RNS Number:9110A
Cellcast plc
04 April 2006
Press Release 4 April 2006
Cellcast plc
("Cellcast" or "the Company")
Preliminary Announcement of Final Results
Cellcast plc (AIM: CLTV.L), a global interactive digital broadcaster, today
presents its maiden preliminary announcement of final results for the year ended
31 December 2005.
Highlights
* Turnover of #13.2 million, up 60% on 2004
* Successful listing on AIM in September 2005, raising #5 million before expenses
* Launch of four additional channels on the Sky Digital network and bandwidth secured on the
fast growing Freeview platform in the UK with launch expected in the near future
* Expansion of operations in Europe and the Middle East
* New ventures established in China, India, Latin America and Eastern Europe
* Significant development of proprietary technology to facilitate distribution of live
interactive content across television, broadband and 3G platforms
* Strategic new initiatives in the gaming and gambling sectors
Commenting on the results, Julian Paul, Chairman of Cellcast plc, said: "I am
very pleased that these results reveal the strong foundations Cellcast has
developed in the UK. Since the Company listed on AIM in September we are now
expanding into new global markets and are entering a truly exciting new period."
For further information:
Cellcast plc
Andrew Wilson, Chief Executive Officer Tel: +44 (0) 20 7190 0300
andrew@cellcast.tv
Emmanuelle Guicharnaud, Chief Financial Officer Tel: +44 (0) 20 7190 0300
emmanuelle@cellcast.tv www.cellcast.com
Daniel Stewart & Company Plc
Marc Young, Corporate Finance Tel: +44 (0) 20 7776 6550
marc.young@danielstewart.co.uk www.danielstewart.co.uk
Media enquiries:
Abchurch
Henry Harrison-Topham / Gareth Mead Tel: +44 (0) 20 7398 7700
henry.ht@abchurch-group.com www.abchurch-group.com
CHAIRMAN'S STATEMENT
I am very pleased to introduce the first Annual Results of Cellcast plc as a
public company following Admission to AIM in September 2005.
Admission to AIM
The Company had a successful debut on AIM, raising #5 million before expenses
and introducing a wide range of new shareholders. I would like to welcome our
new shareholders and thank them for supporting the Company. The placing was
well received which resulted in the issue being oversubscribed. This meant that
we were able to raise more money for the Company than we originally had
intended, and it also allowed Atlas Group, which had been an investor for some
time, to realise part of its holding. We were delighted with the investor
response to the Company and as a consequence now have an excellent institutional
shareholder base. The funds raised will enable us to develop our business in
line with the strategy set out in the Admission document.
2005 results
I am pleased to report that turnover for the year ended 31 December 2005 was up
over 60% to #13.2 million, 97% of which was generated in the UK. Performance in
this market was very strong, contributing some #2.2 million in gross profit and
giving us the resources and opportunity to invest for the future in key overseas
markets. Start-up losses in the overseas territories of Ukraine, India and
Argentina and expensed development costs in those and other territories
aggregated some #1.4 million. As a consequence, the Group recorded a loss at
the EBITDA level of #327,000 (2004: #460,000) and an operating loss before
interest and tax of #728,000 (2004: #708,000). No dividend is proposed.
Staff tribute
The Company depends critically on the loyalty and commitment of its team, both
in the UK and now increasingly overseas, and I wish to put on record the Board's
appreciation of their hard work and commitment. Motivation and retention of key
staff is vital for the future success of the Company. At the time of Admission
to AIM, we put in place share option schemes in the form of an Enterprise
Management Incentive Scheme and an Unapproved Share Option Plan. At 31 December
2005, the Company had granted just over 1.4 million share options under these
schemes to 48 members of staff other than directors, aggregating 5% of the share
capital of the Company.
Outlook
Current year trading in the UK has begun well, with UK generated turnover for
the first two months running some 16% ahead of the same period in the prior
year. This does not include revenue from any Freeview services, which are
expected to flow later in the year. Having spent considerable time and money in
2005 setting the stage for the international expansion of the Group, we
anticipate that revenue growth in 2006, mainly in the second half, will come
from the activities in India, China, South America and other countries where
mobile phone penetration is growing rapidly. We continue to invest in our
proprietary technology and in new formats, and, in developing gambling formats
and applications, hope to benefit from increased international opportunities
arising from deregulation of the gaming industry. There are plenty of
profitable opportunities ahead for the Company, as we continue to take advantage
of the dramatic changes in the media landscape.
Julian Paul
Chairman
3 April 2006
OPERATING REVIEW
During 2005, Cellcast has focused on three key areas of activity, which together
drive revenue growth and uniquely position the Company in the global marketplace
for convergent entertainment services.
United Kingdom
Cellcast now broadcasts over 100 hours of live interactive programming each day,
which are distributed across eight channels on the Sky Digital platform. We
continue to expand our reach in the United Kingdom, through securing bandwidth
on Freeview's digital terrestrial platform, via cable networks, consumer
broadband services, and mobile network portals.
Increasingly, our programmes facilitate user-generated content and are the
conduit for user-to-user experiences that extend participation outside of
television transmission times. Interactive content specially formatted for
mobile also provides further incremental revenue opportunities.
With our experience of integrating new technologies and new communication
channels, and our considerable expertise in the provision of micro-billing
solutions, we continue to develop new products and business models that capture
the opportunities arising from the current growth of 3G, IPTV, enhanced
broadband, video mobile and wireless broadband services.
From our base in one of the world's most competitive digital television markets,
we continue to identify, develop and test profitable new interactive
applications and formats for worldwide distribution. This extensive portfolio
of proven programming lowers the cost of entering new territories and creates
the foundation for our continued global expansion.
International expansion
The Company's strong international push in 2005 has proven the scalability of
our business model and the competitive benefits of its cost-effective
deployment. Our extensive range of interactive applications and programmes can
now be customised to fit any transmission schedule, for broadcasters of all
sizes, from small cable and satellite channels to major terrestrials.
During the past year we have enhanced our position in Europe and developing
markets with distribution deals and partnerships with established broadcasters
and media companies in India, South America, China, Europe and the Middle East.
Through our new subsidiary, Cellcast India Interactive, we partnered with the
Essel Group to launch India's first live 24-hour interactive gaming channel,
PlayTV, offering active viewer involvement to over 47 million cable and DTH
households. With 85 million television households, over 65 million mobile phone
subscribers growing by 2.5 million users a month, and a sustained rise in
consumer spending, India promises to become a leading world market for
convergent entertainment services in a very short time.
Our South American roll-out was launched with a showcase interactive game show
on Telefe, Argentina's largest terrestrial broadcaster. This was the first step
in a regional strategy which simultaneously addresses the Hispanic markets of
Central America and the United States. Following the successful entry into
Argentina, we launched Ecuador's first participation television show on the
country's number one channel TeleAmazonas, and our proven business model is now
attracting the strong interest of broadcasters across the continent.
In the Far East, our initial focus has been China, where our new joint venture
has national billing agreements with China Mobile and China Unicom. China has
the world's largest mobile phone market, with more than 377 million mobile phone
subscribers, and its SMS revenues in 2007 are forecast to exceed those of the
whole of Western Europe. Our innovative programming on TVS-3, one of the
leading entertainment channels in the country's richest province, Guangdong,
provides consumers a seamless service extending television to mobile via China
Mobile's WAP portal. We will continue to identify new broadcast and media
partners in China, and expect to announce further distribution deals in 2006.
We are pursuing commercial discussions with national and regional broadcasters
in several Eastern European countries. Our new partnership with STB, one of
Ukraine's major broadcasters, is expected to be a springboard for entry into the
large Russian market.
In the Middle East, our considerable expertise working with multiple GSM and
fixed-line operators and with the particular network infrastructure and
technical interface constraints of the region, continues to be in demand from
broadcasters. We are the exclusive SMS billing provider to the pan-Arab Future
TV network and to all four channels on the region's largest music network,
Rotana Television, and provide billing services and interactive screen
management to E2 in Cairo, Music Time and Citruss TV in Dubai, and Escape TV in
Jordan.
Proprietary Technology
We made a significant step forward this year with the evolution of the
proprietary Cellcast Interactive Platform (CIP). The new 'Channel in a Box'
architecture means a broadcaster can now play-out via a single system connected
to the CIP back office, and have the complete channel, including advertisements,
interactively enabled. Cutting edge 3D interactivity is built into the system
from the ground up.
In 2006 these upgrades to the CIP will enable us to enhance 3G, podcast and
broadcast delivery, and to focus on short form content and enhanced interactive
formats for mobile platforms including J2ME, Windows and Symbian.
Outlook for 2006
Cellcast is now firmly established as a leading provider of interactive TV and
mobile entertainment. The global market for our programmes and applications
continues to expand. The focus over the coming year is our drive into China, the
USA, Brazil, India, Mexico, Turkey and Russia, within an overall strategy of
building a presence in all markets where mobile penetration is high or growing
rapidly.
Our proprietary CIP platform has already proven its ability to facilitate rapid
deployment of a growing portfolio of applications into multiple markets, and key
platform upgrades during the coming months will allow us to combine 2D and 3D
rendering in real time.
We will continue to invest in new formats designed specifically for
multi-platform distribution, including 3G and IPTV. Close attention will be
paid to user-generated content, and leveraging our established skills to exploit
the interactive applications that can be built around this.
A development focus on gaming formats and applications will take advantage of
our strong presence on the Sky Digital platform in the UK and the increased
international opportunities arising from deregulation in the global gambling
industry.
Andrew Wilson Bertrand Folliet
Chief Executive Officer Chief Operating Officer
3 April 2006 3 April 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2005
2005 2004
# #
Turnover 13,186,663 8,197,875
Cost of sales (11,361,484) (6,373,234)
Gross profit 1,825,179 1,824,641
Administrative expenses:
General 2,152,528 2,284,543
Depreciation & Amortisation 400,908 248,481
(2,553,436) (2,533,024)
Operating loss (728,257) (708,383)
Loss on disposal of subsidiaries (35,726) -
Interest receivable and similar 42,226 2,938
income
Interest payable and similar charges (2,683) (894)
Loss on ordinary activities before (724,440) (706,339)
taxation
Tax on loss on ordinary activities - (7,053)
Loss on ordinary activities after (724,440) (713,392)
taxation
Minority interests - 16,354
Loss for the financial year (724,440) (697,038)
Loss per share
Basic (3.2) pence (3.3) pence
Diluted (3.2) pence (3.3) pence
There are no recognised gains and losses other than those passing through the profit and loss
account.
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2005
2005 2004
# #
Fixed assets
Intangible assets 611,695 386,667
Tangible assets 858,458 529,919
Investments 4,933 4,933
1,475,086 921,519
Current assets
Debtors 2,778,267 1,243,135
Cash at bank and in hand 2,696,180 410,706
5,474,447 1,653,841
Creditors: amounts falling due within (2,852,147) (2,020,094)
one year
Net current assets/(liabilities) 2,622,300 (366,253)
Total assets less current liabilities 4,097,386 555,266
Creditors: amounts falling due after (122,278) (273,424)
more than one year
3,975,108 281,842
Capital and reserves
Called up share capital 850,407 632,200
Share premium account 4,038,676 -
Merger reserve 1,300,395 1,144,282
Profit and loss account (2,214,370) (1,489,930)
Shareholders' funds - equity interests 3,975,108 286,552
Minority interests - (4,710)
3,975,108 281,842
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2005
2005 2004
# # # #
Net cash inflow/(outflow) from operating activities (669,985) 501,441
Returns on investments and servicing of finance
Interest received 42,226 2,938
Interest paid (2,683) (894)
Net cash inflow for returns on investments
and servicing of finance
39,543 2,044
Taxation (7,053) -
Capital Expenditure
Payments to acquire intangible assets (294,674) (400,000)
Payments to acquire tangible assets (804,384) (558,127)
Net cash outflow for capital expenditure (1,099,058) (958,127)
Acquisitions and disposals
Purchase of subsidiary undertakings and - (4,923)
other significant investments
Proceeds on disposal of subsidiary 2 -
undertakings
Cash on disposal of subsidiary undertakings (212,548) -
Net cash outflow for acquisitions and (212,546) (4,923)
disposals
Net cash outflow before management of
liquid resources and financing
(1,949,099) (459,565)
Financing
Issue of ordinary share capital 5,001,248 730,191
Share issue costs (751,244) -
Capital element of finance lease contracts (15,364) (5,125)
Net cash inflow from financing 4,234,640 725,066
Increase in cash in the year 2,285,541 265,501
Notes to the consolidated cash flow statement
(a) Reconciliation of operating loss to net cash outflow from operating 2005 2004
activities
# #
Operating loss (728,257) (708,383)
Depreciation of tangible assets 331,262 235,148
Amortisation of intangible assets 69,646 13,333
Loss on disposal of fixed assets 6,638 -
Increase in debtors (2,386,412) (658,897)
Increase in creditors 2,037,138 1,620,240
Net cash inflow/(outflow) from operating activities (669,985) 501,441
(b) Analysis of net funds 1 January Cashflow Other non- 31 December
2005 Cash 2005
changes
# # # #
Net cash:
Cash at bank and in hand 410,706 2,285,474 - 2,696,180
Bank overdrafts (67) 67 - -
410,639 2,285,541 - 2,696,180
Finance leases (24,108) 15,364 - (8,744)
Net funds 386,531 2,300,905 - 2,687,436
(c) Reconciliation of net cash flow to movement in net funds 2005 2004
# #
Increase in cash in the year 2,285,541 265,501
Finance lease 15,364 5,125
Change in net funds resulting from cash flows 2,300,905 270,626
Cash inflow from finance lease - (29,233)
Movement in net funds in the year 2,300,905 241,393
Opening net funds 386,531 145,138
Closing net funds 2,687,436 386,531
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2005
1 Accounting policies
1.1 Accounting convention
The financial statements are prepared under the historical cost convention.
1.2 Compliance with accounting standards
The financial statements are prepared in accordance with applicable accounting standards.
1.3 Basis of consolidation
The consolidated profit and loss account and balance sheet include the financial statements of the
company and its subsidiary undertakings made up to 31 December 2005.
Acquisitions of subsidiaries are dealt with by the acquisition method of accounting except for those
qualifying as group reconstructions where merger accounting is permitted.
Merger with Cellcast (UK) Limited
On 14 September 2005, Cellcast Plc entered into an agreement with all the shareholders of Cellcast
(UK) Limited to merge their respective businesses. The consideration for the purchase of the share
capital of Cellcast (UK) Limited was satisfied by the allotment and issue of 21,302,900 ordinary
shares of
#0.03 each in Cellcast Plc, credited as fully paid.
The financial statements have been prepared under the merger accounting rules (the pooling of
interests
method), as the combining entities within the group were controlled by the same parties both before
and
after the combination. Accordingly, the financial information for the current period, and for the
prior period
has been presented as if Cellcast (UK) Limited had been owed by Cellcast Plc throughout the current
and
comparative accounting periods.
1.4 Going concern
The accounts have been prepared on a going concern basis.
1.5 Turnover
Revenue is measured at the consideration received or receivable and represents amounts receivable for
services provided in the normal course of business, net of discounts, VAT and other sales related
taxes.
1.6 Research and development
Research expenditure is written off to the profit and loss account in the year in which it is
incurred. Development expenditure is written off in the same way unless the directors are satisfied as
to the technical, commercial and financial viability of individual projects. In this situation, the
expenditure is deferred and amortised over the 5 year period during which the company is expected to
benefit.
1.7 Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates
calculated to write off the cost less estimated residual value of each asset over its expected useful
life, as follows:
Broadcasting equipment 20% to 50% straight line
Computers, Fixtures and fillings 20% to 50% straight line
1.8 Investments
Fixed asset investments are stated at cost less provision for diminution in value.
1.9 Pensions
The Group operates a defined contribution scheme for the benefit of its employees.
Contributions payable are charged to the profit and loss account in the year they are payable.
1.10 Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not
reversed at the
balance sheet date where transactions or events that resulted in an obligation to pay more tax
in the
future or a right to pay less tax in the future have occurred at the balance sheet date. Timing
differences
are differences between the Group's taxable profits and its results as stated in the financial
statements
that arise from the inclusion of gains and losses in tax assessments in periods different from
those in
which they are recognised in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in
which
timing differences are expected to reverse, based on tax rates and laws that have been enacted
or
substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted
basis.
1.11 Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into sterling
at the rates
of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at
the rate
ruling at the date of the transaction. All differences are taken to profit and loss account.
1.12 Leased assets
Assets held under finance leases and hire purchase contracts are capitalised in the balance
sheet and
depreciated over their estimated useful economic lives. The interest element of leasing
payments
represents a constant proportion of the capital balance outstanding and is charged to the profit
and loss
account over the period of the lease. All other leases are regarded as operating leases and the
payments made under them are charged to the profit and loss account on a straight line basis
over the
lease term.
1.13 Licences
Licence costs are amortised over their relevant licence period on a straight line basis.
1.14 Share-based payments
The Group operates executive and employee share schemes. For all grants of share options, the
fair
value as at the date of grant is calculated using an option pricing model and the corresponding
expense
is recognised over the vesting period. The expense is recognised as a staff cost and the
associated
credit entry is made against equity.
2 Earnings per share
The calculation of the basic loss per share is based on the loss attributable to ordinary
equity
shareholders of #724,440 (2004: Loss #697,038) divided by the weighted average of 22,891,724
(2004: 21,073,333) ordinary shares in issue.
Due to the loss incurred in the year, there is no dilution effect from the issued share
options.
3 Reconciliation of movements in shareholders' funds 2005 2004
Group # #
Loss for the financial year (724,440) (697,038)
Issue of shares 5,001,240 -
Conversion of loans to share capital 163,000 -
Issue costs (751,244) -
Net increase/(depletion) in shareholders' funds 3,688,556 (697,038)
Opening shareholders' funds 286,552 983,590
Closing shareholders' funds 3,975,108 286,552
4 Financial Information
The financial information set out in this report does not constitute statutory accounts as defined in
section 240 of the Companies Act1985. The financial information for the year ended 31 December 2005 is
unaudited. Information in respect of the year end 31 December 2004 is extracted from the statutory
accounts of Cellcast (UK) Limited for that year as the financial information for the current period, and
for the prior period has been presented as if Cellcast (UK) Limited had been owed by Cellcast Plc
throughout the current and comparative accounting periods.. The auditors' report on those accounts was
unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.
5 Dividend
The directors are not declaring a dividend.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR VXLFBQZBZBBZ
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