Prelims. Results to 31-12-00

Cube8.com PLC 2 March 2001 CUBE 8.COM PLC Preliminary announcement of results for the year ended 31 December 2000 Key points Cube8 invested in a total of 16 companies during the period. Two of these have ceased trading, contributing to £1.3m written off investments. The company is streamlining the board and restructuring the company into two divisions - Cube8 Ventures and The Winfield Partnership. £3.9m cash at the bank and in hand as at 31 December 2000. No further cash investments are planned for the near future. CEO Brian Hindson says, 'Real incubation takes time, an experienced team, and investments in companies which have the potential to be profitable, genuine businesses, with their own good teams. We believe that Cube8 has the ingredients necessary to deliver on this, and hope to be able to report on positive progress by several of our investee companies over the coming months.' Contacts Tim Dean-Smith, Chairman: 020 7479 2707 - tim@cube8.com Brian Hindson, Chief Executive: 020 7479 2727 - brian@cube8.com John Winfield, Financial Director: 020 7479 2705 - john@cube8.com Chairman's and Chief Executive's Review Summary of Operations Since our interim report in August last year, Cube8 has made three further new investments totalling £1.05m, in Corex Networks, Room Service Deliveries and the Plain English Group. Unfortunately, we also saw the closure of TaoTalk, which ceased trading in December 2000, following its failure to secure further funding, and Web Street, which ceased trading in February 2001. When we announced the closure of TaoTalk, we also announced that we had made provision against investments of £1.3m, which included 100% of our investments in TaoTalk and Web Street. Cash position As at 31 December 2000, Cube8 had £3.9m at the bank. Since then we have completed further investments, and, as at 1st March, we have £3.1m in cash. Based on current projections the company has cash reserves to cover the running costs of the business for two-and-a-half years. Reaching cashflow breakeven as a group will now take longer than originally anticipated, partly due to a slower than expected turnaround at Planet Three, and partly due to an increased start-up budget for our consultancy business. However, we have reduced our running costs, and will continue to charge out some of the Cube8 staff for a portion of their time. Market Conditions The market environment has further deteriorated for technology stocks since our interim report in August last year. This is particularly so for pure ' dotcom' companies, and this contributed to the demise of TaoTalk and Web Street. The Portfolio - Clicks and Mortar strengths Cube8's investment policy of not choosing to focus solely on B2B or B2C online companies, but to build a varied portfolio of businesses which also include substantial offline elements, should stand the company in good stead. Harden's, Itchy Media and The Sticks are all offline publishers with online interests; Room Service is an established offline food and drinks supply and delivery company; Corex Networks is a software provider, not a pure play web business; Planet Three provides design and database services; and Unmissable, which specialises in niche travel and lifestyle products, is looking to build offline exposure also, and Dynamid has developed delivery box and lock wireless control technology for logistics solutions, and is beta testing their product in partnership with a major retailer. We expect some further good progress from the companies within our portfolio this year. Blue Carrots, for example, has substantially grown its monthly revenues, Prizescratch and Harden's are already profitable, established businesses, and The Sticks, Itchy Media, Room Service and Mailtrack are all seeing growing income. Planet Three, in which we hold a 70% stake, is being turned into a solid business by our business development team and we expect that to go into profit this year. Rather than focus on every company here, we have given space to each of the portfolio companies in the full Annual Report to talk about their progress to date. Ongoing strategy We intend to focus on two main areas - investment and consultancy. We have decided to make no new significant cash investments for the next six to twelve months, instead concentrating on working with the companies in our existing portfolio and helping them to continue the advances which they have made. Our job is to invest money and then provide advice and support to the investee companies, to maximise their growth and value. The future value of Cube8 depends on the value that can be built in these investee companies. New Media investors a year ago saw incubation as a way to accelerate start-ups towards significant financial gains in a short space of time, whereas incubation is actually about building up a business over a longer period of time. There is in fact a real role for incubation, as there has been for many years in both the public and private sectors. The change in the market environment over the past twelve months or so means that incubators now once again have to produce real businesses before their job is done. This takes time, an experienced team, and investments in companies which have the potential to be profitable, genuine businesses, with their own good teams. We believe that Cube8 has the ingredients necessary to deliver on this, and hope to be able to report on positive progress by several of our investee companies over the coming months. Working with our investee companies Our management team contains a wealth of online and offline business experience, particularly in running businesses with tight financial control and creating revenue streams. We are working to build solid income streams in the businesses in our portfolio using the intellectual capital among our team, and their experience, creativity and networks. Consultancy Our team's resources can also be put to work with companies outside the Cube8 group, and we have established The Winfield Partnership as the vehicle for this purpose. Winfield will work with strategic partners such as Hewitt Associates to identify client opportunities, and the company can also leverage the resources of our management and business development team and the technical capabilities of Planet Three. New company structure We are restructuring the company into separate divisions. Cube8 will become the holding company for two divisions: Cube8 Ventures Limited - this will hold the portfolio of investments, which will receive incubation input from the Cube8 team The Winfield Partnership plc - this consultancy business has been formed to leverage our core capabilities to create a revenue stream. The structure is subject to the various legal and administrative procedures being completed, and we plan to ratify at our AGM a change of the main company name from Cube8.com plc to The Cube8 Group plc. Personnel changes We propose to reduce the size of the Cube8 main board. David Dobson will become a non-executive on the main board, and also join the board of Cube8 Ventures. He will continue to spend time with Unmissable. Dan Parker will leave the board in mid-April, but he will provide consultancy services to Cube8 and Winfield on a part-time basis. An organisation chart is included in the full Annual Report. Moving Forward Our goal is to position Cube8 as a key player in the UK for the development of fast growing and dynamic businesses, and deliver value to our shareholders by means of generating income streams on an ongoing basis, and also via capital gains on the sale of our successful investee companies. Tim Dean-Smith, Executive Chairman Brian Hindson, Chief Executive 2nd March 2001. CUBE 8.COM PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 December 2000 Note 2000 1999 £'000 £'000 Turnover 1,560 - Cost of sales (890) - Gross profit 670 - Administrative expenses (4,284) (550) Amounts written off investments (1,313) - Operating loss (4,927) (550) Share of operating loss of associated (205) - undertakings Interest receivable and similar income 300 - Interest payable and similar charges (2) - Loss on ordinary activities before taxation (4,834) (550) Tax on loss on ordinary activities (1) - Loss on ordinary activities after tax (4,835) (550) Minority interest 142 - Retained loss for the period (4,693) (550) Loss per share (pence) 3 (1.66) (217.0) Fully diluted loss per share (pence) 3 (1.53) (199.0) CUBE 8.COM PLC CONSOLIDATED BALANCE SHEET as at 31 December 2000 Note 2000 1999 £'000 £'000 Fixed assets Tangible fixed assets 343 36 Investments 1,664 - Investments in associates 3 - 2,010 36 Current assets Debtors 860 160 Cash at bank and in hand 3,996 78 4,856 238 Creditors: amounts falling due within one year (1,206) (118) Net current assets 3,650 120 Total assets less current liabilities 5,660 156 Provisions for liabilities and charges (15) - Net assets 5,645 156 Capital and reserves Called up share capital 3,530 2 Share premium account 9,371 704 Minority interest (208) - Profit and loss account 4 (7,048) (550) Equity shareholders' funds 5 5,645 156 CUBE 8.COM PLC CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December 2000 2000 1999 £'000 £'000 £'000 £'000 Cash out flow from operating activities (2,809) (496) Returns on investments and servicing of finance Interest received 300 - Interest paid (2) - 298 - Taxation - - Purchase of tangible fixed assets (327) (43) Acquisitions Acquisition of fixed asset investments (2,040) - Acquisition of investments in associates (716) - Loans and advances to fixed asset (130) - investments Loans and advances to associates (284) - Acquisition of subsidiaries (14) - Net overdraft acquired with subsidiaries (35) - (3,219) - Financing Issue of equity shares 9,975 617 Increase in cash in the period 3,918 78 CUBE 8.COM PLC NOTES TO THE PRELIMINARY ANNOUNCEMENT for the year ended 31 December 2000 1. Principal accounting policies Accounting convention The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. Preliminary announcement The financial information given above does not constitute the company's statutory accounts within the meaning of section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2000 has been audited and prepared in accordance with applicable accounting standards. Copies of the accounts will be sent to shareholders in due course and will be available at the registered office of the company, 20 Eastbourne Terrace, London, W2 6LE. They will be filed with the Registrar of Companies following the Annual General Meeting. Basis of consolidation The consolidated accounts include the accounts of the company and its subsidiary undertakings and have been prepared using merger accounting principles and acquisition accounting principles. The results are presented as if Cube 8.com plc had been in existence and owned its subsidiaries throughout the period under review. 2. Dividends The company does not propose the payment of a dividend. 3. Loss per share Losses per share are calculated on a net basis using the loss on ordinary activities after taxation and the weighted average number of shares detailed below: 2000 £'000 Basic and diluted losses attributable to ordinary (4,693) shareholders Number Weighted average number of ordinary shares 282,552,595 Diluted share options 24,487,650 Adjusted weighted average number of ordinary shares 307,040,245 Loss per share (pence) (1.66) Diluted loss per share (pence) (1.53) CUBE 8.COM PLC NOTES TO THE PRELIMINARY ANNOUNCEMENT for the year ended 31 December 2000 (continued) 4. Profit and loss account 2000 £'000 At 1 January 2000 (550) Loss for the period (4,693) Merger accounting adjustment (note i) (1,805) At 31 December 2000 (7,048) (i) The merger accounting adjustment represents the excess of the nominal value on the shares issued by the company to the former shareholders of Portal Management Limited over the issued share capital of Portal Management Limited at the date of acquisition. 5 Reconciliation of movements in equity shareholders' funds 2000 £'000 Loss for the period (4,693) Merger adjustment (1,805) Minority interest (208) Issue of shares including premium 12,195 Opening shareholders funds 156 Closing shareholders funds 5,645

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