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

Catalyst MediaAnnouncement

30/03/2017 07:06

RNS Number : 9466A
Catalyst Media Group PLC
30 March 2017
30 March 2017
Catalyst Media Group Plc
("CMG", "Catalyst" or the "Group")
Interim Results for Six Months Ended 31 December 2016
Catalyst Media Group Plc announces its interim results for the six months ended 31 December 2016.
CMG is a 20.54% shareholder in Sports Information Services (Holdings) Limited (formerly Satellite 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 2016
 CMG profit after taxation and before adjustment to investment valuation of 1.03 million (2015: 1.22 million)
 Valuation adjustment of 1.06 million (2015: 1.25 million) resulting in a loss after taxation of 32,526 (2015: 24,449)
 Earnings per share (before valuation adjustment) 4.44p (2015: 5.02p)
 Loss per share (after valuation adjustment) 0.14p (2015: 0.10p)
 Net asset value per share (excluding shares held in treasury) of 106.4p (2015: 102.3p)
 SIS revenues for six months to 30 September 2016 110.1 million (2015: 111.6 million)
 SIS EBITDA for six months to 30 September 2016 of 18.3 million (2015: 20.1 million)
 SIS profit after tax on ordinary activities for the six months to 30 September 2016 of 5.2 million (2015: 6.1 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 approximately 2.5 million
 To support the change in emphasis of the business, SIS has been renamed and rebranded to Sports Information Services
Michael Rosenberg, Chairman of Catalyst commented: "The six months results for SIS showed a decrease in revenues and profits compared to the previous period at 110.1 million and 5.2 million respectively. However a dividend of 20.0 million was paid by SIS in July 2016 and SIS continues to trade in line with its management expectations. However, the revenues and profits of SIS for the year 2017/8 and subsequent years will be impacted by the transition to a lower risk and lower profitability business arising from the changes in the media rights contracts as already reported. This is anticipated by SIS's management to result in a decline in the underlying operating results of approximately 50%, subject always to the impact of any new initiatives."
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 ("MAR").


Chairman's Statement
For the six month period ended 31 December 2016 the Group has generated a net profit after taxation but before adjustment to investment valuation charges of 1.03 million (2015: 1.22 million). After taking account of the adjustment to valuation charge of 1.06 million as referred to below, the Group recorded a loss of 32,526 for the period.
Net assets as at 31 December 2016 were 22.4 million (30 June 2016: 25.0 million). Net cash as at 31 December 2016 was 1.5 million (2015: 13,688). Excluding the shares held in treasury, the net assets per share as at 31 December 2016 was 106.4p (2015: 102.3p).
The Group's main asset remains its 20.54% stake in SIS and, in July 2016, the Company received a dividend of 4.1 million from SIS. The board has reduced the value of the investment by the amount of its profit share for the period being 1.06 million. Accordingly, the value of the investment in SIS has been reduced to 20.9 million after taking account of the dividend receipt referred to above.
CMG equity accounts for its share in the profits of SIS which were 5.2 million after tax for the six month period to 30 September 2016 (2015: 6.1 million). Total revenues of SIS for the period were 110.1 million (2015: 111.6 million) of which 101.5 million (2015: 102.3 million) were derived from the business of providing integrated television and data services to licensed betting offices in the UK, Ireland and overseas and a further 8.6 million (2015: 9.3 million) was contributed by SIS Live services, which provides critical media connectivity from its fibre and satellite networks to its customers. Operating profits of SIS for the period were 6.3 million compared to 7.8 million, in the comparable period for 2015. 
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. As previously disclosed, the business is progressing with its strategic objective of sustaining its place in UK Retail. To date the announced media rights arrangements with Racecourse Media Group ("RMG"), Horse Racing Ireland and the Association of Irish Racecourses, and most recently with Chelmsford City Racecourse, have secured ongoing horse racing content for SIS through to 2022/3. The new rights arrangements are at lower margins than previously achieved however, the agreements reduce major market risks faced by SIS prior to those arrangements. 
Having secured long term horse racing rights, SIS's management is focusing attention on greyhound rights and announced in February 2017 a deal to acquire two greyhound tracks thereby increasing the volume of secure long term content for its Greyhound Service both in the UK and Internationally. 
SIS's management has, at the same time, been focusing on how to enhance the profitability of the business in the light of reduced margins from the traditional core business. A number of diversification initiatives are underway and many of these are showing positive results, details of which are outlined below.
To support the change in emphasis of the business SIS has been renamed and rebranded to Sports Information Services, still maintaining the SIS abbreviation but utilising a more modern and digital orientated logo and colour.
Diversification Initiatives
SIS has a number of initiatives underway and some of these are discussed below:
SIS have devised a methodology to gather and utilise information both from on-course and off-course sources and produce an in-running betting product which will allow bookmakers, in particular, to offer bets during a race. Work is ongoing with regard to both the source data and the final betting product output and this is expected to reach market during FY17-18.
SIS has delivered a technology solution suited to live sports for the betting industry with a tuned, secure, low latency streaming product which can stream both own and third party content from any source to any destination. SIS has already launched IPTV streaming services in the UK and Internationally together with live racing streaming with Bet and Watch and Watch and Bet capabilities. This is an area which is expected to grow in the coming months and years as online bookmakers seek to utilise access to content to drive betting revenues.
SIS compiles odds for a range of sporting events from a bespoke trading room at its headquarters in London. They offer an outsourced trading service, providing price and price derivatives for betting operators. The range of markets covered by trading services currently include Ante Post, Early Prices, Board Prices and SIS's own Starting Prices for both Horse and Greyhound racing and SIS expects to extend the service to other sports in due course.
Although SIS is well placed in the retail sector in a number of markets overseas such as Spain, Greece, Caribbean and Sri Lanka, SIS's management believe this is an area where there is considerable opportunity for both its traditional and new products. SIS has recently launched services in Australia and is in discussion with a number of customers in Europe and Africa where developments with technology and regulation changes are providing opportunities. 
During the current year SIS has developed and implemented Complex Automated Production (CAP) technology which has facilitated high levels of automation on its own six TV channels and has delivered ongoing cost efficiencies. SIS believes that this technology has uses both within the current retail sector and wider and is seeking to leverage the technology. 
SIS LIVE
SIS LIVE provides critical media connectivity from its AnyLive fibre connectivity network and its satellite connectivity network via uplinks, SNG and satellite internet services. It is also engaged in teleports, distribution and satellite capacity provision as well as outside broadcasting for racing. It is becoming the connectivity provider of choice for critical media content in the UK, and regularly provides media connectivity for broadcasters covering key events such as The Six Nations, Premier League, F1, ETP golf, darts and snooker tournaments.
The AnyLive fibre network provides its headquarters with resilient connectivity into key broadcast locations including major UK broadcasters, sports venues, network operators and studio facilities. Signals can be routed directly from SIS's teleport sites or to national and international customers via a combination of satellite and fibre paths.
It provides innovative, cost effective and reliable end to end high quality streaming solutions for live webcasts, social streaming, brands and marketing initiatives for premium providers.
In the current year SIS LIVE has sold its non-core hardware division, which designed and manufactured satellite dishes for commercial use, to General Dynamics. The sale of the business will generate a one off profit in the year and will enable the SIS LIVE management team to focus on the core fibre and satellite connectivity business.
India
SIS continues to progress the outstanding amounts due and the associated tax liabilities relating to the India Commonwealth Games in 2010. Progress continues with regard to both tax and settlement issues however progress is slow and SIS expects final resolution to take a further 12 to 18 months. 
Outlook
SIS continues to trade in line with its management expectations and profit after tax for the year ending 31 March 2017 is expected to be similar to the previous year. Cash generation continues at higher levels due to amortised media rights payments and will generate approximately 10 million, net of the declared and paid dividends, in the year to 31 March 2017. 
The financial year, April 2017 to March 2018, will be a key transition year for SIS in the switch to low risk low margin core UK retail rights. This sees the majority of the current UK horse racing media rights arrangements ending in the period, with the new RMG UK horse racing media rights commencing from April 2018, and as a result, SIS's underlying operating results are expected to decline by approximately 50%.
No decisions have yet been made by the Board of SIS with regard to any dividend payments but the situation remains under review. 
CMG had approximately 1.5 million in cash as at 31 December 2016. Pending any decisions made by SIS with regard to future dividend policy the cash will be retained in the short term to finance overheads which run at under 100,000 per annum and once the SIS divided policy is known, a decision will be made on the most appropriate way to distribute cash to shareholders either by continuing purchases in the market or by way of a dividend.


Consolidated interim statement of comprehensive income

Notes
6 months to 31 December 2016
Unaudited
6 months to 31 December 2015
Unaudited
12 months to 30 June 2016
Audited





Revenue

12,500
12,500
25,000





Cost of sales

-
-
-
Gross profit

12,500
12,500
25,000





Administrative expenses

(56,033)
(46,446)
(112,036)





Operating loss

(43,533)
(33,946)
(87,036)





Financial income

2,984
6
7
Financial costs

(105)
(26)
(186)
Net financial income

2,879
(20)
(179)





Share of profit of equity-accounted associate
1
1,062,740
1,248,832
3,409,845
Impairment of equity-accounted associate

(1,062,740)
(1,248,832)
(3,014,622)
Transitional adjustment relating to equity-accounted associate

-
-
(368,521)





Loss before taxation

(40,654)
(33,966)
(60,513)





Taxation

8,128
9,517
16,543





Loss for the period 

(32,526)
(24,449)
(43,970)





Share of other comprehensive income of associate

-
-
(26,702)
Total comprehensive loss for the period

(32,526)
(24,449)
(70,672)





Attributable to equity holders of the company

(32,526)
(24,449)
(70,672)





Loss per share:
4



Basic

(0.14p)
(0.10p)
(0.18p)
Diluted 

(0.14p)
(0.10p)
(0.18p)
Pre valuation adjustment

4.44p
5.02p
12.17p


Consolidated interim statement of financial position

Notes
31 December 2016
Unaudited
31 December 2015
Unaudited
30 June
2016
Audited
Assets




Non-current assets




Investment in associate
1
20,892,466
25,000,000
25,000,000


20,892,466
25,000,000
25,000,000





Current assets




Trade and other receivables

28,746
18,692
34,173
Cash and cash equivalents

1,484,265
13,688
633


1,513,011
32,380
34,806





Total assets

22,405,477
25,032,380
25,034,806





Equity and liabilities









Capital and reserves attributable to equity holders of the parent




Share capital

2,103,203
2,541,136
2,541,136
Capital redemption reserve

711,116
273,183
273,183
Merger reserve

2,402,674
2,402,674
2,402,674
Retained surplus 

17,171,001
19,764,245
19,718,022


22,387,994
24,981,238
24,935,015





Current liabilities




Trade and other payables

17,483
51,142
96,423
Corporation tax payable

-
-
3,368


17,483
51,142
99,791





Total equity and liabilities

22,405,477
25,032,380
25,034,806


Consolidated interim cash flow statement


6 months
to 31 December 2016
Unaudited
6 months
to 31 December 2015
Unaudited
12 months
to 30
June
2016
Audited





Cash flow from operating activities




Loss before taxation

(40,654)
(33,966)
(60,513)
Adjustments for:




Depreciation, amortisation and valuation adjustment

1,062,740
1,248,832
(3,409,845)
Share of profit from associate

(1,062,740)
(1,248,832)
3,014,622
Transitional adjustment

-
-
368,521
Finance income

(2,984)
(6)
(7)
Finance expense

105
26
186
Corporation taxes recovered

4,758
4,173
18,449





Net cash outflow from operating activities before changes in working capital 

(38,775)
(29,773)
(68,587)
Decrease / (increase) in trade and other receivables

5,429
15,850
(3,513)
(Decrease) / increase in trade and other payables 

(78,940)
10,662
55,943





Net cash outflow used in operating activities 

(112,286)
(3,261)
(16,157)





Investing activities




Dividend received 

4,107,534
-
-
Interest received

2,984
6
7





Net cash inflow from investing activities

4,110,518
6
7





Financing activities




Shares purchased into treasury

(2,514,495)
-
-
Interest paid

(105)
(26)
(186)





Net cash outflow from financing activities

(2,514,600)
(26)
(186)





Net increase/(decrease) in cash and cash equivalents in the period

1,483,632
(3,281)
(16,336)
Cash and cash equivalents at the beginning of the period

633
16,969
16,969





Cash and cash equivalents at the end of the period

1,484,265
13,688
633

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 2015 
2,541,136
273,183
2,402,674
19,788,694
25,005,687






Loss for the 6 month period to 31 December 2015
-
-
-
(24,449)
(24,449)






Total comprehensive loss for the period
-
-
-
(24,449)
(24,449)






At 31 December 2015
2,541,136
273,183
2,402,674
19,764,245
24,981,238






Loss for the 6 month period to 30 June 2016
-
-
-
(19,521)
(19,521)
Share of other comprehensive loss of associate
-
-
-
(26,702)
(26,702)
Total comprehensive loss for the period
-
-
-
(46,223)
(46,223)






At 30 June 2016
2,541,136
273,183
2,402,674
19,718,022
24,935,015

Share
capital
Unaudited
Capital redemption reserve
Unaudited
Merger
reserve
Unaudited
Retained surplus/ (deficit)
Unaudited
Total shareholders equity
Unaudited






At 1 July 2016
2,541,136
273,183
2,402,674
19,718,022
24,935,015






Loss for the 6 month period to 31 December 2016
-
-
-
(32,526)
(32,526)
Share repurchase
-
-
-
(2,514,495)
(2,514,495)
Cancellation of treasury shares
(437,933)
437,933

-
-
Total comprehensive loss for the period
(437,933)
437,933
-
(2,547,021)
(2,547,021)






At 31 December 2016
2,103,203
711,116
2,402,674
17,171,001
22,387,994
On 2 October 2016, the Company purchased in the market 400,000 shares at 70p per share. During the period, the Company purchased in the market a further 2,979,327 shares at 75p per share. The purchases were made out of distributable reserves. All shares repurchased totalling 3,379,327 and shares held in treasury of 1,000,000 with a nominal value of 437,933 were cancelled during the period. See note 5 for further details.

Notes to the interim financial statements


1. Investment in associate
Share of net assets
Fair Value of Intangibles
Total

Group
Group
Group

Cost



At 1 July 2016
19,568,457
5,431,543
25,000,000
Additions - share of profit
1,062,740
-
1,062,740
Dividend received
(4,107,534)
-
(4,107,534)
Valuation adjustment
-
(1,062,740)
(1,062,740)




At 31 December 2016
16,523,663
4,368,803
20,892,466
The Group's interest in the associate Sports Information Services (Holdings) Limited (formerly Satellite Information Services (Holdings) Limited) ("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 2016 and has reduced the value of the investment by the amount of its profit share for the period. As a result, it has concluded that the investment should be held at a value of 20,892,466.
Share of profit of associate*
30 September
2016

31 December 2016
31 December 2015
30 June
2016

SIS Total

CMG share
CMG share
CMG share

'000

'000
'000
'000
Revenue:





SIS Betting Services
101,493

20,847
21,012
42,987
SIS LIVE services
8,615

1,769
1,910
3,830






Total revenue
110,108

22,616
22,922
46,817






Operating profit from ongoing operations
6,332

1,301
1,602
4,182
Net interest receivable / (payable)
233

48
13
94
(Losses) / profits on business wind down
-

-
-
(101)
Profit on disposal of joint venture
-

-
-
132
Profit on disposal of fixed asset
-

-
-
65
Exceptional items
(98)

(20)
(54)
-






Profit before tax
6,467

1,329
1,561
4,372
Taxation
(1,293)

(266)
(312)
(962)
Share of profit after taxation
5,174

1,063
1,249
3,410
Net income from associate
5,174

1,063
1,249
3,410






Other comprehensive income





Actuarial (loss) /gain
-

-
-
(308)
Deferred tax
-

-
-
7
Change in value of hedging instrument
-

-
-
274

-

-
-
(27)






Share of gross assets and liabilities of associate





Gross assets
151,914

31,203
29,911
32,685
Gross liabilities
(71,471)

(14,680)
(12,105)
(13,117)
Net equity
80,443

16,523
17,806
19,568
*The period covered by the associate's accounts is the six months to 30 September 2016. The revenues have been stated excluding internal revenues.
The financial results for SIS are taken from SIS's management accounts to 30 September 2016. The results have historically been adjusted in order to align the accounting policies of SIS (whose accounts were previously prepared under 'Old' UK GAAP) and CMG (whose accounts are prepared under International Financial Reporting Standards).
Within the financial statements for the year ended 30 June 2016, a transitional adjustment was recognised in CMG following SIS's transition to reporting under FRS 102. The estimates made in the CMG accounts in order to align the accounting policies previously are no longer needed.
2. Corporate information
The Company is a company incorporated in England and Wales and quoted on the AIM market of the London Stock Exchange plc.
3. Basis of preparation
These unaudited consolidated interim financial statements cover the six month period from 1 July 2016 to 31 December 2016 including the financial results of SIS for the six month period to 30 September 2016.
These consolidated interim financial statements of the Company and its subsidiaries (the "Group") for the six months ended 31 December 2016 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 interim statement are consistent with the accounting policies to be adopted in the financial statements for the year ended 30 June 2017.
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 2016, 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.
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 2016
6 months to
31 December 2015
12 months to 30 June
2016
Basic and Diluted



Earnings per Share pre valuation adjustment - pence
4.44p
5.02p
12.17p
Loss per Share - pence
(0.14p)
(0.10p)
(0.18p)




Profit attributable to equity shareholders (before valuation adjustment)
1,030,214
1,224,383
2,970,652
Loss attributable to equity shareholders
(32,526)
(24,449)
(43,970)




Weighted average number of Shares in issue
23,221,321
24,411,357
24,411,357


5. Share repurchases
The Company made the following share repurchases during the period:
Date of repurchase

No. of shares

Price per share





02 October 2016

400,000

70p
17 October 2016

65,000

75p
19 October 2016

20,000

75p
25 October 2016

224,200

75p
27 October 2016

1,242,362

75p
1 November 2016

763,133

75p
2 November 2016

25,000

75p
4 November 2016

1,268

75p
7 November 2016

162,737

75p
8 November 2016

1,127

75p
9 November 2016

474,500

75p
The ordinary shares repurchased totalling 3,379,327 and those held in treasury at the beginning of the period totalling 1,000,000 with a total nominal value of 437,933 were cancelled during the period. As at 31 December 2016, there were no shares held in treasury.

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