REG - Catalyst Media Group - Final Results
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
o The dividend was paid on 22 November 2019 to CMG shareholders on the register of members as at 8 November 2019
o 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDFR LLFERFTLALIA
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