VITA.L Regulatory News (VITA)

4 May 2007 07:01

Cellcast plc04 May 2007 Press Release 4 May 2007 Cellcast plc ("Cellcast" or "the Group") Preliminary Announcement of Final Results Cellcast plc (AIM:CLTV), the global interactive digital broadcaster, presentsits preliminary announcement of final results for the year ended 31 December2006. Highlights • Turnover up 66% to £21.9 million (2005: £13.2 million) • Unexpected rise in UK costs in early 2006 met with effective control measures • Strong growth in international business, which accounts for 41% of the Group's total revenues in 2006 (2005: 3%) • Successful launch of Sumo.TV media network • Continued investment in the Group's multi-platform technology • Forecast of sustained profitability with expanded international distribution Commenting on the results, Andrew Wilson, Chief Executive Officer, said: "It isa testament to the dedication of our employees that the Group has been able toaddress the challenges of 2006 and implement the necessary solutions. Thebenefits of the actions taken to reduce the fixed costs of the Group's UKoperations will be realised in the first half of 2007, and we look forward toupdating shareholders on our progress. The successful launch of Sumo.TV inOctober was a particular highlight of last year, and in 2007 we will furtherfocus on our international growth, the foundations of which are now in place." - Ends - For further information:Cellcast plcAndrew Wilson, CEO Tel: +44 (0) 20 7190 0300andrew@cellcast.tv www.cellcast.tv HB CorporateImran Ahmad / Edward Hutton / Rachel Kane Tel: +44 (0) 20 7510 8600r.kane@hbcorporate.co.uk www.hbcorporate.co.uk Media enquiries:AbchurchGareth Mead / Joanne Shears Tel: +44 (0) 20 7398 7700gareth.mead@abchurch-group.com www.abchurch-group.com Chairman's Statement In 2006, the Group achieved a fourth year of uninterrupted revenue growth butfaced an exceptional challenge to its UK business. As a result of changesintroduced by Sky to its Electronic Program Guide (EPG), the Group had to secureadditional bandwidth to provide dedicated channels for each category of itsdiverse programme output on the Sky Digital satellite platform. The increasedcost base led to a significant erosion of the Group's margins, added to whichthe Group faced a reduction in revenues as Sky limited interactive programmingon General Entertainment channels to three hours per day. Management tookimmediate steps to reduce the fixed costs of its UK operations and its channelproduction overheads. At the same time, the Group accelerated its internationaldistribution, which resulted in substantial revenue gains in the last quarter.The 2006 interim results statement, and various trading statements since then,have flagged the steps taken by management to adapt the UK cost base to meet thechanged circumstances, which include a rationalisation of the headcount and areorganisation of channels and leased bandwidth. Implementation of thesemeasures took time, as a result of which operating losses continued into thesecond half of 2006. 2006 Results Overall, the Group sustained a loss at the EBITDA level before the share optionexpense for the year ended 31 December 2006 of £3 million (2005: £327,000) andan operating loss before interest and tax of £3.9 million (2005: £728,000).These results take into account depreciation and amortisation charges of£575,000 (2005: £401,000) and an FRS20 option charge of £299,000 (2005: nil).However, there were significant changes in the turnover mix between 2005 and2006 which are a pointer for the current year. In 2005, 97% of the Group'sturnover of £13.2 million came from its UK operations, almost entirely based ontelco revenue sharing arrangements. In 2006, UK revenues accounted for 59% ofthe Group's turnover of £21.9 million. In 2007, as a result of the rapid growthof the Group's international operations, UK revenues are expected to account forabout one-third of total turnover. In 2006, the majority of the overseas revenue came from Europe and SouthAmerica, which together with Asia are markets with strong revenue and earningspotential in 2007. The Group continues to develop its new multi-platform user-generated contentnetwork, launched as Sumo.TV in October, and in which the Group had invested£440,000 at 31 December 2006. These launch costs were all expensed in 2006 andthe Group continues to invest around £80,000 per month, which will also beexpensed. The Sumo website (www.sumo.tv) attracted over 2 million uniquevisitors per month in the first quarter of 2007, and a priority for the Group isto build early revenues from this innovative venture. Funding The losses experienced during 2006 meant that the Group experienced significantcash outflows which exhausted the cash balances at the start of the year andrequired additional equity funding of some £1.2 million after expenses in August2006. In addition, in December 2006, the Group sought further funding for itsinternational expansion and negotiated a convertible loan facility of £1million, which has been fully drawn. The Directors believe that the combinationof the additional equity and the loan facility is sufficient for the Group'sforeseeable requirements. Outlook In the first quarter of 2007, the Group saw significant increased revenues andprofitability in its South American operations. The UK operations (beforetaking into account Sumo development costs) are now profitable after taking intoaccount all direct costs. Nevertheless, the Group continues to pursueappropriate cost control measures. The growth and profitability of our Asianoperations, particularly in India, remains a priority for 2007. Internationalrevenues currently account for over 60% of the total Group's total revenues, andwe expect that to continue for the remainder of 2007. The Group's continued investment in its multi-platform technology and itsassociated and growing portfolio of TV formats remain a key competitivedifferentiator. Expanded international distribution based on a growing networkof relationships with broadcasters and telecommunication companies shouldincrease economies of scale in respect of both the development and thedeployment of the Group's programme assets, and set us on the path tosustainable profitability. Julian PaulChairman3 May 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER 2006 Year ended Year ended 31 December 2006 31 December 2005 £ £ Turnover 21,977,972 13,186,663 Cost of sales (18,211,533) (11,361,486) Gross profit 3,766,439 1,825,177 Administrative expenses (6,817,914) (2,152,528)Depreciation and amortisation (575,159) (400,908)Other operating income 31,209 -FRS 20 charge - share option expense (298,895) - (7,660,759) (2,553,436) Operating loss (3,894,320) (728,259) Loss on disposal of subsidiaries - (35,726) Loss on ordinary activities before interest (3,894,320) (763,985) Other interest receivable and similar income 32,217 42,226Interest payable and similar charges (6,872) (2,683) Loss on ordinary activities before taxation (3,868,975) (724,442)Tax on loss on ordinary activities 64,798 - Loss on ordinary activities after taxation (3,804,177) (724,442)Minority interests 30,684 - Loss for the period (3,773,493) (724,442) Loss per share - - Basic and diluted (11.6)p (3.2)p CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2006 31 December 2006 31 December 2005 £ £Fixed assetsIntangible assets 656,050 611,695Tangible assets 1,108,507 858,458Investments 4,933 4,933 1,769,490 1,475,086Current assetsStock 38,984 -Debtors 7,081,715 2,778,267 Cash at bank and in hand 135,677 2,696,180 7,256,376 5,474,447Creditors: amounts falling due within one year (7,267,559) (2,852,149) Net current liabilities (11,183) 2,622,298 Total assets less current liabilities 1,758,307 4,097,384 Creditors: amounts falling due after more than one year (70,202) (122,278) 1,688,105 3,975,106 Capital and reservesCalled up share capital 1,331,619 850,407Share premium account 4,775,743 4,038,676Merger reserve 1,300,395 1,300,395Profit and loss account (5,688,968) (2,214,372) Shareholders' funds - equity interests 1,718,789 3,975,106Minority interests (30,684) - 1,688,105 3,975,106 CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006 Year ended Year ended 31 December 2006 31 December 2005 £ £ Net cash outflow from operating activities (3,317,735) (669,985) Returns on investments and servicing of financeInterest received 32,217 42,226Interest paid (6,872) (2,683)Net cash inflow for returns on investments and servicing of finance 25,345 39,543 Taxation 70,097 (7,053) Capital expenditurePayments to acquire intangible assets (138,393) (294,674)Payments to acquire tangible assets (563,451) (804,384)Net cash outflow for capital expenditure (701,844) (1,099,058) Acquisitions and disposalsProceeds on disposal of subsidiary undertakings - 2Cash on disposal of subsidiary undertakings - (212,548)Net cash outflow for acquisitions and disposals - (212,546) Net cash outflow before management of liquid resources and financing (3,924,137) (1,949,099) FinancingIssue of ordinary share capital 1,283,220 5,001,248Share issue costs (64,940) (751,244)Capital element of finance lease contracts (43,799) (15,364)Net cash inflow from financing 1,174,481 4,234,640 Decrease in cash in the period (2,749,656) 2,285,541 NOTES TO THE PRELIMINARY ANNOUNCEMENT 1. Reconciliation of operating loss to net cash outflow from operating activities Year ended Year ended 31 December 2006 31 December 2005 £ £Operating loss (3,894,320) (728,257)Depreciation of tangible assets 479,306 331,262Amortisation of intangible assets 95,853 69,646Loss on disposal of fixed assets - 6,638Share-based payments charge 298,895 -Increase in stock (38,984) -Increase in debtors (4,218,750) (2,386,412)Increase in creditors 3,960,265 2,037,138 Net cash outflow from operating activities (3,317,735) (669,985) 2. Analysis of net funds 1 January 2006 Cash flow Other non-cash 31 December 2006 chargesNet cashCash at bank and in hand 2,696,180 (2,560,503) - 135,677Bank overdrafts - (189,153) - (189,153) 2,696,180 (2,749,656) - (53,476)Finance leases (8,744) 43,798 (167,719) (132,665)Net funds 2,687,436 (2,705,858) (167,719) (186,141) 3. Reconciliation of net cash flow to movement in net debt Year ended Year ended 31 31 December 2006 December 2005 £ £ (Reduction) / Increase in cash in the period (2,749,656) 2,285,541Cash outflow from finance leases 43,798 15,364 Change in net debt resulting from cash flows (2,705,858) 2,300,905New finance lease (167,719) - Movement in net funds in the period (2,873,577) 2,300,905Opening net funds 2,687,436 386,531 Closing net (debt) / funds (186,141) 2,687,436 4. Reconciliation of movement in shareholders' funds 2006 2005 £ £Loss for the financial year (3,773,493) (724,442)Proceeds from issue of shares 1,283,220 5,001,240Conversion of loans to share capital - 163,000Cost of share issue written off to share premium account (64,940) (751,244)Share-based payment charge 298,895 - Net (depletion in)/addition to shareholders' funds (2,256,318) 3,688,554Opening shareholders' funds 3,975,106 286,552 Closing shareholders' funds - equity interests 1,718,789 3,975,106 5. Basis of preparation The financial information for the year ended 31 December 2006 has not beenaudited and does not constitute the Group's statutory financial statementswithin the meaning of S240 of the Companies Act 1985. The preliminary reportwas approved by the Board on 3 May 2007. The statutory accounts for the yearended 31 December 2006 have not been filed with the Registrar of Companies norreported on by the Group's auditors. They will be circulated to theshareholders in May 2007. The comparative results for the year ended 31December 2005 are an abridged version of the audited financial statements for2005 which have been filed with the UK Registrar of Companies and contain anunqualified audit opinion. The consolidated accounts have been properly compiled within the AIM rules andfairly represent the financial position of the group with respect to levels ofturnover, expenses and provisions and the assets and liabilities of the group asat 31 December 2006 and have been prepared in accordance with applicableaccounting standards and on bases consistent with the bases adopted anddisclosed in the accounts. 6. FRS 20 The group operates executive and employee share schemes. For all grants ofshare options, the fair value as at the date of grant is calculated using anoption pricing model and the corresponding expense is recognised over thevesting period. The expense is recognised as a staff cost and the associatedcredit entry is made against equity. No deferred tax has been provided ineither year due to uncertainty of future profits. 7. Going concern The group made a loss during the year of £3,773,493 and at 31 December 2006 thegroup had net current liabilities of £11,183. During December 2006, the grouparranged a convertible loan facility of £1 million, which was fully drawn downbetween January and April 2007. The Directors have considered the business projections, which include detailedcash flow forecasted for 2007 and 2008 and are confident that the group hasadequate resources to continue in operational existence for the foreseeablefuture. 8. Earnings per share The calculation of the basic loss per share is based on the loss attributable toordinary equity shareholders of £3,773,493 (2005: £724,442) divided by theweighted average of 32,609,687 (2005: 22,891,724) ordinary shares in issue. Due to the loss incurred in the year, there is no dilutive effect from theissued share options. This information is provided by RNS The company news service from the London Stock Exchange