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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