Cellcast Share Discussion Threads

[the analyst] 09/10/2008 22:36

Heard back form Neil Craven

He will be getting in touch with me about the margins. Probably next week, when the FD is back from her annual vacation. I'll report back what I can once I find out more

Cheers

[ldmachin] 09/10/2008 22:34

the analyst,

Yes, i noticed that. I took it to mean that it was a flat £1 for members to phone the show? Maybe they get a certain amount of time for their £1. Probably just an incentive promotion to get members signing up for a month or week.

[the analyst] 09/10/2008 22:34

Another one for the pot, LDM - maybe they are making so much money on their Freeview monopoly, that they have put the price down to 75p on the Sky channels to simply put the other channels on Sky out of business? You never know...

[zoo123] 09/10/2008 21:37

Hi,


QUOTE:
"If you think this company is going to make any money from porn then you are mistaken. No one is going to pay for porn because they won't be able to afford it and also because there's that much free porn in the web you don't need to pay.

This pathetic company is finished."


Very wrong.

I'm confident, that not only will this company be around in 5 years time; with limited options to spend freely and go out, adult content, easily billable on web, tv and mobile has a unique appeal amongst the target demographic to provide light relief :p in a depressed environment.

I also believe, that in time, many of the longer term shareholders here will actually be proud of their little company and their investment in it, as well as the acumen of their management in such stormy times.


Anyone who invests now, market cap: sub-£500k, might well be seeing one of the best investments in their personal history.


Kind regards,


MN

[z1gzag] 09/10/2008 19:32

If you think this company is going to make any money from porn then you are mistaken. No one is going to pay for porn because they won't be able to afford it and also because there's that much free porn in the web you don't need to pay.

This pathetic company is finished.

[ldmachin] 09/10/2008 19:24

With Non-Exec Director, Mike Neville's help... CEO Andrew Wilson has taken the time to respond to my questions regarding SMS Media Ltd and the payments made in 2007 to try and clarify the 'cloudy' situation. These are the relevant excerpts:

"...the bulk of these interco charges are related to the fact that when we established Cellcast we had insufficient history to secure leases on our studio and office premises. So all of these were originally signed with Sky Telemedia (as was our corporate account with Vodafone and our corporate credit card account with Barclays). These costs (which amounted to some £950,000 in 2007) are a simple charge through and Sky Telemedia does not retain one penny for facilitating these. We have not gotten around to changing these arrangements but when we do they will only represent more rather than less obligations for Cellcast."

"The payments to SMS Media totalling £240,000 in 2007 represents the salaries and support costs (travel etc) of those members of the management team and support staff who are based and work outside the UK and are involved in our international operations."

He also stated that large shareholder, Neil Craven, is well aware of all these inter-company transactions.

Now, we need to find out about the very high cost of sales, which are producing terrible margins.

[ldmachin] 09/10/2008 17:01

the analyst,

Thanks for the input. I hope that the rate is still £1.50. Cellcast haven't got the cash reserves to enter a price war... and if the channel was busy when they were charging £1.50 then it would be crazy to take it down to 75p without a damn good reason.

[the analyst] 09/10/2008 15:33

Yes, LDM, just waiting to hear back from him.

All I know at the moment is that the directors reassured Neil a long time ago that nothing untoward is going on and have confirmed that is still the case to him. However, no specifics were given, so it has to be taken on trust. I know that Neil has 100% confidence in the directors

It is the question of margins that is paramount to me, rather then SMS Media and Sky Telemedia and it is the question of margins that I am waiting to get some feedback on

Lets face it, if margins had been improved, rather than halving, then we would have a nice cash generative business and could be building up the cash in bank.

Of course, if SMS Media are the cause of the margins falling through the floor, then we are in big trouble. I hope there is better explanation

[ldmachin] 09/10/2008 15:17

the analyst,

Have you been in touch with Neil Craven concerning the question recently? Is he chasing the directors for answers as this time?

It is worrying that he, being a 20% owner of the company, doesn't know exactly what relationship SMS Media Ltd and subsiduaries have with Cellcast?

Thanks.

[the analyst] 09/10/2008 14:37

LDM, in response to your question, I'm hoping to get some information from Neil Craven. I met him at the AGM and one thing for sure, his interests are aligned with ours as he has invested a huge sum of money as a private investor.

The question about SMS Media etc was asked at the AGM, but the response was, in my opinion, very vague and wishy washy. I came away with no idea what these companies really are or what they do, despite having listened to the answer.

Now we have the additional question of slashed margins, which I hope there is a very simple explanation for.

It does seem that SMS Media and Sky Telemedia services are being put through as cost of sales. Perhaps SMS Media have spent a fortune on legal fees that has been put through as cost of sales? Impossible to tell, but I hope we get some answers soon.

The company has a new freeview channel that seems to be doing very well and the group should no be highly profitable and amassing a cash pile that can be used should ofcom fail us all.

[stefanos2] 09/10/2008 14:17

Price says it all.

What an embarrassment these directors are.

When they go to bed at night, I hope they feel ashamed about the people whos lives they have adversely affected. If they don't feel that way now, they will definitley feel that way when they retire on our money. The champagne is not quite so good when it has a sour, bitter taste to it. You simply can't enjoy life when you have guilt eating away at you from within.

[ldmachin] 09/10/2008 00:37

stefanos2,

"But, let them respond before taking it to the next level, chaps."

- This is where the problem lies, i've sent 4 emails to CEO Andrew Wilson recently. 2 he replied too, he had the opportunity there and then to clarify matters but always avoided the questions. And i know other BB posters here have had no response from management either.

Shareholders need to see action fast, management will try and string this out as long as possible... so by the time shareholders actually find out what has been happening to THEIR company... it's already suspended from the market. You see it time and time again on AIM.

[stefanos2] 09/10/2008 00:33

It is VERY important for all of us to know what pay (plus bonuses, plus dividends and othe rbenefits) the directors take from SMS Media and Sky Telemedia.

We NEED to know they are not creaming our money from Cellcast

Not suggesting they are, just that we need to be able to understand our business and know WHY the directors are failing us in making low margins and losses from what should be a great business. It should be a cash cow!

But, let them respond before taking it to the next level, chaps.

[stefanos2] 09/10/2008 00:16

I want to see a complete and transparent breakdown of cost of sales:

- percentage to phone company?
- percentage to SMS Media for 'unknown services'?
- percentage of the sum that actually goes on staff, but that should be in admin expenses?
- Do the girls work on commission? Or are they employed?
- Or part of SMS Media? Are their expenses going down as cost of sales?
- Where does the rest of it all go?
- Percentage to ofcom?

If I knew where the faults are that are draining the gross margins down to basically zero, then I may actually be able to help them. I could get them better margins!

[ldmachin] 09/10/2008 00:10

stefanos2,

Yes, in six months for a premium rate telephone company, which has a tiny 20-30 staff... generating £6,704,265 should not cost £6,320,339 (giving a pitiful £383,926)... not to the mention £700k central costs for six months.

Something is definately very wrong here... and the management refuse to give any clarity.

The problem is, the management are refusing to explain themselves... and i suspect there is a horrible reason for that.

[stefanos2] 09/10/2008 00:01

LDmachin

I have good reason to believe that gross margins for this business should be 20%+

It is interesting to go back and do the sums again with that in mind.

[stefanos2] 08/10/2008 23:59

Like I say, lets just hold fire for a minute and let them explain themselves. Construct a good, well reasoned letter with your complaints and send it either by hand or registered post to the non-exec Chairman and the broker and adviser as well as the CEO.

Being fobbed off with vague 'it's all fine, stop worrying' or 'we've had unexpected costs' is unacceptable.

This is only a £1m company focused on only the UK. They sell erotic entertainment on the tele, the phone and the internet - it is NOT a complex business, yet they have made it the most complex and IMPOSSIBLE company to understand.

What happened to our margins?

Where was the £500k+ lost?

Why is that £500k+ not on the balance sheet?

Get writing and make sure it gets read by those that are there to protect shareholders. That is, the non-execs and the advisers.

[ldmachin] 08/10/2008 23:58

If Cellcast pay Sky Telemedia/SMS Media Ltd another £1.5m this year for spurious services and 'management consultancy' and deliver a full year loss of, say, £500k.

If that money wasn't being drained from Cellcast and instead retained, that would turn the £500k loss into a £1m net profit. On a very conservative P/E of 6, that would mean the the Cellcast shareprice would and should be in the 7p-8p region, instead of the sub 1p region it is now.

That's how important it is to find out why the hell Sky Telemedia/SMS Media Ltd get £1.5m from Cellcast. Sky Telemedia and SMS Media aren't 'real' companies... these companies are purely set-up to provide 'services' for Cellcast. WHICH STINKS.

And the fact that Sky Telemedia ( is being paraded as being Cellcast is f-in criminal. Not to mention that www.casualaction.com is registered in the CEO's name and not cellcast's name and address...

Domain name:
casualaction.co.uk

Registrant:
wilson, andrew

Registrant type:
Unknown

Registrant's address:
3 Horton close
maidenhead
maidenhead
berks
SL6 8TP
GB

There is a hell of a lot here that STINKS and it's all coming from the management's direction in my opinion. Time for action from shareholders while there is still a company trading.

[stefanos2] 08/10/2008 23:43

One option I would suggest would be for Cellcast to acquire both Sky Telemedia and SMS Media and bring the company together under one roof.

Such a move should not serve as a way to rip-off Cellcast holders, though.

The basis of share allocation should be on proportionate to their respective gross revenue, but definitely not net revenue or profit, especially if they are adjusting those figures between the companies on a need to know basis (as some here have suggested could be the case)

[stefanos2] 08/10/2008 23:40

Well done thesageofsaint, this needs addressing.

I am also constructing a letter to be hand delivered to the non-exec Chairman. Slightly more detailed and forceful than yours, but saying the same thing. I will also need to deliver it to the broker and adviser. If necessary the FSA to make a case in point, to make them aware, rather than a complaint.

I encourage others to do the same before any action is taken. Better to ask first, fire later in my opinion. We have over 10% and that can come later. Give directors the chance to explain themselves. Let them explain the reasons behind being tangled up in a complex web of companies owned by directors and held in overseas tax havens where the accounts can not be obtained by PIs.

I am not saying there is anything illegal going on here. In fact, I am sure there is no real wrong doing, but we need to be able to see that and understand it in the accounts.

Hiding facts and figures from investors should be restricted to billion pound banks, not £1m microcaps. When you look at a company with a market cap of less than £1m there is absolutely no reason to cover up complex dealings and relationships that directors have through other companies they own.

What I want to see (and demand) is that we should be given a thorough break-down of what the 'cost of sales' really are. From every pound that comes in from a premium rate call, where does the 95% lost in 'cost of sales' actually go?

What exactly do the SMS and Telemdia companies do? Who owns them? What is their revenue and profit? We should be able to get these details from companies house, but they are conveniently held in tax havens.

I will send the letter later next week. I can't deliver it yet as I need my lawyer to go through it with me first.