REG - Catalyst Media Group - Final Results <Origin Href="QuoteRef">CMX.L</Origin>

Catalyst MediaAnnouncement

03/12/2014 07:10

RNS Number : 6731Y
Catalyst Media Group PLC
03 December 2014
Catalyst Media Group plc
("CMG" or or the "Company")
Final Results for the year ended 30th June 2014
The Board of Catalyst Media Group is pleased to announce the final results for the Company for the year ended 30 June 2014. CMG is a 20.54% shareholder of Satellite Information Services (Holdings) Ltd ("SIS") and the results for the year to 30 June 2014 incorporate its share of the profits of SIS for its year ended 31 March 2014.
Financial overview
 CMG loss before taxation and after impairment charge 3.0 million (2013: 3.7 million loss)
 Impairment charge of our interest in SIS 4.3m (2013: 8.4m)
 Earnings per share before impairment charge 4.72p per share (2013: 17.16p per share)
 Loss per share after impairment charage 10.83p (2013: 13.07p loss)
 Net Asset value per share 92.3p (2013: 103.4p)
 SIS Revenues for year ended 31 March 2014 253.8 million (2013: 260.8 million)
 SIS total operating profit: group and share of joint venture and assoicates 24.2 million (2013: 29.6 million)
 SIS profits after tax and exceptionals 6.9 million (2013: 20.5 million)
 SIS net cash inflow from operating activities 50.2 million (2013: 52.5 million)
Chairman's comment
"The current performance of SIS is in line with management expectations and the positive cash generation has resulted in a dividend payment of 1.0 million to CMG which will be received on 5 December 2014. As explained in the full statement below there are a number of issues that may impact the future growth and profitability of SIS and as a result a further impairment of 4.3 million has been made to the carrying value of the investment in our books. In arriving at this impairment the Board has, inter alia, taken account of the economic and political uncertainties in the betting industry and uncertainty as to the future size of the Bookmaker retail estates."
Enquiries:
Catalyst Media Group:

Michael Rosenberg
Non-executive Chairman
+44 (0)7785 727 595
Melvin Lawson
Non-executive Director
+44 (0)20 7637 8412


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



Chairman's statement
I am pleased to present the results for CMG for the year ended 30 June 2014, 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 the 4.3 million (2013: 8.4 million) impairment charge detailed below and CMG's share in the profits of SIS for its year ended 31 March 2014 of 1.4 million (2013: 4.9 million), CMG recorded a loss before taxation of 3.0 million (2013: 3.7 million loss). Net Assets at the year end were 25.5 million (92.3p per share) (2013: 28.6 million (103.4p per share)). 
The main asset of CMG continues to be the 20.54% share in SIS. CMG equity accounts for its share in the profits of SIS. For the year ended 31 March 2014, SIS had revenues of 253.8 million (2013: 260.8 million) of which 198.2 milion were derived from Betting Services and 55.6 million from SIS LIVE Services. As previously reported, the Outside Broadcast Division of SIS was closed down and closure costs of 10.5 million were incurred during the year. Before providing for these non recurring costs, the total operating profit for SIS was 24.2 million (2013: 29.6 million). Profits after exceptionals and taxation were 6.9 million (2013: 20.5 million). The share attributable to CMG after tax was 1.4 million (2013: 4.9 million). SIS's Net Cash inflow from operating activities for the period was 50.2 million (2013: 52.5m). SIS's operating profit margin(1) fell slightly to 10.4% compared to 12.7% for the previous year mainly due to major events during the 2012 summer months.
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.
Impairment review
The Board of CMG has reviewed the value of its interest in SIS and has also discussed the various scenarios that may impact the business of SIS over the next few years. Taking account of the political and economic uncertainties that surround the business and despite the current good performance of the business.The value of our investment was impaired to 25 million following the valuation of SIS using a discounted cash flow model.
SIS Betting
The services to the betting industry are supported in the main by fixed term media contracts which include horse racing and dog track racing. A large proportion of the media portfolio expires between 2017 and 2020. Activity around extending racecourse media rights has been delayed due to uncertainty around the future size of the Bookmaker retail estates, in part arising from the political and local authority attitude towards betting shops, the impact of Fixed Odds Betting Terminals (FOBT) regulation and the channel shift to online.
SIS intends to engage with media rights owners post the general election when they expect greater forward visibility of bookmakers' future plans.
SIS sold its 25% stake in Chelmsford City Racecourse (CCR) to Tote Media Ltd but remains committed to the venture as its media partner and provider of funding through a secured loan. SIS has negotiated an exclusive 10 year rights deal with CCR which will come into the portfolio from 2015.
Preparations for racing to take place at CCR are going well and racing is expected to start in January 2015. For 2015, 58 fixtures (a reallocation from other tracks) have been granted to CCR by the British Horseracing Authoirty (BHA) and it is on track to become an excellent exclusive source of reliable all-weather racing for the betting industry.
Greyhound racing has a major appeal domestically and internationally. SIS have secured the media rights for the new Towcester track which is due to open in December, it is a ground breaking new venture featuring 8 lane racing making it very attractive to the International market in particular. SIS will be exclusively beaming multiple platform coverage from the planned three meetings per week. It will be the only joint horse racing and greyhound racing venue in the UK.
SIS has invested in expanding their betting division into new sports media content and online capability. It has signed a three-year agreement with the Liga de Futbol Profesional (LFP) and has become the league's official, exclusive partner for collection and distribution of live official data from more than 2,500 matches in the Spanish leagues each season. This will include matches from first division Liga BBVA, the Copa del Rey and the Supercopa and will provide a range of high quality, pre-match, in-running, and post-match data feeds and products tailored to bookmakers' needs.
SIS Betting's core strategy is to become a leader in securing and delivering sports media content to the betting Industry via streaming and satellite pathways. SIS has been working in partnership with Level 3 Communications, Inc., the leading network provider, to power existing rights-based online TV streaming and live broadcasts to clients around the world. Additionally SIS has launched its own data streaming capability, able to deliver betting data and live pictures via multi-bitrate, multi-format channels. This gives SIS the ability to deliver betting media to online bookmakers and is founded on their existing SDI video contribution infrastructure.
SIS live
The SIS LIVE business is a leading supplier of satellite newsgathering (SNG) services to the UK broadcast market and secured a new seven year contract with ITV and ITN news for a new SNG fleet and satellite capacity. SIS LIVE also secured new satellite deals with the BBC, Sky Sports and Sky News Arabia in 2014. In addition to this, SIS LIVE has had success in securing new fibre revenues, which is a key strategic target for growth in the UK Broadcast market, having recently installed fibres at all Premier League football stadia for BBC Match of the Day and provided connectivity to the Sky Group for Disaster Recovery.
Ad hoc SNG and connectivity services remain strong with live coverage so far this year for major sporting events such as golf, football and cycling as well as the Scottish Referendum and WW1 commemorations. Initial hardware product sales to Brazil, Germany, Japan and the UK Army during the year have assisted the hardware sale division of SIS LIVE's lightweight, fast deploy satellite ground terminals.
SIS LIVE has secured key television coverage in 2015 for the UK General Election and contribution services via satellite and fibre for the Rugby World Cup in 2015. It has also agreed partnerships with international fibre providers and hardware sellers to increase the opportunity for further international growth.
Media City studios (Dock 10)
Dock10 in which SIS has a 50% interest operates The Studios complex and the campus wide communications infrastructure at MediaCityUK in Salford. It provides studio facilities, post-production content management and connectivity and infrastructure services. Dock 10 has continued to raise its profile and is now a recognised brand in the UK broadcast industry.
SIS continues to deliver significant expansion reflected in the number of productions based at The Studios and the securing of additional post and content work leading to an increase in utilisation across the Company's facilities, which are near maximum capacity.
Dock 10 is well placed to take advantage of the opportunities afforded by the changes to industry practices, including file based delivery, advanced content management and remote working
India
As has been previously reported significant payments due to SIS Live arising from a contract for television production at the 2010 Commonwealth Games (CWG) in India are in dispute. Arbitration proceedings have started to recover the outstanding payment.
SIS LIVE received a draft assessment in March 2014 from the Indian tax authorities in relation to financial year ended 31 March 2011. On the advice of its lawyers and tax advisors it has commenced appeal proceedings through the Dispute Resolution Panel (DRP) of the Indian Tax Authority. 
The net effect of claims and counterclaims, including the tax claim, is not expected to be material.


SIS Results
The results of SIS for the year ended 31 March 2014 are as follows:

31 March 2014
31 March 2013

'000
'000



Revenue
253,764
260,758




---------
-----------



Operating expenses
(229,959)
(231,368)






Operating profit before exceptional items
26,511
33,144
Exceptional items
(2,706)
(3,754)
Operating profit
Share of operating profit/(loss) of joint venture:
- joint venture
- associate
23,805
475
(40)
29,390
251
-
Total operating profit
Losses on the managed wind down of business
Profit on disposal of tangible assets
24,240
(10,495)
796
29,641
-
424
Net interest payable
(2,192)
(2,345)



Profit on ordinary activities before tax
12,349
27,720



Tax on profit on ordinary activities
(5,404)
(7,273)



Retained profit transferred to reserves
6,945
20,477
Dividends
SIS has a declared a dividend of 5m payable immediately. CMG will receive 1,027,000, which is expected to be received on 5 December 2014. Although SIS continues to be cash positive, there can be no certainty as to the timing or quantum of further dividends.
Outlook
SIS has deferred negotiations with regard to the extension of certain media rights pending the result of the general election in 2015. However SIS remains profitable and cash generative in the immediate term and is planning the necessary steps, albeit in a challenging environment, to ensure the future profitability of the business. Current trading is in line with management expectations.
CMG continues to operate at a low overhead cost. In the light of the payment of the dividend from SIS the Board is examining the best way to utilise these funds and add value for shareholders.
AGM
The Annual General Meeting of the CMG will be held on 20 January 2015 at 10:00 a.m. Formal Notice of the meeting is set out at the end of the report and accounts together with proxy forms.
Michael Rosenberg OBE
Chairman


Consolidated statement of comprehensive income for the year ended 30 June 2014
Year ended
Year ended
30 June
30 June
2014
2013
Year ended
Year ended
Revenue
25,000
25,000
Cost of sales
-
-
Gross profit
25,000
25,000
Administrative expenses
(111,259)
(147,698)
Other operating income
3,172
-
Operating loss
(83,087)
(122,698)
Financial income
2,898
10,763
Financial costs
-
(20)
Net financial costs
2,898
10,743
Share of profit of equity-accounted associate, net of tax
1,367,348
4,854,420
Impairment of equity-accounted associate
(4,298,334)
(8,400,767)
Loss before taxation
(3,011,175)
(3,658,302)
Taxation
17,888
25,836
Loss for the year
(2,993,287)
(3,632,466)
Share of other comprehensive (loss)/income of associate
(69,014)
8,832
Total comprehensive loss for the year
(3,062,301)
(3,623,634)
Attributable to equity holders of the Company
(3,062,301)
(3,623,634)
Earnings/(loss) per share:
Basic
(10.83p)
(13.07p)
Diluted
(10.83p)
(13.07p)
Before impairment
4.72p
17.16p


Consolidated statement of financial position as at 30 June 2014
30 June
2014
30 June
2013
Assets
Non-current assets
Intangible assets
-
-
Investment in associate

25,000,000
28,000,000
25,000,000
28,000,000
Current assets
Trade and other receivables
31,097
9,493
Corporation tax receivable

-
192
Cash and cash equivalents

538,416
622,763


569,513
632,448

Total assets
25,569,513
28,632,448

Equity and liabilities

Capital and reserves attributable to equity holders of the parent
Share capital
2,764,567
2,764,567
Capital redemption reserve
49,752
49,752
Merger reserve
2,402,674
2,402,674
Retained profits
20,311,755
23,374,056
Total equity
25,528,748
28,591,049

Current liabilities
Trade and other payables

31,399
41,399
Corporation tax payable
9,366
-
40,765
41,399
Total equity and liabilities
25,569,513
28,632,448


Consolidated statement of cash flows for the year ended 30 June 2014
Year ended
30 June
2014
Year ended
30 June
2013

Cash flow from operating activities
Loss before taxation
(3,011,175)
(3,658,302)
Adjustments for:
Share of profit from associate
(1,367,348)
(4,854,420)
Impairment of associate
4,298,334
8,400,767
Finance income
(2,898)
(10,763)
Finance expense
-
20
Corporation taxes recovered

27,446
36,572

Net cash flow used in operating activities before changes in working capital 
(55,641)
(86,126)
(Increase) / decrease in trade and other receivables
(21,604)
2,024
(Decrease) / increase in trade and other payables

(10,000)
1,561

Net cash flow used in operating activities 
(87,245)
(82,541)

Investing activities
Dividend received
-
3,080,651
Interest received
2,898
13,758

Net cash flow from investing activities

2,898
3,094,409
Financing activities
Dividends paid

-
(3,870,394)
Interest paid

-
(20)



Net cash flow used in financing activities
-
(3,870,414)



Net decrease in cash and cash equivalents in the year
(84,347)
(858,546)

Cash and cash equivalents at the beginning of the year
622,763
1,481,309
Cash and cash equivalents at the end of the year
538,416
622,763


Notes
1. Investment in associate
Year Ended 30 June 2014

Share of net assets
Goodwill relating to the associate
Carrying value of investment


Group
Group
Group


Cost




At 1 July 2013

15,222,726
12,777,274
28,000,000
Share of profit

1,367,348
-
1,367,348
Share of other comprehensive loss

(69,014)
-
(69,014)
Impairment

(2,734,696)
(1,563,638)
(4,298,334)
At 30 June 2014

13,786,364
11,213,636
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 CMG.
The Board has reviewed its valuation of the investment in SIS as at 30 June 2014. It has taken account of the closure of the Outside Broadcast Division and the exceptional costs incurred. In addition it has reviewed internal forward projections, for a five year period, prepared by the management of SIS which include expectations of future cash flows from the business. It has applied a present day value to the expected cash flows using a discount rate of 5% and has taken account of the uncertainty surrounding the extension of media rights as well as the expected decline in numbers of retail betting shops. As a result it has concluded that an impairment of 4,298,334(ii) should be applied to the investment resulting in a value of 25,000,000 as at 30 June 2014.
Share of profit of associate
2014
SIS Total
'000
2014
CMG share
'000
2013
CMG share
'000
Revenue:



SIS Betting Services
198,187
40,708
37,642
SIS LIVE Services
55,577
11,416
15,918
Total revenue
253,764
52,124
53,560
Operating profit(i)
23,952
4,920
6,743
Net interest payable
(2,192)
(450)
(482)
Losses on business wind down
(10,495)
(2,156)
-
Profit on disposal of fixed asset
796
163
87
Profit before tax
12,061
2,477
6,348
Taxation
(5,404)
(1,110)
(1,494)
Share of profit after taxation
6,657
1,367
4,854
Net income from associate
6,657
1,367
4,854



Other comprehensive income:



Actuarial gain/(loss)
(436)
(90)
12
Deferred tax
100
21
(3)
(336)
(69)
9
Share of net assets and liabilities of associate



Net assets(i)
178,780
36,722
41,526
Net liabilities(i)
(111,663)
(22,936)
(26,303)
Net equity
67,117
13,786
15,223
(i) The financial results for SIS are taken from its latest accounts to 31 March 2014, adjusted in order to align the accounting policies of SIS (whose accounts are prepared under UK GAAP) and CMG (whose accounts are prepared under International Financial Reporting Standards). Adjustments have been made in respect of the recognition of the fair value of derivatives held by SIS as at the balance sheet date. The net cumulative effect of these adjustments is to decrease the value of the investment in associate in the Group's financial statements by 97,000 (2013: increase of 2,697,000).
(ii) The impairment charge 4,298,334 comprises 2,734,696 relating to cumulative adjustments in respect of amortisation of goodwill no longer required as the goodwill is no longer held by SIS and 1,563,638 relating to the adjustment to the fair value of the Group's investment in SIS.
Year Ended 30 June 2013

Share of net assets
Fair Value of Intangibles
Total


Group
Group
Group


Cost




At 1 July 2012

13,440,125
21,178,041
34,618,166
Share of profit

4,854,420
-
4,854,420
Share of other comprehensive income

8,832
-
8,832
Dividend received

(3,080,651)
-
(3,080,651)
Impairment

-
(8,400,767)
(8,400,767)
At 30 June 2013

15,222,726
12,777,274
28,000,000
2. Basis of preparation
These consolidated financial statements of CMG 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. 
CMG 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 2014 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 20 January 2015.

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