Cellcast Share Discussion Threads

[recto verso] 08/7/2008 14:35

Analyst,

Cellcast have known that Ofcom would be tightening up their regulations for more than a year now.

As you say, Cellcast make it very obvious to the consumer what they will get for their money. Its all very clear and transparent. I cant see any problems.

The real problem lies in quiz channels that keep paying public in a green room waiting.

Funny thing is, quiz channels can be classed as teleshopping.

RV

[the analyst] 01/7/2008 20:20

Wonder if Cellcast Asia will get any of the money?



"Canaan to invest more in India
Canaan Partners, the 20-year-old global venture capital (VC) fund with $3 billion under management, will channel a bigger share of money from its latest global fund towards investments in the country.

The investments would be mainly directed towards technology ventures, Canaan Partners India MD Alok Mittal said.

The VC firm recently raised a $650-million global fund and about a quarter of it will be dedicated for investments in India and Israel. It is estimated that around $150 million will be invested in India over the next three years. Around 5-10% of its previous $450 million was dedicated to India and Israel.

Canaan has invested in five companies in India-e4e, Bharatmatrimony, Cellcast, iYogi and TechTribe-since foraying into the country in 2000. Future investments will be centered around the technology sector with typical funding of $3-5 million in Series A. The focus areas would be consumer internet & digital media, mobile and enterprise services.

Globally, Canaan invests in the technology and healthcare segments, but in India it does not have plans for the latter. Mr Mittal was of the view that critical mass for making investments in companies that provide technology in the area of healthcare has not yet been reached in the country.

The India investments have been performing well and Canaan has exited an entity which it indirectly funded. Mr Mittal said it would remain invested in companies for the long term and consider additional rounds of funding. Canaan is present in Delhi, Mumbai and Bangalore and may look at expansion into newer locations."

[the analyst] 01/7/2008 14:18

One thing I like about these results is that they are not over-promising this time around. Having modest expectation and then (hopefully) out-performing would be much better than the other way around (i.e. what investors here have become accustomed to here)

Also, I like the way the business model is becoming simpler and easier to understand. In the long-term, a simple business model is much better for attracting investors. Ideally, directors should be able to describe a business model very clearly in about 10-15 seconds. It should be so clear that even a fund-manager can understand it!

On another positive note, the ofcom paper mentions that they will give companies time to adjust their business models in response to any changes. So, even if we do get a bad decision, it could be 2009 before any changes have to be made. That would give a good six months for the 3G and websites to try to gain critical mass.

[zoo123] 01/7/2008 11:37

Hi,

There are things afoot.......


not least of which is the pre-emptive diversification of revenue, including 3g!

+ call-services in the middle-east, etc.


Yours kindly,



MN

[rp3406] 30/6/2008 22:11

Why continue using a factoring company if the facility will remain undrawn and pay what 1-2% of the invoice value in a fee? They don't appear to even get a decent credit control service judging by the aged debt report.

Can anyone shed any light on the management charges totalling £243,750 under SMS Media Ltd. Is this monies paid by Cellcast to SMS Media - a company that Bertrand Folliet and Andrew Wilson and Directors and shareholders of?

RP3406

[recto verso] 30/6/2008 21:50

Analyst,

Thanks for the response.

RV

[recto verso] 30/6/2008 18:30

Analyst,

I still dont understand why you are so concerned about the "adult" channels ?

Is it the content you are concerned about ? or simply that you dont think Cellcast are capable of creating editorial content for the format ?

RV

[the analyst] 30/6/2008 17:23

Well, trading today amounted to a staggering £1,500 worth of transactions!

I know I said I expected thin trading and very little price movement in repsonse to the results, but I didn't expect it to be quite that much of a non-event...

[the analyst] 30/6/2008 17:20

The annual report has just been released. It puts a bit more meat on the bones



In particular, they confirm that the group should be cash generative in 2008 (rather than the rather more vague 'profitable') which is excellent to see. They also state that they do not expect to draw on any of the credit facilities will not need to be used in 2008 either.

"Going concern
The directors have considered whether or not it is appropriate to adopt the going concern basis in preparing the 2007 financial statements
in view of the substantial operating losses in 2006 and 2007. As indicated in the Chairman's statement, following the substantial cost-cutting
programme in 2007 which continued into the first half of 2008, the company expects th e UK operations to return to profitability during
2008. This, coupled with the completion of the SUMO.tv development process and the removal of any further funding obligations in respect
of the company's international operations, means that the group should be cash-generative by the end of 2008. In addition, in April 2008, the
company received £1.4 million in cash for the rearrangement of its Sky channels carrying the SUMO.tv brand, enabling the company to enter into
a repayment programme with Headstart in respect of its £500,000 convertible loan facility over the next twelve months. As at the date of this
report, the company had available undrawn credit facilities totalling £600,000 (£450,000 factoring facility and £150,000 bank overdraft) and the
company's detailed cash forecasts indicate that the factoring facility should remain undrawn for the remainder of 2008. Accordingly, the directors
believe the going concern basis to be appropriate."

[lord santafe] 30/6/2008 10:36

Annoying how the seller has taken advantage of these couple of buys today, and I do expect the price to increase sometime this week.

[the analyst] 30/6/2008 00:00

Personally, I can't see any reason for investors to be lining up to buy into the company based on these results. At best, I can see that holders will keep hold of their shares a bit longer in hope of a favorable ofcom decision.

My guess is we will see low volume and very little price movement. I hope I'm wrong though.

Of course, there is always the chance we could see directors deciding to buy more shares, which would be most welcome. They only have one day to do it, though - having released the results so late, they will be in a closed period again on Teusday.

[rp3406] 29/6/2008 18:15

I anticipate share price movement of a similar pattern to when we had the channel swap + cash announcement. I think we will see 3 - 3.5p over the next 2-3 days. Hard to say if any serious money will come our way until the effects of Ofcom are known.

[thesageofsaint] 29/6/2008 16:24

Anyone care to hazard a view as to whether there will be any price movement tomorrow. The results pretty much confirmed what I believed. The company has realised that its expansion efforts beyond the uk, whilst generating significant TO growth, was having an adverse affect upon cashflow and that the cash drain imposed could not be supported by organic cash genration. We now find ourselves with a company which is more similar to the CLTV that floated in 2005 than it has been since this point, notwithstanding the obvious development to products and services, when considered in revenue stream source. Sumo has been left as essentially a dormant product (the statements obfuscate around this, but this is in essence a fact) and the company has contracted around its cash flow positive core.

The Asian development apparently again needs funding, therefore expect a further dilution in CLTV's % holding of Cellcast Asia and there is no intent to rekiindle the South American business. All in all it is now much clearer. I have discounted all assets/potential beyond Cellcast UK to zero in my calculations, and I expect that 2008 will show an operating profit of @£700K (excluding one offs). This is based upon: TO £13.2m - CoS £11.5m - Op cost £1m = £0.7m. If this is the case then applying a PE 8-10 we should be looking at 8-10p. If some of the potential in the product stream is exploited them maybe more.

Overall, a much clearer picture than for a while. I am holding my 400k.

The Sage

[rp3406] 29/6/2008 09:12

'When they talk of profitability in 2008, do they mean gross profit?'

I assume gross profit although I also anticipate overheads to be significantly reduced with the loss of 45 staff between 31/12/07 and June 08. For example - take an average salary of £20k - 45 x £20k = £900,000. Plus there is the reduction in rent & rates on the sub-let. Recto V's £300,000 operating loss sounds right (excluding the £1.4 discovery network payment) with the potential to make an operating profit in the second half of the year due to the cost reduction roll out being complete.

Ofcom aside I see a case for 8-10p a share.

I wonder if the results were delayed due to the audit issue?

Anyone going to the AGM on the 24th July ?

[recto verso] 28/6/2008 15:00

Cellcast formats on this irish channel include (a very high percentage of content) :

psychic tv

sumo tv formats : trailerdrome, good morning sumo, sumo selection

curbsurfers

party people

Wonder how its going ? Launched in May 2008.

[recto verso] 27/6/2008 19:59

Profit 800k for 2008 = share price 8-10 p ; assuming that in H1 2008 they sold the 2 channels for 1.4 million and made a 1.1 mil profit. Thus 300k loss.

Therefore assuming another 300k loss in H2 = 800k profit.

[the analyst] 27/6/2008 18:52

When they talk of profitability in 2008, do they mean gross profit, net profit or real operating profit resulting in cash generation?

It's very difficult to understand just how useful or valuable the technology, services and products they talk about really are. Anyone here any the wiser as to whether they are actually worth anything and will generate good revenue?

One thing I wonder is whether it would be useful if they could sell their stake in Cellcast Asia and use the cash to continue to fund the ongoing business into 2009. It might them the time they need to reach true profitability that results in cash generation.

[sans souci] 27/6/2008 18:50

How much would it cost management to buy it out?

[the analyst] 27/6/2008 18:48

I agree, the results are far less bad than feared

However, it seems to me that with the business now basically entirely focussed on the UK, we are more than ever dependent on how the business will have to change and how it will subsequently perform after the ofcom ruling is announced later in the summer

Given they have given no real meaningful numbers for the new Websites or 3G revenues (and in particular, of revenues during H1 which ends on Monday), I suspect those revenues are very very low, despite the 400% growth rates mentioned.

The question is, can these new revenue streams keep growing to levels where they will really help the company trade profitably even if they have to change business model on their tv channels?

Looks to me like they have at least enough cash to take them through to 2009, but that situation will become much clearer in the interims, which are due by Sept 31st.