Final Results

Cellcast Plc

(The "Company" or the "Group")

Audited Results for the year ended 31 December 2013

Following the release of unaudited results for the year to 31 December 2013, the Board of Cellcast PLC (AIM: CLTV) announces the Group's audited results for the year ended 31 December 2013.

Copies of the Annual Report and Accounts for the year ended 31 December 2013 will be available on the Group's website later today and will be posted to shareholders shortly.

 For further information:

Chief Executive's statement

2013 Results

Operating revenues, which continued to be derived almost entirely from interactive broadcasting activities in the UK, amounted to £15.5 million, a decrease of 19% on 2012. The gross margin declined from a level of 6% in 2012 to a negative 1% in 2013. The group posted an operating loss of £2,483,000 compared to the previous year's operating loss of £511,000. The 2013 operating loss includes costs of £1,131,000 the majority of which was spent on exploratory ventures in overseas markets (2012: £276,000).

The primary reason for the UK revenue decrease was the significantly declining performance of the Group's Freeview channels which was a consequence of the reorganisation of the Freeview EPG line up at the end of 2012 General and administrative costs decreased by 18% from £1,019,000 to £838,000. Around 40% (2012: 33%) of these were personnel costs, with 18 permanent staff as at 31 December 2013.

In October 2013 the group successfully relocated its studios and associated production facilities from Central London to Milton Keynes. This is expected to result in operational savings of £150,000 per month when fully implemented in the course of 2014. In addition the set up in Milton Keynes allows flexible access to additional space on demand giving the group the ability to react quickly to opportunities to broadcast on new channels or in new markets.

Amortisation and depreciation expenses of £377,000 - 37% less than in 2013 - are predominantly accounted for by the amortisation of the group's capitalised development costs, which at 31 December 2013 had a net book value of £80,000 (2012 - £326,000).

After taking into account the net interest costs, the total loss for 2013 was £2,491,000 (2012 - loss of £55,000). 2013 loss per share was 3.3p (2012 loss per share of 0.1p).

See the Review of Operations on pages 5 and 6 of this report for a fuller description of the group's operations and technological developments.

Funding

At 31 December 2013, the group had a net cash balance of £404,000 (2012: £740,000).

Your attention is drawn to the going concern paragraph in the notes to the financial statements. The auditor's report on the statutory accounts for the year ended 31 December 2014 is unqualified but contains an emphasis of matter paragraph, which is not unusual in these circumstances. This paragraph draws attention to the material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern.

Post Balance Sheet Event

On 27 March 2014 the group entered into an agreement with Entertainment Networks Ltd, a subsidiary of Sony Pictures Television, under which the group has agreed to early termination of its exclusive rights (which it has held since 2006) to manage and operate the Freeview channel known as Movie Mix in return for a one off payment of £2,980,000. This amount, net of certain expenses, will be recognised as a profit on disposal.

Post payment of legal fees (£100,000) and settling of certain outstanding creditors (£880,000) will provide the group with a cash sum of £2m. This sum will not be used to fund the group's long term capital requirements. It will primarily be used for selected investments in new related digital media opportunities where the group believe they can leverage their core skills, align themselves with proven sector management teams and business models which should provide robust new revenue streams for the PLC

Outlook

Revenues remained poor throughout the first half of 2013 and as anticipated continued to decline in the second half of the year. This was mainly due to a 50% decline in revenue from the Freeview channels, which was a consequence of the group of channels being moved to a disadvantageous position on the EPG. This has increased the group's focus on cost cutting as described in the Strategic Report.

In July the group's losses were significantly curtailed by a negotiated reduction in the cost of one of the Group's Freeview channels which translated into a 32% reduction in the group's overall broadcast cost. In October, other cost cutting measures were implemented which included moving the studio facilities out of London to Milton Keynes and reorganising the current operational structure. It was hoped that the beneficial effect of this relocation and reorganisation would be recognised in the second half of 2013 but for various logistical reasons these benefits will not be fully realised until the first half of 2014.

As the group's traditional UK market offers diminishing opportunities for new customer acquisition the group has identified two areas of potential growth. The first of these involves increasing revenue from existing customers through cross-selling and upselling complementary internet and mobile internet based services. The second is service diversification and expansion into developing markets where mobile and specifically smartphone penetration is growing rapidly, and new digital broadcasting opportunities are emerging. These opportunities are viewed as particularly important as the group seeks to evolve and change its business models in line with the changing socio demographics in certain market sectors. The new products and services and new geographies into which the group is investing should provide a much firmer and more robust platform from which to grow.

Consolidated statement of comprehensive income

For the year ended 31 December 2013

All revenue derives from continuing operations.Consolidated statement of financial position

As at 31 December 2013

Consolidated statement of changes in equity for the year ended 31 December 2013

Consolidated statement of changes in equity for the year ended 31 December 2012

Consolidated statement of cash flows

For the year ended 31 December 2013

Notes to the audited financial statements

Going concern

During the year ended 31 December 2013, the group recorded a loss of £2,490,950. While the group had net cash of £404,153 as at 31 December 2013 it had net current liabilities of £2,545,640. Subsequent to the year end the group sold its rights to operate a Freeview channel to Entertainment Networks Limited, a subsidiary of Sony Pictures Television for £2,980,000. Post payment of legal fees (£100,000) and settling of certain outstanding creditors (£880,000), this will provide the group with a cash sum of £2m. It will primarily be used for selected investment in new related cross media opportunities and not to fund the group's long-term working capital requirements.

The directors have carefully considered whether or not it is appropriate to adopt the going concern basis in preparing the 2013 financial statements. The directors have reviewed the group's detailed cash forecast to ensure that the group's current working capital and credit facilities in place are sufficient for the foreseeable future. This assessment is based upon forecasts following the reduction in the revenue of the UK television business together with the continued reduction in operational costs implemented over the year; it also assumes the maintenance of existing relationships with key suppliers.

After making enquiries, the Directors have concluded that the group has adequate resources to continue trading for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the group financial statements.

The group's revenues are almost entirely in the UK from broadcasting related activities on Sky and Freeview channels.

The financial information is presented to the executive management team who are responsible for making financial decisions as one operating unit which apart from the group's associate undertaking operates in one geographical unit. The executive management team make their decisions based upon this information. The executive management team comprises the chief executive officer, the chief operating officer and the chief financial officer.

The group has 3 significant telecom aggregators, generating 70% of the group's television and broadcast revenue. The 3 telecom aggregators contribute £5,923,117, £3,544,962, and £1,362,728 of the group's total revenue (2012: 80% representing £9,249,341, £5,774,531 and £583,301).

2. Staff costs

Staff costs of £351,663 (2012: £338,343) are included in general and administrative expenses and £796,526 (2012: £847,012) are included in cost of sales.

Average monthly number of employees by activity (including directors):

3. Loss before tax

4. Interest receivable and similar income

5. Interest payable and similar charges

6. TV exploration in overseas countries, new ventures and on-off regulatory costs

In the year, additional expenditure of £702,000 was incurred in exploring an overseas opportunity in South America. This venture was not successful and therefore this amount has been shown as an exceptional item. In addition, a £238,000 receivable balance held as at 31 December 2012 has been written off in relation to this venture. Legal action is being pursued to recover this amount but no amount has been recognised as at 31 December 2013.

A further amount of £130,000 has been incurred in the year in relation to an investigation by Ofcom.

The remaining amount relates to the disposal of the asset held for sale and the on-going costs associated with the remaining asset held for sale.

7. Taxation

Factors affecting the tax charge for the year

At 31 December 2013, the group had estimated tax trading losses of £6.0 million (2012: £3.9 million) which subject to the agreement of the HM Revenue & Customs and overseas tax authorities, are available to carry forward against future profits of the same trade. No deferred tax asset has been recognised on these losses as timings of future profits are uncertain.

8. Loss per share

The calculations of adjusted basic and diluted losses per ordinary share are based on the following results:

Due to the losses incurred in 2013 and 2012 there was no dilutive effect from the issued share options and warrants. The total potential number of dilutive ordinary shares at the year end was 12,783,699 (2012: 12,783,699).

9. Intangible assets

10. Property, plant & equipment

11. Subsidiary companies

At 31 December 2013 Cellcast Plc owned 100% of the issued share capital in Cellcast UK Limited, a company incorporated in the UK whose principal business was television and broadcasting. At 31 December 2013, Cellcast UK owned the following other interests:

12. Investments

On 10 September 2013, the Group invested £202,627 to obtain 35% of the shareholding of 2Giraffes LLP. 2Giraffes LLP is a large global provider of mobile internet content that will have over 15 million monthly unique users spread over 20 countries by the end of December 2014. This investment is held beneficially for Cellcast Plc by Citiwise Enterprise Limited which owned by Andrew Wilson, a director.

This holding is treated as an investment as the Group does not have any significant influence on the operations of 2Giraffes LLP.

The group still holds an 18% holding in Cellcast Middle East Limited, a company incorporated in Lebanon. While its principal activities remains in television and broadcasting it continues to be loss making and the results have not been included as the group has no further funding commitment.

13. Non-current assets held for sale

£170,000 (2012: £220,336) of intangible assets have been classified as non-current assets held for sale as management were committed to a plan to a plan to sell them at the reporting date and they were being actively marketed at a price which was considered to be reasonable. One of the two assets held at 31 December 2012 was sold in July 2013 and it is anticipated that the remaining asset will be sold within the next twelve months for at least its carrying value; as such no impairment loss has been recognised.

The movements in assets held for sale during the year are as follows:

The additional amount capitalised is a deposit which will be refunded on sale and therefore it has been capitalised as part of the asset held for sale.

14. Trade and other receivables

15. Trade and other payables

16. Borrowings

17. Cash flows

18. Events after the reporting period

On 27 March 2014 Cellcast UK Limited, entered into an agreement with Entertainment Networks Ltd, a subsidiary of Sony Pictures Television, under which Cellcast UK Limited has agreed to early termination of its exclusive rights (which it has held since 2006) to manage and operate the Freeview channel known as Movie Mix in consideration for a one off payment of £2,980,000. Post payment of legal fees (£100,000) and settling of certain outstanding creditors (£880,000) will provide the group with a cash sum of £2m. It will primarily be used for selected investment in new related cross media opportunities and not to fund the group's long-term working capital requirements.