REG - Catalyst Media Group - Final Results for the year ended 30th June 2016 <Origin Href="QuoteRef">CMX.L</Origin>

Catalyst MediaAnnouncement

13/12/2016 07:06

RNS Number : 6321R
Catalyst Media Group PLC
13 December 2016
Catalyst Media Group plc
("CMG" or the "Company")
Final Results for the year ended 30th June 2016
The Board of Catalyst Media Group is pleased to announce the final results for the Company for the year ended 30 June 2016. CMG is a 20.54% shareholder of Satellite Information Services (Holdings) Ltd ("SIS") and the results for the year to 30 June 2016 incorporate its share of the profits of SIS for its year ended 31 March 2016.
Financial overview
 CMG loss before taxation 0.06 million (2015: 1.5 million profit)
 Loss per share 0.18p per share (2015: 5.82p (restated) earning per share)
 - Earnings per share before impairment 12.17p per share (2015: 16.84p earning per share)
 Net Asset value per share 98.1p (2015: 98.4p)
 SIS Revenues for year ended 31 March 2016 227.9 million (2015: 229.0 million)
 SIStotal operating profit: group and share of joint venture and associates 20.4 million (2015: 25.9 million)
 SIS profits after tax and exceptional items 16.6 million (2015: 21.4 million)
 SIS net cash inflow from operating activities 48.0 million (2015: 37.8 million)
 SIS declared a dividend of 20.0 million in July 2016, 4.1 million received by CMG
 Following receipt of the SIS dividend, the Company purchased, in aggregate, 3,379,327 ordinary shares in the market at a total cost of 2,514,495
Enquiries:
Catalyst Media Group:

Michael Rosenberg
Non-executive Chairman
+44 (0)7785 727 595
Melvin Lawson
Non-executive Director
+44 (0)20 7734 8111


Strand Hanson Limited:
+44 (0)20 7409 3494
James Harris
Richard Tulloch

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 2016, which incorporates our share of profits for Satellite Information Services (Holdings) Ltd (SIS) in which CMG has a 20.54% interest.
After taking account of CMG's share in the profits of SIS for its year ended 31 March 2016 of 3.4 million (2015 - Restated: 4.4 million), CMG recorded a loss before taxation of 0.06 million, following an impairment charge of 3.0 million and a transitional adjustment of 0.4 million (2015 - Restated: profit of 1.5 million following a 2.8 million impairment charge). Net Assets at the year end were 24.9 million (98.1p per share) (2015 - Restated: 25.0 million (98.4p per share)). 
The main asset of CMG continues to be the 20.54% shareholding in SIS. CMG equity accounts for its share in the profits of SIS. For the year ended 31 March 2016, SIS had revenues of 227.9 million (2015: 229.0 million) of which 209.3 million was derived from Betting Services (2015: 207.3 million) and 18.6 million from SIS LIVE Services (2015: 21.7 million). The total operating profit for SIS was 20.4 million (2015: 25.9 million). Profits after exceptional items and taxation were 16.6 million (2015: 21.4 million). The share attributable to CMG after tax was 3.4 million (2015: 4.4 million). SIS's Net Cash inflow for the period was 48.0 million (2015: 37.8 million) from operating activities. At the year end, SIS had a substantially increased cash position of 62.2m (2015: 21.9m) prior to the payment of the dividend referred to below. SIS's operating profit margin(1) decreased slightly to 8.9% compared to 11.1% (restated) for the previous year.
(1) SIS's operating profit margin is the ratio of SIS's operating profit (total operating profit before exceptional items and share of associate and joint venture) to revenues expressed as a percentage.
Review of CMG's investment in SIS
As reported in the Company's trading update announced on 14 October 2016, the profits were below the prior year due to a reduction in the subscriber base during the year, the impact of which was partially offset by an increase in charges to subscribers, combining with increased costs arising from media rights, additional content and inflationary factors.
In the light of the strong cash position of SIS, the progress it has made in signing new media rights and the continued positive cash flow generation from its operations SIS approved a dividend of 20.0 million in July 2016. CMG received its share of 4.1 million on 29 July 2016.
SIS Betting Retail
As previously reported various racing media rights acquired from Arena Racing and Northern Racing expire at the end of 2016 and 2017. However, following the agreement with Racecourse Media Group ("RMG") the main media and data rights relating to horse racing have now been extended from 2018 to 2023. Given the reduction in margins from 2018 when the new contracts come into effect, SIS has been pursuing growth initiatives to widen its product offering to enhance the profitability of the Company, in particular in the digital streaming sector and online gaming as detailed below under SIS BETTING DIGITAL.
Horse racing Ireland ("HRI") granted a five year extension to the end of 2023 in respect of the contract for distribution of data and live pictures to Licensed Betting Offices in the UK, Ireland and internationally. Also from 2017, SIS has the sole and exclusive right to stream Irish horse racing to online operators worldwide and to distribute direct to home pictures and will be working with At The Races, the current rights holder, to exploit these rights for an initial period.
SIS has signed up additional rights for greyhound tracks and is progressing to secure further rights in this area both on a UK and international basis.
SIS BETTING DIGITAL
The strategy to diversify into B2B supply in the digital sector is continuing with products launched around streaming, mobile games, pricing data and in play data. This has involved direct investments of approximately 8.0 million as at March 2016 and SIS continues to invest in developing current and new initiatives in this area.
SIS has recently been shortlisted for a main industry award for its digital product SIS Stream TV which can deliver content anywhere in the world and gives bookmakers the ability to customise what content is displayed to their customers on any platform.
A major new development is a SIS initiative to bring in-running betting on horseracing to its customers. This consists of a low cost transmitter, the size of a smart phone, which can be inserted into the saddle cloth and carried on the horse. It can relay the racing line and speed of the horse and can highlight where it is running at a different speed to the main pack. This provides real-time data feed of the position of every horse in a race which, when combined with continuously varying odds produced by SIS' automated pricing capability creates a new betting product for SIS customers. This is expected to be launched in 2017 and will provide additional new revenue opportunities for SIS, particularly in the online sector.
SIS LIVE
SIS LIVE continues to offer specialised broadcast solutions including HD, UHD, satellite uplinks, streaming, satellite internet and teleport together with fibre services. SIS LIVE continues to focus on transitioning from a solely satellite business to a mixed satellite and fibre business and now has 65 fibre connections across the UK and Ireland and expects this to increase to 100 by mid 2017.
SIS LIVE has signed an agreement with the media services arm of Babcock International Group to supply Direct To Home ("DTH") services using SIS's UK teleports for uplinking and satellite facilities provided by SIS for distribution of several television channels to households served by the SKY platform. SIS expects to provide further DTH services in the future.
The trend of news broadcasters to move away from Satellite News Gathering ("SNG") towards using IP technology and 4G mobile technology has continued and this has seen a decrease in demand from SIS LIVE customers for SNG trucks, with the fleet size expected to reduce to 18 trucks by 2017.
Following a review of the SIS LIVE business and in line with the move away from SNG, the decision has been made to exit the Satellite Hardware division, which has historically provided the satellite technology for the SNG trucks as well as selling technology to other businesses. The proposed sale of the business has brought interest from a number of parties and negotiations for the sale of this division are on-going.
SIS Results
The results of SIS for the year ended 31 March 2016 are as follows:

31 March 2016
31 March 2015

'000
'000


Restated*



Revenue
227,930
229,035



Operating expenses
(207,534)
(203,612)



Operating profit before exceptional items
20,396
25,493
Exceptional items
-
(70)
Operating profit
Share of operating profit/(loss) of joint venture:
- joint venture
- associate 
20,396
(36)
-
25,423
442
-
Total operating profit
Profit / (Loss) on the managed wind down of business+
Profit on disposal of joint venture
Profit on disposal of associate
Profit on disposal of tangible assets
20,360
(490)
642
-
317
25,865
1,064
-
40
5
Net interest receivable / (payable)
458
(562)



Profit on ordinary activities before tax
21,287
26,412



Tax on profit on ordinary activities
(4,686)
(4,990)



Retained profit transferred to reserves
16,601
21,422 
* The prior year figures within the financial statements of SIS have been restated following the transition to reporting under FRS 102.The restatement relates primarily to the reclassification between interest payable and remeasurements of net defined benefit obligation. The impact on the retained profit transferred to reserves was only an increase of 22,000.
+ Profit/(Loss) on the managed wind down of business relates to the closure of SIS's Outside Broadcast Division in 2014.
India
As reported the claim in respect of the Indian project continues to be pursued but the outcome remains uncertain.
Share buy back programme
CMG received the sum of 4.1 million in July 2016 being its share of the SIS dividend of 20.0 million. Given the strong cash position of SIS it is possible that further dividends may be received in the future but no decisions have been made by SIS with regard to this. As already reported CMG undertook a share buy back programme in accordance with the authority granted at the last AGM. A total of 400,000 shares have been purchased at a price of 70p per share and a total of 2,979,327 shares have been purchased at a price of 75p per share out of the total authorised to be purchased of 3,411,704. The shares so purchased have been cancelled and following that process the Company's issued share capital is now 21,032,030 shares.
It is the intention to propose a renewal of the authority for the Company to purchase further shares at the AGM referred to below.
Outlook
Current trading of SIS is in line with SIS's management's expectations for this year but from 2017 onwards profitability will begin to decline as the margins from betting activities reflect the new arrangements. Cash generation for SIS for 2017, excluding dividends, will remain ahead of EBIT due to amortised rights. CMG overheads continue at a very low level.
AGM
The next Annual General Meeting of the Company will be held on 13 January 2017at 10.00 a.m. 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
Consolidated statement of comprehensive income for the year ended 30 June 2016
Restated
 Year
 ended
 Year
 ended
30 June
30 June
2016
2015














Revenue

25,000
25,000






Cost of sales

-
-






Gross profit

25,000
25,000






Administrative expenses

(112,036)
(119,991)








Operating loss

(87,036)
(94,991)




Financial income

7
1,012
Financial costs

(186)
160

Net financial income

(179)
1,172






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

3,409,845
4,400,080

Impairment of equity-accounted associate

(3,014,622)
(2,832,788)

Transitional adjustment relating to equity-accounted associate

(368,521)







(Loss) / Profit before taxation

(60,513)
1,473,473






Taxation

16,543
22,866






(Loss) / Profit for the year 

(43,970)
1,496,339






Share of other comprehensive loss of associate

(26,702)
(540,407)






Total comprehensive (loss) / profit

(70,672)
955,932






Attributable to equity holders of the Company

(70,672)
955,932






(Loss) / Earnings per share:









Basic

(0.18p)
5.82p






Diluted 

(0.18p)
5.82p






Before impairment

12.17p
16.84p
Consolidated statement of financial position as at 30 June 2016


30 June
2016
Restated
30 June
2015
Assets



Non-current assets



Investment in associate

25,000,000
25,000,000






25,000,000
25,000,000




Current assets



Trade and other receivables

34,173
30,660
Cash and cash equivalents

633
16,969






34,806
47,629




Total assets

25,034,806
25,047,629




Equity and liabilities







Capital and reserves attributable to equity holders of the parent



Share capital

2,541,136
2,541,136
Capital redemption reserve

273,183
273,183
Merger reserve

2,402,674
2,402,674
Retained profits

19,718,022
19,788,694




Total equity

24,935,015
25,005,687




Current liabilities



Trade and other payables

96,423
40,480
Corporation tax payable

3,368
1,462


99,791
41,942




Total equity and liabilities

25,034,806
25,047,629












The financial statements were approved by the Board of Directors and authorised for issue on 12 December 2016.
Michael Rosenberg OBE
Director
Company registration number: 03955206
Consolidated statement of cash flows for the year ended 30 June 2016



Restated

Year ended
30 June
2016
Year ended
30 June
2015








Cash flow from operating activities



Profit / (loss) before taxation

(60,513)
1,473,473
Adjustments for:



Share of profit from associate

(3,409,845)
(4,400,080)
Impairment of associate

3,014,622
2,832,788
Transitional adjustment

368,521

Finance income

(7)
(1,012)
Finance expense

186
(160)
Corporation taxes recovered

18,449
14,962




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

(68,587)
(80,029)
Decrease / (increase) in trade and other receivables

(3,513)
439
Increase / (decrease) in trade and other payables 

55,943
9,080




Net cash flow used in operating activities 

(16,157)
(70,510)




Investing activities



Dividend received

-
1,026,884
Interest received

7
1,012




Net cash flow from investing activities

7
1,027,896




Financing activities



Shares purchased into Treasury

-
(1,478,993)
Interest paid

(186)
160




Net cash flow used in financing activities

(186)
(1,478,833)




Net decrease in cash and cash equivalents in the year 

(16,336)
(521,447)
Cash and cash equivalents at the beginning of the year 

16,969
538,416




Cash and cash equivalents at the end of the year

633
16,969




Notes
1 Investment in associate
Year Ended 30 June 2016

Share of net assets
Fair Value of Intangibles
Total


Group
Group
Group


At 1 July 2015 - Restated

16,553,835
8,446,165
25,000,000
Transitional adjustment

(368,521)
-
(368,521)
Share of profit - 2016

3,409,845
-
3,409,845
Share of other comprehensive loss - 2016

(26,702)
-
(26,702)
Dividend received - 2016

-
-
-
Impairment - 2016

-
(3,014,622)
(3,014,622)
At 30 June 2016 - CMG share of SIS net assets

19,568,457
5,431,543
25,000,000





Year Ended 30 June 2015 - restated

Share of net assets
Fair Value of Intangibles
Total


Group
Group
Group


Cost




At 1 July 2014 - as previously stated

13,786,363
11,213,637
25,000,000
Prior year adjustment

(65,316)
65,316
-
Share of profit - 2015 Restated

4,400,080
-
4,400,080
Share of other comprehensive loss - 2015 restated

(540,407)
-
(489,407)
Dividend received - 2015

(1,026,885)
-
(1,026,885)
Impairment - 2015 Restated

-
(2,832,788)
(2,836,073)
At 30 June 2015 - CMG share of SIS net assets

16,553,835
8,446,165
25,000,000





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 through to 2020/2021 of the income statement, statement of financial position and statements of cash flow. The assumptions made by management were also provided.
It is expected that the net operating profits of SIS would significantly fall to a much lower level due to the change in margins arising from media rights ownership.
This fall would be partially offset by new initiatives in creating additional revenue streams from new digital content and new streaming platforms.
After reviewing the forecasts and other factors, the Directors concluded that the carrying value of the investment should continue at 25 million.
1 Investment in associate (continued)
Transitional adjustment
The prior year figures within the financial statements of SIS were restated following the transition to reporting under FRS 102. 
The transitional adjustment represents CMG's share of the restatements in the SIS accounts relating specifically to the defined benefit pension plan, derivative financial instruments and deferred tax, less any estimates CMG had made in its accounts in relation to these figures which were historically required for CMG's accounts to be correctly stated under IFRS and are no longer required as the SIS accounts are now prepared under FRS 102.
Following the restatements in the SIS accounts, there has been a decrease of 3k to the overall share of profit of associate stated for 2015 and a decrease of 3k to the impairment charge stated for 2015. There has therefore been no impact on the value of CMG's investment which remained at 25,000,000. There was also no impact on the net assets of CMG as at 30 June 2015.
Share of profit of associate
2016
SIS Total
'000
2016
CMG share
'000
2015
Restated
CMG share
'000
Revenue:



SIS Betting Services
209,284
42,987
42,591
SIS LIVE Services
18,646
3,830
4,453
Total revenue
227,930
46,817
47,044




Operating profit 
20,360
4,182
5,313








Net interest receivable / (payable)
458
94
(115)
(Losses) / profits on business wind down
(490)
(101)
218
Profit on disposal of joint venture
642
132
-
Profit on disposal of associate
-
-
8
Profit on disposal of fixed asset
317
65
1
Profit before tax
21,287
4,372
5,425
Taxation
(4,686)
(962)
(1,025)
Share of profit after taxation
16,601
3,410
4,400
Net income from associate
16,601
3,410
4,400




Other comprehensive income:



Actuarial loss
(1,500)
(308)
(616)
Deferred tax
33
7
134
Change in value of hedging instrument
1,337
274
(58)

(130)
(27)
(540)
Share of net assets and liabilities of associate



Net assets 
159,128
32,685
30,074
Net liabilities 
(63,858)
(13,117)
(13,520)
Net equity
95,270
19,568
16,554
2 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. 
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.
3 Annual Report
The Annual Report for the year ended 30 June 2016 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 10.00 a.m. on 13 January 2017.
 

This information is provided by RNS
The company news service from the London Stock Exchange
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