Final Results
Bright Things plc
30 June 2006
BRIGHT THINGS PLC
('Bright Things' or the 'Company')
30 June 2006
Preliminary Results
Bright Things today announces its preliminary results for the year ended 31
March 2006.
Business Overview:
• Loss before tax of £5.2m for the year ended 31 March 2006, this is
slightly more than we estimated in January
• Further four games developed for Bubble
• Lower Bubble pricing expected from distributor to assist in the sale
of the remaining Bubbles this Christmas
• Expenditure in line with expectations
• Further Bubble development expenditure now largely finished and since
the year end significant reduction in general and administrative overhead
Strategic Developments:
• Strategic shift towards generating revenues from interactive DVD games
and the use of patented technology in products outside the initial target
market of the pre-school sector
• Opportunity to develop and market family games for DVD players, with no
additional hardware requirements - Lara Croft Tomb Raider: Angel of Darkness
Interactive DVD progressing well
• Development of Bright Things' patented ASIC chip - potential uses by
other consumer electronic or toy companies
Dominic Wheatley, CEO, Bright Things, said:
'As announced in January sales of 28,000 Bubbles were significantly lower than
anticipated, Bright Things has identified other areas where it can generate
revenues using management's expertise in the home entertainment market as well
as the patented technology used in Bubble.'
'Bright Things is developing its first family interactive DVD Lara Croft as part
of its strategy of developing simple, high quality DVD games that can be played
on any DVD player using the standard remote control. We are also excited about
the potential of using our patented electronic chips, developed for Bubble, in
other applications.'
'These developments mark a potentially important strategic shift for Bright
Things and we will update the market as and when there are more developments in
these areas.'
For further information please contact:
Bright Things PLC 0870 351 7770
Dominic Wheatley, CEO
Ady Moores, CFO
Matthew Tims, Publishing Director
Jonathan Glass / Mark Antelme, Brunswick 020 7404 5959
Bright Things Plc
Chairman's statement
________________________________________________________________________________
Background
Bright Things was formed to introduce and market interactive DVD games for young
children. The company was one of the first to spot the abilities of ordinary DVD
players to play simple but engaging software, with the added advantage of TV
quality pictures. However, the company felt that normal remote controls that
operated DVD players were too small and awkward for young fingers. In order to
overcome this barrier and provide a more intuitive device for young children to
play with, the company invented Bubble. Bubble is a plastic console that emits
infra red signals that control the interactive DVD games specially made to work
in concert with the unit.
Objectives
At the outset, the company set itself three key goals: to obtain major TV
licences upon which to base the games; to develop and patent the technology that
would create Bubble; to find a sales and distribution partner for the initial
launch in the UK.
All three of these goals were met. However, despite their best endeavours, the
distribution partner (Bandai) sold only 28,000 units into retailers as we
announced in January.
Sales
The business model adopted by Bright Things from the outset relied upon the
widespread consumer acceptance of the Bubble unit in order to provide a market
for the games. Taking this approach, Bright Things hoped that a sufficient
number of hardware units would be sold, thereby providing the critical mass
which would help to sell the games. Although the distributor received an
enthusiastic response from retailers and purchased 112,000 units of Bubble from
Bright Things, Bubble launched into a highly price competitive retail space,
which undoubtedly impacted sales.
The company has worked with the distributor to examine possible strategies to
improve sales this Christmas, including reducing the retail price of the Bubble
hardware. Also, a further four games have now been completed (Bob the Builder,
Pingu, Postman Pat and Angelina Ballerina) to add to the six already available,
although we have not yet received an order for these titles from our
distributor. No significant number of units have been sold since the early part
of the year, which is typical in the toy industry which is very seasonal in this
product category.
Future Strategy
The management has identified potential opportunities within the interactive DVD
games business and also with the patented technology of the core element of
Bubble.
Last Christmas saw the emergence of a new wave of interactive DVD game software.
Thirty games were introduced and over 1.8m units were sold in the UK. Many of
the games were based on well known TV shows such as 'Who Wants to be a
Millionaire', 'Telly Addicts' and 'Bullseye'. They utilise a normal remote
control and require no special hardware.
The company realised that this phenomenon had two potential benefits for Bright
Things - firstly it would help introduce the concept to consumers that their DVD
players had the ability to play interactive games, this may also help sales of
Bubble this Christmas. Secondly, Bright Things has developed ten interactive DVD
games and has built up considerable expertise, both creative and technical that
could allow it to enter the family market, further broadening its product
offering and reducing its reliance on Bubble and a single distributor.
After a great deal of research, the company felt that a new category of DVD game
could be successful, and that it would focus away from the quiz based genre and
move to action/adventure games. These would be simple but fun to play and aimed
at the family audience.
New products
Some technical tests proved the potential and the company decided to licence
from Eidos the well known brand of Lara Croft - Tomb Raider to create their
first DVD game. The development of and plans for marketing of this game are
proceeding well. The company hopes to announce further titles in the coming
months as they build a range of similar DVD game entertainment.
A key part of the future strategy on the Bubble technology was the creation of
the patented ASIC chip - essentially the reduction of the many electronic
components that make Bubble onto a single, inexpensive chip. This would allow
the company to manufacture Bubble at a far lower price which would further help
reduce the retail price and improve margins. However, the chip also has the
potential to be used by other consumer electronic or toy companies for a variety
of purposes. Bright Things has engaged in discussions with a number of potential
partners, and is hopeful that a positive return can be made on the investment in
the creation of the patented Bubble technology.
Bright Things continues to operate in a new and developing market. The
management have considerable experience in publishing interactive games on a
variety of formats and has broadened its strategy from children's games to
family games, however the DVD format is still evolving as a platform for
interactive games.
Our People
It has been a very ambitious project to launch and I would like to thank the
staff and many contractors who worked hard to create Bubble and the Bubble
games.
Ian Livingstone
Chairman
29 June 2006
Bright Things Plc
Operational and financial review
________________________________________________________________________________
Acquisition of PushPlay Interactive LLC
Bright Things completed the acquisition of PushPlay Interactive LLC ('PPI') on
28th June 2005. PPI is a limited liability company incorporated in the US. The
consideration payable on this acquisition totalled £1,112,000 and this was
settled by the issue of 415,800 10p ordinary shares at £1.375 per share;
US$500,000 of cash, and 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. The warrants
have been fair valued at £267,000 using the Black-Scholes valuation method. Post
acquisition, the PPI team have been integrated into other group companies. The
results of PPI from 28th June 2005 are included in the consolidated financial
statements.
The combined Intangible assets as a result of the acquisition of PPI capitalised
on the balance sheet total £1,091,000 split between Goodwill of £899,000 and
Patent applications of £192,000.
Bright Things, Inc.
Bright Things, Inc. was incorporated on 6 April 2005 in the state of California,
USA. The results of Bright Things, Inc. are included in these consolidated
accounts.
2006 financial year and future product portfolio
Bright Things launched the following products in the year:
Bubble DVD games console bundled with Teletubbies Interactive DVD game (released
August 2005)
Bubble DVD games console bundled with Balamory Interactive DVD game (released
August 2005)
Teletubbies Bubble Interactive DVD game (released August 2005)
Balamory Bubble Interactive DVD game (released August 2005)
Tweenies Bubble Interactive DVD game (released September 2005)
Fimbles Bubble Interactive DVD game (released October 2005)
Thomas & Friends Bubble Interactive DVD game (released November 2005)
Noddy Bubble Interactive DVD game (released December 2005)
The following additional games have been completed since the year end:
Bob the Builder Bubble Interactive DVD game
Postman Pat Bubble Interactive DVD game
Angelina Ballerina Bubble Interactive DVD game
Pingu Bubble Interactive DVD game
Management are in discussion with our distribution partner as to the release
dates for these completed games. This brings the bubble software portfolio to
ten titles based on a broad range of pre-school television programming. It is
the intention to monitor sales before any further Bubble software development is
committed.
The company is utilising its skills and experience in Interactive DVD games by
broadening its catalogue into the family genre of Interactive DVD. Bright Things
has secured worldwide rights from Eidos Interactive Ltd to develop and publish
an Interactive DVD game based on the iconic video game character Lara Croft,
Tomb Raider.
Further revenue streams
The strength of the Group's Patent and Intellectual Property portfolio combined
with the continuing growth of the Interactive DVD industry are increasingly
presenting opportunities to generate revenue from the use of our technology in
products outside of our initial target market of the pre-school sector.
Development model
We continue to retain the core management and technical skills in house and
subcontract game development to external studios with appropriate expertise in
DVD authoring and DVD game development.
Manufacturing capabilities
Bubble is manufactured by our contract manufacturer located in Zhongshan, China.
Significant investment has been made in tooling costs and quality assurance
processes.
Commercialisation of underlying patented technology
Bright Things have made significant progress in the engineering of its core
bubble technology into an Application Specific Integrated Circuit 'ASIC' chip
set. This enables the core 'Bubble' functionality, which received US Patent
approval during the year to be made available as a one chip solution for other
peripheral devices interacting with a DVD player or set top box.
Strategy for the future
The management has identified potential opportunities within the interactive DVD
games business and also with the patented technology of the core element of
Bubble.
Last year saw the emergence of interactive DVD game software which utilise a
normal remote control and require no special hardware.
The company realised that interactive DVD games software had two potential
benefits for Bright Things - firstly it would help introduce the concept to
consumers that their DVD players had the ability to play interactive games, this
may also help sales of Bubble this Christmas. Secondly, Bright Things has
developed ten interactive DVD games and has built up considerable expertise,
both creative and technical that could allow it to enter the family market,
further broadening its product offering and reducing its reliance on Bubble and
a single distributor.
Following research, the company felt that a new category of DVD game could be
successful, and that it would focus away from the quiz based genre and move to
action/adventure games. These would be simple but fun to play and aimed at the
family audience.
The company has licenced from Eidos the well known brand of Lara Croft - Tomb
Raider to create their first DVD game. The development of and plans for
marketing of this game are proceeding well.
A key part of the future strategy on the Bubble technology was the creation of
the patented ASIC chip. This would allow the company to manufacture Bubble at a
far lower price which would further help reduce the retail price and improve
margins. However, the chip also has the potential to be used by other consumer
electronic or toy companies for a variety of purposes.
Bright Things continues to operate in a new and developing market. The
management have considerable experience in publishing interactive games on a
variety of formats and has broadened its strategy from children's games to
family games.
Results for operations
The Group made an operating loss of £5,349,000 (2005 - £3,576,000) after
goodwill charges of £67,000 (2005 -£Nil).
Research and development and administrative expenses were the main components of
the loss on ordinary activities during the year ended 31 March 2006.
Key figures:
Period from
Year 1 January
Ended 2004 to
31 March 31 March
2006 2005
Turnover 3,110 -
________ ________
Gross Loss (103) -
________ ________
Research and Development 2,708 2,266
________ ________
Other administrative expenses 2,538 1,310
________ ________
Net assets 2,780 6,810
________ ________
Increase/(decrease) in cash (5,216) 6,988
________ ________
Basic and diluted loss per share (25.6)p (25.1)p
________ _______
Turnover, £3,110,000 (2005 - £Nil)
Turnover for the year primarily consists of product sales to our distributor
(Bandai) and royalties receivable on goods sold into the channel by Bandai.
Turnover is split between: Bubble hardware bundles £2,354,000; Bubble software
£753,000; and consultancy revenue of £3,000.
Cost of sales, £3,213,000 (2005 - £Nil)
Direct costs of manufacturing the products were £2,971,000. Freight and
distribution costs were £169,000 and royalties payable to rights holders were
£73,000.
Gross loss, £103,000 (2005 - £Nil)
The overall gross loss for the year is £103,000. This is split between: Gross
Loss on Bubble hardware bundles of £321,000 achieving a negative gross margin of
13.6%; Gross Profit on Bubble software of £215,000 achieving a gross margin of
28.6%; and gross margin of £3,000 on consultancy revenue.
The loss is primarily due to the following reasons: i) higher cost of goods
associated with the first bubble units and Interactive DVD games being produced
(which are fully expensed) before any cost reductions were implemented into the
production line; ii) We have written down a surplus supply of electronic
components which were purchased on long lead times in line with peak season
production demand requirements by a total of £396,000 due to the uncertainty of
the level of future sales; iii) the first batch of 5,000 Bubble consoles was air
freighted into the UK to meet retailer deadlines, these units would normally be
shipped by sea at lower cost.
Administrative expenses
Administrative expenses for the year ended 31 March 2006 are the main component
of the loss on ordinary activities during the year. Comparative figures are
shown for the fifteen months ended 31 March 2005 which are comparable to the
current year as the results for January to March 2004 were insignificant.
Administrative expenses are in line with expectation and are analysed into two
categories:
Research and Development, £2,708,000 (2005 - £2,266,000)
All research and development expenditure has been charged to the profit and loss
account as incurred per the accounting policy in the full financial statements.
This includes all hardware development expenditure, software development
expenditure on individual titles and advance royalties paid under licensing
arrangements.
Hardware, £1,408,000 (2005 - £782,000)
Hardware development spend includes the following; £467,000 relates to design
and engineering spend. £301,000 relates to Factory bring up costs including
quality assurance processes, tooling and pilot build costs. £159,000 relates to
phase one factory cost reductions. £319,000 relates to the ASIC chip
development. £87,000 relates to new business activities. £75,000 relates to the
hardware management process.
Software, £1,238,000 (2005 - £756,000)
Software development spend includes the following; £452,000 relates to the
completion of the 6 software titles launched in the year. £675,000 relates to
software projects now completed yet to be released. £82,000 relates to a project
that has been put on hold since the year end. £29,000 relates to work on
speculative development for new business activities.
All products are developed through outsource contracts with third party
developers and managed via our internal production team.
Management have taken the decision to write off all of these costs in these
accounts due to the uncertainty of the level of future sales.
Licensing expenditure, £62,000 (2005 - £728,000)
Licensing expenditure includes £101,000 relating to advances paid which are
recoupable against future royalties payable. Licensing expenditure also includes
a credit of £39,000 which relates to amounts recouped against royalties payable
on sales during the year in respect of titles whose advances were charged to the
previous period's accounts.
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 the level of future sales, management have taken the
decision to amortise all licence fee expenditure and write off all advances
paid.
Other administrative expenses, £2,538,000 (2005 - £1,310,000)
Other administrative costs comprise all the costs of running Bright Things'
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.
The main component of general and administrative expenditure relates to human
resource costs, totalling £1,150,000 (2005 - £580,000). Additional staff were
recruited into both the UK and US offices during the period as the Group
expanded operationally.
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.
Office and administration costs totalled £380,000 (2005 - £218,000). The largest
component being office costs of £280,000 (2005 - £163,000).
The company continued to operate offices in London and Palo Alto, California,
USA for the year and also through the purchase of PushPlay Interactive LLC ran a
small office in Connecticut from June 2005.
Travel and subsistence costs increased in the year to £288,000 (2005 -
£138,000). This increase is primarily due to the increase in staff and the
travel between the UK & US for new business development activities and managing
software development projects. There was also travel between USA & China to
manage the manufacturing process.
Marketing costs totalled £291,000 (2005 - £123,000). These costs primarily
relate to retained agencies and consultants. Our distributor Bandai have the
financial responsibility in regard to the product marketing and public relations
campaign.
Legal and professional fees relating to the portfolio of patent applications
were £129,000 (2005 - £25,000). The main reason for the increase being the post
acquisition amalgamation of the PushPlay portfolio of patents.
Taxation
No tax charge arises on the profit for the financial year. At 31 March 2006 the
Group has approximately £8.8 million of losses available to carry forward to set
against future taxable profits, subject to agreement with the UK and USA tax
authorities.
Loss per share
Basic loss per share of 25.6p (2005 loss of 25.1p) 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 reduced by the continued
investment in research and development during the year together with increased
operational overheads and lower than anticipated sell through at retail of our
products. At 31 March 2006, the Group had cash of £1,775,000 (2005 £6,991,000).
The Group has no debt. At the end of the financial year the group had net
current assets of £1,659,000 (2005 net current assets of £6,732,000).
Net assets have decreased to £2,780,000 (2005 - £6,810,000), this is primarily
due to spend associated with significantly increasing activities in readiness
for the launch of Bubble in August 2005 and continued investment in research and
development (including a significant amount on development of the ASIC chip to
enable significant future manufacturing cost savings and enabling the potential
of utilising the Bubble technology in other business opportunities).
The Group has made progress in significantly reducing the monthly cash burn
following the completion of the Bubble software titles enabling a reduction in
head count and down sizing of the serviced office space in all locations.
The board continues to monitor the organisation's general overheads and to make
savings where appropriate. The board constantly seeks cost efficiencies as
appropriate given the current level of cash resources.
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. The
Group has continued to enter 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. The Group continues to assess appropriate financing opportunities
based on future business plans and working capital requirements.
Adrian Moores
Finance Director
29 June 2006
Bright Things Plc
Consolidated profit and loss account for the year ended 31 March 2006
________________________________________________________________________________
Note Year ended Period from
31 March 2006 1 January
£'000 2004 to
31 March 2005
£'000
------------ ------------
Turnover - acquisitions 3 -
Turnover - continuing operations 3,107 -
------------ ------------
Turnover 3,110 -
Cost of sales (3,213) -
_______ _______
Gross loss (103) -
------------ ------------
Research and development costs (2,708) (2,266)
Other administrative expenses (2,538) (1,310)
------------ ------------
Administrative expenses (5,246) (3,576)
------------ ------------
Operating loss - acquisitions (4) -
Operating loss - continuing operations (5,345) (3,576)
------------ ------------
Operating loss (5,349) (3,576)
Interest receivable 184 74
_______ _______
Loss on ordinary activities before (5,165) (3,502)
and after taxation and retained loss 3
_______ _______
Loss per share
Basic and diluted
4 (25.6)p (25.1)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 2006
________________________________________________________________________________
Note 31 March 31 March 31 March 31 March
2006 2006 2005 2005
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 1,034 7
Tangible assets 87 71
________ ________
1,121 78
Current assets
Debtors 431 182
Cash at bank and in hand 1,775 6,991
________ ________
2,206 7,173
Creditors: amounts falling due
within one year (547) (441)
________ ________
Net current assets 1,659 6,732
________ ________
Total assets less current
liabilities 2,780 6,810
________ ________
Capital and reserves
Called up share capital 2,045 1,968
Share premium account 9,559 9,342
Warrant reserve 267 -
Merger reserve (286) (858)
Profit and loss account (8,805) (3,642)
________ ________
Shareholders' funds 2,780 6,810
________ ________
The financial statements were approved and authorised by the Board on 29 June
2006.
Adrian Moores
Director
Bright Things Plc
Consolidated cash flow statement for the year ended 31 March 2006
________________________________________________________________________________
Period from Period from
Year ended Year ended 1 January 1 January
2004 to 2004 to
31 March 31 March 31 March 31 March
Note 2006 2006 2005 2005
£'000 £'000 £'000 £'000
Net cash outflow from
operating activities 7 (5,375) (2,578)
Returns on investments
and servicing of finance
Interest received 184 74
________ ________
Net cash inflow from
returns on investment
and servicing
of finance 184 74
Capital expenditure and
financial investment
Purchase of tangible
fixed assets (58) (90)
Purchase of intangible
fixed assets (19) (428)
________ ________
Cash outflow from capital
expenditure
and financial investment (77) (518)
Acquisitions
Purchase of subsidiary
undertaking (273) -
Cash acquired with
subsidiary undertaking 10 -
________ ________
Cash outflow from
acquisitions (263) -
________ ________
Cash outflow before
management
of liquid resources and
financing (5,531) (3,022)
Management of liquid
resources
Increase in fixed term
deposits 6,250 (6,250)
Increase in blocked
deposits (500) -
________ ________
Net cash inflow/(outflow)
from management of liquid
resources 5,750 (6,250)
Financing
Net proceeds from issue
of new share capital - 9,694
Exercise of share options 315 316
________ ________
Net cash inflow from
financing 315 10,010
________ ________
Increase in cash in the
year 8 534 738
________ ________
Bright Things Plc
Notes forming part of the financial statements for the year ended 31 March 2006
________________________________________________________________________________
1 Accounting policies
Basis of preparation
The preliminary announcement has been prepared under the accounting policies
that applied to the financial statements for the period ended 31 March 2005
except for the implementation of FRS 21 Events after the balance sheet date, FRS
22 Earnings per share, FRS 28 Corresponding amounts and the presentational
requirements of FRS 25 Financial instruments (Disclosure and presentation). None
of these standards had any impact on the net assets of the group nor on its loss
for the current or prior year.
2 Segment information
Period from
Year ended 1 January 2004
31 March to 31 March
2006 2005
£'000 £'000
Turnover by activity:
Bubble hardware bundles 2,354-
Bubble software 753
Consultancy 3
________ ________
3,110 -
________ ________
Gross profit/(loss)
by activity:
Bubble hardware (321)
bundles
Bubble software 215
Consultancy 3
________ ________
(103) -
________ ________
All of the Group's turnover, profit and net assets relate to the Group's main
activities, which are principally in the United Kingdom.
SEGMENTAL INFORMATION ANALYSIS
Continuing Acquisitions Total
Operations
£'000 £'000 £'000
Turnover 3,107 3 3,110
Cost of sales (3,213) - (3,213)
___________ _____________ _____________
Gross profit/(loss) (106) 3 (103)
___________ _____________ _____________
Administartive
expenses 5,239 7 5,246
___________ _____________ _____________
Operating
profit/(loss) (5,345) (4) (5,349)
___________ _____________ _____________
3 Taxation on profit from ordinary activities
Period from
Year ended 1 January 2004
31 March to 31 March
2006 2005
£'000 £'000
Loss on ordinary activities before tax (5,165) (3,502)
________ ________
The differences are explained below:
Period from
Year ended 1 January 2004
31 March to 31 March
2006 2005
£'000 £'000
Loss on ordinary activities at the standard
rate of corporation tax in the UK of 30%
(2005 - 30%) (1,549) (1,051)
Effects of:
Unutilised losses carried forward 1,524 1,051
Capital allowances for the year in
deficit of depreciation 13 -
Expenses not deductible for tax purposes 12 -
________ ________
Current tax charge for year - -
________ ________
Deferred Tax
At 31 March 2006 the Group had £8.8 million (2005 - £3.6 million) carried
forward as losses, subject to the agreement of the Inland Revenue and US tax
authorities. After assessing the prospects for the 2007 financial year the board
has decided to not recognise any deferred tax asset as it is prudent to estimate
that no losses will be utilised in that period. The value of the unprovided
deferred tax asset is calculated at £2.58 million (2005 - £0.68 million).
4 Loss per share
Loss per share has been calculated using the following:
Loss Weighted Loss Weighted
average average
number of number of
shares shares
Period from Period from
1 January 1 January
Year ended Year ended 2004 to 2004 to
31 March 31 March 31 March 31 March
2006 2006 2005 2005
£'000 '000s £'000 '000s
Basic and diluted (5,165) 20,154 (3,502) 13,964
________ ________ ________ ________
Loss 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 20,154,033 (2005 - 13,963,607) and the
earnings, being loss after tax is £5,165,000 (2005 - £3,502,000). There are no
potentially dilutive shares in issue.
5 Dividends
No dividend is to be paid.
6 Acquisition of subsidiaries
On 28 June 2005 Bright Things Plc purchased 100% of PushPlay Interactive LLC
('PPI'). The consideration for the purchase totalled £1,112,000. This was
settled by the issue of 415,800 10p ordinary shares at £1.375 per share:
US$500,000 of cash and 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. The fair
value of the warrants has been calculated as £267,000 using the Black-Scholes
valuation method. The fair value of the warrants is determined under the
Black-Scholes valuation method which requires inputs of variables based on
managements' best estimates of future outcomes. The acquisition has been
accounted for in the consolidated accounts using the acquisition method of
accounting. Bright Things Plc has taken advantage of the merger relief
provisions under s.131 Companies Act 1985.
£'000
Equity - 415,800 ordinary shares 572
Cash 273
Fair value of warrants 790,541 ordinary shares 267
_______
Fair value of consideration 1,112
_______
Fair Value Adjustments
Book values on Accounting Revaluation Fair value Fair value
acquisition Policy adjustment
Alignment
US$000's US$000's US$000's US$000's £000's
Debtors 13 - - 13 7
Tangible assets 6 - - 6 4
Intangible assets -
Patents 90 - 260 350 192
NBV Start Up
costs 523 (523) - - -
--------- --------- ---------- -------- -------
Net assets
(non cash) 632 (523) 260 369 203
Bank balances 19 - - 19 10
--------- --------- ---------- -------- -------
Net assets 651 (523) 260 388 213
Fair value of
consideration 1,545 1,112
-------
Goodwill created
at acquisition 899
Fair value adjustments
All assets and liabilities have initially been recognised in the Group accounts
at their fair value. Fair value is defined as the amount at which an asset or
liability could be exchanged in an arm's length transaction between informed and
willing parties, other than in a forced or liquidation sale.
The following fair value adjustments were performed:
• Capitalised start up costs in PushPlay Interactive have been written
off. This represented a difference between US and UK GAAP.
• Patent applications have been valued at the total costs directly
attributable to developing the patented technology.
Pre acquisition results of PushPlay Interactive LLC
In the period 1 April 2005 to 28 June 2005 the results for PushPlay Interactive
LLC were as follows:
US$'000
Turnover 20
Administrative expenses (152)
_______
Retained loss (132)
_______
During the year a new 100% owned subsidiary was incorporated in the US named
Bright Things Inc. The results of this company have been included in the
consolidated accounts on the acquisition accounting basis.
There were no other recognised gains and losses relating to the acquisition.
7 Reconciliation of operating loss to net cash outflow from operating activities
Period from
1 January
Year ended 2004 to
31 March 31 March
2006 2005
£'000 £'000
Operating loss (5,349) (3,576)
Amortisation of
intangibles 83 730
Depreciation 46 20
Increase in debtors (239) (182)
Increase in creditors 84 430
________ ________
Net cash outflow from
operating activities (5,375) (2,578)
________ ________
All cash flows relate to continuing activities
8 Analysis of cash balances and liquid resources
At At
1 April Cash 31 March
2005 2006
£'000 £'000 £'000
Cash 741 534 1,275
Liquid resources 6,250 (5,750) 500
________ ________ ________
Total cash and liquid resources 6,991 (5,216) 1,775
________ ________ ________
9 Reconciliation of net cash flow to movement in net funds
Period from
1 January
Year ended 2004 to
31 March 31 March
2006 2005
£'000 £'000
Increase in cash in the period 534 738
Cash inflow/ (outflow) from increase/ (decrease) in
liquid resources (5,750) 6,250
________ ________
Movement in net funds during the period (5,216) 6,988
________ _______
Net funds at 1 April 2005 6,991 3
________ ________
Net funds at 31 March 2006 1,775 6,991
________ ________
10 Non statutory information
The financial information set out above does not constitute the Company's
statutory accounts within the meaning of s.240 of the Companies Act 1985 for the
year ended 31 March 2006 or the period ended 31 March 2005, but is derived from
those accounts. Statutory accounts for 2005 have been delivered to the Registrar
of Companies and those for 2006 will be delivered following the Company's annual
general meeting. The auditors have reported on those accounts; their reports
were unqualified and did not contain statements under the Companies Act 1985,
s.237(2) or (3).
The full annual report will be posted to shareholders on 30 June 2006. Copies of
this report are available from Bright Things plc, Building 3 - Chiswick Park,
566 Chiswick High Road, London, W4 5YA.
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 13th May 2024
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