Final Results

Brainspark PLC
30 June 2005



FOR IMMEDIATE RELEASE                                               30 June 2005

                 BRAINSPARK Plc ('Brainspark' or the 'Company')
                        Preliminary results announcement
                      for the year ended 31 December 2004

Chairman's statement

I am pleased to present the Company report for the year ended 31 December 2004.

The results show a loss of £1,071,000 in the year compared to a loss of £2.9
million for the financial year to 31 December 2003. The improvement in results
arises from a combination of a continued reduction in running costs of the
Company and the sale of two portfolio companies at higher price than our book
value. Of the £1,071,000 loss, £1,186,000 is due our share of operating loss of
associated undertakings (goodwill amortisation, and impairment charges to the
portfolio). For the first time ever the company has achieved a positive EBITDA
of £151,000.
We hope that the result represents a turnaround for the Group and confirms that
the strategy implemented so far by the Brainspark Board is heading in the right
direction.

The cost cutting measures begun in 2002, having further reduced the net
operating expenses to £33,000 per month this year, net of recovery of rent and
charges made to the cubs.

In order to preserve cash resources and demonstrate their own belief in
Brainspark's future, the Board resolved on 3rd June 2004 to reduce directors
fees to £5,000 per annum for 2004, with the CEO, Mr. Agosta, being the only
director to receive a salary. Mr Agosta's salary was set by the Remuneration
Committee at £60,000 with a £20,000 bonus payable on successful sale of two
portfolio assets. I have agreed to forgo my salary for the year, whilst Don
Caldwell has waived his £5,000 fee.

During 2004 Brainspark sold two of its portfolio holdings:

  • Smile-On, a company providing e-learning services to UK dental
    professionals, for a consideration of £220,000; and
  • The Usability Company, a company providing usability testing and
    consultancy services, for a consideration of £360,000. In addition, the
    disposal gives the Company the opportunity to exercise 15,680 options (equal
    to a 7.8% of the company on a fully diluted base) with an exercise price of
    £1.36. The options are excercisable until 15 February 2006.

Originally, the investment made in these two companies was £1.2 million and the
two holdings had a total consolidated net book value at disposal of £22,000.The
profit against their book value amounted to £558,000.

The Group's cash situation is still tight, and a cash injection through a share
capital issue was agreed by the Board during 2004, after the par values limit
below which the trading of Brainspark shares took place during the last 6 months
of 2004, technically prevented the possibility to inject money at a price close
to the market price. In order to resolve this issue and enable the Company to
raise money at, or above par value the Company called a shareholders' meeting on
3 March 2005 which approved a one to one hundred split of existing Brainspark
shares. As a result of this a capital increase can now take place.


Summary Financial Results

The Group's cash reserves at 31 December 2004 stood at £28,000 compared with
£68,000 at December 2003. The Group's net asset value (NAV) was £2.8 million at
December 2004, compared with £3.8 million at December 2003.

Market Environment

The market environment in the IT sector remains difficult and although our
existing portfolio companies show signs of improvement and are entering into
their profitability phase; the ability to maximise our return on sale from our
investments might require Brainspark to provide further support to certain of
the current portfolio companies over the next two years, whilst we may achieve a
profitable exit earlier in the case of others.

Operational Changes

The Board during 2005 will continue to focus on reducing net operating expenses
to below £30,000 per month.

Board Changes

No Board changes took place in the Company during 2004.

Investment Committee Changes

No changes have been made to the Investment Committee during the year. The
Committee is currently represented by the by Prof. Francesco Gardin, Chairman of
the Company, Mr. David Meacher, an Independent Director, and an external advisor
Prof. John A. Campbell.

Business Process

Brainspark continues to monitor and rationalize its operational infrastructure
and leverage the knowledge and market potential of the whole investment
portfolio.

This is a consequence of the difficult market conditions and is a modification
of the Company's original strategy.

At the outset, Brainspark's strategy was to take a role in the initial stages of
financing new business ideas. It would find and, develop businesses and then
look to exit relatively quickly through a trade sale or flotation.

Investments Review

Brainspark has holdings in 8 companies, 5 in the UK, two in Italy and one in
Israel. Its stake range from nearly 5% to nearly 52% of the relevant portfolio
companies. The portfolio covers a wide range of business sectors, including Web
Services, application service providers and advanced IT solutions.

All portfolio companies, but one, have managed to reach near profitability or
profitability in 2004.

Among the portfolio companies positive signs are emerging basically from all of
them although with different levels of performance but all of them are already,
or about to be operating, finally, at profit.

- On 24 June 2004 Brainspark sold its stake of 38.3% per cent in Smile On for
  £220,000.

- On 6 October 2004, Brainspark sold it stake 33% per cent in Usability for
  £360,000 and as referred to earlier was granted options.

In addition, during the year, the Group increased/decreased its holding as
follows:

- In September 2004 Brainspark agreed to a capital increase in Metapack
  (www.metapack.co.uk), a software and services company, which specialises in 
  the retail supply chain, retaining its percentage holding unchanged (5.89%).

- From June 2004 until June 2005, the company made further investments in Geosim
  Systems Limited which will ultimately increase our ownership to 51%.

- Brainspark's interest in Ludonet has reduced from 14.875% per cent to nil, as
  a result of a second capital injection from the new shareholder who injected
  €230,000 (£162,000) last year. The Company did not participate in the latest
  funding round and as a result our percentage of ownership is now down to zero.

Prospects

The combination of cost reduction that will arise when the three year lease at
our current premises expires in March 2006, and further cost efficiencies that
the Board is considering, together with a proposed capital injection and the
sale of an important asset in our portfolio should finally put the Company, in a
situation where it can attract new investors in the specific vertical markets
Brainspark has been analyzing carefully during the last year.

While there is no guarantee about the successful outcome of all of the above
actions, for the first time since the end of 2001 we can look to the future with
a plan which is entering, finally, into its strategic phase, after what has been
a sustained period of reorganisation.

All portfolio companies plan to be profitable in 2005, whilst this represents
only a third party estimate with no guarantee of success nevertheless management
of the portfolio companies have never shown such confidence levels in the past.
Again this is an indication of the quality of the portfolio and the potential
for growth.

At 31 December 2004, Brainspark's mid-market price per share of 0.47p valued the
Company at £0.9milion against a consolidated net asset value of £2.8 million.
The Board believes that this is a conservative valuation of the company's future
potential.

Prof. Francesco Gardin
Chairman


Consolidated profit and loss account
For the year ended 31 December 2004
                                                  Notes        2004       2003
                                                              £'000      £'000
---------------------------                       ------- ----------- ----------

Turnover                                                          -          -
Net operating expenses - recurring                             (395)      (680)
Net operating expenses - exceptional                              -        (39)
                                                  ------- ----------- ----------

Total net operating expenses/Group operating loss              (395)      (719)

Share of operating loss of associated                        (1,186)    (1,915)
undertakings
                                                  ------- ----------- ----------
Total operating loss: Group and share of
associated undertakings                                      (1,581)    (2,634)
Profit on disposal of associated undertakings                   558          -
                                                  ------- ----------- ----------
Loss on ordinary activities before interest                  (1,023)    (2,634)
Net interest (payable) receivable                               (11)        39
Amounts written off investments                                 (37)      (311)
                                                  ------- ----------- ----------
Loss on ordinary activities before taxation                  (1,071)    (2,906)
Tax on loss on ordinary activities                                -          -
                                                  ------- ----------- ----------
Loss on ordinary activities after taxation                   (1,071)    (2,906)
---------------------------                       ------- ----------- ----------
Retained loss for the financial year                         (1,071)    (2,906)

Loss per 1p ordinary share                                   (0.56p)    (1.55p)
Basic and diluted earnings per share


The loss for the year is derived wholly from continuing activities.


Balance sheets at 31 December 2004

                                Notes     Group     Group   Company   Company
                                           2004      2003      2004      2003
                                          £'000     £'000     £'000     £'000
--------------------------      -------   -------   -------  --------  --------

Fixed assets
Tangible assets                              44        80         -         -
Investments in subsidiary
undertakings                                  -         -     1,617     3,291
Investments in associated
undertakings                              1,451     2,639         -         -
Other investments                         1,549     1,567         -         -
                                -------   -------   -------  --------  --------
                                          3,044     4,286     1,617     3,291
                                -------   -------   -------  --------  --------

Current assets
Debtors (amounts falling due
within one year)                            352       295     1,127     1,338
Debtors (amounts falling due
after more than one year)                   110         -         -         -
Cash at bank and in hand                     28        68         -         -
                                -------   -------   -------  --------  --------
                                            490       363     1,127     1,338
Creditors: amounts falling due
within one year (including
convertible debt)                          (645)     (689)     (364)     (268)
                                -------   -------   -------  --------  --------
Net current
(liabilities)/assets                       (155)     (326)      763     1,070
                                -------   -------   -------  --------  --------
Total assets less current
liabilities                               2,889     3,960     2,380     4,361
Provisions for liabilities and
charges                                    (122)     (122)        -         -
--------------------------      -------   -------   -------  --------  --------
Net assets                                2,767     3,838     2,380     4,361
--------------------------      -------   -------   -------  --------  --------

Capital and reserves
Called up share capital                   1,923     1,923     1,923     1,923
Share premium account                    28,562    28,562    28,562    28,562
Other reserves                            6,813     6,813         -         -
Profit and loss account
(deficit)                               (34,531)  (33,460)  (28,105)  (26,124)
--------------------------      -------   -------   -------  --------  --------
Total equity shareholders'
funds                                     2,767     3,838     2,380     4,361
--------------------------      -------   -------   -------  --------  --------


Consolidated cash flow statement
For the year ended 31 December 2004

                                                   Notes       2004       2003
                                                              £'000      £'000
----------------------------                        ------ ---------- ----------

Net cash outflow from operating activities                     (240)      (967)

Returns on investments and servicing of finance
Interest received                                                 -         39
Interest paid on 5% Convertible bond                             (2)         -
----------------------------                        ------ ---------- ----------
Net cash (outflow)/inflow from returns on
investments and servicing of finance                             (2)        39
----------------------------                        ------ ---------- ----------

Capital expenditure and financial investment
Purchase of other investments                                     -        (15)
Sale of other investments / own shares                            -         77
----------------------------                        ------ ---------- ----------
Net cash inflow from capital expenditure and
financial investment                                              -         62
----------------------------                        ------ ---------- ----------

Acquisitions and disposals
Sale of investments in associated undertakings                  360          -
Purchase of investments in associated undertaking               (70)      (165)
Loans to associated undertakings                               (110)       (15)
----------------------------                        ------ ---------- ----------
Net cash inflow (outflow) from acquisitions and                 180       (180)
disposals
----------------------------                        ------ ---------- ----------
Net cash outflow before financing                               (62)    (1,046)
----------------------------                        ------ ---------- ----------

Financing
5% Convertible bond issue                                         -         50
Repayment of 5% Convertible bond issue                          (50)         -
Loan from major shareholders and others                         110        200
Partial repayment of loan to major shareholders                 (38)      (100)
and others
----------------------------                        ------ ---------- ----------
Net cash inflow from financing                                   22        150
----------------------------                        ------ ---------- ----------
Decrease in net cash for the period                             (40)      (896)
----------------------------                        ------ ---------- ----------

Reconciliation of cash flow to movement in net
funds
Net cash at beginning of period                                  68        964
Decrease in net cash in the period                              (40)      (896)
----------------------------                        ------ ---------- ----------
Net cash at end of period                                        28         68
----------------------------                        ------ ---------- ----------

The audited financial statements, from which the figures contained in this
statement have been extracted, have been delivered to the Registrar of Companies
and sent to shareholders. They will be available from the Company's registered
office at The Lightwell, 12-16 Laystall Street, Clerkenwell, London EC1R 4PF for
a period of 30 days from the date hereof.


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