RNS Number : 5568X
Catalyst Media Group PLC
20 December 2019
 

20 December 2019

 

Catalyst Media Group plc

("CMG" or the "Company")

 

Final Results for the year ended 30 June 2019

Posting of Annual Report and Accounts

Notice of Annual General Meeting ("AGM")

 

The Board of Catalyst Media Group plc is pleased to announce the final results for the Company for the year ended 30 June 2019. CMG is a 20.54% shareholder in Sports Information Services (Holdings) Ltd ("SIS") and the results for the year to 30 June 2019 incorporate its share of the profits of SIS for its year ended 31 March 2019.

Financial overview

·      CMG loss before taxation £0.61 million (following an impairment charge of £4.3 million of the carrying value of the interest in SIS) (2018: profit before taxation £0.95 million)

·      Loss per share 2.8p (2018: profit per share 4.6p)

·      Net asset value per share 67.7p (2018: 126.2p)

·      SIS revenues for the year ended 31 March 2019 £241.4 million (2018: £191.5 million)

·      SIS operating profit excluding profit on sale of SIS Live £2.9 million

·      SIS profit before tax £20.7 million (2018: £6.9 million)

Post period end

·      SIS approved and paid a dividend of £5 million on 31 October 2019 to its shareholders

·      On receipt of its share of the SIS dividend, being £1.03 million, the Board of CMG approved the distribution of £1.05 million to CMG's shareholders by way of a dividend of 5p per share

The dividend was paid on 22 November 2019 to CMG shareholders on the register of members as at 8 November 2019

Following the payment of the dividend, the Company had a cash balance of approximately £0.32 million

Posting of Annual Report & Accounts and Notice of AGM

The Company will today be posting its Annual Report and Accounts for the year ended 30 June 2019, together with a formal notice of AGM and form of proxy, to shareholders. Copies of these documents will shortly be available on the Company's website at www.cmg-plc.com.

The AGM is to be held at 6 Stratton Street, London W1J 8LD on 20 January 2020 at 11.00 a.m.

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

 

I am pleased to present the results for Catalyst Media Group plc ("CMG" or the "Company") for the year ended 30 June 2019, which incorporates our share of profits for Sports Information Services (Holdings) Ltd ("SIS") in which CMG has a 20.54% interest.

The main asset of CMG continues to be the 20.54% shareholding in SIS, which, as detailed below, sold SIS Live in October 2018. CMG equity accounts for its share in the profits of SIS.

As announced on 28 October 2019, SIS's profit before tax for the year ended 31 March 2019, including operating profits for SIS Live of £2.1 million and excluding profit on the sale of SIS Live of £17.8 million, of £2.9 million was impacted by the requirement to make additional provisions post the period end for the ongoing litigation with The Racing Partnership as detailed in the announcements of 8 May and 10 July 2019.  SIS's cash balance has not been impacted by the provision. Including the profits on the sale of SIS Live of £17.8 million, SIS achieved a profit after tax of £18.3 million.

After taking account of CMG's share in the profits of SIS for its year ended 31 March 2019 of £3.8 million (2018: £1.0 million), CMG recorded a loss before taxation of £0.6 million (2018: profit of £0.95 million), following an impairment charge of £4.3 million of its carrying value of its interest in SIS (2018: £nil). Net assets at the year end were £14.7 million (69.7p per share) (2018: £26.5 million (126.2p per share)).

The Board of CMG (the "Board") has reviewed its investment in SIS and has taken account of the change in the business structure of SIS following the sale of SIS LIVE. After discussion with SIS management on the future expected profitability of the ongoing businesses and taking account of the investment required to pursue new initiatives, the Board has decided that it would be appropriate to reduce the carrying value of the Company's interest in SIS in its accounts from £18.5 million before impairment to £14.3 million.In arriving at an appropriate valuation the Board has had regard to the strong net asset position of SIS and its substantial cash reserves and has also assumed that the continuing business will remain profitable, albeit at a lower rate than before.

As previously reported, following the sale of SIS LIVE in October 2018, SIS paid a dividend of approximately £40 million to its shareholders, of which £8.2 million was received by CMG.  Upon receipt of such funds and taking into account the Company's position at that time, the Company distributed a total of £12.2 million to shareholders via a dividend of 58p per share in November 2018.

A further dividend of £5.0 million was paid by SIS to its shareholders in October 2019 and a total of £1.03 million was received by CMG.  Taking into account the Company's then cash balance this was distributed by way of a 5p dividend to CMG shareholders.

SIS Betting - UK and Ireland Retail

SIS continues to provide a core service based on content from Racecourse Media Group horseracing, SIS British Greyhound Service, Irish Horseracing, Chelmsford City Horseracing, 49s and International Horseracing on mid and long term agreements to over 97% of the UK and Irish retail market, including all the major UK bookmaking groups and the majority of the independent market.

Additionally, SIS supplies additional content and services to its UK and Irish retail customers to cover early morning and additional evening products and has recently extended these services adding Spanish, US and various South American horseracing.

SIS Betting - International & Online

In the year SIS has launched twenty 24/7 channels covering horseracing, greyhound racing, virtual racing and mixed channels, having secured content covering the whole 24-hour period - content includes Melbourne Raceclub, Palmero, LARC, South Korean, PARXs, Spanish horseracing as well the UK and Irish horseracing and greyhound racing.

SIS has over 26 channels designed to maximise betting opportunities for international retail and online operators and has signed  numerous international and online operators to multi year agreements and continues to progress its strategy to increase distribution, in both new and existing international and online markets, using proprietary production technology as well as streaming and data pricing services.

SIS Results

 

As announced on 28 October 2019, SIS's profit before tax for the year ended 31 March 2019, including operating profits for SIS Live and excluding profit on the sale of SIS Live, was £2.9 million.

SIS's cash balance at 31 March 2019 was approximately £70 million and SIS declared and paid a dividend of £5.0 million in October 2019.

The results of SIS for the year ended 31 March 2019 are as follows:

 

 

31 March 2019

31 March 2018

 

Before individually significant items*

Individually significant

Items*

Total

Before individually significant items*

Individually significant

Items*

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Turnover

241,404

-

241,404

191,490

-

191,490

Operating expenses

(234,018)

(5,147)

(239,165)

(183,137)

(1,774)

(184,911)

Group operating profit

7,386

(5,147)

2,239

8,353

(1,774)

6,579

Profit on disposal of tangible fixed assets

-

-

-

51

-

51

Profit on disposal of operations

17,836

-

17,836

-

-

-

Other interest receivable and similar income

619

-

619

297

-

297

Interest payable and similar expenses

(6)

-

(6)

(16)

-

(16)

Profit before taxation

25,835

(5,147)

20,688 

8,685

(1,774)

6,911

Tax on profit

(3,391)

978

(2,413)

(2,150)

337

(1,813)

Profit after taxation

22,444

(4,169)

18,275

6,535

(1,437)

5,098

Notes: *Individually significant items in 2019 relate to litigation fees and in 2018 they relate to the Pension ETV exercise.

Share of net assets and liabilities of associate

 

 

 

31 March 2019

31 March 2018

Net assets

119,521

142,440

Net liabilities

(55,688)

(61,340)

Net equity

63,833

81,100

 

India

As previously reported, the claim in respect of the Indian project continues to be pursued but the outcome remains uncertain.  The legal and associated costs relating to this claim have been significantly reduced but are still impacting profits.

Current Trading

As previously announced, the Department for Digital, Culture, Media and Sport concluded the Triennial Review in 2018, announcing a reduction in Fixed Odds Betting Terminals ("FOBT") maximum stakes from £100 to £2.  In the period since the reduction came in to force in April 2019, SIS has seen a reduction in the number of UK Licensed Betting Offices from approximately 9,250 to approximately 8,250, which is slightly lower than SIS's management expected.

Six months on from the FOBT change, SIS's performance is ahead of SIS management's expectations and the investment and progress in Digital and International markets has continued, with recent announcements by SIS including the launch of a World Greyhound Tote product launched in the US market, expansion into South America both for retail and online customers, and a number of new retail and online customers in Europe for its Watch and Bet 24/7 channels.

Whilst the core UK and Irish Retail market declines at predicted rates, the business sees its long-term future aligned with the international and multichannel operations of major betting companies.  The focus on both International and Online and the move to a new target operating model is also securing significant cost savings across SIS.

SIS's profitability for the year to March 2020 is in line with SIS's management's expectations.

Outlook

As stated above, SIS expects profits to be in line with its management expectations for the year ending March 2020 and accordingly, cash reserves are expected to remain high.  On that basis, the Board expects further dividends to be declared by SIS going forward, though the quantum and timing of such dividends is not yet known.

Operating costs for CMG are expected to remain at the current very low level and on receipt of any further dividends from SIS, the Board intendeds to continue to make appropriate distributions to shareholders.

AGM

The next Annual General Meeting of CMG will take place on 20 January 2020.  Formal Notice of the meeting is set out at the end of the report and accounts together with the form of proxy.

Michael Rosenberg OBE

Chairman

19 December 2019

 

Strategic Report

The Directors present their strategic report for the year ended 30 June 2019.

Principal activities and review of the business

The principal activities of the business are outlined and reviewed in the Chairman's Statement. A review of the business is included within the Chairman's Statement.

Principal risks and uncertainties

Investment in SIS

The principal strategic investment of the Group is its 20.54% holding in SIS. The Group is entitled to appoint one director to the board of SIS which currently comprises eight directors, of which five are appointed by shareholders, two are independent and one is the Chairman. Although it can influence the board on strategic decisions, the Group is not in a position to control the day-to-day business and affairs of SIS other than with the support of other directors and a majority of shareholders of SIS.

There are a number of risks and uncertainties associated with the business of SIS which could potentially have an adverse impact on the value of the Group's investment including the fact that the customers of SIS rely upon real time data and uninterrupted content delivery. Loss of content would result in reduced quality of services and potentially reduced income. Therefore SIS has adopted advanced disaster recovery solutions and has built back up facilities which are located around the country.

Financial risk

The Group is subject to financial risk through its exposure to financial assets and liabilities. The Group's main financial risk is its exposure to its investment in SIS.

Credit risk

The Group is not exposed to any credit risk.

Liquidity risk

There is a very low risk that the Group will encounter difficulty in meeting its financial obligations as they fall due, on the basis that the Group operates with minimal overheads and cash flow is well managed.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The principal liabilities of the Group and Company arise in respect of administrative expenditure and trade and other payables. Trade and other payables are all payable within three months.

The Board receives cash flow projections on a regular basis as well as information on cash balances.

Key Performance Indicators (KPIs)

The Company's key performance indicators used by the Board in monitoring the general performance of the Group and its investments are:

Net asset value per share

The net asset value per share of the Group was 90 pence as at 30 June 2019 (2018: 126.2 pence). The net asset value per share increased during the year to 30 June 2019 following an increase in retained profits with share capital remaining constant. The net asset value of the Group as at 30 June 2019 and 30 June 2018 is shown in the Group's consolidated statement of financial position on page 19.

Administrative expenses

The Directors closely monitor the anticipated overheads for the Group and ensure that these are kept to a minimum.

Earnings per share (EPS)

EPS shows the relative performance year-on-year of the Group's profitability measured as an amount of profit or loss attributable to one ordinary share. The calculation of earnings per share is based on the weighted average number of issued ordinary shares in issue for the financial year and the profit/(loss) after taxation attributable to ordinary shareholders. EPS in respect of operations for the year and the previous year is shown in the Group consolidated statement of comprehensive income on page 18.

Key Performance Indicators of Associate

The Directors additionally monitor the performance of SIS in order to evaluate the general performance of the Group.

 

Michael Rosenberg OBE

Chairman

19 December 2019

 

 

Consolidated statement of comprehensive income for the year ended 30 June 2019

 

 

 

Year

Year

 

 

ended

ended

 

 

30 June

30 June

 

 

2019

2018

 

 

£

£

 

 

 

 

Revenue

 

25,000

25,000

 

 

 

 

Cost of sales

 

-

-

 

 

 

 

Gross profit

 

25,000

25,000

 

 

 

 

Administrative expenses

 

(119,411)

(122,608)

 

 

 

 

Operating loss

 

(94,411)

(97,608)

 

 

 

 

Financial income

 

5,312

4,382

Financial costs

 

-

-

Net financial income

 

5,312

4,382

 

 

 

 

Share of profit of equity-accounted associate, net of tax

 

3,753,685

1,047,129

Impairment of equity-accounted associate

 

(4,270,701)

-

 

 

 

 

(Loss)/Profit before taxation

 

(606,115)

953,903

 

 

 

 

Taxation

 

16,623

18,076

 

 

 

 

(Loss)/Profit for the year

 

(589,492)

971,979

 

 

 

 

Share of other comprehensive profit of associate

 

915,673

147,272

 

 

 

 

Total comprehensive (loss)/profit for the year

 

326,181

1,119,251

 

 

 

 

Attributable to equity holders of the Company

 

326,181

1,119,251

 

 

 

 

(Loss)/Earnings per share:

 

 

 

 

 

 

 

Basic

 

(2.80p)

4.62p

 

 

 

 

Diluted

 

(2.80p)

4.62p

 

 

 

 

Consolidated statement of financial position as at 30 June 2019

 

 

 

30 June

2019

£

30 June

2018

£

Assets

 

 

 

Non-current assets

 

 

 

Investment in associate

 

14,274,706

22,090,708

 

 

 

 

 

 

14,274,706

22,090,708

 

 

 

 

Current assets

 

 

 

Trade and other receivables

 

39,007

30,946

Cash and cash equivalents

 

383,612

4,451,635

 

 

 

 

 

 

422,619

4,482,581

 

 

 

 

Total assets

 

14,697,325

26,573,289

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

 

Capital and reserves attributable to equity holders of the parent

 

 

 

Share capital

 

2,103,202

2,103,202

Capital redemption reserve

 

711,117

711,117

Merger reserve

 

2,402,674

2,402,674

Retained profits

 

9,450,670

21,323,087

 

 

 

 

Total equity

 

14,667,663

26,540,080

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

 

29,662

30,243

Corporation tax payable

 

-

2,966

 

 

29,662

33,209

 

 

 

 

Total equity and liabilities

 

14,697,325

26,573,289

 

 

 

 

 

 

 

 

Consolidated statement of cash flows for the year ended 30 June 2019

 

 

 

 

Year ended

30 June

2019

£

Year ended

30 June

2018

£

 

 

 

 

 

 

 

 

Cash flow from operating activities

 

 

 

(Loss) / profit before taxation

 

(606,115)

953,903

Adjustments for:

 

 

 

Share of profit from associate

 

(3,753,685)

(1,047,129)

Impairment of associate

 

4,270,701

-

Finance income

 

(5,312)

(4,382)

Corporation taxes recovered

 

4,365

17,505

 

 

 

 

Net cash flow used in operating activities before changes in working capital

 

(90,046)

(80,103)

Increase in trade and other receivables

 

1,229

(15,866)

Decrease in trade and other payables

 

(579)

(891)

 

 

 

 

Net cash flow used in operating activities

 

(89,396)

(96,860)

 

 

 

 

Investing activities

 

 

 

Dividend received

 

8,214,659

3,080,651

Interest received

 

5,312

4,382

 

 

 

 

Net cash flow from investing activities

 

8,219,971

3,085,033

 

 

 

 

Financing activities

 

 

 

Dividends paid

 

(12,198,598)

-

 

 

 

 

Net cash flow used in financing activities

 

(12,198,598)

-

 

 

 

 

Net decrease in cash and cash equivalents in the year

 

(4,068,023)

2,988,173

Cash and cash equivalents at the beginning of the year

 

4,451,635

1,463,462

 

 

 

 

Cash and cash equivalents at the end of the year

 

383,612

4,451,635

 

 

 

 

 

 

 

Notes

 

1.         Basis of Preparation

 

These consolidated financial statements of Catalyst Media Group plc have been prepared in accordance with accepted International Financial Reporting Standards (IFRSs), International Accounting Standards (IAS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations (collectively "IFRSs") as adopted for use in the European Union and as issued by the International Accounting Standards Board and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies listed below include those applicable to SIS, given its materiality to the Group as a whole.

 

Catalyst Media Group plc is a publicly limited company registered in England and Wales where it is domiciled for tax purposes.

 

The financial statements are prepared under the historical cost convention.

 

These results are audited, however the financial information set out in this announcement does not constitute the Group's statutory accounts for the year ended 30 June 2019, but is derived from the 2019 Report and financial statements. The auditors have issued an unqualified audit report in respect to these financial statements.

 

2.         Investment in associate

 

Year Ended 30 June 2019

 

 

 

Group

 

 

 

 

£

Cost

 

 

 

 

At 1 July 2018

 

 

 

22,090,708

Share of profit - 2019

 

 

 

3,753,685

Share of other comprehensive profit - 2019

 

 

 

915,673

Dividend received - 2019

 

 

 

(8,214,659)

Impairment of equity-accounted associate

 

 

 

(4,270,701)

At 30 June 2019 - CMG share of SIS net assets

 

 

 

14,274,706

 

 

 

 

 

 

Year Ended 30 June 2018

 

 

 

Group

 

 

 

 

£

Cost

 

 

 

 

At 1 July 2017

 

 

 

23,976,958

Share of profit - 2018

 

 

 

1,047,129

Share of other comprehensive loss - 2018

 

 

 

147,272

Dividend received - 2018

 

 

 

(3,080,651)

At 30 June 2018 - CMG share of SIS net assets

 

 

 

22,090,708

 

The Group's interest in the associate, SIS, a company incorporated in England and Wales, is held by Alternateport Limited. Alternateport Limited 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 Limited is a wholly owned subsidiary of Catalyst Media Holdings Limited, a wholly owned subsidiary of Catalyst Media Group plc.

 

A copy of the strategic forecast prepared by SIS was made available to the Directors of CMG showing management forecasts of the income statement, statement of financial position and statements of cash flow. SIS's management have assumed a relatively low level of future profits at a steady level over a period of ten years and applied a discount rate of 30% to arrive at a present value.

 

After reviewing the forecasts and other factors, the Directors concluded that the carrying value of the investment in SIS should be reduced to £14.3 million. The value of the investment in SIS has therefore been impaired by £4.3 million to achieve this.

 

 

 

2 Investment in associate (continued)

 

Share of profit of associate

2019

 

SIS Continuing

 

£'000

2019

 

SIS

Dis-continued

£'000

2019

 

 

SIS Total

 

£'000

2019

 

CMG share

 

£'000

2018

 

CMG share

 

£'000

Revenue:

 

 

 

 

 

SIS Betting Services

222,504

-

222,504

47,263

36,753

SIS LIVE Services

-

18,900

18,900

2,321

2,579

Total revenue

222,504

18,900

241,404

49,584

39,332

 

 

 

 

 

 

Operating profit after individually significant items

119

2,120

2,239

1,517

1,716

 

 

 

 

 

 

Net interest receivable

613

-

613

126

58

Profit / (losses) on business wind down

-

17,836

17,836

2,606

(364)

Profit on disposal of joint venture

-

-

-

-

-

Profit on disposal of fixed asset

-

-

-

-

10

Profit before tax

5,879

14,809

20,688

4,249

1,420

Taxation

(547)

(1,866)

(2,413)

(496)

(372)

Share of profit after taxation

5,332

12,943

18,275

3,753

1,048

Net income from associate

5,332

12,943

18,275

3,753

1,048

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

Actuarial loss

7,026

-

7,026

1,443

12

Deferred tax

(2,434)

-

(2,434)

(500)

34

Change in value of hedging instrument

(134)

-

(134)

(27)

101

 

4,458

-

4,458

916

147

 

Share of net assets and liabilities of associate

 

 

 

 

 

Net assets

119,521

-

119,521

24,550

29,257

Net liabilities

(55,688)

-

(55,688)

(11,438)

(12,599)

Net equity

63,833

-

63,833

13,112

16,658

 

As at 30 June 2019, SIS was continuing to deal with tax and legal issues that arose from the 2010 Commonwealth Games (CWG) in Delhi, India. SIS, via a partnership of the name of SIS Live, delivered the host broadcast production and facilities contract for the 2010 CWG. Given continuing scrutiny of the entire CWG project immediately after the closure of the Games, approximately 40% of the contract has still not been paid. A provision of £5.9 million was made in respect of this non-payment in the SIS financial statements for the year ended 31 March 2011.

 

As at 30 June 2019, SIS continued to be involved in a litigation case brought by The Racing Partnership ("TRP") and others against SIS's subsidiary, Sports Information Services Limited ("SISL"), and others. SISL has successfully defended two of the three claims and, following the year end, both SISL and TRP have been granted permission by the judge to appeal elements of the judgement. SISL have been ordered by the judge to pay 20% of TRP's costs.

 

SIS Live received a draft assessment in March 2014 from Indian tax authorities in relation to the year ended March 2011. SIS has strongly rejected the draft assessment, and continues to appeal it through the Indian judiciary system. As appeal proceedings continue it is not possible to quantify the potential tax liability that may arise of the subsequent recoverability of that amount through the courts and therefore no further provision has been made in the accounts of SIS.

 

3.         Post balance sheet events

 

Post the period end, the Company declared and paid a dividend of £1.05 million in November 2019.  There were no other events subsequent to the Statement of Financial Position which require disclosure.

 

4.         Annual Report

 

The Annual Report for the year ended 30 June 2019 will be available today from the Company's website www.cmg-plc.com.

 

The Annual General Meeting will be held at 6 Stratton Street, London W1J 8LD, at 11.00 on 20 January 2020.


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