Group plc, a financial PRfirm, listing it on AIM in November 2000, before successfully leading amanagement buy-out of the business in 2004 at which time Hansard Group acquireda major division of Energem Resources Inc. which changed its name toFirstAfrica Oil plc. Adam is also a Director of TSE Group plc.
Gordon Hall, Non-Executive Director(aged 65)
Gordon has held a number of high profile board positions within both privateand public Companies. He is currently a non executive Director of both EvolutecLtd and Osmetech plc. Previous Directorships include Ntera Ltd, PlectrumPetroleum plc, Bio Stat Ltd, Shield Diagnostics plc and Andaris Ltd.
Principal Activities and Business Review
The principal activity of the Group is the development and exploitation of aportfolio of sports and lifestyle brands, trademarks, trade names and logos.The Group seeks to exploit the value of its brands by granting licences tothird parties authorising the manufacture, marketing and sale of specifiedlicensed products for a fixed term by reference to a particular territory. Inthe UK the marketing and sale of some licensed products is performed by a GroupCompany.Group turnover decreased by 40% to ‚£1,857,000 (2006: ‚£3,077,000). The reductionin revenue was due to a decline in the Admiral England cricket replica sales.This was due to a combination of factors not least the team's recent poorperformance and a generally depressed UK sports retail sector. Against thisbackdrop, the board decided to take advantage of an offer to terminate itsexclusive Admiral England Cricket Board (ECB) sponsorship one year early, as at31 March 2008 in return for a cash consideration of ‚£1.6 million and areduction in royalties to the ECB.
The Group made a profit before tax for the year ended 31 December 2007 of ‚£ 615,000 (2006: profit of ‚£582,000) with basic earnings per share after exceptional items of 1.4 pence (2006: 1.8 pence).
The balance sheet shows the Group's financial position remains strong with total assets of ‚£5.6 million (2006 - ‚£5.1 million) and net assets of ‚£5 million (2006 - ‚£4.3 million).
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 2007 2006 ‚£'000 ‚£'000 Turnover ‚£1,857 ‚£3,077 Operating profit ‚£572 ‚£586 Operating profit %: 30.8% 19.0% Number of Staff: 8 8
Principal risks and uncertainties
The Directors continually identify, monitor and manage the risks anduncertainties of the Group. Risk is inherent in all businesses. Set out beloware certain risk factors which could have an impact on the Group's long termperformance. This list does not purport to be an exhaustive summary of therisks affecting the Group.
* Licensee relationships
The Group is reliant on developing its relationships with its licensees. The success of the Group depends on the relationships established with those licensees.
* Management and Employees
The success of the Group depends to a significant extent on key Directors andemployees. The loss of one or more of these people could have an adverse effecton the Group.
* Dilution of existing shareholders
Should the Directors decide that the Group needs to issue new Ordinary Shares, in so far as such new Ordinary Shares are not offered first to existing Shareholders, then their interests would be diluted.
* Political risk
A significant proportion of IBL's revenues are accounted for by agreements withlicensees in various countries. Any instability in those countries could affectoperations. * Currency Risk
A significant proportion of the Group's revenues and costs are denominated inlocal licensee currencies. Accordingly, financial operations could be adverselyaffected by exchange rate volatility which could result in a shortfall for theyear.
* Considerations relating to future prospects
IBL has a number of Licensee agreements in place. They are terminable on notice(the periods of which vary) and there can be no guarantee that licensees willnot withdraw from such agreements in the future.
Creditors Payment Policy
It is the policy of the Group to agree appropriate terms and conditions for itstransactions with suppliers (ranging from standard written terms to individualnegotiated contracts) and for payment to be made in accordance with these termsprovided the supplier has complied with its obligations. The average number ofday's credit taken by the Group as at the 31 December 2007 was 45 days (2006:42 days).Environment
The Directors consider that the nature of the Group's activities is not inherently detrimental to the environment.
Employees
The Group places value on the involvement of its employees and they areregularly briefed on the Group's activities. The Group closely monitors staffattrition rates which it seeks to maintain at current low levels and aims tostructure staff compensation levels at competitive rates in order to attractand retain high calibre personnel.
Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the specific aptitudes of the applicant involved. It is the policy of the Group that the training, career development and promotion of disabled persons, as far as possible, be identical with that of other employees.
Dividends
The Directors have not paid or declared a dividend for the year ended 31December 2007 (31 December 2006 - nil). For the foreseeable future, the Groupintends to retain any future earnings for the business and therefore the Groupdoes not anticipate paying dividends in the short term.
Directors' Interests
The interests of those Directors serving at 31 December 2007, all of which are beneficial, in the share capital of the Company were as follows:
On 31 December 2007 On 31 December 2006 Ordinary Shares of 1p each Ordinary Shares of 1p each A Hutchinson 48,194 48,194 A Reynolds 187,500 187,500 P Foulger 70,000 70,000 G Hall - -Substantial Shareholdings
As at 23 June 2008, the following interests in 3% or more of the issued ordinary share capital had been notified to the Company.
Shareholder Number Percentage of issued of shares share capital HSBC Global Custody Nominee (UK) Ltd 7,153,693 21.29%BH01883031 Euroclear Nominees Ltd 56XKK EOC01 5,030,000 14.97% JM Finn Nominees Ltd 3,656,688 10.89% Lance Yates Esq (Estate of) 1,708,480
5.09%
ODI Nominees Ltd 558 ODLCLT 1,222,778
3.64%
James Capel (Nominees) Ltd 118 1,127,291
3.36%
HSBCSS
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for eachfinancial year which give a true and fair view of the state of affairs of theCompany and of the Group and of the profit or loss of the Group for thatperiod. The Company's shares are traded on the AIM Market of the London StockExchange, the rules of which are that the Directors are required to prepare theGroup financial statements in accordance with International Financial ReportingStandards (IFRS) as adopted by the European Union.
In preparing these financial statements, the Directors are required to:
* select suitable accounting policies and then apply them consistently. * make judgements and estimates that are reasonable and prudent.
* state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial statements. * prepare the financial statements on a going concern basis unless it is inappropriate to assume that the Group will continue in business. The Directors are responsible for keeping proper accounting records whichdisclose with reasonable accuracy at any time the financial position of theGroup and to enable them to ensure that the financial statements comply withthe Companies Acts and International Financial Reporting Standards as adoptedby the European Union. They are also responsible for safeguarding the assets ofthe Company and the Group and hence for taking reasonable steps for theprevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions
Auditors
A resolution proposing that Gerald Edelman be reappointed as auditors of the Company will be put to the Annual General Meeting.
Disclosure of information to the Auditors
The Directors who hold office at the date of approval of this report confirmthat so far as they are each aware, there is no relevant audit information ofwhich the Company's auditors are unaware, and each Director has taken all thesteps that he ought to have taken as a Director in order to make him aware ofany relevant audit information and to establish that the Company's auditors
areaware of that information.Annual General Meeting
The resolutions to be proposed at the forthcoming Annual General Meeting are set out in the formal notice of the meeting, as set out on page 40.
Recommendation
The Board considers that the resolutions to be proposed at the Annual GeneralMeeting are in the best interests of the Company and it is unanimousrecommendation that shareholders support these proposals as the Board intendsto do in respect of their own holdings.
The Directors' report was approved by the Board on 23 June 2008 and signed on its behalf by:
Paul FoulgerDirector
Corporate Governance Statement
Compliance
The Directors recognise the value of the principles of the Combined Code on Corporate Governance ("the Combined Code"). Although, as an AIM Company, compliance with the Combined Code is not required the Group seeks to apply the Combined Code where practicable and appropriate for a Company of its size.
The following statement describes how the Group as at 31 December 2007 sought to address the principles underlying the Combined Code.
Board Composition and responsibility
The Board currently comprises two executive Directors and two non-executiveDirectors. The Board notes that the Combined Code guidance recommends that atleast half the Board should comprise independent non-executive Directors. TheBoard has determined that Adam Reynolds and Gordon Hall are independent incharacter and judgement and that there are no relationships or circumstanceswhich could materially affect or interfere with the exercise of theirindependent judgement. The Board is satisfied with the balance betweenexecutive and non-executive Directors which allows it to exercise objectivityin decision making and proper control of the Company's business. The Boardconsiders its composition is appropriate in view of the size and requirementsof the Group's business and the need to maintain a practical balance betweenexecutives and non-executives. Due to the structure of the Company it isconsidered that it is not appropriate to change the successful Boardcomposition at present.All Directors are subject to election by shareholders at the first AnnualGeneral Meeting after their appointment, and are subject to re-election atleast every three years. Non-executive Directors are appointed for a specificterm of office which provides for their removal in certain circumstances,including under section 168 of the Companies Act 2006. The Board does notautomatically re-nominate non-executive Directors for election by shareholders.The terms of appointment of the non-executive Directors can be obtained byrequest to the Company Secretary.The Board's primary objective is to focus on adding value to the assets of theGroup by identifying and assessing business opportunities and ensuring thatpotential risks are identified, monitored and controlled. Matters reserved forBoard decisions include strategic long-term objectives and capital structure ofmajor transactions. The implementation of Board decisions and day to dayoperations of the Group are delegated to Management
Board Meetings
10 board meetings were held during the period. The Director's attendance record during the period is as follows:
Tony Hutchinson (Chief Executive) 9 Paul Foulger (Finance Director) 10 Adam Reynolds (Non-Executive Chairman) 9 Gordon Hall (Non-Executive Director) 10
Audit Committee
This comprises two non-executive Directors, Gordon Hall (Chairman) and Adam Reynolds. The principal duties of the committee are to review the half-yearly and annual financial statements before their submission to the Board and to consider any matters raised by the auditors. The Committee also reviews the independence and objectivity of the auditors. The terms of reference of the Committee reflect current best practice, including authority to:
¢â‚¬¢ Recommend the appointment, re-appointment and removal of the external auditor
¢â‚¬¢ Ensure the objectivity and independence of the auditors including occasions when non-audit services are provided
¢â‚¬¢ Ensure appropriate 'whistle-blowing' arrangements are in place
The non-executive Directors may seek information from any employee of the Groupand obtain external professional advice at the expense of the Company ifconsidered necessary. Due to the relatively low number of personnel employedwithin the Group, the nature of the business and the current control and reviewsystems in place, the Board has decided not to establish a separate internalaudit department.Remuneration CommitteeThe Company has established a formal and transparent procedure for developingpolicy on executive remuneration and for fixing the remuneration packages ofindividual Directors. No Director is involved in deciding his own remuneration.The remuneration committee is made up of Gordon Hall (Chairman) and AdamReynolds. The committee considers the employment and performance of individualexecutive Directors and determines their terms of service and remuneration. Italso has authority to grant options under the Company's Executive Share OptionScheme.The Committee meets at least once a year. The Board of Directors has consideredthe appointment of a separate Nomination Committee, as recommended by thecombined code. However due to the size and nature of the Company, this functionis carried out by the Remuneration Committee with the non-executive Chairman.There is a division of responsibilities between the non-executive Chairman, whois responsible for the overall strategy of the Group and the CEO, who isresponsible for implementing the strategy and day to day running of the Group.He is assisted by the Finance Director.
Board appointments
The appointment of Directors is overseen by the full Board. There is no formalnominations committee, the appointment of new Directors being considered by
thefull Board.Internal ControlThe Directors are responsible for ensuring that the Group maintains a system ofinternal control to provide them with reasonable assurance regarding thereliability of financial information used within the business and forpublication and that the assets are safeguarded. There are inherent limitationsin any system of internal control and accordingly even the most effectivesystem can provide only reasonable, but not absolute, assurance with respect tothe preparation of financial reporting and the safeguarding of assets.The Group, in administering its business has put in place strict authorisation,approval and control levels within which senior management operates. Thesecontrols reflect the Groups organisational structure and business objectives.The control system includes clear lines of accountability and covers all areasof the organisation. The Board operates procedures which include an appropriatecontrol environment through the definition of the above organisation structureand authority levels and the identification of the major business risks.
Internal financial reporting
The Directors are responsible for establishing and maintaining the Group'ssystem of internal reporting and as such have put in place a framework ofcontrols to ensure that the ongoing financial performance is measured in atimely and correct manner and that risks are identified as early as ispracticably possible. There is a comprehensive budgeting system and monthlymanagement accounts are prepared which compare actual results against both thebudget and the previous year. They are reviewed and approved by the Board, andrevised forecasts are prepared on a regular basis.
Relations with shareholders
The Company reports to shareholders twice a year. The Company dispatches thenotice of its Annual General Meeting, together with a description of the itemsof special business, at least 21 clear days before the meeting. Eachsubstantially separate issue is the subject of a separate resolution and allshareholders have the opportunity to put questions to the Board at the AnnualGeneral Meeting. The Chairman of the Audit and Remuneration Committees normallyattend the Annual General Meeting and will answer questions which may berelevant to their work. The Chairman advises the meeting of the details ofproxy votes cast on each of the individual resolutions after they have beenvoted on in the meeting.
The Chairman and the non-executive Director intend to maintain a good and continuing understanding of the objectives and views of the shareholders.
Corporate Social Responsibility
The Board recognises that it has a duty to be a good corporate citizen and is conscious that its business processes minimise harm to the environment, contributes as far as is practicable to the local community and takes a responsible and positive approach to employment practices.
Report of the Remuneration Committee
Statement of Compliance
This report does not constitute a Directors Remuneration Report in accordance with the Directors Remuneration Regulations 2007 which do not apply to the Company as it is not fully listed.
Policy on Executive Directors' remuneration
Remuneration packages are designed to motivate and retain executive Directorsto ensure the continued development of the Company and to reward them forenhancing value to shareholders. The main elements of the remuneration packagefor executive Directors are basic salary or fees, benefits, and share optionincentives.Directors' remunerationThe remuneration of the Directors for the year ended 31 December 2007 is shownbelow: 2007 2006 Executive Directors ‚£'000 ‚£'000 A Hutchinson 138 134 P Foulger 37 30 175 164 Non-Executive Directors A Reynolds 70 40 G Hall 22 15 92 55Directors' Share OptionsAs at 31 December 2007 the Company had granted the following options toDirectors of the Company. Option Number of price per Ordinary Shares Option Holder Ordinary Share under option Exercise period Adam Reynolds 20p 1,250,000 29 June 2006 - 28 June 2010 Gordon Hall 20p 500,000 29 June 2006 - 28 June 2010
The maximum entitlements under the bonus and share incentive scheme to Directors to whom awards have been made are set as follows:
Director Maximum Share Entitlement Tony Hutchinson 1,667,168 Paul Foulger 500,150
Directors'Liability Insurance
The Company has entered into deeds of indemnity for the benefit of eachDirector of the Company in respect of liabilities to which they may becomeliable in their capacity as Director of the Company and of any Company in theGroup. Those indemnities are qualifying third party indemnity provisions withinthe meaning given to that term by Section 309B of the Companies Act, and allthose indemnities remain in force.
Independent Auditors' Report
to the Membersof International Brand Licensingplc
We have audited the Group and parent Company financial statementsof International Brand Licensing plc for the year ended 31 December 2007, whichcomprise the Consolidated Income Statement, the Group and Parent CompanyBalance Sheets, the Group Consolidated Cash Flow Statement, the GroupConsolidated Statement of Changes in Equity and the related notes. Thesefinancial statements have been prepared under the accounting policies set outtherein.This report is made solely to the Company's members, as a body, in accordancewith Section 235 of the Companies Act 1985. Our audit work has been undertakenfor no purpose other than to draw to the attention of the Company's membersthose matters which we are required to include in an auditor's report addressedto them. To the fullest extent permitted by law, we do not accept or assumeresponsibility to any party other than the Company and Company's members as abody, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditors
The Directors' responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union are set out in the Statement of Directors' Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a trueand fair view and are properly prepared in accordance with the Companies Act1985, and as regards the Group financial statements, Article --> [Author:c] 4of the IAS regulations. We also report to you whether, in our opinion, theinformation given in the Directors' report is consistent with those financialstatements. The information in the Directors Report also includes the specificinformation given in the Chairman's statement.
In addition we also report to you if, in our opinion, the Group has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding the Directors' remuneration and other transactions is not disclosed.
We read the other information contained in the Annual Report, and consider itis consistent with the audited financial statements. This information comprisesonly the Chairman's Statement, the Corporate Governance Statement, the Reportof the Remuneration Committee and the Directors' Report. We consider theimplications for our report if we become aware of any apparent misstatements ormaterial inconsistencies with the financial statements. Our responsibilities donot extend to any other information.
Basis of Audit Opinion
We conducted our audit in accordance with International Standards on Auditing(UK and Ireland) issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgements made by the Directors in the preparationof the financial statements, and of whether the accounting policies areappropriate to the Company's circumstances, consistently applied and adequatelydisclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
* the financial statements give a true and fair view, in accordance
with International Financial Reporting Standards as adopted by the European
Union, of the state of the affairs of the Company and Group as at 31
December 2007 and of its profit for the year then ended;
* the financial statements have been properly prepared in accordance with the
Companies Act 1985 and, as regards the Group financial statements, Article
4 of the IAS Regulation; * the information given in the Directors' Report is consistent with the financial statements. * Gerald Edelman 23 June 2008 Chartered Accountants 25 Harley StreetRegistered Auditor London W1G 9BR
ConsolidatedIncome Statement
For the year ended 31 December 2007
Notes 2007 2006 ‚£'000 ‚£'000 Revenue 3 1,857 3,077 Cost of Sales (1,012) (1,503) Gross profit 845 1,574 Administrative expenses (273) (988) Operating profit 4 572 586
Operating profit analysed as:
Before exceptional items (519) 647
Exceptional profit on sale of 5 1,152
121 intangible assets Share based payments (61) (182)
Operating profit after exceptional 572
586 items Finance Income 7 50 - Finance Costs 7 (7) (4) Profit before tax 615 582 Taxation 8 (150) 14
Profit for the year attributable to 465
596 shareholders Earnings per ordinary share 9 pence pence Basic and diluted 1.4 1.8
Consolidated Statement of Recognised Income and Expenses
For the year ended 31 December 2007
2007 2006 ‚£'000 ‚£'000
Exchange differences on translation of foreign 224
(161) operations Prior year adjustments - (62)
Fair value adjustment in respect of (43) - available-for-sale financial assets
Income and expense recognised directly in 181
(223) equity Profit for the year 465 596
Total recognised income and expenses for the 646
373 year attributable to
equity holders of the group Balance SheetsAs at 31 December 2007 Group Group Company Company 2007 2006 2007 2006 Assets Notes ‚£'000 ‚£'000 ‚£'000 ‚£'000 Non-current assets Property, plant and 10 6 9 1 1 equipment Intangibles 11 3,365 3,142 - - Deferred tax assets 19 50 38 50 50 Investments 12 - - - - Available-for-sale 13 70 - 70 70 financial assets Total non-current 3,491 3,189 334 252 assets Current Assets Inventories 14 110 593 - - Trade and other 15 527 1,339 479 1,008 receivables Cash and cash 16 1,437 40 1,199 10 equivalents Total current assets 2,074 1,972 1,678 1,018 Total assets 5,565 5,161 2,012 1,270 Liabilities Current liabilities Trade and other 17 (491) (808) (120) (638) payables Current Tax (98) (54) (20) - liabilities Total current (589) (862) (140) (638) liabilities Net Assets 4,976 4,299 1,872 632 Equity Share Capital 20 336 336 336 336 Share Premium 21 3,090 3,090 3,090 3,090 Other reserve 21 244 244 - - Foreign Currency 21 63 (161) - - Reserves Retained Earnings 21 1,243 790 (1,554) (2,794) Total Shareholders' 4,976 4,299 1,872 632 Equity
The financial statements were approved and authorised for issue by the Board on 23 June 2008.
Paul FoulgerDirector
Group Statement of Changes in Equity
Share Share Other Foreign Retained Total capital premium reserve Currency earnings Equity Reserve ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 As at 1 January 2006 333 3,048 244 - 89 3,714 Profit for the year - - - - 596 596 Issue of ordinary shares 3 42 - - - 45 Exchange difference - - - (161) - (161)
Equity-settled share based - - - - 105
105 payment At 1 January 2007 336 3,090 244 (161) 790 4,299 Profit for the year - - - - 465 465 Total recognised income - - - - 465 465 and expense Fair value adjustment in - - - - (43) (43)
respect of available-for-sale
financial assets Equity-settled share based - - - - 31 31 payment Exchange difference - - - 224 - 224 Total income and - - - 224 453 677 expenses recognised directly in equity At 31 December 2007 336 3,090 244 63 1,243 4,976 ConsolidatedCash Flow StatementFor the year ended 31 December 2007 2007 2006 ‚£'000 ‚£'000
Operating activities after exceptional items
Operating profit 572 586 Depreciation 3 5
Exceptional profit on sale of intangible asset (1,152)
(121)
Decrease/(increase) in receivables 812
(598) (Decrease) in payables (77) (369)
Decrease/(increase) in inventories 483
(341) Share-based payment 61 182 Taxes paid (118) (166)
Net cash generated by /(used in) operating 584
(822) activities Investing activities Interest received 50 -
Purchase of property, plant and equipment -
(4)
Purchase of intangible fixed assets -
(446)
Net proceeds on sale of intangible asset 1,152
775
Purchase of listed Investments (113)
-
Net cash generated by investing activities 1,089
325 Financing activities Interest paid (7) (4)
Net cash used in financing activities (7)
(4)
Net increase/(decrease) in cash and cash 1,666
(501) equivalents
Cash and cash equivalents at beginning of period (229)
272
Cash and cash equivalents at end of period 1,437
(229)
Notes to the Financial Statements
1. General Information
International Brand Licensing plc is a Company incorporated in the United Kingdom and listed on the AIM market of the London Stock Exchange. The address of the registered office is 14 Kinnerton Place South, London, SW1X 8EH.
The Group is engaged in the development and exploitation of a portfolio ofsports and lifestyle brands, trademarks, trade names and logos. The Group seeksto exploit the value of its brands by granting licences to third partiesauthorising the manufacture, marketing and sale of specified licensed productsfor a fixed term by reference to a particular territory. In the UK themarketing and sale of some licensed products is performed by a Group Company.These financial statements are presented in British Pounds Sterling, thecurrency of the primary economic environment in which the Group operates. TheGroup comprises International Brand Licensing plc and its subsidiary Companiesas set out in Note 12 of the financial statements.
2. Accounting policies
The principal accounting policies adopted in preparation of the Group's financial statements are set out below. The policies have been consistently applied, unless otherwise stated.
Basis of preparation
The consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRS and IFRIC Interpretations)issued by the International Accounting Standards Board (IASB) as adopted by theEuropean Union and with those parts of the Companies Acts applicable toCompanies preparing their financial statements under IFRS. Practice iscontinuing to evolve on the application and interpretations of IFRS. Furtherstandards may be issued by the International Accounting Standards (IASB) andstandards currently in issue and endorsed by the EU may be subject tointerpretations issued by IFRIC.The financial statements have been prepared using the measurement basisspecified by IFRS for each type of asset, liability, income and expense. Themeasurement bases are more fully described in the detailed accounting policiesbelow.
This is the first time the Group has prepared its financial statements in accordance with IFRS, having previously been prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP). Details of the transition from UK GAAP to IFRS are given in Note 25.
The Group has taken advantage of certain exemptions available under IFRS 1 "First time adoption of International Financial Reporting Standards". The financial statements have been prepared on the basis of the following exemptions:
* Business combinations prior to January 2006 have not been restated to
comply with IFRS3 Business Combinations.
* The Group has elected to deem the cumulative currency translation
differences on its net investments in foreign operations to be ‚£nil at 1
January 2006.
* The Group has applied IFRS 2 Share-based payments exempt to those equity
settled awards that were granted on or before 2 November 2002.
The preparation of financial statements, in conformity with general acceptedaccounting principles under IFRS, requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities at thedate of the financial statements and the reported amounts of revenues andexpenses during the reported period. Although these estimates are based onmanagement's best knowledge of the amount, event or actions, actual results mayultimately differ from those estimates. The accounting policies have beenapplied consistently throughout the Group for the purposes of preparation ofthese consolidated financial statements.
As permitted by section 230 of the Companies Act 1985 a separate income statement for one parent Company is not presented. The Company's profit for the year was ‚£1,252,000 (2006: Loss ‚£237,000).
Business combination
The acquisition of subsidiaries is accounted for using the purchase method. Thecost of the acquisition is measured at the aggregate of the fair values, at thedate of exchange, of assets given, liabilities incurred or assumed, and equityinstruments issued by the Group in exchange for control of the acquiree, plusany costs directly attributable to the business combination. The acquiree'sidentifiable assets, liabilities and contingent liabilities that meet theconditions for recognition under IFRS 3 are recognised at their fair value atthe acquisition date.
The Group has elected not to apply IFRS 3 "Business Combinations" retrospectively to business combinations prior to the date of transition.
Basis of consolidation
The financial statements incorporate the financial statements of the Companyand entities controlled by the Company made up to the period ended 31 December2007.Control is achieved where the Company has the power to govern the financial andoperating policies of an investee entity so as to obtain benefits from itsactivities. The financial statements of subsidiaries are included in thefinancial statements from the date that control commences until the date thatcontrol ceases.
Where necessary adjustments are made to the results of subsidiaries to bring accounting policies into line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Revenue recognition
Revenue is measured at the fair value of the consideration received orreceivable and represents amounts receivable for goods and services provided inthe normal course of business, net of discounts, VAT and other sales-relatedtaxes. Sales of goods are recognised when goods are delivered and title haspassed. Sales of services are recognised when the service has been completedand invoiced to the customer.Interest income is accrued on a time basis, by reference to the principaloutstanding and at the effective interest rate applicable, which is the ratethat exactly discounts estimated future cash receipts through the expected lifeof the financial asset to that asset's net carrying amount.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost, less estimated residual value of each asset, evenly over its expected useful life at the following rates
Fixtures and fittings - 25%
Computer Equipment - 33.3%
Residual values and useful economic lives are reviewed annually. Property,plant and equipment are assessed for impairment annually or more often ifevents or changes in circumstances indicate that the carrying value may not berecoverable. Where an impairment review is deemed necessary it is performed inaccordance with the policies set out as before.
Impairment of assets other than goodwill and intangible assets with an indefinite life
At each balance sheet date, the Directors review the carrying amounts of theGroup's tangible and intangible assets, other than goodwill and intangibleassets with an indefinite life, to determine whether there is any indicationthat those assets have suffered an impairment loss. If any such indicationexists, the recoverable amount of the asset is estimated in order to determinethe extent of the impairment loss, if any. Where the asset does not generatecash flows that are independent from other assets, the Group estimates therecoverable amounts of the cash-generating unit to which the asset belongs.Recoverable amount is the higher of fair value less costs to sell and value inuse. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of the money and the risks specific to theasset which the estimates of future cash flows have not been adjusted.If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised as an expense immediately, unless the relevant asset is carriedat a revalued amount, in which case the impairment loss is treated as arevaluation decrease.Impairment losses recognised for cash-generating units, to which goodwill hasbeen allocated, are credited initially to the carrying amount of goodwill. Anyremaining impairment loss is charged pro rata to the other assets in thecash-generating unit.Where an impairment loss subsequently reverses, the carrying amount of theasset (cash generating unit) is increased to the revised estimate of itsrecoverable amount, but so that the increased carrying amount does not exceedthe carrying amount that would have been determined had no impairment loss beenrecognised for the asset (cash-generating unit) in the prior period. A reversalof an impairment loss is recognised in the income statement immediately.
Available-for-sale financial assets
For available-for-sale investments, gains and losses arising from changes infair value are recognised directly in equity through the statement ofrecognised income and expense, until the security is disposed at which time thecumulative gain or loss previously recognised in equity is included in theconsolidated income statement for the period. If an available-for-saleinvestment is determined to be impaired, the cumulative loss previouslyrecognised in equity is included in the income statement for the period.
Intangible Assets
Intangible assets represent acquired trademarks and are recorded at historiccost. No amortisation is charged as they are regarded as having infinite lives.The annual results reflect significant expenditure incurred in the support anddevelopment of these brands. In addition the trademarks are supported by theexistence of international licensee agreements which establish obligations asto guaranteed minimum licence income and marketing arrangements with a view tomaximising long-term growth. The Directors believe that the licensee agreementswill be renewed at the end of their legal expiry dates and that the value ofthe trademarks will be maintained. The carrying values are reviewed annually inaccordance with IAS 36 with a view to write down if impairment arises.
Inventories
Inventories and work in progress are stated at the lower of cost and netrealisable value. Cost is calculated on a first in and first out basis andincludes attributable overheads, where appropriate. Net realisable valuerepresents the estimated selling price less all estimated costs of completionand costs to be incurred in marketing, selling and distribution. Wherenecessary, provision is made for slow moving and obsolete stock. Stocks onconsignment and their related obligations are recognised in current assets
andcreditors respectively.Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. Cash and cash equivalents comprise cash on hand and deposits held on call with banks.
Trade and other receivables
Trade receivables are measured at fair value. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original term of the receivable. The amount of the provision is the difference between the carrying amount and the recoverable amount and this difference is recognised in the income statement.
Trade and other payables
Trade payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method.
Financial liability and equity
Financial instruments issued by the Group are treated as equity (i.e. formingpart of shareholders' funds) only to the extent that they meet the followingtwo conditions:
* they include no contractual obligations upon the Group to deliver cash or
other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and * where the instrument will or may be settled in the Company's own equity
instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company's own equity instruments or is a
derivative that will be settled by the Company's exchanging a fixed amount
of cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the proceeds of issue areclassified as a financial liability. Where the instrument so classified takesthe legal form of the Company's own shares, the amounts presented in thehistorical financial information for called up share capital and share premiumaccount exclude amounts in relation to those shares.The finance cost on the financial liability component is correspondingly higherover the life of the instrument. Equity instruments issued by the Company areregarded as the proceeds received, net of direct issue costs.
Equity comprises the following:
* Share capital represents the nominal value of equity shares.
* Share premium represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses of the share issue. * Other reserve represents the merger reserve arising on accounting for a business in prior years. * Foreign currency reserve represents the differences arising from translation of investments in overseas subsidiaries. * Profit and loss reserve represents retained profits.
Foreign currency
The individual financial statements of each Group Company are presented in thecurrency of the primary economic environment in which it operates (itsfunctional currency). For the purpose of the consolidated financial statements,the results and financial position of each Group Company are expressed inpounds sterling, which is the functional currency of the Company, and thepresentation currency for the consolidated financial statements.In preparing the financial statements of the individual Companies, transactionsin currencies other than the entity's functional currency (foreign currencies)are recorded at rates of exchange prevailing on the dates of the transactions.At the balance sheet date, monetary assets and liabilities that are denominatedin foreign currencies are retranslated at the rates prevailing on the balancesheet date.
Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on theretranslation of monetary items, are included in profit or loss for the period.Exchange differences arising on the retranslation of non-monetary items carriedat fair value are included in the profit and loss account for the period exceptfor differences arising on the retranslation of non-monetary items in respectof which gains and losses are recognised directly in equity. For such monetaryitems, any exchange component of the gain or loss is also recognised directlyin equity.For the purpose of presenting consolidated financial statements, the assets andliabilities of the Group's foreign operations are translated at exchange ratesprevailing on the balance sheet date.Income and expense items are translated at the average exchange rates for theperiod, unless exchange rates fluctuate significantly during the period, inwhich case the exchange rates at the date of transactions are used. Exchangedifferences arising, if any, are classified as equity and transferred to theGroup's translation reserve. Such translation differences are recognised asincome and expense in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rates.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. TheGroup's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the balance sheet date.Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporarydifferences can be utilised. Such assets and liabilities are not recognised ifthe temporary difference arises from goodwill or from the initial recognition(other than in a business combination) of other assets and liabilities in atransaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered.Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity.Share based payments
The Group has applied the requirements of IFRS 2 Share based payments. IFRS 2has been applied to all grants of equity instruments after 1 November 2005 thatwere unvested at 1 January 2006, in accordance with the exemptions of IFRS 1.The Group issues equity and cash settled share-based payments to employees.Equity-settled share payments are measured at fair value (excluding the effectof non market-based vesting conditions) at the date of grant. The fair valuedetermined at the grant date of the equity-settled share based payments isexpensed on a straight line basis over the vesting period, based on the Group'sestimate of shares that is eventually vest and adjusted for the effect of nonmarket-based vesting conditions.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium.
A liability equal to the portion of the goods and services received is recognised at the current fair value determined at each balance sheet date for cash-settled, share-based payments.
National insurance on share options
To the extent that the share price at the balance sheet date is greater thanthe exercise price on options granted under unapproved schemes, provision forany National Insurance Contributions have been based on the prevailing rate ofNational Insurance. The provision is accrued over the performance periodattaching to the award.
Accounting Standards issued but not yet effective and/or adopted.
Listed below are new or amended Accounting Standards, or new interpretation guidelines that are not yet effective and/or adopted that may have an impact on the Group, together with the year in which they become applicable to our financial statements.
* IFRS 3 revised: Business Combinations 2009 Financial Year * IFRS 2 Amended: Share Based Payments 2009 Financial Year * IFRS 8: Operating Segments 2009 Financial Year * IAS 1: Presentation of Financial 2009 Financial Statements Year * IAS 23: Borrowing costs (revised 2007) 2009 Financial Year * IAS 27 Amended: Consolidated and Separate Financial 2009 Financial Statements Year * IAS 32 Amended: Financial Instruments: Presentation 2009 Financial and IAS 1 Presentation of Financial Year Statements - Puttable Financial Instruments and Obligations arising on Liquidation * IFRIC 11 IFRS 2: Group and Treasury share 2008 Financial transaction Year * IFRIC 12: Service concession arrangements 2009 Financial Year * IFRIC 13: Customer Loyalty Programmes 2009 Financial Year * IFRIC 14 IAS 19: The Limit on a Defined Benefit 2008 Financial Asset, Minimum Funding Requirements Year and their interaction
Whilst the adoption of these new Accounting Standards and interpretations will undoubtedly lead to additional or modified levels of disclosure and presentation of financial information, we do not anticipate that they will significantly alter the reported earnings of the Group.
Significant judgements, key assumptions and estimates
In the course of the preparation of the financial statements, the Group has made the following significant estimates:
* Estimates of the future cash flows of the Group's subsidiaries which
justify the carrying value at which the intangible asset cost is carried,
in order to arrive at whether an impairment provision is required. These
have been based on each subsidiary's budget for 2008 and appropriate growth
rates and discount rates have been used.
* Judgements made on the estimates of the useful life of property, plant and
equipment, as set out in the relevant accounting policies above. * Estimates have been used to determine the appropriate charge for share-based payments. These have been set out in Note 22. 3. Segmental ReportingPrimary segmental Replica Kit Licensing Eliminations Group reporting format Business Based on operating ‚£'000 ‚£'000 ‚£'000 ‚£'000 divisions Year ended 31 December 2007 Total Revenue 1,516 341 - 1,857 Operating Results (76) (109) (185) Unallocated corporate (395) expenses Exceptional profit on sale 1,152 of intangible assets Operating profit 572 Finance income 50 Finance costs (7) Profit before tax 615 Taxation (150) Profit after taxation 465 Balance Sheet Assets Segment assets 1,839 3,923 (1,519) 4,243 Unallocated corporate 1,322 assets Total assets 5,565 Liabilities Segment liabilities 210 2,189 (1,950) 449 Unallocated corporate 140 liabilities Total liabilities 589 Other information Depreciation and 1 2 - 3 amortisation Year ended 31 December 2006 Total Revenue 2,644 433 - 3,077 Operating Results 598 2 - 600 Unallocated corporate (135) expenses Exceptional profit on sale 121 of intangible assets Operating profit 586 Finance costs (4) Profit before tax 582 Taxation 14 Profit after taxation 596 Balance Sheet Assets Segment assets 2,747 3,371 (1,097) 5,021 Unallocated corporate 140 assets Total assets 5,161 Liabilities Segment liabilities 250 2,284 (2,310) 224 Unallocated corporate 638 liabilities Total liabilities 862 Other information Property, plant and 1 3 - 4 equipment additions Intangible fixed asset 446 - 446 additions Depreciation and 1 4 - 5 amortisation
Secondary segmental reporting format
The turnover and pre tax profit is attributable to the principal activity ofthe Group. An analysis of turnover by geographical destination is given below. 2007 2006 ‚£'000 ‚£'000 United Kingdom 1,516 2,832 Europe and Scandinavia 79 42 North America 102 147 Australia 10 - Asia 66 - Rest of the World 21 56 Accruals 63 - 1,857 3,077
The net assets of the Group are predominantly in the Swiss subsidiary where thebrands are held. The Directors consider that disclosure of the net profit bygeographical destination would be prejudicial to the interests of the Group.
4. Operating profit
Operating profit has been arrived at after charging:
2007 2006 ‚£'000 ‚£'000 Staff costs (see note 6) 445 444
Depreciation of property, plant and equipment 3
5 Operating lease expenditure: - Land and Buildings 11 23 - motor vehicles 6 5
Auditors' remuneration (see below)
- Fees payable to the Company's auditors for the audit of 25 49
the company's annual financial statements and subsidiaries' financial statements Tax compliance services 5 55. Exceptional Items 2007 2006 ‚£'000 ‚£'000 Sales of Intangible Assets 1,945 121
Costs associated with sale of intangible asset (793)
- 1,152 121 Exceptional items are those significant items which are separately disclosed byvirtue of their size or incidence to enable a full understanding of the Group'sfinancial performance.6. Staff costs
Staff costs (including Directors) consist of:
2007 2006 ‚£'000 ‚£'000 Wages and Salaries 396 685 Social Security Costs 42 58 Pension Costs 7 1 445 444 Number Number Distribution and sales 2 2 Administration 6 6 8 8 7. Finance income and costs 2007 2006 ‚£'000 ‚£'000 Finance Income Interest Income from deposits 50 - Finance Costs
Interest expense from borrowings at amortised 7
4 cost 8. Taxation 2007 2006 ‚£'000 ‚£'000 Current Tax Expense Current tax charge 86 24
Adjustment in respect of prior periods 76
- Current tax expense 162 24
Deferred tax expense/(income) (12)
(38) Total tax expense/(income) 150 (14)
The tax assessed for the year differs from the standard rate of corporation tax in the UK at 30%. The differences are explained below:
2007 2006 ‚£'000 ‚£'000 Profit before tax 615 582
Profit on ordinary activities at the standard rate 185 175 of corporation tax in the UK of 30% ( 2006 - 30%)
Effects of:
Expenses that are not deductable in determining 15
26 taxable profit Indexation Allowance - (54)
Adjustment in respect of prior periods 76
- Other tax adjustments (126) (161) Total tax expense/(income) 150 (14) 9. Earnings per share 2007 2006 ‚£'000 ‚£'000 Earnings
Earnings for the purposes of basic and diluted 465
596 earnings per share Numbers
Weighted average number of ordinary shares for the 33,599,755 33,585,891 purpose of basic earnings per share
Dilutive effect of share options -
13,956
Weighted average number of ordinary shares for the 33,599,755 33,599,755 purpose of diluted earnings per share
Basic Earnings per 1p ordinary share After exceptional items - basic and diluted 1.4
1.8
There is no dilutive effect of the options
10. Property, plant and equipment
Group Plant and Fixtures and Total Machinery Fittings Cost ‚£'000 ‚£'000 ‚£'000 At 1 January 2006 8 39 47 Additions 4 - 4 Exchange Differences - 1 1 At 31 December 2006 12 52 Additions - - - At 31 December 2007 12 40 52 Depreciation At 1 January 2006 6 32 38 Charge for the year 3 2 5 At 31 December 2006 9 34 43 Charge for the year 1 2 3 At 31 December 2007 10 36 46 Net book value At 31 December 2007 2 4 6 At 31 December 2006 3 6 9 Company Plant and Fixtures and Total Machinery Fittings Cost ‚£'000 ‚£'000 ‚£'000 At 1 January 2006 - - - Additions 1 - 1 At 31 December 2006 1 - 1 Additions - - - At 31 December 2007 1 - 1 Depreciation At 1 December 2006 and - - - 31 December 2007 Net book value At 31 December 2007 1 - 1 At 31 December 2006 1 - 1 11. Intangible Fixed AssetsGroup Intangible Fixed Assets ‚£'000 Cost At 1 January 2006 3,471 Additions 446 Disposals (610) Exchange Differences (165) At 31 December 2006 3,142 Exchange Differences 223 At 31 December 2007 3,365
The Group's trademarks are held by the Swiss Subsidiary whose functional currency is Swiss Francs. Exchange differences arise upon the retranslation of the assets into British Pounds Sterling at the balance sheet date.
12. Investments Investment in subsidiary undertakings ‚£'000
At 1 January 2007 and 31 December 2007
213
The principal subsidiaries of International Brand Licensing plc are as followsName of Company Proportion Class of Nature of Held Shareholding Business International Brand Licensing 100% Ordinary IntellectualAG* Property Management International Brands Holdings 100% Ordinary IntellectualLimited ** Property Management
* Incorporated and registered in Switzerland
** Incorporated and registered in the United Kingdom
International Brand Licensing AG holds a 49% stake in Admiral Asia (L) Limited,an associate company incorporated and registered in Malaysia. The effect of theresults of Admiral Asia (L) Limited on the group's profits for the year is notmaterial and has therefore not been consolidated into these financialstatements.
13. Available-for-sale financial assets
Group and Company ‚£'000 At 1 January 2007 - Additions 113 Revaluation through equity (43) At 31 December 2007 70The fair value of the listed available-for-sale investments is based onreported market prices at the balance sheet date. The Directors do not considerthat they have significant influence over the financial and operating policiesof the investees as they have no representation on the Board of Directors andhave no participation in policy making processes including participation indecisions about the dividends or other distributions and have a small minoritystake in those investments.14. Inventories Group Group Company Company 2007 2006 2007 2006 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Finished goods and goods for 110 593 - - resale Inventories are stated after provision for obsolescence of ‚£292,000 (2006: ‚£nil).The Directors consider that the carrying value of inventories are statedat the lower of cost held for trading and net realisable value.
15. Trade and other receivables
Group Group Company Company 2007 2006 2007 2006 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Trade Debtors - Gross 405 743 - - Less provision for bad (25) - - - Debts 380 743 - - Prepayments and accrued 147 532 2 42 income Amounts due from - - 477 923 subsidiary undertakings after more than one year Other receivable - 64 - 43 527 1,339 479 1,008
The Directors consider that the carrying amount of trade and other receivables approximates to their face value. In addition, some of the unimpaired trade receivables are past due date as at the reporting date. The age of the financial assets past due date but not impaired is as follows:
Group Group 2007 2006 ‚£'000 ‚£'000
Not more than 3 months past due date 28
361
More than 3 months but not more than one year 83
28 111 389 The Group has no significant concentration of credit risk, with exposure spreadover a large number of customers. These debts have been determined by referenceto past default experience and a knowledge of the individual circumstance ofcertain receivables.
16. Cash and cash equivalents
Group Group Company Company 2007 2006 2007 2006 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Cash and cash 1,437 40 1,199 10 equivalents
All of the Group's cash and cash equivalents are at floating rate. The Directors consider that the carrying amount of cash and cash equivalents approximates their fair value.
17. Trade and other payables
Group Group Company Company 2007 2006 2007 2006 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Bank overdraft - 269 - 269 Trade payables 155 278 26 89
Amounts due to subsidiary - - -
190 undertakings
Other taxation and social 18 23 10
9 security Accrued expenses and 315 237 84 81 deferred income Other payables 3 1 - - 491 808 120 638
Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs.
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
18. Financial instruments - Risk management
The Group in principal does not use or trade in derivative financial instruments.
Financial assets categorised as loans Notes Group Group and receivables 2007 2007 ‚£'000 ‚£'000 Trade receivables 15 380 743 Other receivables 15 - 64 Cash and cash equivalents 16 1,437 40 1,817 847
Financial liabilities measured at
amortised cost Bank Overdraft 17 - 269 Trade Payables 17 155 278 Other Payables 17 3 1 Accruals and deferred income 17 315 237
Other taxes and social security 17 18
23 Current Tax Liability 17 98 54 589 862 The main risks arising from the Group's financial instruments are credit risk,interest rate risk, liquidity risk and fair value risk. The Board reviews andagrees policies for managing these risks and they are summarised below. Thesepolicies have remained unchanged throughout the financial period.
Credit risk
The Group's exposure to credit risk is limited to the carrying values of financial assets recognised at the balance sheet date, as summarised below:
2007 2006 ‚£'000 ‚£'000
Classes of financial assets - carrying amount
Cash and cash equivalents 1,437 40
Trade and other receivables 380
807 1,817 847 The maximum exposure to credit risk in relation to trade receivables isequivalent to the period end balance. It is the Group's policy to assess thecredit risk of its customers. The Group closely monitors the credit worthinessof customers and other counterparties, and will require an advance payment ifnecessary. The Group will terminate business with a company with a poor credithistory.
The Directors consider that all the above financial assets that are not impaired for each of the reporting dates under review are of good credit quality, based on financial information and past trading history, including those that are past due.
The Group is not exposed to any significant credit risk exposure to any singlecounterparty or Group of counterparties having similar characteristics. Thecredit risk for cash and cash equivalents is considered negligible since thecounterparties are reputable banks with high quality external credit ratings.
Liquidity risk
The Group's objective is to maintain a balance between continuity of fundingand flexibility through cash pooling and shareholder funding. The Groupmonitors its liquidity risk on an ongoing basis by undertaking rigorous cashflow forecasting procedures.The Group's financial liabilities have contracted maturities, which aresummarised below: 2007 2007 2006 2006 Within 6 to 12 Within 6 to 12 6 months months 6 months months ‚£'000 ‚£'000 ‚£'000 ‚£'000 Trade Payables 155 - 278 -Interest rate riskThe Group finances itself using its own cash balances which comprise cash andshort-term deposits, and therefore has no significant interest rate risk.Additionally, borrowings on short term and long term borrowings are on fixedrates.19. Deferred taxation Group and Company Group Group 2007 2006 ‚£'000 ‚£'000
Balance as at 31 January 2007 (38)
-
Deferred tax taken straight to the income statement (12)
(38)
Deferred tax asset consisting of other timing (50)
(38)differences 20. Share capital 2007 2006 ‚£'000 ‚£'000 Authorised
50,000,000 ordinary shares of 1p each 500
500
Allotted, called up and fully paid 33,593,353 ordinary shares of 1p each 336
336
At year end there were 650,000 unexercised share options held by @miral BV at an exercise price of 18.5p. These options are exercisable by 11th January 2011.
Additionally as at 31 December 2007 there were 225,000 unexercised options heldby a former Director at an exercise price of 18p, exercisable by 30 January2014.21. ReservesGroup Foreign Share Other Currency Retained premium Reserve Reserve earnings ‚£'000 ‚£'000 ‚£'000 ‚£'000 As at 1 January 2007 3,090 244 (161) 790 Profit for the year - - - 465 Share Based Payment - - - 31 Fair value adjustment in - - - (43)
respect of available-for-sale
financial assets Exchange difference - - 224 - At 31 December 2007 3,090 244 63 1,243 Company Foreign Share Merger Currency Retained premium Reserve Reserve earnings ‚£'000 ‚£'000 ‚£'000 ‚£'000 As at 1 January 2007 3,090 - - (2,794) Profit for the year - - - 1,252 Share Based Payment - - - 31
Fair value adjustment in - - - (43) respect of available-for-sale
financial assets At 31 December 2007 3,090 - - (1,554) 22. Share based payment
Share options have been granted as set out in Note 20 and in the Report of theRemuneration Committee on page 12. Options were valued using the Black-Scholesoption-pricing model. The fair value per option granted and the assumptionsused in the calculations are as follows 2007
2006
Weighted average share price in pence 19
19
Weighted average exercise price in pence 19
19 Expected volatility 20% 20% Expected life in years 8 8 Risk free rate 4.5% 4.5% Dividend yield 0% 0%
Expected volatility was determined by calculating the volatility in the share price over the 12 months to 31 December 07.
23. Leases
Operating leases
The total annual future minimum lease payments due are as follows:
Group Group 2007 2006 ‚£'000 ‚£'000 Land and Buildings Not later than one year 11 14
Later than one year and not later than five -
9 years 11 23 Motor Vehicles Not later than one year 6 -
Later than one year and not later than five -
5 years 6 5 24. Related Party DisclosuresDuring the year the Company was invoiced ‚£15,000 by Hansard Communications.comLimited, a Company of which both Adam Reynolds and Paul Foulger are Directors,for financial public relations services. The Company was also invoiced ‚£12,000by Alan Bailey (Studios) Limited, a Company of which both Adam Reynolds andPaul Foulger are Directors, for office rent and administration costs.
25. Explanation of transition to IFRS
As stated in the basis of preparation, these are the Group's first annualconsolidated financial statements prepared in accordance with IFRS. The lastfinancial statements under UK GAAP were for the year ended 31 December 2006 andthe date of transition to IFRS was therefore 1 January 2006.The adoption of IFRS has had no impact on either the equity or results of theCompany for 2007. The only changes resulting from the transition to IFRS are ofa presentational nature.26. Capital Commitment
The Group has no capital commitments as at 31 December 2007.
27. Contingent Liabilities
There are no material contingent liabilities as at 31 December 2007.
vendor