Final Results
Brainspark PLC
29 June 2007
FOR IMMEDIATE RELEASE 29 June 2007
BRAINSPARK PLC
('BRAINSPARK' OR THE 'COMPANY')
ANNUAL AUDITED RESULTS ANNNOUNCEMENT
FOR THE YEAR TO DECEMBER 2006
CHAIRMAN'S STATEMENT
I am pleased to present the Company report for the year ended 31 December 2006.
The results show a profit of £18,000 compared to a loss of £151,000 for the
financial year to 31 December 2005. The result is due to the combination of
reduction in running costs of the Company, profit from sales of assets and
increase in profit from associates.
These results are presented in accordance with IFRS.
We hope that the result represents a turnaround for the Group. This is the first
profitable year since going public in 2000 and confirms that the strategy
implemented by the Board so far is heading in the right direction.
Company background
Brainspark's core business is identifying early stage investment opportunities
and to monitor, manage and facilitate a profitable exit strategy.
Since I become Chairman of Brainspark in early 2002, we have concentrated on
mainly managing our existing portfolio, reducing costs and securing funding for
the company. During 2006 we were again in a position to make new investments,
whilst exiting with a profit from sales of existing portfolio companies. This
has allowed us to make recent new investments in China.
New Investments
The first investment made during 2006 was Polarizonics, a US company which has
developed a new method of potentially increasing the data storage capacity and
read-rate of both red and blue laser DVDs by up to three times. This is
described as Polar High-definition DVD (PH-DVD) Technology. This technology
exploits the polarization element contained in all current DVD formats not being
used for the physical encoding of the information on the disc to significantly
increase both the speed and capacity of DVDs. Applications have been made for
patents in respect of this technology.
The second investment was in Mediapolis SpA and was a second stage round of
funding in the largest planned amusement park in the North of Italy. Although it
is substantially different from the historic Brainspark technology investments,
namely in a real estate development, this project is very familiar to one of the
directors of the Company. This director is also an investor alongside
Brainspark, which gives access to the network of relationships associated with
this investment.
On 31 July 2006 Brainspark participated in the £250,000 new financing round in
Metapack Ltd. Metapack is the leading UK provider of delivery software for
multi-Channel home delivery. Investors in this round included existing
investors, Cross Atlantic Capital Partners, Brainspark as well as existing
management and Directors of the company. Brainspark held 10.72% of the company
following the funding round.
Exits
On 6th July 2006 Brainspark completed the disposal Kerb Limited and its entire
holding of 30,167 1p ordinary shares, which represented 25% of the issued share
capital of the company, for a cash consideration of £205,000. Kerb reported
revenues for the year ended February 2006 of approximately £600,000 with pre-tax
profits of around £13,000. The holding was purchased by the company.Brainspark's
book value of Kerb was £79,000. This resulted in a profit of £126,000
On 8 August 2005, Brainspark granted a call option to Exprivia SpA (formerly
AiSoftw@re SpA) over the entire issued share capital of Brainspark's wholly
owned subsidiary, Infusion 2002 Limited which in turn held a 16.21% investment
in Advanced Computer Systems SpA ('ACS'), an Italian Company. This option
originally expired on 31 July 2006 but this was extended to 31 October 2006.
Brainspark received a £300,000 non-refundable deposit which was settled by a
tri-partite intercompany settlement arrangement between GeoSim, Brainspark and
Exprivia.
During the option extension period, for which Brainspark received £25,000, by
way of an inter-company settlement agreement, management were in discussions
with Exprivia, as a result of which Infusion 2002 Limited sold 197,233 shares in
ACS to Exprivia, representing a 7.68% interest for a consideration of
US$1,000,000, and the £300,000 non-refundable deposit. This gave rise to a gain
on disposal of £174,000. The US$1,000,000 consideration has been satisfied by
transferring a secured commercial debt in Geosim from Exprivia to Brainspark.
Brainspark continues to hold 8.52% of ACS.
Summary Financial Results
The Group's cash reserves at 31 December 2006 stood at £410,000 compared with
£446,000 at 31 December 2005. The Group's net asset value (NAV) was £3.51
million at 31 December 2006, compared with £3.46 million at 31 December 2005.
Transition to IFRS
The results and net equity are represented in accordance with IFRS. For
Brainspark this requirement would have become compulsory for our Interim Report
to 30 June 2007. We have adopted IFRS earlier than required. All full
reconciliation of the net equity and loss for the year ended 31 December 2005 as
presented previously under UK GAAP and now under IFRS is given in note 24 to
these financial statements.
The principal effect of this implementation has been to carry our investments in
associates at cost adjusted for our share of profits less any impairment
charges. This has resulted in the partial reversal of previous goodwill
amortisation charges, and share of losses resulting in a net improvement in
their carrying value and consequently in net assets of £987,000.
The biggest component of this has been the revision in the carrying value of
GeoSim, our largest portfolio company. As part of the IFRS transitional
arrangements we reviewed the carrying value at 31 December 2004 and each
subsequent year thereafter testing for impairment each time.
Market Environment
The market environment in the IT sector has shown signs of growth and some of
our existing portfolio companies are finally operating profitably. In order to
maximise our return on sale from our investments Brainspark may be required to
provide further support to some of our current portfolio companies over the
short to medium term.
The emergence of China and India in the IT sector, together with the extension
to the membership of the EU to the New European Countries has opened the IT
labour market. This has made it easier to supply services to old European
Countries. This has reshaped the overall sector and led to major challenges and
opportunities for the companies.
Operational Changes
Following the appointment of Mr. D. Bailey in January 2006 as a Company
Director, there are now two Executive Directors, including the Chairman. This
has led to the efficient implementation and execution of the strategies of the
Board.
Investment Committee Changes
No changes have been made to the Investment Committee during the year. The
Committee is currently represented by Prof. F. Gardin, Chairman of the Company,
Mr. D.Meacher, an Independent Director, and an external advisor, Prof. John A.
Campbell.
Business Strategy
At the outset, Brainspark's strategy was to take a role in the initial stages of
financing new business ideas. It would find and develop businesses, then look to
exit relatively quickly through a trade sale or flotation.
Inevitably, the investment market has changed and whilst we have remained
committed to this strategy we have had to adapt the way in which we have sought
to implement it. Specifically, we have focused more recently (as set out below)
on developing opportunities for 'spin-outs' from Science Parks and Incubators in
China, whilst at the same time seeking to develop exit strategies for our
existing investments. Brainspark continues to monitor and rationalise its
operational infrastructure and leverage the knowledge and market potential of
its investment portfolio.
Brainspark's Directors will consider, from time to time, co-investing in some of
the Company's initiatives.
Portfolio Companies
An update on the Group's portfolio companies held at 31 December 2006 is as
follow:
GeoSim (www.geosim.co.il) established itself as the world leader in building
complete and photorealistic 3D virtual cities and in delivering them through the
Internet for use in local searching and real estate, city planning and homeland
security, tourism and entertainment.
Whilst the geo-spatial visualization solutions offered by Google, Microsoft and
others feature satellite photographs, street photographs and more recently
coarse 3D-models with limited visual quality and interactivity, GeoSim delivers
highly detailed, fully interactive city models, which the user can explore from
the land or the air.
GeoSim's city models are not only addictive and immersive (i.e. conveying the
experience of 'being there'), they are also 'intelligent' - one can click on any
building, bus stop or shop to find out more information about it or even go
inside.
By combining GeoSim's virtual cities with business information ('3D-Yellow
Pages'), tourist/what's-on information and introducing human interaction between
the concurrent users, GeoSim provides a ground-breaking solution for local
search, social networking and entertainment applications related to the city
metaphor.
Together with the Philadelphia Convention and Visitors Bureau and the Center
City District, GeoSim is about to complete Virtual Philadelphia, which will be
its first full-scale virtual city. Online beta-testing of Virtual Philadelphia
will start in early July 2007 - two months later (Sept. 2007) it will be ready
for public launch.
In the second half of 2007, GeoSim is planning to start the Virtual Paris
project, which is likely to have a dramatic impact on its market penetration
efforts.
Polarizonics has developed a novel method of encoding information on optical
discs. While present DVD's use only the modulation of light intensity,
Polarizonics succeeded in manipulating light polarization in a controlled way.
This opened up a new dimension of physical encoding of information on optical
discs. The Polarizonics technology can both increase the capacity of each
storage layer of DVD discs, and increase disc copy protection through a special
encoding method which cannot be replicated in common DVD write drivers. In 2007,
Polarizonics has initiated contact with Chinese representatives to engage in an
effort to incorporate Polarizonics technology in the next generation of Chinese
disc formats.
ACS SpA (www.acsys.it) processing stations have become a reference point in both
National and International remote sensing markets.
In previous years ACS consolidated its role in environmental applications of
Earth Observation, participating in important research projects focused on
climate change and natural risk management.
The aim is to enlarge ACS offering, targeting new clients and proposing new
off-the-shelf services, focusing on environmental risk management and
environmental policy making support. ACS is continuing its technology transfer
to the bio-medical market and exploiting its image processing expertise. This
strategy has increased the order backlog which should ensure that the company
has a steady flow of work in forthcoming years.
Easyart.com (www.easyart.com) recorded its first year of profits in 2006. During
the year the company completed the integration of WorldGallery.co.uk, a rival
site acquired at the end of 2005 and also launched a new art brand directed at
women www.passionart.com. The company continues to make progress and has
extended its range of art-related products to over 70,000 unique prints. Easyart
also launched The Easyart Academy www.easyart.com/academy, which allows artists
and photographers to upload and sell their own images and signed a distribution
deal with Christie's Images, the image licensing arm of the world-famous Auction
House.
Fortune Cookie (www.fortunecookie.co.uk) designs and builds findable,
accessible, beautiful websites for some of Britain's best known brands including
Amnesty International, Small Luxury Hotels and National Express. The company has
established long-term strategic relationships with Legal & General, FT Business
and Kuoni. In a 2006 survey of over 395 UK digital agencies the readers of
Revolution, Marketing and Marketing Direct ranked Fortune Cookie number 5 for
delivery of ROI, 4 for creativity and 3 for use of technology. In March 2007
Media Momentum ranked Fortune Cookie one of the UK's 50 fastest growing digital
media companies.
MetaPack (www.metapack.com) MetaPack's Delivery Management Solution (DMS)
provides integration to all UK parcel carriers. Through its intelligent
streaming functionality, MetaPack DMS allows goods to be despatched using the
most suitable carrier network, depending on customer delivery requirements, the
type of parcel and the carrier or own fleet operation best able to deliver it.
The customer base of leading retailers continue to grow, and the company has
recently launched an ASP or software as a service (SaaS) version of our delivery
software. The addition of new capital funds will help us to promote the new
product into the B2C and B2B markets as well as develop a C2C product.
Metapack's on-line presence continues to be strong, with a 70% year on year
growth in deliveries for many of their clients, meaning an increasing proportion
of their ongoing revenues is guaranteed through support & maintenance or
transactional payments, as opposed to one-off licence or implementation fees.
Mediapolis
Management continues to monitor the performance of this holding.
Tax Losses
The Group has no tax charge for the year due to losses incurred and has a
potential deferred tax asset arising from unutilised management expenses
available for carry forward and relief against future taxable profits. The
deferred tax asset has not been recognised in the financial statements in
accordance with the Group's accounting policy for deferred tax.
The Group's unutilised management expenses and capital losses carried forward at
31 December 2006 amount to approximately £11 million (2005: £11 million) and £4
million (2005: £4 million) respectively. All such losses rest in Brainspark
Associates Limited and are available for future utilisation against profits of
the business. The possibility is that Brainspark will need to acquire a
profitable business in order to utilise the excess management expenses that have
arisen from accumulated investment activities to date, which would ultimately
enable Brainspark to distribute dividends to its shareholders.
2007 Developments
China Developments
Brainspark has developed a China strategic investment plan which could
ultimately secure Brainspark approximately a 25% share in a company that will
make investments in China, both on 6-12 months returns, in pre-IPO situations,
and in 3-5 year return with high growth small- to medium- sized technology
companies. The company, China IPO Group, has entered into first refusal
relationships with some of the most significant Chinese Science Parks and
Incubators in China.
China IPO Group is managed in Jersey and the Directors are the Rt. Hon. Earl of
Cromer, Non-Executive Chairman, Professor F. Gardin, Executive Director, Mr. E.
Burman, Executive Director, and as Non-Executive Directors Mr. D. B. Bailey and
Professor Liu Man Hong. Bedell Trust in Jersey act as company secretary. Allen &
Overy in Beijing has been retained as the law firm.
Lord Cromer has extensive experience of China where he worked for almost 20
years as Managing Director and Director of several companies. He is also
Chairman of JF China Region Fund, Japan High Yield Property Fund and Pedder
Street Asia Absolute Return Fund, and is on the boards of the Cambridge Asia,
Chairman of Cromer Associates Limited, a company which advises foreign companies
investing in China and Chinese companies investing overseas.
Prof. F. Gardin, Mr. E. Burman and Mr. D. Bailey are Chairman and Directors of
Brainspark Plc. Mr Edward Burman lives in Beijing, where he moved in 2003 and
will be responsible for the China activities.
Prof. Liu Man Hong is Director of the Venture Capital R&D Centre at Renmin
University and Honorary Vice-Chairman of the Chinese Venture Capital
Association, she holds a Ph.D. in Economics from Columbia University.
The main subsidiary is China IPO Management Ltd incorporated as a Wholly Foreign
Owned Enterprise in China, located in Beijing, acting as the local management
company.
In April 2007 China IPO Group signed an exclusive contract with Xi'an
International Business Incubator (XIBI) with more than 350 companies being
incubated. XIBI is part of the Xi'an High Tech Zone, which hosts around 8,000
companies.
Xi'an is one of the main Chinese centres for the Military Aerospace industry,
with 50 universities and research centres. Xi'an has a population of 8 million
people and is the capital of Shaanxi Province, which has a total population of
approximately 30 million.
The contract gives China IPO Group first-refusal rights on investment in the 350
companies currently incubated in XIBI, for an initial period of 2 years
renewable for up to 10 years. Business sectors of the 350 companies range from
alternative energies to advanced sensor technologies and added value services
for mobile communications. Under the terms of the agreement, China IPO
Management Limited will open an office within the incubator provide training to
entrepreneurs of the companies on capital markets, investment principles and
international marketing. In addition the company will identify and monitor
investment opportunities among the initial 350 incubated companies.
China IPO Group is currently engaged in negotiations with further selected
Science Parks in China.
Investment
On 2nd April 2007 China IPO Group made its first pre-IPO investment in ET-China
Holdings Ltd ('ET-China'), a travel company with its main operations in
Guangzhou (Guangdong Province). ET-China is primarily engaged in serving the
leisure market in South China through the sale of air tickets, hotel rooms,
packaged group tours and associated products and services to corporate entities
and to individual travellers. In addition, ET-China, through a joint venture
with China Southern Airlines, provides the e-ticketing service and back office
support services for China Southern Airlines. South China covers nine provinces
with a total population of 450 million people, and is considered the 16th
largest economy in the world by GDP.
China IPO Group has invested $200,000 (£100,000) as part of a $7,000,000
(£3,500,000) unsecured convertible loan note for pre-IPO funding. The minimum
investment unit to be entitled to the best terms of the loan note is $500,000
(£250,000). The unit was offered to China IPO Group but the current capital
structure of the company prevented it from subscribing the minimum investment.
Two directors of China IPO Group, as well as Prof. F. Gardin and Mr D. Bailey,
agreed to subscribe the remaining $300,000 (£150,000) to match the minimum unit.
The independent Directors of Brainspark confirmed that the investment by Prof. F
Gardin and Mr Bailey is on no more favourable terms than the investment by China
IPO Group. Mr. L. Fogliani, an 8.89% investor in Brainspark, has agreed to
subscribe an additional $100,000 (£50,000) under the same terms as China IPO
Group. The total investment therefore amounted to $600,000 (£300,000).
Exits
On 17 February 2007 - The Group sold its 34.6% holding in Traderserve, for an
immediate cash consideration of £75,000, to existing shareholders of the company
and their associates. Traderserve Limited ('Traderserve') are a software vendor
and consultancy firm focused on real-time trading applications for brokers,
traders and fund managers.
Under the terms of the sale, in the event of a sale of Traderserve Shares within
a 24 month period Brainspark will retain the right to receive a full 34.6% of
the gain made from such a sale. Subsequently; during the following 60 months, in
the event of a sale of Traderserve shares the 34.6% gain received by Brainspark
will be decreased by straight line depreciation to an irreducible 5% of the
gain.
In the Brainspark's books Traderserve was fully written down a number of years
ago. The transaction will therefore generate a profit of £75,000 in 2007.
Board Changes
On 2 May 2007 D Caldwell resigned as Director of Brainspark to pursue other
business activities in America. D. Caldwell served as Chairman in the past and
more recently as a Director of the Company. The Board would like to express
their appreciation for his continued support and invaluable contribution.
Stock Option Plan
The two Executive Directors, Prof F. Gardin and Mr. Bailey will be paid fees,
from 1 March 2007, of £80,000 and £20,000 per annum respectively. This reflects
their administration and other duties in developing Brainspark. Prof F. Gardin
has not received any fees for some years and Mr Bailey has not previously been
in receipt of fees.
On 1 March 2007 the Company issued options to the Directors, the issue of
options was treated as a Related Party transaction under AIM Rules. Mr. D.
Caldwell, the only Independent Director at that time, having consulted the
Company's Nominated Adviser, considered that the terms of the Unapproved Share
Option Scheme and the issue of options to Directors were fair and reasonable in
so far as the Company's shareholders were concerned. Further details are
provided in the Remuneration Committee Report.
Other Events
In February 2007, Cotterford Ltd., an investment company in the UK, subscribed
£400,000 for an issue of new Metapack shares repesenting 17.78 per cent. of the
enlarged issued share capital. Brainspark holds 30,000 shares in Metapack, which
now represents 8.23% of the enlarged capital.
On 2 May 2007 Brainspark announced that GeoSim has raised additional finance for
working capital and development. Private investors in America subscribed
$980,000 to complete the second $1,280,000 tranche of financing at a pre-money
valuation of $20,000,000 for Geosim. The first $720,000 tranche at pre-money
valuation of $10,000,000 was closed in September 2006.
As a result of this $2,000,000 funding, the exercise of approved ESOP options
and post conversion by Crash LLC of their options and 'Bonus Warrants',
Brainspark's (fully diluted) interest is 39.53% of Geosim.
At a Geosim valuation of $20,000,000 Brainspark's 39.53% equity holding is
valued at $7,900,000 (£ 3,950,000). This alone is equivalent to 1.19 p a share.
Co Investment by Directors and Key Shareholders of Brainspark
One or more of the Directors and key shareholders may occasionally co-invest
personally in companies with Brainspark, its associates or its investment
companies ('the Group') though the Group will always have 'first refusal' in any
such circumstances. In such circumstances the Directors concerned or key
shareholders will make a full declaration of his personal investment and will
not participate in the vote on any Board resolution in respect of the relevant
investment. As, when, and if this happens the Director or key shareholder
concerned will co-invest on terms which are no more favourable than those which
the Group is investing. Any such investments will be subject to compliance with
the Stock Exchange rules of the AIM market.
Investments Review
At the end of December 2006 Brainspark had holdings in 8 companies, 4 in the UK,
2 in Italy, 1 in Israel and 1 the United States. Its stake range from nearly 5%
to nearly 43.28% of the relevant portfolio companies. The portfolio covers a
wide range of business sectors, including Web Services, application service
providers and advanced IT solutions.
At 29 December 2006, Brainspark's mid-market price per share of 0.575p valued
the Company at £ 1,901,507
Prof. Francesco Gardin
Chairman
28 June 2007
Consolidated Income Statement for the year ended 31 December 2006
Note 31 December 2006 31 December 2005
£'000 £'000
Continuing operations
Investment revenue 9 -
Gain on disposal of investments 300 -
Reversal of provision - 122
Share of profits of associates 92 104
Finance charges (31) -
Other operating expenses (196) (258)
Impairment of available for
sale investments (156) (119)
----------- -----------
Profit /(Loss) before tax 18 (151)
Tax - -
----------- -----------
Profit/(Loss) for the year from
continuing operations 18 (151)
=========== ===========
Attributable to:
Equity holders of the parent 18 (151)
=========== ===========
Earnings per share
Basic and diluted earnings per
0.01p ordinary share 2 0.005p (0.08)p
=========== ===========
Balance sheets at 31 December 2006
Notes Group Group Company Company
2006 2005 2006 2005
£'000 £'000 £'000 £'000
Non-current assets
Property, plant and equipment - 9 - -
Investments in subsidiaries - - 1,430 1,180
Investments in associates 2,023 2,010 - -
Available for sale investments 718 1,130 - -
------- ------- -------- --------
Total non-current assets 2,741 3,149 1,430 1,180
------- ------- -------- --------
Current assets
Trade and other receivables 626 327 1,915 2,242
Cash and cash equivalents 410 446 - -
------- ------- -------- --------
Total current assets 1,036 773 1,915 2,242
------- ------- -------- --------
Current liabilities
Trade and other payables (266) (461) (181) (245)
------- ------- -------- --------
Total current liabilities (266) (461) (181) (245)
------- ------- -------- --------
Net current assets 770 312 1,734 1,997
-------------------------- ------- ------- ------- -------- --------
Net assets 3,511 3,461 3,164 3,177
-------------------------- ------- ------- ------- -------- --------
Equity
Share capital 1,936 1,936 1,936 1,936
Share premium account 29,186 29,186 29,186 29,186
Other reserves 6,813 6,813 - -
Equity component of convertible
instrument 32 - 32 -
Retained losses (34,456) (34,474) (27,990) (27,945)
-------------------------- ------- ------- ------- -------- --------
Equity attributable to equity
holders of the parent 3,511 3,461 3,164 3,177
-------------------------- ------- ------- ------- -------- --------
Statement of changes in equity
For the year ended 31 December 2006
Group Equity component Profit and
Share Share Other of convertible loss
capital premium reserve instrument account Total
£'000 £'000 £'000 £'000 £'000 £'000
---------- ------- -------- ------- ------------ --------- ------
At 1
January 1,936 29,186 6,813 - (34,474) 3,461
2006
Profit for
the year - - - - 18 18
Equity
component
of
convertible - - - 32 - 32
loan
---------- ------- -------- ------- ------------ --------- ------
At 31
December 1,936 29,186 6,813 32 (34,456) 3,511
2006
---------- ------- -------- ------- ------------ --------- ------
Company
At 1
January 1,936 29,186 - - (27,945) 3,177
2006
Loss for
the year - - - - (45) (45)
Equity
component
of
convertible - - - 32 - 32
loan
---------- ------- -------- ------- ------------ --------- ------
At 31
December 1,936 29,186 - 32 (27,990) 3,164
2006
---------- ------- -------- ------- ------------ --------- ------
Cash flow statements
For the year ended 31 December 2006
---------------------- ------ -------- ------- -------- --------
Note Group Group Company Company
2006 2005 2006 2005
£'000 £'000 £'000 £'000
---------------------- ------ -------- ------- -------- --------
Net cash used in operating
activities (183) (297) - (666)
Cash flows from investing
activities
Interest received 9 - - -
Proceeds from sale of investments
in associates 230 105 - -
Purchase of investments (92) - - -
Loans to associates - (56) - -
---------------------- ------ -------- ------- -------- --------
Net cash generated from investing
activities 147 49 - -
---------------------- ------ -------- ------- -------- --------
Cash flows from financing
activities
Interest paid on shareholder loan - (11) - (11)
Proceeds from convertible loan
issue - 850 - 850
Repayment of loans to major
shareholders and others - (173) - (173)
---------------------- ------ -------- ------- -------- --------
Net cash generated from financing
activities - 666 - 666
---------------------- ------ -------- ------- -------- --------
(Decrease)/increase in net cash
for the year (36) 418 - -
---------------------- ------ -------- ------- -------- --------
Cash and cash equivalents at
beginning of year 446 28 - -
---------------------- ------ -------- ------- -------- --------
Cash and cash equivalents at end
of year 410 446 - -
---------------------- ------ -------- ------- -------- --------
Notes
1. ACCOUNTING POLICIES
Basis of preparation
The financial information has been prepared in accordance with International
Financial Reporting Standard ('IFRS') for the first time. The disclosures
required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in
note 24. The financial statements have been prepared in accordance with IFRS as
adopted by the European Union applied in accordance with the provisions of the
Companies Act 1985.
The financial statements have been prepared under the historical cost
convention.
2. EARNINGS PER SHARE
The basic earnings/(loss) per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the period. Diluted earnings per share is computed
using the same weighted average number of shares during the period adjusted for
the dilutive effect of share warrants and convertible loans outstanding during
the period.
The profit/ (loss) and weighted average number of shares used in the calculation
are set out below:
--------------------------------------------------------------------------------
2006 Per 2005 Per
Weighted share Weighted share
average no Amount average no Amount
Profit of shares pence (Loss) of shares pence
£'000 000's £'000 000's
--------------------------------------------------------------------------------
Earnings/(loss) per
share
Basic and Diluted 18 330,697 0.005 (151) 193,091 (0.08)
IAS 33 requires presentation of diluted earnings per share when a company could
be called upon to issue shares that would decrease earnings per share or
increase net loss per share. For a loss making company with outstanding share
options and warrants, net loss per share would only be increased by the exercise
of out-of-the money options and warrants. Since it seems inappropriate that
option holders would act irrationally, no adjustment has been made to diluted
earnings per share for out-of-the money options and warrants in the
comparatives. There are no other diluting share issues, in either financial
period, consequently diluted earnings per share equals basic earnings per share.
3. FINANCIAL INFORMATION
The above financial information comprises non-statutory accounts within the
meaning of section 240 of the Companies Act 1985. The financial information for
the year ended 31 December 2006 has been extracted from published audited
accounts for the year ended December 2006 that will be delivered to the
Registrar of Companies and on which the report of the auditors was unqualified
and did not contain statements under s237 (2) or (3) of the Companies Act 1985.
4. REPORT AND ACCOUNTS
The Report and Accounts is being posted to shareholders today. Copies may be
obtained during normal office hours from the Company's registered office, The
Lightwell, 12 - 16 Laystall Street, Clerkenwell, London, EC1R 4PF or from the
company's website, www.brainspark.com.
For further information please contact:-
Brainspark plc 00 39 335 296573
Francesco Gardin
Beaumont Cornish Limited 0207 628 3396
Roland Cornish
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