Interim Results

Cube8.com PLC 22 August 2000 Cube8.com plc Interim Results for the six months ended 30 June 2000 The Interim Results for Cube8.com plc, the technology, media and telecom incubation and investment company that also provides strategic management consulting and technology services, are announced today. The Company was admitted to the Alternative Investment Market on 28 of February, raising £9.5 million, net of expenses. Highlights * 13 investments to date, one pending * £7m cash remaining at 30 June 2000 * Brian Hindson appointed as Chief Executive Officer * Ongoing strategy - business activities to have 3 areas of focus * Investment scope extended to telecoms, media & other technology * Target for operating break-even by June 2001 Tim Dean-Smith, Chairman and Chief Executive said: 'Cube8 is well set to weather volatility in the stock market without needing recourse to further fund raising. The Company has a strong management team, which has the contacts, skills and hands-on experience enabling it to add value to investee companies. The Company also has a portfolio which is making good progress and which contains a good diversification of investment. I believe that the prospects for Cube8 are extremely promising, and I look forward to reporting at the end of the year on the Company's further progress.' Enquiries: Tim Dean-Smith Cube8.com plc Tel: 020 7243 2000 Issued by: Julian Bosdet / Henry Harrison-Topham Bankside Consultants Limited Tel: 020 7220 7477 Chairman's Statement Summary of operations Cube8 was admitted to the Alternative Investment Market on 28 February this year, raising £9.5 million, net of expenses. The Company has completed the six investments detailed at the time of the initial offering, and has made a further seven investments to date. One further investment is currently pending, subject to successful completion of due diligence. Investment portfolio Overall, the thirteen companies in the portfolio are making good progress. I will mention some key points here, and there is detailed information in this document on each of the investments in the Company's portfolio. Dynamid has raised further funds at a price 50% higher than the price at which Cube8 invested. The Unmissable.com site went live at the end of May, and has been generating revenues since then. TaoTalk has grown its user base to in excess of 80,000, on very low marketing spend. Blue Carrots has 120,000 registered users, as against 25,000 at the beginning of March this year, and again, the user acquisition cost has been extremely low. Prizescratch has signed an important contract with Future Publishing, which will ensure significant further distribution of its scratchcard games, and we expect Prizescratch to be profitable in the year ending 31 March 2001. PVC PR has been profitable in its first 3 months of operation. Harden's has signed important distribution agreements, including exposure on the Vodafone mobile portal. The Project Boris shopping engine is behind schedule due to programming delays following specification additions, but I anticipate that the beta version will be live by October, in time for the important Christmas shopping season. Cash position As at 30 June, Cube8 had £7 million cash at the bank. Allowing for 2 additional investments completed since then, one further investment pending and funds allocated for additional investment in existing portfolio companies, there are approximately £5 million of unallocated cash reserves as at 22 August. Cube8 therefore operates from a strong financial base. Without further investments the Company has cash reserves to cover the running costs of the business for more than three years. Board appointment The business has grown substantially since February, and to reflect this development I am pleased to announce today that the Board has appointed Brian Hindson as Chief Executive Officer, effective 1 September 2000. I will retain the role of Executive Chairman. Brian is joining Cube8 from the British Red Cross where he holds the position of Deputy Chief Executive Officer. He comes with significant experience of running complex organisations, and has particular strengths in strategic planning and project appraisal, as well as in managing portfolios of wide ranging, multi-disciplined business units with international reach. I believe that combining Brian's high-calibre management skills with the existing levels of drive, innovation and expertise will be an important factor for the long term success of Cube8. Ongoing strategy The Company's operations will have 3 main areas of focus, these being: (i) Investment (ii) Consultancy and Agency Services (iii) Networking and Fundraising Investment - broader focus Cube8 will broaden its investment horizon beyond the internet, to encompass telecoms, media and other technology companies. The short term profitability of the companies in which we invest will be of great importance - in almost every case we will want to see profits either now or forecast in the reasonably short term. We will also look at allocating some of our funds to later-stage private companies, particularly where there may be an opportunity to realise a profit relatively quickly. Consultancy and agency services - strategic investment I am also pleased to announce today the acquisition of a majority stake in Planet Three, a substantial web design and agency business, which will greatly enhance the Company's capabilities and resources in the area of Consultancy and Agency Services. Networking and fundraising - new partnerships & alliances A key success factor for our investee companies is enabling them to take advantage of synergies with other Cube8 investees, and also off our UK and international 'people network'. An important part of this is the range of contacts which Cube8 has with other investment funds and groups, and the Company is in discussions with several parties with regard to establishing partnerships and strategic alliances in the UK and overseas. To further enhance these contacts, and to permit the Company to provide fund raising and other related financial services for its incubatees, and also as a third-party service, we will be seeking to acquire an appropriate SFA approved company, and discussions are currently taking place with various parties to this end. Operating break-even The Company's objective will be to generate cash income from the second and third areas of operational focus. The target is for this cash income, together with dividends from other profitable investments, to cover the majority or all of the Company's monthly overheads by June next year. This target is independent of any gains made on the sale of investments. Conclusion Cube8 is well set to weather volatility in the stock market without needing recourse to further fund raising. The Company has a strong management team, which has the contacts, skills and hands-on experience enabling it to add value to investee companies. The Company also has a portfolio which is progressing well and which contains a good diversification of investment. I believe that the prospects for Cube8 are extremely promising, and I look forward to reporting at the end of the year on the Company's further progress. Tim Dean-Smith 22 August 2000 Chairman & CEO Cube8.com plc Consolidated Profit and Loss Account for the Period Ended 30 June 2000 Period Period Ended Ended 30 June 2000 31 December 1999 (Unaudited) (Audited) £ £ Turnover 324,066 - Cost of Sales (242,581) - ---------- ---------- Gross Profit 81,486 - Administrative expenses - before exceptional item (1,046,963) (550,183) - provision for NI on share options (117,427) - ---------- ---------- Operating Loss (1,082,904) (550,183) Share of Operating Loss of Associated Undertakings (59,242) - ---------- ---------- Loss on Ordinary Activities Before Interest and Tax (1,142,146) (550,183) Interest Receivable 146,935 21 ---------- ---------- Loss on Ordinary Activities Before Taxation (995,211) (550,162) Tax on Loss of Ordinary Activities (48,978) - ---------- ---------- Loss on Ordinary Activities After Taxation (1,044,189) - Minority Interest 2,877 - Retained Loss (1,041,312) (550,162) ---------- ---------- Basic Loss Per Ordinary Share (0.3p) (217.0p) ========== ========== Fully Diluted Loss Per Ordinary Share (0.3p) (199.0p) ========== ========== Consolidated Balance Sheet As at 30 June 2000 30 June 2000 31 December 1999 (Unaudited) (Audited) £ £ £ £ Tangible Fixed Assets Tangible assets 138,992 36,096 Investments 4,743,635 - ---------- ---------- 4,882,627 36,096 Current Assets Debtors 620,468 160,235 Cash at bank and in hand 7,009,422 77,603 ---------- ---------- 7,629,890 237,838 Creditors: Amount Falling Due Within One Year (443,762) (117,974) ---------- ---------- Net Current Assets 7,186,128 119,864 Provisions for liabilities and charges (117,427) - ---------- ---------- Total Assets Less Current Liabilities 11,951,328 155,960 ========== ========== Capital and Reserves Called up share capital 3,509,888 2,535 Share premium account 12,685,492 703,587 Merger reserve (2,652,578) - Profit and Loss account (1,594,351) (550,162) ---------- ---------- Equity to shareholders' funds 11,948,451 155,960 Minority interest 2,877 - ----------- ---------- Total Capital and Reserves 11,951,328 155,960 =========== ========== ON BEHALF OF THE BOARD T J A Dean-Smith J K Winfield Chairman & CEO Finance Director 22 August 2000 Cash Flow Statement Period Ended Period Ended 30 June 2000 31 December 1999 (Unaudited) (Audited) Note £ £ Net Cash Outflow from 1 Operating Activities (1,201,470) (496,682) Returns on Investments and Servicing of Finance Interest received 128,147 21 Capital Expenditure Payments to acquire tangible fixed assets (120,598) (42,798) Acquisitions and Disposals Fixed asset investments (900,000) - Investment in associates (700,000) - Loan (250,000) - Financing Issue of Ordinary shares 9,975,740 617,062 ---------- ---------- Increase in Cash 2 6,931,819 77,603 ========== ========== Notes To The Accounts 1)Reconciliation of Operating Loss to Net Cash Outflow from Operating Activities Period Ended Period Ended 30 June 2000 31 December 1999 £ £ Operating Loss (1,082,904) (550,183) Depreciation 17,627 6,702 Increase in debtors (530,430) (71,175) Increase in creditors 276,810 117,974 Increase in provisions 117,427 - Net Cash Outflow from ---------- ---------- Operating Activities (1,201,470) (496,682) ========== ========== 2) Reconciliation of Net Cash Flow to Movement in Net Funds Net cash brought forward 77,603 - Movement in funds 6,931,819 77,603 ---------- ---------- Net Cash Carried Forward 7,009,422 77,603 ========== ========== 3) Accounting Policies Basis of Accounting The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting rules. Basis of Consolidation The group financial statements consolidate the accounts for the company and its subsidiary undertakings. Profits and losses of companies entering the group are included from date of acquisition. The net assets of the subsidiaries acquired are included on the basis of their fair value. 4) Post Balance Sheet Events On 27 July 2000 Cube8 made an investment in Antique Street Limited, taking a stake of 60% of the company. On 7 August 2000 Cube8 made an investment in Planet Three Limited, taking a stake of 70% and providing additional working capital funding. 5) Comparative Figures The comparative figures for the group for the period ended 31 December 1999 relate to Portal Management Limited and its subsidiary undertakings. Cube8.com plc acquired Portal Management Limited on 18 February 2000 by way of a share for share exchange. 6) Interim Report Copies of this statement will be sent to all shareholders. The statement will also be published on the group's web site at www.cube8.com and will also be available on written application to the Company Secretary, Cube8.com plc, 20 Eastbourne Terrace, London W2 6LE.

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