Half Yearly Report

30 September 2014

LiteBulb Group Limited

("LiteBulb" or the "Company" or the "Group")

Half Yearly Report

LiteBulb (AIM: LBB), the branded product developer, announces unaudited results for the six months ended 30 June 2014 in line with management expectations. Given the strong retail offering of the business, LiteBulb has a highly seasonal reporting pattern with the majority of revenues delivered ahead of the Christmas trading period. The Company remains on target to announce maiden profits after tax for the full year.

Financial highlights

· Revenue up 183% to £4.0m (H1 2013: £1.4m), with a confirmed order pipeline for delivery in H2 of over £12m

· Gross profit up 157% to £1.5m (H1 2013: £0.6m)

· Adjusted loss before tax of £2.3m* (H1 2013: £0.9m*)

§ reflecting the increase in scale of the Group and seasonal H2 weighting

*before finance costs and exceptional administrative expenses and excluding losses from discontinued operations

Operational highlights

· Successful acquisition and integration of Go Entertainment Group

· Significant sales to Sainsbury's and WH Smiths during the period

· £2.0m expansion capital raised through the issue of secured Convertible Loan Notes

· New accounts opened with BHS, WH Smiths and Amazon

· Developed new brand relationships with the Discovery Channel, the History Channel, Mary Berry and Manchester City, to add to existing arrangements with established brands including Star Wars, Dr Who, Disney & Peppa Pig

Post-Period End

· Sales orders in place for over £12m for delivery post period end

· Deals with Epic Rights and Nickelodeon

Simon McGivern, Chief Executive of LiteBulb, commented: 

"The strategy of building up a larger integrated business focussed on developing high quality branded products is really paying off, both commercially with our customers and key retail partners, but also in terms of delivering a step change in our revenues. As always, the second half of the year sees the majority of our sales as retailers stock up ahead of Christmas, but with the forward order book currently totalling over £12m, we are confident that we will deliver a considerable uplift in revenues for the full year and move into profitability for the first time. We have invested heavily in the management team and infrastructure, and now have scope for further strong growth, both organically and by acquisition."

Enquiries:

About LiteBulb Group

LiteBulb Group designs, manufactures and distributes innovative brands and products to the global retail market.

LiteBulb Products - our wide range of products are sold in over 30 countries through blue chip retailers including: ASDA, BHS, Tesco, Sainsbury's, WH Smith, Halfords, Marks & Spencer, Morrisons, QVC, Next, Fenwicks and Toys R Us.

LiteBulb Creative is a creative agency with global reach, delivering compelling and agile brand extension programmes to the entertainment industry. LiteBulb Creative has designed products and campaigns for clients around the world, including Disney, Mattel and Miramax.

Chairman's Statement

I am pleased to write to you with my first report as Chairman of your company for the six month period to 30 June 2014.

Introduction

2013 was a transformational year for LiteBulb with the successful completion of three acquisitions during the period. This created scale in terms of product offering and customer reach, and the momentum has continued into 2014 with the acquisition of Go Entertainment Group ("Go"), which has broadened the Group's offering in the gift category. Through organic growth and acquisition, the Group now has a scalable model that can add value to clients at each stage of the product and merchandising cycle and that is already delivering incremental revenues. The Group is on target to deliver revenues in excess of £20m for the full year, up from £8m in 2013.

Our strategy of strengthening our relationships with retailers has begun to bear fruit with some exciting projects in progress, such as with Disney and Tesco, brought about by the collaboration of our different group companies.

The management focus is firmly on integrating the businesses in terms of implementing common operating systems and procedures, achieving savings by the removal of duplicated costs and by increased purchasing power, and pursuing group sales opportunities on a collective basis. Whilst we do not underestimate the challenge of delivering a unified group, we are pleased with the progress made to date.

Financial Results

Revenues from continuing operations for the six months increased by 183% to £4.0m (H1 2013: £1.4m), with an increase in gross profit of 157% to £1.5m (H1 2013: £0.6m). Gross margin has reduced to 39% (H1 2012: 43%), due to the mix of product sales. This is in line with management expectation as the Go and Meld businesses operate on lower gross margins than Bluw, and 2014 is therefore reflective of a broader mix of sales, whereas the 2013 results principally related to Bluw.

The loss before tax, finance costs and exceptionals, and excluding discontinued operations, increased to £2.3m (H1 2012: £0.9m). This increased loss during the period is as a result of the increased scale and the seasonal profile of the Group. The Group's profit is forecast to be delivered in Q4 2014 in line with the Christmas trading period.

Net Cash at Bank at 30 June 2014 was £0.9m, down £0.9m from 31 December 2013, reflecting the losses for the period and the increase in stock in advance of the key trading period, offset by the receipt of the £2.0m proceeds from the convertible loan note issue.

Acquisition

Go Entertainment

In April we completed the acquisition of Go, a brand extension specialist working with a number of key content owners, including Discovery Channel, History Channel, David Attenborough and ESPN. Go is expert in providing bespoke gift ranges across books, magazines and DVDs to key UK retailers. In the past two years, Go has successfully launched in the US and brings a greater international footprint to the Group.

Fundraisings

£2.0m Fundraising

In April we completed a £2.0m fundraising by way of a secured convertible loan note issue to provide further expansion capital. This round of fundraising was supported by the existing bond-holders as well as attracting new investors, which we see as a further endorsement of our strategic plan and growth ambitions.

Current trading

After a number of difficult years for retail, sentiment and confidence in the economic climate is beginning to improve. Overall the quantity of product being ordered is steadily increasing and the demand for, and the security provided by supplying established brands, such as Star Wars, Dr Who, Disney and Peppa Pig, is becoming more evident. Therefore, we believe that the Group's strategy of securing licences with well-known brands is a sensible approach.

Post the period end, we received significant orders from our key customers, M&S, Sainsbury's, Boots and Next, in excess of £4m. The Sainsbury's order is particularly pleasing as this is for the Mary Berry range of kitchenware being supplied by Meld Home, under a three year licence arrangement. The range was launched in March and the strong sell through in Sainsbury's has led to repeat orders for Autumn 2014 and Spring 2015, bringing the total sales for this product range to in excess of £1m. On 1 July we also announced orders totalling £1m from a number of major retailers, including products being sold in the Debenham's Christmas Gift Range and a deal to supply products to the German retailer, Tchibo.

In addition, we announced our appointment as a creative partner with US branding, marketing and rights management company Epic Rights ("Epic"). We will be working with Epic to take advantage of licensing and merchandising opportunities across its music brands including Kiss, Madonna and John Lennon. At the same time we also announced a deal with Nickelodeon to produce style guides for fashion ranges associated with the popular Teenage Mutant Ninja Turtles and Paw Patrol cartoons. Revenues from these deals are expected to contribute to second half revenues and beyond.

To date, we have now received orders for over £12m for delivery in the second half and expect to see a considerable uplift in sales in the final quarter given our usual seasonal weighting.

Group operational cost savings should begin to become evident in 2015, and the platform that has been created for the group companies should bear fruit as cross selling to our retail customers results in top line growth.

Outlook

As mentioned above, the seasonality of our business means that we are heavily reliant on trading in the final quarter of the year. With the orders received to date, as well indicative orders to come before the Christmas period, we expect to report a significant increase in revenues in the second half of the year in line with consensus expectations. This is expected to generate a profit after tax for the current financial year

Our strategy remains to build the critical mass of the business so that we can leverage off the greater placing power that we have with our retail partners, due to a wider portfolio of products being sold to them and the security they have from working with a bigger supplier. We continue to believe that the Group can grow by acquisition as well as organically and we continue to review a number of attractive opportunities.

On a final note, I'd like to welcome the team at Go to the LiteBulb Group and thank all the employees, of which we now have over 120, for their continued hard work and dedication as we continue to grow the Group.

Michael Hough

Chairman

30 September 2014

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CASHFLOW

1. Basis of preparation

The half yearly financial information set out in this statement for the six months to 30 June 2014 and to 30 June 2013 is unaudited. This financial information does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. It does not comply with IAS 34 'Interim Financial Reporting', as is permissible under the rules of the AIM market.

This half yearly report, which is neither audited nor reviewed, has been prepared in accordance with the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs).

2. Status of financial information

The comparative financial information for the 18 months ended 31 December 2013 has been derived from the audited statutory financial statements for that period.

The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

3. Segment information

As the company operates in one business segment and as such this is the primary business segment. The company's secondary segment is geographical. The segmental results by geographical area are shown below:

4. Discontinued operations

During 2013, the Premium Factory was disposed of, via a liquidation process, and its results are shown separately below:

The net liabilities disposed of are show below:

5. Loss per Share

The calculation of basic loss per share is based on the loss attributable to ordinary shareholders and the weighted average number of ordinary shares in issue during the period.

The calculation of diluted loss per share is based on loss per share attributable to ordinary shareholders and the weighted average number of ordinary shares that would be in issue, assuming conversion of all dilutive potential ordinary shares into ordinary shares.

Reconciliations of the loss and weighted average number of shares used in the calculations are set out below:

Due to the Group's loss for the period, the diluted loss per share is the same as the basic loss per share.

6. Stated capital

During the period, 285,576,390 ordinary shares were issued as follows:

On 23 January 2014, 5,462,329 shares in respect of interest.

On 11 February 2014, 20,833,333 shares in respect of the conversion of a loan note and 273,973 in respect of interest.

On 20 March 2014, 8,496,433 shares in respect of the exercise of employee share options, 8,333,334 shares in respect of the conversion of a loan note, 1,273,248 shares in respect of the settlement of a creditor and 833,333 shares in respect of interest.

On 7 April 2014, 5,239,727 shares in respect of interest and 41,666,667 in respect of the conversion of a loan note.

On 23 April 2014, 182,008,761 shares in respect of the acquisition of Go Entertainment Group.

On 30 April 2014, 7,000,000 shares in respect of the exercise of employee share options.

On 27 June 2014, 4,155,252 shares in respect of interest.

7. Acquisitions

On 23 April 2014, the Company acquired the entire share capital of Go Entertainment Group Limited. The book values, which is the equivalent to fair value, of the assets at acquisition were as follows: