Contract Win & Trading Update

30 Dec 2005 07:00

Orca Interactive Ltd30 December 2005 Orca Interactive Ltd ("Orca" or the "Company") Contract Win and Trading Update Introduction RA'anana, Israel - 30 December 2005 - Orca (LSE: ORCA), a global market leaderin developing middleware and applications for IPTV (Internet ProtocolTelevision), today announces that it has secured a further significant contractwin, however, the timing and terms of the contract will mean that revenues forthe year to 31 December 2005 will fall significantly short of marketexpectations. Contract Win Orca has today signed a strategic contract (the "Contract") with a franchise ofone of the world's leading media companies (the "Franchise") to become the soleprovider to the Franchise of a full video-on-demand service. The Contract willinitially result in $3.0 million of committed revenue to Orca. Given Orca'sstatus as the sole provider to the Franchise, the Board of Orca also believesthat this deal has the potential to generate substantial further revenues overthe coming years. In addition, Orca has agreed to acquire a minority stake in the Franchise for aninvestment of $2.5million. The Board believes that this investment will provideOrca with an opportunity to benefit from the expected significant growth andfuture profitability of the Franchise. The Board also believes that having astrategic relationship with a global media company has the potential to enableOrca to introduce an important value added partner, in the form of content, tofuture bids, which will strengthen Orca's position in the market. A significant proportion of Orca's overall revenues from the Contract will begenerated from the provision of licenses for the use of Orca's RiGHTv IPTVmiddleware. In addition, as Orca is the prime contractor, revenues will also begenerated from professional services and complementary 3rd party IPTV solutionsystems. Pursuant to the Company's accounting policies, and as the Contract has beensigned later in the year than the Board originally anticipated, the Boardexpects to recognise only a small part of the initial revenues from the Contractin the current financial year. Trading Update The Board now expects that revenues for the second half of the current year willbe broadly similar to those reported for the first half and, therefore, thatreported revenues for the full year ending 31 December 2005 will fallsignificantly short of current market expectations. Net cash at the year-end isexpected to stand at approximately $21m. The Board is continuing to see strong growth in the Company's pipeline ofopportunities, as an increasing number of telecoms and media companies prepareto deploy IPTV services. It is expected that a number of these opportunitieswill result in revenue generating contracts in 2006. Haggai Barel +972 9769 9400CEO, Orca Interactive James Melville-Ross / Cass Helstrip +44 20 7831 3113Financial Dynamics This information is provided by RNS The company news service from the London Stock Exchange