BRAINSPARK PLC 2001 INTERIM RESULTS 

August 28 2001. Brainspark plc today announced its Interim Results for the six months ended 30 June 2001. Brainspark is an incubator focused on germinating and developing technology and internet-related businesses. 

HIGHLIGHTS 

* Two follow-on funding rounds in the period of £1.05 million into Smile-On and £3.25 million into Metapack. 

* Cash reserves of £7m. 

* Consolidated net-asset value of £12.4 million. 

Don Caldwell, Chairman, commented: 
"The changes outlined in Brainspark`s Financial Statements for the year ended 31 December 2000, including my own appointment, have been implemented. I am glad to say that Brainspark`s underlying operating cash requirement is now broadly in line with the level forecast at that time. However, the mid-market price at 30 June 2001 of 7.0p valued the company`s issued share capital at à 8.6m against a consolidated net asset value of à12.4m. I believe that this insufficiently values the company`s investment portfolio and the future potential of the business. 

Discussions with a number of parties which may or may not lead to an offer being made to the Company are ongoing and shareholders will be kept informed of developments." 

Enquiries: 

Brainspark (020 7843 6600) 
Jasper Judd (Chief Financial Officer) 

David Hart (Director of marketing and communications) 

Citigate Dewe Rogerson (020 7638 9571) 
Martin Jackson / Charles Vivian 

Brainspark Plc 

Chairman`s statement 

In her statement issued with the Brainspark`s Financial Statements for the year ended 31 December 2000, my predecessor Barbara Thomas announced various operational changes within Brainspark taken in the light of the negative sentiment afflicting the technology investment market, particularly that for early stage companies. 

Those changes, including my own appointment, have been implemented, and I am glad to say that Brainspark`s underlying operating cash requirement is now broadly in line with the level forecast at that time 

The Board, however, continues to look carefully at all ways in which the company`s value can be preserved and enhanced 

Financial Summary 

The consolidated net asset value at 30 June 2001 was £12.4m, down from £20.5m at 31 December 2000. Of the fall of £8.1m, £2.3m is attributable to recurring operating expenses and the remainder (£5.8m) principally to exceptionals and share of results of associates, net of interest. 

The fall in Brainspark`s share price to a bid price of 6.0p on 30 June 2001 contributed £2.0m to the above figure of £5.8m, being principally in respect 
of non-cash provisions relating to the Employee Benefit Trust. 

Investments Review 

If anything, market conditions have been worse than those most commentators had predicted, and it has been extremely hard for early stage technology businesses to raise further funds. Accordingly, we were very pleased that both Metapack and Smile-On successfully completed financings of £3.25m and £1.05m respectively in the period. 

Unfortunately, the period also involved the closures of EC1 Media and Gasworld, and (in July 2001) the sale of the Petspark and the Leisurehub businesses. Provisions for disposal have also been made against Globe-Rail and iProx 
On the positive side, Propex has made real progress towards becoming the key marketplace for major UK commercial property deals, having achieved the buy-in of some of the biggest players in the sector. 

The Usability Company, for which Brainspark provided seed funding in February 2001, has had a very encouraging start and looks set to become imminently self-sustaining. 

Brainspark`s remaining active investments, Easyart, Fortune-Cookie, Kerb, Que Pasa Media and Traderserve are all at important stages in their development and the next few months should tell us much about their long-term prospects. 

Outlook 

The mid-market price at 30 June 2001 of 7.0p valued the company`s issued share capital at £8.6m against a consolidated net asset value of £12.4m. I believe that this insufficiently values the company`s investment portfolio and the future potential of the business. 

Your Board remains committed to looking for value-creation opportunities and with £7.0m in cash at the end of June 2001, Brainspark remains positioned to withstand an extremely difficult market environment. 

Shareholders may be aware that, on 30 July 2001, the Company announced that it was in the early stages of discussions with a number of parties, which may or may not lead to an offer being made for the Company. These discussions are ongoing and shareholders will be kept informed of developments. 

D. Caldwell - Chairman