(ILI) Imagelinx

Imagelinx plc (the "Company")

Interim Results

For the six months ended 30 June 2011

22 August 2011

Imagelinx (AIM: ILI), the provider of graphic brand management services is pleased to announce Interim Results for the six months ended 30 June 2011.

Highlights

·      Revenues of £6.07m (2010 £6.10m).

·      Profit before tax of £598,000 (2010 loss of £286,000). 

·      EBITDA of £987,000 (2010 £90,000).

·    Continued reduction in costs particularly in American operations

Commenting today, Richard Clothier, Chairman of Imagelinx plc, said:

"The financial performance of the Group has been much improved by cost reductions.  However, the loss of a major client will reduce revenues in the second half and therefore further re-organisation is under way which will help to mitigate its effect.  Our presence in North America is now substantially reduced and a greater focus is being applied in Europe where we have begun to increase our marketing activities. This will add to cost before the resulting revenue begins to flow."

Enquiries:

Operational review

Despite no change in revenues of £6.07m for the first half year (2010: £6.1m), a substantial improvement in operating profit at £666,000 was achieved compared to a loss in 2010 of £42,000 before exceptional costs of £170,000. This improvement was achieved mainly by a reduction in administration expenses of over £660,000.

After finance costs of £68,000 (2010: £74,000) the pre-tax profit was £598,000 (2010: loss £286,000) and, due to previous losses, no tax is payable.

The operating profit before depreciation and amortisation was £987,000 in the first half of 2011 compared to £90,000 in 2010 and therefore, with modest capital expenditure, the cash position has improved to a net cash surplus of £180,000, from a net debt position of £740,000. Debtors remain similar to the year-end, but trade and lease finance creditors have been reduced by approximately £400,000.

Earnings per share were 0.21p, compared to a loss in the first half of 2010 of 0.10p.

As reported in April, the principal development has been the loss of P&G as our USA based client. P&G consolidated well over one hundred mainly regional suppliers, to a handful of global suppliers, as part of a major purchasing driven restructuring of its packaging supply chain. This has had no impact on Imagelinx turnover in the first half of the year but will have a progressive effect during the second half. As a result resource levels have been reduced rapidly in the USA and this process will have been largely completed by the end of the third quarter.

Costs are being reduced by re-organisation elsewhere in the Group and by the end of the year the internal IT development capability will have been transferred to the UK from Germany. This, however, will entail double running costs during the transition period.

Revenue from the awards of additional brands and new clients which were won at the end of last year has not yet begun to flow but is expected later in the year. Work for a major new consumer goods client in Europe has begun and we are increasing our sales effort in a drive for additional revenue which is expected to support the results in 2012 and beyond. Progress may however be limited by the expected lack of economic growth and weaker demand for consumer goods.

Although increased capital expenditure on new systems and infrastructure is likely to be undertaken in the second half, the net cash position should improve further as the working capital previously employed in the North American business is reduced.

CONSOLIDATED INCOME STATEMENT

consolidated STATEMENT OF comprehensive income

consolidated STATEMENT OF CHanges in equity

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

1       Basis of Preparation

This interim announcement was approved by the Board of Directors on 22 August 2011.

The financial information set out in this interim report does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. The group's statutory financial statements for the year ended 31 December 2010, 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 498(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 2006.

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.

A copy of the Interim Results is available on the Company's website www.imagelinx.co.uk

2       Accounting Policies

The accounting policies used in this interim report are the same as those set out in the financial statements for the year ended 31 December 2010.

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:

4      PROFIT per ordinary share

The calculation of basic and diluted earnings per share is based on the following data.

Earnings:

Number of shares

In accordance with IAS 33 "Earnings per share", diluted earnings per share for 30 June 2010 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.