Final Results

NewMedia SPARK PLC
14 June 2005





NewMedia SPARK plc
Preliminary Announcement of Annual Results for the year ended 31 March 2005


NewMedia SPARK plc ('SPARK') today announces preliminary results for the year
ended 31 March 2005.



Chief Executive Officer's report


•  Strong growth of most significant companies within the portfolio
   drives 11.4% growth in Net Assets per share to 12.8p (March 2004: 11.5p)

•  Substantial exits in the year put total cash balances (restricted and
   unrestricted) up to £21.7m (March 2004: £11.3m)

•  Buy-back of 9.75 million shares at an average price of 10.7p
   represents a 16.4% discount to year end net asset value

•  Sufficient cash reserves to continue backing successful portfolio
   companies and support a limited number of targeted new investments within our
   preferred sectors, as well as to continue buy-backs as appropriate

•  64% reduction in operating costs reflecting the full effects of the
   sale of a controlling stake in Spuetz AG ('Spuetz') and successful subletting 
   of excess office space





OVERVIEW



The value of investments has risen by £6.6m this year (March 2004: £2.1m) as
companies within the portfolio performed strongly enough to enable valuations
based on earnings rather than previous funding rounds.  Of this, £0.3m is shown
on the face of the Profit and Loss account as a 'Gain on investments', and £6.3m
as an 'Unrealised gain' on investments shown in the Consolidated Statement of
Total Recognised Gains and Losses.  The £0.3m gain is the net result of a £3m
gain on the sale of Pricerunner offset by a series of smaller losses or
write-offs, the largest of which (£1.2m) was for the sale of 24% of Spuetz.



In all, these sales raised £10.9m of cash leaving £21.7m at the year end - after
operating costs, investments and share buy-backs.  Of this, £2.5m is restricted
in accordance with the Court's requirements following the share premium
reduction, and £0.4m is a rent deposit.  A further £1.1m, currently in debtors,
is expected to be transferred to cash once the funds put in escrow to cover
potential warranty claims from the sale of Pricerunner ends in August 2005.
Just over £1m was returned to shareholders via share buy-backs which started in
December.



Net operating costs after rental income have fallen by 64%, reflecting a full
year's benefit of the rationalisation that took place when our holding in Spuetz
was sold down so that it was no longer consolidated into the group.  It also
reflects the success at letting excess space at our offices in Glasshouse
Street, which generated revenues of £1.2m in the year (2004: £0.5m).




COMMENTARY



Investment Values



The increased value of investments of £6.3m that have not yet been realised
(i.e. sold or written off) is driven principally by four investments.  In
accordance with BVCA valuation guidelines, three of these have been revalued on
the basis of their earnings and one on the basis of the value at which further
investment has been made into the company.



Mergermarket

The largest uplift is mergermarket, a company that delivers M&A research and
intelligence tools for investment banks, hedge funds, solicitors and other
advisors.  The business has grown its turnover in the first four months of the
current year by 82% over the same period last year, has been cash flow positive
since the last investment almost two years ago, and now has almost 1,000
customers across Europe and the US.  Mergermarket invested heavily into a US
launch in 2004, thereby depressing short term profitability.  However, it is a
substantial, cash generative business, now showing operating profits at group
level, it has substantial cash reserves (47% up on prior year) enabling us to
increase the value of our 26.8% holding by £5.7m to £8m.



FootFall

The value of our investment in FootFall has also increased this year.  Following
four years of 60% compound sales growth and a second year of profits we are now
increasing the carrying value of our 17.46% holding in this business by £1.3m to
£3.8m.  FootFall provides counting solutions for pedestrian traffic ('footfall')
in retail environments and is the market leader in Europe and Asia. More than
50% of income is attributable to recurring contracts, usually with blue chip
customers, whose renewal rate is close to 100%.  It has sold 8 out of the 10
biggest people counting systems outside the US and addresses a market that is
less than 5% penetrated in the developed countries, therefore offering
significant growth potential.



Firebox

Firebox has also reported another good year.  On the basis of revenues up by 28%
on the prior year and a third year of profits (up by 62% on prior year), the
valuation of this business has also been adjusted up by £0.8m to £1.5m for our
29.4% holding.



IMI

The final positive revaluation of substance relates to IMI, a business providing
content management systems and data services for mobile operators and major
internet portals in India.  Whilst this has been an investment in our portfolio
since July 2000, it was only in September 2004 that IMI Mobile (a division of
IMI) began to generate meaningful revenues from its activities in the mobile
arena.  The company has relationships with major Indian operators and media
owners, and is witnessing a rapid growth in revenues from them as they build
their services.  Whilst revenues were a modest $2m for the year to March 2005
with operating profit margins of 25%, two months into the new financial year,
the revenue run-rate is already twice this level and generating higher operating
profit margins.  In view of this growth, SPARK has agreed to invest a further
£1.4m into IMI to fund its expansion into new territories and services - only a
part of which had been invested at the year end.  Last year, our 35.7% holding
in this business had a legacy value of £0.3m, so the valuation of this stake has
been raised by £0.9m to reflect the value being placed on the business in the
new round of funding.



Written down investments

Against these positive valuation movements, our 38% holding in Synaptic has been
written down by £1.9m to £1m.  Synaptic Systems is a mature, profitable business
providing research and product information services for financial planning
professionals such as Independent Financial Advisors (IFA).  Whilst this is a
cash generative company that has in the past paid dividends, a recent slow down
in the IFA market has had a corresponding effect on Synaptic Systems.  Whilst
the company has adapted its business to this new environment and is exploring
some promising new markets, we have taken the view that its valuation does not
reflect the fact that the business is no longer in a growth market.  Apart from
this, the only other material write down for the year was of our remaining
holding in Spuetz.  In line with our 'mark to market' valuation policy for
quoted investments the investment was written down by £0.4m.



Other large investments

The remaining larger investments, such as Aspex Semiconductor, Kobalt Music
Group and DX3, are valued at their previous carrying values, adjusted only for
the cost of any further investment.  Nonetheless, they have all made substantial
progress.  The largest of these is Aspex Semiconductor into which SPARK invested
a further £2m in the year.  The company has continued to gain customers both for
its embedded chips and, more recently, for its accelerator boards that can be
sold on a shorter sales cycle.  As Aspex Semiconductor begins to move from
selling evaluation kits to fulfilling volume orders, the requirement for further
products and working capital increases.  In view of this, we are exploring
sources of investment for the business to assist us in the proper capitalisation
of an increasingly substantial operation.



In addition, both Kobalt Music Group and DX3 Technologies have made significant
progress in the year with Kobalt Music Services signing up administration
contracts for Gwen Stefani and Eminem's co-writers amongst others, and DX3
obtaining some of the first major catalogues of rights-cleared content for
distribution to mobile phones.



Exits



As noted in the interim results, the current year has seen the first substantial
cash exit from an investment made as a start-up.  After five years and a total
investment of $8.7m (from all investors, including SPARK), Pricerunner, our
price comparison business, was sold to Valueclick Inc. for between $30m and $36m
depending on the outcome of an earn-out.  SPARK's 40.6% holding in this business
was valued at £3.5m at March 2004, and our current expectation remains that we
will have received £6.5m at the end of the escrow period in August 2005.  Of
this amount, £5.4m has been received during the year, with £1.1m held in
debtors.  In addition, in November 2004 a 24% stake in Spuetz was sold for £4.3m
and withholding taxes of £1.8m were recovered from the German tax authorities.
Another £1.2m was raised from sales (Intelligent Apps, Safelogic), loan
repayments (Kobalt and Insurancewide) or liquidation (Linkguard) of certain
smaller assets.  Taken together, these realisations have substantially
strengthened SPARK's cash reserves, enabling the initiation of share buy-backs
whilst also ensuring sufficient financial strength to promote the value of other
assets in the portfolio.



Looking forward, the prospects for further exits over the coming year look
promising, assuming a stable economic environment.  With the passage of time,
proportionately more of the assets in our portfolio are gaining the scale and
strategic significance to achieve valuations similar or larger to that achieved
on the Pricerunner exit.  A number of them are receiving approaches from trade
buyers, and others, such as FootFall, are evaluating these along with an
acquisition strategy funded by an approach to the public capital markets.
Combined with our existing cash balances, any proceeds received from exits
during the year should support a limited number of new investments in our
preferred technology and media sectors.




Operations



The rationalisation of the Group has been in place sufficiently long now for the
benefits to be visible in the Financial Statements.  Operating costs have fallen
to £3.5m for the year including £1.1m of property costs (net of a £0.5m property
provision release).  Rental income has risen to £1.2m as the serviced office
space within 33 Glasshouse Street has approached full occupancy, reducing the
total operating costs for the year, net of property income, to £2.2m.  Ninety
percent of the difference between this and the £6.1m equivalent for the prior
year can be explained by the cost of discontinued operations in Germany, with
the remainder reflecting the success at letting out the office space.



With this substantial rationalisation of both the property and the issues with
Spuetz, the volume and complexity of the tasks outside portfolio management have
reduced.  Accordingly, we have been able to manage our headcount down to just
five full time staff.



CONCLUSION



SPARK's maturing portfolio of investments is now beginning to deliver more
substantial asset sales, increasing cash balances and improvements to net asset
values from a modest operating base.  With stable markets we are confident that
we will be able to continue this process whilst taking advantage of good quality
investment opportunities as they arise.  We would also look to continue using
cash reserves to fund buy-backs on the basis that SPARK's share price at the
time of writing (9.5p) is at a significant discount to net assets.



Andrew Carruthers



14 June 2005


For further information:


NewMedia SPARK plc  020 7851 7777
Andrew Carruthers, Chief Executive Officer





Consolidated Statement of Total Recognised Gains and Losses
Year ended 31 March 2005

                                                                           Year ended              Year ended
                                                                        31 March 2005           31 March 2004
                                                                                                     Restated
                                                                                £'000                   £'000
                                                                            Unaudited                 Audited

Loss for the year                                                               (966)                 (3,446)
Unrealised gain on investments                                                  6,280                       6
Movements in relation to own shares of subsidiary                                   -                   (601)
Reserve transfer on lapse of warrants                                               -                   8,391
Foreign currency translation                                                      460                   (907)

Total recognised gains and losses for the year                                  5,774                   3,443
Prior period adjustment                                                         (630)
Total recognised gains and losses since the last Annual Report                  5,144







Reconciliation of Movements in Consolidated Shareholders' Funds
Year ended 31 March 2005

                                                                           Year ended               Year ended
                                                                        31 March 2005            31 March 2004
                                                                                                      Restated
                                                                                £'000                    £'000
                                                                            Unaudited                  Audited

Loss for the year                                                               (966)                  (3,446)
Other recognised gains and losses for the year                                  6,740                    6,889
Reversal of amortisation of own shares                                            217                      286
Reduction in capital reserve on lapse of warrants                                   -                  (8,391)
Own shares purchased                                                          (1,043)                        -
Proceeds of issues of shares                                                       75                        6
Net addition / (reduction) to shareholders' funds                               5,023                  (4,656)
Opening shareholders' funds - as previously reported                           53,603                   58,545
Impact of change in accounting policy                                           (630)                    (916)
Opening shareholders' funds - restated                                         52,973                   57,629
Closing shareholders' funds                                                    57,996                   52,973






Consolidated Profit & Loss Account
Year ended 31 March 2005

                                                                           Year ended               Year ended
                                                                        31 March 2005            31 March 2004
                                                                                                      restated
                                                                                £'000                    £'000
                                                                            Unaudited                  Audited

Turnover                                                                            -                      639

Administrative expenses:
- Salaries and other staff costs                                                1,373                    2,155
- Administrative and operating costs                                            1,531                    3,340
- Depreciation                                                                    222                      574
- Other costs                                                                     328                    1,339
Total administrative expenses                                                   3,454                    7,408

Other operating income                                                          1,258                      634

Operating loss                                                                (2,196)                  (6,135)

Gain on investments                                                               321                    2,119
Loss on disposal of subsidiary                                                      -                  (1,177)
Interest receivable and similar income                                            909                    1,217

Loss on ordinary activities before taxation                                     (966)                  (3,976)

Tax on loss on ordinary activities                                                  -                      139

Loss on ordinary activities after taxation                                      (966)                  (3,837)

Equity minority interests                                                           -                      391

Retained loss for the year                                                      (966)                  (3,446)

Basic and diluted loss per ordinary share                                     (0.21p)                  (0.75p)





Consolidated Balance Sheet


                                                                             31 March                 31 March
                                                                                 2005                     2004
                                                                                                      restated
                                                                                £'000                    £'000
                                                                            Unaudited                  Audited

Fixed Assets

Tangible assets                                                                   848                    1,059
Investments                                                                    35,013                   41,693
                                                                               35,861                   42,752
Current Assets
Debtors                                                                         2,351                    5,737
Restricted cash                                                                 2,869                      413
Cash at bank and in hand                                                       18,815                   10,860
                                                                               24,035                   17,010


Creditors: amounts falling due within one year                                (1,711)                  (6,046)



Net current assets                                                             22,324                   10,964



Total assets less current liabilities                                          58,185                   53,716



Provisions for liabilities and charges                                          (189)                    (743)



Net Assets                                                                     57,996                   52,973



Capital and reserves
Called up share capital                                                        11,818                   11,799
Share premium account                                                          39,693                  183,371
Own shares held by EBT                                                          (413)                    (630)
Revaluation reserve                                                          (24,103)                 (41,566)
Profit and loss account                                                        31,001                (100,001)
Equity shareholders' funds                                                     57,996                   52,973


Net Asset Value per share                                                       12.8p                    11.5p



                                                                          Number '000              Number '000

Ordinary shares in issue                                                      472,736                  471,986
Shares held in Treasury                                                       (9,750)                        -
Shares held by employee benefit trust                                         (9,569)                 (10,675)
Shares in issue for net asset per share calculation                           453,417                  461,311







Consolidated Cash Flow Statement
                                                                           Year ended               Year ended
                                                                        31 March 2005            31 March 2004
                                                                                £'000                    £'000
                                                                            Unaudited                  Audited

Net cash outflow from operating activities                                    (1,993)                  (8,533)


Returns on investments and servicing of finance

Interest received                                                                 909                    1,217
Dividend received                                                               5,787                        -
Net cash inflow from returns on investments and servicing of                    6,696                    1,217
finance

Taxation
UK Corporation Tax paid                                                             -                    (150)
Overseas tax paid                                                               (279)                    (331)
Net cash outflow from taxation                                                  (279)                    (481)

Capital expenditure and financial investment
Payments to acquire tangible fixed assets                                        (16)                    (308)
Receipts from disposal of tangible fixed assets                                     5                       54
Payments to acquire investments                                               (3,990)                  (4,212)
Receipts from sales of investments                                             10,856                    3,523
Net cash inflow / (outflow) from investing activities                           6,855                    (943)


Acquisitions and disposals
Sale of subsidiary undertakings                                                     -                    9,061
Net cash sold with subsidiaries                                                     -                 (37,301)

Net cash outflow from acquisitions and disposals                                    -                 (28,240)


Net cash inflow / (outflow) before financing                                   11,279                 (36,980)



Financing
Issue of ordinary share capital                                                    75                        6
Purchase of own shares                                                        (1,043)                        -
Transfer into restricted cash in accordance with Court order                  (2,437)                        -
Purchase of own shares by subsidiary                                                -                  (2,462)


Net cash outflow from financing                                               (3,405)                  (2,456)


Net cash inflow / (outflow) in the year                                         7,874                 (39,436)


Analysis of changes in net funds



Net cash inflow / (outflow) in the year                                         7,874                 (39,436)
Foreign exchange differences                                                       81                  (1,693)
Increase / (decrease) in cash in the year                                       7,955                 (41,129)





Reserves                                                     Share Premium       Revaluation  Profit and Loss
                                                                   Account           reserve          account
                                                                     £'000             £'000            £'000
                                                                 Unaudited         Unaudited        Unaudited


Reserves at 1 April 2004                                           183,371          (41,566)        (100,001)
Unrealised gain on investments                                           -             6,280                -
Previously unrealised losses now deemed permanent                        -            11,183         (11,183)
Shares issued during the year                                           56                 -                -
Cancellation of share premium following court approval           (143,734)                            143,734
Own shares purchased for treasury in the year                            -                 -          (1,043)
Foreign currency translation                                             -                 -              460
Loss for the year                                                        -                 -            (966)
Reserves at 31 March 2005                                           39,693          (24,103)           31,001



Note


The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 March 2005 and 2004.  The
financial information for the year ended 31 March 2004 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 2005, 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 2004, except as stated
below:



1) During the year, the group revised its accounting policy for the valuation of
investments which have not had a recent funding round and which are considered
by the directors to be mature companies. The revised policy allows directors'
valuations above cost and is in accordance with the most recent BVCA guidelines.
Typically, mature investments will be valued in accordance with earnings or
sales multiple principles. The effect of this change for the year ended 31 March
2005 is to increase the Total Recognised Gains and Losses and Net Assets by
£5.9m. There is no effect on the accounts for the year ended 31 March 2004 as a
result of this change in policy as none of the investments were considered to be
mature by the directors at that time.



2) In addition, the group revised its accounting policy for the valuation of
investments, so that the profit or loss on disposal of investments is calculated
with reference to the proceeds less the net book value of the investment.  Any
balance in the revaluation reserve is treated as realised and transferred to the
profit and loss reserve.



The comparative figures for the year ended 31 March 2004 have been restated to
reflect this revision of accounting policy. The effect of this restatement on
the current period's results are, on the profit and loss account, to increase
the total gains from investments and increase the overall profit for the period
by £11.2m and to remove the adjustment for the same amount which would
previously have been shown in the Statement of Total Recognised Gains and Losses
to add back the losses recorded in prior years which had not been realised in
prior periods. It has no effect on the total recognised gains and losses for the
period, nor on the balance sheet.



3)  The group also revised its accounting policy for the treatment of shares
held by the NewMedia SPARK Employee Benefit Trust (EBT) in accordance with
Urgent Issue Task Force number 38. These shares are now shown as a reduction to
shareholders' funds rather than as an investment in the consolidated Balance
Sheet. The effect of this change on the balance sheet previously reported is to
reduce the value of investments, net assets and equity shareholders funds by
£630,000 for 31 March 2004.


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