30 Sep 2008 09:40
FOR IMMEDIATE RELEASE 30 SEPTEMBER 2008
BRAINSPARK Plc ("Brainspark" or "the Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2008
Chairman's statement
In the six months ended 30 June 2008, the Company made a profit before taxation of £12k, compared to a profit of the comparative period last year of £4k. Brainspark's efforts were devoted to the launch of China IPO Group PLC, an investment company focusing on opportunities in China. Meanwhile Brainspark's management continue to realise value from the existing UK asset portfolio. Proceeds will be utilised to develop the Chinese operations.
Financial Summary
The consolidated net asset value at 30 June 2008 was £3,583k up from £3,571k at 31 December 2007. At 30 June 2008, Brainspark's mid-market share price of 0.4p valued the company at £1,320k against a consolidated net asset value of £3,583k.
First Half 2008 Events.
On 30 June the Company sold its 17.5% holding, 54,690 'A' ordinary shares,1490 warrants and £300k loan in Easyart Holdings (UK) to Svenska Konstbolaget AB, being inter alia the Nordic venture capital company Verdane Capital, for £200k in cash. The transaction valued Easyart at £857k.
Brainspark's management remain committed to continue the positive trend of the Company during the final part of the year
Portfolio Review
At of 30 June 2008 Brainspark had holdings in 7 companies, 2 in the UK, 1 in Jersey, 2 in Italy, 1 in Israel and 1 in the United States. Its stakes range from nearly 0.5% to 42.71% in these companies. The portfolio covers a wide range of business sectors, including web services, application service providers, advanced IT solutions and an investment company.
In April 2008 IPO Beijing Investment Consulting Ltd, a wholly owned subsidiary of China IPO Group PLC was incorporated It opened its first office in Beijing in June 2008 and also established a second office in Xi'an Brainspark has provided China IPO Group PLC with working capital loans of £155,000.
China IPO Group fund raising continued in the first half of 2008 and despite adverse market conditions the Company remains confident that a first round of financing will be closed before the end of the year.
Further progress for the second half of 2008
During the second half of 2008 Brainspark continued the positive trend of the first six months.
During August 2008 Geosim (www.geosim.co.il), entered into a new agreement with two US shareholders which secured a $500,000 loan to the company. The company was reliant upon the completion of $3m funding, for its future development, having only secured $1.5m. The company is now entirely dependent on further funds to be made available from existing, or future investors. Sales of advertising contracts for the 3D Philadelphia website have begun and more efforts, subject to successful fund raising, will be devoted by the company on marketing and sales activities in Philadelphia.
The investment in Geosim is held in the company's book at £1.83m. and the Directors will need to review it in the event that Geosim fails to raise the necessary funding to sustain its business.
Prof. Francesco Gardin
Chairman
30 September 2008
Financial Statements
________________________________________________________
Consolidated Income Statement for the six months ended 30 June 2008
| Note | Six months to 30 June 2008 (Unaudited) | Six months to 30 June 2007 (Unaudited) | Year ended 31 December 2007 (Audited) | |
| £'000 | £'000 | £'000 | ||
| Continuing operations | ||||
| Investment revenue | 8 | 9 | 15 | |
| Gain on disposal of investments | 200 | 75 | 299 | |
| Share of profits of associates | - | - | 7 | |
| Finance charges | - | - | (15) | |
| Other operating expenses | (196) | (80) | (268) | |
| Profit before tax | 12 | 4 | 38 | |
| Tax | - | - | - | |
| Profit for the period from continuing operations | 12 | 4 | 38 | |
| Attributable to: | ||||
| Equity holders of the parent | 12 | 4 | 38 | |
| Earnings per share | ||||
| Basic and diluted earnings per 0.01p ordinary share | 3 | 0.003p | 0.001p | 0.01p |
Consolidated Balance sheet at 30 June 2008
| Notes | Six months to 30 June 2008 (Unaudited) £'000 | Six months to 30 June 2007 (Unaudited) £'000 | Year Ended 31 December 2007 (Audited) £'000 | |
| Non-current assets | ||||
| Investments in associates | 4 | 1,830 | 2,023 | 1,830 |
| Available for sale investments | 5 | 919 | 818 | 919 |
| Total non-current assets | 2,749 | 2,841 | 2,749 | |
| Current assets | ||||
| Trade and other receivables | 560 | 626 | 563 | |
| Cash and cash equivalents | 502 | 305 | 499 | |
| Total current assets | 1,062 | 931 | 1,062 | |
| Current liabilities | ||||
| Trade and other payables | (228) | (257) | (240) | |
| Total current liabilities | (228) | (257) | (240) | |
| Net current assets | 834 | 674 | 822 | |
| Net assets | 3,583 | 3,515 | 3,571 | |
| Equity | ||||
| Share capital | 1,936 | 1,936 | 1,936 | |
| Share premium account | 29,186 | 29,186 | 29,186 | |
| Other reserves | 6,813 | 6,813 | 6,813 | |
| Equity component of convertible instrument | 32 | 32 | 32 | |
| Fair value adjustment to available for sale investments | 22 | - | 22 | |
| Retained losses | (34,406) | (34,452) | (34,418) | |
| Equity attributable to equity holders of the parent | 3,583 | 3,515 | 3,571 |
Statement of changes in equity
For the six month period ended 30 June 2008
| Six months to 30 June 2008 (Unaudited) £'000 | Six months to 30 June 2007 (Unaudited) £'000 | Year ended 31 December 2007 (Audited) £'000 | ||
| Profit for the period | 12 | 4 | 38 | |
| Net addition in equity | 12 | 4 | 38 | |
| Opening equity attributable to equity holders of the parent | 3,571 | 3,511 | 3,533 | |
| Closing equity equity attributable to equity holders of the parent | 3,583 | 3,515 | 3,571 |
Consolidated cash flow statements
For the six months ended 30 June 2008
| Six months to 30 June 2008 (Unaudited) £'000 | Six months to 30 June 2007 (Unaudited) £'000 | Year ended 31 December 2007 (Audited) £'000 | ||
| Net cash used in operating activities | (205) | (89) | (225) | |
| Cash flows from investing activities | ||||
| Interest received | 8 | 9 | 15 | |
| Proceeds from sale of investments in associates | 200 | 75 | 375 | |
| Purchase of investments | - | (100) | (76) | |
| Net cash generated from investing activities | 208 | (16) | 314 | |
| Increase/(Decrease) in net cash for the period | 3 | (105) | 89 | |
| Cash and cash equivalents at beginning of period | 499 | 410 | 410 | |
| Cash and cash equivalents at end of the period | 502 | 305 | 499 |
Notes to the financial statements
1 Accounting policies
Significant accounting policies
The interim financial statements have been prepared under the historical cost convention, except for the revaluation of certain properties and financial instruments.
The same accounting policies, presentation and methods of computation are followed in these interim financial statements as were applied in the preparation of the Group’s financial statements for the year ended 31 December 2007.
2 Segment reporting
| Six month to 30 June 2008 (Unaudited) | Six month to 30 June 2007 (Unaudited) | Year ended 31 December 2007 (Audited) | |
| Segment assets | Segment assets | Segment assets | |
| £'000 | £'000 | £'000 | |
| United Kingdom | 960 | 834 | 1,053 |
| Continental Europe | 630 | 688 | 630 |
| Middle East | 1,830 | 1,830 | 1,830 |
| China | 105 | 105 | - |
| United States | 58 | 58 | 58 |
| 3,583 | 3,515 | 3,571 |
3 Earnings 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 warrants and convertible loans outstanding during the period.
Notes to the financial statements
The profit and weighted average number of shares used in the calculation are set out below:
| Six months to 30 June 2008 (Unaudited) £'000 | Six months to 30 June 2007 (Unaudited) £'000 | Year ended 31 December 2007 (Audited) £'000 | |
| Profit attributable to ordinary shareholders | 12 | 4 | 38 |
| Adjusted profit | 12 | 4 | 38 |
| Weighted average number of ordinary shares | 330,697 | 330,697 | 330,697 |
| Adjusted weighted average number of ordinary shares | 330,697 | 330,697 | 330,697 |
| Basic profit per share | 0.003p | 0.001p | 0.01p |
| Diluted profit per share | 0.003p | 0.001p | 0.01p |
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 or increase net loss per share. For a loss making company with outstanding share options and warrants, net loss per share would only be increased by the exercise of out-of-the money options and warrants. Since it seems inappropriate that option holders would act irrationally, no adjustment has been made to diluted earnings per share for out-of-the money options and warrants in the comparatives. There are no other diluting share issues, in either financial period, consequently diluted earnings per share equals basic earnings per share.
4 Investments in associates
| Six months to 30 June 2008 (Unaudited) £'000 | Six months to 30 June 2007 (Unaudited) £'000 | Year ended 31 December 2007 (Audited) £'000 | |
| Share of assets | |||
| At beginning of period | - | 145 | 145 |
| Transfer | - | - | (103) |
| Disposal | - | - | (42) |
| At period end | - | 145 | - |
| Goodwill | |||
| At beginning of period | 1,830 | 1,878 | 1,878 |
| Capitalisation of loans | - | - | (48) |
| At period end | 1,830 | 1,878 | 1,830 |
| - | - | - | |
| Carrying value at period end | 1,830 | 2,023 | 1,830 |
Notes to the financial statements
5 Available for sale investments
| Six months to 30 June 2008 (Unaudited) £'000 | Six months to 30 June 2007 (Unaudited) £'000 | Year ended 31 December 2007 (Audited) £'000 | |
| At beginning of period | 919 | 718 | 718 |
| Additions | - | 100 | 76 |
| Fair value adjustment | - | - | 22 |
| Transfer | - | - | 103 |
| At period end | 919 | 818 | 919 |
6 Related party transactions
Prof. Francesco Gardin and "S.I.C.I. sas di F. Gardin" are paid £80,000 per annum for the provision of services. Financial Fun Limited, of which Mr. Bailey is Chairman, is paid £20,000 per annum for the provision of Mr. Bailey's services.
7 Board Approval
The Interim Statement was approved by the Board on 30 September 2008.
8 Availability of Interim Results
Copies of the Interim Results will be available from the Lightwell, 12-16 Laystall Street, London, EC1R 4PF and from the Company's website, www.brainspark.com.
For further information, please contact:
Francesco Gardin, Brainspark plc, telephone: 00 39 335 296573
Roland Cornish, Beaumont Cornish Limited, telephone: 020 7628 3396