RNS Number : 5931C
Imagelinx PLC
03 September 2008
Imagelinx plc
("Imagelinx" or the "Company")
Interim Results
Highlights
* Half year turnover up by £0.6m (16%) on the prior period to £4.4m.
* Half-year result (pre-exceptional gain relating to pension scheme) of £28,000 operating profit, compared to a loss of £706,000 in
the equivalent period in the prior year.
* Acquisition of Brandmark Digital Limited for £48,000 in February 2008 has generated £52,000 profit in first 5 months of trading.
* £4.5m exceptional gain to Income Statement as a result of the Pensions Regulator granting clearance for Imagelinx to enter its
dormant subsidiary holding the 'Crabtree Pension Scheme' into creditors voluntary liquidation.
Operating review
The profit before tax for the group in the first half of 2008 was £4.5m compared with £0.7m loss in the same period last year. This was
due both to a £4.5m exceptional gain to the Income Statement due to the dormant company responsible for the 'Crabtree Pension Scheme' being
placed into a Creditors Voluntary Arrangement, and also due to the operating business returning to profitability during the first half of
2008.
After adjusting for the exceptional gain above, the operating profit before goodwill amortisation was £128,000 compared to a loss of
£606,000 in the first half of 2007. EBITDA for the first half of 2008 was £0.3m compared to a loss of £0.4m in the first half of 2007.
Turnover for the half year was in line with our expectations and rose by £599,000 due largely to the acquisition of Brandmark Digital
which was acquired on 6 February 2008. Additional revenue from 2 new clients gained in the second half of 2007 offset the slightly lower
spending seen by some UK clients in the current year and we hope to see further growth from these new clients as the scale of their business
with us increases in the second half of 2008. We are mindful of the risk that the timing and amount of our clients' spend may be affected
by the worsening economic climate but so far we have seen no evidence of this.
The major improvement in operating performance was in the Imagelinx business in the UK due to a lower level of costs. Tecnolink has
performed in line with its results last year and our new subsidiary, Brandmark Digital in Scotland, has made a maiden contribution, also in
line with expectations. We expect further improvement in the second half of 2008 from this business, which is making a valuable contribution
to our capabilities in flexo plate-making. We are increasing our offering in this respect and will be delivering our own flexo plates to
some of our existing clients in the Imagelinx business in the second half of this year. This is an important development of our strategy to
supply an increasing range of services to our clients and offer a comprehensive service across pre-press activities.
We are currently making some further operational efficiencies across the group which will place us in a better position to handle
increased volumes more effectively in the final quarter of the year and into next year and we continue to monitor and control our costs
across the group.
We announced in our annual report for 2007 in March 2008 that following legal advice, we were not contractually liable for the LTG
Gateshead ("Crabtree") Pension Scheme and that we had approached the Pension Regulator with a view to the Pension Protection Fund ("PPF")
taking this scheme into the Fund. Following negotiations with both the Pension Regulator and the PPF, we announced on 6 August 2008 that we
had reached agreement with the Pension Regulator and the PPF that Imagelinx plc would make a final payment of £400,000 to the Crabtree
Pension Scheme and the Pension Regulator would grant clearance to Imagelinx plc that no further contribution would be required. Accordingly,
LTG Gateshead entered into a creditors voluntary arrangement which reflected this agreement. As the deficit at 31 December 2007 was £5.1m,
after allowing for the final contribution of £400,000 and related fees, this has given rise to an exceptional gain of some £4.5m in the
first half of 2008 and is largely responsible for the increase in the net assets of the group from £2.1m to £6.7m. During the first half of this year, our bank have granted facilities of £750,000
which have been partially used to finalise negotiations in respect of the Crabtree Pension Scheme, and also will be used to fund the
continued growth of the group.
As stated in the announcement of our 2007 results in March of this year, we are expecting the outcome of major tenders which may have a
beneficial impact on our revenue going forwards.
CONSOLIDATED INCOME STATEMENT
(Unaudited) (Unaudited) (Audited)
6 months 6 months Year
Notes ended 30 ended 30 ended 31 December
June June
2008 2007 2007
£'000 £'000 £'000
cONTINUING OPERATIONS
Revenue 3 4,401 3,802 7,525
Cost of sales (2,374) (2,028) (4,093)
_____________ _____________ _____________
GROSS PROFIT 2,027 1,774 3,432
Other operating income - - 47
Administration expenses (1,899) (2,380) (4,309)
Other operating expenses (100) (100) (319)
Exceptional gain relating to
pension scheme 4,527 - -
_____________ _____________ _____________
OPERATING RESULT 4,555 (706) (1,149)
Finance income - - 31
Finance costs (10) (11) (48)
_____________ _____________ _____________
PROFIT/(LOSS) BEFORE TAX 4,545 (717) (1,166)
Tax income - 12 12
_____________ _____________ _____________
RESULT FOR THE PERIOD 4,545 (705) (1,154)
_____________ _____________ _____________
Profit/(loss) per ordinary 4
share
Basic 1.57p (0.24p) (0.40)p
Diluted 1.50p (0.24p) (0.40)p
_____________ _____________ _____________
consolidated STATEMENT OF TOTAL RECOGNISED income AND expenditure
(Unaudited) (Unaudited) (Audited)
6 months 6 months Year
ended 30 ended 30 ended 31 December
June June
2008 2007 2007
£'000 £'000 £'000
Actuarial losses on defined - - (67)
benefit pension scheme
Exchange differences on - - 4
translation of foreign
operations
_____________ _____________ _____________
NET INCOME RECOGNISED DIRECTLY - - (63)
TO EQUITY
Profit/(loss) for the period 4,545 (705) (1,154)
_____________ _____________ _____________
Total recognised income and 4,545 (705) (1,217)
expense for the period
_____________ _____________ _____________
CONSOLIDATED BALANCE SHEET
(Unaudited) (Unaudited) (Audited)
30 30 31 December
June June
2008 2007 2007
£'000 £'000 £'000
NON-CURRENT ASSETS
Goodwill 4,384 4,384 4,384
Other intangible assets 689 887 789
Property, plant and equipment 1,090 1,363 1,166
_________ _________ _________
6,163 6,634 6,339
CURRENT ASSETS
Inventories 61 81 39
Trade and other receivables 2,532 2,564 1,691
Cash and cash equivalents 396 283 533
_________ _________ _________
2,989 2,928 2,263
_________ _________ _________
TOTAL ASSETS 9,152 9,562 8,602
CURRENT LIABILITIES
Trade and other payables (760) (888) (535)
Obligations under finance leases (95) (132) (142)
Bank overdrafts and loans (394) - (5)
Short term provisions (918) (643) (458)
Loan notes (100) (100) (200)
_________ _________ _________
(2,267) (1,763) (1,340)
NON-CURRENT LIABILITIES
Retirement benefit obligations - (5,084) (5,102)
Obligations under finance leases - (95) (20)
Loan notes (150) (100) -
_________ _________ _________
(150) (5,279) (5,122)
TOTAL LIABILITiES (2,417) (7,042) (6,462)
_________ _________ _________
NET ASSETS 6,735 2,520 2,140
_________ _________ _________
EQUITY
Share capital 14,452 14,452 14,452
Share premium account 38,644 38,644 38,644
Translation reserve (28) (32) (28)
Profit and loss account (46,333) (50,544) (50,928)
_________ _________ _________
6,735 2,520 2,140
_________ _________ _________
CONSOLIDATED CASH FLOW STATEMENT
(Unaudited) (Unaudited) (Audited)
6 months 6 months Year
ended 30 ended 30 ended 31 December
June June
2008 2007 2007
£'000 £'000 £'000
NET CASH from operating (240) (1,029) (703)
activitieS
_________ _________ _________
Investing activities
Interest received - - 12
Purchases of property, plant (95) (69) (73)
and equipment
Proceeds from sale of property - - 3
plant and equipment
Acquisition of subsidiary (14) - -
________ _________ _________
Net cash used in investing (109) (69) (58)
activities
_________ _________ _________
Financing activities
Interest paid (10) (11) (48)
Repayment of obligations under (67) (87) (152)
finance leases
Repayment of loans (100) - -
_________ _________ _________
Net cash used from financing (177) (98) (200)
activities
_________ _________ _________
DECREASE in cash (526) (1,196) (961)
_________ _________ _________
* Basis of Preparation
This interim announcement was approved by the Board of Directors on 2 September 2008.
The financial information set out in this interim report does not constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985. The group's statutory financial statements for the year ended 31 December 2007, prepared under International Financial
Reporting Standards as issued by the IASB and adopted by the European Union (IFRS), have been filed with the Registrar of Companies. The
auditor's report on those financial statements was unmodified and did not contain a statement under Section 237(2) or (3) (accounting
records or returns inadequate, accounts not agreeing with records and returns or failure to obtain necessary information and explanations)
of the Companies Act 1985.
The directors continually monitor the financial position of the group, taking into account the latest forecasts of future cash flows and
analyses of these forecasts, sensitised in respect of the key uncertainties facing the group's ability to generate cash. The directors
consider that the group's ability to continue as a going concern is dependant on the timing of actual versus targeted sales in Imagelinx
while it is building up the client base for its services.
2 Accounting Policies
The accounting policies used in this interim report are those set out in the financial statements for the year ended 31 December 2007.
3 segmental analysis
Imagelinx plc operates in only one division, that of packaging graphics services, with all significant operations being based either in
the UK, Germany or the United States. The segmental analysis of operations is as follows:
Segmental analysis by activity (Unaudited) (Unaudited) (Audited)
30 30 31 December
June June
2008 2007 2007
£'000 £'000 £'000
REVENUE BY ORIGIN
UK 3,549 2,969 5,891
US 852 833 1,634
_________ _________ _________
Total Revenue 4,401 3,802 7,525
_________ _________ _________
SEGMENT RESULT
UK 4,536 (725) (1,509)
Germany (201) (216) 32
US 220 235 328
_________ _________ _________
Operating result 4,555 (706) (1,149)
Finance income - - 31
Finance costs (10) (11) (48)
_________ _________ _________
Profit/(loss) before tax 4,545 (717) (1,166)
_________ _________ _________
PROFIT/(loss) per ordinary share
The calculation of basic and diluted earnings per share is based on the following data.
Earnings:
(Unaudited) (Unaudited) (Audited)
30 30 31 December
June June
2008 2007 2007
£'000 £'000 £'000
Profit/(loss) for the year 4,545 (705) (1,154)
Number of shares
30 June 2008 30 June 31 December 2007
2007
No. No. No.
Weighted average number of 289,038,635 289,038,635 289,038,635
ordinary shares for the purposes
of basic earnings per share
Effect of dilutive potential 13,416,202 13,416,202 13,416,202
ordinary shares Share options
Weighted average number of
ordinary shares for the purposes 302,454,837 302,454,837 302,454,837
of diluted earnings per share
In accordance with IAS 33 'Earnings per Share', diluted earnings per share is taken as being equal to basic earnings per share, where
the group has recorded a loss, as the effect of including share options is anti-dilutive.
This information is provided by RNS
The company news service from the London Stock Exchange
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