Bright Station
News Announcement
BRIGHT STATION PLC REPORTS Q1 2000 RESULTS
London, England, 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).
(more)
<PAGE>
Bright Station Q1 2000 Results, 6/30/00 page 2
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 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.
(more)
<PAGE>
Bright Station Q1 2000 Results, 6/30/00 page 3
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:
o Stephen Hill, previously Managing Director and Vice President of EMEA
at Inktomi Corporation (NASDAQ:INKT), as CEO of the Smartlogik
knowledge management business, a core element of the Web Solutions
division.
o Jeff Meers and Adrian Jones as CEO and Managing Director respectively
of OfficeShopper.com. Both join Bright Station plc from International
Data Group (IDG), the leading global provider of IT media, research,
conferences and expositions. Jeff Meers was Worldwide President, IDG
Global Solutions, and Adrian Jones was Worldwide Senior Vice President.
o 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, 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.
(more)
<PAGE>
Bright Station Q1 2000 Results, 6/30/00 page 4
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.
For further information, please contact:
Dan Wagner, Chief Executive
David Mattey, Chief Financial Officer
Bright Station plc 020 7930 6900
[email protected]
John Olsen/Nick Lockwood
Hogarth Partnership (UK Investor Relations for Bright Station) 020 7357 9477
[email protected]
Robert Rinderman/David Collins
Jaffoni & Collins (US Investor Relations for Bright Station) 001 212 835 8500
[email protected]
(financial tables follow)
<PAGE>
Bright Station Q1 2000 Results, 6/30/00 page 5
Bright Station plc
Consolidated Profit And Loss Account (unaudited)
For the 3 months ended March 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
---------- ------------ ------------- ---------- ----------- -----------
2000 2000 2000 1999 1999 1999
---------- ------------ ------------- ---------- ----------- -----------
$'000 $'000 $'000 $'000 $'000 $'000
Turnover 2,377 61,189 63,566 1,987 66,091 68,078
Cost of sales (614) (27,336) (27,950) (359) (28,618) (28,977)
---------- ------------ ------------- ---------- ----------- -----------
Gross profit 1,763 33,853 35,616 1,628 37,473 39,101
Distribution costs (524) (9,117) (9,641) (39) (7,797) (7,836)
Administrative expenses (4,046) (18,170) (22,216) (3,575) (16,443) (20,018)
Amortisation of development
costs/goodwill (291) (4,300) (4,591) (242) (3,167) (3,409)
---------- ------------ ------------- ---------- ----------- -----------
Operating (loss)/profit (3,098) 2,266 (832) (2,228) 10,066 7,838
Exceptional item - Provision for loss on
disposal of ISD - (169,142) (169,142) - - -
---------- ------------ ------------- ---------- ----------- -----------
(Loss)/profit on ordinary activities
before interest (3,098) (166,876) (169,974) (2,228) 10,066 7,838
---------- ------------ ---------- -----------
Net interest payable (7,361) (7,161)
------------- -----------
(Loss)/profit on ordinary activities
before taxation (177,335) 677
Taxation on (loss)/profit on ordinary
activities (450) (76)
------------- -----------
(Loss)/profit on ordinary activities
after taxation (177,785) 601
Minority equity interests (34) 216
------------- -----------
Retained (loss)/profit (177,819) 817
------------- -----------
------------- -----------
(Loss)/earnings per ADS (cents) (458.7) 2.2
------------- -----------
------------- -----------
(Loss)/earnings per ADS excluding exceptional loss
(cents) (22.4) 2.2
------------- -----------
ADS's used in computing earnings per ADS (thousands)
38,765 37,885
</TABLE>
The financial results set forth above represent the company's financial results
under UK GAAP translated for convenience into US Dollars at the rate of
US$:(pound) 1.595 being the rate of exchange on March 31, 2000, the last trading
day of the period.
<PAGE>
Bright Station Q1 2000 Results, 6/30/00 page 6
Bright Station plc
Consolidated Balance Sheet (unaudited)
As at March 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C>
March 31 December 31
2000 1999
$'000 $'000
FIXED ASSETS
Intangible assets 42,176 43,113
Goodwill 13,313 15,639
Tangible assets 20,711 22,869
Investments 15,264 15,368
----------------- -----------------
91,464 96,989
----------------- -----------------
CURRENT ASSETS
Stocks 97 96
Debtors 66,588 58,521
Cash at bank and in hand 8,193 16,781
----------------- -----------------
74,878 75,398
CREDITORS (amounts falling
due within one year) (120,465) (114,161)
----------------- -----------------
NET CURRENT LIABILITIES (45,587) (38,763)
----------------- -----------------
TOTAL ASSETS LESS CURRENT LIABILITIES 45,877 58,226
CREDITORS (amounts falling due
after more than one year) (218,818) (219,105)
Provisions for liabilities and charges (2,070) (2,281)
----------------- -----------------
(175,011) (163,160)
----------------- -----------------
CAPITAL AND RESERVES
Called up share capital 2,477 2,471
Share premium account 247,765 247,144
Shares to be issued 322 1,542
Profit and loss account (426,485) (415,183)
----------------- -----------------
Ordinary shareholders' funds (175,921) (164,026)
Minority interest 910 866
----------------- -----------------
Total shareholders' funds (175,011) (163,160)
----------------- -----------------
</TABLE>
The financial results set forth above represent the company's financial results
under UK GAAP translated for convenience into US Dollars at the rate of
US$:(pound) 1.595 being the rate of exchange on March 31, 2000, the last trading
day of the period.
<PAGE>
Bright Station Q1 2000 Results, 6/30/00 page 7
Bright Station plc
Consolidated Cash Flow Statement (unaudited)
For the 3 months ended March 31, 2000
<TABLE>
<CAPTION>
2000 1999
$'000 $'000
<S> <C> <C>
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)
-------------- ------------
</TABLE>
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.
<PAGE>
Bright Station Q1 2000 Results, 6/30/00 page 8
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
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 $'000
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------------
ISD - 61,079 61,079 - 66,052 66,052
-------------------------------------------------------------------------------------------------------------------------
WSD 1,759 110 1,869 1,501 39 1,540
-------------------------------------------------------------------------------------------------------------------------
ECD 618 - 618 486 - 486
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Total revenues 2,377 61,189 63,566 1,987 66,091 68,078
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
The financial results set forth above represent the company's financial results
under UK GAAP translated for the convenience into US Dollars at the rate of
US$:(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.
