Context. Observations suggest that low-mass stars condense out of dense, relatively isolated, molecular cloud cores, with each core spawning a small-N cluster of stars. Aims. Our aim is to identify the physical processes shaping the collapse and fragmentation of a 5.4 M core, and to understand how these processes influence the mass distribution, kinematics, and binary statistics of the resulting stars. Methods. We perform SPH simulations of the collapse and fragmentation of cores having different initial levels of turbulence (α TURB = 0.05, 0.10, 0.25). We use a new treatment of the energy equation that captures (i) excitation of the rotational and vibrational degrees of freedom of H 2 , dissociation of H 2 , ionisation of H and He; and (ii) the transport of cooling radiation against opacity due to both dust and gas (including the effects of dust sublimation, molecules, and H − ions). We also perform comparison simulations using a standard barotropic equation of state. Results. We find that -when compared with the barotropic equation of state -our more realistic treatment of the energy equation results in more protostellar objects being formed, and a higher proportion of brown dwarfs; the multiplicity frequency is essentially unchanged, but the multiple systems tend to have shorter periods (by a factor ∼3), higher eccentricities, and higher mass ratios. The reason for this is that small fragments are able to cool more effectively with the new treatment, as compared with the barotropic equation of state. We also note that in our simulations the process of fragmentation is often bimodal, in the following sense. The first protostar to form is usually, at the end, the most massive, i.e. the primary. However, frequently a disc-like structure subsequently forms round this primary, and then, once it has accumulated sufficient mass, quickly fragments to produce several secondaries. Conclusions. We believe that this delayed fragmentation of a disc-like structure is likely to be an important source of very low-mass stars in nature (both low-mass hydrogen-burning stars and brown dwarf stars); hence it may be fundamental to understanding the way in which the statistical properties of stars change -continuously but monotonically -with decreasing mass. However, in our simulations the individual cores probably produce too many stars, and hence too many single stars. We list the physical and numerical features that still need to be included in our simulations to make them more realistic; in particular, radiative and mechanical feedback, non-ideal magneto-hydrodynamic effects, and a more sophisticated implementation of sink particles.