27 Mar 2014 15:53
Cellcast PLC
(the "Company" or the "Group")
Unaudited Preliminary Results for the year ended 31 December 2013
The Board of Cellcast PLC (AIM: CLTV) announces the Group's unaudited preliminary results for the year ended 31 December 2013.
Financial Results Highlights
· Operating Revenue 15.54 million (2012: £19.16 million)
· Operating loss of £2.48 million (2012: loss £0.51 million)
· Exceptional costs of £1.13 million (2012: £0.28 million)
· Loss for the year £2.49 million (2012: loss £0.06 million)
Post Balance Sheet Event
· Agreement signed with Entertainment Network Ltd resulting in one off payment of £2.98 million (approximately £2 million net)
.
Andrew Wilson, CEO of Cellcast PLC, commented:
"The results for the year just ended have been disappointing with the reduction in revenues reflecting the general market decline in the premium rate service sector. Whilst the beneficial effects of the relocation to Milton Keynes and reorganisation were expected to be recognised in the second half of 2013, for various logistical reasons, these benefits will not now be fully realised until June 2014.
As the Group's traditional UK market offers diminishing opportunities for new customer acquisition the Group has identified two new areas of potential growth. The first, cross-selling and upselling complementary internet and mobile internet based services to the existing customer base and the second, expansion into developing markets where mobile and specifically smartphone penetration is growing rapidly and new digital broadcasting opportunities are emerging.
I am delighted to announce the agreement with Entertainment Network Ltd resulting in a one off net payment of approximately £2 million which was announced today."
For further information:
Cellcast PLC | |
Andrew Wilson, CEO | Tel: +44 (0) 203 376 9420 |
andrew@cellcast.tv | www.cellcast.tv |
Zeus Capital | |
Ross Andrews | Tel: +44 (0) 161 831 1512 |
Andrew Jones | www.zeuscapital.co.uk |
Chief Executive's Statement
Unaudited 2013 Results
Operating revenues, which continued to be derived almost entirely from interactive broadcasting activities in the UK, amounted to £15.5 million, a decrease of 19% on 2012. The gross margin declined from a level of 6% in 2012 to a negative 1% in 2013. The Group posted an operating loss of £2,483,000 compared to the previous year's operating loss of £511,000. The 2013 operating loss includes £1,131,000 the majority of which was spent on unsuccessful exploratory ventures in overseas markets (2012: £276,000).
Revenues remained poor throughout the first half of 2013 and as anticipated continued to decline in the second half. Evidence suggests that this pressure was derived less from competitive share than from a continued recession driven shrinkage in customer demand for our services. Industry research shows that revenue across the premium rate service sector declined in 2013 and the group's diminution in revenue reflects this general market decline, a decline that continued despite the cessation of operation by a number of competitive channels.
General and administrative costs decreased by 18% from £1,019,000 to £838,000. Around 40% of these were personnel costs, with 18 permanent staff at 31 December 2013.
In October 2013 the Group successfully relocated its studios and associated production facilities from Central London to Milton Keynes. This is expected to result in operational savings of £150,000 per month when fully implemented. In addition, the set up in Milton Keynes allows flexible access to additional space on demand giving the group the ability to react quickly to opportunities to broadcast on new channels or in new markets. It was hoped that the beneficial effect of this relocation and reorganisation would be recognised in the second half of 2013 but for various logistical reasons these benefits will not be fully realised until June 2014.
Amortisation and depreciation expenses of £377,000 - 37% less than in 2013 - are predominantly accounted for by the amortisation of the group's capitalised development costs, which at 31 December 2013 net book value of £80,000 (2012 - £326,000).
After taking into account the net interest costs, the total loss for 2013 was £2,491,000 (2012 - loss of £55,000). 2013 loss per share was 3.3p (2012 loss per share of 0.1p).
Funding
At 31 December 2013, the Group had a net cash balance of £404,000 (2012: £740,000).
Your attention is drawn to note 1 "Basis of Preparation" and the statement that the directors anticipate that the auditor's report, to be issued with the Group's statutory accounts for the year ended 31 December 2013, will be unqualified but will contain an emphasis of matter paragraph. This emphasis of matter paragraph will draw attention to the material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern.
Post Balance Sheet Event
Today, Cellcast is pleased to announce that Cellcast UK, its wholly owned subsidiary, has entered into an agreement with Entertainment Networks Ltd, a subsidiary of Sony Pictures Television, under which Cellcast UK has agreed to early termination of its exclusive rights (which it has held since 2006) to manage and operate the Freeview channel known as Movie Mix in consideration for a one off payment of £2,980,000.
Of the consideration receivable the directors believe that the net amount, after payment of certain liabilities in relation to the operation of the Movie Mix channel and professional fees, will be approximately £2 million.
This will provide the Company with a cash sum, which the directors expect to use to support the short working capital requirements of Cellcast PLC.
Outlook
As the Group's traditional UK market offers diminishing opportunities for new customer acquisition the Group has identified two areas of potential growth. The first of these involves increase revenue from existing customers through cross-selling and upselling complementary internet and mobile internet based services. The second is expansion into developing markets where mobile and specifically smartphone penetration is growing rapidly and new digital broadcasting opportunities are emerging. The fruits of these efforts were realised in the second half of 2013 and it is hoped these revenues will continue to grow through 2014.
Andrew Wilson
Chief Executive Officer
27 March 2014
Unaudited Consolidated Statement of Comprehensive Income
Note | For the year ended 31 December | ||||
2013 | 2012 | ||||
£ | £ | ||||
Revenue | 15,544,328 | 19,162,938 | |||
Cost of sales | (15,680,450) | (17,766,096) | |||
Gross (loss) / profit | (136,122) | 1,396,842 | |||
Operating costs and expenses: | |||||
General and administrative | (837,950) | (1,019,808) | |||
TV exploration in overseas countries, new ventures and one-off regulatory costs | (1,131,215) | (275,656) | |||
Equity settled share-based payment charge | - | (9,365) | |||
Amortisation & depreciation | (377,470) | (602,995) | |||
Total operating costs and expenses |
| (2,346,635) | (1,907,824) | ||
Operating loss | (2,482,757) | (510,982) | |||
Gain on sale of intellectual property | - | 457,084 | |||
Interest receivable & similar income | 5 | 448 | 650 | ||
Interest payable and similar charges | 6 | (8,641) | (2,027) | ||
Loss before tax | (2,490,950) | (55,275) | |||
Taxation | - | - | |||
Loss for the year and total comprehensive loss attributable to owners of the parent | (2,490,950) | (55,275) | |||
Loss per share | |||||
Basic & diluted | 4 | (3.3)p | (0.1)p | ||
Unaudited Consolidated Statement of Financial Position
Assets | Note | As at 31 December 2013 £ | As at 31 December 2012 £ | |
Non-current assets | ||||
Intangible assets | 7 | 132,298 | 423,812 | |
Property, plant and equipment | 8 | 284,512 | 172,720 | |
Investments | 202,627 | - | ||
619,437 | 596,532 | |||
Current assets | ||||
Trade and other receivables | 9 | 2,072,670 | 3,059,186 | |
Cash and cash equivalents | 404,153 | 798,125 | ||
2,476,824 | 3,857,311 | |||
Non-current assets classified as held for sale | 170,000 | 220,336 | ||
Total assets | 3,266,260 | 4,674,179 | ||
Capital and reserves | ||||
Called up share capital | 2,285,398 | 2,285,398 | ||
Share premium account | 5,533,626 | 5,533,626 | ||
Merger reserve | 1,300,395 | 1,300,395 | ||
Warrant Reserve | 13,702 | 13,702 | ||
Retained earnings | (10,889,324) | (8,398,374) | ||
Equity attributable to owners of the parent | (1,756,203) | 734,747 | ||
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | 10 | 5,022,463 | 3,881,559 | |
Borrowings | 11 | - | 57,873 | |
Total liabilities | 5,022,463 | 3,939,432 | ||
Total equity and liabilities | 3,266,260 | 4,674,179 |
Unaudited Consolidated Statement of Changes in Equity for the Year Ended 31 December 2013
Amounts attributable to the owners of the parent | ||||||||
Share Capital |
Share Premium |
Merger Reserve | Cumulative Translation Reserve |
Warrant Reserve |
Retained Earnings |
Total | ||
£ | £ | £ | £ | £ | £ | £ | ||
Balance at 1 January 2013 Unaudited | 2,285,398 | 5,533,626 | 1,300,395 | - | 13,702 | (8,398,374) | 734,747 | |
Loss for the year and total comprehensive income | - | - | - | - | - | (2,490,950) | (2,490,950) | |
Balance at 31 December 2013 Unaudited | 2,285,398 | 5,533,626 | 1,300,395 | - | 13,702 | (10,889,324) | (1,756,203) | |
Unaudited Consolidated Statement of Changes in Equity for the Year Ended 31 December 2012
Amounts attributable to the owners of the parent | ||||||||
Share Capital |
Share Premium |
Merger Reserve | Cumulative Translation Reserve |
Warrant Reserve |
Retained Earnings |
Total | ||
£ | £ | £ | £ | £ | £ | £ | ||
Balance at 1 January 2012 Unaudited |
2,285,398 |
5,533,626 |
1,300,395 |
- |
13,702 |
(8,352,464) |
780,657 | |
Loss for the year and total comprehensive income |
- |
- |
- |
- |
- |
(55,275) |
(55,275) | |
Transactions with owners | ||||||||
Equity settled share-based payment charge | - | - | - | - | - | 9,365 | 9,365 | |
Balance at 31 December 2012 Unaudited |
2,285,398 |
5,533,626 |
1,300,395 |
- |
13,702 |
(8,398,374) |
734,747 | |
Unaudited Consolidated Statement Of Cash Flows For the year ended 31 December
2013 | 2012 | |||
£ | £ | |||
Net cash inflow/(outflow) from operations | 12a | 22,130 | (8,894) | |
Interest received | 448 | 650 | ||
Net cash inflow/(outflow) from operating activities | 22,578 | (8,244) | ||
Net cash (outflow)/inflow from investing activities | 12b | (350,036) | 133,077 | |
Net cash used in financing activities | 12c | (8,641) | (2,027) | |
Net (decrease)/increase in cash and cash equivalents | (336,099) | 122,806 | ||
Cash and cash equivalents at beginning of year | 740,252 | 617,446 | ||
Cash and cash equivalents at end of year | 12d | 404,153 | 740,252 |
Notes to the unaudited financial statements
1. Basis of preparation
The figures for the year ended 31 December 2013 have been extracted from the unaudited statutory financial statements for the year that have yet to be delivered to the Registrar of Companies and on which the auditor has yet to issue an opinion. The financial information attached has been prepared in accordance with the recognition and measurement requirements of international financial reporting standards (IFRS) as adopted by the EU and international financial reporting interpretations committee (IFRIC) interpretations issued and effective at the time of preparing those financial statements. The accounting policies applied in the year ended 31 December 2013 are consistent with those applied in the financial statements for the year ended 31 December 2012.
The financial information for the years ended 31 December 2013 and 31 December 2012 does not constitute statutory financial information as defined in Section 434 of the Companies Act 2006 and does not contain all of the information required to be disclosed in a full set of IFRS financial statements. This announcement was approved by the Board of Directors on 27 March 2014. The auditor's report on the financial statements for 31 December 2012 was unqualified, and did not contain a statement under either Section 498 (2) or 498 (3) of the Companies Act 2006 and included an emphasis of matter relating to the uncertainties in respect to the Group's ability to continue as a going concern. The financial statements for the year ended 31 December 2012 have been delivered to the Registrar.
Going concern
During the year ended 31 December 2013, the group recorded a loss of £2,490,950. While the group has net cash of £404,153 as at 31 December 2013 it has net current liabilities of £2,545,639. Subsequent to the year end the group sold its rights to Entertainment Networks Limited, a subsidiary of Sony Pictures Television for £2,980,000, generating additional cash for the group of £2,000,000. Furthermore, payments plans have been agreed with the group's main creditors.
The directors have carefully considered whether or not it is appropriate to adopt the going concern basis in preparing the 2013 financial statements. The directors have reviewed the group's detailed cash forecast to ensure that the group's current working capital and credit facilities in place are sufficient for the foreseeable future. This assumption is based upon updated forecasts required as a result of the reduction in the performance of the UK television business together with the continued reduction in operational costs implemented over the year and assumes the maintenance of existing relationships with key suppliers.
After making enquiries, the Directors have concluded that the group has adequate resources to continue trading for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the group financial statements.
The directors anticipate that the auditor's report, to be issued with the Group's statutory accounts for the year ended 31 December 2013, will be unqualified but will contain an emphasis of matter paragraph. This emphasis of matter paragraph will draw attention to the material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern, referred to above.
2. Segmental reporting
The group's revenues are almost entirely in the UK from interactive broadcasting activities on Sky and Freeview channels. The financial information is presented to the executive management team who are responsible for making financial decisions as one operating unit which apart from the group's associate undertaking operates in one geographical unit. The executive management team make their decisions based upon this information. The executive management team comprises the chief executive officer, the chief operating officer and the chief financial officer.
The group has 3 significant telecom aggregators, generating 70% of the group's television and broadcast revenue. The 3 telecom aggregators contribute £5,923,117, £3,544,962, and £1,362,728 of the group's total revenue. (2012: 80% representing £9,249,341, £5,774,531 and £583,301).
3. Staff costs
2013 | 2012 | |
£ | £ | |
Wages and salaries (including directors) | 880,525 | 915,364 |
Social security costs | 186,674 | 189,636 |
Other pension costs | 80,990 | 70,990 |
Share option expenses | - | 9,365 |
1,148,188 | 1,185,355 |
Staff costs are included in general and administrative expenses (2013:£326,857, 2012: £338,343) and cost of sales (2013: £740,342, 2012: £847,012).
Average monthly number of employees by activity (including directors)
2013 | 2012 |
| |
Production | 4 | 4 | |
Technical | 3 | 10 | |
Management | 10 | 4 | |
Administration | 4 | 4 | |
21 | 22 | ||
2013 | 2012 | |
Key management | £ | £ |
Salaries and other short-term employee benefits | 496,538 | 508,056 |
Post employment benefits | 80,000 | 70,000 |
Share option expense | - | 9,365 |
576,538 | 587,421 |
4. Loss per Share
The calculations of adjusted basic and diluted losses per ordinary share are based on the following results:
2013 | 2012 | |
£ | £ | |
Loss for the financial period | (2,490,950) | (55,275) |
Weighted average number of ordinary shares | 76,471,557 | 76,471,557 |
Basic and diluted loss per share (pence) | (3.3)p | (0.1)p |
Due to the losses incurred in 2013 there was no dilution effect from the issued share options and warrants in 2013 or 2012.
The total potential number of dilutive ordinary shares at the year end was 12,783,699 (2012: 12,783,699).
5. Interest receivable and similar income
2013 | 2012 | |
£ | £ | |
Bank interest received | 448 | 650 |
6. Interest payable and similar charges
2013 | 2012 | |
£ | £ | |
Bank charges & interest paid | 8,641 | 2,027 |
7. Intangible assets
The decrease in the net book value of intangible assets in the year is predominantly due to the amortisation charge for the year of £310,516.
8. Property, plant & equipment
Broadcasting equipment | Computer equipment | Totals | ||||||
£ | £ | £ | ||||||
Cost | ||||||||
At 1 January 2012 | 1,665,778 | 205,130 | 1,870,908 | |||||
Additions | 54,669 | - | 54,669 | |||||
At 31 December 2012 | 1,720,447 | 205,130 | 1,925,577 | |||||
Additions | 178,745 | - | 178,745 | |||||
At 31 December 2013 | 1,899,192 | 205,130 | 2,104,322 | |||||
Depreciation | ||||||||
At 1 January 2012 | 1,493,490 | 205,130 | 1,698,620 | |||||
Charge for year | 54,237 | - | 54,237 | |||||
At 31 December 2012 | 1,547,727 | 205,130 | 1,752,857 | |||||
Charge for year | 66,953 | - | 66,953 | |||||
At 31 December 2013 | 1,614,680 | 205,130 | 1,819,810 | |||||
Net book value at 31 December 2013 | 284,512 | - | 284,512 | |||||
Net book value at 31 December 2012 | 172,720 | - | 172,720 | |||||
Net book value at 1 January 2012 | 172,288 | - | 172,288 | |||||
9. Trade and other receivables
2013 | 2012 | ||
£ | £ | ||
Trade receivables | 456,982 | 1,336,050 | |
Prepayments and accrued income | 1,440,862 | 1,328,037 | |
Other receivables | 174,826 | 395,099 | |
2,072,670 | 3,059,186 |
10. Trade and other payables
2013 | 2012 | ||
£ | £ | ||
Trade payables | 3,744,070 | 2,093,172 | |
Other taxes & social security | 258,152 | 477,088 | |
Other payables | 326,810 | 330,933 | |
Accruals | 693,431 | 980,366 | |
5,022,463 | 3,881,559 | ||
Credit payment profile in days | 83 days | 40 days |
11. Borrowings
2013 | 2012 | ||
£ | £ | ||
Bank overdraft | - | 57,873 |
12. Cash Flows Year ended 31 December
2013 | 2012 | ||
£ | £ | ||
a | Reconciliation of net loss before tax to net cash outflow from operating activities | ||
Loss before tax | (2,490,950) | (55,275) | |
Interest receivable and similar income | (448) | (650) | |
Interest payable and similar charges | 8,641 | 2,027 | |
Amortisation and depreciation | 377,470 | 602,995 | |
Proceeds on sale of intellectual property | - | (457,084) | |
Share option expenses | - | 9,365 | |
Decrease in trade and other receivables | 986,516 | 216,901 | |
Increase / (decrease) in trade and other payables | 1,140,901 | (327,173) | |
Net cash inflow / (outflow) from operating activities | 22,130 | (8,894) | |
b | Cash flow from investing activities | ||
Proceeds on sale of assets held for sale | 123,200 | - | |
Proceeds on sale of intellectual property | - | 457,084 | |
Purchase of property, plant and equipment | (178,745) | (54,669) | |
Purchase of assets held for sale | (72,864) | (220,336) | |
Purchase of intangible assets | (19,000) | (49,002) | |
Purchase of investments | (202,627) | - | |
Net cash (outflow)/inflow from investing activities | (350,036) | 133,077 | |
c | Cash flow from financing activities | ||
2013 | 2012 | ||
£ | £ | ||
Interest paid | (8,641) | (2,027) | |
Net cash used in financing activities | (8,641) | (2,027) | |
d | Cash and cash equivalents | ||
Cash at bank | 404,153 | 798,125 | |
Borrowings | - | (57,873) | |
Cash and cash equivalents at end of year | 404,153 | 740,252 |
13. Capital commitments
At 31 December 2013, the group had no outstanding capital commitments (2012: nil).
14. Events after the reporting period
On 27 March 2013, the Company's wholly owned subsidiary Cellcast UK Limited ("Cellcast UK") entered into an agreement with Entertainment Network Ltd, a subsidiary of Sony Pictures Television, under which Cellcast UK agreed to early terminate its exclusive rights (which it has held since 2006) to manage and operate the Freeview channel known as Movie Mix in consideration for a one off payment of £2,980,000.