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Web-Angel PLC (WEB)

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Tuesday 25 June, 2002

Web-Angel PLC

Final Results

Web-Angel PLC
25 June 2002



For immediate release 25 June 2002


                                 web-angel plc

                    Preliminary Results for 12 months ended

                       31 December 2001 and Board Changes



Highlights:

  • Cash balances at 31 December 2001 a healthy £3.5 million (2000: £4.8m),
    with current balances of approximately £3 million
  • Since the year end, cost-cutting measures implemented, including Board
    rationalisation, to preserve cash position
  • Earned option over at least 3.65% equity in merged M-Surfers/Melody entity
  • Further investments made in portfolio companies ETC and Delsy
  • Net asset per share of 2.8p following exceptional impairment of goodwill
    charge
  • Company seeking corporate transaction



Penny Hughes, Chairman of web-angel plc, said:

'In light of the continued deterioration in sentiment towards early-stage
technology investments, our operational priorities have been to reduce our cost
base to preserve our strong cash position whilst remaining selective on
investment opportunities.

The Company has been in discussions with a limited number of parties with a view
to identifying and agreeing a corporate transaction. At present, these
discussions have not resulted in a suitable transaction but the Board's
immediate focus is to pursue this in the interests of enhancing shareholder
value.'

                                    - ends -



For further information, please contact:

Nick Tamblyn, web angel plc  0207 010 8200

David Rydell / Miles Bake, Bell Pottinger Financial  0207 861 3863




Chairman's statement

Introduction

At the time of the interim results I drew attention in my statement to the
continued deterioration in sentiment towards early stage technology investments
and the fact that this was adversely affecting our investments. In light of this
our operational priorities have been to control our cost base to conserve our
cash resources while remaining selective on investment opportunities. I had also
indicated that the Company was aware that consolidation and other corporate
development opportunities were being pursued in the sector and that web-angel
was in the early stages of evaluating its strategic options. Since my interim
statement it has become increasingly clear that the business approach being
adopted by the Group will not achieve the improvements in shareholder value that
had been targeted, this has caused the Board to take the steps detailed below to
help to redress this problem and to help improve the outlook for shareholders.


Financial Results

The financial results reflect the difficulties experienced by the business, with
a loss before amortisation and exceptional impairment of goodwill of £2.5
million. This is larger than last year primarily as a result of the amounts
written off investments having increased from £0.3 million to £1.4 million,
caused by investee companies struggling to attract follow on funding. After
taking into account amortisation and exceptional impairment of goodwill the loss
on ordinary activities is increased to £22 million the exceptional charge having
been necessitated by the radically changed outlook for investment accelerator
businesses of web-angel's size and cost structure.

Cash balances at 31st December 2001 remained healthy at £3.5 million although
they had reduced by £1.3 million during the course of the year. Net assets per
share were 2.8 pence with the significant fall since last year being primarily
due to the write off of all intangible assets and the write down of investments.


Investment Portfolio

The investment portfolio has experienced a number of set backs during the course
of the year, which has resulted in a net reduction in the number of portfolio
companies which are still active, from six investments at 31st December 2000 to
four investments at 31st December 2001.

Investments were made in two new companies during the year. In January a 4.4%
interest was taken in Icontrol Transactions Inc ('Icontrol') at a cost of
£170,000. Products being developed by Icontrol include voice authentication and
Biocert server software. In addition, in April the Company announced that it had
helped to create and taken a 9.26% interest in a Stockholm based corporate
venturing company Auxema AB (Auxema), aimed at exploiting wireless technologies
from AU-Systems existing and future intellectual property. Progress on Auxema
has however, been on hold since AU Systems was taken over by Teleca AB (publ.).
This takeover, which was announced in the last quarter of 2001 and completed
during the first quarter of this year, has meant that the future of Auxema is
under review.

In addition to the two new investments follow on investments were made in both
ETC (Electronic Trading Company) Limited ('ETC') and Delsy Electronic Components
AG ('Delsy'). The combined cost of these additional investments was £0.3 million
with a further £0.2 million invested in Delsy subsequent to the year-end.

Unfortunately four of the Group's investments failed during the year due to
difficulties in raising further funding and in meeting their business plan
projections as a result of the difficult market conditions. Full provision had
been made against two of these investments at the half-year covering Ascot
Drummond Ltd, and YBag Ltd, with full provision now having also been made
against Online Medical Conferences Ltd and Information Superhighway Ltd.

Two other investment opportunities which were worked on during the year were
Melody Interactive Solutions AB, (Melody) a provider of SMS related services to
mobile internet operators and portal companies and M-Surfers AB (M-Surfers) a
Swedish company focused on bringing music, including ring tones and related
content to mobile phones. Following on from an 'introduction' by web-angel these
two Companies effectively merged subsequent to the year-end. In consequence of
this transaction and as a reflection of the work carried out by web-angel on
both companies web-angel is in the process of receiving an option over 250,961
ordinary shares, representing 3.65% of the enlarged share capital with the
possibility that the option may be increased to being over 285,340 ordinary
shares. Based on the valuation inherent in a recent third party fund raising,
the value of the shares under option have approximately doubled in comparison to
the cost of exercising the options in full of approximately £315,000. This
option has a remaining life of just over a year in which to be exercised. At the
year-end the third party costs associated with earning this option amounting to
£146,000 were included in work in progress.


Management

Subsequent to the year-end a number of changes have been agreed to the Board of
Directors and to the remuneration packages of certain of the remaining directors
aimed at reducing the operational cash burn while ensuring that the business is
in a position to be able to identify and conclude a corporate transaction.

The changes have seen both Peter Jungen and Geoff Mott resign as directors, with
effect from today, in addition Jens Bjaroy has agreed in principle that he will
be leaving web-angel on 30 June 2002 and will resign his position as Business
Development Director at that time. Both Nick Tamblyn and myself agreed to take
reduced salaries as part of a series of cost cutting measures effective 1 April
2002.

I would like to take this opportunity to thank Jens Bjaroy, Peter Jungen and
Geoff Mott for their contribution to web-angel during what has been a difficult
and testing time.


Outlook and Objectives

Although recent discussions have taken place with a limited number of parties
with a view to identifying and agreeing a corporate transaction none of these
discussions have resulted in a suitable transaction at this time. It is
difficult to determine when such a transaction might be identified and agreed
although our target is that a transaction will be agreed by the time that the
interim results are announced if not before.




Penny L Hughes   Chairman   24 June 2002






                      Consolidated Profit and Loss Account

                      for the Year Ended 31 December 2001

                                                                                          2001              2000
                                                                                         £'000             £'000

Turnover                                                                                  156               265
Cost of sales                                                                            (101)              (78)
                                                                                --------------    --------------
Gross profit                                                                               55               187
                                                                                --------------    --------------
Administrative expenses:
Amortisation of goodwill                                                               (1,020)             (595)
Exceptional impairment of good will                                                   (18,525)                -
Other                                                                                  (1,397)             (958)
                                                                                --------------    --------------
                                                                                      (20,942)           (1,553)
                                                                                --------------    --------------
Operating loss                                                                        (20,887)           (1,366)
Exceptional gain on closure of former associate                                            80               145
Interest receivable and similar income                                                    226               249
Amounts written off investments                                                        (1,414)             (274)
                                                                                --------------    --------------
Loss on ordinary activities before taxation                                           (21,995)           (1,246)
Taxation                                                                                    -                 -
                                                                                --------------    --------------
Loss on ordinary activities after taxation and retained loss for the year             (21,995)           (1,246)
                                                                              ----------------  ----------------

                                                                              ----------------  ----------------
Loss per share (note 1)                                                                (16.9)p            (1.4)p
                                                                              ----------------  ----------------

                                                                              ----------------  ----------------
Diluted loss per share (note1)                                                         (16.9)p            (1.4)p
                                                                              ----------------  ----------------

                                                                              ----------------  ----------------


The operating loss for 2000 related to the current activities with the exception
of administrative expenses relating to discontinued operations of £200,000.





                 Consolidated Balance Sheet at 31 December 2001
                                                                                         2001              2000
                                                                                        £'000             £'000
Fixed assets
Intangible assets                                                                           -            19,545
Tangible assets                                                                            29                15
Investments                                                                               164             1,928
                                                                              ----------------  ----------------
                                                                                          193            21,488
                                                                              ----------------  ----------------
Current assets
Stocks                                                                                    146                65
Debtors                                                                                    99               579
Investments                                                                                37               147
Cash at bank                                                                            3,510             4,840
                                                                              ----------------  ----------------
                                                                                        3,792             5,631
Creditors: amounts falling due within one year                                           (338)             (622)
                                                                              ----------------  ----------------
Net current assets                                                                      3,454             5,009
                                                                              ----------------  ----------------
Total assets less current liabilities and net assets                                    3,647            26,497
                                                                              ----------------  ----------------

                                                                              ----------------  ----------------
Capital and reserves
Called up share capital                                                                 4,800             4,800
Share premium account                                                                     331               331
Investment revaluation reserve                                                              -               855
Other reserves                                                                            608            22,841
Profit and loss account                                                                (2,092)           (2,330)
                                                                              ----------------  ----------------
Shareholders' funds-equity                                                              3,647            26,497
                                                                              ----------------  ----------------

                                                                              ----------------  ----------------




                        Consolidated Cash Flow Statement

                        for the Year Ended 31 December 2001

                                                                               2001                 2000
                                                                              £'000                £'000

Net cash outflow from operating activities (note2)                           (1,211)                (978)
Returns on investments and servicing of finance                                 220                  241
Taxation                                                                          -                  (88)
Capital expenditure and financial investment                                   (339)                (771)
Acquisitions                                                                      -                 (558)
                                                                             ----------------  ----------------
Net cash outflow before financing                                            (1,330)              (2,154)
Management of liquid resources                                                3,006                2,413
Net cash inflow from financing                                                    -                   63
                                                                             ----------------  ----------------
Increase in cash in the year                                                  1,676                  322
                                                                             ----------------  ----------------

                                                                             ----------------  ----------------




Notes:


1.     Loss per share and diluted loss per share


        The loss per share is based on the loss on ordinary activities after
        taxation, and on the weighted average number of shares in issue during
        the year of 130,034,650 (2000: 90,581,074). There is no dilutive effect
        in the current year or in 2000.


2. Reconciliation of Operating Loss to Net Cash Outflow From Operating
Activities

                                                                                    2001               2000
                                                                                   £'000              £'000

Operating loss                                                                   (20,887)            (1,366)
Depreciation                                                                           5                  9
Amortisation of goodwill                                                           1,020                595
Exceptional impairment of goodwill                                                18,525                  -
Other including exchange                                                               6                 10
Loss on disposal of tangible fixed assets                                              -                 11
Decrease / (increase) in debtors                                                     373                (16)
Decrease in creditors                                                               (172)              (156)
Increase in stocks                                                                   (81)               (65)
                                                                             ----------------   ---------------
Net cash outflow from operating activities                                        (1,211)              (978)
                                                                             ----------------   ---------------




        3.     The financial information set out above does not constitute
        statutory accounts, within the meaning of Section 240(5) of the
        Companies Act 1985, for the years ended 31 December 2001 or 2000. The
        financial information for 2000 is derived from the statutory accounts
        for 2000, which have been delivered to the Registrar of Companies. The
        auditors have reported on the 2000 accounts: their report was
        unqualified and did not contain a statement under section 237(2) or (3)
        of the Companies Act 1985. The statutory accounts for 2001 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.


        4.     Copies of this announcement are available from the Company's
        office at 233 Shaftesbury Avenue, London WC2H 8EE.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
                                      

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