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Web-Angel PLC (WEB)

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Friday 28 September, 2001

Web-Angel PLC

Interim Results

Web-Angel PLC
28 September 2001

28 September 2001

            Interim results for the six months ended 30 June 2001

               equity options secured in two further companies


  * Agreement entered into to earn 25% interest in a UK joint venture with
    Melody Interactive Solutions AB and to secure an option over 10% of
    M-Surfers AB

  * 4.4% interest taken in Icontrol Transactions Inc together with a 9.3%
    interest in Auxema

  * Portfolio reflects increased focus on wireless ventures and network
    infrastructures with Auxema, Melody and M-Surfers investments

  * Aon Ltd, the UK subsidiary of Aon inc. of the US, has become the major
    shareholder in ETC with web-angel also increasing its stake in the company
    from 9.5% to 12%

  * Interim operating loss of £1.2 million (for six months ended 31 December
    2000: £1.1 million), in line with expectations after accounting for
    exceptional items

  * Robust cash balance of £4.2m (at 31 December 2000: £4.8m) reflects the
    benefits of web-angel's scalable model and prudent burn rate

  * Auxema AB, web-angel's part owned corporate venturing subsidiary in
    Stockholm expects to spinout first company in coming months

Penny Hughes, Chairman, said:

'We are pleased to have driven the business and portfolio forwards in these
challenging market circumstances, while retaining a robust cash position.

Our principal objective remains to improve shareholder value. The Company is
aware that consolidation and other corporate developments are being pursued in
the sector and is in the early stage of reviewing its strategic options.'

For further information please contact:

Nick Tamblyn

Finance Director, web-angel                    020 7010 8200

David Rydell/Miles Bake

Bell Pottinger Financial                       020 7353 9203 / 07989 379736

web-angel plc

Interim Results

For the six months ended 30 June 2001

Chairman's Statement


Since my year-end statement, web-angel has continued to maintain a strong cash
position and to strengthen its portfolio as opportunities have allowed.
However, market sentiment towards early stage technology investments has
continued to deteriorate -affecting realisation valuations- and although this
has led to an increasing number of companies looking to us for additional
early stage funding we remain highly selective when assessing new investment


The loss for the six months ended 30 June 2001 was £1.2 million, including £
510,000 of goodwill amortisation and £250,000 written off investments. Other
than for this investment write-off, they are in line with expectations.
Overheads are running at the same level as during the second half of 2000
although efforts are being made to reduce these where appropriate.

Our cash balances remain in robust shape having been reduced by only £600,000
from £4.8 million at 31 December 2000 to £4.2 million at 30 June 2001.
Goodwill has continued to be amortised in line with the policy adopted at the
year-end although this will be kept under review in light of any long-term
changes in market sentiment, which affect the value of this goodwill.

Investment Portfolio

Two further investments have been made during the half-year. In January a 4.4
% interest was taken in Icontrol Transactions Inc ('Icontrol'), at a cost of £
170,000. This is an American company in which McKenna Venture Accelerator, our
affiliated US Venture Capital fund, has a 30% interest. Products being
developed by Icontrol include voice authentication and BioCert server

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-System's existing and future intellectual property. We expect to see the
first investments through Auxema in the coming months.

At 31 December 2000 the portfolio comprised seven investments. However, due to
the difficulties in attracting further funding for a number of businesses in
the portfolio in the period under review, provision has had to be made against
three of these investments during the period. In particular Ascot Drummond did
not receive an expected second tranche of funding and has subsequently been
placed into administration. This reflects the difficulties that many companies
in the sector are experiencing and full provision has therefore been made
against this investment.

Subsequent to 30 June 2001, ETC (Electronic Trading Company) Limited ('ETC')
has received £800,000 of additional funding of which £180,000 was provided by
web-angel. As part of this interim fund raising AON Limited converted its
existing loans into equity in addition to providing part of the additional
funds. Following these transactions, web-angel holding in ETC has increased
from 9.5% to 12%.

Business Development

web-angel continues to explore a number of other investment opportunities.
These include an agreement with Melody Interactive Solutions AB ('Melody'), a
provider of SMS related services to mobile internet operators and portal
companies, whereby web-angel will receive 25% of the equity in a joint-venture
company to be formed by both Melody and web-angel. This is subject to
web-angel assisting in securing a major commercial partner for the new
business, using the proprietary technology owned and developed by Melody.
Talks with network operators and portal companies who may fulfil this role are

A similar type of transaction has been entered into with M-Surfers AB
('M-Surfers'), a Swedish company focused on bringing music, including ring
tones and related content, to mobile phones. web-angel has an option to
purchase shares representing approximately 10% of M-Surfers equity, subject to
web-angel helping to secure a commercial partner for M-Surfers.

Outlook and Objectives

The long term potential for wireless and other technology investments remains
attractive, although it has become increasingly clear that the recovery in
market sentiment is going to take time. As such our operational priorities are
to remain selective on investment opportunities and to control our cost base
to conserve our cash resources. Our principal objective remains to improve
shareholder value. The Company is aware that consolidation and other corporate
development opportunities are being pursued in the sector and is in the early
stages of evaluating its strategic options.

Penny Hughes
28 September 2001

Unaudited Group Results for the six months ended 30 June 2001

                                           Six months   Six months         Year
                                                ended        ended        ended 
                                               30 June      30 June  31 December
                                                 2001         2000         2000
                                                £'000        £'000        £'000

Turnover                                          112           71          265

Cost of sales                                   (101)            -         (78)

Gross Profit                                       11           71          187

Administrative expenses:

Amortisation of goodwill                        (510)         (85)        (595)

Other                                           (683)        (288)        (958)

Operating Loss                                (1,182)        (302)      (1,366)

Exceptional gain on closure of former              80            -          145

Interest receivable and similar income            136          118          249

Amounts written off investments                 (250)            -        (274)

Loss on ordinary activities before and        (1,216)        (184)      (1,246)
after taxation

Loss per share                                 (0.9)p       (0.4)p       (1.4)p

Unaudited Group Balance Sheet for the six months ended 30 June 2001

                                                    Six months     Year ended
                                                         ended    31 December
                                                  30 June 2001           2000
                                                         £'000          £'000

Fixed assets
Intangible assets                                       19,035         19,545
Tangible assets                                             13             15
Investments                                              1,770          1,928
                                                        20,818         21,488
Current assets
Stocks                                                     146             65
Debtors                                                    485            579
Investments                                                  -            147
Cash at bank                                             4,226          4,840
                                                         4,857          5,631
Creditors: amounts falling due within one year           (539)          (622)
Net current assets                                       4,318          5,009
Total assets less current liabilities and net           25,136         26,497

Capital and reserves
Called up share capital                                  4,800          4,800
Share premium account                                      331            331
Investment revaluation reserve                             710            855
Other reserves                                          22,841         22,841
Profit and loss account                                (3,546)        (2,330)
Shareholders' funds - equity                            25,136         26,497


    1.     The figures above do not constitute statutory accounts within
    the meaning of Section 240 of the Companies Act 1985. The comparative
    figures for the year ended 31 December 2000 have been extracted from
    the statutory accounts for that year, on which the auditors reported
    without qualification, and which have been filed with the Registrar of

    2.     The interim results for the six months ended 30 June 2001 are
    unaudited and have been prepared in accordance with the accounting
    policies stated in the statutory accounts for the year ended 31
    December 2000.

   3.     The directors do not propose to recommend the payment of an
   interim dividend (2000: nil).

These interim results are being circulated to shareholders and are available
upon request from the Company's head office at OC&C House, 233 Shaftesbury
Avenue, London WC2H 8EE (Tel: 020 7010 8200 e-mail: [email protected])

                                      Directors and Advisers

Directors               PL Hughes     Chairman*

                        J Bjaroy      Business Development Director

                        NJ Tamblyn    Finance Director

                        O Ermgassen*

                        P Jessiman*

                        P Jungen*

                        G Mott*

                        C Outram*

Secretary               NJ Tamblyn
Registered Office       OC&C House

                        233 Shaftesbury Avenue

                        London WC2H 8EE
Registered Number       1712354
Auditor                 KPMG Audit plc

                        Chartered Accountants

                        8 Salisbury Square

                        London WC1X 8RW
Nominated Advisers      Ernst & Young LLP

                        One Colmore Row

                        Birmingham B3 2BD
Nominated Broker        Peel Hunt & Company Limited

                        62 Threadneedle Street

                        London ECR 8HP
Solicitors              Nabarro Nathanson

                        Lacon House

                        84 Theobald's Road

                        London WC1X 8RW
Registrars              Capita IRG Ltd

                        Balfour House

                        390/398 High Road

                        Ilford, Essex IG1 1NQ
Principal Bankers       Lloyds TSB Bank plc

                        4/6 Copthall Avenue

                        London EC2R 7DA

web-angel plc

OC&C House, 233 Shaftesbury Avenue, London WC2H 8EE

Telephone: 020 7010 8200 Facsimile: 020 7010 8222

Email: [email protected]


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