VITA.L Regulatory News (VITA)

31 Aug 2006 07:02

Cellcast plc31 August 2006 Press Release 31 August2006 Cellcast plc ("Cellcast" or "the Company") 2006 Interim Results Cellcast plc (AIM: CLTV.L), an international provider of digital participationtelevision programmes and interactive mobile content, announces its interimresults for the six months ended 30 June 2006. The Company develops innovative strategies for integrating mobile phone contentinto the TV environment. In the UK alone, Cellcast currently broadcasts over 60hours of live interactive programming each day. Highlights • Turnover increased by 65% to £9.6 million from £5.8 million during the same period in 2005• Profitability impacted by reorganisation of Sky's Electronic Programming Guide ("EPG"), with a loss of before tax of £2 million, compared to a loss of £539,000 in the same period in the prior year.• Moved quickly to counter effects of EPG by introducing new formats, redeploying bandwidth, increasing marketing spend to help viewers find channels, and, reducing production costs and operating expenses• Continued growth in international operations which accounted for around 25% of revenues in the first half and will represent rapidly growing proportion of overall revenues in second half of 2006• Rapid expansion of international operations has been achieved at a low cost, demonstrating scalability of business and technical models Commenting on the results, Julian Paul, Chairman of Cellcast plc, said: "Withthe Board having taken the necessary steps to restore the profitability of ourUK operations, and with an increasing proportion of our revenues coming frominternational markets, I feel confident that Cellcast will prosper in thisexciting marketplace." 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 PlcLindsay Mair, Corporate Finance Tel: +44 (0) 20 7776 6550lindsay.mair@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 The first half of 2006 has been a very challenging period for the Company due toexternal events that effected our UK operations. Your Board reacted bothswiftly and positively to counter this temporary set-back and as a resultstability is now being restored to our UK operations. Importantly, during thisperiod the Board remained focused on the continuing successful internationalroll-out and this is reflected in our results detailed below. 2006 Interim Results Turnover both in the UK and internationally, totalling £9.6 million, was upsubstantially on last year's £5.8 million for the same period. However, the SkyElectronic Programming Guide (EPG) reorganisation that took place in March andApril this year had a negative impact on the Group's profitability, as weannounced on 2 June 2006. The EPG reorganisation has created schedulinginefficiencies and has made navigation difficult for the regular viewers of theCompany's programmes. These issues have led to the Company incurring higherthan foreseen costs and have resulted in the Company reporting a larger thananticipated loss before tax for the six months to 30 June 2006 of £2 million(2005: £539,000). Losses at the EBITDA level were £1.6 million (operating lossof £2 million, less depreciation and amortisation of £285,000 and minorityinterest share of overseas losses of £142,000). The equivalent figure for thesix months to 30 June 2005 was an EBITDA loss of £327,000. No dividend isproposed (2005: £nil). The Company has moved quickly to counter the effect of the EPG changes, havingintroduced new formats, redeployed bandwidth and increased marketing of all itschannels to help viewers locate them on the EPG. In addition, the Company hasreduced production costs as well as operating expenses which will providesignificant cost savings in the future. The Board believes it is unlikely thatSky Digital will implement another similar EPG reorganisation in the foreseeablefuture. The Directors also believe that good progress has been achieved in thedevelopment of Cellcast's international operations which, from a negligible baselast year, accounted for some 25% of revenues in the first half of 2006.Building on momentum from the second quarter, the Directors expect that theCompany's international operations will represent a rapidly growing proportionof overall revenues in the second half of 2006. The expansion of our international presence at relatively low cost not only is ademonstration of the scalability of the Company's business model, but also ofthe versatility and straightforward implementation of its technologies, usuallyin partnership with local broadcasters. We are actively involved in France, Ukraine, across the Middle East, India,China, Malaysia, Thailand, Indonesia, Argentina, Brazil and USA. The Company'semphasis lies in those markets where mobile phone penetration is growingrapidly. Notably, we have successfully penetrated the huge Indian market, whichwe believe will be a significant source of future revenue. India currently hasover 85 million television households and in 2005, mobile phone subscribersreached 60 million with a current growth rate of 2.5 million new users a month.Cellcast has been in this growing market since 2004, and in May, we launchedBid2Win, a 30-minute reverse auction show broadcast on five channels inpartnership with a single mobile operator. In its first month of broadcast,Bid2Win generated over 1,300,000 units of premium SMS traffic. From September,Bid2Win will be dubbed into various Indian languages or dialects for regionaldistribution, reaching out to new audiences with little additional cost. Outlook With the Board having taken the necessary steps to restore the profitability ofour UK operations, and with an increasing proportion of our revenues coming frominternational markets, I feel confident that Cellcast will prosper in thisexciting marketplace. Julian PaulChairman30 August 2006 UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE SIX MONTHS ENDED 30 JUNE 2006 Cellcast plc Cellcast UK Ltd Cellcast plc 6 months 6 months Year 30 June 2006 30 June 2005 31 December 2005 £ £ £ Turnover 9,612,554 5,838,162 13,186,663 Cost of sales (8,791,962) (4,399,197) (11,361,484) Gross profit 820,592 1,438,965 1,825,179 Administrative expenses (2,560,487) (1,804,360) (2,152,528)Depreciation and amortisation (285,368) (167,101) (400,908) Operating loss (2,025,263) (532,496) (728,257) Loss on disposal of subsidiaries - - (35,726) Loss on ordinary activities before interest (2,025,263) (532,496) (763,983) Other interest receivable and similar income 22,103 3,211 42,226Interest payable and similar charges (935) (10,000) (2,683) Loss on ordinary activities before taxation (2,004,095) (539,285) (724,440) Tax on loss on ordinary activities - (5,298) - Loss on ordinary activities after taxation (2,004,095) (544,583) (724,440) Minority interests 141,852 38,399 - Loss for the period (1,862,243) (506,184) (724,440) Loss per share Basic and diluted (6.6)p (2.4)p (3.2)p UNAUDITED CONSOLIDATED BALANCE SHEETAS AT 30 JUNE 2006 Cellcast plc Cellcast UK Ltd Cellcast plc 30 June 2006 30 June 2005 31 December 2005 £ £ £Fixed assets Intangible assets 604,444 376,667 611,695Tangible assets 1,064,200 561,849 858,458Investments 4,933 4,933 4,933 1,673,577 943,449 1,475,086 Current assets Debtors 4,239,185 1,550,352 2,778,267Cash at bank and in hand 221,382 158,569 2,696,180 4,460,567 1,708,921 5,474,447 Creditors: amounts falling due within one year (4,107,459) (2,915,107) (2,852,147) 353,108 (1,206,186) 2,622,300 Net current liabilities Total assets less current liabilities 2,026,685 (262,737) 4,097,386 Creditors: amounts falling due after more than one year (55,672) - (122,278) 1,971,013 (262,737) 3,975,108 Capital and reserves Called up share capital 850,407 632,200 850,407Share premium account 4,038,676 1,144,282 4,038,676Merger reserve 1,300,395 - 1,300,395 Profit and loss account (4,076,613) (1,996,114) (2,214,370) Shareholders' funds - equity interests 2,112,865 (219,632) 3,975,108 Minority interests (141,852) (43,105) - 1,971,013 (262,737) 3,975,108 UNAUDITED CONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2006 Cellcast plc Cellcast UK Ltd Cellcast plc 6 months 6 months Year 30 June 2006 30 June 2005 31 December 2005 £ £ £ £ £ £Net cash outflow from operating activities (2,167,333) (60,456) (669,985) Returns on investments and servicing offinanceInterest received 22,103 3,216 42,226Interest paid (935) - (2,683) Net cash inflow for returns on investments 21,168 3,216 39,543and servicing of finance Taxation - - (7,053) Capital expenditure Payments to acquire intangible assets (56,654) - (294,674)Payments to acquire tangible assets (427,206) (189,031) (804,384) Net cash outflow for capital expenditure (483,860) (189,031) (1,099,058) Acquisitions and disposals Proceeds 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 (2,630,025) (246,271) (1,949,099) FinancingIssue of ordinary share capital - - 5,001,248Share issue costs - - (751,244)Capital element of finance lease contracts 155,227 (9,093) (15,364) Net cash inflow from financing 155,227 (9,093) 4,234,640 Increase in cash in the period (2,474,798) (255,364) 2,285,541 NOTES TO THE UNAUDITED CONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2006 1 Reconciliation of operating loss to net cash outflow from operating activities Cellcast plc Cellcast UK Ltd Cellcast plc 31 December 30 June 2006 30 June 2005 2005 £ £ £ Operating loss (2,025,263) (532,496) (728,257) Depreciation of tangible assets 278,117 157,101 331,262 Amortisation of intangible assets 7,251 10,000 69,646 Loss on disposal of fixed assets - - 6,638 Increase in debtors (1,460,917) (307,217) (2,386,412) Increase in creditors 1,033,479 612,156 2,037,138 Net cash outflow from operating activities (2,167,333) (60,456) (669,985) 2 Analysis of net funds 1 January Other non-cash 30 June 2006 2006 Cash flow changes Net cash Cash at bank and in hand 2,696,180 (2,474,798) - 221,382 Bank overdrafts - - - - 2,696,180 (2,474,798) - 221,382 Finance leases (8,744) (155,227) - (163,971) Net funds 2,687,436 (2,630,025) - 57,411 3 Reconciliation of net cash flow to movement in net debt Cellcast plc Cellcast UK Ltd Cellcast plc 31 December 30 June 2006 30 June 2005 2005 £ £ £ (Reduction) / Increase in cash in the (2,474,798) (255,364) 2,285,541 period Cash inflow from increase in debt - 9,093 - Cash inflow from finance lease (155,227) - 15,364 Movement in net funds in the period (2,630,025) (246,271) 2,300,905 Opening net funds 2,687,436 386,531 386,531 Closing net funds 57,411 140,260 2,687,436 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2006 1. Basis of consolidationThe consolidated profit and loss account and balance sheet include thefinancial statements of the company and its subsidiary undertakings made up to30 June 2006. The financial statements have been prepared under the mergeraccounting rules (the pooling of interests method), as the combining entitieswithin the group were controlled by the same parties both before and after thecombination. Accordingly, the financial information for the current period andfor the prior period has been presented as if Cellcast (UK) Limited has beenowned by Cellcast plc throughout both periods. 2. Accounting conventionThe accounts are prepared under the historical cost convention and on the goingconcern basis. 3. Basis of preparationThe interim accounts have been properly compiled in accordance with the AIMrules and fairly represent the financial position of the group with respect tolevels of turnover, expenses and provisions and the assets and liabilities ofthe group as at 30 June 2006 and (subject to the qualification that theaccounts are unaudited) have been prepared in accordance with applicableaccounting standards and on the bases consistent with the bases adopted anddisclosed in the accounts. 4. Earnings per shareThe calculation of the basic loss per share is based on the loss attributableto ordinary equity shareholders of £1,862,243 (December 2005 £724,440) dividedby the weighted average of 28,346,911 (December 2005 22,891,724) ordinaryshares in issue. Due to the loss in the period, there is no dilution effect from the issuedshare options. This information is provided by RNS The company news service from the London Stock Exchange