REG - Catalyst Media Group - Final Results for 30 June 2023 and Notice of AGM
20/12/2023 12:45
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RNS Number : 4994X Catalyst Media Group PLC 20 December 2023
20 December 2023
Catalyst Media Group Plc
("CMG", the "Company" or the "Group")
Final Results for the Year Ended 30 June 2023
and Notice of Annual General Meeting
The Board of CMG (AIM: CMX) is pleased to announce the Company's final results
for its financial year ended 30 June 2023.
CMG is a 20.54% shareholder in Sports Information Services (Holdings) Limited
("SIS") and the results for the year to 30 June 2023 incorporate its share in
the profits/losses of SIS for its financial year ended 31 March 2023, as an
equity-accounted associate.
Highlights:
· CMG profit after taxation of £2.6 million (2022: £24.5
million), further to a reversal of historic impairment charges recognised
against the carrying value of its investment in SIS totalling approximately
£1.9 million (2022: £23.4 million)
· Profit per share of 12.43p (2022: profit per share of 116.28p)
· Net asset value per share of 175p (2022: 168.9p)
· For its financial year to 31 March 2023, SIS achieved:
o Turnover of £230.7 million (2022: £218.3 million)
o Operating profit prior to litigation fees of £5.4 million (2022: £9.2
million)
o Profit after taxation prior to litigation fees of £4.9 million (2022:
£7.4 million)
· On 31 October 2023, the Company received its share of an ordinary
and special dividend paid by SIS being £6.16 million (2022: £0.69 million)
and on 21 November 2023 paid an interim dividend of approximately £5.68
million, equating to 27 pence per CMG ordinary share
SIS Current Trading and Outlook
SIS has started its new financial year well, and management continues to
pursue and win new business opportunities both in terms of content
acquisition, most recently securing new rights for Korean horseracing, and new
customers, with the most recent deals announced being Aardvark Technologies
Ltd and Altenar Technologies Ltd.
Following recent state approval SIS is anticipating the launch of its first
Fixed Odds Horseracing service in a US state in early 2024 with further
licence applications already in progress.
SIS has advised CMG that it expects to close its financial year to March 2024
with increased profit before tax year-on-year.
SIS's cash position as of 1 November 2023 was approximately £17 million,
following the payment of both a normal and special dividend to its
shareholders totalling £30 million.
Following the total dividend distribution, SIS secured an initial £35 million
banking facility to provide funds for working capital and to finance growth,
including acquisition financing, and the SIS Board continues to support the
company's long term business strategy. Such banking facility can be increased
to £50 million.
Availability of Annual Report & Financial Statements and Notice of Annual
General Meeting
A PDF copy of the Company's full Annual Report and Financial Statements for
its financial year ended 30 June 2023, together with the formal notice of
Annual General Meeting ("AGM") and form of proxy, will shortly be made
available to download from the Company's website at: www.cmg-plc.com
(http://www.cmg-plc.com) .
The AGM is to be held at 6 Stratton Street, London, W1J 8LD at 11.00 a.m. on
Wednesday, 16 January 2024.
Enquiries:
Catalyst Media Group plc
Michael Rosenberg, Non-executive Chairman Mob: 07785 727 595
Melvin Lawson, Non-executive Director Tel: 020 7734 8111
Strand Hanson Limited Tel: 020 7409 3494
James Harris
Matthew Chandler
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended by virtue of the Market
Abuse (Amendment) (EU Exit) Regulations 2019.
Key Extracts from the Company's audited Annual Report and Financial Statements
are set out below:
Chairman's Statement
The Board of Catalyst Media Group plc ("CMG" or the "Company") is pleased to
present the audited financial statements of CMG and its subsidiaries (the
"Group") for the year ended 30 June 2023. Such results incorporate the
Company's share of profits/losses for Sports Information Services (Holdings)
Ltd ("SIS") in which CMG has a 20.54% interest.
The main asset of CMG continues to be its 20.54% shareholding in SIS and, as
detailed further below, CMG equity accounts for its share in the
profits/losses of SIS.
After taking account of CMG's share in the profit of SIS for its year ended 31
March 2023 of £0.88 million (2022: £1.15 million), and a reversal of
historic impairment charges recognised against the carrying value of its
interest in SIS totalling £1.86m (2022: £23.39m), CMG recorded a profit
before taxation of £2.6 million (2022: £24.4 million). Net assets at the
year end were £36.8 million (175.0p per share) (2022: £35.5 million (168.9p
per share).
On 31 October 2023 the Company announced that SIS had recently declared and
paid an ordinary and special dividend totalling £30 million, of which CMG had
received its share being £6.16 million. On the same date, CMG declared an
interim dividend of 27p per share, amounting to £5.68 million, that was paid
to its shareholders on 21 November 2023.
During the year, the Board of CMG decided to appoint new auditors in place of
the previous auditors, Haysmacintyre LLP, and after reviewing various
alternative firms, Saffery LLP were duly appointed on 12 October 2023.
SIS - UK and Ireland Retail
SIS continues to provide its core service including Racecourse Media Group
horseracing, the SIS British Greyhound Service, Irish Horseracing, Chelmsford
City Horseracing, 49's and International Horseracing to almost the entire UK
and Irish retail market, including all the major UK bookmaking groups and the
majority of the independent market.
SIS supplies its retail services, production distribution and content, to all
the major retail brands on long term agreements.
In June 2023, SIS strengthened its long-term position by securing a five-year
renewal to the Horse Racing Ireland and Association of Irish Racecourses'
worldwide Fixed Odds rights.
SIS - International & Online
SIS has continued to expand its international reach both in terms of customers
and rights agreements. New racing rights have been secured for horseracing
from South Africa, Australia, Italy, Korea and Poland and a number of existing
international content agreements have been renewed.
SIS has over 150 live feeds to customers designed to maximise betting
opportunities for international retail and online operators and has
signed numerous international and online operators to multi-year agreements.
SIS continues to progress its strategy to increase distribution, in both new
and existing international and online markets, using proprietary production
technology as well as ultra-low latency streaming and data pricing services.
SIS has seen its new US subsidiary secure licences to supply elements of its
content in three states and has a number of other state applications in
progress and expects to go live with Fixed Odds horseracing in 2024.
As previously reported in November 2022, SIS executed its option to increase
its stake in Racelab Pty Limited, a racing data science and technology
company, based in Australia, from 25% to 50%.
SIS - Non-racing content
The SIS Competitive Gaming (e-sports) service, has seen customer growth in the
year and is now focussing on two sports related titles, e-football, and
e-basketball, following feedback from customers. It provides around 100,000
unique events per annum with plans underway to increase this number further.
The events are supplied to customers in a number of territories worldwide
including the three US states where SIS is currently licenced.
The 49's branded numbers business has seen expansion of its product offering
since acquisition in 2020 with its product range now including the original
49's draw, Fast 15's and 39's, plus upgraded virtual horseracing. In SIS's
financial year to 31 March 2023, it has also launched a bespoke draw product,
Lotto365, for bet365. Accordingly the business now produces over 500,000 draws
per annum.
SIS - Results
SIS's final result for its year ended 31 March 2023 was a profit before tax of
£6.6 million (2022: £7.0 million) reflecting additional non-recurring
investment in strategic initiatives during the year. SIS's cash balance on 31
March 2023 was approximately £47.4 million (2022: £62.8 million), a decrease
on the prior year due to increased investment in intangible assets relating to
rights agreements during the year. In late October 2023, SIS declared a total
dividend of £30 million (2022: £4.4 million) and CMG received its share of
such dividend on 31 October 2023. The consolidated results of Sports
Information Services (Holdings) Limited and its subsidiaries for its year
ended 31 March 2023 were as follows:
31 March 2023 31 March 2022
Before individually significant items* Individually significant Total Before individually significant items* Individually significant Total
Items* Items*
£'000 £'000 £'000 £'000 £'000 £'000
Turnover 230,748 - 230,748 218,349 - 218,349
Operating expenses (225,356) - (225,356) (209,290) (2,200) (211,490)
Other operating income - - - 105 - 105
Group operating profit / (loss) 5,392 - 5,392 9,164 (2,200) 6,964
Other interest receivable and similar income 1,344 - 1,344 275 - 275
Interest payable and similar expenses (165) - (165) (277) - (277)
Profit / (loss) before taxation 6,571 - 6,571 9,162 (2,200) 6,962
Tax on (profit) / loss (1,687) - (1,687) (1,762) 418 (1,344)
Profit / (loss) after taxation 4,884 - 4,884 7,400 (1,782) 5,618
Other comprehensive income (4,740) - (4,740) 330 - 330
Total comprehensive income 144 - 144 7,730 (1,782) 5,948
Note: * - Individually significant items relate to litigation fees.
Share of assets and liabilities of associate
31 March 2023 31 March 2022
Gross assets 130,349 126,605
Gross liabilities (72,723) (66,293)
Net assets 57,626 60,312
SIS - India
An arbitration award was made in July 2020 which the respondent has paid into
court. These funds are now subject to appeals in the Delhi High Court by both
parties: SIS continues to pursue claims disallowed by the arbitrators whilst
the respondent attempts to nullify the award in its entirety. The overall
outcome therefore remains uncertain.
The legal and associated costs relating to this claim have been significantly
reduced but are still impacting profits.
SIS - Current Trading and Outlook
SIS has started its new financial year well, and management continues to
pursue and win new business opportunities both in terms of content
acquisition, most recently securing new rights for Korean horseracing, and new
customers, with the most recent deals announced being Aardvark Technologies
Ltd and Altenar Technologies Ltd.
Following recent state approval SIS is anticipating the launch of its first
Fixed Odds Horseracing service in a US state in early 2024 with further
licence applications already in progress.
SIS has advised CMG that it expects to close its financial year to March 2024
with increased profit before tax year-on-year.
SIS's cash position as of 1 November 2023 was approximately £17 million,
following the payment of both a normal and special dividend to its
shareholders totalling £30 million.
Following the total dividend distribution, SIS secured an initial £35 million
banking facility to provide funds for working capital and to finance growth,
including acquisition financing, and the SIS Board continue to support the
company's long term business strategy. Such banking facility can be increased
to £50 million.
CMG's outlook and Annual General Meeting
The Directors consider that the most appropriate treatment for the Group's
investment in its associate, SIS, as at 30 June 2023 is to reverse historic
impairments recognised against the carrying value of the investment totalling
£1.86 million (2022: £23.39 million) to increase its value at 30 June 2023
to £36.61 million (2022: £35.43 million).
The Directors consider that at 30 June 2023 there were significant indicators
that a material reversal of previously recognised impairments should be
recorded. Following the resolution of The Racing Partnership ("TRP")
litigation during the previous financial period and based on the return to
profitability of SIS, the extension of core RMG horseracing rights, and the
optimism around the prospects for future trade, the Directors expect the
performance of SIS to continue to strengthen in future financial periods and
consider that valuation methodologies such as the comparable company model,
and discounted cashflow analysis are sufficiently reliable to report a revised
carrying value for the investment.
The directors have chosen to use the comparable company methodology using an
appropriate EBITDA multiple to assess the recoverable value of the investment
and to determine the value of previously recognised impairment to be reversed,
as disclosed above. The Directors consider the comparable company valuation
methodology to be more appropriate than other methods.
For further details in respect of the judgments and estimation techniques used
by the Directors in their assessment, please refer to notes 1 and 2 to the
financial statements.
While there can be no certainty of the potential realisation value of this
asset, it is the reasonable belief and judgement of the Directors based,
inter alia, on extensive discussions with SIS's management and a review of its
strategic plans and current and forecast trading, that it is appropriate to
reverse previous impairments to the carrying value of the asset.
As stated above, SIS anticipates achieving increased profit before tax in
respect of its current financial year compared with last year and is on course
to expand its interests in the USA and elsewhere. Following the recent receipt
of the ordinary and special dividend from SIS and payment to CMG shareholders
of a 27p per share interim dividend the Company has sufficient working capital
for its foreseeable future needs and continues to operate with minimal
overheads.
The next Annual General Meeting of CMG will take place on Tuesday, 16 January
2024. Formal notice of the meeting is set out at the end of the annual
report and accounts together with a form of proxy.
Michael Rosenberg, OBE
Chairman
19 December 2023
Strategic Report
The Directors present their strategic report for the year ended 30 June 2023.
Principal activities and review of the business
The principal activities of the business are outlined in the Chairman's
Statement. A review of the business is also included within the Chairman's
Statement.
Principal risks and uncertainties
Investment in SIS
The principal strategic investment of the Group is its 20.54% shareholding in
SIS. The Group is entitled to appoint one director to the board of SIS which
currently comprises ten 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 the 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. At a technical level this includes 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. SIS has therefore adopted advanced disaster recovery solutions and has
built back up facilities which are located around the UK.
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 approximately 175 pence as at
30 June 2023 (2022: 169 pence). The net asset value of the Group as at 30 June
2023 and 30 June 2022 is shown in the Group's consolidated statement of
financial position.
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 ordinary shares in issue for the financial year concerned and the
profit/(loss) after taxation attributable to ordinary shareholders. EPS in
respect of operations for the year and the prior financial year is shown in
the Group consolidated statement of comprehensive income.
Key Performance Indicators of Associate
The Directors additionally monitor the performance of SIS in order to evaluate
the general performance of the Group. The Directors consider that group
turnover, group operating profit percentage before individually significant
items, net cashflow from operating profits and average number of employees are
of most significance in evaluating the performance of the Group. The 2023
financial results of SIS are disclosed in the Chairman's Statement.
s172 Statement
CMG's directors are mindful of their responsibilities under section 172 of the
Companies Act 2006 to promote the success of the business through operating in
accordance with good corporate practice and with considered engagement with
the Group's stakeholders. Several of the Group's major shareholders are also
directors of the Group, as referenced in the Directors' Report, and are
therefore actively involved in all key decision-making. Please see the
Corporate Governance Statement for further details of engagement with
stakeholders.
The board of directors regularly review and identify other principal
stakeholders of the business, and decisions in respect of the Group's
activities are made only after reviewing, and discussing, the potential impact
on such stakeholders. Furthermore, in terms of engagement with the Group's
suppliers, the directors continue to actively monitor ethical standards and
environmental issues to ensure that the wider business is compliant with
global standards.
Michael Rosenberg, OBE
Chairman
19 December 2023
Consolidated statement of comprehensive income for the year ended 30 June 2023
Year Year
ended ended
30 June 30 June
2023 2022
£ £
Revenue 25,000 25,000
Administrative expenses (179,447) (137,859)
Operating loss (154,447) (112,859)
Financial income 2,243 36
Financial costs - -
Net financial income 2,243 36
Share of profit of equity-accounted associate, net of tax 880,174 1,153,937
Reversal of impairment of equity-accounted associate 1,856,276 23,391,701
Profit before taxation 2,584,246 24,432,815
Taxation 30,300 23,957
Profit for the year 2,614,546 24,456,772
Share of other comprehensive (loss)/profit of associate (651,323) 67,782
Total comprehensive profit for the year 1,963,223 24,524,554
Attributable to equity holders of the Company 1,963,223 24,524,554
Profit per share:
Basic 12.43p 116.28p
Diluted 12.43p 116.28p
The above Consolidated Statement of Comprehensive Income should be read in
conjunction with the accompanying notes in the Company's full Annual Report
and Financial Statements.
Consolidated statement of financial position as at 30 June 2023
30 June 30 June
2023 2022
£ £
Assets
Non-current assets
Investment in associate 36,611,584 35,430,000
36,611,584 35,430,000
Current assets
Trade and other receivables 78,668 56,953
Cash and cash equivalents 174,364 93,011
253,032 149,964
Total assets 36,864,616 35,579,964
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 31,579,260 30,310,114
Total equity 36,796,253 35,527,107
Current liabilities
Trade and other payables 68,363 52,857
Total equity and liabilities 36,864,616 35,579,964
The above Consolidated Statement of Financial Position should be read in
conjunction with the accompanying notes in the Company's full Annual Report
and Financial Statements.
Consolidated statement of changes in equity for the year ended 30 June 2023
Attributable to equity holders of the Group
30 June 2023 Share Capital Merger Retained Total
Capital Redemption Reserve Reserve Profits Shareholders
Equity
£ £ £ £ £
At 1 July 2022 2,103,202 711,117 2,402,674 30,310,114 35,527,107
Profit for the year - - - 2,614,546 2,614,546
Other comprehensive income:
Share of other comprehensive loss of associate - - - (651,323) (651,323)
Total comprehensive profit for the period - - - 1,963,223 1,963,223
Dividends paid - - - (694,077) (694,077)
At 30 June 2023 2,103,202 711,117 2,402,674 31,579,260 36,796,253
The following describes the nature and purpose of each reserve within owners'
equity:
Share capital Amount subscribed for shares at nominal value.
Share premium Amount subscribed for share capital in excess of nominal value.
Capital redemption reserve Amounts arising from the purchase by the group of its own shares.
Merger reserve Amounts arising from the merger of subsidiary investments.
Retained profits Cumulative profit of the Group attributable to equity shareholders.
Attributable to equity holders of the Group
30 June 2022 Share Capital Merger Retained Total
Capital Redemption Reserve Reserve Profits Shareholders
Equity
£ £ £ £ £
At 1 July 2021 2,103,202 711,117 2,402,674 5,785,560 11,002,553
Profit for the year 2022 - - - 24,456,772 24,456,772
Other comprehensive income
Share of other comprehensive profit of associate - - - 67,782 67,782
Total comprehensive profit for the period - - - 24,524,554 24,524,554
At 30 June 2022 2,103,202 711,117 2,402,674 30,310,114 35,527,107
Consolidated statement of cash flows for the year ended 30 June 2023
Year ended Year ended
30 June 30 June
2023 2022
£ £
Cash flow from operating activities
Profit before taxation 2,584,246 24,432,815
Adjustments for:
Share of (profit) from associate (880,174) (1,153,937)
(Reversal of impairment) of investment in associate (1,856,276) (23,391,701)
Finance income (2,243) (36)
Corporation taxes recovered 17,904 -
Net cash flow used in operating activities before changes in working capital (136,543) (112,859)
(Increase) / decrease in trade and other receivables (9,318) 24,316
Increase in trade and other payables 15,505 13,688
Net cash flow used in operating activities (130,356) (74,855)
Investing activities
Dividend received 903,543 -
Interest received 2,243 36
Net cash flow from investing activities 905,786 36
Financing activities
Dividends paid (694,077) -
Net cash flow used in financing activities (694,077) -
Net decrease in cash and cash equivalents in the year 81,353 (74,819)
Cash and cash equivalents at the beginning of the year 93,011 167,830
Cash and cash equivalents at the end of the year 174,364 93,011
The above Consolidated Statement of Cash Flows should be read in conjunction
with the accompanying notes in the Company's full Annual Report and Financial
Statements.
Notes to the consolidated financial information
1. Basis of preparation and significant accounting policies
The consolidated financial information set out above does not constitute the
Group's financial statements for the years ended 30 June 2023 or 30 June 2022
but is derived from those financial statements. Statutory financial statements
for 2022 have been delivered to the Registrar of Companies and those for 2023
have been approved by the board and will be delivered in due course. The
auditors have reported on the 2023 and 2022 financial statements which carried
unqualified audit reports and did not contain a statement under section 498(2)
or 498(3) of the Companies Act 2006. The 2022 financial statements included
reference to a matter to which the auditors drew attention by way of emphasis,
namely the reversal of previously recognised impairment charges against the
carrying value of the Group's investment in an associate (Sports Information
Services (Holdings) Limited). Notes 1 and 2 of the full Annual Report and
Financial Statements disclose judgements applied by the Directors in
determining the appropriate carrying value of the investment, the basis on
which the value was determined and that there is estimation uncertainty
concerning the use of Level 2 and Level 3 inputs in making this assessment.
The auditor's opinion was not modified in respect of such matter. The 2023
financial statements did not include a reference to any matters to which the
auditor drew attention by way of emphasis.
While the financial information included in this announcement has been
compiled in accordance with, inter alia, International Financial Reporting
Standards (IFRS), this announcement does not in itself contain sufficient
information to comply with IFRS. The accounting policies used in the
preparation of this announcement are consistent with those in the full
financial statements including those applicable to SIS, given its materiality
to the Group as a whole.
CMG is an AIM quoted public limited company registered in England and Wales
where it is domiciled for tax purposes. Its financial statements are prepared
under the historical cost convention.
Going concern
The Directors can report that based on the Group's budgets and financial
projections, they have satisfied themselves that the business is a going
concern covering a period of at least twelve months from the date of approval
of the financial statements. In assessing the Group as a going concern, the
directors are also mindful of the business of SIS that provides the entire
value of the Group. The directors are satisfied that SIS is a going concern.
The Board has a reasonable expectation that the Company and its Group have
adequate resources and facilities to continue in operational existence for the
foreseeable future and the accounts are accordingly prepared on a going
concern basis.
2. Investment in associate
Year Ended 30 June 2023 Group
£
Cost
At 1 July 2022 35,430,000
Share of profit - 2023 880,174
Share of other comprehensive income - 2023 (651,323)
Dividend received - 2023 (903,543)
Reversal of impairment of equity-accounted associate 1,856,276
At 30 June 2023 36,611,584
Year Ended 30 June 2022 Group
£
Cost
At 1 July 2021 10,816,580
Share of profit - 2022 1,153,937
Share of other comprehensive income - 2022 67,782
Dividend received - 2022 -
Reversal of impairment of equity-accounted associate 23,391,701
At 30 June 2022 35,430,000
The Group's interest in its 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 forecasts 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 growing level of future profits at a steady rate over a period
of five years. CMG's management have made reference to SIS's most recently
reported EBITDA, with adjustments made for exceptional and non-recurring
items, while also considering the sustainability of its financial performance.
During the prior year the Directors of CMG believed that as at 30 June 2022
there were significant impairment reversal indicators, including the expected
future growth of SIS, the extension of core RMG horseracing rights, and the
optimism around the prospects for future trade. The directors therefore
believed that an enterprise method of valuation of CMG's investment in SIS was
an appropriate methodology to follow. In the current year, the directors have
identified an adjusted EBITDA figure for SIS for the twelve month period to 30
June 2023 which excluded the impact of certain non-recurring and non-trade
items. An appropriate EBITDA multiple was obtained through comparisons of
multiples used by businesses in comparable sectors. An average of the mean and
median multiples was used. An illiquidity discount of 20% was then applied to
the valuation in the midpoint of the range of illiquidity discounts identified
by the Directors for unlisted businesses.
After applying the methodology described above, the Directors concluded that
the carrying value of the investment in SIS should be £36.61m (2022:
£35.43m) and have therefore reversed historic impairments recorded against
the value of the investment in previous years totalling £1.86m (£23.39m).
The Directors consider that the value at 30 June 2023 is appropriate based on
the strategic plans of SIS.
Share of profit of associate
2023 2023 2022
CMG share CMG share
SIS Total
£'000 £'000
£'000
Revenue 230,748 47,396 44,849
Operating profit / (loss) before individually significant items
5,392 1,108 1,882
Group's share of loss in associate (163) (33) (56)
Net interest receivable 1,342 275 56
Individually significant items
- - (452)
Profit / (loss) before tax 6,571 1,350 1,430
Taxation (1,687) (347) (276)
Share of profit / (loss) after taxation 4,884 1,003 1,154
Net income from associate under 4,884 1,003 1,154
IFRS 9 expected credit loss provision (598) (123) -
Adjusted net income from associate 4,286 880 -
Other comprehensive income:
Actuarial (loss) / gain (7,292) (1,498) 104
Deferred tax 2,552 524 (36)
Acquisition of a subsidiary and revaluation loss 1,569 322 -
Total other comprehensive income (3,171) (652) 68
Share of assets and liabilities of associate
Gross assets 130,349 26,774 26,005
Gross liabilities (72,723) (14,938) (13,617)
Share of Net Asset Value 57,626 11,836 12,388
SIS prepares financial statements in accordance with FRS 102, whereas CMG
prepares financial statements in accordance with IFRS. The directors have
reviewed the potential differences of accounting treatment under the
respective frameworks and have made an adjustment to reflect an expected
credit loss provision of £123,000 under IFRS 9, and to recognise adjusted net
income from its associate of £0.88m. Following the review, the directors have
concluded that there are no other material differences of accounting treatment
in the application of FRS 102 and IFRS on SIS's results for the year.
During the year, SIS's defined benefit pension scheme assets were revalued on
buy-in of a bulk annuity resulting in the recognition of a net revaluation
loss of £4.74m. Also during the year SIS increased its shareholding in
Racelab Pty Limited from 25% to 50%, resulting in a change in accounting
treatment from an investment in associate to a subsidiary and an impact on
equity of £1.576m. Both of these items are non-recurring in nature.
An arbitration award was made in July 2020 which the respondent has paid into
court. These funds are now subject to appeals in the Delhi High Court by both
parties: SIS continues to pursue claims disallowed by the arbitrators whilst
the respondent attempts to nullify the award in its entirety. The overall
outcome therefore remains uncertain. The legal and associated costs relating
to this claim have been significantly reduced but are still impacting profits.
3. Post balance sheet events
On 31 October 2023, the Company announced that SIS had recently declared and
paid an ordinary and special dividend totalling £30 million of which CMG had
received its share of £6.16 million. On the same date, CMG declared an
interim dividend of 27p per share, amounting to approximately £5.7 million,
that was paid on 21 November 2023.
See note 2 of the full Annual Report and Financial Statements for a
description of the impact of the post balance sheet events as they relate to
SIS's reporting date (31 March 2023) on the Group's valuation of its
investment in associate as at 30 June 2023.
- ENDS -
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