Iq-ai Ltd Regulatory News (IQAI)

28 August 2013

Flying Brands Limited (the "Company" or the "Group")

Interim Results Announcement

For the 26 weeks ended 28 June 2013

Flying Brands Limited today announces its interim financial results for the 26 weeks ended 28 June 2013.

Summary Information

About us

The Group was a multi-brand multi-channel home shopping specialist, comprising of three divisions; Garden, Gifts and Entertainment. During 2011 the Group re-focused its activities and dramatically altered its operating strategy with the proposed disposal of all of its trading businesses.

2012 saw the completion of the disposal of the trade and assets of the Gifts business (comprising of the FF, FD and DA brands), the trade and assets of GBS, GCO and L2 brands and finally the disposal of the trade and assets of GD. The disposal of GD in July 2012 resulted in the closure of the GLD business based in Jersey.

The primary focus of the Group going forward is the maximisation of the long-term value of Retreat Farm.

Chairman's statement

The Company has continued to examine possible alternatives for the future use of Retreat Farm in order to maximise its value for shareholders and expects to decide on a preferred option in the near future. We would expect to enter into detailed discussions with the planning authorities very shortly thereafter.

We are still in discussions with Jersey Choice Marketing Limited to resolve amicably their potential warranty claim arising from their purchase of the Gardening Direct Business. Meanwhile we have received part £125k of the £625k deferred consideration on the agreed rescheduled basis and expect to receive another payment of £125k in November 2013.

We noted in our last annual report and accounts that the Group was involved in a dispute with Flying Flowers Pty Ltd ("FFA"), an Australian company, arising from matters relating to the disposal of the Group's Gifts business which FFA allege amounted to breaches of contract by the Group. FFA has now raised an action in the Jersey Courts. The Group denies breach of contract and has defended vigorously these claims and raised its own counterclaim against FFA for FFA's failure to pay monies contractually due to the Group.

As part of the Company's continuing efforts to reduce its overheads, it has been agreed that Stephen Cook will move to a part-time basis as chief executive with a proportionate decrease in remuneration.

Paul DavidsonChairman28 August 2013

For further information please contact:

Flying Brands Limited 01245 392 272

Chris Knott

 Smithfield Consultants 020 7360 4900

John Kiely

Responsibility Statement

We confirm that to the best of our knowledge:

a) The condensed set of financial statements, which has been prepared in accordance with IAS34 Interim Financial Reporting as adopted by the EU, gives a true and fair view of the assets, liabilities and financial position as required by DTR 4.2.4R.

b) The interim management report includes a fair review of the information required by DTR 4.2.7R, being an indication of important events that have occurred during the 26 weeks of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties in the remaining 26 weeks of the year.

c) The interim management report includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first 26 weeks of the current financial year and that have materially affected the financial position or performance of the entity during the period and any changes in the related party transactions described in the last annual report that could do so.

By Order of the Board,

S S Cook C T Knott

Chief Executive Officer Finance Director

28 August 2013 28 August 2013

Definitions

Business Review

To the members of Flying Brands Limited

This interim management report has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Flying Brands Limited and its subsidiary undertakings when viewed as a whole.

Continuing operations

The continuing operations relate to rental income from the lease of the glasshouses at Retreat Farm.

Overheads have been substantially reduced to a level that will enable the group to operate whilst the options for maximising the value of Retreat Farm continue to be explored.

Long-term strategy and business objectives

In the 2012 Annual Report and Accounts the Group reported that its main objective was to maximise the long term value of its Retreat Farm site.

In the first 26 weeks of the financial period the Group has continued to explore the various options available for development of Retreat Farm and expects to decide on a preferred option in the near future. The Group expects to enter into detailed discussions with the planning authorities very shortly thereafter.

Loss for the period

The Group's loss for the period relating to continuing operations was £0.4m (26 weeks to 29.06.12: £1.6m). The profit from discontinued businesses was nil (26 weeks to 29.06.12: £0.5m) giving a total loss attributable to the Group of £0.4m (26 weeks to 29.06.12: £1.1m).

Results for the first half of 2012

A summary of the key financial results is set out in the table below.

Financial position

The Group's balance sheet as at 28 June 2013 can be summarised as set out in the table below:

Capital structure

The Group has no bank debt (29 July 2012: £nil).

In January 2013 the Group refinanced the £0.75m Palatine debt with a £1.0m loan from Acorn Finance which is repayable on 18 January 2015. Following this refinancing, the Group's overdraft facility of £0.25m with the bank was withdrawn.

Cash flow

The net cash outflow for the first 26 weeks relating to operating activities was £0.4m (26 weeks to 29.06.12: £2.49m). This was partially offset by net cash inflow of £0.25m from the refinancing of the Palatine debt.

The Group has received £0.125m of the £0.625m deferred consideration relating to the sale of the GD business. As discussed in the 2012 Annual Report and Accounts, the Group is still involved in a potential warranty claim with Jersey Choice Marketing Limited. The £0.5m balance has been rescheduled and discussions continue in an attempt to avoid litigation.

Principal risks and uncertainties

The principal risks are those risks that the Board believes the Group faces at the date of this report. They include certain risks relating to the Retreat Farm property in Jersey.

Going concern basis

The Group continues to meet its day to day working capital requirements through its cash reserves and on-going cash flows. The Directors have prepared detailed cash flow forecasts to support the decision to prepare the financial statements on a going concern basis. The working capital projections include the receipt of the deferred consideration of the GD disposal from Jersey Choice Marketing Limited and estimates of the on-going costs of the business.

The Group is also involved in a separate contractual dispute with Flying Flowers Pty Ltd, an Australian company. At this stage the financial impact of this case, should it be successful, cannot be quantified.

On the assumption that the rescheduled deferred consideration is received, the Group will have enough working capital for the next 12 months, in order to meet its liabilities as they fall due. The Group may also be able to realise assets to ensure that it had sufficient working capital to meet its liabilities as they fall due, however there is no certainty that disposals could be achieved in the necessary timeframes. Therefore for the reasons outlined above there is a material uncertainty in relation to going concern.

The Group's forecasts and projections, taking into account the uncertainties above, show that the Group has a reasonable expectation of maintaining sufficient working capital to enable the Group to meet its liabilities as they fall due for the foreseeable future, being a period of not less than 12 months from the date of approval of this report.

Thus the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Consolidated income statement

26 weeks ended 28 June 2013

Consolidated statement of comprehensive income

26 weeks ended 28 June 2013

Consolidated balance sheet

As at 28 June 2013

Consolidated statement of changes in equity

26 weeks ended 28 June 2013

Consolidated cash flow statement

26 weeks ended 28 June 2013

Notes to the financial statements

1 Accounting policies

1.1 Reporting entity

These Financial Statements are the unaudited Consolidated Interim Financial Statements (hereafter "the Interim Financial Statements") of Flying Brands Limited, a company registered in Jersey, and its subsidiaries (hereafter "the Group") for the 26 weeks ended 28 June 2013.

These Interim Financial Statements have been prepared under IFRS applying the accounting policies published in the Group's IFRS Financial Statements for the 52 weeks ended 28 December 2012, published on 25 April 2013.

1.2 Basis of preparation

The annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements including in this Interim Report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.

These Interim Financial Statements should be read in conjunction with the Consolidated Financial Statements for the 52 weeks ended 28 December 2012 (hereafter "the Annual Report and Accounts"), as they provide an update of previously reported information. They were approved for issue by the Board of Directors on 25 April 2013.

The comparative figures for the 52 weeks ended 28 December 2012 are not the Company's statutory accounts for the financial year. These accounts have been reported on by the Company's auditor and delivered to both the UK Financial Services Authority and the Jersey Financial Services Commission. The report did not contain a statement under section 498(2) or (3) for the Companies Act 2006 however, did contain a modified opinion with an emphasis of matter over going concern.

1.3 Significant accounting policies

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements.

1.4 Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions which any of the group's other components. An operating segment's operating results, for which discrete financial information is available, is reviewed regularly by the Group's Board to make decisions about resources to be allocated to the segment and assess its performance.

1.5 Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the Interim Financial Statements.

2 Segmental analysis

The Directors took the decision to market for sale all the brands owned by the Group. This included the reportable divisions of Garden, Gifts and Entertainment. Now that this disposal process is complete the remaining business is reported upon as a single segment.

The previous reportable segments; Garden, Gifts and Entertainment, along with Greetings Direct and Dealtastic are now reported as the discontinued segment.

The accounting policies of the reportable segments are the same as described in note 1. Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before interest and tax, as included in the internal management reports that are reviewed by the Group's Board.

Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these sectors.

2.1 Segmentation by segment

2 Segmental analysis …(continued)

3 Taxation

The interim tax charge has been estimated based on a full year forecast tax rate of nil% for underlying tax (2012: nil%).

4 Dividends

No interim dividend (2012: nil) is proposed due to the performance of the Group in the first half of 2013.

5 Earnings per share

Basic

Basic earnings per share is calculated by dividing the (loss)/profit attributable to the equity holders of the Company by the weighted average number of Ordinary shares in issue during the period, excluding Ordinary shares purchased by the Company and held as treasury shares.

Diluted

Diluted earnings per share are calculated by adjusting the weighted average number of Ordinary shares outstanding to assume conversion of all dilutive potential Ordinary shares. The Company has one category of dilutive potential Ordinary shares: LTIP awards.

The calculation is performed for the LTIP awards to determine the number of Ordinary shares that could have been acquired at fair value (determined as the average market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share awards. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share awards.

For the purposes of calculating diluted earnings per share the LTIP share awards have been assumed to be non-dilutive as the terms of the LTIP are not likely to be satisfied in the foreseeable future.

6 Related party

All material related third party transactions were consistent with those disclosed in the 2012 Annual Report and Accounts.

7 Results of all discontinued operations

On 21 February 2012 the Group entered into a sale agreement to dispose of its Gifts division to Interflora British Unit. This disposal competed on 30 April 2012.

On 30 March 2012 the Group entered into a sale agreement to dispose of GBS, GCO and L2 to The Garden and Home Trading Company Limited (a subsidiary of MBL Group PLC) and certain intellectual property of GCO to Williams Commerce Limited. The disposal was completed on 30 April 2012.

On 6 July 2012 the Group completed the disposal of the remaining GD brand to Jersey Choice Marketing Limited. The GLD business, which the Group had intended to retain at 30 December 2011, was closed on 31 July 2012.

The continuing operations of the Group relate to the lease of part of the Retreat Farm site.

The results of operations in these discontinued brands are as follows:

8 Trade and other receivables

9 Trade and other payables

The loan note was payable to Palatine LLP and related to deferred consideration due following the acquisition of Flowers Direct in 2010. On 20 July 2012 the Group repaid £0.25m of the loan. On 18 January 2013 the Group refinanced the £0.75m Palatine debt with a new loan of £1.0m with Acorn Finance Limited ("Facility").

10 Loan

As previously disclosed the Group entered into a new loan agreement to refinance the Palatine debt with a loan of £1.0m from Acorn Finance. The new Facility is secured by a charge over the freehold of Retreat Farm and is repayable in full on 18 January 2015.

11 Assets held for sale

The assets held for sale at 29 June 2012 relate to the discontinued GD business. This disposal completed on 9 July 2012. The assets which formed the disposal group were as follows:

12 Contingent liabilities

The Group is involved in a dispute with Flying Flowers Pty Ltd ("FFA"), an Australian company, arising from matters relating to the disposal of the Group's Gifts business which FFA allege amounted to breaches of contract by the Group. The Group denies breach of contract and will defend vigorously these claims.

The Group has been notified of a potential claim from Jersey Choice Marketing Limited following the sale of Gardening Direct. This is the result of an alleged breach of warranty given at the time of the sale which the Group denies.