Final Results
Bright Things plc
29 June 2005
BRIGHT THINGS PLC
('Bright Things' or the 'Company')
29 June 2005
Preliminary Results
Bright Things PLC, the developer of an educational games console, Bubble, and
associated software for the pre-school market today announced Preliminary
results:
Business Highlights:
•Development of games console, 'Bubble' nearing completion - expected to
be available in stores in the UK and Eire in the autumn
•Content agreements signed with rights holders to create titles based on
characters including Noddy, Balamory, Postman Pat, Bob the Builder and the
Teletubbies
•Six games expected to be available at launch date with a further six
currently under development
•UK and Eire distribution agreement in place with Bandai
•Progress being made with distribution in Continental Europe and the US
•Expenditure in line with expectations
•Share placing in March 2005 raised £6 million to secure future
development costs
•Acquisition of PushPlay strengthens Bright Things' position with regards
to patent applications and IP rights
Dominic Wheatley, CEO, Bright Things, said:
'This has been an incredibly busy year for Bright Things. We have created the
products in line with the timeframe and investment cost expected. The initial
response within the industry to Bubble and associated software based upon
characters including Bob the Builder, Teletubbies, Noddy and Postman Pat, has
been extremely positive. We are pleased to have the distribution agreement with
Bandai in place for the UK and Eire and are progressing opportunities for
distribution in Europe and the US.
'In the coming months we look forward to the retail launch of Bubble in the UK
and Eire. In addition, our recent acquisition of PushPlay gives Bright Things
the opportunity to develop an enhanced product range and to plan for second
generation products.'
For further information please contact:
Bright Things PLC 0870 351 7770
Dominic Wheatley, CEO
Ady Moores, CFO
Matthew Tims, Publishing Director
Giles Croot / Mark Antelme, Brunswick 020 7404 5959
Chairman's statement
When I wrote to you at the time of our half year report in December 2004, I set
out the progress we had made on a number of fronts. This included the
considerable effort put into the creation of both the hardware unit (the games
console) and the interactive software to accompany it. Today I am pleased to
provide further details of your company's development.
The Hardware
We now have a name for the product - Bubble. After a successful pilot build of
150 Bubbles at the factory in China in May, we are now in main production. The
pilot build has enabled us to refine the product and I am pleased to report that
the firmware is working well and will shortly be finalised. Meanwhile work
continues towards our goal of shrinking the electronics to ever smaller and
cheaper components.
A key element of the quality control work undertaken was on DVD compatability.
We have now tested Bubble's compatability on the majority of DVD makes, and this
work continues to ensure even higher compatability thresholds can be achieved.
We expect Bubble to be in stores in the Autumn.
The Software
Our plan was to create six games initially to accompany the launch of the
hardware, with more to follow around Christmas and the New Year. So far we have
finalised: Balamory, Teletubbies, Tweenies and Fimbles. Noddy and Thomas (the
Tank Engine) and Friends were started shortly after the first four and are
expected to be finished in the next few weeks.
TV rights
We have further strengthened our catalogue of children's television show rights
with the agreement with HIT Entertainment. We have also agreed terms for several
shows from other TV companies and are now conducting contract discussions. We
are working towards a portfolio of approximately 20 titles, 10 of which will be
available as games by the first quarter next year and the rest by Christmas
2006. We plan to build on the consumer experience of the launch titles to
maximise the game play experience for our customers.
Marketing
All packaging, catalogues, software packs, manuals and materials are now
complete. The marketing campaign has been drawn up for the Autumn, including PR
and TV advertising. A Bubble magazine has been created which will be bundled
with every box and we have a series of trade press advertisements slated for the
selling season.
Distribution and Bandai
Bandai UK will act as our sole distributor in the UK and Eire. We have presented
Bubble to key retail buyers over the last few months and we have all been
encouraged by the positive reaction we have received. At this stage we are not
proposing to raise guidance on likely unit sales, but will continue to monitor
the position as we move towards launch.
We are also in discussions with potential European and American distributors
with the aim of expanding sales next year. The launch in the UK will help us
hone the product offering both in terms of the hardware and the software, and
the cost reduction efforts will pay dividends when we go to higher volume
manufacturing.
Acquisition of PushPlay
We have recently completed the acquisition of PushPlay Interactive LLC. PushPlay
is a US based company which was formed to design and licence a games console
product, including methods capable of delivering interactive DVD content through
a remote device. Given the similarities of our business aims and the advanced
development stage of Bubble, we both concluded that our businesses would offer a
stronger, broader competitive offering if we worked together.
The acquisition of PushPlay gives us a team with their own strong relationships
in the US market. Looking ahead, we believe that the IP of the PushPlay team has
potential to be useful for new product development, based on the technology,
including second iterations of Bubble. Furthermore, Push Play has identified
other commercial uses of the technology that may open new revenue streams to
Bright Things.
People
The original plans have been met and the team at Bright Things have been
impressive. I would like to thank not only our employees but also the many
contractors who have been so supportive.
The developers had the difficult task of creating these games alongside the
development of the actual hardware and firmware, and they have my considerable
admiration for their achievements. I would like to thank Louise Merlin our head
producer and Dominique Colonna-Cesari, Gigi Misra and Christine Webb for their
excellent production work. They all came to us from the BBC and, like Shamsul
Rosunally and Nick Lowe, have been invaluable members of the team.
We are indebted to our friends at Third Butcher who have been so professional in
putting the marketing plans together.
I warmly welcome the two founders of Push Play, Art and Craig Gravina. Their
engineering experience and the research they have done in the area of
interactive DVD will hopefully prove an invaluable asset to Bright Things.
Outlook
I am pleased with the progress that the company has made and we are now
approaching a most interesting period. Whilst the pre-school market is
competitive, we believe we have created a first class product using much loved
childrens' characters. With UK distribution in place for the Christmas period
and with progress being made in other territories, we remain confident about the
future.
We look forward to updating the market further in due course.
Ian Livingstone
Chairman
28 June 2005
Operational and financial review
Bright Things Plc was incorporated on 8 March 2004. On 16 April 2004 the entire
share capital of Bright Entertainment Limited (formerly Bright Things Limited)
was acquired by Bright Things Plc. The consideration comprised shares in Bright
Things Plc which were issued to the shareholders of Bright Entertainment Limited
on a share for share exchange basis.
Bright Things Plc placed 5,000,000 new ordinary shares at a price of 90 pence
per share and was admitted to trading on AIM on 30 April 2004. The company
raised £3,957,000 net of costs from this issue of ordinary shares.
The shareholders of Bright Things Plc after the share for share exchange and the
placing of new ordinary shares comprised both the controlling management
shareholders, new institutional and private shareholders, and ex-Bright
Entertainment Limited shareholders.
Bright Things plc took advantage of the merger accounting relief provisions
under s131 Companies Act 1985 when it issued equity shares on a share for share
basis to acquire a 100% interest in Bright Entertainment Limited.
Merger accounting has been applied and the effect that this has on the
consolidated accounts is as follows:
(a) the consolidated results include those of the trading company Bright
Entertainment Limited for the fifteen month period to 31 March 2005;
(b) a merger reserve with a deficit of £858,000 is created being the
difference between the cost of the investment in Bright Entertainment Limited
(as shown in Bright Things Plc's balance sheet of £1,000,000) and the nominal
value of the share capital and share premium as shown in Bright Entertainment
Limited's balance sheet of £142,000.
Bright Things Plc entered into an agreement with BBC Worldwide Limited on 7 May
2004. This agreement included licensing rights to seven children's properties
and the secondment of a dedicated software development management team from BBC
Worldwide's award winning multi-media business. Part of the consideration
payable on this agreement was settled by the issue of 333,333 ordinary shares at
90 pence each to BBC Worldwide Limited on 14 May 2004.
In March 2005 an option holder exercised an option over 350,945 shares at 90
pence per share. These ordinary shares commenced trading on AIM on 9 March 2005.
Bright Things Plc placed 4,000,000 new ordinary shares at a price of £1.50 per
share. The shares were admitted to trading on AIM on 29 March 2005. The company
raised £5,737,000 net of costs from this issue of ordinary shares.
Results for operations
The group made an operating loss of £3,576,000 (2003 - £98,000)
Research and development and administrative expenses relate to the fifteen
months ended 31 March 2005; and these are the main components of the loss on
ordinary activities during the period.
Key figures:
Period from Year ended
1 January 2004 31 December
to
31 March 2005 2003
£,000 £,000
Research and Development 2,266 26
----------- -----------
Other administrative expenses 1,310 72
----------- -----------
Net assets/(liabilities) 6,810 (120)
----------- -----------
Increase/(decrease) in cash 6,988 (19)
----------- -----------
Basic and diluted loss per share (25.1)p (1.0)p
=========== ===========
Research and Development
All research and development expenditure has been charged to the profit and loss
account as incurred. This includes all hardware development expenditure,
software development expenditure on individual titles and advance royalties paid
under licensing arrangements.
Hardware, £782,000
Hardware development is taking place using specialised engineering firms
primarily based in California, USA.
Software, £756,000
All products are developed through outsource contracts with third party
developers. As part of the BBC Worldwide contract, six members of staff from BBC
Worldwide Limited were seconded to the company to work on the development of the
software, this team forms the internal management for all outsource contracts.
Licensing expenditure, £728,000
Licensing expenditure includes payments made to acquire the rights to licensed
properties and to develop interactive DVD games which work on our hardware
platform for commercial exploitation. Licensing expenditure includes £148,000
relating to advances paid which are recoupable against future royalties payable.
Licensing expenditure also includes £300,000 which was settled by the issue of
333,333 new ordinary shares.
Licence fees payable to organisations for use of their Intellectual Property
over a number of years are charged to the profit and loss account on the basis
of actual product sales. Management relies on forecasts of sales to determine
the relevant amortisation rate of the licence fee. Management regularly reviews
the carrying value of such licences.
Due to the uncertainty of not having any actual sales data to compare against
forecasts, management have taken the decision to amortise all licence fee
expenditure during the current period.
Administrative expenses
Other administrative costs comprise all the costs of running Bright Thing's
operating and corporate functions. This includes the staff, contractors and
agencies together with associated costs employed in sales, marketing, PR,
design, project management, production, IT, quality assurance, finance, legal
and licensing. Total administration costs of £1,310,000 were incurred during the
period.
The company seeks to outsource as many administrative overheads as possible.
External agencies and contractors have been used to assist in sales, marketing
and PR roles.
The company opened offices in London and Palo Alto, California, USA during the
period.
The board continues to monitor the organisation's general overhead. The board
constantly seeks internal efficiencies as appropriate to the growth phase of the
business.
Taxation
No tax charge arises on the profit for the financial year. At 31 March 2005 the
Group has approximately £3.6 million of losses available to carry forward to set
against future taxable profits, subject to agreement with the Inland Revenue.
Earnings per share
Basic loss per share of 25.1p (2003 loss of 1.0p) has increased due to the
scaling up of the group's research and development activities.
Working Capital
The Group's operational cash position has been strengthened by the placing in
March 2005. At 31 March 2005, the Group had cash of £6,991,000 (2003 £3,000).
The Group has no debt. At the end of the financial year the group had net
current assets of £6,732,000 (2003 net current liabilities £130,000).
The increase in Net Assets to £6,810,000 (2003 net liabilities £120,000) is
largely due to the increase in cash resulting from the issue of new shares from
the placing of ordinary shares in April 2004 and March 2005.
Financial Instruments
During the period, the Group's financial instruments, comprised cash and various
items such as trade creditors that arise directly from operations. The main
purpose of these financial instruments is to finance the Group's operations.
After the period end the Group has entered into derivative transactions in the
form of foreign currency contracts in order to manage the currency risk arising
from the Group's operations. The Group's policy is, and was throughout the
period under review, not to trade in financial instruments. The main risk
arising from the Group's financial instruments are liquidity risk and foreign
currency risk. The Board reviews and agrees policies for managing each of these
risks on a regular basis.
Liquidity risk
The Group continually monitors the operational working capital requirements of
the business. In particular the point where seasonal sales spikes require
fulfilling with shipments by sea from the Far East. The group continues to
assess whether a trade finance line is appropriate taking into account the
current cash position of the company.
Foreign currency risk
At present the Group makes significant payments in US dollars for the
manufacture of finished products and the development of new games. The Group
manages the foreign currency exposure from this through forward contracts. Due
to the significant nature of this risk the Group has entered into US Dollar
forward contracts based on forecast US Dollar requirements up to June 2006.
Adrian Moores
Finance Director
Bright Things Plc
Consolidated profit and loss account for the period ended 31 March 2005
Note Period from Year ended
1 January 2004 to 31 December
31 March 2005 2003
£,000 £,000
--------- ----------
Research and Development (2,266) (26)
Other administrative expenses (1,310) (72)
--------- ----------
--------- ----------
Administrative expenses and operating
loss (3,576) (98)
Interest receivable 74 -
--------- ----------
========= ==========
Loss on ordinary activities before and
after taxation (3,502) (98)
and retained profit
========= ==========
Loss per share
Basic and diluted 2 (25.1)p (1.0)p
========= ==========
All amounts relate to continuing activities.
All recognised gains and losses are included in the profit and loss account.
Bright Things Plc
Consolidated balance sheet at 31 March 2005
31 March 31 March 31 December 31 December
2005 2005 2003 2003
£,000 £,000 £,000 £,000
Fixed assets
Intangible assets 7 9
Tangible assets 71 1
-------- ----------
78 10
Current assets
Debtors 182 -
Cash at bank and in hand 6,991 3
-------- ----------
7,173 3
-------- ----------
Creditors: amounts falling
due (441) (133)
within one year
-------- ----------
Net current
assets/(liabilities) 6,732 (130)
-------- ----------
Total assets less current
liabilities 6,810 (120)
======== ==========
Capital and reserves
Called up share capital 1,968 1,000
Share premium account 9,342 -
Merger reserve (858) (980)
Profit and loss account (3,642) (140)
-------- ----------
Shareholders' funds - equity 6,810 (120)
======== ==========
Bright Things Plc annual report and accounts 2005
Consolidated cash flow statement for the period ended 31 March 2005
Note Period from Period from Year ended Year ended
1 January 2004 to 1 January 2004 to 31 December 31 December
31 March 2005 31 March 2005 2003 2003
£,000 £,000 £,000 £,000
Net cash
outflow from
operating 3 (2,578) (18)
activities
Returns on
investments
and
servicing of
finance
Interest
received 74 -
-------- --------
Net cash
inflow from
returns on 74 -
investment
and servicing
of finance
Capital
expenditure
and
financial
investment
Purchase of
tangible
fixed (90) (1)
assets
Purchase of
intangible
fixed assets (428) -
-------- --------
-------- --------
Cash outflow
from capital
expenditure (518) (1)
and financial
investment -------- --------
Cash outflow
before
management (3,022) (19)
of liquid
resources and
financing
Management of
liquid
resources
Increase in
fixed term
deposits (6,250) -
-------- --------
Net cash
outflow from
management of
liquid (6,250) -
resources
(6,250) -
Financing
Net proceeds
from issue of
new share
capital 9,694 -
Exercise of
share options 316 -
-------- --------
Net cash
inflow from
financing 10,010 -
-------- --------
Increase/
(decr
ease) in cash 738 (19)
in the year
======== ========
Notes
1. The announcement set out above does not constitute a full financial statement
of the Company's affairs for the period ended 31 March 2005. The Company's
auditors have reported on the full accounts for the said year and have
accompanied them with an unqualified report. The accounts have yet to be
delivered to the Registrar of Companies. The annual report and accounts will be
posted to shareholders in due course. Copies of the annual report and accounts
will be available for members of the public at the Company's registered office,
7 Pilgrim Street, London, EC4V 6LB. The preliminary statement was approved by
the board on 28 June 2005.
2. Earnings per share
Earnings per share has been calculated using the following:
Earnings Weighted Earnings Weighted
Period from average number Year ended average number
1 January 2004 of shares 31 December of shares
to Period from Year ended Year ended 31
31 March 2005 1 January 2004 2003 December
to 2003
31 March 2005
£,000 £,000 £,000 £,000
Basic and
diluted (3,502) 13,964 (98) 10,000
========== ============ ========== ============
Earnings per ordinary share have been calculated using the weighted average
number of shares in issue during the relevant financial periods. The weighted
average number of equity shares in issue, is 13,963,607 (2003 - 10,000,000) and
the earnings, being loss after tax is £3,502,000 (2003 - £98,000).
3. Reconciliation of operating loss to net cash inflow from operating activities
Period from Year ended
1 January 2004 to 31 December
31 March 2005 2003
£,000 £,000
Operating loss (3,576) (98)
Amortisation of intangibles 730 -
Depreciation 20 1
Increase in debtors (182) -
Increase in creditors 430 79
------------ ----------
Net cash inflow from operating activities (2,578) (18)
============ ==========
4. Reconciliation of net cash flow to movement in net funds
Period from Year ended
1 January 2004 to 31 December
31 March 2005 2003
£,000 £,000
Increase/(decrease) in cash in the period 738 (98)
Cash inflow from increase in liquid
resources 6,250 -
------------ ----------
Movement in net funds during the period 6,988 (19)
Net funds at 1 January 2004 3 22
------------ ----------
Net funds at 31 March 2005 6,991 3
============ ==========
5. Dividend
The directors do not recommend the payment of a dividend in the period (2003
£nil).
This information is provided by RNS
The company news service from the London Stock Exchange
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