1 Jun 2012 07:00
Embargoed until 7am 1 June 2012
Brainspark Plc
("Brainspark" or "the Company")
Strategic Update
At a Board meeting held on 9 May the Directors of the Company reviewed the recent poor stock market performance of Brainspark's quoted ordinary shares. The Management reiterates its commitment to consider all options to maximise shareholder value and ensure that the market recognises the value of Brainspark's investments.
The Directors believe that the market has failed to recognise the development of Brainspark over the last year and in particular that of its operating subsidiaries. By way of example, the Directors' examined the Company's leisure sector operations, namely the equity interests in ORH SpA (which controls the Ora Hotel Group), YouCan Group SpA (the SoSushi restaurant chain) and Sipiem SpA (which owns 90 per cent. of the Ondaland water park). As announced on 2 April 2012, Brainspark is in the process of completing the acquisition of a 51 per cent. stake in ORH SpA and 40 per cent. of Sipiem, (regarding Sipiem, the Company is in discussion to buy an additional 11 per cent.) with the remaining outstanding payments reflected in the updated table below (payment for the acquisition of Sosushi was completed, as announced, on 13 April 2012):
Payments Outstanding | |||
Investee Company | Cash Payment (EUR) | BSP Shares | % Holding |
Ora Hotel Group | 800,000 | Nil | 51 |
Sosushi | Nil | Nil | 51 |
Sipiem | 650,000 | Nil | 40 |
All three companies operate under their own independent management and show promising unaudited 2011 financial results:
Company | Revenue (EUR) | EBITDA (EUR) |
Ora Hotels Group | 45m | 2m |
Ondaland | 4m | 2m |
YouCan Group SpA | 2m | 0.3m |
Source: Brainspark plc
A peer group comparison suggests a historic EV/EBITDA multiple of over 10 times is presently being achieved by the UK-quoted leisure sector. Based on this and other similar assessments, the value presently attributed to Brainspark's own leisure assets and opportunities appear much too deeply discounted.
In light of the above, the Board will consult with its Nominated Advisor and Financial Advisors regarding the various strategic alternatives to benefit shareholders' equity value, through a timed and in-depth analysis of transactions such as a dual listing on the Italian Stock Exchange, the demerger of specific assets or merging some assets with other listed industry players. It has also engaged FSA-regulated investment bank, Beaufort International Associates Ltd., to assist it with research and valuation services for this and other projects. Further announcements will be made when additional information is available.
One of the possible outcomes of the alternative strategies above would be a separate listing for the leisure assets of the business, aiming at (i) gaining greater access to funding and support for the Company's business plan without the need to impose further dilution on Brainspark's current shareholders, (ii) increasing transparency for investors and (iii) eliminating a perceived conglomerate discount.
Alfredo Villa, Executive Chairman of Brainspark, commented:
"The Brainspark Board of Directors remains concerned by the continuing weakness in its share price.
"Progress continues to be made in all of the Company's businesses. The Board continues to work towards completion of the sale of the Mediapolis land although, as announced on 24 April 2012, the hold-up in relation to this transaction relates to a technical aspect on the mortgage held over the land and, although the deadline for completion of the transaction has technically expired, the contract between the parties remains active as a result of their ongoing negotiations. It is understood that the market's attention is, at this time, focused on this particular transaction as it will provide a much needed injection of capital into Brainspark. However, the exact closing date of this transaction remains dependent on Banca Nazionale del Lavoro releasing the mortgage over the land, which is a condition for completion of the sale.
"The Board wishes to stress that Mediapolis is just one of Brainspark's assets, and that much value has been added elsewhere within the Company over the past years and that the Board will work towards securing a market valuation which properly reflects the value of all Brainspark's investments."
-ends-
For further information please contact:
Brainspark plc +39 02 525 051
Alfredo Villa, Executive Chairman
Cersare Suglia, Chief Executive
Westhouse Securities +44 (0) 20 7601 6100
Antonio Bossi
Jonathan Haines
Leander PR +44 (0) 7795 168 157
Christian Taylor-Wilkinson
About Brainspark Plc
Brainspark plc (AIM: BSP) is an AIM listed investment company pursuing a dynamic strategy to create a comprehensive portfolio of companies primarily encompassing the interactive media, leisure, entertainment and financial services sectors mainly in Italy but also other European countries. The Company may be either a passive or active investor and Brainspark's investment rationale ranges from acquiring minority positions with strategic influence through to larger controlling positions.