Final Results

NewMedia SPARK PLC
17 June 2004

NewMedia SPARK plc
Preliminary Announcement of Annual Results for the year ended 31 March 2004


NewMedia SPARK plc today announces preliminary results for the year ended 31
March 2004.

Chief Executive Officer's report

SPARK's stated net asset value at the 31st March 2004 financial year-end was
11.4p per share, broadly unchanged from the position at the interim stage.
Following a decline in asset value during the first half of the financial year,
in the second half our operating expenses were partially offset by a modest
uplift in the carrying value of our investment portfolio.


Highlights

•    €29.3m gross cash returned from Spuetz (including €15.7m received
     after the balance sheet date), SPARK's former German subsidiary, improving
     liquidity despite reduction in reported group cash reserves.

•    Bulk of Group cash now under SPARK control in London whereas it had
     been previously under Spuetz control.

•    Good underlying prospects in portfolio, including the remaining 37%
     stake in Spuetz.

•    Several smaller investments sold at above book value during second
     half and two of our more substantial portfolio companies currently at a 
     fairly advanced stage of negotiation for trade sales, also above book 
     value.

•    Office lease costs substantially mitigated by subletting of property.

•    Group structure simplified - including executive directors, we
     currently employ just seven staff.

•    Net Assets stable at 11.4p per share on prudent valuations, suggesting
     that buy backs with cash returned from Germany would be beneficial to
     shareholders at current market price of 9.5p.

•    Balance sheet reconstruction to be proposed to permit share buy backs.


During 2003/4 we have made considerable progress in resolving the two major
structural issues that had been negatively impacting on SPARK, namely the fact
that the bulk of our liquidity was blocked within Spuetz, and the on-going cost
of our ten year property lease at Glasshouse Street.



With regard to Spuetz, we have been successful in returning substantial funds
from Spuetz to the UK on terms that reflect the underlying asset and cash value
attributable to SPARK with respect to its Spuetz shareholding. We now retain a
37% shareholding in the quoted Spuetz business which we believe has good
potential for capital appreciation following Spuetz's decision to invest in the
Twister Group. The Twister Group is a substantial, profitable and fast growing
business which is a European leader in the provision of mass response services
for television programming.



The partial sale of our Spuetz shareholding and dividend distribution from
Spuetz will free up our management time and financial resources, and importantly
will also simplify the presentation of our balance sheet and profit and loss
account in future periods. During the last two years the requirement to
consolidate Spuetz's accounts into SPARK's own accounts has considerably
complicated the presentation of both our balance sheet and our profit and loss
account.



Our consolidated accounts as at 31st March 2004 reflect the fact that we no
longer consolidate Spuetz AG. This is due to the reduction in our holding in
Spuetz from 68% to 37% in March 2004 immediately prior to the financial year
end. It should be noted that our stated net cash position of £10.9m as at 31st
March 2004 substantially understates our true underlying cash and liquid asset
position due to the timing of receipts over the financial year end.
Subsequently, we have received a gross dividend from Spuetz of €15.7m, and we
retain a 37% shareholding in Spuetz which ex-dividend has a present quoted
market value of approximately €10m. Our liquidity position therefore remains
strong, and importantly we now have substantial cash balances available for use
in the UK rather than tied up in a German subsidiary.



Following the part-disposal of Spuetz, SPARK is now a much leaner, simpler
organisation. Including executive directors, we currently employ just seven
staff (two of whom are part time). Excluding property and one-off legal costs,
we expect our annual operating expenses to be around £1.1m p.a.



With regard to property, during the year we entered into a joint venture with
Corpnex to convert our surplus office space at Glasshouse Street into serviced
offices. We are pleased to report that this venture is progressing well, with
occupancy rates now over 75% and above budget. We therefore expect our net
property costs, which had been running at approximately £1.3m p.a., to reduce
substantially during the current year.



Taken together, the above developments have now freed us to devote more time and
resource to maximising the value of our investment portfolio. Although not yet
reflected to any substantial extent in the book valuation of our portfolio,
underlying progress has been very encouraging in recent months. As we commented
in our interim statement, our portfolio is now maturing and a significant number
of our portfolio companies have now either reached profitability or have
achieved leading positions within their market segments.



As shareholders will be aware, our valuation policies have historically been
such that we do not re-value our holdings above cost unless there is a specific
third party valuation event - in practice usually either a third party
investment into the portfolio company at a higher level or a disposal of shares
in that company. It is in the nature of some of our most successful investments
that they are now self-financing and hence under such policies revaluation may
not be triggered until either a flotation or trade sale of the business. We may
review our accounting policies in future periods if we believe that the new BVCA
guidelines (which allow upwards revaluation of investments on an earnings
multiple basis) would present a fairer view of our asset values. Meanwhile,
under our existing accounting policies there were in fact a small number of
revaluation events during the second six months of the financial year, and this
delivered a portfolio valuation uplift that partly covered our costs of
operation during that period (approximately £1.1m, or 5%). We believe that there
remains potential for substantial appreciation in the future.



During the year, several of our smaller investments (including ADVFN, Digital
Animations and QSA) were disposed of for amounts above book value. More
significantly, two of our more substantial portfolio companies are currently at
a fairly advanced stage of negotiation for trade sale at valuations in excess of
book value. There can be no guarantee that either sale will be concluded, but
these negotiations support our view that the carrying value of our portfolio is
conservative. In terms of flotations, we have continued to monitor the state of
the new issue market closely, but to date have been wary of floating investee
companies prematurely. At the time of writing the IPO market is showing signs of
becoming more difficult, but nevertheless we will continue to monitor flotation
opportunities closely.



In general, we have made only limited further investments into our investee
companies during the past year. This has reflected our wish to conserve cash
levels until we can demonstrate proven success in realising profit from existing
portfolio companies, and also reflects the reduced cash requirements of the
portfolio as it has matured. The major exception to this rule has been Aspex,
where we have continued to fund the business to a significant extent (£5.0m
during the year). Our total cash investment in Aspex is now over £10.8m, making
it our largest single unquoted investment, and on conversion of loan stock
holdings our effective economic interest in Aspex would be 68%. We believe that
our investment in Aspex has the most substantial upside potential of all our
portfolio companies.



Other investee companies, such as Pricerunner, Footfall, Mergermarket, and
Firebox are at a more mature, profitable stage and have continued to make good
progress. Overall, excluding our continuing investment in Spuetz (£13.2m) and
own shares held in the Employee Benefit Trust (£0.6m), the book value of our
investment portfolio as at 31st March 2004 was £28.5m.



We remain confident that the portfolio is conservatively valued and has the
potential for significant uplifts in the future. Having returned liquidity from
Germany to the UK, we are now in a position to make further investments should
suitable opportunities emerge and are monitoring such opportunities carefully -
though we would prefer to demonstrate profitable exits from existing portfolio
companies before committing too much money to new investments.



Meanwhile, given our view of the potential worth of our portfolio, it seems to
us that one of the best uses of surplus funds would be to re-purchase our own
shares at the right price. For this reason with our forthcoming notice of AGM we
hope to send shareholders documentation to approve a reconstruction of our
balance sheet to eliminate accumulated losses and create distributable reserves.
Such reconstructions are complex and require Court approval, but if it proves
possible without excessive cost then we view it as desirable as it would give
SPARK the ability to utilise surplus funds to implement share buy backs. The
timing, extent and price of any such buy backs will depend on market conditions
at the time, and also on our view of the potential value of our investment
portfolio relative to SPARK's share price. However for guidance our current view
would be that the present 9.5p market price of SPARK shares would represent an
attractive buying opportunity.



Michael Whitaker
17 June 2004


For further information:

NewMedia SPARK plc                             020 7851 7777
Mike Whitaker, Chief Executive Officer


Consolidated Statement of Total Recognised Gains and Losses
year ended 31 March 2004
                                                                           Year ended              Year ended
                                                                        31 March 2004           31 March 2003
                                                                                £'000                   £'000
                                                                            Unaudited                 Audited

Loss for the year                                                             (6,066)                 (9,030)
Unrealised gain / (loss) on investments                                           201                 (4,560)
Previously unrealised losses on investments now deemed permanent                2,425                   7,704
Movements in relation to own shares of subsidiary                               (601)                       -
Reserve transfer on lapse of warrants                                           8,391                       -
Foreign currency translation                                                    (907)                   2,850

Total recognised gains and losses relating to the year                          3,443                 (3,036)



Reconciliation of Movements in Consolidated Shareholders' Funds
year ended 31 March 2004
                                                                           Year ended               Year ended
                                                                        31 March 2004            31 March 2003
                                                                                £'000                    £'000
                                                                            Unaudited                  Audited

Loss for the year                                                             (6,066)                  (9,030)
Other recognised gains and losses for the year                                  9,509                    5,994
Reduction in capital reserve on lapse of warrants                             (8,391)                        -
Proceeds of issue of shares                                                         6                        -
Net reduction to shareholders' funds                                          (4,942)                  (3,036)
Opening shareholders' funds                                                    58,545                   61,581
Closing shareholders' funds                                                    53,603                   58,545





Consolidated Profit & Loss Account
year ended 31 March 2004
                                                                           Year ended               Year ended
                                                                        31 March 2004            31 March 2003
                                                                                £'000                    £'000
                                                                            Unaudited                  Audited

Turnover                                                                          639                    1,295

Administrative expenses:
- Salaries and other staff costs                                                2,155                    8,361
- Administrative and operating costs                                            3,340                    8,170
- Amortisation of positive goodwill                                                 -                    1,338
- Amortisation of negative goodwill                                                 -                  (5,221)
- Depreciation                                                                    574                      915
- Other costs                                                                   1,339                    2,695
Total administrative expenses                                                   7,408                   16,258

Other operating income                                                            634                      650

Operating loss                                                                (6,135)                 (14,313)

(Loss) / gain on investments                                                    (501)                    3,943
Loss on disposal of subsidiary                                                (1,177)                        -
Net interest receivable and similar income                                      1,217                    1,284

Loss on ordinary activities before taxation                                   (6,596)                  (9,086)

Tax credit on loss on ordinary activities                                         139                      330

Loss on ordinary activities after taxation                                    (6,457)                  (8,756)

Equity minority interests                                                         391                    (274)

Retained loss for the year                                                    (6,066)                  (9,030)

Basic and diluted loss per ordinary share                                     (1.32p)                  (1.96p)




Consolidated Balance Sheet
as at 31 March 2004
                                                                                 2004                     2003
                                                                                £'000                    £'000
                                                                            Unaudited                  Audited
Fixed Assets
Tangible assets                                                                 1,059                    1,372
Investments                                                                    42,323                   25,408
                                                                               43,382                   26,780
Current Assets
Debtors                                                                         6,150                    3,930
Cash at bank and in hand                                                       10,860                   51,989
                                                                               17,010                   55,919

Creditors: amounts falling due within one year                                (6,046)                  (7,260)

Net current assets                                                             10,964                   48,659

Total assets less current liabilities                                          54,346                   75,439

Provisions for liabilities and charges                                          (743)                  (3,660)

Equity minority interests                                                           -                 (13,234)


Net Assets                                                                     53,603                   58,545


Capital and reserves
Called up share capital                                                        11,799                   11,799
Share premium account                                                         183,371                  183,365
Revaluation reserve                                                          (41,566)                 (44,192)
Capital reserve                                                                     -                    8,391
Profit and loss account                                                     (100,001)                (100,818)
Equity shareholders' funds                                                     53,603                   58,545



Consolidated Cash Flow Statement
year ended 31 March 2004
                                                                           Year ended               Year ended
                                                                        31 March 2004            31 March 2003
                                                                                £'000                    £'000
                                                                            Unaudited                  Audited

Net cash outflow from operating activities                                    (8,533)                 (12,693)


Returns on investments and servicing of finance

Interest received                                                               1,218                    1,284

Taxation

UK Corporation Tax (paid) / recovered                                           (150)                      118
Foreign tax paid                                                                (332)                        -
Net cash (outflow) / inflow from taxation                                       (482)                      118

Capital expenditure and financial investment

Payments to acquire tangible fixed assets                                       (305)                     (68)
Receipts from disposal of tangible fixed assets                                    51                      264
Payments to acquire investments                                               (4,212)                  (8,347)
Receipts from sales of investments                                              3,523                   28,351
Net cash (outflow) / inflow from investing activities                           (943)                   20,200


Acquisitions and disposals

Sale of subsidiary undertakings                                                 9,061                    3,517
Purchase of minority interest                                                       -                  (2,645)
Net cash sold with subsidiaries                                              (37,301)                  (2,901)
Net cash outflow from acquisitions and disposals                             (28,240)                  (2,029)


Net cash (outflow) / inflow before financing                                 (36,980)                    6,880


Financing
Issue of ordinary share capital                                                     6                        -
Purchase of own shares by subsidiary                                          (2,462)                        -
Net cash outflow from financing                                               (2,456)                        -

Net cash (outflow) / inflow in the year                                      (39,436)                    6,880


Net cash (outflow) / inflow in the year                                      (39,436)                    6,880
Foreign exchange differences                                                  (1,693)                    3,327
(Decrease) / increase in cash in the year                                    (41,129)                   10,207




Note

The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 March 2004 and 2003.  The
financial information for the year ended 31 March 2003 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies.  The auditors reported on those accounts; their report was
unqualified and did not contain a statement under s237(2) or (3) Companies Act
1985.  The statutory accounts for the year ended 31 March 2004, on which the
auditors have not yet reported, will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and will
be delivered to the Registrar of Companies following the company's annual
general meeting.

This announcement is prepared on the basis of the accounting policies as stated
in the statutory accounts for the year ended 31 March 2003, without exception.


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