Interim Results

NewMedia SPARK PLC
09 December 2004


9 December 2004



                          NewMedia SPARK plc ('SPARK')
            Interim Results for the six months to 30 September 2004

     
•    Profit before tax of £1m for the period offset by unrealised losses to
     leave net asset value per share slightly lower at 11.4p (March 2004: 11.5p)
•    Cash balances up to £17.8m (March 2004: £10.9m) after funding investments 
     and overheads
•    A further £6.1m received in November from the sale of Spuetz stock and tax 
     reimbursements
•    First major sale of a start-up investment, Pricerunner, for cash at well 
     above book value
•    Capital reconstruction now approved, paving the way for share buy-backs
•    Sufficient cash reserves to continue backing successful portfolio
     companies and support a limited number of new investments
•    Headcount reduced to 5 full time employees
•    Over 90% of office space now sublet


OVERVIEW

SPARK's net asset value at 30th September 2004 was 11.4p per share, largely
unchanged from the financial year end in March 2004 (11.5p).  Cash balances have
increased over the period from £10.9m to £17.8m due to exits achieved from
investments. This is after funding the administrative costs, investment
commitments to Aspex of £3.9m and some modest new investments amounting to
£750k.  Subsequent to 30 September, another £6.1m has been received from further
asset sales and tax reclaims.  Realised gains have been responsible for SPARK's
profit before tax of £1m for the period, even though smaller unrealised losses
on investments, when combined with overheads for the period, kept net assets
slightly down.   At the AGM in September, the shareholders approved a resolution
to reconstruct the balance sheet, eliminating accumulated losses and creating
distributable reserves.  In October these steps were approved by the court,
paving the way for share buy-backs. As a condition of the approval, after the
period end, the Court required cash of £2.4m to be put into a blocked reserve
account for the protection of creditors.  The authority allows the company to
buy-back a maximum of 10% of share capital (or, if lower, £5m worth of share
purchases) and will be effective after the announcement of these interim
results.


COMMENTARY

Asset sales

These headlines mark a turning point for several key components of SPARK's
business.  Most notably, we have received cash in from the first major sale of
one of our start-up investments in August.  The sale of Pricerunner to
Valueclick for between US$30m and US$36m (depending on the outcome of an
earn-out) represented a substantial uplift to the valuation of the investment
previously reported in these accounts.  SPARK's 40.6% stake in this business had
risen from a £1.5m book value in September 2003, to £3.5m in March 2004 with an
eventual anticipated value (after estimating the likely earn-out and releases of
cash held in escrow) of £6.5m by August 2005.  In US dollar terms, Pricerunner
had received total funding (from all investors, including SPARK) of $8.7m since
its inception in July 1999.  Its sale for up to $36m five years later
illustrates several features of early stage investing that we have sought to
reflect in these statements over the years.  Namely, that under normal
circumstances, investing into early stage companies can take five years or more
before the successful companies have developed sufficiently to deliver value.
Secondly, it demonstrates that it is very difficult to value these companies
during their development, and that the valuation policies adopted by SPARK tend
to value investments prudently.

Another major feature of these results is the re-balancing of our participation
in Spuetz AG, so that it is now a more appropriately sized investment in our
portfolio.  The first step of this process occurred just before the March 2004
year end when we reduced our stake from 68% to 38%, thereby reclassifying it as
an investment rather than a subsidiary.  This was followed by the receipt of a
substantial cash dividend of €12.4m (net of withholding tax) during the period.
The effect has been a sharp reduction in the reported group cash balance from
£46m in the interims for September 2003.  However, £42.1m of that was held in a
quoted German subsidiary plagued by litigious minority shareholders, which meant
that the use of those cash balances was effectively blocked.  The 30th September
cash balance of £17.8m therefore represents a dramatic improvement to the
effective liquidity of SPARK.  The further sale of another 24% stake after 30
September for £4.3m and the receipt of withholding tax of £1.8m, has improved
this position still further.   The remaining 11% stake in Spuetz is now an
appropriate position to maintain whilst Spuetz works to develop its investment
in Twister.

Whilst these sales of Spuetz stock have been extremely positive for the cash
position of SPARK, they have had some negative corresponding effects for the
valuation of the portfolio and therefore net assets.  At the interims in
September 2003, the consolidation of Spuetz as a subsidiary required us to
reflect the net asset value of that company in our accounts.  This was a strong,
cash backed, net asset value derived in large part from a series of successful
exits achieved during SPARK's ownership of Spuetz, culminating in the sale of
Tullet & Tokyo to Collins Stewart in March 2003.  However, to sell large blocks
of illiquid Spuetz stock meant that in both the March and November transactions
this year the sales could only be achieved at prices below net asset value per
share.  It was the sale of 1.3m shares made at €4.75 per share on 10th November
that formed the basis of the valuation in our accounts at 30th September and
triggered the downwards revaluation by £1.6m.  It is this write down that
substantially forms the unrealised loss in the Statement of Total Recognised
Gains and Losses.  In the second half, part of this will be transferred to the
face of the Profit and Loss account as a realised loss.

Elsewhere in the portfolio, we have also seen falling values from some of the
smaller investments, either where sales have been made at values below their
March 2004 book value, or where we believe that weak performances suggest that a
write down, or write off, would be prudent.  The largest of these was a £500k
write-off for ROK Group Ltd., but in sum, they amounted to £988k (or 3% of the
investment portfolio) which has been charged to the Profit and Loss account, and
combined with the write down in the value of Spuetz contributed to a total fall
of £2.6m.  This is more than covered by the profits of the Pricerunner sale, but
not by enough to cover the overheads for the period as well.  The result is the
small decline in the net asset value per share.

Portfolio developments

Now that Pricerunner is sold and the complex task of resolving the position with
Spuetz is behind us, the focus can return to delivering value from other parts
of the portfolio that now consists of investments in steadily maturing
companies.  The group of larger investments including Aspex, Mergermarket,
Footfall, and Firebox, which continue to grow both in terms of revenues and
market strength, represent an increasingly solid underpinning for the value of
the portfolio.  Indeed, it remains our view that these investments fall into the
same category as Pricerunner in terms of their likely exit values compared to
their current carrying values in the accounts of SPARK. Furthermore, in the case
of both Aspex and Mergermarket there have been recent transactions with
comparable companies that would suggest substantially higher valuations than
those currently reflected in our accounts.  As indicated in the annual accounts
for the period to March 2004, it may be necessary to review whether the BVCA
guidelines for valuing profitable companies (allowing upwards revaluations based
on an earnings multiple) should be applied to some of these investments.

Elsewhere in the portfolio there are a few investments that have not featured
much in our commentaries that are nevertheless beginning to develop strongly.
In particular two, IMI Software (IMI) and Kobalt Music, have made substantial
progress not yet reflected in their revenues or profits.  IMI is based in India
and originated as a software developer for the design of tower structures.  Over
the last 18 months it has developed and deployed a content provisioning platform
for mobile operators in India (IMI mobile), combining both the technology and
the content acquisition capabilities required to service a burgeoning market for
content over mobile phones (SMS, MMS, ring tones, games, wallpapers, images
etc.).  Its customers are now mobile phone operators who between them have
access to 75% of the 35m mobile phones in India.  This market, with a population
of a billion people and penetration of mobile handsets at only 3%, is generally
regarded as being at the beginning of its growth cycle.  In addition, IMI mobile
is providing mobile content for resale through the largest portals in India
(Yahoo and MSN), it provides the mobile return path for interactive TV
programmes run by India's largest TV channel, Star TV (Part of the Murdoch group
of companies), and it is winning contracts with operators outside India in
Singapore and the Middle East.  On the back of these contracts, IMI's revenues
are growing rapidly, it employs 100 people and is profitable on an operating
basis - yet a 36% stake is valued in our books at £300k.

In another market, Kobalt Music has developed a reporting and administration
platform for the music publishing industry.  Traditionally a rather neglected
sector in a high profile industry, the efficient administration of copyrights
has recently obtained much greater prominence as the major recording companies
have seen profits falling from music sales, and as other financial institutions
have seen the value in the annuities associated with good publishing assets.
Coupled with the disenchantment long felt by writers suffering from
inefficiencies in collection processes that benefit the publishers at the
expense of artists, these trends are providing opportunities for Kobalt to win
increasing profile and administration contracts traditionally the domain of
larger players.  Examples include administration contracts for copyrights of
music legends such as James Brown, and writers for performers such as Eminem,
Robbie Williams, Britney Spears, Janet Jackson and many others.  Kobalt Music
already administer for Sanctuary Music publishing and recently signed a joint
venture with them to administer their acquired catalogues as well, winning as
their first joint client the pop-reggae band UB40.

Both Kobalt Music and IMI mobile represent the potential for significant further
growth in portfolio value in the medium term.  Along with our larger
investments, they provide good access to investment opportunities for SPARK in
emerging sectors where the association with, and experience gained from,
developing successful new businesses can be converted into attractive dealflow.
SPARK now has sufficient cash reserves to begin exploring these opportunities.

Operations

We continue to make good progress on mitigating the legacy effects of our ten
year property lease.  At the time of writing, our joint venture partners
managing the serviced office space within 33 Glasshouse Street have successfully
filled 92% of the desks, thereby reducing the costs of the building down from an
annual cost of £1.4m to £300k.  Whilst occupancy will vary with demand in the
West End, this represents a strong performance and remains ahead of budget.

With this substantial rationalisation of both the property and the issues with
Spuetz, the volume and complexity of the tasks outside portfolio management have
reduced.  Accordingly, we have been able to manage our headcount down to just
five full time staff.

Changes to accounting policies

The restatement of the results from previous periods relates to two changes in
accounting policy. The first is a mandatory change following the release of new
accounting standards for the treatment of holdings in the company's own shares
which requires own shares held (in this case by the NewMedia SPARK Employee
Benefit Trust) to be shown as a reduction to shareholders' funds rather than as
an investment in the consolidated Balance Sheet.  These shares have been
deducted from the total issued shares in calculating net assets per share,
thereby increasing net assets per share.  The second change is aimed at
simplifying the recognition of investment gains and losses.  Following this
latter change, both the Profit and Loss account and the Statement of Recognised
Gains and Losses will only reflect changes in the realised and unrealised values
of investments for the current period, rather than the cumulative effects of
these changes with those of previous periods.   This new policy has no effect on
the reported net assets per share.


CONCLUSION

SPARK now represents a lean, focussed organisation with a strong balance sheet,
a maturing portfolio of strategically placed investments, and a good quality
deal flow.  With stable markets we are confident that we will be able to
demonstrate further value over the next 18 months and are equipped to take
advantage of good quality investment opportunities as they arise.



Andrew Carruthers
8 December 2004




INDEPENDENT REVIEW REPORT TO NEWMEDIA SPARK PLC

Introduction

We have been instructed by the company to review the financial information for
the six months ended 30 September 2004 which comprises the consolidated
statement of total recognised gains and losses, the consolidated profit and loss
account, the consolidated balance sheet, the consolidated cash flow statement,
the consolidated reserves note, the consolidated reconciliation of shareholders'
funds and related notes 1 to 5.  We have read the other information contained in
the interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.

This report is made solely to the company, in accordance with Bulletin 1999/4
issued by the Auditing Practices Board.  Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are also responsible for ensuring that the accounting polices and presentation
applied to the interim figures are consistent with those applied in preparing
the preceding annual accounts except where any changes, and the reasons for
them, are disclosed.

Review work performed

We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom.  A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed.  A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions.  It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit.  Accordingly, we do not
express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2004.



Deloitte & Touche LLP
Chartered Accountants
London
8 December 2004






Consolidated Profit and Loss Account                          Six months to    Six months to          Year to
Interim Report to 30 September 2004                                  30-Sep           30-Sep           31-Mar
                                                                       2004             2003             2004
                                                                      £'000            £'000            £'000
                                                                  Unaudited        Unaudited          Audited
                                                                                    Restated         Restated

Turnover                                                                  -                -              639
Administrative expenses
Salaries and other staff costs                                        (744)          (1,642)          (2,155)
Other administrative and operating costs                              (958)          (2,280)          (3,340)
Depreciation                                                          (125)            (469)            (574)
Other costs                                                           (158)          (1,321)          (1,339)
Total administrative expenses                                       (1,985)          (5,712)          (7,408)

Other operating income                                                  535              802              634
Operating loss                                                      (1,450)          (4,910)          (6,135)

Gains from investments                                                2,104              434            2,119
Loss on disposal of subsidiary                                            -                -          (1,177)
Interest receivable and similar income                                  354              533            1,217
Profit / (loss) on ordinary activities before taxation                1,008          (3,412)          (3,976)

Tax (charge) / credit on loss on ordinary activities                      -             (14)              139

Profit / (loss) on ordinary activities after taxation                 1,008          (3,957)          (3,837)

Equity minority interests                                                 -              545              391

Retained profit / (loss) for the period                               1,008          (3,412)          (3,446)

Basic and diluted earnings / (loss) per ordinary share                0.22p          (0.74p)          (0.75p)







Consolidated Statement of Total Recognised          Six months to Six months to       Year to
Gains and Losses                                           30-Sep        30-Sep        31-Mar
Interim Report to 30 September 2004                          2004          2003          2004
                                                            £'000         £'000         £'000
                                                        Unaudited     Unaudited       Audited
                                                                       Restated      Restated

Profit / (loss) for the financial period                    1,008       (3,412)       (3,446)
Unrealised (loss)/ gain on investments                    (1,721)         (523)             6
Movement in relation to own shares of subsidiary                -             -         (601)
Reserve transfer on lapse of warrants                           -             -         8,391
Foreign currency translation                                  311            96         (907)
Total recognised gains and losses in the period             (402)       (3,839)         3,443
Prior period adjustment                                     (630)
Total recognised gains and losses since the last          (1,032)
Annual Report







Consolidated Balance Sheet                                          30-Sep         30-Sep          31-Mar
Interim Report to 30 September 2004                                   2004           2003            2004
                                                                     £'000          £'000           £'000
                                                                 Unaudited      Unaudited         Audited
                                                                                 Restated        Restated
Fixed assets
Tangible assets                                                        930          1,090           1,059
Investments                                                         30,654         25,406          41,693
                                                                    31,584         26,496          42,752
Current assets
Debtors                                                              5,454          3,516           6,150
Cash at bank and in hand                                            17,836         46,357          10,860
                                                                    23,290         49,873          17,010
Creditors: amounts falling due within one year                     (1,452)        (6,395)         (6,046)

Net current assets                                                  21,838         43,478          10,964

Total assets less current liabilities                               53,422         69,974          53,716

Provision for liabilities and charges                                (743)        (3,207)           (743)
Equity minority interest                                                 -       (12,832)               -

Net assets                                                          52,679         53,935          52,973

Capital and reserves

Called up share capital                                             11,799         11,799          11,799
Own shares held                                                      (522)          (776)           (630)
Capital reserve                                                          -          8,391               -
Share premium account                                              183,371        183,371         183,371
Revaluation reserve                                               (33,113)       (43,732)        (41,566)
Profit and loss account                                          (108,856)      (105,118)       (100,001)
Equity shareholders funds                                           52,679         53,935          52,973

Net Asset Value per share                                            11.4p          11.7p           11.5p
                                                                    Number         Number          Number 
                                                                      '000           '000            '000
Ordinary shares in issue                                           471,986        471,986         471,986
Shares held by Employee Benefit Trust                              (9,819)       (10,675)        (10,675)
Shares in issue for net asset per share calculation                462,167        461,311         461,311





Consolidated Cash Flow Statement                              Six months to    Six months to          Year to
Interim Report to 30 September 2004                                  30-Sep           30-Sep           31-Mar
                                                                       2004             2003             2004
                                                                      £'000            £'000            £'000
                                                                  Unaudited        Unaudited          Audited

Net cash outflow from operating activities                          (1,011)          (5,039)          (8,533)

Return on investments and servicing of finance
Interest received                                                       354              537            1,217
Dividend received                                                     5,787                -                -
Net cash inflow from returns on investments and                       6,141              537            1,217
servicing of finance

Taxation
UK Corporation tax paid                                                   -                -            (150)
Overseas tax paid                                                   (2,228)            (273)            (331)
Net cash outflow from taxation                                      (2,228)            (273)            (481)

Capital expenditure and financial investment
Payments to acquire tangible fixed assets                                 -            (174)            (308)
Proceeds from disposal of fixed assets                                    5                -               54
Payments to acquire investments                                       (753)          (2,033)          (4,212)
Receipts from sales of investments                                    4,812            1,159            3,523
Net cash inflow / (outflow) from investing activities                 4,064          (1,048)            (943)

Acquisitions and disposals
Sale of subsidiary undertakings                                           -                -            9,061
Net cash sold with subsidiaries                                           -                -         (37,301)
Net cash outflow from acquisitions and disposals                          -                -         (28,240)

Net cash inflow / (outflow) before financing                          6,966          (5,823)         (36,980)

Financing
Issue of ordinary share capital                                           -                6                6
Purchase of own shares by subsidiary                                      -                -          (2,462)
Net cash inflow / (outflow) from financing                                -                6          (2,456)

Net cash inflow / (outflow) in the period                             6,966          (5,817)         (39,436)



Analysis of changes in net funds

Net cash inflow / (outflow) in the period                                6,966       (5,817)        (39,436)
Foreign exchange differences                                                10           185         (1,693)
Increase / (decrease) in cash in the period                              6,976       (5,632)        (41,129)




                                                               Share Premium      Revaluation     Profit and
                                                                     account          reserve           loss
                                                                                                     account
Reserves                                                               £'000            £'000          £'000

Reserves at 1 April 2004                                             183,371         (41,566)      (100,001)
Unrealised loss on investments                                             -          (1,721)              -
Previously unrealised losses now deemed permanent                          -           10,174       (10,174)
Foreign currency translation                                               -                -            311
Profit for the period                                                      -                -          1,008
Reserves at 30 September 2004                                        183,371         (33,113)      (108,856)




Reconciliation of Movements in Consolidated         Six months to Six months to        Year to
Shareholders' Funds                                        30-Sep        30-Sep         31-Mar
Interim Report to 30 September 2004                          2004          2003           2004
                                                            £'000         £'000          £'000
                                                        Unaudited     Unaudited        Audited
                                                                       Restated       Restated

Profit / (loss) for the financial period                    1,008       (3,412)        (3,446)
Other recognised gains and losses for the period          (1,410)         (427)          6,889
Reversal of amortisation of own shares                        108           139            286
Reduction in capital reserve on lapse of warrants               -             -        (8,391)
Proceeds of issues of shares                                    -             6              6
Net reduction in shareholders' funds                        (294)       (3,694)        (4,656)
Opening shareholders' funds - as previously                53,603        58,545         58,545
reported
Impact of change in accounting policy                       (630)         (916)          (916)
Opening shareholders' funds - restated                     52,973        57,629         57,629
Closing shareholders' funds                                52,679        53,935         52,973




Notes to the Interim Report to 30 September 2004
     
1)   The information relating to the six month periods ended 30 September 2004 
     and 30 September 2003 is unaudited. The information relating to the period
     ended 31 March 2004 is extracted from the audited accounts of the Company 
     which have been filed at Companies House and on which the auditors issued 
     an unqualified opinion. The Interim Report has been prepared under 
     accounting policies consistent with those adopted in the 31 March 2004 
     accounts other than as disclosed below.

2)   The above financial information does not constitute statutory accounts
     within the meaning of Section 240 Companies Act 1985.

3)   Earnings / loss per share is based on the weighted average number of shares 
     in issue during the six months ended 30 September 2004 of 461,866,000 (31
     March 2004: 460,878,000). These weighted average numbers exclude shares 
     held by the Employee Benefit Trust.

4)   At 1 April 2004, the group revised its accounting policy for the valuation 
     of investments, so that the profit or loss on disposal of investments is 
     calculated with reference to the proceeds less the net book value of the
     investment.  Any balance in the revaluation reserve is treated as realised 
     and transferred to the profit and loss reserve.

     The comparative figures for the year ended 31 March 2004 and the six month
     period ended 30 September 2003 have been restated to reflect this revision 
     of accounting policy.

     The effect of this restatement on the current period's results are, on the
     profit and loss account, to increase the total gains from investments and
     increase the overall profit for the period by £10.2m and to remove the
     adjustment for the same amount which would previously have been shown in 
     the Statement of Total Recognised Gains and Losses to add back the losses 
     recorded in prior years which had not been realised in prior periods. It 
     has no effect on the total recognised gains and losses for the period, nor 
     on the balance sheet.

5)   At 1 April 2004, the group revised its accounting policy for the treatment 
     of shares held by the NewMedia SPARK Employee Benefit Trust (EBT) in
     accordance with Urgent Issue Task Force number 38. These shares are now 
     shown as a reduction to shareholders' funds rather than as an investment in 
     the consolidated Balance Sheet. The effect of this change on the balance 
     sheets previously reported is to reduce the value of investments, net 
     assets and equity shareholders funds by £776,000 for 30 September 2003 and 
     by £630,000 for 31 March 2004.



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