REG - Catalyst Media Group - Half-year Report

Catalyst MediaAnnouncement

27/03/2019 07:05

RNS Number : 0918U
Catalyst Media Group PLC
27 March 2019
 


27 March 2019
 
Catalyst Media Group Plc
("CMG", "Catalyst" or the "Group")
 
Interim Results for Six Months Ended 31 December 2018
 
Catalyst Media Group Plc announces its interim results for the six months ended 31 December 2018.
 
CMG is a 20.54% shareholder in Sports Information Services (Holdings) Ltd ("SIS") and the results include its share in the profits of SIS as an equity accounted associate.
 
Financial Highlights for the six months to 31 December 2018
·        CMG profit after taxation and before adjustment to investment valuation of £0.42 million (2017: £0.34 million)
·        Earnings per share of 1.98p (2017: 1.62p)
·        Net asset value per share of 70.2p (2017: 122.5p)
·        In the six months to 30 September 2018, SIS achieved, including the results for SIS LIVE which was sold in October 2018
-    Revenues of £120.7 million (2017: £100.9 million)
-    EBITDA of £8.5 million (2017: £11.1 million)
-    Profit after tax on ordinary activities of £2.1 million (2017: £1.8 million)
·        Following the sale of SIS LIVE in October 2018, SIS declared a dividend of £40.0 million of which £8.2 million was received by CMG
·        CMG declared a dividend of £12.2 million in October 2018, paid in November 2018
 
Michael Rosenberg, Chairman of Catalyst commented: "With SIS's domestic retail position secured with contracts signed for between two to four years with 98% of the UK and Irish Licensed Betting Offices, albeit at lower margins, SIS has focused on utilising its industry expertise and content in other markets including international retail and online. 2019 has already seen a deepening partnership between SIS and the Racecourse Media Group in respect of international and online rights, with a new 24/7 service having been launched in January 2019.
 
SIS has confirmed that it expects to achieve a profit before tax, excluding profit on sale of SIS Live and before certain charges, for the year to 31 March 2019 towards the upper end of previous guidance and that SIS continues to expect to announce a dividend after the end of its current financial year. As and when received, the Company anticipates that it will distribute such funds to shareholders."
 
Enquiries:
 
Catalyst Media Group Plc
Michael Rosenberg, Non-executive Chairman:      07785 727 595
Melvin Lawson, Non-executive Director:                020 7734 8111
 
Strand Hanson Limited:                                       020 7409 3494
James Harris / Richard Tulloch
 
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.
 
 
 
Chairman's Statement
 
For the six month period ended 31 December 2018, the Company has generated a net profit after taxation before adjustment to investment valuation of £0.42 million (2017: £0.34 million).
 
Net assets as at 31 December 2018 were £14.8 million (30 June 2018: £26.5 million). Net cash as at 31 December 2018 was £0.4 million (2017: £4.5 million).
 
CMG's main asset remains its 20.54% stake in SIS and, in October 2018, the Company received a dividend of £8.2 million from SIS. Following the payment of a dividend of £12.2 million to shareholders in October 2018, the value of CMG's investment in SIS has been reduced from £21.2 million to £14.3 million. As a result, the net assets per share as at 31 December 2018 were 70.2p (2017: 122.5p).
 
CMG equity accounts for its share in the profits of SIS which, including the results of SIS Live which was subsequently sold in October 2018, were £2.1 million after tax for the six month period to 30 September 2018 (2017: £1.8 million). SIS revenues for the period were £120.7 million (2017: £100.9 million) of which £109.0 million (2017: £92.5 million) was derived from the business of providing integrated television and data services to Licensed Betting Offices in the UK, Ireland and overseas and a further £11.7 million (2017: £8.4 million) was contributed by SIS Live which provides satellite news gathering and associated transmission services to its customers. Operating profits of SIS for the period increased to £2.5 million, compared to £2.1 million in the comparable period for 2017, as a result of some racecourse rights ending and investment in non-UK retail areas of the business.
 
Following the sale of SIS LIVE in October 2018, SIS's average cash position increased to approximately £95 million and SIS subsequently approved and paid a dividend of £40 million on 26 October 2018 to its shareholders.
 
On receipt of its share of the SIS dividend, being £8.2 million, the Company had a cash balance of approximately £12.6 million and as announced on 26 October 2018, the Board of CMG approved the distribution of £12.2 million to CMG's shareholders by way of a dividend of 58p per share. The dividend was paid on 23 November 2018 to CMG shareholders on the register of members as at 9 November 2018.
 
CMG currently has cash of approximately £400,000 which is sufficient for its present needs.
 
SIS BETTING
 
SIS is a leading supplier of data, pictures and pricing across a range of sports enabling more than 100,000 betting opportunities a year.
 
SIS continues to concentrate on its strategy of utilising its skill set and experience in delivering appealing linear betting opportunities in the UK and Irish retail markets, whilst also seeking to expand into both online and international retail markets. The focus of the strategy is to secure the long-term future of SIS and to reduce its reliance on the UK retail market.
 
Domestic Retail (UK and Ireland)
 
SIS has UK retail rights deals with the Racecourse Media Group ("RMG") for UK premium horseracing and Horse Racing Ireland and the Association of Irish Racecourses for all Irish horseracing, which together with Chelmsford City Racecourse an all weather racecourse, 49's virtual and live draws and a series of greyhound racing rights from eight British tracks, provides SIS with comprehensive core content for its UK and Irish retail service through to 2023.
 
SIS continues to provide this core service on mid and long term agreements to 98% of the UK and Irish Retail market, including all the major UK bookmaking groups and the majority of the independent market.
 
Additionally, SIS supplies additional content and services to its UK and Irish retail customers to cover early morning and additional evening products and has recently extended these services adding additional early morning greyhounds from UK and Ireland, Korean horseracing, Melbourne Racecourse Group, and various South American horseracing.
 
To date there has been no significant change in Licensed Betting Office numbers, however, as previously announced the Department for Digital, Culture, Media and Sport concluded the Triennial Review in 2018, announcing a reduction in maximum Fixed Odds Betting Terminals stakes from £100 to £2. The implementation of this legislation is on 1 April 2019 and although the impact is not yet known, it is possible that future years could be significantly impacted if the press reported impact on UK Licensed Betting Offices does happen.
 
International Retail and Online
 
SIS currently supplies several international and online operators and has continued to progress its strategy to increase its distribution in these markets using proprietary streaming and production technology as well as data pricing services.
 
As announced in January 2018, SIS secured international retail and digital rights for the RMG's horseracing content from January 2019 and September 2018 respectively. This content forms a key part of the SIS World Racing International service which is the SIS successor to the GBI Fixed Odds and Tote Service which ended in December 2018.
 
The vast majority of SIS existing international fixed odds customers have signed up for mid to long term agreements for the new service which commenced in January 2019 and SIS is talking to a number of new operators regarding a full International racing channel.
 
SIS launched in January 2019 its 24/7 channels covering horseracing, greyhound racing, virtuals and mixed channels having secured content covering the whole 24 hour period - content includes Melbourne Raceclub, Palmero, LARC, South Korean as well the UK and Irish content. There will be an initial 13 channel combinations aimed at online operators using a watch and bet model as well as international retail operators in different time zones and SIS has already signed a couple of contracts
 
SIS demonstrated two new products at the ICE industry exhibition in London in February 2019 - a Competitive Gaming (e-sports) product and a Horseracing In-Running product. Both were received well by attendees and trials will be commencing shortly with a number of operators.
 
SIS LIVE
 
As previously reported the sale of SIS LIVE, the connectivity business of SIS, was completed on 9 October 2018 to NEP Group a worldwide outsourced technical production partner supporting premier content producers of live sports and entertainment. SIS LIVE has now been rebranded NEP Connect and SIS looks forward to continuing to work with NEP Connect as a long-term supply partner. SIS achieved revenues of £11.7 million in the period reported (2017: £8.4 million).
 
India
 
As previously reported the claim in respect of the Indian project continues to be pursued but the outcome remains uncertain. The legal and associated costs relating to this claim have been significantly reduced but are still impacting profits and are expected to continue for some time.
 
Litigation
 
As previously announced SIS is experiencing increased litigation costs. The one remaining case was heard at the High Court in January/February 2019 and a judgement is expected to be passed down by Easter. SIS believes it has a robust defence against the claims being made and once judgement is received it will make further announcements depending on the result.
 
OUTLOOK
 
The Company has been advised by SIS that it expects profit before tax for the year to 31 March 2019, excluding profit on sale of SIS Live and certain other charges, will be towards the upper end of previous guidance of £3.5 million to £4.5 million. SIS's cash balances as at 31 March 2019, are expected to be approximately £70 million, after the payment of a special dividend of £40 million in October 2018.
 
SIS's Board continues to expect to announce a dividend after the end of its current financial year to 31 March 2019, though the quantum of such dividend has not yet been determined. Should SIS make a further dividend distribution and on receipt of such funds, it is the current intention of the CMG Board to consider distributing the majority of such funds to its shareholders. The Company will make further announcements in this regard as appropriate.

 
Consolidated interim statement of comprehensive income
 




 


Notes


6 months to 31 December 2018
 
£
Unaudited


6 months to 31 December 2017
 
£
Unaudited


12 months to 30 June 2018
 
£
Audited




 


 


 


 


 




Revenue


 


12,500


12,500


25,000




 


 


 


 


 




Cost of sales


 


-


-


-




Gross profit


 


12,500


12,500


25,000




 


 


 


 


 




Administrative expenses


 


(49,574)


(52,438)


(122,608)




Other operating income


 


-


-


-




Operating loss


 


(37,074)


(39,938)


(97,608)




 


 


 


 


 




Financial income


 


4,912


1,040


4,382




Financial costs


 


-


-


-




Net financial income


 


4,912


1,040


4,382




 


 


 


 


 




Share of profit of equity-accounted associate


3


440,172


369,720


1,047,129




 


 


 


 


 




Profit before taxation


 


408,010


330,822


953,903




 


 


 


 


 




Taxation


 


9,020


9,076


18,076




 


 


 


 


 




Profit / (loss) for the period


 


417,030


339,898


971,979




 


 


 


 


 




Share of other comprehensive loss of associate
 


 


-


-


147,272




Total comprehensive income / (loss) for the period


 


417,030


339,898


1,119,251




 


 


 


 


 




Attributable to equity holders of the company


 


417,030


339,898


1,119,251




 


 


 


 


 




Earnings / (loss) per share:


4


 


 


 




Basic


 


1.98p


1.62p


4,62p




Diluted


 


1.98p


1.62p


4.62p




 
 
 
Consolidated interim statement of financial position
 




 


Notes


31 December 2018
 
£
Unaudited


31 December 2017
 
£
Unaudited


30 June
2018
 
£
Audited




Assets


 


 


 


 




Non-current assets


 


 


 


 




Investment in associate


3


14,316,221


21,266,027


22,090,708




 


 


14,316,221


21,266,027


22,090,708




 


 


 


 


 




Current assets


 


 


 


 




Trade and other receivables


 


10,422


29,280


30,946




Cash and cash equivalents


 


449,583


4,474,928


4,451,635




 


 


460,005


4,504,208


4,482,581




 


 


 


 


 




Total assets


 


14,776,226


25,770,235


26,573,289




 


 


 


 


 




Equity and liabilities


 


 


 


 




 


 


 


 


 




Capital and reserves attributable to equity holders of the parent


 


 


 


 




Share capital


 


2,103,202


2,103,202


2,103,202




Capital redemption reserve


 


711,117


711,117


711,117




Merger reserve


 


2,402,674


2,402,674


2,402,674




Retained profits


 


9,541,519


20,543,734


21,323,087




 


 


14,758,512


25,760,727


26,540,080




 


 


 


 


 




Current liabilities


 


 


 


 




Trade and other payables


 


19,403


10,984


30,243




Corporation tax payable


 


(1,689)


(1,476)


2,966




 


 


17,714


9,508


33,209




 


 


 


 


 




Total equity and liabilities


 


14,776,226


25,770,235


26,573,289




 
 
 
Consolidated interim cash flow statement
 




 


 


6 months
to 31 December 2018
 
£
Unaudited


6 months
to 31 December 2017
 
£
Unaudited


12 months
to 30
June
2018
 
£
Audited




 


 


 


 


 




Cash flow from operating activities


 


 


 


 




Profit before taxation


 


408,010


330,822


953,903




Adjustments for:


 


 


 


 




Share of profit from associate


 


(440,172)


(369,720)


(1,047,129)




Finance income


 


(4,912)


(1,040)


(4,382)




Corporation taxes recovered


 


4,365


4,063


17,505




 


 


 


 


 




Net cash outflow from operating activities before changes in working capital


 


(32,709)


(35,875)


(80,103)




Decrease / (increase) in trade and other receivables


 


20,524


(14,200)


(15,866)




(Decrease) in trade and other payables


 


(10,840)


(20,150)


(891)




 


 


 


 


 




Net cash outflow used in operating activities


 


(23,025)


(70,225)


(96,860)




 


 


 


 


 




Investing activities


 


 


 


 




Dividend received


 


8,214,659


3,080,651


3,080,651




Interest received


 


4,912


1,040


4,382




 


 


 


 


 




Net cash inflow from investing activities


 


8,219,571


3,081,691


3,085,033




 


 


 


 


 




Financing activities


 


 


 


 




Dividends paid
 


 


(12,198,598)
 


-


-




Net cash outflow from financing activities


 


(12,198,598)


-


-




 


 


 


 


 




Net movement in cash and cash equivalents in the period


 


(4,002,052)


3,011,466


2,988,173




Cash and cash equivalents at the beginning of the period


 


4,451,635


1,463,462


1,463,462




 


 


 


 


 




Cash and cash equivalents at the end of the period


 


449,583


4,474,928


4,451,635




 

 

Consolidated interim statement of changes in equity
 




 


Share
 capital
 
£
Unaudited


Capital redemption reserve
£
Unaudited


Merger
 reserve
 
£
Unaudited


Retained surplus/ (deficit)
 
£
Unaudited


Total shareholders equity
 £
Unaudited




 


 


 


 


 


 




At 1 July 2017


2,103,202


711,117


2,402,674


20,203,836


25,420,829




 


 


 


 


 


 




Profit for the 6 month period to 31 December 2017


-


-


-


339,898


339,898




Share repurchase
Cancellation of treasury shares


-
-


-
-


-
-


-
-


-
-




Total comprehensive loss for the period


-


-


-


339,898


339,898




 


 


 


 


 


 




At 31 December 2017


2,103,202


711,117


2,402,674


20,543,734


25,760,727




 


 


 


 


 


 




Profit for the 6 month period to 30 June 2018


-


-


-


632,081


632,081




Share of other comprehensive loss of associate


-


-


-


147,272


147,272




Total comprehensive profit for the period


-


-


-


779,353


779,353




 


 


 


 


 


 




At 30 June 2018


2,103,202


711,117


2,402,674


21,323,087


26,540,080




 




 


Share
 capital
 
£
Unaudited


Capital redemption reserve
£
Unaudited


Merger
 reserve
 
£
Unaudited


Retained surplus/ (deficit)
 
£
Unaudited


Total shareholders equity
 £
Unaudited




 


 


 


 


 


 




At 1 July 2018


2,103,202


711,117


2,402,674


21,323,087


26,540,080




 


 


 


 


 


 




Profit for the 6 month period to 31 December 2018


-


-


-


417,030


417,030




Dividend paid to company shareholders


-


-


-


(12,198,598)


(12,198,598)




Total comprehensive loss for the period


-


-


-


(11,781,568)


(11,781,568)




 


 


 


 


 


 




At 31 December 2018


2,103,202


711,117


2,402,674


9,541,519


14,758,512




 
                                                                       

 

Notes to the interim financial statements
 
1.       Corporate information
 
The Company is a company incorporated in England and Wales and quoted on the AIM market of the London Stock Exchange plc.
 
2.       Basis of preparation
 
These unaudited consolidated interim financial statements cover the six month period from 1 July 2018 to 31 December 2018 including the financial results of Sports Information Services (Holdings) Limited ("SIS") for the six month period to 30 September 2018.
 
These consolidated interim financial statements of the Company and its subsidiaries (the "Group") for the six months ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) as adopted by the European Union and also in accordance with the Companies Act 2006.
 
The accounting policies adopted for the preparation of this unaudited interim statement are consistent with the accounting policies adopted in the Group's financial statements for the year ended 30 June 2018 and will remain so for the year ending 30 June 2019.
 
The financial information set out above does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2018, on which the report of the auditors was unqualified and did not contain a statement under section 498 of the Companies Act 2006, have been filed with the Registrar of Companies.
 
New financial reporting requirements
 
The Group has applied the following new financial reporting standards for the first time in preparing its financial statements for the year ended 30 June 2019. There has been no material impact on the Group's financial statements
§     IFRS 9: Financial Instruments
§     IFRS 15: Revenue from Contracts with Customers
 
Standards, interpretations and amendments to published standards not yet effective
 
At the date of authorisation of these consolidated financial statements, the IASB and IFRIC have issued the following standard and interpretations which are effective for annual accounting periods beginning on or after the stated effective date.  This standard and interpretations is not effective for and has not been applied in the preparation of these consolidated financial statements:
 
§ IFRS 16: Leases (effective as of 1 January 2019)
The Directors anticipate that the adoption of this standard will not have a material impact on the Group's financial statements in the period of initial adoption.
 
3.       Investment in associate
 




 


Total




 


Group




 


£




Cost


 




At 1 July 2018


22,090,708




Additions - share of profit


440,172




Dividend received


(8,214,659)




 


 




At 31 December 2018


14,316,221




 
The Group's interest in its associate SIS, a company incorporated in England and Wales, is held by Alternateport Limited ("Alternateport"). Alternateport 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 is a wholly owned subsidiary of Catalyst Media Holdings Limited, a wholly-owned subsidiary of the Company. The intangible assets represent the value attributable to the ongoing business activities of SIS, which are subject to an annual valuation adjustment.
 
The Board has reviewed its valuation of the investment in SIS as at 31 December 2018 and has, in line with the Group's accounting policies, reduced the value of the investment by the amount of its profit share for the period and dividends received. As a result, it has concluded that the investment should be held at a value of £14,316,219.
 




Share of profit of associate*


30 September
2018


 


31 December 2018


31 December 2017


30 June
2018




 


SIS Total


 


CMG share


CMG share


CMG share




 


£'000


 


£'000


£'000


£'000




Revenue:


 


 


 


 


 




SIS Betting Services


109,013


 


22,391


19,002


36,753




SIS LIVE services


11,653


 


2,394


1,715


2,579




 


 


 


 


 


 




Total revenue


120,666


 


24,785


20,717


39,332




 


 


 


 


 


 




Operating profit from ongoing operations


2,517


 


517


424


1,716




Net interest receivable / (payable)


129


 


26


32


58




(Losses) / profits on business wind down


-


 


-


-


(364)




Profit on disposal of fixed asset


-


 


-


-


10




 


 


 


 


 


 




Profit before tax


2,646


 


543


456


1,420




Taxation


(503)


 


(103)


(87)


(372)




Share of profit after taxation


2,143


 


440


369


1,048




Net income from associate


2,143


 


440


369


1,048




 


 


 


 


 


 




Other comprehensive income


 


 


 


 


 




Actuarial (loss) /gain


-


 


-


-


12




Deferred tax


-


 


-


-


34




Change in value of hedging instrument


 


 


 


 


101




 


-


 


-


-


147




 


 


 


 


 


 




Share of gross assets and liabilities of associate


 


 


 


 


 




Gross assets


140,144


 


28,786


32,152


29,257




Gross liabilities


(56,901)


 


(11,687)


(13,238)


(12,599)




Net equity


83,243


 


17,099


18,914


16,658




 
*The period covered by the associate's accounts is the six months to 30 September 2018. The revenues have been stated excluding internal revenues.
 
4.       Earnings/(loss) per share
 
The calculation of the basic earnings per ordinary share of 10p each in the capital of the Company ("Share") is based upon the following:
 




 


6 months to
31 December 2018
£


6 months to
31 December 2017
£


12 months to 30 June
2018
£




Basic and Diluted


 


 


 




Profits per share - pence


1.98p


1.62p


4.62p




 


 


 


 




 


 


 


 




Profit attributable to equity shareholders


417,030


339,898


971,979




 


 


 


 




Weighted average number of Shares in issue


21,032,030


21,032,030


21,032,030




 




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