Preliminary Results

RNS Number : 6634E

Bright Things plc

30 September 2008

 



Bright Things plc

('Bright Things' or the 'Company')

PRELIMINARY RESULTS for the year ended 31st March 2008

Bright Things today announces today announces its full year results for the year ended 31 March 2008.

Financial Highlights:

• Revenues rose to £257,000 (2007: £205,000)

• Gross profits for the year were £163,000 (2007: £101,000)

• Loss per share fell to 2.5p (2007: 13.5p)

Operational Highlights:

• Acquired CommonWorld Ltd a company which develops social networking platforms for the creation of online communities.

• Development of 'SocialGO' the Company's first social networking product (now in Beta testing). 

• Raised £955,000 by a placing of new shares at 4p per share.

• Developed and launched the Tiger Woods PGA Tour 07 DVD game.

• Reduced running costs by, amongst other things, relocating the Head Office.

Dominic Wheatley, CEO of Bright Things commented:

'This has been a year of transition for Bright Things: with the acquisition of CommonWorld and the subsequent development of the SocialGO social networking product. We are all very excited about the potential benefits this product can bring to the Company, and I look forward to updating shareholders as to new developments as and when they arise.'

The Annual Report and Accounts has today been sent to Shareholders is available on the Company's website: www.brightthings.com 

For further information please contact:

Bright Things PLC                            0870 351 7770

Dominic Wheatley, CEO

Edward Levey, Finance Director

HB Corporate

Luke Cairns/ Rory Creedon               Tel: [phone]

Brunswick Group

Giles Croot / Mark Antelme,              Tel: [phone]

Chairman's Statement

Introduction

As I announced in the results for the period ending 31 March 2007 and subsequently in the interims, the Board has been reviewing a number of new initiatives and opportunities with a view to growing the business and, in doing so, create value for Shareholders. 

Work has continued on the Company's current business, the Tiger Woods PGA Tour 07 game was launched on schedule and the Company continues to explore new opportunities for the ASIC chip. 

Notwithstanding the Board's belief in the potential of the historic business, it recognised that in order to grow the Company needed a new product initiative.

Such a product was identified during the year and in December 2007 the company acquired CommonWorld Ltd. Under the terms of the Acquisition Agreement, the Company agreed to acquire the entire issued share capital of CommonWorld for the issue of 7,500,000 Ordinary Shares in the Company and £189,000 of pre-acquisition development loans, which were capitalised as part of the agreement. Following completion of the first version of the product on 31 July 2008, a further 3,091,250 new Ordinary Shares were issued to the vendors of CommonWorld Ltd. In addition, if the net proceeds of sales of the Social Network Maker product in the period of two years following the commercial launch exceed £2,000,000, the Company will issue to the vendors of CommonWorld a further 3,091,250 new Ordinary Shares. The maximum aggregate number of new Ordinary Shares that may be issued pursuant to the Acquisition Agreement is 13,682,500 new Ordinary Shares.

The first product, now named 'SocialGO', has been designed to provide a secure, dedicated social network for Groups and Organisations. Whilst 'SocialGO' has similar features and functions to social network sites on the Internet such as Facebook, MySpace or Bebo it is distinct by virtue of it enabling Groups and Organisations to create and maintain their own social networks. 

'SocialGO' is designed to be highly customisable in both design and layout to suit the specific requirements of the user. The Directors consider there are numerous types of Groups and Organisations for whom 'SocialGO' could become an indispensable tool, be it for schools, companies, local sports leagues or simply extended family networks.

At the date of the acquisition, the product was still under development and CommonWorld's only asset on completion was the Intellectual Property ('IP') behind the social network platform. 

Immediately following the acquisition, Get On With It Limited ('GOWIT'), a company controlled by the vendors of CommonWorld, was contracted to complete the development of the product. GOWIT has been granted a licence of the IP by CommonWorld under which GOWIT is granted rights that will permit it to support and host seven websites developed for third parties using the IP. The licence also permits GOWIT to use and licence the IP to develop, support and host further bespoke websites for clients, with the prior written consent of CommonWorld, in respect of which CommonWorld will be entitled to a 15% royalty.

Under the services agreement pursuant to which GOWIT agreed to develop 'Social Network Maker', CommonWorld agreed to pay GOWIT a royalty of 7.5% on all sales of 'Social Network Maker' in excess of £2,000,000, in addition to the fees and expenses payable to GOWIT for the provision of services. 

In order to facilitate the transaction the Company completed at the same time a Capital Reorganisation and Placing. Under the Capital Reorganisation, each issued Ordinary Share of 10p was subdivided into one new Ordinary Share of 1p and one Deferred Share of 9p. It was resolved that the rights attaching to the Deferred Shares would be minimal so that the equity value of the Company would effectively be attributed entirely to the new Ordinary Shares. It was also resolved to sub-divide each of the unissued Ordinary Shares into 10 new Ordinary Shares of 1p. In due course it is intended that the Deferred Shares will be cancelled as part of a capital reconstruction. At the same time the Company raised £955,000 (before expenses) by the issue of 23,875,000 new Ordinary Shares at 4p. The Placing Shares rank pari-passu in all respects with the new Ordinary Shares in issue following the Capital Reorganisation.

Progress

The group has made progress in a number of areas

• Reduced the overhead and cost base and relocated our Head Office to a more cost effective location

• Completed development and launched Tiger Woods PGA Tour 07 game

• Completed a capital reorganisation where each issued Ordinary Share of 10p was subdivided into one new Ordinary Share of 1p and one Deferred Share of 9p. 

• Completed an additional fundraising of £955,000 (before expenses) in December 2007, in which 23,875,000 new ordinary shares were allotted at a placing price of 4p.

• Identified a new business opportunity and completed the acquisition of CommonWorld Ltd, a company which develops social networking platform to allow the creation of web based communities 

• Completed development of the first Social networking product, 'SocialGO', which is currently being Beta tested.

Results

Revenue at £257,000 (2007 - £205,000) primarily consists of ASIC income along with sales and royalties from 41,000 iDVD games (2007 - 37,000 units). Segmental analysis of revenue can be found in note 3 to the accounts.

The operating loss was reduced to £1,011,000 (2007 loss £3,344,000), with cost of sales at £94,000 (2007 - £104,000) research & development costs at £350,000 (2007 - £847,000), other administrative expenses, at £824,000 (2007 - £2,598,000). Other administrative expenses include a one off charge for impairment of IP of £19,000 (2007 - nil), no impairment of goodwill (2007 - £832,000) and a charge for share based payments of £92,000 (2007 - £107,000).

Continuing the trend from last year, cost reductions have reflected on the above overheads and cost of sales. All expenditure continues to be closely monitored.

The Group had cash deposits of £601,000 (2007 - £864,000) at the Balance Sheet date. 

Prospects

Opportunities for new applications for the Application Specific Integrated Circuit 'ASIC' chip continue to be explored. However, at this time, no further orders have been received from Radica. We continue to have discussions with other parties interested in utilising the ASIC in their products. 

New iDVD products will be considered with the Company intending to remain selective in identifying premium licenses, but at present there are no projects in place.

The Board are excited about the prospects offered by SocialGO. The sales growth of similar types of products is impressive and the Board considers the product to be well positioned to take a stake in this market.

Summary

We continue to explore all opportunities to utilise the Company's expertise and intellectual property. 

Overheads have been significantly reduced and your Board will continue to carefully monitor the working capital requirements of the company.

Finally, I would like to thank all employees for their hard work and dedication during the year.

Ian Livingstone

Chairman

25 September 2008

   Bright Things Plc

Consolidated income statement for the year ended 31 March 2008

__________________________________________________________________________________________

Note	31 March 2008 £’000	31 March 2007 £'000
Revenue                                                                                2	257	205
Cost of sales	(94)	(104)
	_______	_______
Gross profit	163	101
Research and development costs                                           4	(350)	(847)
Administrative expenses - other	(805)	(1,766)
Administrative expenses - impairment of intangible assets	(19)	(832)
Total administrative expenses	(1,174)	(3,445)
	_______	_______
Loss from operations                                                                           3	(1,011)	(3,344)
Finance income	27	52
	_______	_______
Loss before and after tax for the year	(984)	(3,292)
	_______	_______
Attributable to:
Equity shareholders	(984)	(3,292)
	_______	_______
Loss per share
Basic and diluted                                                                               5	(2.5)p	(13.5)p
	_______	_______

Consolidated balance sheet at 31 March 2008

__________________________________________________________________________________________

Note	31 March	31 March	31 March	31 March
	2008	2008	2007	2007
	£'000	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		9		38
Intangible assets		414		89
		________		________
Total non-current assets		423		127
Current assets
Inventories	-		7
Trade and other receivables	27		161
Tax asset	37		20
Cash and cash equivalents	601		864
	________		________
Total current assets		665		1,052
		________		________
Total assets		1,088		1,179
Liabilities
Current Liabilities
Trade and other payables	(118)		(194)
Tax liabilities	(8)		(11)
Accruals and deferred income	(182)		(347)
	________		________
Total liabilities		(308)		(552)
		________		________
Total net assets		780		627
		________		________
Capital and reserves attributable to equity shareholders
Called up share capital - 1p ordinary		618		-
Called up share capital - 9p deferred		2,741		-
Called up share capital - 10p ordinary		-		3,045
Share premium account		10,170		9,589
Warrant reserve		267		267
Merger reserve		(136)		(286)
Share based payment reserve		312		220
Retained deficit		(13,192)		(12,208)
		________		________
Total equity		780		627
		________		________

The financial statements were approved by the Board and authorised for issue on 25 September 2008. 

Edward Levey, Director

The notes on pages 31 to 65 form part of the group financial statements.

  Bright Things Plc 

Consolidated cash flow statement for the year ended 31 March 2008

__________________________________________________________________________________________

	31 March	31 March	31 March	31 March
	2008	2008	2007	2007
	£'000	£'000	£'000	£'000
Cash flows from operating activities
Loss before tax		(984)		(3,292)
Share based payments		92		107
Depreciation on property plant and equipment		33		38
Amortisation of intangible assets		70		113
(Loss)/Profit on sale of property, plant and equipment		-		5
Goodwill and IP impairment		19		832
Finance income		(27)		(52)
		_______		_______
Cash used in operating activities before		(797)		(2,249)
changes in working capital and provisions
Decrease in trade and other receivables		120		250
Decrease in inventory		7		7
(Decrease)/increase in trade and other payables and accruals and deferred income		(248)		5
		_______		_______
Cash used in operations		(918)		(1,987)
Investing activities
Purchase of property, plant and equipment	(3)		(6)
Purchase of intangible fixed assets	(189)		-
Finance income	27		52
	_______		_______
Net cash (used in)/from investing activities		(165)		46
Financing activities
Proceeds from issue of new share capital	955		1,100
Costs of issue of new share capital	(135)		(70)
	_______		_______
Net cash from financing activities		820		1,030
Net decrease in cash and cash equivalents		(263)		(911)
Cash and cash equivalents at beginning of the year		864		1,775
		_______		_______
Cash and cash equivalents at end of the year		601		864
		_______		_______

.

Bright Things Plc 

Notes forming part of the financial statements for the year ended 31 March 2008

__________________________________________________________________________________________

1    Accounting policies

Principal accounting policies

The Company is a limited liability company incorporated and domiciled in the United Kingdom. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Adoption of IFRS in the financial year ending 31 March 2008

In the current year the Group has adopted standards and interpretations issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee that are relevant to its operations and effective for the Group's financial year end on 31 March 2008, see note 23. The adoption of these standards and interpretations has resulted in changes to the Group's accounting policies. 

The basis of preparation and accounting policies used in preparing the accounts for the year ended 31 March 2008 are set out below. The basis of preparation describes how IFRS has been applied under IFRS 1.

Basis of preparation

The financial statements have been prepared in accordance with EU Endorsed International Financial Reporting Standards ('IFRS') and the Companies Act 1985 applicable to companies reporting under IFRS. The Group has adopted all of the standards and interpretations issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee that are relevant to its operations. 

Going concern

The Directors continually monitor the financial position of the Group, taking into account the latest cash flow forecasts and the ability of the Group to generate cash. The Company intends to raise additional cash by way of a placing, which will be underwritten. The Directors have prepared the financial statements on a going concern basis having given consideration to forecast sales and the marketability of SocialGO together with the proposed fundraising for the period to 31 August 2009. 

While there will always remain some inherent uncertainty within the aforementioned cash flow forecasts, the Directors remain confident that they will be able to manage the Group's finances and operations so as to achieve the forecasted cash flows and, as a result, that it is appropriate to draw up the financial statements on a going concern basis.

The financial statements do not include any adjustments that would result if the going concern basis of preparation were to become no longer appropriate.

2    Revenue

	Year ended	Year ended
	31 March	31 March
	2008	2007
	£'000	£'000
Revenue arises from:
Sale of goods	173	144
Royalties	67	26
Provision of services	17	35
	________	________
	257	205
	________	________

3    Loss from operations            

	Year ended	Year ended
	31 March	31 March
	2008	2007
	£'000	£'000
This is arrived at after charging/(crediting):
Staff costs (see note 7)	281	662
License fees for intellectual properties - advances	50	198
Depreciation	33	50
Amortisation of intellectual property	70	112
Impairment of intellectual property	19	-
Goodwill impairment charge	-	832
Exchange differences	4	(2)
Development expenses and advances	300	649
Loss on disposal of property, plant and equipment	-	5
Auditors' remuneration in respect of Company	25	25
Audit of subsidiary undertakings pursuant to legislation         Auditors' remuneration    - non-audit services - other     services	26 9	26     5
Auditors' remuneration    - non-audit services - taxation	11	6
Share based payments	92	107

4    Research and development costs

	Year ended	Year ended
	31 March	31 March
	2008	2007
	£'000	£'000
Consist of:
Development expenses and advances	300	649
Licence fees for intellectual properties - advances	50	198
	________	________
	350	847

5    Loss per share

    Loss per share has been calculated using the following:

Year ended	Year ended	Year ended
	31 March	31 March
	2008	2007
Loss (£'000)	(984)	(3,292)
Weighted average number of shares ('000s)	38,680	24,311
	________	________
Basic and diluted loss per ordinary share	(2.5)p	(13.5)p
	________	________

Loss per ordinary share has 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 38,679,586 (2007 - 24,310,780) and the earnings, being loss after tax is £984,000 (2007 - £3,292,000 loss). There are no potentially dilutive shares in issue. Share options totalling 2,393,105 (2007 - 2,198,105) have not been included in the calculation of diluted loss per share because they are anti-dilutive for the periods presented.

Following completion of the first version of the SocialGO product on 31 July 2008, 3,091,250 new Ordinary Shares were issued to the vendors of CommonWorld Ltd. In addition, if the net proceeds of sales of the Social Network Maker product in the period of two years following the commercial launch exceed £2,000,000, the Company will issue to the vendors of CommonWorld a further 3,091,250 new Ordinary Shares.

Other than the shares issued relating to the acquisition of CommonWorld, there have been no share issues since the balance sheet date that would significantly alter the basic and diluted EPS calculations if those transactions had occurred before the year end.

The company has outstanding issued warrants to subscribe for 540,541 10p ordinary shares at £1.50 per share and 250,000 10p ordinary shares at £2.50 per share. These outstanding warrants are considered to be anti-dilutive.

6        Related party transactions

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are described below.

Matthew Tims is a director. A contract for his consultancy services with Creative Partners has been in place during the period. £18,250 (2007 - £63,250) was due under this agreement in the period. All transactions were conducted on an arm's length basis on normal trading terms. At 31 March 2008, £1,175 (2007 - £4,750) was outstanding.

During the year, Greg Ingham served as a director. A contract for his consultancy services with MediaClash was in place during the period, ending in September 2007. £3,333 (2007 - nil) was due under this agreement in the period. All transactions were conducted on an arm's length basis on normal trading terms.  There was no balance outstanding at 31 March 2008 (2007 - nil).

Alex Halliday and Steve Hardman were directors of CommonWorld Ltd prior to its acquisition by Bright Things plc. Steve Hardman and Alex Halliday are currently directors of Get On With It Ltd and as two of the four vendors of CommonWorld Ltd are shareholders in Bright Things plc having received shares as consideration. Get On With It Ltd have the contract to complete the development of SocialGO and provide ongoing development support. £356,463 (2007 - nil) was due under this agreement in the period. All transactions were conducted on an arm's length basis on normal trading terms. At 31 March 2008, £61,254 (2007 - nil) was outstanding.

7    Major non-cash transactions

During the year the group entered into the following non-cash transactions: 

        Shares issued as consideration

7,500,000 shares were issued in consideration for the purchase of CommonWorld Limited on 27 December 2007. 

On 30 July 2008, following the completion of the development and developer testing of SocialGO by 31 July 2008, the Company issued Get On With It Ltd, the vendors of CommonWorld Limited, a further 3,091,250 new 1p Ordinary Shares.

        Share options

    Further to disclosure on share options in note 16, the Directors believe that the key stakeholders in the business of an early stage company should be rewarded and aligned to the same objectives as the shareholders. Therefore, share options have been used to incentivise contractors.

8    Events after the balance sheet date

On 30 July 2008, following the completion of the development and developer testing of SocialGO by 31 July 2008, the Company issued the vendors of CommonWorld Limited, a further 3,091,250 new 1p Ordinary Shares (see note 17).

On 25 September 2008 the Company intends to announce the plan to raise additional cash by means of a share placing on AIM.

The financial statements were authorised for issue by the board as a whole following their approval on 25 September 2008.

9    Non statutory information

The full annual report has today been posted to shareholders. Copies of this report on the Company website www.brightthings.com 

 

END

 

 

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