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Cellcast shares dip as revenues and profits decline
Cross platform media company Cellcast saw its shares dip on Tuesday as the company revealed its revenues and profits fell, with the company citing "difficult economic conditions" for its core markets.
The AIM-traded firm's year-on-year revenues dropped by 0.8% to £12m and gross profits fell 27% to £0.8m as the cost of online sales increased by 1.8% to £11.2m due to a growth of online revenues which, according to Cellcast, carry more direct costs.
The group's broadcasting activities in the UK resulted in revenues of £11.3m, down 1.7% on 2016, which was slightly offset by a 6.5% increase in funds from management and consultancy services offered to overseas gaming and lottery operators, which stood at £0.66m.
Chief executive Craig Gardiner said: "The core focus of the board in 2017 has been to control the cost base in all areas of the business. The renegotiation of our supplier bandwidth agreements in July 2017 has led to the company trading profitably at the operating profit level in the second half of the financial year."
The bandwidth agreement negotiations took place in August, allowing for an improved second half of the year.
The Milton Keynes based company is a provider of participatory programming, a technology partner for third parties and an investor in dynamic new ventures, with a focus on mobile media.
"Whilst the board has taken the prudent approach of making a 100% provision for the funds held by the group in relation to the Lexinta Fund, this has not had an impact on the day to day running of the business, which continues to have sufficient funds for its normal operations," said Gardiner.
Cellcast initially invested £0.495m into Lexinta, which is currently under investigation by the Swiss authorities, with the investment now valued at £0.75m.
The company also reported a tricky start to 2018 as its core revenues have been impacted by next-generation satellite boxes making it harder for people to consume Cellcast's content and resulting in declining revenues through the Sky platform.
As of 1157 BST, Cellcast's shares were down 13.04% at 2.00p.