Interim Results - Replacement

Brainspark PLC 28 August 2001 The issuer advises that the 'Interim Results' announcement released today at 13:06 under RNS Number 0785J contained typographical errors and should be disregarded. The full corrected version is shown below. BRAINSPARK PLC 2001 INTERIM RESULTS August 28 2001. Brainspark plc today announced its Interim Results for the six months ended 30 June 2001. Brainspark is an incubator focused on germinating and developing technology and internet-related businesses. HIGHLIGHTS * Two follow-on funding rounds in the period of £1.05 million into Smile-On and £3.25 million into Metapack. * Cash reserves of £7m. * Consolidated net-asset value of £12.4 million. Don Caldwell, Chairman, commented: 'The changes outlined in Brainspark's Financial Statements for the year ended 31 December 2000, including my own appointment, have been implemented. I am glad to say that Brainspark's underlying operating cash requirement is now broadly in line with the level forecast at that time. However, the mid-market price at 30 June 2001 of 7.0p valued the company's issued share capital at £ 8.6m against a consolidated net asset value of £12.4m. I believe that this insufficiently values the company's investment portfolio and the future potential of the business. Discussions with a number of parties which may or may not lead to an offer being made to the Company are ongoing and shareholders will be kept informed of developments.' Enquiries: Brainspark (020 7843 6600) Jasper Judd (Chief Financial Officer) David Hart (Director of marketing and communications) Citigate Dewe Rogerson (020 7638 9571) Martin Jackson / Charles Vivian Brainspark Plc Chairman's statement In her statement issued with the Brainspark's Financial Statements for the year ended 31 December 2000, my predecessor Barbara Thomas announced various operational changes within Brainspark taken in the light of the negative sentiment afflicting the technology investment market, particularly that for early stage companies. Those changes, including my own appointment, have been implemented, and I am glad to say that Brainspark's underlying operating cash requirement is now broadly in line with the level forecast at that time The Board, however, continues to look carefully at all ways in which the company's value can be preserved and enhanced Financial Summary The consolidated net asset value at 30 June 2001 was £12.4m, down from £20.5m at 31 December 2000. Of the fall of £8.1m, £2.3m is attributable to recurring operating expenses and the remainder (£5.8m) principally to exceptionals and share of results of associates, net of interest. The fall in Brainspark's share price to a bid price of 6.0p on 30 June 2001 contributed £2.0m to the above figure of £5.8m, being principally in respect of non-cash provisions relating to the Employee Benefit Trust. Investments Review If anything, market conditions have been worse than those most commentators had predicted, and it has been extremely hard for early stage technology businesses to raise further funds. Accordingly, we were very pleased that both Metapack and Smile-On successfully completed financings of £3.25m and £1.05m respectively in the period. Unfortunately, the period also involved the closures of EC1 Media and Gasworld, and (in July 2001) the sale of the Petspark and the Leisurehub businesses. Provisions for disposal have also been made against Globe-Rail and iProx On the positive side, Propex has made real progress towards becoming the key marketplace for major UK commercial property deals, having achieved the buy-in of some of the biggest players in the sector. The Usability Company, for which Brainspark provided seed funding in February 2001, has had a very encouraging start and looks set to become imminently self-sustaining. Brainspark's remaining active investments, Easyart, Fortune-Cookie, Kerb, Que Pasa Media and Traderserve are all at important stages in their development and the next few months should tell us much about their long-term prospects. Outlook The mid-market price at 30 June 2001 of 7.0p valued the company's issued share capital at £8.6m against a consolidated net asset value of £12.4m. I believe that this insufficiently values the company's investment portfolio and the future potential of the business. Your Board remains committed to looking for value-creation opportunities and with £7.0m in cash at the end of June 2001, Brainspark remains positioned to withstand an extremely difficult market environment. Shareholders may be aware that, on 30 July 2001, the Company announced that it was in the early stages of discussions with a number of parties, which may or may not lead to an offer being made for the Company. These discussions are ongoing and shareholders will be kept informed of developments. D. Caldwell - Chairman Consolidated Profit and Loss Account (unaudited) Notes Six Six Year months months ended to 30 to 30 June 31 December June 2001 2000 2000 £000 £000 £000 Turnover 2a) - - - Net operating expenses - recurring (2336) (2868) (5644) Net operating expenses - exceptional 2b) (3100) (2961) (4054) -------- ---------- ----------- Total net operating expenses/group (5436) (5829) (9698) operating loss - continuing Share of operating loss of associated 3 (1873) (1667) (4548) undertakings -------- ---------- ----------- Total operating loss : group and share (7309) (7496) (14246) of associated undertakings Exceptional items Profit on deemed disposal of interests 2c) 370 1221 1379 in associated undertakings Loss on disposal and provisions for loss 2c) (1632) - (2433) on disposal of interests in associated and subsidiary undertakings -------- ---------- ----------- Loss on ordinary activities before (8571) (6275) (15300) interest Net interest receivable 251 328 736 -------- ---------- ----------- Loss on ordinary activities before (8320) (5947) (14564) taxation Tax on loss on ordinary activities - (27) (27) -------- ---------- ----------- Loss on ordinary activities after (8320) (5974) (14591) taxation Equity minority interests 34 - 37 -------- ---------- ----------- Retained loss for the financial period (8286) (5974) (14554) ======= ======= ======== Loss per 1p ordinary share - basic and diluted 4 (6.7) p (5.6) p (14.9) p --------- ----------- ----------- Consolidated Statement of Total Recognised Gains and Losses Loss for the financial period (8286) (5974) (14554) Revaluation of fixed asset investments 34 719 719 -------- ----------- ------------ Total recognised gains and losses for the period (8252) (5255) (13835) ===== ====== ======= There are no differences between the results disclosed above and the historical cost equivalents. Consolidated Balance Sheet (unaudited) Notes At 30 At 30 At 31 June June December 2001 2000 2000 £000 £000 £000 Fixed assets Tangible assets 943 812 1135 Investments in associated 5 2201 8304 4987 undertakings Other investments 6 1602 1568 1568 Investment in own shares 7 253 4342 2445 --------- -------- ------- 4999 15026 10135 --------- -------- ------- Current assets Debtors 1024 2087 1609 Cash at bank and in hand 6978 14020 9766 --------- -------- ------- 8002 16107 11375 Creditors : amounts falling due (469) (1379) (586) within one year --------- -------- ------- Net current assets 7533 14728 10789 --------- -------- ------- Total assets less current 12532 29754 20924 liabilities --------- -------- ------- Provisions for liabilities and (153) (1044) (385) charges --------- -------- ------- Net assets 12379 28710 20539 ========= ========= ======== Capital and reserves Called up share capital 1233 1231 1233 Share premium account 26442 26312 26442 Revaluation reserve 753 719 719 Other reserves 6813 6813 6813 Profit and loss account (22862) (6365) (14702) (deficit) --------- -------- ------- Total equity shareholders' funds 12379 28710 20505 Equity minority interests - - 34 --------- -------- ------- Capital employed 12379 28710 20539 ======== ======== ========= Reconciliation of Movements in Consolidated Equity Shareholders' Funds Loss for the period (8286) (5974) (14554) New share capital issued for - 26667 26799 cash Revaluation of fixed asset 34 719 719 investments Charge for issue of shares at 126 152 395 below market value --------- -------- ------- Net addition to shareholders' (8126) 21564 13359 funds Opening shareholders' funds 20505 7146 7146 --------- -------- ------- Closing shareholders' funds 12379 28710 20505 ========= ========= ========== Consolidated Cash Flow Statement (unaudited) Notes Six months to Six months to Year ended 30 June 30 June 31 December 2001 2000 2000 £000 £000 £000 Net cash outflow from operating 8 (2248) (3605) (6260) activities ----------- ------------ ------------- Returns on investments and servicing of finance Interest received (net) 237 320 723 ----------- ------------ ------------- Net cash inflow from returns on investments and servicing of 237 320 723 finance ----------- ------------ ------------- Capital expenditure and financial investment Purchase of tangible fixed (5) (960) (1392) assets Purchase of other investments - (849) (849) Purchase of own shares - (5323) (5322) Disposal of fixed assets 2 - - ----------- ------------ ------------- Net cash outflow from capital expenditure and financial (3) (7132) (7563) investment ----------- ------------ ------------- Acquisitions and disposals Purchase of subsidiary - - (550) undertaking Cash acquired with subsidiary - - 550 undertaking Closure of subsidiary (49) - - undertaking Purchase of investments in (310) (5603) (6800) associated undertakings Loans to associated (415) (274) (780) undertakings ----------- ------------ ------------- Net cash outflow from acquisitions and disposals (774) (5877) (7580) ----------- ------------ ------------- Net cash outflow before (2788) (16294) (20680) financing ----------- ------------ ------------- Financing Issue of ordinary share capital - 26667 26799 ----------- ------------ ------------- Net cash inflow from financing - 26667 26799 ----------- ------------ ------------- (Decrease) increase in net cash (2788) 10373 6119 for the period ========= ========= ========= Reconciliation of net cash flow to movement in net cash Net cash at beginning of period 9766 3647 3647 (Decrease) increase in net cash (2788) 10373 6119 in the period ----------- ------------ ------------- Net cash at end of period 6978 14020 9766 ========== ========== =========== Notes to the Interim Financial Statements 1. Basis of preparation The interim financial statements have been prepared on the basis of the accounting policies set out in the Group's 2000 Annual Report and Accounts Fixed annual charges are apportioned to the interim period on the basis of time elapsed and other expenses are accrued in accordance with the same principles used in the preparation of the annual accounts. The financial information contained in this interim statement is unaudited and does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The comparative information for the year ended 31 December 2000 is an abridged version of the statutory accounts for that year and those accounts,upon which the auditors issued an unqualified opinion,have been filed with the Registrar of Companies. 2. Profit and loss account Six months Six months to to Year to 30 June 2001 30 June 31 December 2000 2000 a) Turnover £000 £000 £000 Group turnover including share of 495 383 1239 associated undertakings Less: share of associated (495) (383) (1239) undertakings -------- --------- --------- - - - ======== ======== ======== b) Net operating expenses - exceptional National Insurance on 242 (1980) (1177) warrants Provision against investment in own (2192) (981) (2877) shares (note 7) Provisions against loans to (450) - - associated undertakings Goodwill valuation adjustment on (240) associated undertakings Restructuring and closure (460) - - costs -------- --------- --------- (3100) (2961) (4054) ======== ======== ======== c) Exceptional items Profit on deemed disposal of 370 1221 1379 interests in associated undertakings -------- --------- --------- Loss on disposal and provisions for (1632) - (2433) loss on disposal of interests in associated and subsidiary undertakings ======== ======== ========= The profit on deemed disposal of interests in associated undertakings comprises principally the profit on the dilution of the Group's interest in Smile-on when it raised second round funding from third parties. The losses on disposal and provisions for losses on disposal of interests in associated and subsidiary undertakings comprise principally Leisurehub, Gasworld, Globe Rail, iProx, EC1 Media and a further provision in respect of the disposal of Perfectday which took place during the year ended 31 December 2000. 3. Share of operating loss of associated undertakings Six months Six months to to Year to 30 June 2001 30 June 31 December 2000 2000 £000 £000 £000 Share of operating loss of associated 1099 1026 2680 undertakings Amortisation of goodwill on 774 641 1868 acquisition -------- --------- --------- 1873 1667 4548 ========= ========= ========= Brainspark Notes to the Interim Financial Statements 4. Loss per 1p ordinary share Six months Six months to to Year to 30 June 2001 30 June 2000 31 December 2000 £000 £000 £000 Loss attributable to ordinary (8286) (5974) (14554) shareholders Effect of dilutive share - - - options -------- --------- --------- Adjusted loss (8286) (5974) (14554) ======== ======= ======== Weighted average number of 123258 106352 97555 ordinary shares Dilutive share options 1817 9713 8318 -------- --------- --------- Adjusted weighted average number 125075 116065 105873 of ordinary shares ======= ======== ======== Basic loss per share (6.7) p (5.6) p (14.9) p ======== ======== ======== Diluted loss per share (6.7) p (5.6) p (14.9) p ======== ======== ======== The Group has one class of dilutive potential ordinary shares being those share options granted where the exercise price is less than the average market price of the Company's ordinary shares during the period.However these are not considered dilutive as their conversion to ordinary shares would reduce the net loss per share from continuing operations. 5. Investments in associated undertakings Six months Six months to to Year to 30 June 2001 30 June 2000 31 December 2000 £000 £000 £000 Share of net assets At 1 January 1084 402 402 Additions 310 1453 1912 Disposals (371) - 44 Share of profit (loss) for (1099) (1045) (2653) the period Profit on deemed 370 1221 1379 disposals -------- --------- --------- At period end 294 2031 1084 ======== ======== ======== Goodwill At 1 January 3323 2764 2764 Arising on acquisition 611 4150 4975 Disposals (1013) - (2548) Valuation adjustment (240) - - Amortisation of (774) (641) (1868) goodwill -------- --------- --------- At period end 1907 6273 3323 ======== ======== ======== Loans to associated undertakings At 1 January 580 - 86 Additions 415 - 780 Loans capitalised (400) - (86) Provisions against loans and (595) - (200) disposals -------- --------- --------- At period end - - 580 ======== ========= ========= Net book amount at period 2201 8304 4987 end ======== ========= ========= Notes to the Interim Financial Statements 6. Other investments Six months Six months to to Year to 30 June 2001 30 June 31 December 2000 2000 £000 £000 £000 Cost or valuation At 1 January 1568 - - Additions - 849 849 Revaluation 34 719 719 -------- --------- --------- At period end 1602 1568 1568 ======== ======== ======== Other investments comprise interests in Metapack and Propex at valuation. 7. Investment in own shares Six months Six months to to Year to 30 June 2001 30 June 31 December 2000 2000 £000 £000 £000 Cost / valuation At 1 January 2445 - - Additions - 5322 5322 Provision against (2192) (980) (2877) investment -------- --------- --------- At period end 253 4342 2445 ========= ========= ======== The investment in own shares represents a loan of £5.3 million made to an Employee Benefit Trust which invested the proceeds wholly in 4,236,329 company shares.The trust was established to cover actual and potential national insurance liabilities on the exercise of warrants held by employees and partner company managers at the time of the flotation.The provision arises from the reduction in the company's share price from 125p at flotation to the bid price of 6.0p at 30 June 2001. 8. Reconciliation of operating loss to net cash outflow from operating activities Six months Six months to to Year to 30 June 2001 30 June 31 December 2000 2000 £000 £000 £000 Operating loss (5436) (5829) (9698) Depreciation charge 191 155 257 Goodwill written off on acquisition of - - 71 subsidiary undertaking Goodwill valuation adjustment on 240 - - associated undertakings Provision against loans to associated 450 - - undertakings Provision against investment in 2192 981 2877 own shares Loss on disposal of fixed - - 7 assets Decrease (increase) in 344 (1373) (1025) debtors (Decrease) increase in (123) 1265 471 creditors Charge for issue of shares at 126 152 395 below market value (Decrease) increase in (232) 1044 385 provisions ---------- ---------- --------- (2248) (3605) (6260) ========= ======== =========

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