Interim Results

Bright Things plc 01 December 2006 BRIGHT THINGS PLC ('Bright Things' or 'the Group') Interim Results (unaudited) for the 6 months ended 30 September 2006 1 December 2006 Highlights â€¢ Operating loss reduced by 52% to Â£1.3 million (2005 - Â£2.7 million) â€¢ Basic Loss per share reduced by 52% to 6.3p (2005 - 13.0p) â€¢ Â£1.1 million fundraising (November 2006) to fund standalone Interactive DVD development â€¢ Lara Croft Tomb Raider - The Action Adventure Interactive DVD game launched in November 2006 â€¢ Worldwide licensing agreement signed with Radica Games Limited. Licence fee received as well as an up front payment against an initial order of ASIC chips. Dominic Wheatley, CEO of Bright Things, said: 'Bright Things has made progress in the first half of the year, we have signed our first licencing agreement with Radica Games that incorporates our ASIC chip and we have released our first standalone Interactive DVD Game - Lara Croft Tomb Raider. This is part of a continued effort to expand the licensing of our ASIC chip technology and concentrate on strategic relationships to licence DVD games content for development and publication next year. ' For further information please contact: Bright Things Plc 0870 351 7770 Dominic Wheatley, CEO Ady Moores, CFO Matthew Tims, Publishing Director Corporate Synergy Plc John Prior / David Seal 0207 448 4400 Brunswick Jonathan Glass / Mark Antelme 020 7404 5959 Bright Things Plc Chairman's Statement Introduction The Bright Things team has made progress in the period to 30 September 2006. The Directors have identified a number of ways of utilising the technologies developed to-date and skills learnt by our people in that process to focus the future direction of the business. Bubble Our distribution partner Bandai has continued in its sales and marketing efforts with the Bubble games console and interactive DVD software. Bandai has implemented price reductions to sell the stock of Bubble hardware and software that they purchased from Bright Things in the year ended 31 March 2006. We do not expect to receive any further orders from Bandai and we will consider any future activity at the end of the distribution agreement. Technologies The 'Application Specific Integrated Circuit' (ASIC) chip is a custom chip designed for the 'iDVD ASIC Platform'. The 'iDVD ASIC Platform' is a suite of technologies that enables full featured interactivity and game play experiences over traditionally static media delivery systems (DVD Players, Video on Demand 'VOD', etc). The Platform communicates with external media players (DVD Players) and media delivery devices (set-tops) and extends the feature set of the media format (DVD and VOD) with computer like hardware and software control of the content. Included in this suite of technologies is a mature and easy-to-use set of Development tools. Leveraging this suite of technologies, DVD and VOD publishers are able to provide users with an interactive experience similar to PC applications or CD-ROM environments, an interactive experience far superior than DVD or VOD alone. Radica agreement The Company has signed a worldwide licensing agreement with Radica Games Limited (NASDAQ: RADA) for its ASIC chips. The Company also received a licence fee for the software development kit as well as an up front payment against an initial order quantity of ASIC chips to be shipped in the first half of 2007. The agreement is the first licensing arrangement the Group has entered into for the technology and is part of a continued effort to expand the licensing of our iDVD ASIC Platform. Strong portfolio of protected intellectual property The Group now has over 20 US and international patent applications. The patent portfolio defensively tries to cover Bubble product and iDVD ASIC Platform, and offensively tries to cover alternative implementations of intelligent interactive DVD consoles. The patent applications cover core product, peripherals and additional categories. Recent fundraising On 13 November 2006 the Company allotted 10,000,000 new ordinary shares which were placed at 11p per ordinary share to raise Â£1,100,000 gross new funds. Interactive DVD games The Company entered into a licensing agreement with Eidos to develop and distribute an Interactive DVD game based around Lara Croft Tomb Raider. This game is the first action adventure style Interactive DVD to be released into the burgeoning Interactive DVD sector which is dominated by TV Quiz games. The game was released in the United Kingdom in early November 2006 and is available at most major retailers. Our TV campaign starts in early December. The game has also been launched in France, Germany, Italy and Australia and will be launched shortly in South Africa, Nordic territories, Middle Eastern territories, Portugal and Greece. Tomb Raider will be launched in the US in Q4 2007. We look forward to updating the market towards the end of January. The DVD games market is showing signs of continued growth and the company is now concentrating on strategic relationships to licence content for development and publication next year. Ian Livingstone Chairman 1 December 2006 Bright Things Plc Operational and financial review 6 months ended 30 September 2006 and future product portfolio Bright Things had no software or hardware product launches in the six month period to 30 September 2006. The Company signed a worldwide licensing agreement with Radica Games Limited (NASDAQ: RADA) for its ASIC chips. The Company received a licence fee for the software development kit and an up front payment against an initial order quantity of ASIC chips to be shipped in early 2007. The revenue from the software development kit has been spread over the first 12 month period to which it relates. The up front payment for the ASIC chips has been treated as a payment in advance and in included in creditors in the balance sheet. On 6 November 2006 'Lara Croft Tomb Raider - The Action Adventure' was released in the United Kingdom. Further revenue streams The strength of the Group's Patent and Intellectual Property portfolio combined with the continuing growth of the Interactive DVD industry is 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. Turnover, Cost of sales and Gross Profit Turnover, Cost of sales and Gross Profit for the period consist of sales of component stock that was written off in the financial year ended 31 March 2006. It also includes two months of revenue from the sale of our software development kit sold to Radica. These total Â£20,000 for the period. Administrative expenses Administrative expenses for the six months ended 30 September 2006 are the main component of the loss on ordinary activities during the period. Administrative expenses are in line with expectation and are analysed into two categories: Research & development expenditure and impairment of licences - Â£622,000 (2005 - Â£1,461,000) Research and development expenditure and impairment of licence fees in the 6 month period included Â£81,000 spent on the iDVD ASIC platform; Â£128,000 was spent on completing Bubble software titles that have yet to be released and Â£413,000 on all costs relating to the licensing and development of Lara Croft Tomb Raider - The Action Adventure (turnover for this title will be included in the year ended 31 March 2007). General & administrative expenditure - Â£822,000 (2005 - Â£1,185,000) The main component of general and administrative expenditure relates to human resource costs, totalling Â£366,000 (2005 - Â£504,000) for the period. A reduction in head count has taken place during the period. At 30 September 2006 - 8 heads (2005 - 21 heads). An average of 11 heads for the six months ended 30 September 2006 (2005 - 14). Office and administration costs reduced to Â£116,000 (2005 - Â£178,000) for the period, the largest component of which was office rent of Â£83,000 (2005 - Â£98,000). Travel and subsistence costs reduced to Â£68,000 (2005 - Â£124,000). Marketing costs reduced to Â£46,000 (2005 - Â£118,000) in the period. These costs primarily relate to retained agencies and consultants. Legal and professional fees relating to the portfolio of patent applications reduced to Â£21,000 (2005 - Â£78,000) for the period. Adoption of FRS20 - Share based payment These unaudited results for the 6 month period ended 30 September 2006 have been prepared on a consistent basis and using the same accounting policies as those adopted in the financial statements for the year ended 31 March 2006, except that the Company has adopted FRS20 - Share Based Payment and the results for the year ended 31 March 2006 and 6 month period ended 30 September 2005 have been restated to reflect the share option charge. As a result of adopting FRS20 - Share Based Payment, a prior year adjustment has been processed that increased the recognised loss since the last financial statements by Â£336,000. The loss after tax for the 6 month period ended 30 September 2006 has been reduced by Â£111,000. This has the cumulative effect of reducing the FRS20 adjustment included in the profit and loss account reserve on the balance sheet to Â£211,000 and the FRS20 adjustment included in the share premium account on the balance sheet to Â£14,000. Loss after tax for the 6 month period ended 30 September 2005 has been increased by Â£54,000 and loss after tax for the year ended 31 March 2006 has been increased by Â£9,000. Loss per share Basic loss per share of 6.3p (2005 loss of 13p) has decreased due to the scaling back of the companies research and development activities and general overhead. Net assets Net assets have decreased to Â£1,396,000 as at 30 September 2006 from Â£2,780,000 at 31 March 2006. This is due to the operating loss for the period and FRS20 adjustment. Cash at bank at 30 September 2006 is Â£765,000. This comprises Â£653,000 held in a Special Interest Bearing Account (SIBA) and the remainder of the funds held in current accounts. On 13 November 2006 the Company allotted 10,000,000 new ordinary shares which were placed at 11p per ordinary share to raise Â£1,100,000 of gross new funds. The Directors' continue to assess the appropriate application of these funds. Adrian Moores Finance Director 1 December 2006 Bright Things Plc Consolidated profit and loss account for the period ended 30 September 2006 (restated) (restated) 6 months ended 6 months ended 12 months to 31 30 September 30 September March 2006 2005 2006 Note (unaudited) (unaudited) (unaudited) Â£'000 Â£'000 Â£'000 Turnover - acquisitions - - 3 Turnover - continuing operations 20 674 3,107 Turnover 20 674 3,110 Cost of sales - (685) (3,213) _______ _______ _______ Gross profit/(loss) 20 (11) (103) Research and development costs (622) (1,461) (2,708) Other administrative expenses (822) (1,185) (2,538) Adjustment in respect of share options 111 (54) (9) Administrative expenses (1,333) (2,700) (5,255) _______ _______ _______ Operating loss - acquisitions - (4) (4) Operating loss - continuing operations (1,313) (2,707) (5,354) Operating loss (1,313) (2,711) (5,358) Interest receivable 28 128 184 _______ _______ _______ Loss on ordinary activities before and after taxation (1,285) (2,583) (5,174) _______ _______ _______ Basic and diluted loss per share 5 (6.3p) (13.0)p (25.7)p _______ _______ _______ All amounts relate to continuing activities. Bright Things Plc Statement of total recognised gains and losses for the period ended 30 September 2006 (restated) (restated) 6 months ended 6 months ended 12 months to 31 30 September 30 September March 2006 2005 2006 Note (unaudited) (unaudited) (unaudited) Â£'000 Â£'000 Â£'000 Loss for the period and total recognised gains and losses for the period (1,285) (2,583) (5,174) Prior Year adjustment 2 (336) _______ Total gains and losses since last financial statements (1,621) _______ Bright Things Plc Consolidated balance sheet at 30 September 2006 (restated) (restated) 30 September 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (unaudited) Note Â£'000 Â£'000 Â£'000 Fixed assets Intangible assets 6 978 1,079 1,034 Tangible assets 61 100 87 _______ _______ _______ 1,039 1,179 1,121 _______ _______ _______ Current assets Stock - 543 - Debtors 77 679 431 Cash at bank and in hand 765 3,960 1,775 _______ _______ _______ 842 5,182 2,206 Creditors: amounts falling due within one year (497) (1,262) (547) _______ _______ _______ Net current assets 345 3,920 1,659 _______ _______ _______ Total assets less current liabilities 1,384 5,099 2,780 _______ _______ _______ Capital & Reserves Called up share capital 7 2,045 2,010 2,045 Share premium 8 9,573 9,966 9,573 Warrant reserve 8 267 267 267 Merger reserve 8 (286) (858) (286) Profit and loss account 8 (10,215) (6,286) (8,819) _______ _______ _______ Equity shareholders' funds 9 1,384 5,099 2,780 _______ _______ _______ The interim unaudited balance sheet was approved and authorised for issue by the Board of Directors on 30 November 2006. Adrian Moores Director Bright Things Plc Consolidated cash flow statement for the period ended 30 September 2006 6 months ended 6 months ended 12 months to 31 30 September 30 September March Note 2006 2005 2006 (unaudited) (unaudited) (unaudited) Â£'000 Â£'000 Â£'000 Net cash outflow from operating activities 10 (1,038) (2,820) (5,375) _______ _______ _______ Returns on investments and servicing of finance Interest received 28 128 184 _______ _______ _______ Net cash inflow from returns on investments and servicing of finance 28 128 184 Capital expenditure and financial Investment Purchase of tangible fixed assets - (45) (58) Purchase of intangible fixed assets - - (19) _______ _______ _______ Cash outflow from capital expenditure and financial investment - (45) (77) Acquisitions Purchase of subsidiary undertaking - (273) (273) Cash acquired with subsidiary undertaking - 10 10 Acquisition expenses - (31) - _______ _______ _______ Cash Outflow from acquisitions - (294) (263) Cash outflow before management of liquid resources and financing (1,010) (3,031) (5,531) Management of liquid resources Decrease in fixed term deposits 11 - 6,250 6,250 Decrease/(increase) in blocked deposits 11 500 (500) (500) _______ _______ _______ Decrease/(Increase) of liquid resources 500 5,750 5,750 Financing Exercise of share options - - 315 _______ _______ _______ (Decrease)/Increase in cash 11 (510) 2,719 534 _______ _______ _______ 1 Accounting Policies The unaudited results for the 6 month period ended 30 September 2006 have been prepared on a consistent basis and using the same accounting policies as those adopted in the financial statements for the year ended 31 March 2006, except that the Company has adopted FRS20 - Share Based Payment and the results for the year ended 31 March 2006 and 6 month period ended 30 September 2005 have been restated. 2 Adoption of FRS20 - Share based payment As a result of adopting FRS20 - Share Based Payment, a prior year adjustment has been processed that increased the recognised loss since the last financial statements by Â£336,000. The loss after tax for the 6 month period ended 30 September 2006 has been reduced by Â£111,000. This has the cumulative effect of reducing the FRS20 adjustment included in the profit and loss account reserve on the balance sheet to Â£211,000 and the FRS20 adjustment included in the share premium account on the balance sheet to Â£14,000. Loss after tax for the 6 month period ended 30 September 2005 has been increased by Â£54,000 and loss after tax for the year ended 31 March 2006 has been increased by Â£9,000. 3 Non-statutory accounts This statement does not comprise statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year to 31 March 2006 is a restated extract from the latest consolidated financial statements. The accounts received an unqualified auditor's report and have been filed with the Registrar of Companies however they have been restated for the adjustment described in note 2 which has not been audited. The results for the half year to 30 September 2006 and 30 September 2005 are unaudited. 4 Segmental information Turnover by business activity: 6 months ended 6 months ended 12 months to 31 30 September 30 September March 2006 2005 2006 (unaudited) (unaudited) (unaudited) ASIC - Software development kit 9 - - Sales of component parts from stock 11 - - Standalone Interactive DVD software - - - Bubble hardware bundles - 522 2,354 Bubble software - 149 753 Consultancy - 3 3 _______ _______ _______ Turnover 20 674 3,110 _______ _______ _______ 5 Loss per share Basic loss per share is calculated as follows (the effect of all potential ordinary shares is antidilutive): (restated) (restated) 6 months ended 6 months ended 12 months to 31 30 September 30 September March 2006 2005 2006 (unaudited) (unaudited) (unaudited) Loss after taxation for the period Â£1,285,000 Â£2,583,000 Â£5,174,000 Weighted average number of shares 20,450,078 19,900,130 20,154,033 _______ _______ _______ Basic and diluted loss per share 6.3p 13.0p 25.7p _______ _______ _______ 6 Intangible assets Goodwill on Intellectual Total consolidation property Â£'000 Â£'000 Â£'000 Cost At 1 April 2006 899 221 1,120 Additions - - - Acquired with subsidiary - - - _______ _______ _______ At 30 September 2006 899 221 1,120 _______ _______ _______ Amortisation At 1 April 2006 67 19 86 Provision for period 45 11 56 _______ _______ _______ At 30 September 2006 112 30 142 _______ _______ _______ Net book value At 30 September 2006 787 191 978 _______ _______ _______ At 31 March 2006 832 202 1,034 _______ _______ _______ 7 Share capital Authorised 30 September 31 March 30 September 31 March 2006 2006 2006 2006 Number Number Â£'000 Â£'000 Ordinary shares of 10p each 50,000,000 50,000,000 5,000 5,000 __________ __________ ________ ________ Allotted, called up and fully paid 30 September 31 March 30 September 31 March 2006 2006 2006 2006 Number Number Â£'000 Â£'000 Ordinary shares of 10p each 20,450,078 20,450,078 2,045 2,045 __________ __________ ________ ________ 8 Reserves Share premium Warrant reserve Merger Profit and account reserve loss account Â£'000 Â£'000 Â£'000 Â£'000 At 1 April 2006 9,559 267 (286) (8,805) FRS20 adjustment 14 - - (14) ______ ______ _______ _______ At 1 April 2006 - restated 9,573 267 (286) (8,819) Loss for the period - - - (1,285) FRS20 adjustment - - - (111) ______ ______ _______ _______ At 30 September 2006 9,573 267 (286) (10,215) ______ ______ _______ _______ 9 Reconciliation of movements in shareholders' funds (restated) (restated) 30 September 30 September 31 March (unaudited) (unaudited) (unaudited) 2006 2005 2006 Â£'000 Â£'000 Â£'000 Loss for the period (1,285) (2,583) (5,174) ________ ________ ________ Movement in FRS20 share option (credit)/charge (111) 54 9 Exercise of share options - - 315 Shares issued as consideration in acquisition of PushPlay Interactive LLC (PPI) (see note 3) - 551 551 Fair valuation of warrants issued as consideration in acquisition of PPI (refer to note 3) - 267 267 Unrealised FX gain on translation of foreign Subsidiaries - - 2 ________ ________ ________ (1,396) (1,711) (4,030) Opening shareholders' funds 2,780 6,810 6,810 ________ ________ ________ Closing shareholders' funds 1,384 5,099 2,780 ________ ________ ________ 10 Reconciliation of operating loss to net cash outflow from operating activities (restated) (restated) 6 months ended 6 months ended 12 months to 31 30 September 30 September March 2006 2005 2006 (unaudited) (unaudited) (unaudited) Â£'000 Â£'000 Â£'000 Operating loss (1,313) (2,711) (5,358) Depreciation/amortisation 82 60 129 Share option adjustment (111) 54 9 Decrease/(increase) in debtors 354 (490) (239) (Decrease)/increase in creditors (50) 810 84 Increase in stock - (543) - _______ _______ _______ Net cash outflow from operating Activities (1,038) (2,820) (5,375) _______ _______ _______ All cash flows relate to continuing activities. 11 Analysis of net funds At 1 April 2006 Cash At 30 Sep 2006 Â£'000 Â£'000 Â£'000 Cash 1,275 (510) 765 Liquid resources 500 (500) - _______ _______ _______ Total cash and liquid resources 1,775 (1,010) 765 _______ _______ _______ The interim report and financial statements will be posted to shareholders on 1 December 2006. The report is also available at 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

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