Bright Station plc Reports Q1 2000 Results.Business Editors LONDON--(BUSINESS WIRE)--June 30, 2000 Bright Station plc (LSE:BSN, NASDAQ:BSTN) (http://www.brightstation.com) today announced financial results for the three-month period ended March 31, 2000. Overview The first quarter of 2000 was a period of fundamental change for the Company, involving the final stages of negotiations for the sale of the Information Services business (ISD) to the Thomson Corporation (TSE:TOC) and the announcement of the creation of Bright Station plc. While encouraging progress was made in a number of areas of the continuing businesses, the first quarter results reflect management's focus on the disposal of ISD and the fact that the capital for investing in Bright Station's continuing businesses was not available until after the disposal was completed in May 2000. The proceeds from the sale, together with the associated $44 million of new equity investment by Thomson and JIYU Holdings, have eliminated all of the Company's debt and provide the financial resources to enable Bright Station to capitalize on its technology assets and to develop its eCommerce solutions business. Since the disposal, excellent progress has been made across the continuing businesses, including the appointment of a number of highly experienced executives to key management posts, the securing of important new contracts, the acquisition of the key technology assets of boo.com and the hiring of many of boo.com's top programming talent, and the detailed formulation of future business development strategies for the continuing businesses, designed to drive revenue growth from the second half of 2000 onwards. Group financial review Turnover from the continuing businesses in the first quarter increased modestly to $2.4m, compared to $2.0m in Q1 1999. Operating losses from continuing businesses were $3.1m (Q1 1999: $2.2m), reflecting a build up of sales and marketing capability put into place in the second half of 1999. Revenues from the discontinuing ISD were $61.1m (Q1 1999: $66.1m), and operating profit was $2.3m (Q1 1999: $10.1m). Operations review of continuing businesses Following completion of the sale of ISD, the Company now comprises three Divisions, the Web Solutions Division, the eCommerce Division, and the Internet Ventures Division. Web Solutions Division (WSD WSD - Wafers Started per Day WSD - Wage and Salary Department WSD - Warfare Systems Directorate WSD - Warranty Start Date (legal) WSD - Washington School for the Deaf WSD - Water Supplies Department (Hong Kong) WSD - Wear Scar Diameter WSD - Weblogic Service Delivery WSD - Weight Set Decomposition (algorithm) WSD - Wind Speed, Direction WSD - Winsock Direct (Microsoft) WSD - Wisconsin School for the Deaf WSD - Women's Specific Design (bicycles)) WSD is focused on the proprietary InfoSort content indexing technology, Muscat natural language search technology, WebTop/WebCheck concept-based search tool and Smartlogik, the knowledge management suite of solutions. Revenues for the first quarter increased to $1.8m (Q1 1999: $1.5m). Since the creation of Bright Station, a number of prominent and valuable contracts have been won by Smartlogik. Most notably, its knowledge management solutions have been selected by BAA plc for deployment across 5,500 employees' desktops throughout its global intranet, and by Yellow Pages (a subsidiary of BT plc) for use in its online service yell.com as the core search and structure technology. In addition, WebTop.com, the Company's intelligent search engine, has announced that it has successfully indexed over 500 million documents on the Web, making it one of only four search engines that have nearly 30% of the Web indexed. WebTop.com has also formed a strategic partnership with Netscape to provide sophisticated, multi-lingual Web searching to users of their leading Web browser in the Netherlands. eCommerce Division (ECD) ECD contains the B2B OfficeShopper Internet procurement business, and the Sparza B2B eCommerce licensing technologies. Revenues for the first quarter increased to $0.6m (Q1 1999: $0.5m). Since the creation of Bright Station, ECD's offering has been significantly enhanced as a result of the acquisition of the key technology assets of boo.com, the online fashion retailer. At a fraction of the development price, the Company acquired a highly sophisticated, fully functional, multi-language and multi-currency eCommerce solution which will be licensed to third parties seeking to create or enhance their own e-tail offerings. In the weeks since the acquisition, numerous third parties have contacted Bright Station regarding the Company's B2C solutions. As well as securing the technology assets, Bright Station was also able to secure the services of around 40 of boo.com's key programmers, who will be instrumental in delivering the technology in a tailored form to future licensees. Internet Ventures Division (IVD) IVD is a new division, constituted since the quarter end, whose function is to nurture, and invest in, promising high technology and Internet start-up businesses leveraging the Company's technology assets and expertise. Its management team, supported by a strong advisory panel, is actively investigating such opportunities. Experienced management team additions Since the quarter end, a number of significant new management appointments have been made at an operational level. These appointments include: - Bassam Debs, Chairman, Jiyu Holdings - Matthew Freud, Founder, Freud Communications; Non-exec. director, Oxygen Holdings - Robert Lomnitz as the first Chief Executive of the newly-founded Internet Ventures Division (IVD). Robert Lomnitz was previously Director of Internet Investments at Baltic Asset Management. These appointments greatly strengthen the management capability across Bright Station, and represent an important element in the strategy of creating a platform from which the full potential of the Company's technology assets can be leveraged. In addition, a highly experienced 13-strong advisory panel has been formed to assist the IVD in evaluating the internet investment climate, sharing ideas and experiences and identifying co-operative investment and development opportunities. The external members of the panel are: - Bassam Debs, Chairman, Jiyu Holdings - Matthew Freud, Founder, Freud Communications; Non-exec. director, Oxygen Holdings - Julie Meyer, Founder, First Tuesday - Charlie Muirhead, Founder, Orchestream; Founder, iGabriel - Simon Murdoch, Co-founding Partner, Chase Episode 1 - Eva Pascoe, Founder and Managing Director, Zoom; Founder Cyberia Cafes - Ivan Pope, Chairman and acting CEO, Pregenesis; Founder, NetNames - Dr. Allyson Reed, Director, Business Development and Marketing, Central Laboratory of the Research Councils As a result of the sale of ISD, a number of executive Directors most closely associated with that business (Patrick Sommers, Jason Molle MOLLE - Modular Lightweight Load-carrying Equipment, Ciaran Morton and Stephen Maller) joined Thomson on completion of the transaction. Patrick Sommers has however remained as a non-executive Director of Bright Station. As a consequence the Company now operates with a smaller Board, comprised of two executive Directors and five non-executive Directors. Disposal of Information Services Division ("ISD") & new equity investment In order to remove the constraints imposed on the Company by the prevailing debt structure, management and the Board decided to dispose of the ISD to Thomson for $275m, a proposal that was overwhelmingly approved by shareholders at an EGM on April 27, 2000. The sale was completed on May 4th. Pursuant to the transaction, Thomson and JIYU Holdings were allotted New Ordinary Shares in Bright Station at a price of 170.5 pence per share ($10.88 per ADS). These subscriptions provide (pound)27.9 million ($44.0mn) of new equity investment in the Company, and result in Thomson and JIYU holding 5.4% and 4.1% respectively of the enlarged issued share capital. Outlook With the sale of ISD completed, a debt-free balance sheet and in excess of $46 million of cash available to invest in growing the Company's continuing businesses, Bright Station has an excellent platform from which to grow. Already, since the close of the first quarter, the Company has demonstrated the strong competitive positioning of its technologies, its ability to identify and convert opportunities to further enhance its technology portfolio, and its ability to recruit top quality personnel to manage the businesses within its portfolio going forward. As indicated in previous announcements, the Board anticipates that the actions taken will deliver strong revenue growth from the second half of 2000, but also that increased levels of investment aimed at driving this growth will result in negative earnings for the year as a whole. Overall, the Board believes that the Company has made a highly encouraging start in its new form, and that it is in a strong position to deliver the growth in value that shareholders rightly expect.
Bright Station plc
Consolidated Profit And Loss Account (unaudited)
For the 3 months ended March 31, 2000
Continuing Discontinued
operations operations Total
----------- ------------ ------------
2000 2000 2000
----------- ------------ ------------
$'000 $'000 $'000
Turnover 2,377 61,189 63,566
Cost of sales (614) (27,336) (27,950)
----------- ------------ ------------
Gross profit 1,763 33,853 35,616
Distribution costs (524) (9,117) (9,641)
Administrative expenses (4,046) (18,170) (22,216)
Amortisation of development
costs/goodwill (291) (4,300) (4,591)
----------- ------------ ------------
Operating (loss)/profit (3,098) 2,266 (832)
Exceptional item - Provision
for loss on disposal of ISD - (169,142) (169,142)
----------- ------------ ------------
(Loss)/profit on ordinary
activities before interest (3,098) (166,876) (169,974)
=========== ============
Net interest payable (7,361)
------------
(Loss)/profit on ordinary
activities before taxation (177,335)
Taxation on (loss)/profit on
ordinary activities (450)
------------
(Loss)/profit on ordinary
activities after taxation (177,785)
Minority equity interests (34)
------------
Retained (loss)/profit (177,819)
============
------------
(Loss)/earnings per ADS (cents) (458.7)
------------
------------
(Loss)/earnings per ADS excluding
exceptional loss (cents) (22.4)
------------
ADS's used in computing earnings
per ADS (thousands) 38,765
The financial results set forth above represent the company's
financial results under UK GAAP translated for convenience into US
Dollars at the rate of US$:(pound) 1.595 being the rate of exchange on
March 31, 2000, the last trading day of the period.
Bright Station plc
Consolidated Profit And Loss Account (unaudited)
For the 3 months ended March 31, 2000
Continuing Discontinued
operations operations Total
----------- ------------ ------------
1999 1999 1999
----------- ------------ ------------
$'000 $'000 $'000
Turnover 1,987 66,091 68,078
Cost of sales (359) (28,618) (28,977)
----------- ------------ ------------
Gross profit 1,628 37,473 39,101
Distribution costs (39) (7,797) (7,836)
Administrative expenses (3,575) (16,443) (20,018)
Amortisation of development
costs/goodwill (242) (3,167) (3,409)
----------- ------------ ------------
Operating (loss)/profit (2,228) 10,066 7,838
Exceptional item - Provision
for loss on disposal of ISD - - -
----------- ------------ ------------
(Loss)/profit on ordinary
activities before interest (2,228) 10,066 7,838
=========== ============
Net interest payable (7,161)
------------
(Loss)/profit on ordinary
activities before taxation 677
Taxation on (loss)/profit on
ordinary activities (76)
------------
(Loss)/profit on ordinary
activities after taxation 601
Minority equity interests 216
------------
Retained (loss)/profit 817
============
------------
(Loss)/earnings per ADS (cents) 2.2
------------
------------
(Loss)/earnings per ADS excluding
exceptional loss (cents) 2.2
------------
ADS's used in computing earnings
per ADS (thousands) 37,885
The financial results set forth above represent the company's
financial results under UK GAAP translated for convenience into US
Dollars at the rate of US$:(pound) 1.595 being the rate of exchange on
March 31, 2000, the last trading day of the period.
Bright Station plc
Consolidated Balance Sheet (unaudited)
As at March 31, 2000
March 31 December 31
2000 1999
$'000 $'000
FIXED ASSETS
Intangible assets 42,176 43,113
Goodwill 13,313 15,639
Tangible assets 20,711 22,869
Investments 15,264 15,368
----------- -----------
91,464 96,989
----------- -----------
CURRENT ASSETS
Stocks 97 96
Debtors 66,588 58,521
Cash at bank and in hand 8,193 16,781
----------- -----------
74,878 75,398
CREDITORS (amounts falling
due within one year) (120,465) (114,161)
----------- -----------
NET CURRENT LIABILITIES (45,587) (38,763)
----------- -----------
TOTAL ASSETS LESS CURRENT LIABILITIES 45,877 58,226
CREDITORS (amounts falling due
after more than one year) (218,818) (219,105)
Provisions for liabilities and charges (2,070) (2,281)
----------- -----------
(175,011) (163,160)
----------- -----------
CAPITAL AND RESERVES
Called up share capital 2,477 2,471
Share premium account 247,765 247,144
Shares to be issued 322 1,542
Profit and loss account (426,485) (415,183)
----------- -----------
Ordinary shareholders' funds (175,921) (164,026)
Minority interest 910 866
----------- -----------
Total shareholders' funds (175,011) (163,160)
----------- -----------
The financial results set forth above represent the company's
financial results under UK GAAP translated for convenience into US
Dollars at the rate of US$:(pound) 1.595 being the rate of exchange on
March 31, 2000, the last trading day of the period.
Bright Station plc
Consolidated Cash Flow Statement (unaudited)
For the 3 months ended March 31, 2000
2000 1999
$'000 $'000
NET CASH INFLOW/(OUTFLOW) FROM
OPERATING ACTIVITIES 4,418 (4,090)
-------- --------
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received 102 14
Interest paid on bank loans and overdrafts (2,348) (3,270)
Interest paid on finance leases (8) (8)
-------- --------
(2,254) (3,264)
-------- --------
TAXATION PAID (191) (252)
-------- --------
CAPITAL EXPENDITURE
Payments to develop intangible assets (3,203) (5,511)
Payments to acquire tangible fixed assets (565) (2,260)
Receipts from sales of tangible fixed assets - 94
-------- --------
(3,768) (7,677)
-------- --------
ACQUISITIONS AND DISPOSALS
Purchase of share in joint venture - (777)
CASH OUTFLOW BEFORE THE USE OF
LIQUID RESOURCES AND FINANCING (1,795) (16,060)
-------- --------
FINANCING
Net proceeds on issue of
Ordinary share capital 182 -
Expenses on issue of Ordinary Share Capital (48) -
Debt due within one year
- Increase in borrowings - 18,706
- Repayment of loans (5,903) (434)
Repayment of capital element of
finance leases (1,024) (203)
-------- --------
(6,793) 18,069
-------- --------
(DECREASE)/INCREASE IN CASH (8,588) 2,009
======== ========
RECONCILIATION OF NET CASH FLOW
TO MOVEMENT IN NET DEBT
(Decrease)/increase in cash in the period (8,588) 2,009
Cash used to decrease lease financing 1,024 203
Cash acquired from issue of debt
(net of expenses) - (18,706)
Cash used to repay loans 5,903 434
-------- --------
Change in net debt from cash flows (1,661) (16,060)
Other non-cash changes (397) (389)
New finance leases - (1,577)
Effect of foreign exchange rate changes 829 (7,506)
-------- --------
Movement in net debt in period (1,229) (25,532)
Net debt at beginning of period (245,831) (229,994)
-------- --------
Net debt at end of period (247,060) (255,526)
======== ========
The financial results set forth above represent the company's
financial results under UK GAAP translated for convenience into US
Dollars at the rate of US$:(pound) 1.595 being the rate of exchange on
March 31, 2000, the last trading day of the period.
----------------------------------------------------------------------
Bright Station plc
Analysis of Revenues
For the 3 months ended March 31, 2000 (unaudited)
----------------------------------------------------------------------
2000 1999
----------------------------------------------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
$'000 $'000 $'000 $'000 $'000 $'000
----------------------------------------------------------------------
----------------------------------------------------------------------
ISD - 61,079 61,079 - 66,052 66,052
----------------------------------------------------------------------
WSD 1,759 110 1,869 1,501 39 1,540
----------------------------------------------------------------------
ECD 618 - 618 486 - 486
----------------------------------------------------------------------
----------------------------------------------------------------------
Total
revenues 2,377 61,189 63,566 1,987 66,091 68,078
---------=============================================================
The financial results set forth above represent the company's
financial results under UK GAAP translated for convenience into US
Dollars at the rate of US$:(pound) 1.595 being the rate of exchange on
March 31, 2000, the last trading day of the period.
These results are unaudited and do not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985. The
financial statements for the year ended December 31, 1999 have not
been audited by the Company's auditors, PricewaterhouseCoopers. The
financial statements for the year ended December 31, 1998 have been
reported on by PricewaterhouseCoopers and delivered to the Registrar
of Companies. The audit report was not qualified and neither did it
contain any statements under Section 237 (2) or (3) of the Companies
Act 1985. The unaudited results for the three months ended March 31,
2000 have been prepared in accordance with the accounting policies
stated in the 1998 Annual Report and Accounts.
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