REG - Catalyst Media Group - Final Results, Notice of AGM and Proposed Dividend
12/12/2024 17:00
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RNS Number : 9254P Catalyst Media Group PLC 12 December 2024
12 December 2024
Catalyst Media Group Plc
("CMG", the "Company" or the "Group")
Final Results for the Year Ended 30 June 2024,
Notice of Annual General Meeting and Declaration of Dividend
The Board of CMG (AIM: CMX) is pleased to announce the Company's final results
for its financial year ended 30 June 2024 including details of a proposed
final dividend.
CMG is a 20.54% shareholder in Sports Information Services (Holdings) Limited
("SIS") and the results for the year to 30 June 2024 incorporate its share in
the profits/losses of SIS for its financial year ended 31 March 2024, as an
equity-accounted associate.
Highlights:
· CMG profit after taxation of £283k (2023: £2.6 million, further
to a reversal of historic impairment charges recognised against the carrying
value of its investment in SIS totalling approximately £1.9 million)
· Profit per share of 1.35p (2023: 12.43p)
· Net asset value per share of 149p (2023: 175p)
· For its financial year to 31 March 2024, SIS achieved:
· Turnover of £234.1 million (2023: £230.7 million)
· Operating profit of £3.5 million (2023: £5.4 million)
· Profit after taxation of £1.9 million (2023: £4.9 million)
· On 31 October 2023, the Company received its share of an ordinary
and special dividend paid by SIS being £6.16 million and on 21 November 2023
paid an interim dividend of approximately £5.68 million, equating to 27 pence
per CMG ordinary share
· On 31 October 2024, the Company received its share of a further
dividend paid by SIS amounting to £0.63 million. Accordingly, the Board of
CMG has resolved to declare a final dividend of approximately £0.84 million,
equating to 4 pence per CMG ordinary share, subject to shareholder approval at
the Company's forthcoming Annual General Meeting ("AGM")
SIS Current Trading and Outlook
Management is continuing to invest in scaling its content creation business
with a focus on an increased volume of matches and the securing of additional
customers in addition to the continued expansion of its racing business both
through direct deals and distributors. Progress in the US remains strong and
SIS Content Services Inc. continues to apply for regulatory licences in states
on top of the 10 already secured which will serve to fuel growth of the
existing Competitive Gaming business in the US.
SIS has advised CMG that following changes to its Greyhound rights and, in
particular, with the cessation of Greyhound Television in April 2024 together
with its ongoing investment in the scaling of its content creation business,
its financial year to 31 March 2025 will see a decline in profitability year
on year although the absolute outturn remains difficult to predict as new
customers such as FanDuel scale up their use of the product in new markets.
SIS's cash position as of 31 October 2024 was approximately £5.2 million,
following the payment of an ordinary dividend to its shareholders totalling
£3.1 million.
Availability of Annual Report & Financial Statements and Notice of AGM
A PDF copy of the Company's full Annual Report and Financial Statements for
its financial year ended 30 June 2024, together with the formal notice of 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
Friday, 17 January 2025.
Dividend Declaration
Further to the Company's announcement of 31 October 2024 regarding the payment
of a dividend of £3,078,732 by SIS (the "SIS Dividend") of which the Company
received £632,275, the Board of CMG has resolved, subject to shareholder
approval at the Company's forthcoming AGM, to pay a final dividend of
approximately £0.84 million, equating to 4p per CMG ordinary share on 31
January 2025, to shareholders on the Company's register at 17 January 2025.
The ex-dividend date will therefore be 16 January 2025.
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:
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 2024. 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 2024 of £0.39 million (2023: £0.88 million), and a reversal of
historic impairment charges recognised against the carrying value of its
interest in SIS totalling £nil (2023: £1.86m), CMG recorded a profit before
taxation of £0.25 million (2023: £2.58 million). Net assets at the year end
were £31.4 million (149.3p per share) (2023: £36.8 million (175.0p 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. In late October 2024 SIS declared a
dividend of £3.1 million and CMG received its share of such dividend on 31
October 2024 amounting to £0.63 million. Accordingly, the Board of CMG has
resolved to declare a final dividend of 4p per share, amounting to £0.84
million, subject to shareholder approval at the Company's forthcoming Annual
General Meeting. Further details of the record and payment dates are provided
in the outlook section below.
SIS - UK and Ireland Retail
SIS continues to provide its core offering including Racecourse Media Group
horseracing, 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. At the start of 2024, the SIS Greyhound Service was
restructured, with a reduction in the volume of meetings, following changes to
both the track rights and some customer contracts both from a retail and
online perspective.
SIS supplies its retail services, production distribution and content, to the
major retail brands on recently renewed long term agreements.
Rights deals are typically for between three to five-year terms, and, 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's management continues to work on securing rights
renewals as they fall due.
SIS - International & Online
SIS continues to expand its international racing operations both through
acquisition and renewal of rights, which has recently included new rights
deals in Selangor (Malaysia) and Taif (Saudi Arabia). It is also expanding its
customer base geographically with over 150 live feeds to customers designed to
maximise betting opportunities for international retail and online operators
with 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.
In February 2024, SIS Content Servies Inc, its US subsidiary, launched fixed
odds horseracing in Colorado USA with bet365 following approval by state
authorities. This followed the previous launches in calendar year 2023 of
Competitive Gaming in three states including Colorado.
On 12 March 2024 the board of Racelab Pty Limited, a company based in
Australia in which SIS has a 50% stake, appointed a Voluntary Administrator
following its failure to secure further funding. The assets of the business
have subsequently been sold by the administrator and following a Deed of
Company Arrangement the Racelab Pty Limited company has been returned to its
shareholders debt and asset free. SIS's results for its financial year to 31
March 2024 include a write-down in respect of its investment in this company.
SIS - Non-racing content
The SIS Competitive Gaming (e-sports) service, has seen significant customer
growth in the year and remains focussed on two sports related titles,
e-football, and e-basketball, further to feedback from its customers. It
provides over 150,000 unique events per annum with plans underway to increase
this number further. The events are supplied to customers in several
territories worldwide and June 2024 saw an enhancement in distribution
capabilities with Genius Sports and EveryMatrix commencing distribution of the
Competitive Gaming events thereby expanding availability for customers.
SIS Content Services Inc is, as of October 2024, licenced in ten US states
which as well as experiencing revenue growth from existing US customers has
also seen FanDuel, the US sports arm of Flutter, launch the e-basketball
product.
The 49's branded numbers business has a range of products from its original
draw (twice daily) to over 500,000 draws per annum from its stable of branded
products, 49's, Fast 15's, 39's and the 49's virtual racing product plus a
bespoke draw product, Lotto365, for bet365.
SIS - Results
SIS's final result for its year ended 31 March 2024, prepared in compliance
with United Kingdom Accounting Standards, including Financial Reporting
Standard 102, was a profit before tax of £6.8 million (2023: £6.6 million)
prior to accounting for the discontinued operations of its Racelab subsidiary.
The Group's profit before tax including discontinued operations and after the
write down of such investment was £4.6 million. SIS's cash balance on 31
March 2024 was approximately £5.9 million (2023: £47.4 million), a decrease
on the prior year due to a significant total distribution to its shareholders
in October 2023 of £30 million and increased investment in its content
creation business. In December 2023, SIS secured an initial £35 million
banking facility to provide funds for working capital and to finance growth,
including acquisition financing. Such banking facility can be increased to
£50 million.
In late October 2024, SIS declared a total dividend of £3.1 million (2023:
£30 million) and CMG received its share of such dividend on 31 October 2024.
The consolidated results of Sports Information Services (Holdings) Limited and
its subsidiaries for its year ended 31 March 2024, prepared in compliance with
United Kingdom Accounting Standards, including Financial Reporting Standard
102, were as follows:
31 March 2024 31 March 2023
Before individually significant items* Individually significant Total Before individually significant items* Individually significant Total
Items* Items*
£'000 £'000 £'000 £'000 £'000 £'000
Turnover 234,117 - 234,117 230,748 - 230,748
Operating expenses (226,606) - (226,606) (225,356) - (225,356)
Other operating income - (4,059) (4,059) - - -
Group operating profit / (loss) 7,511 (4,059) 3,452 5,392 - 5,392
Other interest receivable and similar income 1,204 - 1,204 1,344 - 1,344
Interest payable and similar expenses (43) - (43) (165) - (165)
Profit / (loss) before taxation 8,672 (4,059) 4,613 6,571 - 6,571
Tax on (profit) / loss (2,730) - (2,730) (1,687) - (1,687)
Profit / (loss) after taxation 5,942 (4,059) 1,883 4,884 - 4,884
Other comprehensive income (28) - (28) (4,740) - (4,740)
Total comprehensive income 5,914 (4,059) 1,855 144 - 144
Note: * - Individually significant items for 2024 relate to the impairment of
an investment.
Share of assets and liabilities of associate
31 March 2024 31 March 2023
Non-current assets 32,950 31,729
Current assets 49,301 97,125
Current liabilities (52,179) (70,201)
Non-current liabilities (1,922) (2,522)
Defined benefit pension asset 1,301 1,495
Net assets 29,451 57,626
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
Management is continuing to invest in scaling its content creation business
with a focus on an increased volume of matches and the securing of additional
customers in addition to the continued expansion of its racing business both
through direct deals and distributors. Progress in the US remains strong and
SIS Content Services Inc. continues to apply for regulatory licences in states
on top of the 10 already secured which will serve to fuel growth of the
existing Competitive Gaming business in the US.
SIS has advised CMG that following changes to its Greyhound rights and, in
particular, with the cessation of Greyhound Television in April 2024 together
with its ongoing investment in the scaling of its content creation business,
its financial year to 31 March 2025 will see a decline in profitability year
on year although the absolute outturn remains difficult to predict as new
customers such as FanDuel scale up their use of the product in new markets.
SIS's cash position as of 31 October 2024 was approximately £5.2 million,
following the payment of an ordinary dividend to its shareholders totalling
£3.1 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 2024 is to retain its holding
at the existing carrying value for the investment of £30.8 million (2023:
£36.6 million), the movement on which reflects the Group's share of SIS's
total comprehensive income of £0.38 million (2023: £0.23 million) and the
dividend received from SIS amounting to £6.16 million (2023: £0.90 million).
The Directors consider that at 30 June 2024 there were no significant
indicators that an impairment should be recorded. During the prior year, as at
30 June 2023, previously recognised impairments totalling £1.86 mllion were
reversed by the Directors. Following the resolution of The Racing Partnership
("TRP") litigation during a previous financial period and based on the current
return to profitability of SIS, the extension of its 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
support a valuation of the investment at its current carrying value.
The Directors have chosen to use the comparable company methodology using an
appropriate EBITDA multiple to assess the recoverable value of the investment.
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
maintain the carrying value of the asset at its current level.
As stated above, SIS is on course to expand its interests in the USA and
elsewhere. Following the recent receipt of a £632,275 dividend payment from
SIS the Company has the capacity to declare and pay a final dividend to CMG's
shareholders whilst retaining sufficient working capital for its foreseeable
future needs and continuing to operate with minimal overheads. Accordingly,
the Board of CMG has resolved, subject to shareholder approval at the
Company's forthcoming Annual General Meeting, to pay a final dividend of 4p
per share on 31 January 2025 to shareholders on the Company's register on 17
January 2025.
The next Annual General Meeting of CMG will take place on Friday, 17 January
2025. 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
11 December 2024
Strategic Report
The Directors present their strategic report for the year ended 30 June 2024.
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 nine 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. The Group
currently has no representative on the board 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 149 pence as at
30 June 2024 (2023: 175 pence). The net asset value of the Group as at 30 June
2024 and 30 June 2023 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 2024
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
11 December 2024
Consolidated statement of comprehensive income for the year ended 30 June 2024
Year Year
ended ended
30 June 30 June
2024 2023
£ £
Revenue 25,000 25,000
Administrative expenses (184,611) (179,447)
Other operating income 14,669 -
Operating loss (144,942) (154,447)
Financial income 9,859 2,243
Financial costs - -
Net financial income 9,859 2,243
Share of profit of equity-accounted associate, net of tax 386,768 880,174
Reversal of impairment of equity-accounted associate - 1,856,276
Profit before taxation 251,685 2,584,246
Taxation 31,500 30,300
Profit for the year 283,185 2,614,546
Share of other comprehensive loss of associate (5,751) (651,323)
Total comprehensive profit for the year 277,434 1,963,223
Attributable to equity holders of the Company 277,434 1,963,223
Profit per share:
Basic 1.35p 12.43p
Diluted 1.35p 12.43p
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 2024
30 June 30 June
2024 2023
£ £
Assets
Non-current assets
Investment in associate 30,831,299 36,611,584
30,831,299 36,611,584
Current assets
Trade and other receivables 95,203 78,668
Cash and cash equivalents 525,192 174,364
620,395 253,032
Total assets 31,451,694 36,864,616
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 26,177,995 31,579,260
Total equity 31,394,988 36,796,253
Current liabilities
Trade and other payables 56,706 68,363
Total equity and liabilities 31,451,694 36,864,616
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 changes in equity for the year ended 30 June 2024
Attributable to equity holders of the Group
Share Capital Merger Retained Total
30 June 2024 Capital Redemption Reserve Reserve Profits Shareholders
Equity
£ £ £ £ £
At 1 July 2023 2,103,202 711,117 2,402,674 31,579,260 36,796,253
Profit for the year - - - 283,185 283,185
Other comprehensive income:
Share of other comprehensive loss of associate - - - (5,751) (5,751)
Total comprehensive profit for the period - - - 277,434 277,434
Dividends paid - - - (5,678,699) (5,678,699)
At 30 June 2024 2,103,202 711,117 2,402,674 26,177,995 31,394,988
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 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
Consolidated statement of cash flows for the year ended 30 June 2024
Year ended Year ended
30 June 30 June
2024 2023
£ £
Cash flow from operating activities
Profit before taxation 251,685 2,584,246
Adjustments for:
Share of (profit) from associate (386,768) (880,174)
(Reversal of impairment) of investment in associate - (1,856,276)
Finance income (9,859) (2,243)
Corporation taxes recovered - 17,904
Net cash flow used in operating activities before changes in working capital (144,942) (136,543)
Decrease / (increase) in trade and other receivables 14,965 (9,318)
(Decrease) / increase in trade and other payables (11,657) 15,505
Net cash flow used in operating activities (141,634) (130,356)
Investing activities
Dividend received 6,161,302 903,543
Interest received 9,859 2,243
Net cash flow from investing activities 6,171,161 905,786
Financing activities
Dividends paid (5,678,699) (694,077)
Net cash flow used in financing activities (5,678,699) (694,077)
Net increase in cash and cash equivalents in the year 350,828 81,353
Cash and cash equivalents at the beginning of the year 174,364 93,011
Cash and cash equivalents at the end of the year 525,192 174,364
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 2024 or 30 June 2023
but is derived from those financial statements. Statutory financial statements
for 2023 have been delivered to the Registrar of Companies and those for 2024
have been approved by the Board and will be delivered in due course. The
auditors have reported on the 2024 and 2023 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.
While the financial information included in this announcement has been
compiled in accordance with, inter alia, Uk-adopted international accounting
standards, this announcement does not in itself contain sufficient information
to comply with such standards. 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 financial statements are accordingly prepared on a
going concern basis.
2. Investment in associate
Year Ended 30 June 2024 Group
£
Cost
At 1 July 2023 36,611,584
Share of profit - 2024 386,768
Share of other comprehensive income - 2024 (5,751)
Dividend received - 2024 (6,161,302)
At 30 June 2024 30,831,299
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
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. 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 statement of
comprehensive income, statement of financial position and statement 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.
The Directors of CMG believe that as at 30 June 2024 there were no impairment
indicators in respect of the investment in SIS, owing to the expectation of
future growth of SIS, the extension of core RMG horseracing rights, and the
optimism around the prospects for future trade. The directors therefore
believe that an enterprise method of valuation of CMG's investment in SIS was
an appropriate methodology to follow. The directors identified an adjusted
EBITDA figure for SIS for the twelve month period to 30 June 2024 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 value of the investment in SIS at 30 June 2024 was in excess of the
carrying value of £30.8m and therefore no impairment is required. In the
prior year, the Directors had reversed historic impairments recorded against
the value of the investment in previous years totalling £1.86m. The Directors
consider that the value at 30 June 2024 is appropriate based on the strategic
plans of SIS.
Share of profit of associate
2024 2024 2023
CMG share CMG share
SIS Total
£'000 £'000
£'000
Revenue 234,117 48,088 47,396
Operating profit before individually significant items
7,511 1,543 1,108
Group's share of loss in associate - - (33)
Net interest receivable 1,161 238 275
Individually significant items (4,059) (833) -
Profit before tax 4,613 948 1,350
Taxation (2,730) (561) (347)
Share of profit after taxation 1,883 387 1,003
Net income from associate 1,883 387 1,003
IFRS 9 expected credit loss provision - - (123)
Adjusted net income from associate 1,883 387 880
Other comprehensive income:
Actuarial (loss) (43) (9) (1,498)
Deferred tax 15 3 524
Acquisition of a subsidiary and revaluation loss - - 322
Total other comprehensive income (28) (6) (652)
Share of assets and liabilities of associate
Gross assets 83,552 17,161 26,774
Gross liabilities (54,101) (11,112) (14,938)
Share of Net Asset Value 29,451 6,049 11,836
SIS prepares financial statements in accordance with FRS 102, whereas CMG
prepares financial statements in accordance with UK-adopted international
accounting standards. The directors have reviewed the potential differences in
accounting treatment under the respective frameworks and have made an
adjustment to reflect an expected credit loss provision of £nil (2023:
£0.12m) under IFRS 9, and to recognise adjusted net income from its associate
of £0.39m (2023: £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 prior 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 (CMG's share amounted to £0.97m). Also during the
prior 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 (CMG's share
amounted to £0.32m). Both of these prior year items were 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 2024, CMG received its share of an ordinary dividend paid by SIS
totalling £3.1 million.
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 2024) on the Group's valuation of its
investment in associate as at 30 June 2024.
- ENDS -
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