VITA.L Regulatory News (VITA)

4 Apr 2006 07:01

Cellcast plc04 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, todaypresents its maiden preliminary announcement of final results for the year ended31 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 amvery pleased that these results reveal the strong foundations Cellcast hasdeveloped in the UK. Since the Company listed on AIM in September we are nowexpanding into new global markets and are entering a truly exciting new period." For further information: Cellcast plcAndrew Wilson, Chief Executive Officer Tel: +44 (0) 20 7190 0300andrew@cellcast.tvEmmanuelle Guicharnaud, Chief Financial Officer Tel: +44 (0) 20 7190 0300emmanuelle@cellcast.tv www.cellcast.com Daniel Stewart & Company PlcMarc Young, Corporate Finance Tel: +44 (0) 20 7776 6550marc.young@danielstewart.co.uk www.danielstewart.co.uk Media enquiries:AbchurchHenry Harrison-Topham / Gareth Mead Tel: +44 (0) 20 7398 7700henry.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 apublic company following Admission to AIM in September 2005. Admission to AIM The Company had a successful debut on AIM, raising £5 million before expensesand introducing a wide range of new shareholders. I would like to welcome ournew shareholders and thank them for supporting the Company. The placing waswell received which resulted in the issue being oversubscribed. This meant thatwe were able to raise more money for the Company than we originally hadintended, and it also allowed Atlas Group, which had been an investor for sometime, to realise part of its holding. We were delighted with the investorresponse to the Company and as a consequence now have an excellent institutionalshareholder base. The funds raised will enable us to develop our business inline 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 upover 60% to £13.2 million, 97% of which was generated in the UK. Performance inthis market was very strong, contributing some £2.2 million in gross profit andgiving us the resources and opportunity to invest for the future in key overseasmarkets. Start-up losses in the overseas territories of Ukraine, India andArgentina and expensed development costs in those and other territoriesaggregated some £1.4 million. As a consequence, the Group recorded a loss atthe EBITDA level of £327,000 (2004: £460,000) and an operating loss beforeinterest 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, bothin the UK and now increasingly overseas, and I wish to put on record the Board'sappreciation of their hard work and commitment. Motivation and retention of keystaff is vital for the future success of the Company. At the time of Admissionto AIM, we put in place share option schemes in the form of an EnterpriseManagement Incentive Scheme and an Unapproved Share Option Plan. At 31 December2005, the Company had granted just over 1.4 million share options under theseschemes to 48 members of staff other than directors, aggregating 5% of the sharecapital of the Company. Outlook Current year trading in the UK has begun well, with UK generated turnover forthe first two months running some 16% ahead of the same period in the prioryear. This does not include revenue from any Freeview services, which areexpected to flow later in the year. Having spent considerable time and money in2005 setting the stage for the international expansion of the Group, weanticipate that revenue growth in 2006, mainly in the second half, will comefrom the activities in India, China, South America and other countries wheremobile phone penetration is growing rapidly. We continue to invest in ourproprietary technology and in new formats, and, in developing gambling formatsand applications, hope to benefit from increased international opportunitiesarising from deregulation of the gaming industry. There are plenty ofprofitable opportunities ahead for the Company, as we continue to take advantageof the dramatic changes in the media landscape. Julian PaulChairman 3 April 2006 OPERATING REVIEW During 2005, Cellcast has focused on three key areas of activity, which togetherdrive revenue growth and uniquely position the Company in the global marketplacefor 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. Wecontinue to expand our reach in the United Kingdom, through securing bandwidthon Freeview's digital terrestrial platform, via cable networks, consumerbroadband services, and mobile network portals. Increasingly, our programmes facilitate user-generated content and are theconduit for user-to-user experiences that extend participation outside oftelevision transmission times. Interactive content specially formatted formobile also provides further incremental revenue opportunities. With our experience of integrating new technologies and new communicationchannels, and our considerable expertise in the provision of micro-billingsolutions, we continue to develop new products and business models that capturethe opportunities arising from the current growth of 3G, IPTV, enhancedbroadband, 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 interactiveapplications and formats for worldwide distribution. This extensive portfolioof proven programming lowers the cost of entering new territories and createsthe foundation for our continued global expansion. International expansion The Company's strong international push in 2005 has proven the scalability ofour business model and the competitive benefits of its cost-effectivedeployment. Our extensive range of interactive applications and programmes cannow be customised to fit any transmission schedule, for broadcasters of allsizes, from small cable and satellite channels to major terrestrials. During the past year we have enhanced our position in Europe and developingmarkets with distribution deals and partnerships with established broadcastersand media companies in India, South America, China, Europe and the Middle East. Through our new subsidiary, Cellcast India Interactive, we partnered with theEssel Group to launch India's first live 24-hour interactive gaming channel,PlayTV, offering active viewer involvement to over 47 million cable and DTHhouseholds. With 85 million television households, over 65 million mobile phonesubscribers growing by 2.5 million users a month, and a sustained rise inconsumer spending, India promises to become a leading world market forconvergent entertainment services in a very short time. Our South American roll-out was launched with a showcase interactive game showon Telefe, Argentina's largest terrestrial broadcaster. This was the first stepin a regional strategy which simultaneously addresses the Hispanic markets ofCentral America and the United States. Following the successful entry intoArgentina, we launched Ecuador's first participation television show on thecountry's number one channel TeleAmazonas, and our proven business model is nowattracting the strong interest of broadcasters across the continent. In the Far East, our initial focus has been China, where our new joint venturehas national billing agreements with China Mobile and China Unicom. China hasthe world's largest mobile phone market, with more than 377 million mobile phonesubscribers, and its SMS revenues in 2007 are forecast to exceed those of thewhole of Western Europe. Our innovative programming on TVS-3, one of theleading entertainment channels in the country's richest province, Guangdong,provides consumers a seamless service extending television to mobile via ChinaMobile's WAP portal. We will continue to identify new broadcast and mediapartners in China, and expect to announce further distribution deals in 2006. We are pursuing commercial discussions with national and regional broadcastersin several Eastern European countries. Our new partnership with STB, one ofUkraine's major broadcasters, is expected to be a springboard for entry into thelarge Russian market. In the Middle East, our considerable expertise working with multiple GSM andfixed-line operators and with the particular network infrastructure andtechnical interface constraints of the region, continues to be in demand frombroadcasters. We are the exclusive SMS billing provider to the pan-Arab FutureTV network and to all four channels on the region's largest music network,Rotana Television, and provide billing services and interactive screenmanagement to E2 in Cairo, Music Time and Citruss TV in Dubai, and Escape TV inJordan. Proprietary Technology We made a significant step forward this year with the evolution of theproprietary Cellcast Interactive Platform (CIP). The new 'Channel in a Box'architecture means a broadcaster can now play-out via a single system connectedto the CIP back office, and have the complete channel, including advertisements,interactively enabled. Cutting edge 3D interactivity is built into the systemfrom the ground up. In 2006 these upgrades to the CIP will enable us to enhance 3G, podcast andbroadcast delivery, and to focus on short form content and enhanced interactiveformats for mobile platforms including J2ME, Windows and Symbian. Outlook for 2006 Cellcast is now firmly established as a leading provider of interactive TV andmobile entertainment. The global market for our programmes and applicationscontinues to expand. The focus over the coming year is our drive into China, theUSA, Brazil, India, Mexico, Turkey and Russia, within an overall strategy ofbuilding a presence in all markets where mobile penetration is high or growingrapidly. Our proprietary CIP platform has already proven its ability to facilitate rapiddeployment of a growing portfolio of applications into multiple markets, and keyplatform upgrades during the coming months will allow us to combine 2D and 3Drendering in real time. We will continue to invest in new formats designed specifically formulti-platform distribution, including 3G and IPTV. Close attention will bepaid to user-generated content, and leveraging our established skills to exploitthe interactive applications that can be built around this. A development focus on gaming formats and applications will take advantage ofour strong presence on the Sky Digital platform in the UK and the increasedinternational opportunities arising from deregulation in the global gamblingindustry. Andrew Wilson Bertrand Folliet Chief Executive Officer Chief Operating Officer 3 April 2006 3 April 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR 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 2,284,543Depreciation & 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 2,938incomeInterest 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 shareBasic (3.2) pence (3.3) penceDiluted (3.2) pence (3.3) pence There are no recognised gains and losses other than those passing through the profit and lossaccount. CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2005 2005 2004 £ £ Fixed assetsIntangible assets 611,695 386,667Tangible assets 858,458 529,919Investments 4,933 4,933 1,475,086 921,519Current assetsDebtors 2,778,267 1,243,135Cash 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 reservesCalled up share capital 850,407 632,200Share premium account 4,038,676 -Merger reserve 1,300,395 1,144,282Profit and loss account (2,214,370) (1,489,930) Shareholders' funds - equity interests 3,975,108 286,552Minority interests - (4,710) 3,975,108 281,842 CONSOLIDATED CASH FLOW STATEMENTFOR 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 financeInterest received 42,226 2,938Interest paid (2,683) (894) Net cash inflow for returns on investmentsand servicing of finance 39,543 2,044 Taxation (7,053) - Capital ExpenditurePayments 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 disposalsPurchase of subsidiary undertakings and - (4,923)other significant investmentsProceeds on disposal of subsidiary 2 -undertakingsCash on disposal of subsidiary undertakings (212,548) - Net cash outflow for acquisitions and (212,546) (4,923)disposals Net cash outflow before management ofliquid resources and financing (1,949,099) (459,565) FinancingIssue of ordinary share capital 5,001,248 730,191Share 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 STATEMENTSFOR 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