RNS Number : 1238J
Catalyst Media Group PLC
27 March 2018
 

27 March 2018

 

Catalyst Media Group Plc

("CMG", "Catalyst" or the "Group")

 

Interim Results for Six Months Ended 31 December 2017

 

Catalyst Media Group Plc announces its interim results for the six months ended 31 December 2017.

 

CMG is a 20.54% shareholder in Sports Information Services (Holdings) Ltd ("SIS") and the results include its share in the profits of SIS as an equity accounted associate.

 

Financial Highlights for the six months to 31 December 2017

·        CMG profit after taxation and before adjustment to investment valuation of £0.34 million (2016: £1.03 million)

·        Valuation adjustment of £nil (2016: £1.06 million) resulting in a profit after taxation of £339,898 (2016: loss of £32,526)

·        Earnings per share (before valuation adjustment) 1.62p (2016: 4.44p)

·        Earnings per share (after valuation adjustment) 1.62p (2016: loss of 0.14p)

·        Net asset value per share of 122.5p (2016: 106.4p)

·        SIS revenues for six months to 30 September 2017 £100.9 million (2016: £110.1 million)

·        SIS EBITDA for six months to 30 September 2017 of £11.1 million (2016: £18.3 million)

·        SIS profit after tax on ordinary activities for the six months to 30 September 2017 of £1.8 million (2016: £5.2 million)

·        SIS declared a dividend of £15.0 million in October 2017, £3.1 million received by CMG

 

Michael Rosenberg, Chairman of Catalyst commented:

 

"With SIS's domestic retail position secured with contracts signed for between three to five years with 99% of the Licensed Betting Offices, albeit at lower margins from 2018, SIS has focused on utilising its industry expertise and content in other markets including International Retail and Online.  The recent announcement by SIS of a deepening partnership with Racecourse Media Group on International and online rights, demonstrates the progress SIS is making in developing its business outside of domestic retail.

 

We understand that SIS continues to perform in line with SIS's management expectations and expects operating profits and profit before tax for the year to 31 March 2018 to be in line with previous guidance and that SIS continues to expect to announce a further dividend after the end of its current financial year.  As and when received by the Company, the Company will consider the optimum method of distributing such funds, including the cash currently held by the Company, to shareholders."

 

Enquiries:

 

Catalyst Media Group Plc

Michael Rosenberg, Non-executive Chairman       07785 727 595

Melvin Lawson, Non-executive Director                 020 7734 8111

 

Strand Hanson Limited                                    020 7409 3494

James Harris

Richard Tulloch

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

 



Chairman's Statement

 

For the six month period ended 31 December 2017 the Group has generated a net profit after taxation before adjustment to investment valuation of £0.34 million (2016: £1.03 million).

 

Net assets as at 31 December 2017 were £25.8 million (30 June 2017: £25.5 million).  Net cash as at 31 December 2017 was £4.5 million (2016: £1.5 million).  The net assets per share as at 31 December 2017 were 122.5p (2016: 106.4p).

 

The Group's main asset remains its 20.54% stake in SIS and, in October 2017, the Company received a dividend of £3.1 million from SIS.  Accordingly, the value of the investment in SIS has been reduced to £21.3 million after taking account of the dividend receipt.

 

CMG equity accounts for its share in the profits of SIS, which were £1.8 million after tax for the six month period to 30 September 2017 (2016: £5.2 million).  Total revenues of SIS for the period were £100.9 million (2016: £110.1 million) of which £92.5 million (2016: £101.5 million) were derived from the business of providing integrated television and data services to Licensed Betting Offices in the UK, Ireland and overseas and a further £8.4 million (2016: £8.6 million) was contributed by SIS Live services, which provides satellite news gathering and associated transmission services to its customers.  Operating profits of SIS for the period decreased to £2.1 million, compared to £6.3 million in the comparable period for 2016, as a result of some racecourse rights ending and investment in non-UK retail areas of the business.

 

SIS BETTING

 

SIS is a leading supplier of data, pictures and pricing across a range of sports enabling more than 100,000 events on which to bet per year.

 

Given the lower margins of new media contracts, SIS is focused on utilising its skill set and experience in delivering appealing linear betting opportunities to the UK retail market into both online and international retail markets.  The focus of the strategy is to secure the long-term future of SIS and to reduce its reliance on the UK retail market.

 

Domestic Retail (UK and Ireland)

 

SIS has agreed new UK retail rights deals with RMG (Racecourse Media Group) for UK premium horseracing and Horse Racing Ireland and the Association of Irish Racecourses for all Irish horseracing, which together with the series of greyhound racing rights from eight British tracks, provides SIS with comprehensive core content for its UK and Irish retail service through to 2023.

 

The British greyhound service went live on 1 January 2018 and joined Irish horseracing and all weather horseracing from Chelmsford City as key elements of its service to the UK and Irish retail markets, with 99% of Licensed Betting Offices signed up to long term deals to take the service.  RMG's UK horseracing will become part of this service from 1 April 2018.

 

SIS announced the retirement of its ISIS and TDC text display systems earlier in the year, replacing the systems with a state of the art display system from a strategic partner, enhancing the service to customers. This will be complete by the end of the financial year delivering some cost savings.

 

International Retail

 

In January 2018, SIS announced an expansion of the partnership with RMG to jointly licence international rights for both RMG and SIS horseracing content.  SIS will lead sales of the joint product in all non-Tote exclusive territories combining the UK and Irish horseracing content with SIS's British greyhound content to maximise international sales.  This will replace the current arrangement with GBI Racing which expires on 31 December 2018.

 

SIS has extended many of its current arrangements with customers for a further five years and the new arrangement with RMG will enable long term deals to be signed with new customers

 

Online

 

The launch of the British greyhound service has proved to be a significant catalyst with online operators signing with SIS for various digital services such as streaming platform capabilities, greyhound and horseracing content, pricing and data.  This area is expected to see further growth in the year to March 2019, as more operators integrate and the available content expands.  The recent agreement with RMG to include international rights, provides SIS with additional online content and SIS expects further content deals to be signed in the coming year.

 

SIS LIVE

 

SIS Live provides satellite uplinks, satellite news gathering and satellite internet services.  It also is engaged in media fibre, teleports, distribution and satellite capacity provision.  It is becoming the connectivity provider of choice for critical media content, providing significant media connectivity for football, golf, rugby and motor racing events.

 

Its fibre network connects its headquarters with resilient connectivity into key broadcast locations including major UK broadcasters, sports venues, network operators and studio facilities.  Signals can be routed directly from SIS's teleport sites or to national and international customers via a combination of satellite and fibre paths.

 

As announced previously, SIS's management continue to see a prosperous future for SIS Live, though also recognise there may be a strategic benefit for SIS Live in alternative ownership.  As a result, SIS has received approaches for SIS Live which are being considered and could result in a sale in the near future, with any net proceeds from such a sale expected to be returned to SIS shareholders.

 

INDIA

 

SIS continues to progress the outstanding amounts due and the associated tax liabilities relating to the India Commonwealth Games in 2010.  Progress has been made in recent months, however SIS expects resolution of this issue to continue to be delayed with the timing of the outcome remaining uncertain.

 

OUTLOOK

 

The Company has been advised by SIS that its trading is in line with SIS's management expectations and that, as previously announced, SIS is expected to achieve an operating profit, before non-trading costs, for the full year to 31 March 2018 of approximately £10.0 million.  One-off costs associated with non-trading activities, including costs associated with litigation and SIS's defined benefit pension scheme, will though impact profit before tax for the full year to 31 March 2018 by approximately £4.0 million.  Cash balances at SIS as at 31 March 2018 are expected to remain in line with the prior year at approximately £73 million, following the payment of a dividend of £15 million in October 2017.

 

SIS's Board continues to expect to announce a further dividend after the end of its current financial year to 31 March 2018.  Should SIS make a further dividend distribution and on receipt of such funds, it is the current intention of the CMG Board to consider the optimum method of distributing the majority of such funds, including the cash currently held within the Company, to shareholders.  The Company will make further announcements in this regard as appropriate.

 



 

Consolidated interim statement of comprehensive income

 


Notes

6 months to 31 December 2017

 

£

Unaudited

6 months to 31 December 2016

 

£

Unaudited

12 months to 30 June 2017

 

£

Audited






Revenue


12,500

12,500

25,000






Cost of sales


-

-

-

Gross profit


12,500

12,500

25,000






Administrative expenses


(52,438)

(56,033)

(128,916)

Other operating income


-

-

-

Operating loss


(39,938)

(43,533)

(103,916)






Financial income


1,040

2,984

3,056

Financial costs


-

(105)

(106)

Net financial income


1,040

2,879

2,950

 





Share of profit of equity-accounted associate

3

369,720

1,062,740

3,498,784

Impairment of equity-accounted associate


-

(1,062,740)

-

Transitional adjustment relating to equity-accounted associate


-

-

-






Profit before taxation


330,822

(40,654)

3,397,818






Taxation


9,076

8,128

16,783






Profit / (loss) for the period


339,898

(32,526)

3,414,601






Share of other comprehensive loss of associate

 


-

-

(414,292)

Total comprehensive income / (loss) for the period


339,898

(32,526)

3,000,309






Attributable to equity holders of the company


339,898

(32,526)

3,000,309






Earnings / (loss) per share:

4




Basic


1.62p

(0.14p)

15.43p

Diluted


1.62p

(0.14p)

15.43p

Pre valuation adjustment


1.62p

4.44p

15.43p

 



 

Consolidated interim statement of financial position

 


Notes

31 December 2017

 

£

Unaudited

31 December 2016

 

£

Unaudited

30 June

2017

 

£

Audited

Assets





Non-current assets





Investment in associate

3

21,266,027

20,892,466

23,976,958



21,266,027

20,892,466

23,976,958






Current assets





Trade and other receivables


29,280

28,746

15,080

Cash and cash equivalents


4,474,928

1,484,265

1,463,462



4,504,208

1,513,011

1,478,542






Total assets


25,770,235

22,405,477

25,455,500






Equity and liabilities










Capital and reserves attributable to equity holders of the parent





Share capital


2,103,202

2,103,203

2,103,202

Capital redemption reserve


711,117

711,116

711,117

Merger reserve


2,402,674

2,402,674

2,402,674

Retained surplus


20,543,734

17,171,001

20,203,836



25,760,727

22,387,994

25,420,829






Current liabilities





Trade and other payables


10,984

17,483

31,134

Corporation tax payable


(1,476)

-

3,537



9,508

17,483

34,671






Total equity and liabilities


25,770,235

22,405,477

25,455,500

 



 

Consolidated interim cash flow statement

 



6 months

to 31 December 2017

 

£

Unaudited

6 months

to 31 December 2016

 

£

Unaudited

12 months

to 30

June

2017

 

£

Audited





 

Cash flow from operating activities





Profit / (loss) before taxation


330,822

(40,654)

3,397,818

Adjustments for:





Depreciation, amortisation and valuation adjustment


(369,720)

1,062,740

(3,498,784)

Share of profit from associate


-

(1,062,740)

-

Transitional adjustment


-

-

-

Finance income


(1,040)

(2,984)

(3,056)

Finance expense


-

105

106

Corporation taxes recovered


4,063

4,758

16,952






Net cash outflow from operating activities before changes in working capital


(35,875)

(38,775)

(86,964)

(Increase) / decrease in trade and other receivables


(14,200)

5,429

19,093

(Decrease) / increase in trade and other payables


(20,150)

(78,940)

(65,289)






Net cash outflow used in operating activities


(70,225)

(112,286)

(133,160)






Investing activities





Dividend received


3,080,651

4,107,534

4,107,534

Interest received


1,040

2,984

3,056






Net cash inflow from investing activities


3,081,691

4,110,518

4,110,590






Financing activities





Shares purchased into treasury


-

(2,514,495)

(2,514,495)

Interest paid


-

(105)

(106)

 





Net cash outflow from financing activities


-

(2,514,600)

(2,514,601)






Net increase in cash and cash equivalents in the period


3,011,466

1,483,632

1,462,829

Cash and cash equivalents at the beginning of the period


1,463,462

633

633






Cash and cash equivalents at the end of the period


4,474,928

1,484,265

1,463,462

 



 

Consolidated interim statement of changes in equity

 


Share

 capital

 

£

Unaudited

Capital redemption reserve

£

Unaudited

Merger

 reserve

 

£

Unaudited

Retained surplus/ (deficit)

£

Unaudited

Total shareholders equity

 £

Unaudited







At 1 July 2016

2,541,136

273,183

2,402,674

19,718,022

24,935,015







Loss for the 6 month period to 31 December 2016

-

-

-

(32,526)

(32,526)

Share repurchase

-

-

-

(2,514,495)

(2,514,495)

Cancellation of treasury shares

(437,934)

437,934

-

-

-

Total comprehensive loss for the period

(437,934)

437,934

-

(2,547,021)

(2,547,021)







At 31 December 2016

2,103,202

711,117

2,402,674

17,171,001

22,387,994







Profit for the 6 month period to 30 June 2017

-

-

-

3,447,127

3,447,127

Share of other comprehensive loss of associate

-

-

-

(414,292)

(414,292)

Total comprehensive profit for the period

-

-

-

3,032,835

3,032,835







At 30 June 2017

2,103,202

711,117

2,402,674

20,203,836

25,420,829








Share

 capital

 

£

Unaudited

Capital redemption reserve

£

Unaudited

Merger

 reserve

 

£

Unaudited

Retained surplus/ (deficit)

£

Unaudited

Total shareholders equity

 £

Unaudited







At 1 July 2017

2,103,202

711,117

2,402,674

20,203,836

25,420,829







Profit for the 6 month period to 31 December 2017

-

-

-

339,898

339,898

Total comprehensive loss for the period

-

-

-

339,898

339,898







At 31 December 2017

2,103,202

711,117

2,402,674

20,543,734

25,760,727

 



 

Notes to the interim financial statements

 

1.       Corporate information

 

The Company is a company incorporated in England and Wales and quoted on the AIM market of the London Stock Exchange plc.

 

2.       Basis of preparation

 

These unaudited consolidated interim financial statements cover the six month period from 1 July 2017 to 31 December 2017 including the financial results of Sports Information Services (Holdings) Limited ("SIS") for the six month period to 30 September 2017.

 

These consolidated interim financial statements of the Company and its subsidiaries (the "Group") for the six months ended 31 December 2017 have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) as adopted by the European Union and also in accordance with the Companies Act 2006.

 

The accounting policies adopted for the preparation of this unaudited interim statement are consistent with the accounting policies adopted in the Group's financial statements for the year ended 30 June 2017 and will remain so for the year ending 30 June 2018.

 

The financial information set out above does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  Statutory accounts for the year ended 30 June 2017, on which the report of the auditors was unqualified and did not contain a statement under section 498 of the Companies Act 2006, have been filed with the Registrar of Companies.

 

New financial reporting requirements

 

Standards, interpretations and amendments to published standards not yet effective

 

At the date of authorisation of these consolidated financial statements, the IASB and IFRIC have issued the following standards and interpretations which are effective for annual accounting periods beginning on or after the stated effective date.  These standards and interpretations are not effective for and have not been applied in the preparation of these consolidated financial statements:

§ IFRS 9: Financial Instruments (effective as of 1 January 2018)

§ IFRS 15: Revenue from Contracts with Customers (effective as of 1 January 2018)

§ IFRS 16: Leases (effective as of 1 January 2019)

The Directors anticipate that the adoption of these standards and interpretations will not have a material impact on the Group's financial statements in the period of initial adoption.

 

3.       Investment in associate

 


Total


Group


£

Cost


At 1 July 2017

23,976,958

Additions - share of profit

369,720

Dividend received

(3,080,651)

Valuation adjustment

-



At 31 December 2017

21,266,027

 

The Group's interest in its associate SIS, a company incorporated in England and Wales, is held by Alternateport Limited ("Alternateport").  Alternateport holds an investment of 20.54% in the equity share capital of SIS and is entitled to appoint a director and alternate director to the SIS board.  This right has been exercised since acquisition.  Alternateport is a wholly owned subsidiary of Catalyst Media Holdings Limited, a wholly-owned subsidiary of the Company.  The intangible assets represent the value attributable to the ongoing business activities of SIS, which are subject to an annual valuation adjustment.

 

The Board has reviewed its valuation of the investment in SIS as at 31 December 2017 and has, in line with the Group's accounting policies, concluded that the investment should be held at a value of £21,266,027.

 

Share of profit of associate*

30 September

2017


31 December 2017

31 December 2016

30 June

2017


SIS Total


CMG share

CMG share

CMG share


£'000


£'000

£'000

£'000

Revenue:






SIS Betting Services

92,512


19,002

20,847

41,598

SIS LIVE services

8,349


1,715

1,769

3,248







Total revenue

100,861


20,717

22,616

44,846







Operating profit from ongoing operations

2,065


424

1,301

4,312

Net interest receivable / (payable)

157


32

48

110

(Losses) / profits on business wind down

-


-

-

189

Profit on disposal of fixed asset

-


-

-

5

Exceptional items

-


-

(20)

-







Profit before tax

2,222


456

1,329

4,616

Taxation

(422)


(87)

(266)

(1,117)

Share of profit after taxation

1,800


369

1,063

3,499

Net income from associate

1,800


369

1,063

3,499







Other comprehensive income






Actuarial (loss) /gain

-


-

-

(308)

Deferred tax

-


-

-

103

Change in value of hedging instrument





(209)


-


-

-

(414)







Share of gross assets and liabilities of associate






Gross assets

156,533


32,152

31,203

33,221

Gross liabilities

(64,448)


(13,238)

(14,680)

(14,676)

Net equity

92,085


18,914

16,523

18,545

 

*The period covered by the associate's accounts is the six months to 30 September 2017.  The revenues have been stated excluding internal revenues.

 

4.       Earnings/(loss) per share

 

The calculation of the basic earnings per ordinary share of 10p each in the capital of the Company ("Share") is based upon the following:

 


6 months to

31 December 2017

£

6 months to

31 December 2016

£

12 months to 30 June

2017

£

Basic and Diluted



 

Earnings per Share pre valuation adjustment - pence

1.62p

4.44p

15.43p

(Loss) / profit per Share - pence

1.62p

(0.14p)

15.43p





Profit attributable to equity shareholders (before valuation adjustment)

339,898

1,030,214

3,414,601

(Loss) / profit attributable to equity shareholders

-

(32,526)

-





Weighted average number of Shares in issue

21,032,030

23,221,321

22,135,672

 


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