RNS Number:7963K
Channel Health PLC
28 September 2001
CHANNEL HEALTH PLC
("Channel Health" or "the Company")
Interim Results for the Six Months ended 30 June 2001
Channel Health, the first dedicated health related television channel with an
interactive website in the UK, announces its interim results for the six
months ended 30 June 2001.
HIGHLIGHTS
* Significant increase in revenues to #497,000
* Operating loss before and after tax was #1.7 million, marginally higher
than budget
* #1.2 million NHS-sponsored interactive pilot proceeding ahead of
schedule with whole of value expected to be invoiced by December, 2001
* Multiple marketing opportunities for the interactive pregnancy series
and website
* Strong relationship with Department of Health continues including
submission of a #2 million quote for additional interactivity and extra
topics
* All Channel Health programme-making processes are accredited by the
Centre for Health Information ("CHIQ")
* Advertising/sponsorship deals with Procter & Gamble, Johnson & Johnson,
Dendron, Kimberly Clark, SMA and JMC holidays
* European expansion with the European Union Healthsat project to launch
in January 2002 with Channel Health programming reaching 11 million homes
* 40 hours of original programming and over 2,000 website articles
completed to date
Joanne Sawicki, Chief Executive of Channel Health, commented:
"Throughout the last year, we have focused on developing high quality
programming and leveraging this content into building multiple revenue
streams. We have also been successful in building awareness and sponsorship
opportunities for our unique programming."
28 September 2001
Enquiries:
Channel Health Tel: 020 7758 3200
Joanne Sawicki, Chief Executive
Dabinder Dhanda, Finance Director
College Hill Tel: 020 7457 2020
Nicola Weiner nicola.weiner@collegehill.com
Andree Taylor andree.taylor@collegehill.com
Channel Health plc
Interim Results for the Six Months ended 30 June 2001
CHAIRMAN'S STATEMENT
Interim Results
The six month period to 30 June 2001 was a period of considerable growth for
Channel Health with attention focused on developing the Company's revenue
model. Revenues in the period increased significantly to #497,000. The loss
before and after tax for the six months was #1.7 million, marginally higher
than budget due to an acceleration of the NHS-sponsored interactive pilot, and
the loss per share was 4.7p.
Our achievements during the period reaffirmed a business model based upon
non-traditional revenue streams, such as the #1.2 million contract to produce
digital interactive television pilots for the Department of Health. The
project has proceeded ahead of schedule with deliverables for the interactive
television pilot being accelerated, resulting in costs that would have been
incurred in the second half of the year having been taken in the period under
review. Since work is invoiced in arrears, Channel Health is now benefiting
from the acceleration with over #900,000 billed to the NHS to date. The
project had originally been forecast to complete in March, 2002. It is now
expected that the whole of its value will be invoiced by December, 2001.
NHS Project
The NHS is sponsoring a seven-part interactive series on pregnancy, Bush
Babies, which makes its debut in October, 2001. The series is being launched
in conjunction with The Maternity Guide, the first ever interactive television
service on pregnancy and childcare. The Maternity Guide is accessible via the
red button on the television remote control and runs on a continuous loop 18
hours a day, seven days a week. Ahead of its launch, 95% of new mothers in
the UK will have received materials via their healthcare professionals
notifying them of the series and the website, www.channelhealth.tv. This will
be achieved via partnerships with Health Promotion England ("HPE") and Bounty
Euro RSCG ("Bounty"). HPE, which was established in April 2000 to provide
health education and communications campaigns in support of public health
policy, will feature information on the series and website in some 600,000
copies of its Pregnancy Guide. Publishing and sampling company, Bounty, will
also include a Channel Health sponsored booklet "You, Your Baby and Your
Midwife" in 300,000 Bounty bags, given directly to new mothers. Our
partnerships with HPE and with Bounty should ensure that the series and its
interactive website receives a high level of promotional support. This will
be supported by vigorous campaigns in women's interest magazines and the
national press. Furthermore, BSkyB has agreed, in principle, to cross market
the pregnancy series via its Sky One television programmes and Guide.
We are confident that the NHS pilot project, being launched in October, will
be just the beginning of a long and fruitful relationship with the Department
of Health. We are currently examining the strategic options with the
Department of Health and NHS regarding digital television. The Department of
Health has asked for a quote from Channel Health to provide a greater depth of
interactivity for the pregnancy series - such as extra video channels, return
path functionality and email - and to explore the possibility of providing
interactive services in relation to other health-related topics, such as
diabetes and coronary heart disease. This quote was submitted at #2 million.
Content is King
Core to Channel Health's strategy is the creation and ownership of high
quality content that can be used across several platforms, be it television,
interactive text, websites, SMS messaging or print. Channel Health's
programme production processes have received by accreditation by CHIQ, the
only body accredited by the Government to kite mark top quality health
information.
Discussions have also been conducted with BSkyB, Flextech, Channel 5, Channel
4 and GMTV regarding the possibility of Channel Health providing its health
content to those channels and websites.
Channel Health has to date created 40 hours of original programming and over
2,000 website articles. This content has begun to sell internationally.
Furthermore, Bounty has indicated an intention to spend #50,000 to make pre-
and post-natal videos and an information-based television service in
association with Patientline - a hospital telecommunication and entertainment
supplier. Work on this project will begin later this calendar year.
Attracting high profile talent is also vital to creating commercially
attractive content. Channel Health is currently negotiating heads of terms
with Dr Miriam Stoppard, one of the world's best known media doctors. Once
signed, Dr Stoppard will become the face of Channel Health, a hugely powerful
promotional force. Channel Health has also signed a collaboration agreement
with part-work publisher, Marshall Cavendish, to adapt their content into
digital form. The first project, Creative Loving, is expected to launch by
the end of the year.
Sponsorship
The NHS is the Channel's biggest sponsor to date. However, moving into the
second half of the year, we will begin activities with fast moving consumer
goods ("FMCG") and pharmaceutical sponsors. As other television channels are
hit by dramatic falls in advertising revenues, Channel Health has concentrated
on the development of its sponsorship model. This is beginning to pay
dividends. Whilst advertisers are turning away from the traditional scatter
gun approach to airtime, they are beginning to explore new means of
communicating directly with the consumer via targeted mediums such as Channel
Health.
Procter and Gamble ("P&G"), the largest FMCG advertiser in the world, has
begun advertising on Channel Health. P&G's presence amongst other
high-calibre advertisers such as Johnson & Johnson, Dendron, Kimberly Clark,
SMA, and JMC holidays, is a vital endorsement for the Channel. We also have a
commitment from the Central Office of Information (COI) to put public health
messages around the NHS programming. The COI is one of the highest spending
advertisers in the UK.
The Board believes that the advertising spots sold to date are merely an
introduction for these clients. Channel Health's unique selling point is its
ability to sell sponsored programming. The first advertising funded
information pieces are now beginning to go to air - SMA has commissioned the
channel to make an information piece on how to safely prepare a baby's bottle
and Dendron has commissioned pieces on cradle cap and teething for babies.
This bespoke service allows the clients' messages to be fully conveyed in an
item which is longer, more cost-effective and more informative than the usual
commercial.
With the emergence of set-top boxes, such as TIVO and Sky's new Sky Plus box
that record programmes whilst allowing the viewer to skip advertisements,
there is an urgent need for advertisers to explore how they can get their
messages across via association with the content of programmes. Channel
Health has uniquely positioned itself to create such bespoke programming in
the healthcare sector.
At present, Channel Health is in the final stages of negotiation with five
major pharmaceutical companies to create interactive programming on topics
ranging from diabetes to infertility.
Via a partnership with home shopping provider, Sirrius TV, we have begun to
run home shopping segments. We have agreed a deal with home shopping channel,
Shop America, whereby Shop America will sublet Channel Health's broadcast time
from midnight until dawn to sell their self-improvement and healthcare
products.
European Expansion
The European Union Healthsat project has begun to take shape with the first
monies coming in from this project. The service is scheduled for launch in
January 2002 and will see Channel Health programming reaching 11 million homes
via the Astra satellite. The Commission has asked Channel Health to tender
for a further European project.
Digital roll-out by cable companies in Europe has been characterised by
repeated technical delays. Channel Health is, however, in various stages of
negotiation with companies in Finland, Holland, Spain and Russia. Signature
awaits the switchover from analogue to digital in all of those territories.
These carriage contracts will be based upon a subscription model for its
programming whereby Channel Health will receive monies ranging from 2p to 25p
per subscriber per month.
In the UK, negotiations with NTL for cable carriage have been finalised and
Channel Health is awaiting the green-light for carriage later this year. The
NTL carriage contract will increase the Company's potential broadcast audience
by 1 million homes.
Recent Share Issue
On 30 July 2001, the Company announced that it had taken advantage of its
authority to place up to 5 per cent of its existing authorised but unissued
share capital for cash to raise #359,914, net of expenses. The placing was
supported by new and existing institutional shareholders.
Current Trading and Prospects
The achievements of the last twelve months, following the IPO on AIM in August
2000, are significant. The period under review has witnessed the landmark
award of the NHS pilot project, together with considerable progress in respect
of sponsorship deals. It has, moreover, been marked by a vigorous
concentration on cost control to ensure that the financial resources available
to the Company have been deployed most effectively. Having now invoiced 75%
of the monies due in respect of the NHS pilot, Channel Health is confident
that it is well-placed to be the beneficiary of further Government spending in
this area and will be concentrating its resources, in order to meet the
stringent requirements of the NHS.
The UK Government has a commitment to the rollout of digital television for
all citizens and to provide public services via the television. The
Department of Health was the first to launch a DiTV pilot. Now the Department
of Works and Pensions has invited Channel Health to tender for its #1.9
million pilot. Channel Health is short-listed and expects a response within
the next two months. Most other Government departments will be conducting
similar trials. Channel Health's infrastructure can be extended into these
other areas in a cost effective and time efficient manner.
The directors are encouraged by the development of the business and believe
that if trading in the second half of the financial year continues to meet
directors' expectations, the Company should have sufficient funding for its
requirements through that period. However, if the Company is to maintain and
develop its activities in the future, the Board recognises that further
funding will be necessary and is currently exploring various sources of
funding in order to achieve this.
Channel Health has now built the foundations upon which we can grow a stable
and healthy future. We have capitalised on our first mover advantage and are
beginning to monetise both our content and infrastructure.
Richard Murray
Chairman
28 September 2001
Channel Health plc
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2001
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months Period
ended
Ended 30 June 31
2001 December
2000
(unaudited) (audited)
Notes #'000 #'000
Turnover 2 497 20
497 20
Cost of sales (1,146) (850)
Gross loss (649) (830)
Administrative expenses (1,097) (1,479)
Operating loss (1,746) (2,309)
Net Interest receivable 32 78
Loss on ordinary activities before and (1,714) (2,231)
after taxation
Retained loss carried forward (1,714) (2,231)
Basic (loss) per share 1 (4.7p) (6.2p)
Fully diluted (loss) per share 1 (4.7p) (6.2p)
All operations derive from continuing activities.
No statement of total recognized gains and losses has been presented as there
are no recognised gains and losses other than the loss for the period.
Channel Health plc
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2001
CONSOLIDATED BALANCE SHEET
Six months Period ended
Ended 30 June 31 December
2001 2000
(unaudited) (audited)
Notes #'000 #'000
Fixed assets
Intangible assets 2,237 2,296
Tangible assets 388 382
2,625 2,678
Current assets
Stock 999 717
Debtors 546 555
Cash at bank and in hand 415 2,610
1,960 3,882
Creditors: amounts falling due within one (657) (918)
year
Net current assets 1,303 2,964
Total assets less current liabilities 3,928 5,642
Capital and reserves
Called up share capital 3 3,578 3,578
Share premium account 4,295 4,295
Profit and loss account (3,945) (2,231)
Shareholders' funds 4 3,928 5,642
Channel Health plc
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2001
CONSOLIDATED CASH FLOW STATEMENT
Six months Period
ended
Ended 30 31
June December
2001 2000
(unaudited) (audited)
Notes #'000 #'000
Net cash outflow from operating activities 5 (2,162) (2,773)
Returns on investments and servicing of finance:
Interest received 33 80
Interest paid and similar charges on external (1) (2)
financing
Net cash flow from returns on investment and 32 78
servicing of finance
Capital expenditure:
Purchase of tangible fixed assets (65) (302)
Net cash outflow from capital expenditure (65) (302)
Acquisitions and disposals:
Cash in subsidiary at acquisition - 234
- 234
Financing:
Issue of equity share capital - 1,078
Share premium received on share capital issued - 5,036
Less: Share issue expenses written off - (741)
Net cash inflow from financing - 5,373
Increase / (Decrease) in cash 6 (2,195) 2,610
Notes to the Interim Statement
1. These interim results have been prepared in accordance
with the accounting policies adopted in the financial statements for the year
ended 31 December 2000.
The interim accounts are unaudited, but have been reviewed by the
auditors.
No comparatives have been given for the corresponding six months of the
previous year as the reporting entity was not incorporated until 27 July 2000.
The calculation of loss per share has been based on the loss after tax, and a
weighted average number of ordinary shares in issue. For the period ended 30
June 2001 the loss after tax was #1,714,000 for basic and diluted loss per
share, and the weighted average number of shares in issue during the period of
35,784,796 for basic and 35, 784,796 shares for the diluted loss per share.
2. Turnover
Turnover represents the invoiced value of television and web advertising,
on-line revenue from sale of products, web Intellectual Property Rights income
and other revenues. Sales of original programming and pre-sales advances, as
well as television programme sponsorship revenues, are also included in
turnover.
3. Share capital
Six Period
months
ended ended
30 June 31
December
2001
2000
#'000 #'000
Authorised:
Authorised share capital of 50,000,000 ordinary shares 5,000 5,000
of 10p each
Allotted, called up and fully paid:
35,784,796 ordinary shares of 10p each 3,578 3,578
4. Reconciliation of movements in shareholders funds
Six months Period
ended ended
30 June 31 December
2001 2000
Group Group
#'000 #'000
Loss for the period (1,714) (2,231)
Share issue (net of expenses) - 3,578
New share capital subscribed - 4,295
Opening Shareholders Funds 5,642 -
Closing Shareholders Funds as at 30 June 2001 3,928 5,642
5. Net cash outflow from operating activities
Six months Period
ended ended
30 June 31 December
2001 2000
#'000 #'000
Operating loss (1,746) (2,309)
Depreciation 59 44
Amortisation of goodwill 59 49
Increase in stock (282) (631)
Decrease in debtors 9 (372)
Decrease in creditors (261) 446
Net cash outflow from operating activities (2,162) (2,773)
6. Reconciliation of net cash outflow to movement in net
funds
As 1 January Cash Outflow At 30 June
2001 2001
#'000 #'000 #'000
Cash at bank and in hand 2,610 (2,195) 415
7. Availability of Report
This Interim Report is being sent to all shareholders, and is also available
on the Channel Health website at www.channelhealth.tv.
INDEPENDENT REVIEW REPORT TO CHANNEL HEALTH PLC
We have been instructed by the company to review the attached financial
information and we have read the other information contained in the interim
report and considered whether it contains any apparent misstatements of
material inconsistencies with the financial information.
The interim report, including the financial information contained therein, is
the responsibility of and has been approved by, the directors. The Listing
Rules of the London Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes,
and the reasons for them, are disclosed.
We conducted our review in accordance with guidance in Bulletin 1999/4 issued
by the Auditing Practices Board. A review consists principally of making
enquiries of 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
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.
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 interim
period ended 30 June 2001.
AGN Shipleys Chartered Accountants,
10 Orange Street
Haymarket
London
WC2H 7DQ
28 September 2001
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