2nd Jun 2015 08:28
LONDON (Alliance News) - Cellcast PLC Tuesday posted a swing to a pretax profit in 2014 due to cost savings and the sale of a long-term channel management contract, which helped offset a decline from its traditional interactive broadcast revenue.
The chat and adult interactive channel operator posted a pretax profit of GBP2.9 million for 2014, swung from a pretax loss of GBP2.5 million in 2013. Cellcast recorded exceptional revenue from Sony Corp subsidiary Entertainment Networks, after it agreed the early termination of Cellcast's rights to manage the Freeview channel Movie Mix.
Cost of sales were slashed by 30% due to the company relocating to Milton Keynes and renegotiating its bandwidth costs, and overseas new business development costs were much lower at GBP42,000 during the year, compared to GBP1.3 million in 2013.
The company had entered into a joint venture deal with Atlas Group last May, but after a strategy review decided its resources would be better put towards alternative investment ventures, as a results the joint venture did not commence and was wound up in March. The investment sum of GBP1 million was recovered in full by the company, it said.
Cellcast said its revenue from operating its current television channels continued to decline during the year, and that is unlikely to change in current markets, so the sustainability of its business depends on its ability to compensate for revenue declines by cost savings or identifying new revenue streams.
The company is looking to diversify in the gaming and gambling sector, and said over the past few months it has been developing partnerships with companies which have experience in this sector to cross-sell products to its existing database in the UK and explore new opportunities in undeveloped international markets.
Time to market on these ventures has been longer than previously anticipated, Cellcast said, but applications and services are now in testing with the aim of launching them in the third quarter of 2015.
"During the year revenue from our core services continued to decline, with customer numbers and gross margins coming under increasing pressure. To counter this, we have been pursuing a cost review programme, including our relocation to Milton Keynes and the renegotiation of our bandwidth commitments. Going forward, the board has also been looking at diversification opportunities into other digital content sectors to leverage our skills and experience in interactive broadcasting and mobile transaction services," said Chief Executive Officer Andrew Wilson in a statement.
Shares in Cellcast are untraded Tuesday morning. It last closed at 1.38 pence.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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