CLP.L Regulatory News (CLP)

Brainspark plc

("Brainspark" or "the Company")

FINAL RESULTS

For the Year Ended 31 December 2010

Brainspark plc (AIM: BSP), a fast growing international investment company, announces its final results for the year ended 31 December 2010.

Shareholders' attention is drawn to the Company's interim results for the 6 months ended 30 June 2011, which includes an update on the Company's current trading and which are also announced today.

Following publication of the Annual Report and announcement of the interim results, which is expected at 7.01 this morning, the Company's ordinary shares will be restored to trading on AIM with effect from at 7.30 a.m. today.

CHAIRMAN'S STATEMENT

2010 was a transformative year for the Group, with six new companies being added to the portfolio. We have increased our presence in the leisure and interactive media sectors, as well as acquiring assets in the financial services sector. Since the year end we have invested in a further five companies and increased our holding in four existing investments, giving us a majority share holding in three companies.

Our strategy is to become a leading investor in our chosen sectors; namely, leisure, interactive media and financial services, and we believe we have now gained a relevant foothold. The board took the decision early in 2010 to try gain a majority shareholding in our investments where possible, to allow us to better influence the strategy and decision making processes of these companies; helping us to align, where necessary, certain aspects of these businesses thereby creating workable synergies within the portfolio which would ultimately bring in greater rewards for shareholders.

As with any investment company, a small minority of investments do not bring the return expected within an appropriate time frame and Brainspark is no exception. Although we have yet to make a loss on the disposal of an asset, two of our current investments have not performed well and the board will make a decision regarding our position in due course.

Financial Review

The consolidated net asset value at 31 December 2010 was £13.95 million, up from £1.69 million at 31 December 2009. At 31 December 2010, Brainspark's mid-market share price of £0.75p valued the Company at approximately £10.3 million.

The Group made a loss before tax in the period of £8.29 million, compared to the loss as at 31 December 2009 of £128,000. The increase is partly due to taking impairment charges of £6.19 million which are primarily in respect of AC Ancona of £3.63 million and Cogeme SET SpA of £1.61million.

Operational Review

A number of significant investments were made during the year. In summary, these were:

On 3 March 2010 the Group subscribed for 25,000,000 new ordinary shares in Daniel Stewart Securities plc, an AIM listed financial services company and stockbroker, for a consideration of £500,000, giving Brainspark a holding of 6.66 per cent. On 29 June 2010, the Company exercised an option to purchase a further 75,000,000 new ordinary shares in Daniel Stewart at a price of 2 pence per share. On 9 February 2011, the entire holding was placed by Daniel Stewart with its staff and existing shareholders for a price of 2 pence per share.

On 24 March 2010 the Group acquired a 20% stake in TLT Tempo Libero e Turismo SpA (trading as Ondaland), Italy's largest water theme park for a consideration of £5.17 million. This investment was structured through a cash payment of £2.16 million and the issue of 400,000,000 new ordinary shares in Brainspark (before share consolidation). Ondaland became the second investment for the Group in the theme park sector after Mediapolis.

On 26 March 2010 the Group entered into an agreement with Digital Magics SpA to acquire a 50.2% holding in Bibop SpA, a leading Italian digital technology company which owns a revolutionary video community platform called MyCast. The total consideration payable by Brainspark was £2,385,000 through a cash payment of £870,000 and the issue of 792,000 new ordinary shares of 1 pence in Brainspark.

Bibop is currently in discussions with a number of major UK and US television broadcasters to integrate MyCast within their TV programming.

On 14 May 2010, Brainspark announced it had entered into an agreement to acquire an 11.56% interest in Vyke Communications plc for a consideration of £748,750. The investment was made as part of a placing by Vyke which was announced on 22 April 2010 and approved by Vyke shareholders on 10 May 2010. Vyke is an AIM quoted, mobile voice over internet protocol (VoIP) provider. On 8 September, Brainspark received a further 2,139,286 shares in Vyke at 3.5p per share in lieu of £74,875 of commission due to Brainspark

From Allenby Capital Limited, the Company's Nomad at that time. Brainspark remains the owner of 23,522,145 shares in Vyke, equivalent to a 12.71% interest in the company, although Vyke was delisted from AIM on 19 April 2011.

On 18 May 2010 Brainspark announced that it had invested £2.1m in Cogeme, a leading Italian Tier 2 manufacturer of high precision components for the automotive sector, to acquire a 6.12% stake in the issued share capital of Cogeme. During 2010, Brainspark acquired a further 10.08% stake in Cogeme for c.EUR3.29 million. Subsequently Brainspark sold an 8.47% in Cogeme for c.EUR2.77 million (c.£2.36 million), leaving the current holding at 4,492,857 shares in Cogeme equivalent to 7.27% of Cogeme's issued share capital.

On 6 August 2010, the Company increased its equity stake in its core investment, B'Parks & Leisure (formerly Mediapolis Investments SA) to 55.35%. B'Parks & Leisure has a 69.94% equity interest in Mediapolis S.p.A., which is the owner of a site in northern Italy with plans for the development of a theme park. The transaction comprised Brainspark acquiring 145,400 ordinary shares in B'Parks & Leisure from certain vendors for a total consideration of 3,600,000 new ordinary shares of 2.5 pence in Brainspark and EUR1.2 million in cash.

On 25 November 2010, the Group entered into agreements to invest in Gruppo Bancario del Mediterraneo Holding SpA ("GBM") and its 52.5% subsidiary Banca Federiciana SpA ("Banca Federiciana"). Brainspark purchased from GBM 2,500 options to subscribe for the same amount of ordinary shares in Banca Federiciana representing approximately 4.67% of Banca Federiciana share capital as enlarged by the exercise of all the options outstanding on the share capital of Banca Federiciana. The total consideration for the purchase of the Options is EUR500, 000 and they are exercisable until the end of 2011.

Banca Federiciana is an Italian bank based in the Puglia region focused on the SME sector. At 31 December 2009, Banca Federiciana had net assets of approximately EUR16.14 million (£13.68 million).

On 31 December 2010, a binding agreement was signed with GEI Company Group S.p.A. ("GEI"), under which GEI will be the General Contractor Company for the Mediapolis project.GEI is a Milan-based General Contractor with strong expertise in delivering complex projects in diverse areas, in particular, its core business lies within the tourism and hospitality sectors. It is expected that GEI will introduce external investors to fully finance and start the construction of the Mediapolis project. GEI is also in charge of providing all the technical and managerial staff, of implementing the project and managing the theme park, the commercial centre, the hotels and the co-generating power station part of the Mediapolis project. In exchange for these services GEI will have a 15% economic interest in the net profit deriving from the Mediapolis project.

Investment Portfolio as at 31 December 2010

Annual Report and Notice of Annual General Meeting

A copy of the audited annual report for the year ended 31 December 2010 together with a notice of Annual General Meeting to be held at 12-16 Laystall Street, London WC1R 4PF on 27 January 2012 at 11 am will today be posted to shareholders and is also available from the Group' website at www.brainspark.com.

-ends-

For further information please contact:

Brainspark plc +39 02 525 051

Alfredo Villa, Chairman and CEO

Arbuthnot Securities +44(0) 20 7012 2000

Antonio Bossi / Ed Groome

Leander PR +44(0) 7795 168 157

Christian Taylor-Wilkinson

Financial Statements

__________________________________________________

Consolidated Statement of Comprehensive Income for the year ended 31 December 2010

Statement of Financial Position at 31 December 2010

Statement of Changes in Equity

For the year ended 31 December 2009

Statement of Changes in Equity

For the year ended 31 December 2010

Statement of Cash Flows

For the year ended 31 December 2010

Notes to the financial statements

1 General Information

Brainspark PLC is a company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on AIM of the London Stock Exchange. The address of the registered office is given on the company information page. The nature of the group's operations and its principal activities are set out in the Chief Executive Officer's statement.

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the group operates. Foreign operations are included in accordance with the policies set out in note 2.

Standards and amendments which became effective during the year have not had a material impact on the financial statements.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

IFRS 1 (amended) Severe Hyperinflation and Removal of Fixed dates for First Time Adopters

IFRS 7 (amended) Disclosures - Transfer of Financial assets

IFRS 9 Financial Instruments

IFRS10 Consolidated Financial Statements

IFRS 11 Joint arrangements

IFRS 12 Disclosure of Interests in Other Entities

IFRS 13 Fair Value Management

IAS 12 (amended) Deferred tax: Recovery of Underlying Assets

IAS 1 (amended) Presentation of Items of Other Comprehensive Income

IAS 27 Separate Financial Statements

IAS 28 Investments in Associates and Joint Ventures

IFRIC 14, IAS 19 (amended) Limit on a Defined Benefit Asset, Minimum Funding Requirement and their interaction

There were no Standards and Interpretations which were in issue but not effective at the date of authorisation of these financial statements, including the above, that the Directors anticipate will have a material impact on the financial statements of the Group or the Company

2 Accounting policies

The principal accounting policies are summarised below. They have all been applied consistently throughout the period covered by these consolidated financial statements.

Basis of preparation and Going Concern

The financial statements have been prepared in accordance with IFRS as adopted by the European Union applied in accordance with the provisions of the Companies Act 2006.

The financial statements have been prepared under the historical cost convention except for certain financial instruments that are stated at their fair values.

After making reasonable enquiries and events after the balance sheet date, the Board consider that the group has adequate future resources and facilities to continue in operational existence for the forseeable future and therefore the financial statements are prepared on a going concern basis.

The directors are satisfied that the group has sufficient future resources, even though at the balance sheet date the group had no liquidity, in order to meet its on-going operating costs and investment funding obligations. The directors are of the opinion that operational liabilities and contractual commitments can be settled from the timely disposal of investments, should the need arise, and from on-going future anticipated rounds of debt or equity funding. Whilst it is difficult to predict the timing of these cash flows, the board have no reason to believe that cash cannot be yielded at critical points to meet liabilities as they fall due. As a consequence, these financial statements are prepared on a going concern basis.

Share based payments

In determining the fair value of equity settled share based payments and related charge to the income statement, the Group makes assumptions about future events and market conditions. In particular, judgement must be made as to the likely number of shares that will vest, and the fair value of each award granted. The fair value is determined using a valuation model which is dependent on future estimates including the timing with which options will be exercised and the future volatility of the Group's shares. Such assumptions are based on publicly available information and reflect market expectations and advice taken from qualified personnel. Different assumptions about these factors could materially affect the reported value of share based payments.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain the benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business Combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for resale in accordance with IFRS 5 Non Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the income statement.

Investments in Associates

Associates are those enterprises in which the Group has significant influence but not control. Associates are accounted for in the consolidated financial statements using the equity method, whereby the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the investee. The income statement reflects the investor's share of the results of operations of the investee. If the investor's share of losses exceeds the carrying amount of the investment, the carrying amount of the investment is reduced to nil and recognition of further losses are discontinued, unless the investor has incurred obligations to the investee or to satisfy obligations of the investee that the investor has guaranteed or otherwise committed, whether funded or not. To the extent that the investor has incurred such obligations, the investor continues to recognise its share of losses of the investee.

Any excess of the cost of acquisition over the Group's share of the fair values of the identifiable net assets of the associate at the date of acquisition is recognised as goodwill. Any deficiency of the cost of acquisition below the Group's share of the fair values of the identifiable net assets of the associate at the date of acquisition (i.e. discount on acquisition) is credited to the income statement in the period of acquisition.

Transactions between the Group and its associates are eliminated to the extent of the investor's interest in the entity. Unrealised losses are not eliminated to the extent that the transaction provides evidence of an impairment of the asset transferred.

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value.

Group Reorganisation

The company applied the Companies Act merger relief provisions when it issued shares to acquire the entire share capital of Brainspark Associates Limited in previous years. Accordingly no share premium was recorded relating to the Company's issue of these shares.

Investments in subsidiaries

Investments in subsidiaries are stated at cost less any provision for impairment.

Foreign currency

The functional currency is pound sterling. Transactions in foreign currencies are translated into sterling at the rates of exchange ruling on the date on which transactions occur. At the balance sheet date, foreign currency monetary items are translated into sterling at the foreign exchange rate ruling at the balance sheet date. Foreign exchange differences arising on translation are recognised in the income statement in the period in which they arise. At the balance sheet date, non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of the transaction, and non-monetary items which are carried at fair value denominated in a foreign currency are reported using the exchange rates that existed at the date when the values were determined.

Taxation

The tax expense represents the sum of the tax currently payable and any deferred tax.

Current taxes are based on the results of the Group companies and are calculated according to local tax rules, using the tax rates that have been enacted or substantially enacted by the balance sheet date.

Deferred tax is provided in full using the balance sheet liability method for all taxable temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax is measured using currently enacted or substantially enacted tax rates.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax assets are recognised to the extent the temporary difference will reverse in the foreseeable future and that it is probable that future taxable profit will be available against which the asset can be utilised. Deferred tax is recognised for all deductible temporary differences arising from investments in subsidiaries and associates, to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

Revenue

Revenue, which excludes Value Added Tax, represents the value of services rendered. Consultancy fees are recognised as earned on unconditional supply of services.

Financial Instruments

Financial assets and financial liabilities are recognised on the balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Trade Receivables

Trade and other receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the Group will not be able to collect all amounts due. The amount of any provision is recognised in the income statement.

Investments

Investments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at cost, including transaction costs.

Investments classified as available for sale are measured at subsequent reporting dates at fair value.

Fair value is defined as the price at which an orderly transaction would take place between market participants at the reporting date and is therefore an estimate and as such requires the use of judgement. Where possible fair value is based upon observable market prices, such as listed equity markets or reported merger and acquisition transactions. Alternative bases of valuation may include contracted proceeds or best estimate thereof, implied valuation from further investment and long-term cash flows discounted at a rate which is tested against market data. Gains and losses arising from changes in fair value are recognised directly in other comprehensive income, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in other comprehensive income is included in the net profit or loss for the period. Impairment losses recognised in the income statement for equity investments classified as available-for-sale are not subsequently reversed through the income statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Convertible bonds

Convertible bonds are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity.

Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.

The interest expense on the liability component is calculated by applying the prevailing market interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note.

Trade payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

3 Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with generally accepted accounting practice requires management to make estimates and judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In order to arrive at the fair value of associates and investments a significant amount of judgement and estimation has been adopted by the Directors as detailed in the investments accounting policy. Where these investments are un-listed and there is no readily available market for sale the carrying value is based upon future cash flows and current earnings multiples for which similar entities have been sold. In view of current market conditions impairment charges totalling £6,192,000 (2009: £Nil) have been made against investments. The carrying value of investments at 31 December 2010 is £22,970,000 (2009: £1,814,000).

4 Segment information

IFRS 8 requires reporting segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker.

Information reported to the Group's chief operating decision maker for the purposes of resource allocation and assessment of segment performance is specifically focused on the geographical segments within the Group. The principal categories of these segments are the UK, USA and Italy.

Information regarding the Group's reportable segments is presented below:

Italy had no income or expenditure during 2009.

5 Employee information

6 Directors' remuneration

There are no retirement benefits accruing to the Directors. Details of directors' remuneration are included in the Directors' Report.

7 Investment revenue

8 Finance charges

9 Loss for the year

10 Company income statement

An income statement for Brainspark PLC is not presented in accordance with the exemption allowed by the Section 408 of the Companies Act 2006. The parent company's loss for the financial year amounted to £373,000 (2009: Loss £138,000).

11 Tax

The Group has no tax charge for the year due to losses incurred and has a potential deferred tax asset arising from unutilised management expenses available for carry forward and relief against future taxable profits. The deferred tax asset has not been recognised in the financial statements in accordance with the Group's accounting policy for deferred tax.

The Group's unutilised management expenses and capital losses carried forward at 31 December 2010 amount to approximately £11 million (2009: £11 million) and £4 million (2009: £4 million) respectively.

The standard rate of tax for the current year, based on the UK standard rate of corporation tax is 28% (2009 - 28%). The actual tax for the current and previous year varies from the standard rate for the reasons set out in the following reconciliation:

12 Analysis of profit/(loss) for the year from discontinued operations

In the prior financial year the group concluded its Capital Reconstruction, where the group divested its Chinese operations, through China IPO (2009) Limited and some of its European holdings, through Infusion (2009) Limited.

The combined results of the discontinued operations, Infusion 2002 Limited and China IPO Group Limited, included in the income statement are set out below

13 Loss per share

The basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is computed using the same weighted average number of shares during the period adjusted for the dilutive effect of share options and convertible loans outstanding during the period.

The loss and weighted average number of shares used in the calculation are set out below:

IAS 33 requires presentation of diluted earnings per share when a company could be called upon to issue shares that would decrease earnings per share. Since it seems inappropriate that option holders and bondholders would act irrationally, no adjustment has been made to diluted earnings per share for out-of-the money options. There are no other diluting share issues, in either financial period, consequently diluted earnings per share equals basic earnings per share.

14 Investments in subsidiaries

The Company's subsidiary undertakings at 31 December 2010 were as follows:

15 Available for sale investments

The vast majority of available for sale investments are valued in accordance with IFRS 7 and Level 3 of the fair value hierarchy; with the exception of Level 1 investments which represent quoted equity investments, namely Daniel Stewart PLC, Cogeme SET SpA and Moggle Inc. Their fair value is determined by unadjusted quoted prices from active markets.

The Level 3, unquoted equity instruments comprise an aggregate 40.63% investment in the Mediapolis project via Mediapolis SpA and Mediapolis Investments SA, a 1.96% investment in Polarizonics, a 10.0% investment in Filmmaster Television S.R.L, a 13.4% investment in GeoSim, a 20% in Ondaland, a 51.75% in BIBOP and a 20% in ORH srl. Their fair value and the methodology adopted is determined on the basis of or a combination of either their net assets or, where a sale is imminent, the best estimate of the eventual proceeds. Given the methodology adopted, it is not envisaged that the adoption of alternative assumptions/methodologies, sensitivity analysis, would have a material impact upon the investments.

16 Trade and other receivables

The directors consider that the carrying value of trade and other receivables approximates to their fair value.

Other receivables represent refundable investment deposits in respect of aborted transactions and are after a provision of £37,000 made in the year.

17 Borrowings, Trade and other payables

The directors consider that the carrying value of trade and other payables approximates to their fair value.

On 31 March 2010 the company launched an issue of £10 million, before issue costs, 7.00% convertible bonds due 2014. The Bonds are convertible into new ordinary shares of 2.5 pence each in the company at a conversion rate of 400 New Ordinary Shares per Bond up until 15 March 2014. The nominal value of each Bond is GBP 1,000. The redemption date of the bonds is 31 March 2014 the coupon of 7% is payable at the end of each year. The company, between 1 and 7 April 2012, can repurchase and serve notice on any or all of the bondholders to sell their Bond in whole or in part at 110% of the nominal value. The bondholders, at any time prior to redemption, may serve a conversion notice to the company in respect of all or any integral multiple of GBP 1,000 nominal value of bonds held by them. At the balance sheet date no bondholder had served notice on the company and the company had not served notice on the bondholders.

Under IAS 32 the bonds contain two components liability and equity elements. The equity element is presented in equity under the heading of "equity component of convertible instrument". The effective interest rate of the liability element on initial recognition is 6.85% per annum.

The other payable of £1million represents the directors' assessment of the amount due to former shareholders of Mediapolis SA in order to fulfil contractual obligations under a purchase agreement.

18 Financial instruments

The Group's financial instruments comprise cash, trade receivables and trade payables that arise from its operations and convertible loans. The main purpose of these financial instruments is to provide finance for the Group's future investments and day to day operational needs. The Group does not enter into any derivative transactions such as interest rate swaps or forward foreign exchange contracts as the Group does not have any significant foreign currency transactions nor does it have any borrowings. The main risks faced by the Group are therefore limited to interest rate risk on surplus cash deposits and liquidity risk associated with raising sufficient funding to meet the operational needs of the business. The Board reviews and agrees policies for managing these risks and they are summarised below.

Interest rate risk

Any surplus cash funds are deposited with highly credit rated third party banks and the interest rates earned and security of these balances are monitored on a regular basis against competing financial institutions' products.

Liquidity risk

The group had no cash at the balance sheet date (refer to note 2 - Basis of preparation of financial statements and going concern). The group continues to secure future funding and cash resources from disposals as and when required in order to meet its cash requirements. This is an on-going process and the directors are confident with their cash flow models.

Interest rate risk of financial assets

The composition of the Group's financial assets which are interest receiving is set out below:

Interest rate risk of financial liabilities

The Group has no formal overdraft or loan facilities with bankers and the Group's creditors falling due within one year at the year end are of a short term nature.

Fair values of financial assets and liabilities

At 31 December 2010 and 31 December 2009 there was no material difference between the book value and fair value of the financial assets and liabilities.

Foreign currency exposures

The Group had no material exposure, with the exception of the Euro, to foreign currency movements at 31 December 2010. The group's functional currency is sterling. The group's monetary assets and liabilities at 31 December 2010 were denominated in sterling.

19 Called up share capital

On 14 June 2010 the Company undertook a consolidation of its share capital whereby every 250 of its existing ordinary shares of 0.01p each were consolidated into 1 new ordinary share of 2.5p each.

The following shares were issued during the year:

On 26 January 2010, the Company issued 350,000,000 ordinary shares of 0.01p each at 0.7p by way of a placing.

Also on 26 January 2010 the Company issued 19,230,769 ordinary shares of 0.01p each at 0.65p to Mr A. Villa following the conversion of his loan note to the company.

On 5 March 2010 the Company issued 72,000,000 ordinary shares of 0.01p each at 0.7p by way of placing.

On 19 March 2010 the Company issued 100,000,000 ordinary shares of 0.01p each at 0.7p in order to satisfy the first tranche payment for AC Ancona.

On 24 March 2010 the Company issued 400,000,000 ordinary shares of 0.01p each at 0.75p in order to partly satisfy the consideration payable under the Ondaland investment.

On 26 March 2010 the Company issued 198,000,000 ordinary shares of 0.01p each at 0.75p in order to partly satisfy the consideration payable for the investment in Bibop/Digitial Magics.

On 31 March 2010 the Company issued 539,386,200 ordinary shares of 0.01p each in order to increase its investment holding in Mediapolis SA and Mediapolis SpA.

On 14 May 2010 the Company issued 111,000,000 ordinary shares of 0.01p each at 0.7p being the second tranche payment for its investment in AC Ancona.

On 6 August 2010 the Company issued 3,600,000 ordinary shares of 2.5p each at 62p being the additional investment in Mediapolis SA.

On 9 November 2010 the Company issued 241,071 ordinary shares of 2.5p each at 70p to Mr Villa in lieu of his salary entitlement for the year.

On 25 November 2010 the Company issued 388,092 ordinary shares of 2.5p each at £1.10p as partial consideration in Banca Federciana.

On 1 March 2007 the Company issued options to the Directors under a new unapproved executive share option scheme. The following Directors had outstanding share options in the Company; these remained exercisable at various time intervals but before 31 March 2010, as follows:

All share options have lapsed in the year and none were exercised since the commencement of the scheme.

20 Reserves

The Group considers its capital to comprise ordinary share capital, share premium, retained losses and its convertible bonds. In managing its capital, the Group's primary objective is to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, through new share issues, the Group considers not only their short-term position but also their long-term operational and strategic objectives.

Other reserves represent a merger reserve amounting to £6,813,000 arising on the acquisition by the Company of the entire share capital of Brainspark Associates Limited.

A fair value adjustment, in the year, of £5,460,000 to available for sale investments represents a net increase in some of the group's available for sale investments based upon assessments made by the directors'.

21 Cash used in operations

22 Related party transactions

Transactions between the company and its subsidiaries, which are related parties have been eliminated on consolidation and are not disclosed in this note. Transactions between the company and its subsidiaries are disclosed in the company's separate financial statements.

Prof. Francesco Gardin received reimbursable travel, accommodation and ancillary support costs of £78,000 (2009:£124,925) in addition to his remuneration as director, prior to his resignation.

Mr Villa has a personal interest in Mediapolis Investments SA, a company in which Brainspark has a minority interest.

RCF SA invoiced £145,000 (2009 £42,500) in respect of the successful placing of shares; Mr Alfredo Villa is Managing Director of RCF SA.

Remuneration of key management personnel

The remuneration of the directors, who are the key personnel of the group, is included in the Directors Report. Under "IAS 24: Related party disclosures", all their remuneration is in relation to short-term employee benefits.