VITA.L Regulatory News (VITA)

21 Sep 2005 08:00

Cellcast plc21 September 2005 Press Release 21 September 2005 Cellcast plc ("Cellcast" or "the Group") First Day of Dealings Cellcast plc today announces the commencement of dealings of its Ordinary Shareson the AIM market (AIM) of the London Stock Exchange. Daniel Stewart is actingas Nominated Adviser and as Broker to Cellcast. The stock market EPIC will beCLTV.L Placing StatisticsPlacing Price 71 penceNumber of Placing Shares to be issued 7,044,000Number of Vendor Placing Shares to be Placed 2,634,167Percentage of Enlarged Issued Share Capital being issued by the Company under the 24.8 per. centPlacingGross proceeds of the Placing £5.0 millionEstimated net proceeds from the Placing to be received by the Company £4.3 millionNumber of Ordinary Shares in issue immediately following Admission 28,346,911Market capitalisation of the Company on Admission at the Placing Price £20.1 million The Placing attracted high levels of interest resulting in it beingoversubscribed, and in addition to raising £5 million for the Group, an existingshareholder (Atlas Group of Companies Limited) has sold £1.87 million of sharesin the Placing. Reasons for the placing and Admission and use of proceeds The net proceeds of the Placing received by the Group will be used to strengthenthe balance sheet and to finance its future growth. It will raise the Group'sprofile which is important, given its expansion plans, and will allow the Groupto attract and motivate key staff through the issue of share options. It willalso enable Cellcast to issue publicly traded shares as consideration for futureacquisitions. Andrew Wilson, Chief Executive of Cellcast plc, said: "We are delighted that theAIM flotation of the Group has been completed successfully and it is gratifyingto witness such high levels of institutional demand. This listing makes bothstrategic and commercial sense as we take Cellcast to the next stage of itsdevelopment and we now look forward to working with our new institutionalshareholders." Cellcast announces the appointment of Julian Paul as non-executive Chairman.Julian Paul qualified as a Chartered Accountant with Arthur Andersen in 1971,and subsequently spent nearly twenty years as a commercial and merchant banker.Since 1991 he has held several senior board positions with companies in themedia and entertainment sector. He was Deputy Chairman of Castle Communicationsplc between 1991 and 1997 and Chairman of Tele-Cine Cell Group plc between 1994and 1998. He is currently Deputy Chairman of Eagle Rock Entertainment Limited,of which he was a founder shareholder. He is also a non-executive director ofEntertainment Rights plc, Pilat Media Global plc and Stagecoach Theatre Artsplc. Commenting on the appointment of Julian Paul as non-executive Chairman, AndrewWilson, said: "The Board is particularly pleased to welcome Julian to Cellcastas our Chairman. Julian brings with him a wealth of relevant knowledge as wellas valuable experience of public company life. Our aim is to maintain ourmarket leadership in the provision of global interactive digital broadcasting,and Julian will play a key role in our forward strategy." Cellcast also announces the appointment of Michael Neville as non-executivedirector. Michael Neville has extensive experience in capital markets and hasexperience at board level in several public companies. Cellcast will be reporting its maiden set of Interim Results on Wednesday 28September 2005. - Ends - For further information:Cellcast plcAndrew Wilson, Chief Executive Officer Tel: +44 (0) 20 7190 0300andrew@cellcast.tv www.cellcast.com Daniel Stewart & Company PlcLindsay Mair, Head of Corporate Finance Tel: +44 (0) 20 7776 6550lindsay.mair@danielstewart.co.uk www.danielstewart.co.uk Media enquiries:AbchurchHenry Harrison-Topham / Tania Wild Tel: +44 (0) 20 7398 7700henry.ht@abchurch-group.com www.abchurch-group.com Further Information Cellcast develops, aggregates and distributes a range of mobile andparticipation television applications. It produces live interactive programmingwhich integrates mobile entertainment into the multi-channel televisionenvironment through audience participation via their mobile and/or fixed linephone. These formats and applications generate telephony-based pay-to-play andpay-to-participate income streams through revenue sharing agreements withbroadcasters, mobile phone aggregators and fixed line operators. Participants'details are retained by the Group on a database that allows it to market otherservices to them. The Group's applications and services can be utilised on multiple mediaplatforms (television, internet and mobile), require no set-top box and arequick to implement as viewers can participate via their mobile phone. Itsinteractive content is also well suited to television over the internet. Cellcast's programming is able to generate revenue throughout its broadcastperiod and benefits from low cost user-generated content. As a result, itsprogramming offers additional yield potential when compared to regularadvertising based and teleshopping programming. In the UK and a number of otherEuropean countries advertising on television is limited to 12 minutes in anyhour and the amount of teleshopping is also restricted. In the UK, for example,on general entertainment channels such as those broadcast by Cellcast,teleshopping is restricted to three hours in any one day. Given theseregulatory restrictions, Cellcast's applications are able to generate revenue asa part of the programme and thus create new revenue streams for broadcasters. Also while viewer interaction is initiated by a particular television programme,Cellcast's applications and services are designed to encourage viewers tocontinue to interact after the broadcast has finished, for example, in the areasof gaming and dating. The Directors believe that this model creates theopportunity to generate follow-on revenues which are incremental to thoseinitially generated by participation in the interactive programme. KEY STRENGTHS The Directors believe that the key strengths of the Group are the following: • its programming produces additional revenue streams for broadcasters at limited cost; • it has a proprietary technology platform; • its services may be accessed by the public via multiple media platforms; • its applications have post-broadcast follow-on revenue opportunities; • the international scaleability of the business model; and • the experience of its management team. BACKGROUND AND HISTORY In 2002, Andrew Wilson and Bertrand Folliet (Chief Executive Officer and ChiefOperating Officer of the Group respectively) identified the participationtelevision market as having significant growth potential and established theGroup to capitalise on this and on their experience in this market. BUSINESS ACTIVITIES AND SERVICES The Group markets directly to consumers via its owned and operated broadcastchannels and air time on third party channels and provides a range ofprogramming and services to television broadcast and network partners. The Group currently broadcasts approximately 80 hours of live UK television perday across nine channels on the Sky Digital platform in the UK. The Group's formats and applications include: • voting and polling; • game shows and competitions; • gaming and gambling; • reverse auctions; • interactive astrology and psychic readings; • interactive talk shows; and • dating and chat lines. The Group provides the following services to television broadcast and networkpartners: • a portfolio of successful and innovative interactive TV formats; • interactive TV programme production; • indirectly, through third party providers, technical, marketing and customer relationship support including database management, data- mining and mobile marketing; • indirectly, through third party providers, fully-hosted SMS and IVR services including billing • solutions; and • the facility to enable international broadcasting and distribution. The Group's customers comprise broadcasters who license and distribute itsprogrammes. Its key suppliers are satellite and cable providers who supplybandwidth and distribution. It also has strong relationships withtelecommunications companies and aggregators, who pay the Group a proportion ofthe revenues they earn from traffic generated by viewers' calls, MMS, video andSMS in response to the Group's programmes. The Group markets directly to consumers through its wholly owned and operatedbroadcast channels and through purchased air time on third party channels. TheGroup distributes proprietary applications and programming on many majoroverseas channels and platforms and collaborates with broadcasters in Europe,the Middle East, India and South America. These include Future TV, LBC, MBC,Dubai Television and Rotana in the Middle East; and Zee TV and Star TV in India. The Group is planning to launch an interactive 24-hour channel on the AsiaSat3S platform which is accessible in at least 50 countries and to licence itsformats and programming to Canal+ in France. The Group has indirect relationships, through telecommunications aggregators,with a range of telecommunications carriers including BT, Vodafone, Orange,Virgin Mobile, 3 Mobile, O2 and T-Mobile. Cellcast Interactive Platform ("CIP") The Group has developed a platform that deploys existing technology to integrateviewer-generated content including messaging, speech and video, intopre-recorded and live TV programming and which facilitates the distribution ofcontent to a wide range of consumer devices including mobile phones, PDAs,television and the internet. The CIP's client-server architecture enables multiple clients to connect to acentral Cellcast Interactive Server so that broadcasters can increaseinteractivity without a significant upfront investment. This allows them totest market demand and rapidly deploy applications and programmes. It alsoenables broadcasters to push their content to three key consumer platforms:television; mobile phones; and the internet, including broadband television andIPTV. As well as providing multiple content distribution channels, the platformhandles responses from voice and IVR, SMS, MMS and 3G, mobile applications;set-top box applications, and internet browsers. The CIP facilitates the collection of revenue through Premium Rate Telephony;Premium Rate SMS; credit and debit cards; and PayPal. THE MARKET AND COMPETITION The growth of special interest cable and satellite television channels in thedigital broadcast environment has resulted in audiences and revenues beingspread over an increasing number of channels. For example, in the UK, one ofthe most competitive markets in the world, Ofcom issued 162 new licences tobroadcast television services in 2004, and over 370 channels are now availableto UK audiences. Competition for customers is thus intense and, as a result,traditional television broadcasting models, which are based on advertisingrevenue, are coming under pressure. Broadcasters are seeking to find new waysof winning audience share and generating revenue streams, whilst seeking toreduce the operational costs of providing new formats and services. Among earlyparticipation television applications, voting and polling demonstrated thepotential of the new medium. This is evidenced by the success of programmessuch as Big Brother and Pop Idol. The market has grown rapidly since its inception. In 2003, the 900 millionmessages sent in the European SMS-TV market generated an estimated A400 millionshared by broadcasters, mobile operators, and technology providers. Accordingto a report in the McKinsey Quarterly (McKinsey & Company), the addition of SMSboosts the viewership of popular free-to-air television shows by up to 20 percent. and can encourage ratings growth of circa 50-100 per cent. for niche cableand satellite channels. Further, according to McKinsey & Company, the EuropeanSMS-TV market could reach A750 million by the end of 2005. Television is a highly effective medium through which to market mobileentertainment services, which are now a significant part of the mobile contentsector. Research and Markets forecasts that the mobile content market willgenerate in the region of US$78 billion in revenues worldwide by 2007, up fromUS$16.7 billion in 2003. A number of companies produce and broadcast interactive formats. Theseoperators focus on the sale of their formats and/or on buying airtime to promotethem. They tend to focus on a single genre such as interactive quiz shows andformats and do not have the extensive portfolio of live interactive formats thatthe Group has developed. STRATEGY OF THE GROUP The Group intends to grow its business in the following ways: • continued international expansion of the business by developing operations in Italy, India, the US, Argentina, and, in due course, China and other Asian markets; • launching new channels on Sky; • broadening the Group's distribution capabilities through regional satellite syndication by establishing local production and broadcast facilities serving Latin America, the United States, India, China and South-East Asia; • developing its applications and interactive programming into formats suitable for new media platforms including 3G, IPTV, enhanced broadband, mobile video and wireless broadband services; • taking advantage of the increasing functionality of mobile phones to deliver more sophisticated applications, appealing formats, and new premium services; and • targeting its customer database of approximately 1 million mobile user numbers to: • facilitate higher returns from current services and applications; and • to encourage participation by cross selling its products and services directly to users. Worldwide revenues for mobile gaming are predicted to be US$19.3 billion by 2009and the Group is developing a number of interactive multi-platform applicationsto increase its gaming capabilities to capitalise on this growing market byproviding applications for channels it operates such as GetLucky TV and forthird party channels to facilitate live betting. SUMMARY FINANCIAL INFORMATION The following table sets out the key financial information relating to the Groupwhich has been derived from the AIM Admission document. Year ended Year ended Period ended 31 December 31 December 31 December 2004 2003 2002 £'000 £'000 £'000Turnover 8,198 3,104 2,134Gross profit 1,825 793 1,258Operating loss (708) (713) (71)Loss on ordinary activities before taxation (706) (713) (68) Historic turnover has grown by over 280 per cent. over the past three years.Losses have been increasing over the last three years as the Group has incurredsignificant expenditure in developing new markets, and, testing and implementingnew applications. RECENT DEVELOPMENTS The Group has recently entered into an agreement with Top Up TV whereby Top UpTV has agreed to broadcast the Cellcast Content during available overnight hourscontrolled by Top Up TV on the Freeview DTT platform. The Directors believethis is a strategic opportunity for the Group to expand its operations in the UKmarket. Further details of this agreement are set out in AIM Admissiondocument. The Board will continue to promote and expand the Group's business in the UK andalso internationally. The Group is in advanced discussions to start tests inthe US, Italy and Argentina and launch new applications in France. DIRECTORS AND MANAGEMENT Directors Julian Paul FCA, Non Executive Chairman (aged 60) Julian qualified as a Chartered Accountant with Arthur Andersen in 1971, andsubsequently spent nearly twenty years as a commercial and merchant banker.Since 1991 he has held several senior board positions with companies in themedia and entertainment sector. He was Deputy Chairman of Castle Communicationsplc between 1991 and 1997 and Chairman of Tele-Cine Cell Group plc between 1994and 1998. He is currently Deputy Chairman of Eagle Rock Entertainment Limited,of which he was a founder shareholder. He is also a non-executive director ofEntertainment Rights plc, Pilat Media Global plc and Stagecoach Theatre Artsplc. Andrew Wilson, Chief Executive Officer (aged 44) Andrew co-founded the Group in 2002. With twenty years' experience in thetelecoms and information industries, he has a proven track record of buildinginnovative international businesses in the telecoms, broadcasting and new mediasectors. Before co-founding the Group, he was a director of the Tokyo basedJasdaq-listed e-Lux Corporation, and an executive director of the publiclylisted Hong Kong company, e-New Media Limited. Prior to this he was a directorof the international telemedia services provider, Voice Information SystemLimited ("VISL") and Joint Managing Director of Marketing Solutions, asubsidiary of DDB Needham. Andrew is a frequent speaker at industry conferences.Andrew has an Honours Degree in Film Studies from the University of Warwick. Bertrand Folliet, Chief Operating Officer (aged 39) Bertrand co-founded the Group in 2002. He has many years' experience in thetelecoms, digital content and multimedia industries, and a successful record ofbuilding profitable businesses providing value-added billing and distributionservices in the international telecom sector. Bertrand was formally the ChiefOperating Officer of Jasdaq-listed e-Lux Corporation's key operating subsidiaryin Hong Kong, prior to which he was an executive director of the publicly listed Hong Kong companye-New Media Limited. He also served as Managing Director of e-New Mediasubsidiary New Media Corporation, which grew to US$140 million in revenues andUS$10 million in profit in 1999, and was Director of Operations of thatCompany's predecessor, VISL. Before joining VISL, he was Vice President ofMatra-Hachette Multimedia On-line. Bertrand has a PhD from Paris DauphineUniversity. Emmanuelle Guicharnaud, Chief Financial Officer (aged 32) Emmanuelle spent 4 years as a Management Consultant for Price WaterhouseCoopers. In 1999 she joined a privately held chain of hotels with theresponsibility of evaluating new acquisitions. In 2000 she relocated to the UKand took up a position as the financial controller of m-Quest, a telecomscompany providing value added telephony and SMS solutions that was subsequentlyacquired by Monstermob PLC. She joined the Group as financial controller in2002. Emmanuelle holds a DECF (Accountancy and Finance Diploma) from anInternational Business School (ESC). Michael Neville, Non Executive Director (aged 51) Michael has extensive experience in capital markets and is director of a numberof public and private companies. He is the Chairman of Atlas, which will, atAdmission, own 28.3 per cent. of the Enlarged Issued Share Capital. Hisbackground is in the telecommunications and technology arena, where he hasworked for the last 17 years specialising in strategy, mergers and acquisitions,and turn around situations. Michael has worked for companies such as C&W,Norweb, Ozemail Interline Pty and OnCue Telecommunications Limited where he hasbeen involved in large and small scale fund raisings as well as various mergerand acquisitions transactions. Michael holds an engineering degree as well as aMBA. Cellcast intends to appoint another non-executive director following Admission. The following have disclosable interests in Cellcast's issued ordinary shareCapital: Atlas Group of Companies Limited hold 8,017,288 shares representing 28.2 percent. of the Company's issued share capital; SMSMedia Limited hold 8,762,953 shares representing 30.9 per cent. of theCompany's issued share capital; and Sardik Limited hold 1,888,503 shares representing 6.7 per cent. of the Company'sissued share capital. The Directors have the following beneficial interests in the Cellcast's issuedordinary share capital: Julian Paul has no interest; Andrew Wilson is beneficially interested in 2,907,384 shares representing 10.3per cent. of the Company's issued share capital; Bertrand Folliet is beneficially interested in 2,907,384 shares representing10.3 per cent. of the Company's issued share capital; Emmanuelle Guicharnaud is beneficially interested in 353,777 shares representing1.25 per cent. of the Company's issued share capital; and Michael Neville has no interest. This information is provided by RNS The company news service from the London Stock Exchange