Preliminary Unaudited Results

RNS Number : 7864G

Brainspark PLC

03 July 2012

 



3 July 2012

Brainspark plc

                                                 ("Brainspark" or "the Company")

PRELIMINARY UNAUDITED RESULTS

For the Year Ended 31 December 2011

Brainspark plc (AIM: BSP), a fast growing international investment company, announces its preliminary unaudited results for the year ended 31 December 2011.

The Company's shares trading on AIM remains suspended pending publication of the audited annual accounts which is expected by the end of July.

CHAIRMAN'S STATEMENT

Financial Review

At 31 December 2011 the Company had invested in non-current assets an amount equal to £26.14 million, up from £22.13 million at the end of 2010.

During the year under review, the Company has pursued its repositioning strategy, to establish Brainspark as a focused operator in the leisure and media sectors, with operations located around the Mediterranean.

In a prudent implementation of the above strategy, the new Board has decided to reduce the balance sheet value on the majority of its assets by 40 per cent, to factor in the continuing difficult economic environment. For that reason the new Board has decided to take an impairment charge of £11.04 million.

The result of this new, prudent and conservative financial approach is a final Equity Value at 31 December 2011 of £16.20 million. 

The Company made a loss before tax in the period of £11.70 million compared to the loss as at 31 December 2010 of £8.29 million. This loss is mainly due to the decision to apply the above mentioned impairment charges. The operational loss for the year was £0.88 million (financial costs of £0.45 million and current operating costs of £0.43 million).

To reduce the Group's overall costs the Directors' salaries were reduced from £333,000 to £192,000, a reduction of 42.3 per cent., and other operating expenses were reduced from £1.33 million to £0.43 million, a reduction of 67 per cent.

With an outstanding fully diluted number of shares at 31 December 2011 of 50.8 million, the Equity Value per share, after loss and impairment charge was 31.9 pence per share.

Operational Review

2011 was a year during which Brainspark consolidated and simplified its overall strategy. From being an opportunistic investor across different sectors with a number of minority stakes, to becoming an investor in medium sized operational companies, mainly in the leisure business in the Mediterranean area.

To achieve this change in direction, Brainspark has sold some of its minority stakes and has increased its holdings in those companies that the Board wants to affect control over and manage directly. The Board's goal is to acquire the controlling stake of 51 per cent. of some medium to large size Italian companies focused in the leisure and media sectors; current investments include: Ora Hotel Group S.p.A., Sipiem S.p.A. (Ondaland) and You Can Group S.r.l.

This strategy, which the Company commenced during 2011, has started to come to fruition in 2012, where the Company is expecting to close all its contractualised acquisitions, and to buy additional majority stakes, if the Board considers them appropriate to the ongoing strategy of the Company, within its investing policy. The collateral needed to bring this strategy into full effect is expected to come from the sale of the Mediapolis land, which the Board expects to close in 2012.

The effect of the consolidation of these investments will be reflected in the full year 2012 consolidated balance sheet, which will be the first to record the revenue and profit of these investee companies. As the Company announced to the market in its trading statement on 9 March 2012, the companies controlled by Brainspark have reported consolidated revenues of EUR 51 million and an EBITDA of EUR 4.3 million for the year end to 31 December 2011.

Post Balance Sheet Events

Since 1 January 2012 the following events have taken place:

On 23 February 2012 the Company announced that it has placed 13,125,000 new ordinary shares of 2.5p at a price of between 15 to 16 pence per share raising a total of approximately £2 million, before costs, via institutional investors and certain Directors of the Company. The proceeds will be used to fund new investments as well as for working capital purposes.

On 23 March 2012 the Company announced that further to the announcements of 28 June 2011, 19 October 2011, 8 November 2011 and 4 January 2012, the Company has issued, subject to admission to trading on AIM a total of 29,690,000 new ordinary shares of 2.5p each to the vendors of You Can Group srl (the holding company for the Sosushi restaurant chain), ORH S.p.A (the holding company for the Ora Hotel Group) and to a holder of Brainspark bonds. In addition, the Company announced that it has agreed with a bond holder to convert bonds worth £2,824,800 including accrued interest into 8,070,857 new Ordinary Shares at 35 pence per share. The Company also agreed to issue 150,000 new Ordinary Shares to a consultant to the Company in lieu of fees. In addition the Company has agreed with Argentaria srl to reverse the acquisition of an office building in Milan and will not therefore issue the 5,000,000 new Ordinary Shares referred to in the announcement of 8 November 2011.

On 3 April 2012 the Company announced that it has placed 5,750,000 new ordinary shares of 2.5p at a price of 10 pence per share raising a total of £575,000 before costs, via institutional investors and a Director of the Company. The proceeds will be used to fund working capital purposes ahead of receiving funds from the sale of Mediapolis..

On 13 April 2012 the Company announced that it had allotted 3,440,000 new Ordinary Shares of 2.5p each to the vendors of You Can Group srl as consideration for the acquisition of SoSushi and 3,440,000 to You Can Group srl as increase in capital in You Can Group srl. In addition, the Company has also allotted 6,306,667 new Ordinary Shares of 2.5p each to the vendors of Sipiem SpA.

On 4 May 2012 the Company announced the acquisition of 10 per cent. of Sixlove Group SpA  for a total consideration of EUR 690,000, to be paid as follows: EUR 150,000 in cash, on or before 15 June 2012 and EUR 540,000 in exchange for 3,000,000 new Ordinary shares to be issued at 15 pence per share.

Board Appointments

On 29 February 2012 Justin Drummond was appointed as Executive Chairman but due to other interests and commitments resigned on 16 April 2012. Also on 16 April 2012 Haresh Kanabar and Alessandro Malacart resigned to pursue other interests. On 30 April 2012 Enrico Petocchi was appointed as Chief Financial Officer and Dominic White was appointed as Non-Executive Director. On 14 May 2012 Cesare Suglia was appointed as Chief Executive Officer. On 29 May 2012 Francesco Emilani was also appointed as Non-Executive Director.

Alfredo Villa

Chairman

3 July 2012

Unaudited Consolidated Statement of Comprehensive Income for the year ended 31 December 2011

		2011	2010
Continuing operations		£'000	£'000
Commission		-	75
Gain/(loss) on disposal of investments		240	(449)
Finance charges		(608)	(386)
Other operating expenses		(295)	(1,334)
Impairment charges		(11,042)	(6,192)
Loss before tax		(11,705)	(8,286)
Tax		-	-
Loss for the year from continuing operations		(11,705)	(8,286)
Other comprehensive income
Net value (loss)/gain on available for sale investments		(1,921)	5,460
TOTAL COMPREHENSIVE LOSS FOR THE YEAR		(13,626)	(2,286)
Loss attributable to:
Owners of the company		(11,705)	(8,286)
Total Comprehensive loss Attributable to:
Owners of the company		(13,626)	(2,826)
Loss per share:
From continuing operations		(23p)	(87p)
Basic and diluted loss per 2.5p ordinary share from continuing operations		(23p)	(87p)

Unaudited Statement of Financial Position at 31 December 2011

		Group 2011 £'000	Group 2010 £'000	Company 2011 £'000	Company 2010 £'000
Non-current assets
Investments in subsidiaries		-	-	-	-
Available for sale investments		15,686	22,126	-	-
Trade and other receivables		10,454	-	22,191	23,448
Total non-current assets		26,140	22,126	22,191	23,448
Current assets
Available for sale investments		-	844	-	-
Trade and other receivables		-	129	-	-
Cash and cash equivalents		7	-	-	-
Total current assets		7	973	-	-
Current liabilities
Trade and other payables		(4,256)	(1,252)	-	-
Total current liabilities		(4,256)	(1,252)	-	-
Net current liabilities		(4,249)	(279)	-	-
Total assets less current liabilities		21,891	21,847	22,191	23,448
Non-current liabilities
Borrowings		(5,692)	(7,896)	(5,692)	(7,896)
Net assets		16,199	13,951	16,499	15,552
Equity
Share capital		1,271	344	1,271	344
Share premium account		28,930	13,983	28,930	13,983
Other reserves		6,813	6,813	-	-
Equity component of convertible instrument		1,875	1,875	1,875	1,875
Fair value adjustment to available for sale investments		4,390	6,311	-	-
Retained losses		(27,080)	(15,375)	(15,577)	(650)
Equity attributable to owners of the company		16,199	13,951	16,499	15,552

 

END

 

 

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