30 Sep 2008 07:00
Cellcast plc
(the "Company")
Interim Results for the six months ended 30 June 2008
Highlights for the period
Revenue for the six months to 30 June 2008 was £6.7 million, up 4.8% on the same period in 2007
Operating profit of £615,000, including £1.2 million gain on the disposal of two of the Group's Sky channels, compared to a loss of £1.5 million in the same period in 2007
General and administrative expenses reduced by 30%
Post period highlights
The Group is following a conservative growth strategy, leveraging its extensive portfolio of interactive content and multi-platform technology assets
Internationally, the Group continues to work with local partners rather than directly investing in media or airtime purchases itself
The Group remains uncertain of the impact of OFCOM proposals to tighten the regulation of UK participation-TV services and awaits completion of the public consultation process in December 2008
New opportunities continue to arise from the sustained growth of 3G, IPTV, enhanced broadband, video mobile and wireless broadband services in the UK
Julian Paul, Chairman of Cellcast plc, commented:
"The Group is now a substantially UK-based business and is committed to effective management of its cost base in the current uncertain economic environment while being alert to continuing opportunities among new media services."
For further information:
| Cellcast plc | |
| Andrew Wilson, CEO | Tel: +44 (0) 20 7190 0300 |
| andrew@cellcast.tv | www.cellcast.tv |
| HB Corporate | |
| Edward Hutton | Tel: +44 (0) 20 7510 8600 |
Media enquiries:
| Threadneedle Communications | |
| Graham Herring / Josh Royston | Tel: +44 (0) 20 7653 9850 |
| graham.herring@threadneedlepr.co.uk |
CHAIRMAN'S STATEMENT
Results
Revenue from continuing operations for the six months to 30 June 2008 was £6.7 million, up 4.8% on the same period in the previous year. Virtually all of this revenue arose in the UK, thus confirming the statement in the 2007 annual report that Cellcast has reverted to being a substantially UK based business (albeit with a continuing stake in Cellcast Asia Holdings "CAH")
The income statement reflects a substantial reduction in the Group's overall cost base, with general and administrative expenses down some £300,000 or 30% on the equivalent period in 2007. It also reflects the £1.2 million gain on the previously announced disposal for cash of two of the Group's premium Sky channels in June 2008.
As a consequence, the Group reports an operating profit from continuing operations of £615,000, compared to a loss of £1.5 million in the same period the previous year. After interest costs and Cellcast's share of losses in CAH, profit after tax for the period was £342,000, compared to a loss of £1.8 million in the same period the previous year.
This represents basic earnings per share of 0.5p (2007 - loss per share of 3.3p). No dividend is proposed.
Staffing
The reduction in general and administrative overheads noted above has largely been brought about by substantial reductions in the number of staff. In the 2007 annual report I commented that we started 2008 with 71 employees but that by the end of June 2008 there would be only 26 employees in the UK. By the end of September 2008, we expect there will be 22 employees. This is unlikely to be reduced further. Staff costs are the largest component in general and administrative overheads and, as a result of these reductions, we anticipate that the monthly run-rate from now on for general and administrative expenses will be of the order of £90,000.
SUMO.tv
In the 2007 annual report, I stated that there were unlikely to be any further SUMO development costs after June 2008. Development work on SUMO has now ceased and there will be no further capitalised costs associated with this project in the second half of 2008. In the six months to 30 June 2008, a further £706,000 of development costs were capitalised, bringing the total to £2.2 million. The directors believe that the cost of this investment is recoverable from future earnings These will be derived through the Group's continued realisation of benefits from the investment in content and technology for SUMO, particularly in regard to core participation TV applications and formats, which are enabling it to capture new opportunities arising from the sustained growth of 3G, IPTV, enhanced broadband, video mobile and wireless broadband services in the UK.
Cellcast Asia Holdings
The Group continues to have a 37.5% share in Cellcast Asia Holdings ("CAH") which incorporates all Cellcast's Indian and Asian interests. Cellcast's share of CAH losses was £179,000 in the six months to 30 June 2008. CAH is currently engaged in a further round of fund-raising to expand its telecommunication infrastructure to respond to the needs of the growing number of television channels in India as well as covering its working capital, on terms and conditions yet to be agreed. However, the terms under discussion indicate that the current carrying value of Cellcast's shareholding in CAH of £700,000 will not be impaired. The Group continues to have no further funding obligations in respect of CAH. A further announcement will be made in due course, as and when further financing takes place.
Outlook
With global economic uncertainties having a significant impact on consumer spending in 2008, the Group intends to follow a conservative growth strategy by leveraging its developed interactive content and multi-platform technology assets. At the same time, the Group will renew its focus on providing innovative products and services to capture the opportunities arising from the growing uptake of 3G services, IPTV, and video mobile services in the UK market, all of which require compelling content to drive subscriptions.
The public consultation process on proposals by the UK regulator OFCOM to tighten the regulation of television and radio programmes which rely on premium rate telephone services is due to be completed in December 2008. The Group welcomes regulation intended to offer further protection to consumers, which is good for the interactive entertainment industry, its sustainability and growth. However, the technology driving convergence, together with the new tools facilitating audience participation, are blurring the lines between editorial and advertising, and this remains a significant challenge for regulators addressing new media services.
The international business model has been adapted to the extent that the Group will in future partner with third-parties willing to underwrite the costs of distribution in consideration of a higher revenue share, rather than directly investing in media or airtime purchases itself. This will enable us to minimise risk and better manage our resources in support of our content and application development and related B2B solutions.
Julian Paul
Chairman
30 September 2008
| CONDENSED CONSOLIDATED INCOME STATEMENT | ||||
| Unaudited | Unaudited | Audited | ||
| 6 months ended | 6 months ended | Year ended | ||
| 30/06/08 | 30/06/07 | 31/12/07 | ||
| £ | £ | £ | ||
| Continuing operations | ||||
| REVENUE | 6,704,265 | 6,396,314 | 12,008,998 | |
| Cost of sales | (6,320,339) | (6,141,539) | (11,119,565) | |
| GROSS PROFIT | 383,926 | 254,775 | 889,433 | |
| Operating costs and expenses: | ||||
| General and administrative | (703,084) | (1,012,081) | (2,061,806) | |
| Share option expense | (52,465) | (492,708) | (150,665) | |
| Amortisation and depreciation | (207,979) | (234,831) | (489,200) | |
| Profit on sale of channels | 1,195,064 | - | - | |
| Total operating costs and expenses | 231,536 | (1,739,620) | (2,701,671) | |
| PROFIT / (LOSS) FROM OPERATIONS | 615,462 | (1,484,845) | (1,812,238) | |
| Other interest receivable & similar income | 2,339 | 2,122 | 4,898 | |
| Interest payable & similar charges | (96,743) | (7,634) | (168,586) | |
| Share of loss in associates | (178,820) | - | (180,567) | |
| PROFIT / (LOSS) BEFORE TAX | 342,238 | (1,490,357) | (2,156,493) | |
| Current taxation | - | - | - | |
| Deferred taxation | - | - | 84,698 | |
| Total taxation | - | - | (84,698) | |
| Profit / (loss) after tax for continuing operations | 342,238 | (1,490,357) | (2,241,191) | |
| Discontinued operations | ||||
| Profit / (loss) for the period from discontinued operations | - | (279,586) | 18,591 | |
| Total profit / (loss) for the period | 342,238 | (1,769,943) | (2,222,600) | |
| Gain / (loss) attributable to minority interest | - | (22,943) | 30,684 | |
| Profit / (loss) for the year attributable to equity holders of the parent | 342,238 | (1,747,000) | (2,253,284) | |
| PROFIT / (LOSS) FOR THE PERIOD | 342,238 | (1,769,943) | (2,222,600) | |
| EARNINGS / (LOSS) PER SHARE | ||||
| Basic and diluted | 0.5p | (3.3)p | (3.7)p | |
| Note: The profit from operations for the period arises from the Group's continuing operations and the profit / (loss) after tax is attributable to equity holders of the parent company. | ||||
| CONDENSED CONSOLIDATED BALANCE SHEET | ||||
| Unaudited | Unaudited | Audited | ||
| 30/06/08 | 30/06/07 | 31/12/07 | ||
| £ | £ | £ | ||
| ASSETS | ||||
| NON-CURRENT ASSETS | ||||
| Intangible assets | 2,665,417 | 1,763,857 | 2,212,605 | |
| Property, plant and equipment | 351,234 | 951,540 | 511,096 | |
| Investments in associates | 382,397 | 4,933 | 561,217 | |
| Deferred tax | - | 84,698 | - | |
| 3,399,048 | 2,805,028 | 3,284,918 | ||
| CURRENT ASSETS | ||||
| Trade and other receivables | 2,201,380 | 3,480,259 | 2,270,027 | |
| Cash and cash equivalents | 321,793 | 134,310 | 7,533 | |
| 2,523,173 | 3,614,569 | 2,277,560 | ||
| TOTAL ASSETS | 5,922,221 | 6,419,597 | 5,562,478 | |
| CAPITAL AND RESERVES | ||||
| Called up share capital | 2,265,398 | 1,726,656 | 2,265,398 | |
| Share premium account | 5,498,626 | 5,317,756 | 5,498,626 | |
| Merger reserve | 1,300,395 | 1,300,395 | 1,300,395 | |
| Cumulative translation reserve | (3,320) | 58,085 | (5,159) | |
| Retained earnings | (6,803,230) | (6,499,907) | (7,197,933) | |
| Equity attributable to equity holders of the parent | 2,257,869 | 1,902,985 | 1,861,327 | |
| Minority interest | - | (53,627) | - | |
| Total equity | 2,257,869 | 1,849,358 | 1,861,327 | |
| LIABILITIES | ||||
| NON-CURRENT LIABILITIES | ||||
| Finance Leases | - | 51,147 | - | |
| Current liabilities | ||||
| Trade and other payables | 3,226,417 | 4,519,092 | 3,219,042 | |
| Borrowings | 437,935 | - | 482,109 | |
| TOTAL LIABILITIES | 3,664,352 | 4,570,239 | 3,701,151 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | 5,922,221 | 6,419,597 | 5,562,478 | |
| All the above equity Shareholders' Funds are attributable to equity holders of the parent company. | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||
| As at 30 June 2008 | Share | Share | Merger | Cumulative | Retained | Shareholders | Minority | Total |
| Capital | Premium | Reserve | Translation | Earnings | Funds | interest | ||
| Reserves | ||||||||
| £ | £ | £ | £ | £ | £ | £ | £ | |
| Balance at 1 January 2008 | 2,265,398 | 5,498,626 | 1,300,395 | (5,159) | (7,197,933) | 1,861,327 | - | 1,861,327 |
| Gain / (loss) for the period | 342,238 | 342,238 | - | 342,238 | ||||
| Exchange translation | 1,839 | 1,839 | 1,839 | |||||
| Total recognised gain / (loss) for the year | - | - | - | 1,839 | 342,238 | 344,077 | - | 344,077 |
| Share based payment charge | 52,465 | 52,465 | 52,465 | |||||
| Balance at 30 June 2008 | 2,265,398 | 5,498,626 | 1,300,395 | (3,320) | (6,803,230) | 2,257,869 | - | 2,257,869 |
The above equity and reserves are attributable to equity holders of the parent company.
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||
| As at 31 December 2007 | Share | Share | Merger | Cumulative | Retained | Shareholders | Minority | Total |
| Capital | Premium | Reserve | Translation | Earnings | Funds | interest | ||
| Reserves | ||||||||
| £ | £ | £ | £ | £ | £ | £ | £ | |
| Balance at 1 January 2007 | 1,331,619 | 4,775,743 | 1,300,395 | 24,995 | (5,245,614) | 2,187,138 | (30,684) | 2,156,454 |
| Gain / (loss) for the year | (2,253,284) | (2,253,284) | 30,684 | (2,222,600) | ||||
| Exchange translation | (30,154) | - | (30,154) | (30,154) | ||||
| Total recognised gain / (loss) for the year | - | - | - | (30,154) | (2,253,284) | (2,283,438) | 30,684 | (2,252,754) |
| Share based payment charge | 150,665 | 150,665 | 150,665 | |||||
| Warrant issue charge | 150,300 | 150,300 | 150,300 | |||||
| Proceeds of share issue | 933,779 | 722,883 | 1,656,662 | 1,656,662 | ||||
| Balance at 31 December 2007 | 2,265,398 | 5,498,626 | 1,300,395 | (5,159) | (7,197,933) | 1,861,327 | - | 1,861,327 |
The above equity and reserves are attributable to equity holders of the parent company.
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||
| As at 30 June 2007 | Share | Share | Merger | Cumulative | Retained | Shareholders | Minority | Total |
| Capital | Premium | Reserve | Translation | Earnings | Funds | interest | ||
| Reserves | ||||||||
| £ | £ | £ | £ | £ | £ | £ | £ | |
| Balance at 1 January 2007 | 1,331,619 | 4,775,743 | 1,300,395 | 24,995 | (5,245,614) | 2,187,138 | (30,684) | 2,156,454 |
| Loss for the period | (1,747,000) | (1,747,000) | (22,943) | (1,769,943) | ||||
| Exchange translation | 33,090 | 33,090 | 33,090 | |||||
| Total recognised gain / losses for the period | - | - | - | 33,090 | (1,747,000) | (1,713,910) | (22,943) | (1,736,853) |
| Share based payment charge | 492,708 | 492,708 | 492,708 | |||||
| Proceeds of share issue | 395,037 | 604,963 | 1,000,000 | 1,000,000 | ||||
| Share issue costs | (62,951) | (62,951) | (62,951) | |||||
| Balance at 30 June 2007 | 1,726,656 | 5,317,755 | 1,300,395 | 58,085 | (6,499,906) | 1,902,985 | (53,627) | 1,849,358 |
The above equity and reserves are attributable to equity holders of the parent company.
| CONDENSED CONSOLIDATED CASH FLOW STATEMENT | ||||
| Unaudited 6 months ended | Unaudited 6 months ended | Audited Year ended | ||
| Net increase in cash and cash equivalents | 30/06/08 | 30/06/07 | 31/12/07 | |
| £ | £ | £ | ||
| Net cash inflow / (outflow) from operations | a | 988,832 | 15,391 | (432,743) |
| Income taxes | - | - | - | |
| Interest received | 2,339 | 2,122 | 4,898 | |
| Net cash inflow / (outflow) from operating activities |
| 991,171 | 17,513 | (427,845) |
| Net cash outflow from investing activities | b | (500,929) | (737,844) | (1,207,154) |
| Net cash generated from / (used in) financing activities | c | (177,821) | 908,117 | 1,705,029 |
| Net increase in cash and cash equivalents | 312,421 | 187,786 | 70,030 | |
| Cash and cash equivalents at beginning of period |
| 7,533 | (53,476) | (53,476) |
| Exchange gains and losses |
| 1,839 | - | (9,021) |
| Cash and cash equivalents at end of period |
| 321,793 | 134,310 | 7,533 |
| APPENDICES TO THE CONDENSED CONSOLIDATED CASH FLOW STATEMENT | |||||
| Unaudited 6 months ended | Unaudited 6 months ended | Audited Year ended | |||
| a | Reconciliation of net profit /(loss) to net cash inflow/(outflow) from operating activities | 30/06/08 | 30/06/07 | 31/12/07 | |
| £ | £ | £ | |||
| Profit / (loss) before tax on continuing operations | 342,238 | (1,490,357) | (2,156,493) | ||
| Other interest receivable & similar income | (2,339) | (2,122) | (4,898) | ||
| Interest payable & similar charges | 96,743 | 7,634 | 168,586 | ||
| Share of loss in associates | 178,820 | - | 180,567 | ||
| Amortisation and depreciation | 207,979 | 234,831 | 489,200 | ||
| Share option expenses | 52,465 | 492,708 | 150,665 | ||
| General administration fees settled in shares | - | - | 221,024 | ||
| Increase in work in progress | - | 38,984 | - | ||
| (Increase)/decrease in trade and other receivables | 68,647 | 3,516,758 | 182,233 | ||
| Increase/(decrease) in trade and other payables | 44,279 | (2,503,459) | 1,573,787 | ||
| Net cash inflow / (outflow) from continuing operations |
| 988,832 | 294,977 | 804,671 | |
| Net cash outflow from discontinued operations |
| - | (279,586) | (1,237,414) | |
| Net cash inflow / (outflow) from operations | 988,832 | 15,391 | (432,743) | ||
| b | Cash flow from investing activities | ||||
| Purchase of property, plant and equipment | (48,117) | (73,391) | (12,235) | ||
| Purchase of intangible assets |
| (452,812) | (664,453) | (1,194,919) | |
| Net cash outflow from investing activities |
| (500,929) | (737,844) | (1,207,154) | |
| c | Cash flow from financing activities | ||||
| Capital element of finance leases | (36,904) | (21,298) | (62,463) | ||
| Interest paid | (96,743) | (7,634) | (44,418) | ||
| Repayment of loan | (44,174) | - | - | ||
| Proceeds from the issue of convertible loan note | - | - | 2,000,000 | ||
| Proceeds from the issue of share capital | - | 1,000,000 | - | ||
| Less issue costs | - | (62,951) | (188,090) | ||
| Net cash generated from / (used in) financing activities |
| (177,821) | 908,117 | 1,705,029 | |
1. General Information
Cellcast plc is a limited liability company incorporated and domiciled in the United Kingdom. Its business address is Bentinck House, 3-8 Bolsover Street, London W1W 6AB. The address of its registered office is The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU. Copies of this statement are available from this address and from the company's website www.cellcast.tv.
The company is quoted on the AIM Market of the London Stock Exchange.
This condensed consolidated interim financial information was approved for issue on 30 September 2008.
2. Basis of preparation
The condensed consolidated interim financial information for the six months ended 30 June 2008 should be read in conjunction with the annual financial statements for the year ended 31 December 2007, which have been prepared in accordance with IFRS.
The current and comparative periods to June have been prepared using accounting policies and practices consistent with those adopted in the annual financial statements for the year ended 31 December 2007 and are also consistent with those which will be adopted in the 2008 financial statements. Comparative figures for the year ended 31 December 2007 have been extracted from the statutory financial statements for that period which carried an qualified audit report, did not contain a statement under section 237(2) or (3) of the Companies Act and have been delivered to the Registrar of Companies.
The previously reported results for the six months ended 30 June 2007 have been restated to reflect the fact that certain operations that were continuing at 30 June 2007 have since been discontinued, and therefore the 2007 comparatives in these interim accounts are presented on a comparable basis to the 2008 results.
The financial information contained in this Report does not constitute statutory accounts as defined by Section 240 of the Companies Act 1985.
3. Earnings per share
Basic and diluted earnings per share is based on the profit / (loss) after tax and on the following weighted average number of shares in issue.
| Continuing operations | |||
| 30/06/2008 | 31/12/2007 | 30/06/2007 | |
| £ | £ | £ | |
| Reported profit / (loss) for the financial period | 342,238 | (2,241,191) | (1,490,357) |
| Weighted average number of ordinary shares | 75,513,224 | 59,390,157 | 53,405,602 |
| Basic and diluted profit / (loss) per share | 0.5p | (3.8p) | (2.8p) |
| Continuing and discontinued operations | |||
| 30/06/2008 | 31/12/2007 | 30/06/2007 | |
| £ | £ | £ | |
| Reported profit / (loss) for the financial period | 342,238 | (2,222,600) | (1,769,943) |
| Weighted average number of ordinary shares | 75,513,224 | 59,390,157 | 53,405,602 |
| Basic and diluted profit / (loss) per share | 0.5p | (3.7p) | (3.3p) |
Due to the loss incurred in the year ended 31 December 2007 there is no dilutive effect from the issued share options. For the period ended 30 June 2008 the share options issued are non dilutive.
4. Segmental Reporting
| Unaudited | Unaudited | Audited | |
| 6 months | 6 months | Year | |
| ended | ended | ended | |
| 30/06/08 | 30/06/07 | 31/12/07 | |
| £ | £ | £ | |
| Revenue | |||
| UK | 6,703,235 | 5,631,624 | 11,871,761 |
| Asia | 1,030 | 764,690 | 137,237 |
| Total | 6,704,265 | 6,396,314 | 12,008,998 |
|
| |||
| Cost of sales | |||
| UK | 6,319,135 | 5,121,355 | 10,959,797 |
| Asia | 1,204 | 1,020,184 | 159,768 |
| Total | 6,320,339 | 6,141,539 | 11,119,565 |
|
| |||
| Gross profit | |||
| UK | 384,100 | 510,269 | 911,964 |
| Asia | (174) | (255,494) | (22,531) |
| Total | 383,926 | 254,775 | 889,433 |
| Operating profit / (loss) for continuing activities | |||
| UK | 876,080 | (127,748) | (1,009,397) |
| Asia | (174) | (629,558) | (162,976) |
| Segmental operating profit / (loss) | 875,906 | (757,306) | (1,172,373) |
| Non Segmental | |||
| Amortisation and depreciation | (207,979) | (234,831) | (489,200) |
| Share option expense | (52,465) | (492,708) | (150,665) |
| Total | 615,462 | (1,484,845) | (1,812,238) |
| Total assets | |||
| UK | 5,782,695 | 4,533,134 | 5,471,589 |
| Rest of Europe | - | 130,430 | 65,970 |
| Asia | 139,526 | 867,840 | 24,919 |
| South America | - | 803,495 | - |
| Non Segmental | |||
| Deferred tax | - | 84,698 | - |
| Total | 5,922,221 | 6,419,597 | 5,562,478 |
|
|
| Unaudited | Unaudited | Audited | |
| 6 months | 6 months | Year | |
| ended | ended | ended | |
| 30/06/08 | 30/06/07 | 31/12/07 | |
| £ | £ | £ | |
| Total liabilities | |||
| UK | 3,531,085 | 2,662,682 | 3,141,728 |
| Rest of Europe | - | - | 65,970 |
| Asia | 133,267 | 979,144 | 11,344 |
| South America | - | 928,413 | - |
| Non Segmental | |||
| Borrowings | - | - | 482,109 |
| Total | 3,664,352 | 4,570,239 | 3,701,151 |
|
| |||
| Capital expenditure - Intangible | |||
| UK | 705,921 | 664,453 | 1,194,919 |
| Total | 705,921 | 664,453 | 1,194,919 |
| Disposal of channels - Intangible | |||
| UK | 204,936 | - | - |
| Total | 204,936 | - | - |
| Capital expenditure - Tangible | |||
| UK | - | 48,538 | 12,235 |
| Asia | - | 24,853 | - |
| Total | - | 73,391 | 12,235 |
| Amortisation and depreciation | |||
| UK | 199,965 | 221,930 | 483,268 |
| Asia | 8,014 | 12,901 | 5,932 |
| Total | 207,979 | 234,831 | 489,200 |