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FOR IMMEDIATE RELEASE 30 June 2005
BRAINSPARK Plc ("Brainspark" or the "Company")
INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2005
CHAIRMAN'S STATEMENT
In the six months ended 30 June 2005, the Company incurred a loss before
taxation of £551k, compared to a loss for the comparative period last year of
£556k. Of the loss of £551k, £133k principally represents operating costs and
£418k is mainly attributable to the amortization of goodwill on acquisitions.
Operating costs for the period ended 30 June 2005 of £130k represent a decrease
of £64k from the comparative period last year.
Actions for raising capital to support the first part of the above expansion
have been launched during the period and we expect these to be completed in the
second half of 2005.
Financial Summary
The consolidated net asset value at 30 June 2005 was £2,216 k - down from
£2,767k at 31 December 2004.
The Group's cash reserves at 30 June 2005 stood at £57k compared with £28k at
31 December 2004.
Investments Review
As of 30 June 2005 Brainspark had holdings in 8 companies, 5 in the UK, two in
Italy and one in Israel. Its stakes range from nearly 5% to 50.3% of the
relevant portfolio companies. The portfolio covers a wide range of business
sectors, including web services, application service providers and advanced IT
solutions.
Outlook
At 30 June 2005, Brainspark's mid-market price per share of 0.3p valued the
Company's issued capital at £576k against a consolidated net asset value of
£2,216k.
A convertible loan for £305k has been approved by the Board. All the convertible
loan has been subscribed and paid for in August 2005.
Moreover an agreement has been entered into with AISoftw@re SpA ("AIS"), an
Italian software company listed on the Milan Stock Exchange, which grants AIS
the right to buy Brainspark's stake in ACS, a Brainspark portfolio company; for
an amount of £1,430k. Of that amount, £300k has already been paid in settlement
of existing debts and financial commitments of the Company. The Agreement is
subject to a number of conditions including a condition that, by 31 October 2005
, Infusion 2002 Limited, the vehicle through which Brainspark holds its take in
ACS, will have no assets or liabilities other than its investment in ACS.
Mr. Alfredo Villa has been appointed Brainspark Board Member on 2nd July 2005;
we believe that his 20 year experience in Asset Management will be very valuable
for the definition and implementation of the Company's new strategy.
A Formal termination notice has been sent to the Landlord of the Company's
current office premises in order for the Company to exit the existing lease
agreement at the end of March 2006. This will result will result in annual cost
savings of £240k(1)
Finally, a Memorandum of Understanding has been signed on between Geosim Systems
Ltd (an Israeli company 50.3% owned by Brainspark) and an undisclosed US
investor. This transaction will provide, not only additional funds for Geosim,
but also a strategic partner to pursue opportunities in the US market.
While all the above actions represent an important step forward for the Company
we continue facing the future with guarded optimism.
Prof. Francesco Gardin
Chairman
29 September 2005
FINANCIAL STATEMENTS
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 30 JUNE 2005
Notes Six months to Six months to Year ended
30 June 30 June 31 December
2005 2004 2004
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
--------------------------------------------------------------------------------
Turnover 2a - - -
Net operating
expenses -
recurring (130) (194) (395)
--------------------------------------------------------------------------------
Total net operating
expenses/Group
operating loss (130) (194) (395)
Share of operating
loss of associated
undertakings 3 (418) (362) (1,186)
--------------------------------------------------------------------------------
Total operating loss:
Group and share of
associated undertakings (548) (556) (1,581)
Profit on disposal of
associated undertakings - - 558
--------------------------------------------------------------------------------
Loss on ordinary
activities before
interest (548) (556) (1,023)
Net interest payable (3) (5) (11)
Amounts written off
investments - - (37)
--------------------------------------------------------------------------------
Loss on ordinary
activities before
taxation (551) (561) (1,071)
Tax on loss on ordinary - - -
activities
--------------------------------------------------------------------------------
Loss on ordinary
activities
after taxation (551) (561) (1,071)
--------------------------------------------------------------------------------
Retained loss for the
financial period (551) (561) (1,071)
--------------------------------------------------------------------------------
Loss per 1p
ordinary share 4 (0.29p) (0.29p) (0.56p)
Basic and diluted
--------------------------------------------------------------------------------
The loss for period is derived wholly from continuing activities.
The Company has no recognised gains or losses other than the loss for the
period.
CONSOLIDATED BALANCE SHEET AT 30 JUNE 2005
Notes Six months to Six months to Year ended
30 June 30 June 31 December
2005 2004 2004
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
--------------------------------------------------------------------------------
Fixed assets
Tangible assets 26 62 44
Investments in
associated
undertakings 5 1,059 2,277 1,451
Other
investments 6 1,549 1,567 1,549
--------------------------------------------------------------------------------
2,634 3,906 3,044
--------------------------------------------------------------------------------
Current assets
Debtors 402 219 462
Cash at bank
and in hand 57 41 28
--------------------------------------------------------------------------------
459 260 490
Creditors: amounts
falling due within
one year (755) (767) (645)
--------------------------------------------------------------------------------
Net current
liabilities (296) (507) (155)
--------------------------------------------------------------------------------
Total assets less
current liabilities 2,338 3,399 2,889
Provisions for
liabilities
and charges (122) (122) (122)
--------------------------------------------------------------------------------
Net assets 2,216 3,277 2,767
--------------------------------------------------------------------------------
Capital and reserves
Called up
share capital 1,923 1,923 1,923
Share premium
account 28,562 28,562 28,562
Other reserves 6,813 6,813 6,813
Profit and loss
account (deficit) (35,082) (34,021) (34,531)
--------------------------------------------------------------------------------
Total equity
shareholders'
funds 2,216 3,277 2,767
--------------------------------------------------------------------------------
RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
FOR THE PERIOD ENDED 30 JUNE 2005
--------------------------------------------------------------------------------
Notes Six months to Six months to Year ended
30 June 30 June 31 December
2005 2004 2004
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
--------------------------------------------------------------------------------
Loss for the period (551) (561) (1,071)
--------------------------------------------------------------------------------
Net reduction in
shareholders'
funds (551) (561) (1,071)
Opening
shareholders'
funds 2,767 3,838 3,838
--------------------------------------------------------------------------------
Closing
shareholders'
funds 2,216 3,277 2,767
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2005
--------------------------------------------------------------------------------
Notes Six months Six months to Year ended
to 30 June 30 June 2004 31 December
2005 (Unaudited) 2004
(Unaudited) (Audited)
£'000 £'000 £'000
--------------------------------------------------------------------------------
Net cash flow from
operating activities 7 - 47 (240)
Returns on investments and
servicing of finance
Interest paid on 5%
Convertible bond - - (2)
--------------------------------------------------------------------------------
Net cash outflow from
returns on investments
and servicing
of finance - - (2)
--------------------------------------------------------------------------------
Acquisitions and disposals
Sale of investments in
associated undertakings 55 - 360
Purchase of investments
in associated undertaking - (147) (70)
Loans to associated
undertakings (26) - (110)
--------------------------------------------------------------------------------
Net cash inflow (outflow)
from acquisitions
and disposals 29 (147) 180
--------------------------------------------------------------------------------
Net cash inflow (outflow)
before financing 29 (100) (62)
--------------------------------------------------------------------------------
Financing
--------------------------------------------------------------------------------
Repayment of 5%
Convertible bond issue - - (50)
--------------------------------------------------------------------------------
Loan from major
shareholder - - 110
--------------------------------------------------------------------------------
Partial repayment of
loan to major shareholder - - (38)
--------------------------------------------------------------------------------
Short term loans - 110 -
--------------------------------------------------------------------------------
Repayment of short
term loans - (37) -
--------------------------------------------------------------------------------
Net cash inflow
from financing - 73 22
--------------------------------------------------------------------------------
Increase (decrease)
in net cash for
the period 29 (27) (40)
--------------------------------------------------------------------------------
Reconciliation of cash flow
to movement in net funds
Net cash at beginning
of period 28 68 68
Increase (decrease) in
net cash in the period 29 (27) (40)
--------------------------------------------------------------------------------
Net cash at end of period 57 41 28
30 June
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
Principal accounting policies
The financial statements have been prepared under the historical cost convention
modified to include certain investments at valuation, and in accordance with
applicable accounting standards. Fixed annual charges are appointed to the
interim period on the basis of time elapsed and other expenses are accrued in
accordance with the same principles used in the preparation of the annual
accounts. The financial information contained in this interim statements is
unaudited and does not constitute statutory accounts as defined in Section 240
of the Companies Act 1985.
The comparative information for the year ended 31 December 2004 is an abridged
version of the statutory accounts for that year and those accounts, upon which
the auditors issued an unqualified opinion.
2. Profit and Loss
Six months to Six months to Year ended
30 June 2005 30 June 2004 31 December 2004
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Turnover
Group turnover including
share of associated 238 206 669
undertakings
Less: share of
associated (238) (206) (669)
undertakings
--------------------------------------------------------------------------------
- - -
--------------------------------------------------------------------------------
3. Share of operating loss of associated undertakings
Six months to Six months to Year ended to
30 June 2005 30 June 2004 31 December 2004
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Share of operating loss of
associated Undertakings - (39) (11)
Amortisation of goodwill
on acquisition (418) (323) (836)
Impairment of goodwill - - (339)
--------------------------------------------------------------------------------
(418) (362) (1,186)
--------------------------------------------------------------------------------
4. Basic and diluted loss per 1p ordinary share
Six months to Six months to Year ended
30 June 2005 30 June 2004 31 December 2004
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Loss attributable to
ordinary shareholders (551) (561) (1,071)
--------------------------------------------------------------------------------
Adjusted loss (551) (561) (1,071)
--------------------------------------------------------------------------------
Weighted average number of
ordinary shares 192,273 192,273 192,273
Adjusted weighted average
number of ordinary shares 192,273 192,273 192,273
Basic loss per share (0.29p) (0.29p) (0.56p)
Diluted loss per share (0.29p) (0.29p) (0.56p)
--------------------------------------------------------------------------------
5. Investments in associated undertakings
Six months to Six months to Year ended
30 June 2005 30 June 2004 31 December 2004
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Share of net assets
At beginning of period 28 61 61
Disposal - - (22)
Share of loss for the period - (39) (11)
--------------------------------------------------------------------------------
At period end 28 22 28
--------------------------------------------------------------------------------
Goodwill
At beginning of period 1,313 2,578 2,578
Adjustment - - (90)
Amortisation of goodwill (418) (323) (1,175)
--------------------------------------------------------------------------------
At period end 895 2,255 1,313
--------------------------------------------------------------------------------
Loans to associated
undertakings
At beginning of period 410 300 300
Further advances in the
period 26 - 110
Provisions against loans and
disposal (300) (300) (300)
--------------------------------------------------------------------------------
At period end 136 - 110
--------------------------------------------------------------------------------
Net book amount at period end 1,059 2,277 1,451
--------------------------------------------------------------------------------
6. Other investments
Six months to Six months to Year ended
30 June 2005 30 June 2004 31 December
(Unaudited) (Unaudited) 2004
£'000 £'000 (Audited)
£'000
At beginning of period 1,549 1,567 1,567
Additions - - 19
Amounts written off in
the year - - (37)
--------------------------------------------------------------------------------
At period end 1,549 1,567 1,549
--------------------------------------------------------------------------------
7. Reconciliation of operating loss to net cash inflow from operating activities
Six months to Six months to Year ended
30 June 2005 30 June 2004 31 December
(Unaudited) (Unaudited) 2004
£'000 £'000 (Audited)
£'000
Operating loss (133) (194) (395)
Depreciation charge 18 18 36
Rental income converted
into shares in
investments - - (19)
Decrease in debtors 5 76 53
Increase in creditors 110 147 85
--------------------------------------------------------------------------------
Net cash flow from
operating activities - 47 (240)
--------------------------------------------------------------------------------
8. Ultimate controlling party
The group has no ultimate controlling party.
9. Availability of Interim Results
Copies of the interim results will be available from The Lightwell, 12-16
Laystall Street, London EC1R 4PF.
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