Cellcast Share Discussion Threads

[the analyst] 19/6/2009 18:56

Just saw that someone registered a company called 'SMS Media Limited" with Companies House in April.

Seems to be Richard Howard, the guy behind Pebble Communications, which I think now trades under the phonenumbers4u brand. They provide premium rate services for Psychic and horoscope lines, as well as adult interactive 121 services



The company doesn't seem to been involved in any scandals, although they did get a fine from ofcom last year. It was only a small one, though.

Just interesting they would decide to use the same company name as the one used by Cellcast's Directors to move money around...

[the analyst] 19/6/2009 17:24

The last bit of newsflow says that the AGM letter has an explanation as to why the restructuring is a good thing for shareholders, but when you read the letter, it really doesn't explain any reasons at all. I guess we just have to wait and see...

[zangdook] 19/6/2009 11:29

Why would anybody pay to look at pictures of that dog?

[lord santafe] 18/6/2009 23:51

Looks like I sold at 1.475p at just the right time, and last week that got me into LMY and PPA. Just hope I can get back in oneday for around 1p.

[the analyst] 18/6/2009 23:09

Hi LDM,

Any views on the accounts?

When you spoke to Andrew, did you manage to find out what exactly SMS Media Ltd do and who they are?

I wonder why there there were £321,040 in management charges due to them in 2008?

Can we be sure that none of those 'management charges' went to any of Cellcast's Directors, their family or friends. Either directly or indirectly. If they did, then it begs a few questions - what exactly can the management of SMS Media Ltd offer that the management of Cellcast plc can't do as employees of the company, if they are the same people?

[the analyst] 18/6/2009 16:49

Cheers Metaphysical man, must be blind today...

[zangdook] 18/6/2009 16:43

So the authorised shares will increase from 100m to about 150m; if they issue them all we get diluted to 50% of our current stake, but it will be done as a rights issue or some similar scheme allowing us to maintain our percentage if we're willing to put in more cash.
I'd rather like to know what they want the cash for.

[the analyst] 18/6/2009 16:23

Can you see the AGM circular letter posted on their site?

[the analyst] 18/6/2009 15:57

"SMS Media Limited
In 2008 sales to SMS Media Limited amounted to £66,982 and management charges totalled £321,040. At the year end £84,140 (2007:
£23,395) was owed to SMS Media Limited, which has common directors and beneficial shareholders in Bertrand Folliet and Andrew Wilson.

Sky Telemedia (UK) Limited
During the year recharges, relating mostly to rent and rates, from Sky Telemedia (UK) Limited amounted to £417,806 (2007: £952,623). At
the year end £15,368 (2007: £94,177) was owed to Sky Telemedia (UK) Limited. Sky Telemedia (UK) Limited is a wholly owned subsidiary
of SMS Media Limited."

[the analyst] 18/6/2009 15:54

Ah yes, I was looking for a 2009 report!

[the analyst] 18/6/2009 15:52

It does look like more dilution on its way.

At least it won't be below 1p per share.

Funny thing is, I'm sure the results seemed to be suggesting they didn't need more cash. I don't think it looks like a simple prudent measure 'just in case' either, as companies are usually pretty quick to say so if that is the case.

So, maybe they are considering buying some of the competition, as I suggested in an earlier post?

If it means they end up with better margins, then it could be good for all holders.

We just have to wait and see, though - the company has a long history of dilution and disappointment...

[metaphysicalman] 18/6/2009 15:50

Annual report available on this page:



Letter re share subdivision via this page (Notice of AGM link)

[metaphysicalman] 18/6/2009 15:48

Interesting that they are proposing the share par value to be reduced to 1p to allow the issue of more shares at close to current market price... more dilution on the way?

[the analyst] 18/6/2009 15:36

I don't see the annual report posted yet on their website, or the letter that goes with it

"The report and accounts and the AGM Circular have been posted on the Company's
website (www.cellcast.tv) in accordance with AIM Rule 26"

[the analyst] 17/6/2009 15:47

All good stuff LDM, cheers

As I have said many times before, I do think these guys are working hard and trying their best. It's not yet clear whether the work will be for the benefit of all shareholders. We wait and see on that one.

Good to see some degree of success, though. A year ago, it was looking like they may go bust, with ofcom destroying the business. But now, it looks like they may make it through the bad times. That is, as long as the situation doesn't deteriorate into depression...

I suspect that the loss of the first freeview channel will have impacted earnings and margins briefly. There will also have been a time lag in getting the new channels earning good cash (people need to re-tune their freeview boxes, for a start, just to get the channels, if they are new).

Shame the new channels don't start earlier to get the crowd that are just in from the pub, but a midnight start is not too bad.

My expectations are that the pressure on margins they have warned about will only impact on Q2 and by Q3 they will be back on track

I too still have a target of £1m pa profit at some stage, although I suspect this may be for the year ending Dec 2010. If they can achieve that and the economic conditions are better by then, too then I could easily see another re-rating. maybe even 10p per share, or 20p+ if other ventures like Cellcast Asia perform well

Overall, I think the results showed some pretty good progress, but I still want to see more clarity in the figures...

[the analyst] 16/6/2009 23:07

Cheers LDM,

So, would you say you are quite happy with the margins?

I think I see different things in some of the statements than you seem to see. For example:

"Following the substantial cost-cutting programme in 2007 and 2008, the group has seen the UK operations return to profitability in the last quarter of 2008. The group's detailed cash forecasts indicate that the credit facilities currently available are sufficient for the foreseeable future."

To me, this says that they were temporarily in profit in that last quarter, but it may also mean they are not now and perhaps, that they actually need to use those credit facilities (else why mention them?). If that is the case and the business is no longer running profitably, then that is not good

With regard to the increased number of freeview channels, that is indeed good. I'm in France right now so can't check it out, but could you tell me if all those channels have all important 10pm-1am time slots up and running? I've been told that it is those hours that drive 80%+ of the revenue.

Also, do you know what they mean by 'profit' with regards to Celcast Asia - last time they mentioned Cellcast Asia profit, they were actually talking about gross profit pre-admin expenses...


Finally,
Will you be going to the AGM?

[the analyst] 16/6/2009 16:39

I went through the results figures last week - seems to be all good progress apart from the warning on margins

At first glance, I thought it was really encouraging - margins finally starting to improve over the second half. I don't have my notes with me, but I think it had moved up from less than 7% in H1 to just over 10% in the second half.

A good start, I thought, even though to become a decent business they really need to push to be getting 15-20% margins minimum. At 20% they would be able to generate cash and pay a dividend.

But, then they dropped the bombshell - that margins have gone back down again recently, apparently due to increased competition. That was really disappointing, especially now they have quite a few web businesses. Most web businesses operate on very high margins (80%+). The margins for my web business are well over 90%

In typical CLTV fashion, they failed to explain the figures adequately. What makes up the cost of sales? Let hope the accounts are much clearer...

It would be good to know why competition is getting more intense - surely if conditions are tough, then the competition should be struggling and we might even expect some of those companies (those without critical mass) to be going bust? Are the other premium rate companies simply able to get far better margins than Cellcast? If so, why?

Unfortunately, I've failed to get any accounts from similar companies to compare to Cellcast. That would be very useful to try to understand what Cellcast could be doing to generate the cash they should be. A premium rate phone call / internet business earning over £9m in revenue in the second half alone and looking to pushing at £20m+ for the current year, not generating cash? Something is wrong with that and it needs explaining to investors

[davidruk] 15/6/2009 11:41

Re: thesageofsaint
I'm still holding and share your optimism with fingers and toes crossed. It would be great if this comes good after the long wait.
Dave

[thesageofsaint] 12/6/2009 20:27

This board has been astonishingly quite since the results. Even the regulars have abstained from any comment. Myself, well I continue to hold 1% of CLTV and for the first tem in a long time have some justifiable confidence that I was wise not a fool to invest. In the current climate to grow revenues by 50% in the 2nd half and also increase gross margins is staggering. If one assumes that next year will show no turnover growth and flat margins, and that op costs are stable, then CLTV will make between £700k and £1m EBITDA. The only significant EBITDA charge will be the amortisation of SUMO capital charge, which will still allow CLTV to make an operating profit. However, make some reasonable assumptions about turnover growth extrapolation and continued margin improvements, CLTV could be making £2m EBITDA and @ £1.4m profit. This will place the company on a forward multiple of 0.8. Yes, Yes, Yes I hear you say, but what of OFCOM and all the other strategic threats. Well CLTV has never been as diverse and dynamic in its ability to rapidly translate concept to product or proliferate the product. I see that for each threat there are multiple opportunities. This has to be one of the most undervalued and unrecognised companies on the AIM. What is the going price for £20m turnover, arguably if CLTV's current management cannot turn a profit from this income then somebody can. Asia is the nugget that could catapult this company. Now trading profitably, with IPL rights and obviously well regarded, 37.5% of CAH could be worth a pot that could be filled by the company's current market cap 10 times over.

I have been invested in companies like CLTV before, when I was convinced I was correct in my assessment but nobody else took any interest, only to be vindicated eventually with a multibagger. Any thoughts would be appreciated.

The Sage